September 7, 2011 / 7:35 PM / 6 years ago

Text-Fitch affirms Fulton Financial; outlook stable

(The following statement was released by the rating agency.) NEW YORK, September 07 (Fitch) Fitch Ratings has affirmed the long-term and short-term Issuer Default Ratings (IDRs) of Fulton Financial (FULT.O) Corporation (FULT) at ‘A-’ and ‘F1’ respectively. The Rating Outlook is Stable. A complete list of ratings follows this release. The ratings affirmation reflects the company’s consistent performance and solid overall financial condition including asset quality, liquidity and capital position. Profitability has steadily improved due to declining provisions for loan losses combined with a gradually increasing NIM and good expense control. ROA was in line with the average of ‘A-’ peers and well above the average for lower-rated U.S. bank peers. FULT has a concentration in commercial real estate (CRE) at 32% of total assets. In affirming the rating, Fitch considered further potential stresses to FULT’s CRE portfolio. Fitch expects that any potential problems would remain well contained given exposure is to the relatively more stable markets of the Mid-Atlantic as well as portfolio granularity and disciplined underwriting. Residential construction exposure has been reduced considerably and over 40% of the CRE portfolio is owner occupied. FULT’s capital position is expected to remain at conservative levels. Tangible common equity continued to improve in recent quarters owing to internal capital generation and a restrained level of risk assets. Funding from deposits represents close to 90% of the liability mix. Within total deposits, FULT continues to work down the level of CDs in favor of lower cost demand or savings deposits. Holding company liquidity is sound with good coverage of debt servicing costs. Double leverage of 120% appears moderately higher than the ‘A-’ peer average. However, FULT has considerable flexibility to service holding company obligations given the following: interest is up-streamed from subsidiary banks, subsidiaries have good dividend capacity and the holding company entities have a comfortable level of cash and other liquid assets. The Stable Rating Outlook reflects an expectation for solid capital levels, sustained profitability, manageable credit costs, and sound liquidity. Should asset quality deterioration pressure earnings and/or capital levels, negative rating actions could ensue. Rating upside is considered limited at least in the near term given FULT’s relatively small franchise, CRE concentration and level of NPAs. With $16.0 billion in assets, FULT is a financial holding company based in Lancaster, PA operating through community bank subsidiaries located across Pennsylvania, Maryland, Delaware, New Jersey, and Virginia. The following ratings are affirmed with a Stable Outlook. Fulton Financial Corporation -- Long-term IDR at ‘A-'; -- Short-term IDR at ‘F1’; -- Individual rating at ‘B/C’; -- Viability Rating at ‘a-’ -- Subordinated debt at ‘BBB+'; -- Support at ‘5’; -- Support Floor at ‘NF’. Fulton Bank -- Long-term IDR at ‘A-'; -- Long-term deposits at ‘A’; -- Short-term IDR at ‘F1’; -- Short-term deposits at ‘F1’; -- Individual rating at ‘B/C’; -- Viability Rating at ‘a-’ -- Support at ‘5’; -- Support Floor at ‘NF’. Columbia Bank (The) -- Long-term IDR at ‘A-'; -- Long-term deposits at ‘A’; -- Short-term IDR at ‘F1’; -- Short-term deposits at ‘F1’; -- Individual Rating at ‘B/C’; -- Viability Rating at ‘a-’ -- Support at ‘5’; -- Support Floor at ‘NF’. Lafayette Ambassador Bank -- Long-term IDR at ‘A-'; -- Long-term deposits at ‘A’; -- Short-term IDR at ‘F1’; -- Short-term deposits at ‘F1’; -- Individual rating at ‘B/C’; -- Viability Rating at ‘a-’ -- Support at ‘5’; -- Support Floor at ‘NF’. The Bank -- Long-term IDR at ‘A-'; -- Long-term deposits at ‘A’; -- Short-Term IDR at ‘F1’; -- Short-Term deposits at ‘F1’; -- Individual rating at ‘B/C’; -- Viability Rating at ‘a-’ -- Support affirmed at ‘5’; -- Support Floor at ‘NF’. Fulton Capital Trust I -- Preferred stock at ‘BBB’. Contact: Primary Analyst Joseph Scott Senior Director +1-212-908-0821 Fitch, Inc. One State Street Plaza New York, NY 10004 Secondary Analyst Brandon Bajema Associate Director +1-312-368-2332 Committee Chairperson Christopher Wolfe Managing Director +1-212-908-0771 (New York Ratings team) (email: Harold.Barnett@thomsonreuters.com; Reuters messaging: harold.barnett.thomsonreuters.net; Tel: +1-646-223-4186)) 

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