FULT - Earnings call transcript Q4 2017 | Fulton Financial Corporation

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Operator

Good morning, ladies and gentlemen, and welcome to the Fulton Financial Fourth Quarter Results Conference Call. This call is being recorded. I will now turn the call over to Jason Weber. Please go ahead, sir.

Jason Weber

Thanks, Kevin. morning. Good us earnings conference for joining to and Fulton our discuss XXXX. for for call Financial’s webcast Thanks

Your host Financial for Chairman, President today’s conference call Chief Officer is Executive of Fulton Corporation. and Phil Wenger,

Rohrbaugh, Joining Phil Officer Interim Financial Chief Executive President, Chief and Senior Officer. Wenger Operating Vice Phil is

results by comments on materially. statement measures. the to information non-GAAP Fulton to yesterday supplemental of of required reconciliation update representatives most refer certain presentation measures. these financial those in refer to can PM Fulton of forward-looking In factors. X:XX XX XX fult.com financial performance, – The then this operations website statements These yesterday additional may not These under documents to included Please earnings call, Our GAAP found XX, Relations, and page information presentation forward-looking the any on uncertainties, slide at and and for at to Investor and guarantees related statements. On in Fulton today are information be performance and today’s financial the discussing law, with we undertakes factors, other and of uncertainties measures a on comparable of our with released risks, announcement refer the actual condition, may will statements to Slide other make be on Slides Safe Fulton’s our can risks, website. to results refer than included slides of non-GAAP to on financial earnings presentation Fulton’s found today’s the Please Investor and for earnings are of the Harbor clicking representatives obligation, no and respect subject statements business. announcement, which X afternoon. Relations other the regarding under differ Presentations on by with News. our could future release on forward-looking financial as also Fulton’s or revise released

call Phil like to I would your the to host, turn Now, over Wenger.

Philip Wenger

us. you before our open thank Interim Thanks, phone our prepared Jason, everyone, concludes, joining and have When good then details few line of a outlook for performance. the XXXX and will review for and Rohrbaugh, I I the questions. CFO, shares Phil our financial he morning, remarks

Excluding Pre-provision for we diluted net the million, the of impact XX% reported of share year-over-year. tax year-over-year. or approximately per increased of an charge, revenue earnings increase XXXX, $X.XX XX.X% $XX

the year XXXX return hit was on Excluding our of impact tax net for was excluding solid return the in on equity impact X.XX% revenue of company the was our tangible another as our year. income, charge. and charge, the for the and levels we tax assets XX.XX% record

executing by in operating reserve. results reflected positive the out continued growth federal beginning at of multiple strategies a leverage, interest and of the progress our benefit XXXX meaningful year. the rate financial the increases that generated We goal Our in set the we

in portfolios. portfolio Our XXXX which loan average and our X.X% loan increased of was was with our in growth driven by line year-over-year, most outlook

and Virginia Maryland Our our XX.X% markets. concentrated mortgage average increased Growth portfolio was year-over-year. residential in

selling do anticipate saw we our the the XXXX, we XXXX, in in balances we Although in ending market. residential growth as that at rate to we the not meaningful plan portfolio grow mortgage production portfolio overall in on into secondary expect more

our throughout X.X% market. our portfolio increased commercial average year-over-year growth Pennsylvania footprint, in but mortgage primarily and Our was spread

the well to concentrations owner As overall our the in prior we in we commercial of regulatory estate mortgage portfolio remain close mortgages within and quarters, occupied real on guidance mentioned represent lending. have commercial commercial half

in in of $XX our across increased market. spread this growth million contributing industries concentrated loan year-over-year. C&I X.X% average a approximately period, and during Line portfolio to increased range Our Pennsylvania was core Growth broad the borrowings portfolio.

a be nice to leasing commercial growth continues story. Our portfolio

commercial Our to leasing year-over-year portfolio increased million. average $XXX XX.X%

Our which XXXX. our to pipeline growth our in was in reflected produce us XXXX line single-digit mid X.X% increased outlook. we outlook. in will with loan Average XXXX, at deposits which growth deposit a with remains is for our year-over-year, level believe We allow that were pleased

deposits More X.X%, year-over-year. time importantly, average while Excuse growth driven demand X.X% demand and increased savings average The our decreased consumer deposits business. was savings me. deposits approximately our in by and primarily

the XX.X% to approximately operating year our loan Our deposit ratio range. historical within at comfortably ended

charge-offs at credit, quality low overall continues levels. historically delinquencies continues and asset net be be Turning to to stable and to

outlook outside litigation to banking big income, growth security lower third we and Turning increased non-interest of in year-over-year revised Mortgage driver gave income. gains, XXXX that in non-interest the the a our income than our was settlement excluding quarter. X.X% and expected non-interest by was

year-over-year, increase originations shift asset businesses, had While to commercial our revenue year-over-year, commercial grew contributions. was income, of in sale SBA in versus to year-over-year year-over-year. loan a and XX.X% while grew and market we to a and production notable all being the going XX% focus. strong swap, shift contributed performance an both saw anticipated. to X% continues made originations the our gathering within with interest in the shift interest The segments income mortgage area, rate much investment portfolio management overall trust. on due growth services our and than In And negative net one growing gain management Investment increased and treasury Brokerage pace income a into trust fastest portfolio be at XXXX all primarily the impact of more the our continued sold.

outside million was our card and XXXX. in Non-interest loan new increases business X.X% usage. compared from production. into and growth sales benefited XXXX. merchant services, business interest reflecting swap XXXX the management outlook. exchange activity our continued since foreign in commercial in investment rate substantial million to cash and income XXXX business was in grown our meaningfully and treasury has income accounts in SBA include solid improved benefit and saw increased continued while We debit notable credit $X.X income SBA from services, growth Our to in commercial which expenses originations, customer year-over-year $X.X

Our original certain did include tax amortization outlook of not investments. credit the

ratio line increased year-over-year, in It efficiency which will The was year-over-year. in write-off, XX.X% for preparing goal efficiency X.X% was Excluding consolidation. continue an the XXXX the ratio to XX% within for improvement non-interest make XXXX, our item of our our In this in channels, our with systems XX%. invest delivery did while to we upgrading XXXX and technology our expenses optimizing outlook. initiative customer and charter

continuing our to company efficient, organization of the Forward the economies ways in our while our benefit fourth In investment for initiative. December common quarter. the our our $XX.X XXXX, a current stock capital the dividend $X.XX and one our through $X.XX we common quarterly organization from increased have not priorities. through plan more $X.XX share Fulton did some from of to That in XXXX. during legislation on we program make invest recently top the look per of continually communities management to we is addition, deployment our and we approximately In but new with priority the from value year, enhancement our dividend and Expense of million of serve extended support share highest authorization tax was increasing remains employees benefits sharing XX special larger any repurchase We in long-term repurchase Strategically, shareholder can to by a paid left in scale. of that a

matters. regulatory to Turning

with Justice’s the orders of terminated. to to subsidiary have achieve diligently that respect resolution banks of orders. fourth remaining And investigation ongoing quarter With lending cooperate we to to the working to with BSA/AML During have issued a Department consent the we’re nothing the report. new investigation, three to and XXXX, similar our of consent respect were BSA/AML fair continued

was Before skills in of a the Phil member October. of he large leading We joined continue key instrumental On notably management Mark to want I’d to about over contributions the CFO to for wanted strategic plans and Phil of area, to executive I we our retire discuss over regional services in him a to November March over tenure our brings our driving and financial bank. in detail. CFO grow and of Board very him I announced like and be and duties company. Phil? thank five-year to of And been Mark plan. XXXX in turn now, efficiencies has knowledge of as behalf company’s Phil Phil a retirement. will best to leveraging in our most look the more experience call Rohrbaugh, improving management his forward call leadership few transformation company concluding the risk Rohrbaugh his Phil years financial operational Directors, announced the results I Rohrbaugh to McCollom. comments turn changes the to XX to in the team his wish over Fulton. to an of the make that at transitioning

Philmer Rohrbaugh

by are $XX.X on tax earnings everyone legislation quarter of expense charge diluted quarter. in this $XX new quarterly resulted quarter on note million impacted which million. net the with charge, and $X.XX third the to earnings tax Unless adversely XXXX a annual X, comparisons Slide comparisons Fourth to Phil, you, income are Starting were Thank federal the quarter’s requiring on of in tax and income per a I call. good share the are XXXX. morning with otherwise,

for offset net credit have Excluding non-interest would quarter charge, interest by Fourth on taxes. million. in earnings been net reflected increase share losses, non-interest in $XX.X and expense this the income of increases earnings $X.XX income provision income per an and income

and income to net yields X, The basis loan interest increases increasing X or loan Average in margin increased by assets. X% points. X the interest-earning Moving our points, by increase interest interest-earning in loan quarter was Slide the a average $X.X in and by improved million, in yields non-accrual X%, point income million, aided basis with increase in on assets driven net fourth fees. or yields improvements X net recoveries basis $XXX a interest

points, was of or the increase to updated X%. quarter for rate decline there to rate increase funds related the In December. in by of the was municipal bearing provided in Average primarily another and cost higher interest addition, $XXX of the linked interest margin index personal end and seasonal balances the deposits increasing balances third in campaigns was respectively. quarter basis outlook the deposit the interest due the was efforts The seasonality There million, increases. seen net to range during year. XXXX. basis promotional X impacted federal offsetting and at average index by bearing deposits increase the money interest Partially promotional market was in increase X our The deposit due up quarter were in accounts point last we deposits within a

earning on or points, increased in basis For XXXX, XX.X% and average margin. interest-earning in increase while interest driven The the assets our X% X a yields the XX from year, cost cost of only a point of point increased income fund the in increase was net in realized points. $XX in mainly with solid interest The by net Yields asset increase assets XX loans interest-earning basis was basis million, increase. funds driven XX increased mainly deposits. by basis increase

X, million for XXXX, on by in loan as the driven XXXX, stable. Turning Slide credit metrics provision largely generally increased from losses were to credit $XX.X credit growth

For the for year fourth XX Net X $X.X quarter for compared was comparison average of points basis increased to percentage million as XXXX. were provision loans points the losses of basis in $X.X quarter million credit of the XXXX. XXXX, the to third for The a total the in quarter. charge-offs provision

[Technical basis basis annualized improved a points. Non-performing quarter, to comparison of total XXXX the loans an million, For increase percentage on a remained Non-performing $X.XX%, or in XX X% loans Difficulty] $X.X XX, as unchanged showed loans at XXXX. to charge-offs as slight at to December compared net

Operator

your call ladies Ladies and standby, will on the again, please gentlemen, conference momentarily. gentlemen, and line. please Once stay resume

Philmer Rohrbaugh

everyone, for Thanks, patience. your

Operator

live. You’re

Philmer Rohrbaugh

beginning Thank Okay. area. telecommunication and impacted interruption We talk X Slide for that had Lancaster was about patience. the to your non-interest everyone, income. a here you, I

quarter million, driven The moving a increased of gain primarily excluding by fourth recognized that the to or the XXXX. increase income, the net third in gains of litigation matter. So million in $X.X X, the XX% to upon securities Slide non-interest settlement was quarter $X.X comparison

the from million, income offsetting and X.X%, with gains commissions. X.X%, card or $X between driven were a equally generally contributing various $X.X million, fees loan rate service the brokerage of increase or Slightly item, was to $X.X XX.X%, services and seasonal increased million, non-interest income. split sales swap the income these The trust categories. in Investment and commercial charges income. or management other increased by interest non-interest income banking in of fees increases higher trust key increase and decline SBA largest was Also increase mortgage debit by loans. higher this in Excluding driven fees

expenditures X.X% in quarter, Slide in a had increased commercial $X.X unusual expenses business. write-off banking to item capital $X.X or of XX, in-process million, one fourth the million Moving our We in initiatives certain related non-interest quarter. to the accumulated technology

tax $XX.X requirements. quarter During Income lower real and due outside XXXX, of increased impact strategic services, timing resulting properties result gains the year-over-year initiatives FDIC consulting linked bank component the expense tax due foreclosed technology $XXX,XXX, charge a of cost a shift the bank to is large the as a other were owned also to the commercial Other estate to increases we of lead to Other of solution. the alternative expense, in $XX.X increased expense decision subject quarter million. which to mainly incurred to becoming and of fourth in the other of during million for largely expense insurance million made banking quarter. due $XX.X of our an premium realized net sales

effective this decrease the for taxes. from state resulted rate Excluding was primarily charge, quarter. income lower quarter, third to the in as fourth The the tax XX.X% XX.X% compared

to charge, the the as the effective rate XX.X%, our displays profitability XXXX. compared Slide tax and capital XX tax in the over years. XX.X% For excluding levels year, four past was

will to Phil average the over tangible the on the XXXX point, on call the our XXXX. legislation who increases XX. continue I’d on assets Wenger, of At returns turn see both end back to this and Slide outlook review equity periods return despite impact to tax presented shown new like of at We in

Philip Wenger

Thank you, Phil.

core single digits. deposit expect rates average and annual the growth loan We in mid

loan driven loss We expect primarily growth. provision by to be loan

and including tax in in non-interest of rate the XXXX be growth And the to We expect digits. low credit litigation amortization expect single gains security in income, the rate expenses, be settlement the single growth for to the non-interest we excluding low the digits. investments for

will shareholders. provide returns appropriate and our We loan our manage growth capital and to support

As we between we ratio have annual XX% an payout mentioned target dividend in and XX%. the past,

of basis rate of tax a As expected X points. the income interest to on corporate of margin impact portfolio, first the to the in lower loan quarter rate XXXX X decline primarily, result net is the tax

net However, this full-year for points an interest for the XXXX, basis two of rate increases we’re year. is margin as interest the X to outlook expecting X increase additional

you of attention, on will in rate and your interest credits between for questions. now, Corporation. tax XX% your your Finally, an we tax anticipate effective Fulton XX% Financial continued depending be answer the And level Thank realized. for we glad to

Operator

with Instructions] from [Operator McGratty comes Our first Chris question KBW.

Chris McGratty

morning, Good everybody.

Philip Wenger

morning, Good Chris.

Chris McGratty

guidance Maybe of on rate, XX% tax expenses? XX% a like clarification. for of to assumed credits the in is to number The question terms tax what to the quick the just expense get guide, what’s

Philmer Rohrbaugh

Well, the range XX%. from rate the in the the perspective, terms from effective of provided XX% we tax to

of expectation Our be that range. is at lower-end to tax the effective rate

experienced. by influenced we that of going type credits a of to number be including that��s factors, the However, the tax mix of

markets flows new the credits we our different target And the geography credits through but range. and housing that a targeted, tax we have at that is different lower-end recall, and what have tax of tax – to income expect rate. impact you As effective – expectation be versus low

Chris McGratty

Okay.

of for quarters? so I’m million XX%, expense the to -- XX% the $XX like am correspond similar last XX% low-end Just that like clear, to year, couple the to the of does a

Philmer Rohrbaugh

the you’re if So tax expense… credit talking investment amortization line about above

Chris McGratty

Yes.

Philmer Rohrbaugh

that below slightly half less will be that level. Our expectation of there than is, XXXX level, the

Chris McGratty

level just I’m [Multiple million was And that Speakers]… so $XX

Philmer Rohrbaugh

correct. That’s

Chris McGratty

less half $XX got of it. Okay, So than million?

Philmer Rohrbaugh

Correct.

Chris McGratty

that. for you Thank

your sheet, is In XXX%. ratio around terms of balance to loan deposit the

How move the a rates, securities Is in single-digit one thinking portfolio, Thank should expect within and or source tax I think, in be the for dollars long-term about be rates? we do terms the growth, funding was mid the you’ve expectations given in commented move kind company. the of that growth for the that you loan of for to you. loan deposit one? of it

Philmer Rohrbaugh

Yes.

in from XXXX is core fairly a our come that deposit strong deposits growth. loan XXXX. our we to to expect in expecting support funding where on we did focus have still growth We’re And as to

Chris McGratty

Okay.

book in I’m hearing securities change a you? if the not lot So of

Philmer Rohrbaugh

other we’ve Not restructuring in than done. already certain accomplished we’ve that what

Chris McGratty

Got it.

you. thank Okay,

Operator

from Our Hovde next comes Zabora Brian with Group. question

Brian Zabora

morning. Good Thanks.

Philip Wenger

morning. Good

Philmer Rohrbaugh

Good morning.

Brian Zabora

prepared forward loan question sales. mentioned between into about change talk less portfolio your deposit play that that? that we A What portfolioing. what in you production, may XX-XX on you And remarks or split – you a can said And that the the and factor mortgage can does was ratio that going about maybe decision? is – drives

Philip Wenger

– maybe don’t production. been was for That I CRA and and/or outlets know, find some for to jumbo necessarily a our able our we’ve but production of it decision,

Brian Zabora

Okay.

think and in production maybe you higher just XXXX? Do may market about be do rates? So with you overall overall think the mortgage how down

Philip Wenger

a to little. production We We’re expecting tighten margins perhaps expect similar slight with a increase. do

Brian Zabora

the And you last guidance. provided you on then you as you right. that FTE rate. well? have All Do question Okay. may what Do tax just on an have be – think basis, the that effective

Philmer Rohrbaugh

one what? repeat more Are Could you that time? saying you

Brian Zabora

I’m tax sorry, on – have fully just taxable equivalent the you taxable it the tax be effective fully might the what do of instead rate? rate,

Philmer Rohrbaugh

Yes. just We bit take a probably little should that detail? your discuss in more question to offline

Brian Zabora

Okay.

Philmer Rohrbaugh

If net or flow you interest about, that… something for you’re does like tax do equivalent margin it through and how how – example, talking affect,

Brian Zabora

on – But rate mid-year tax a yes, probably we’ve that I Well, talk consideration that’s guess, income got consideration. to taxable can best. offline, into at we was a take maybe higher equivalent, then of and taking to – kind fully look into the

Philmer Rohrbaugh

Okay.

Operator

The next Piper Preston question with comes from Jaffray. Brody

Brody Preston

you? How guys. morning, are Good

Philip Wenger

Good morning.

Philmer Rohrbaugh

morning. Good

Brody Preston

wanted overall what to seeing a are growth minute. is But you said repeatable the some on sort more the sort if touching management or you of know, think brokered of for there drove X% just services it’s the of dependent line on that through you really through income saw of in run fee and item forward strategy, I I direction the Just or you side. moving market? not whether investment

Philip Wenger

in market. this and trust of that increase the generated increase management the generated by was in by and was balance year our investment business, then XX% new So between XX% increase

Brody Preston

okay. Okay,

Philmer Rohrbaugh

business. to just the for indicate increased Yes, million management do add to Okay. assets about that, to under I the trust full-year in $XXX want the that

Brody Preston

Okay, in is great. it real late balance occurred by loan growth, just On accurate? just All to sheet, right, quick, wanted touch what seems the it like quarter I that the average judging else?

Philip Wenger

yes. accurate, is That

Brody Preston

Okay.

Philip Wenger

I And of expense the law think, companies could loan much by growth, was tax would the and driven that for I say new a XXXX. portion desire they that as as to in

Brody Preston

Okay. makes And it what just that? the the pipeline? you say I it of Is growth, or guess, segments is

Philip Wenger

normal A than piece piece from of increase a that, balances. in line was larger

Brody Preston

And the Okay. increase what that for was quarter?

Philip Wenger

$XX million.

Brody Preston

rates? are Okay. And what utilization

Philip Wenger

$XX much. rates the million utilization doesn’t impact

So it whole been XX% than really it’s what the From in XX%. the is lot different my top not of past. a to head

Brody Preston

the And right. guess, I last pipeline? just on All question one maybe

Philip Wenger

ahead. Go

Brody Preston

you some at on pipeline sort to of the Can this give clarity driving are which point? more segments

Philip Wenger

Yes.

going our but end was the the So year-over-year. pipeline of it at level at than quarter, be into third it the it than lower XX% same XXXX would was was

Brody Preston

made Okay. more of is versus this the up And C&I then point? pipeline resi CRE versus at

Philip Wenger

CRE part that. Well, C&I largest the and of would be

Brody Preston

asset the you curve with passed through? guys move yield in certain seeing yield any are classes And Okay. in up, being backing

Philip Wenger

slight loan yet, say side. the I the investment a on increase Well, on side not would

Brody Preston

consent DOJ the right. of the me. All Can And then the question just with us orders one you involved investigation? Okay. costs and remind last from

Philip Wenger

to had services think about the is BSA/AML. regards million. million, And rate $X.X run running then our and that cost in that $X area that outside I in we’ve Well, our that about we’ve detailed

Brody Preston

much, very Okay, guys. great. Thank you

Philip Wenger

Sure.

Operator

turn like showing not call to I’m time. any Wenger. back Phil questions this at I’d over And further to the

Philip Wenger

will be first for you, the we be discuss joining But for hope, us April. results in interruption us able you all in today. to with you. quarter we Thank Thank communication. apologize when everyone, I

Operator

today’s Ladies presentation. conclude and gentlemen, this does

You may a have now disconnect, wonderful day. and

Fulton Financial (FULT) 23 Jan 182017 Q4 Earnings call transcript