Shares of Fulton Financial Corporation (FULT - Free Report) declined 1.2% on last day’s trading session due to its expectations of an unfavorable impact on second-quarter 2018 results of nearly $32 million or 18 cents per share as a result of fraud committed by some employees of one of its major clients.
In a regulatory filing on May 31, the company stated that it issued about $48 million in loan to the unidentified borrower, which excludes another $32 million the borrower had taken from other financial lenders.
Having conducted a thorough review of the lending relationship, Fulton Financial expects to take a $40 million charge off, which amounts to an after-tax hit of $32 million. Also, the company is dealing with the borrower to determine assets that can be used for recovery. Thus, at the moment, Fulton Financial could not provide an estimate of any additional recoveries that may be realized in the future.
In March 2018, the Lancaster, PA-based lender had started the $21 million expansion of its headquarters, which is expected to increase job prospects in the city by nearly 400.
Fulton Financial reported first-quarter 2018 net income of $49.5 million, up 14.1% year over year, benefitting from higher revenues and lower provisions. Also, strong capital position remains a key tailwind for the company, which it seeks to utilize for growing loans balance and enhancing shareholders’ value in 2018.
Further, rising interest rates and lower tax rates are likely to result in measurable growth of Fulton Financial, going forward. Also, the company remains committed to reducing expenses through consolidation of branches.
Shares of Fulton Financial have lost 5.2% over the past six months against the industry’s rally of 2.2%.
Currently, the stock carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Some better-ranked stocks in the same space worth considering are First Commonwealth Financial Corp. (FCF - Free Report) , Financial Institutions (FISI - Free Report) and Bryn Mawr Bank Corporation (BMTC - Free Report) . All these stocks carry a Zacks Rank #2 (Buy).
First Commonwealth’s Zacks Consensus Estimate for current-year earnings was revised slightly upward for 2018, in the last 60 days. Also, its share price has increased 30.1% in the past 12 months.
Financial Institutions’ current-year earnings estimates were revised 2.6% upward, over the last 60 days. Further, the company’s shares have increased nearly 10% in a year.
Bryn Mawr’s Zacks Consensus Estimate for current-year earnings was revised nearly 2% upward, over the last 60 days. Moreover, in the past year, its shares have gained 17.1%.
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