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Fulton Financial (FULT - Get Report) of Lancaster, Pa., closed at $9.49 Friday, down 3% year-to-date, following a decline of 3% during 2011. Based on a quarterly payout of six cents, the shares have a dividend yield of 2.53%.
Fulton reported fourth-quarter earnings of $36.1 million, or 18 cents a share, declining from $39.3 million, or 20 cents a share in the third quarter, but improving from $31.5 million, or 16 cents a share, in the fourth quarter of 2010.
The sequential decline mainly reflected a 14% decline in "other service charges and fees" to $10.8 million, as the Durbin Amendment took its toll, while the year-over-year earnings increase reflected securities gains of $3.1 million in , compared to losses of $443,000 in the fourth quarter of 2010.
Fulton Financial's fourth-quarter operating ROA was 0.89%, and according to SNL Financial, the ROA has ranged between 0.77% and 0.98%, over the past five quarters.
Despite "somewhat disappointing results," FBR analyst Bob Ramsey last Wednesday reiterated his "Outperform" rating for Fulton and raised his price target for the shares to $12 from $10, "to reflect stronger industry valuation multiples."
Looking beyond some one-time fourth-quarter items, including "a bulk nonperforming loan sale also added approximately $5 million to credit cost," the analyst said that "Lower-than-expected fee income will have a more lasting impact on future quarters and is the largest contributor to our reduction in 2012 EPS to $0.85 (from $0.90)."
" While 4Q11 results were unexciting, FULT's profitability remains strong (11% [return on tangible common equity] in 2011), and shares trade at a discount to peers on earnings," he said.
The shares trade for 1.3 times tangible book value, according to SNL, and for 11 times Ramsey's 2012 EPS estimate.
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Written by Philip van Doorn in Jupiter, Fla.
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