FULT - Earnings call transcript Q1 2019 | Fulton Financial Corporation

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Operator

Good day, ladies and gentlemen, and welcome to the Fulton Financial First Quarter 2019 Results Conference Call. [Operator Instructions].

As a reminder, this conference call may be recorded. I would now turn the call over to Mr. Jason Weber. begin. may you Sir,

Jason Weber

morning. and joining earnings webcast of first Good Financial's for for conference quarter call to XXXX. Thanks Joelle. us for Fulton the Thanks, discuss our

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

is Officer. Phil Chief Wenger Vice and McCollom, Mark Joining Executive Senior President Financial

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

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

Philip Wenger

stable have performance a Mark the XXXX and Thank and quarter good to financial start with everyone. pleased with of first increase Jason, extremely during had basis CFO, year remarks Thanks, details an interest compared are last our in competitive prepared growth Despite morning, first shares end million seasonally We few joining first conditions we year's XXXX I strong of and of decrease quarter lending our our loan discusses the our period results. approximately landscape, credit approximately the before us. $XX a Overall, increased point X to margin. outlook. balances million our a you loan balance for first ended in quarter. in quarter period $XXX net McCollom,

volumes pipelines year. importantly, are More time our and origination XX% running this last than higher commercial over

growth we XXXX and portfolios. indirect confident in So a to our strong growth in consumer continue loan auto our front, we remain see On outlook. residential mortgage

Now and linked credit. assets, relatively loss quality turning the continues decline a and we loan provision. quarter and to in net loans to The stable, asset nonperforming charge-offs saw overall be

and are cycle to weakness the We of for are portfolio continuing signs economic are stress. in and we mindful assess where the of analyze or

impact moving selloff fees. Now market quarter in the the linked income seasonality. by management quarter a Also, had fees. driven in to part Noninterest negative fourth our decreased on wealth

majority However, products income of and the across improvements businesses. year-over-year saw noninterest

insurance. impacted positively $X by from of quarter first The of life million gains XXXX was

mortgage The swap were banking. income product gains, X.X%. those year-over-year loan and year-over-year commercial up of Excluding biggest interest was growth the noninterest in drivers rate

rate in interest Our from improved. product banking Mortgage originations. benefited commercial year-over-year commercial as spreads loan swap income XX% growth increased

XX% our income will XXXX. for XXXX quarter to categories, XX% stated believe of the noninterest XX.X% major XXXX. our XX.X%, quarter The the of efficiency to income we inside was first first several Turning to in compared current pipelines. throughout and of goal ratio improve of In fee

continue the calling move had quarter, look on an efficiency increase drive for efficient, ratio end to we need become we seasonality our linked efficiency same at more so impact the opportunities on the focus to our revenues ratio sales can time, goal. while our towards in the of While efforts to lower

were first Our contained operating expenses well increasing less X% the year-over-year. in than quarter,

moving like consolidation our On Jersey bank and Fulton this termination $X.XX I'd consolidation point, and December May of We're turn program, final With the through which respect order, call the the Lafayette the we share the Bank year We to our in dividend have our left X.X once quarterly authorized we by brand. to Bank that Bank with approximately towards remaining in during XX, discuss completing flagship planning in $X.XX. continued will and approximately million consent Columbia capital the Mark? of $XXX Fulton XXXX. front, the of performance Mark under to our BSA/AML progress detail. At priority the quarter Bank into more the establishing Fulton is forward over September. stock common strategic Fulton of order. we make order one increased Bank, to Bank common to terminated, New consolidate million McCollom repurchased of a for the financial to the of is in this Ambassador of repurchase And

Mark McCollom

note morning discuss That out XXXX. good point on call. all first and to said, being the banks otherwise, the impact Phil, in day quarter I with the and are I of that seasonality Unless you, we comparisons issues Thank the quarterly count fourth Great. will quarter. everyone

from first X. also per were $X.XX, Slide this share quarter quarter useful year-over-year on XX% diluted of Earnings fourth consistent result, with the and $X.XX up quarter nearly a As analysis when reviewing is year ago. the Starting results. a trends

$X.X less as part the positive quarter these declines two $XX.X the of and and of in income and fourth net during factors for we quarter increase lower in days decrease the reported first were million, due through was expense on net XXXX, the a quarter. we In and to We'll slight interest comparison less but saw a business seasonality those Our from linked provision income Offsetting million quarter despite increase income up the business first moment. of each the basis components to XXXX X XX.X% in these well. an noninterest days, in in taxes. in losses noninterest credit in a income step quarter a

Moving Slide to X.

to our our interest-earning asset by basis the year our the grew In quarter, XX expansion net driven or $XXX grew net income first income point interest average XX loan improved XX by a increase a and interest driven an first million margin. X.X%, a Compared point a X.X% net X.XX% fueled basis interest-earning increase in in Our ago, interest our interest by $XXX,XXX, quarter yields. of margin to net in X points, yields basis average primarily expansion basis point at by assets.

points cost average increased X the X which basis increase side, funds on overall points, On funding than interest-earning assets. of basis was lower the our

betas linked had yields, market's more in range outlook were deposit net increased by X.X% lower Our on slightly end you views updated our quarter expected. quarter and with million will we deposit deposits quarter of from quarter guidance $XX $XXX the interest and anticipated. Based with not we Average million to we X funding to million were or as the loans for comments. primarily end net unchanged. respect declined last rate point average the during increase at ending interest or as while my provided From X.X%. exceeded linked X.X% the mix expectations loan margin future increases, a The quarter a provide ending basis loans than the of $XXX deposits higher due favorable deposit on XXXX, betas high margin pronounced linked increased the we or while standpoint,

we Slide was losses million decreased X. $X.X to The the credit for The first on in outlook. provision the $X.X for linked within provision provided in quarter credit XXXX to quarter our credit losses million. range Turning

credit first quarter For quarter. December to loans X.XX%. XXX% XX, charge-offs for allowance XXXX, points at an of coverage as Nonperforming to was March at on The decreased ratio basis increased points the XX, XXXX, annualized XX fourth total quarter, basis loans of unchanged XX points as March net as slightly the allowance to million slightly at quarter Nonperforming XX XXXX. points XXXX. a basis basis losses $X in XX, credit at last during as improved as XXXX, loans to XX December for comparison decreased compared at to to to losses nonperforming XXX% loans in loans basis a The March to compared XX, XX, percentage of the percentage compared XXXX.

X. Slide to Moving

this revenues. of insight changes category. we notice that in into presentation income first noninterest You'll drivers made new to our fee-based our our Hopefully, gives you better presentation the some

by managing our with consistent legal we our managing line consolidate change company to from is banking company our of entity by this charters, business. migration As continued our

the in securities to are amortization. linked noninterest to days the our in first the to which lower activity income, income a category positive the rate came mortgage fourth due the increased the income on servicing to fewer quarter On linked backlog This note, and quarter due overdraft half our quarter in swap created rates Gain quarter quarter due higher to Our government loan such and quarter fees, is gains, interest as by commercial first the income of first excluding in our further XXXX. the seasonality, $XXX,XXX revenues was of shutdown lower compared due SBA matched revenues, revenues fourth as fourth comparison quarter pipeline. $X.X stronger lower and mortgage income, sales. typically to servicing quarter. the which prepayment quarter in in quarter, calendar card seasonality on decreased ahead a first of fees Certain in typically million SBA first were banking accelerated offset as fee expectations. sales hindered increase

Slide to Moving X.

amortization benefit income million In in expenses which quarter. expenses first of tax the fourth for to million $X.X due $X.X noninterest XXXX, were corresponding investment Our investment, higher certain decreased of the generated credit elevated million occupancy tax quarter a a our this as X.X%. million Phil to costs. expenses increased or quarter mentioned, Adjusting X.X% Year-over-year, item, tax linked during increasing were and for $X.X or due well expenses principally $X quarter. contained, seasonally payroll the

costs quarter associated with efforts of this charter $X.X from $XXX,XXX were increase first the a year, quarter. consolidation our million, the fourth During

closing and $X fourth costs from first incurred consolidation quarter. to this of of were This related was in X quarter. cost total addition, the unchanged matter number the In for during branches incurred the million

tax and to tax adjusted within million first our fourth investment. past capital levels rate effective effective tax quarter provided the the tax This mainly aforementioned quarter investment. the quarter expense for tax as XX.X% the quarter recognized in due as compared was was with outlook. credit the $X for linked tax profitability the in XX.X% The displays for income Our Slide to rate increased credits X credit range of the the years. over fourth our X impact associated the

returns We on continue returns average over in presented. to increases periods and see equity the on tangible assets both

we have our Lastly, on for included XX. guidance Slide XXXX

We are guidance X XXXX. to our making the adjustments remainder for of

we and pretax guidance changes between rate New to and effective tax actual months tightening Jersey law analysis earnings First, tax are tax now driving Final of of are being an our refinement. XX% XX%. X this

we pleased margin, expansion the interest than year start net are stronger our with guided. margin we off to had For

our for the X.X%. full operator which over ahead. points for However, net X caused expecting of year of our we'll the full Therefore, to a go and Joelle, curve now year. our the be increase outlook rate versus now year in call XXXX turn that, balance basis margin, no was for more interest increases net the to XXXX forecast tempered margin outlook to us flatter the questions. future we're yield X have With interest to the

Operator

Instructions]. [Operator

Our comes O'Neill. first Frank Sandler question with from Schiraldi

Frank Schiraldi

just first back of the given on Just mid-March. buybacks, the authorization new announcement in

levels? for Just the wondering you're that, down your something of in should -- little that these here? sort more stock that fell could is pulling thing we off bit at about again? appetite Is a think buybacks the talk Or a stock to if -- in with back-burner -- stock about how you interested your case of bank

Philip Wenger

So depend price. a the our on level repurchase activity will stock growth and of lot Frank, our on

Frank Schiraldi

-- of quarter and activity, fourth this just I a Okay. in obviously, there program the is was even lot larger.

to was program quite exactly So December, the obviously, just majority the these be don't buyback. at stock to I the you in this, of levels But levels, did guys are recall trying think -- meaningful the on the stock planning in about at those current the way? And weak. a here what active when you were on

Mark McCollom

than think, look comes and flow the you our capital company, stock at going it intrinsic had have this we run is in believe, of value Well, is. so waterfall know, this Frank, I as growth as what we Mark. then forecasted we gives -- capital mean that. if have organic of authorization, use we is we're But we to said, this We model in growth, cash our Phil and available differently that. And excess potentially organic to us ability what the

Frank Schiraldi

on just Okay. secondly And the NIM. then

So I flattish the sort here of guidance would from -- NIM imply assume. and

expect assuming just couple least wondering the the a And continued of could deposit pressures quarters. so asset -- just I'm at And for side you if offset talk about the on wondering, of things. you pricing

Mark McCollom

-- we mean than refined had in we guided our is for I fourth this Yes. that quarter what different Sure, Frank. guidance really We quarter. the had no

guide increases, would and gave. raised us in the fourth comment quarter was previous what lower guidance happen as well, of rate end with to was, would to the think that no the our we I question there a

of So on of guidance year-over-year the this to really that laid a the wider disclosed now out we've basis, had if just you lower math last we're how quarter. guiding we run half

particularly year anticipating the are very pricing of saw deposit first abate second to although those still the to half pricing the will the that that. they Whether quarter, -- that it in in know or pressures some We deposit we continue we we not, pressures, somewhat. early see some commented is in of continue

is Our will assumption somewhat. they that continue

that, upside So a if this. we're to that be on wrong could positive

Operator

Gunther next Davidson. Russell question D.A. from our And comes with

Russell Gunther

I saw commentary XX XX, Fed Throughout guide How cuts next we Just were point would fund the stick by the curve, for with the updated there. features we minute, a trend the year basis quarter, rate margin the of end margin cut? implying or a the X. appreciate to if get the

Mark McCollom

there's margin. cut, decline our a a If basis XX there point in would be

that based read [indiscernible] haven't on the and are in and certainly we we're seeing in -- things forecast that market. we We not what other

for think certainly I increases rate and believe folks there's cuts that see no we're that. no around questions that most going to year, this

been to a We back increase either had as couple neutral a slowly see and if drifting have a of mildly policy we're we balance a rate decrease do to get We've an indeed now. actually rate continuing prolonged if or for even that sheet insurance asset-sensitive that a more we years would posture, to here. no

Russell Gunther

to particularly there, saw Mark. appreciate then the And switching branch the and there. Philadelphia loan on new I Great. growth color just I gears the Okay. the focusing area, down

an of update that tracking what or maybe us how on trending, give you how outlook on your expectations so could Just commercial Just that's is market, for broken it's far? kind any down retail?

Philip Wenger

on right loan commercial our $XX there's million So growth in is million is our $XXX Most now, another portfolio of and Philadelphia about the loan deposits. side. in

We continue. expect to that

that about growth able to the in been we quarter, we've that grow rate to market. increase. of deposits expect open branches the very X And are optimistic Now this potential we to our

Russell Gunther

any way? appreciate Philadelphia in competition I the the sort And then of that, any Phil. on comment in just

Philip Wenger

everywhere a anything very in even of our banks It's more else, actually there's competition, banks else. from banks Philadelphia like -- than and lot smaller I from larger little size. mean from that's

tend So side, And small larger pretty it's in compete we the banks. business to that on -- market. well we

Operator

our next And Raymond Tamayo from comes with James. Daniel question

Daniel Tamayo

million Just million a cost guess there to be to right? I expect the consolidation Am $X over the about Would question $X.X quarters. total that million there? $X in would Do million two on you cost. next I -- charter reading still $X.X

Mark McCollom

million. with those quarter, would We costs quarter. we're in said to the still had $X.X to first the million that still $X.X actually majority third we quarters, $X case. consolidation and And the to yes, expect occur second million $X last million it charter cost and of that's on had Yes, consistent the budget. be $X.X million We in

Daniel Tamayo

Okay. costs, on are And there then what going expectations the branch the consolidation forward?

Mark McCollom

The branches are closed. all

to costs incurred first the behind now in the and year, that quarter seeing we'll So that. we quarter should benefits but start and fourth be the us, this

Daniel Tamayo

on if I then Okay, more terrific. ask the And one could NIM.

good out X flush be to could basis of but guidance, points? the assumption? what some the might basis expansion you what would X on gave into get that relative You built you the If color to points

Mark McCollom

of a depending Well, interest net on would as loans, loan into we I those there's a lot betas. -- depending where something If mix, deposit of and we say large spreads spreads the our there's spreads, on obviously competition company. on for are go interplay that between would that in lot determine loan that assumptions for range. X depending on as income mix,

Operator

from comes Schultheis with Boenning. question next our And Matt

Matthew Schultheis

forward, Looking or that identified like Philadelphia, years, that any that into markets try are in? to there would you X duplicate sort that effort of works say, to you that, obviously assuming you other as with X out anticipate, move have your

Philip Wenger

Well, definitely Baltimore and we've begun that.

in of loan city. office more X production year the next And branch the end have our of have We city we probably to in before the retail X Baltimore the year. open expect and or

And next years, so be would the X the I'd market. that primary say, to in X

Matthew Schultheis

comfortable regard was And you consent being tomorrow, in appropriate, consent your lifted? of of announcing a Okay. anticipation it sort your M&A, to orders feel that and orders deal with if would realizing

Philip Wenger

specifically answer lot okay because would with with can't a we they And said we it, they no, if Fed. that we And of I we have that situation, if were it. wouldn't. consider in would discussions the if were

Operator

And comes from our next Joe Securities. with question Gladue Alden

Joseph Gladue

question last I had, addressed. that the think been I had

preparations Just and on that could thoughts CSO expectations. wondering for your if some and you give your us

Mark McCollom

It's Sure. Sure, Joe. Mark. Yes.

were for further know. we'll effective the are quarters, before working a lot when updates be then, have give let We that that implementation. XXXX. with any you consultants that have if quarter to be And position first we with to certainly becomes in will internally in well of rule we As it who assisting really as compliance feel us of we a in confident hard we've prior people third-party mentioned as

Operator

next Chris comes our KBW. McGratty And question with from

Kelly Motta

Maybe bakes there NIM is to we it on color circle Or if on the guidance bit deposit be seeing This be I overall we Kelly what back in that? you're thinking color appreciate on us we you the could more? all pressure. actually cost a Motta was more Should NIM. competition the moderate kind should I a bit McGratty. the just hoping to of about deposit Chris for in, could and expecting your of terms how for the if give outlook side.

Mark McCollom

internal assumed betas our not Well, we than had assumed, we be be they deposit But XXXX, assumed increases budget rate the XXXX now to we and we think in would also higher together had what for June in our putting XXXX, when forecast which case. in aware, December of we're the as were you're XXXX.

that, they revised the in expectations was. bit even quarter, deposit lower little in pulled forecast we've with So for back a first what our but than betas, our came

we and to wholesale with that year. in So some on, some to with think that's their funding first as And as us as those just first we us, if good in municipal we increased pressure. news. reported strong that mean and tend But supplement growth for pricing else, then business going our reminder, Also, well, either off see sheets. growth, loan need the of other balance was influx the through seasonally quarter, people quarter And we there then year deposits organic as deposit quarter then to this have, see earnings season, if goes the which we everybody fourth strong quarter, we or with options. the go always it's fund of that's I biggest the run a for in of could third for be that

Operator

Instructions]. [Operator

from question Piper with Brody next Our comes Preston Jaffray.

Broderick Preston

and this a expect if towards a other quarter, maybe for the just or construction. composition of would residential the just I skewed about remainder if sense year for wanted to your little categories and to expect the bit consumer of bit. talk I be the pick little you get up maybe to more that growth want you composition the

Philip Wenger

went will pleased growth were continue. more C&I I down. I think continue, our CRE with we will think will that is continue, I trend. would anticipate residential would of I a that, that actually indirect also. Well, But seasonal lending C&I our anticipate

think are, the that some we first in think was And CRE had strong large construction growth started settle I deals they the late I So categories the fourth in will the pick because rolling quarter stay they but and quarter. in will up.

Broderick Preston

I'm it's at stance? wanted Okay. commentary. softened hopped if your sorry Great. some sense to -- to since more the whether in But something competition you already, changed Fed And the the a to I this just has addressed on outlook wanted market deposit get late. I all for get neutral -- your and

Mark McCollom

which a outperformance continues as or was what our we closely. than mentioned the pressure something -- of deposit was the watching of goes of for we see was very, abate obviously on, -- we're pricing second the part quarter. Yes, But quarter. to those the did lower quarter, half easing of that interest-bearing some what in Sure. pressure deposit year things somewhat, it not pricing deposit we very first our particularly bit in in little that see the clause, the and the margin led it's obviously in did of betas, deposit type Whether

Broderick Preston

then portfolio are want And there? I things update agribusiness great. the performing an and get perspective and dairy from a credit how to on Okay, also

Philip Wenger

performing about portfolio's dairy been. the that say how has it I'd Yes,

think still that and we way. it thought -- our it we think I I we on was last said call, feel stabilizing

Operator

remarks. showing Phil not this closing questions like turn any for over to call I'm the Wenger further would any time. now I to at back

Philip Wenger

joining second all be us We Well, for in quarter you, thank today. hope when results be discuss you July. will to us with able we

Operator

today's conference. thank participating conclude in day. program does This disconnect. Ladies Everyone, today's and may you and gentlemen, a you all have wonderful for

Fulton Financial (FULT) 17 Apr 192019 Q1 Earnings call transcript