At the same time, DBRS Morningstar confirmed the ratings of its primary banking subsidiary,
KEY RATING CONSIDERATIONS
Fulton's ratings confirmation and Stable trend reflect the Company's solid community banking franchise operating in a number of states and historically sound asset quality that is supported by consistent and conservative loan underwriting and a fairly granular loan portfolio. Additionally, the Company exhibits good core deposit funding, as well as a solid capital position.
Fulton's ratings also consider the Company's limited scale and somewhat concentrated position in commercial real estate loans (CRE).
RATING DRIVERS
DBRS Morningstar considers Fulton's current ratings as well placed. Over the longer term, the ratings would be upgraded if Fulton grew its franchise resulting in greater revenue diversity and driving a sustained improvement in profitability metrics. Conversely, sustained weaker profitability metrics, an increase in risk appetite, overly aggressive capital management or a poorly integrated acquisition would result in a downgrade of ratings.
RATING RATIONALE
Franchise Combined
Earnings Combined
Fulton's earnings proved resilient in 2021 with a relatively stable net interest margin and strong results from non-interest income sources, including wealth management. The Company reported net income of
Risk Combined
Consistently strong asset quality and conservative underwriting have remained a key strength for the Company and help underpin the ratings. DBRS Morningstar considers Fulton's relatively high level of CRE and construction loans, which represented approximately 46% of total loans at YE21, a concentration risk. Somewhat reducing this risk are the highly granular exposure limits the Company has maintained for both borrowers and projects, as well as a large percentage of owner-occupied CRE exposures that are typically less risky. Net charge-offs were just .07% for 2021. However, DBRS Morningstar views current asset quality metrics as unsustainably low and expects these metrics to start trending back towards more normalized levels.
Funding and Liquidity Combined
DBRS Morningstar views the Company's funding and liquidity as solid. Deposit growth continued in 2021 with deposits increasing 12% year-over-year. The Company fully funds its loan portfolio with deposits and is not reliant on wholesale funding. On balance sheet liquidity remains strong and the Company has ready access to additional sources of liquidity, if needed.
Capitalization Combined
Regulatory capital ratios remain sound. Specifically, the CET1 ratio was 9.9% while the total capital ratio was 14.1% at year-end. The Company increased its dividend and repurchased shares in 2021.The recently announced acquisition of
Further details on the Scorecard Indicators and
ESG CONSIDERATIONS
A description of how DBRS Morningstar considers ESG factors within the DBRS Morningstar analytical framework can be found in the DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings at https://www.dbrsmorningstar.com/research/373262.
Notes:
All figures are in
The principal methodology is the Global Methodology for
The primary sources of information used for this rating include Morningstar, Inc. and Company Documents. DBRS Morningstar considers the information available to it for the purposes of providing this rating was of satisfactory quality.
The rated entity or its related entities did participate in the rating process for this rating action. DBRS Morningstar had access to the accounts and other relevant internal documents of the rated entity or its related entities in connection with this rating action.
Generally, the conditions that lead to the assignment of a Negative or Positive trend are resolved within a 12-month period. DBRS Morningstar's outlooks and ratings are under regular surveillance.
For more information on this credit or on this industry, visit www.dbrsmorningstar.com.
Tel. +1 212 806-3277
Ratings
Date Issued Debt Rated Action Rating Trend Attributesi
US = Lead Analyst based in USA
CA = Lead Analyst based in
EU = Lead Analyst based in EU
E = EU endorsed
U =
Unsolicited Participating With Access
Unsolicited Participating Without Access
Unsolicited Non-participating
07-Mar-22 Trust Preferred Securities Confirmed BBB (high) Stb US
Columbia Bancorp Statutory Trust II
Date Issued Debt Rated Action Rating Trend Attributesi
US = Lead Analyst based in USA
CA = Lead Analyst based in
EU = Lead Analyst based in EU
E = EU endorsed
U =
Unsolicited Participating With Access
Unsolicited Participating Without Access
Unsolicited Non-participating
07-Mar-22 Trust Preferred Securities Confirmed BBB (high) Stb US
Columbia Bancorp Statutory Trust III
Date Issued Debt Rated Action Rating Trend Attributesi
US = Lead Analyst based in USA
CA = Lead Analyst based in
EU = Lead Analyst based in EU
E = EU endorsed
U =
Unsolicited Participating With Access
Unsolicited Participating Without Access
Unsolicited Non-participating
07-Mar-22 Trust Preferred Securities Confirmed BBB (high) Stb US
Date Issued Debt Rated Action Rating Trend Attributesi
US = Lead Analyst based in USA
CA = Lead Analyst based in
EU = Lead Analyst based in EU
E = EU endorsed
U =
Unsolicited Participating With Access
Unsolicited Participating Without Access
Unsolicited Non-participating
07-Mar-22 Long-Term Issuer Rating Confirmed A Stb US
07-Mar-22 Short-Term Issuer Rating Confirmed R-1 (low) Stb US
07-Mar-22 Long-Term Deposits Confirmed A Stb US
07-Mar-22 Long-Term Senior Debt Confirmed A Stb US
07-Mar-22 Short-Term Instruments Confirmed R-1 (low) Stb US
Date Issued Debt Rated Action Rating Trend Attributesi
US = Lead Analyst based in USA
CA = Lead Analyst based in
EU = Lead Analyst based in EU
E = EU endorsed
U =
Unsolicited Participating With Access
Unsolicited Participating Without Access
Unsolicited Non-participating
07-Mar-22 Long-Term Issuer Rating Confirmed A (low) Stb US
07-Mar-22 Short-Term Issuer Rating Confirmed R-1 (low) Stb US
07-Mar-22 Long-Term Senior Debt Confirmed A (low) Stb US
07-Mar-22 Short-Term Instruments Confirmed R-1 (low) Stb US
07-Mar-22 Subordinated Debt Confirmed BBB (high) Stb US
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