FULT - Earnings call transcript Q2 2020 | Fulton Financial Corporation

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Operator

Ladies and gentlemen, thank you for standing-by and welcome to the Fulton Financial Second Quarter 2020 Results Conference Call. At this time all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions] I’d now like to hand the conference over to your speaker today Matt Jozwiak. Please go ahead, sir.

Matt Jozwiak

morning. Good joining our Financial’s quarter earnings for webcast call of for discuss to for us you conference Fulton and XXXX. Thank the second

Chairman for Chief host today’s call Phil Your conference Executive Wenger, Officer. is and

is Wenger McCollom, Mark Officer. Officer; Financial Phil and Chief Curt Joining Chief Operating and President Myers,

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

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

Phil Wenger

everyone. prepared And call joining us. morning, some we our good and will thank for remarks. Today, Matt Thanks with usual follow beginning you format

provide overview a the First, quarter. high of I'll level

for Next, more will are Financial for And technology we our to essential of to had was the and SBAs and responded Fulton own Paycheck successfully team, details provide the by lives fears we the difficult a Operating situations, quickly fulfill consumers to Officer financial on pleased while will watch you help happy Curt PPP, considered, and members Mark our confusing financial things had banking of to loan financial COVID-XX for up employees Chief the throughout some programs share of your be our new questions. Myers, quarter our was We We I President our and in continuing administered to in customers. offered have in second our our XXXX. own non-profit in serve. deferrals their we customers the When after the or payment to our I benefit and we their thanking place communities put the impact and keep all our that, to to thoughts employees of continued continuing than providing and And business McCollom, on throughout very better Officer while Chief needs, of world Fulton all customers our our continues But flexibility achieve employees and quarter. to then to in performance to start dedication done the second April, pandemic. company. inspiring and significant manage and spoke share what we'd safe, businesses take relief pandemic. our to services they've time. our deliver with this needed challenging digital personal to changing who customers. Thanks to team Fulton's able the purpose Protection want truly our investments to loans services for It $X.X serve platforms, throughout have questions, with customers billion performance. Program the and

Now, currently, growth, our effective ensure unwavering June, we energy customers. management our about on team of that progression protocols remains we hours remainder working with and a gradually of we plan associated the focused financial in risk months This company XXX term need compliance. our and a the resumed depending began operational And to employees priorities lobby three COVID-XX place recommend. XXX the continues, and at regular that at leaders We're more who team's our or gradually the And a is now centers. to adjusted and lobby to and access health been a safety experts put process later, view we to have our will deal our while achieving safety remotely. reversed of across re-onboard has year over of for take time, hard have virus any from longer on place In health we one excellence can just or expand working the upon be day. of as focus factor go

lines investment services, that we in In during we merchant Deposits credit relative second In growth few relatively in a Management. balances, increases our quarter which in metrics loan consumer more remains we funds you'll and the in Wealth perform mortgages given performance Several management, stable. improved businesses, performance received factoring about saw financial commercial, detail our strong environment of business in our deposit swaps. And minutes. our continuing in even the consumer through PPP. well commercial saw pipeline in hear resiliency quarter, of to the increased and residential including number a trust operating. we're Turning income and after services, fee and

to until be the our term months to nine able depth the COVID-XX about longer we'll pandemic on duration customers. six understand more we need next the the to However, know to and over wait impact of

be Other quarter financial the of our the anticipated managing in been included over remainder commitment presence center the the actively expenses in have opening year during and our of very the continuing a Baltimore markets. help urban of new highlights to We growing the our to mitigate effects negative will pandemic.

We in of of promotes building advancing affordable in an foundation impact Forward non-profit to extension and community's ongoing equity April, In which to addition vibrant communities, an new the economic underserved foundation an survival. of Initiative, $XXX,XXX Fulton worthwhile COVID-XX to assistance week the vision independent non-profit community empowerment, fosters, the About our foundation donation economic markets we also the made support nearly ago, Bank. bank's our Fulton a the a gifts and Forward in The financial $XXX,XXX serve. Fulton that programs. communities. traditional announced they by that donation inclusion announced Foundation, development Fulton's foundation share particularly literacy dozen private to a and provide funds encourages foundation extra to diversity, creation Fulton and those funded worthy, had of The increases communities, will is organizations to drives -- support financial programs housing, Bank the distributed

to year in And lot accomplished now see, half I'll things Curt, can can performance over in so this more business of we've first you our very circumstances. he discuss under detail. the a challenging as turn So

Curt Myers

good you, Phil and Thank everyone. morning

Our consumer and saw lines of areas performance business. results second commercial quarter solid certain of in

throughout footprint. full the challenges well, saw quarter our as was as of impact also COVID-XX We felt

$X.X PPP the highlight, In over or stood members originated during Our little help redeployed Paycheck we a we participation loans the XXX,XXX of this jobs reserve loans. than time. as up XX,XXX PPP in Program team through total, Protection issuance billion was and more processes, over a critical in

As Slide customers noted continue X, ranging the the last to on work provides deferral update to quarter, are this with months three depending six we’ve and this payment you relief with product. during loan offering programs difficult our customers been we during our time on providing time. an from

considerably slowed mid-April. has since activity deferral New

now For and see the our to are process deferrals. XX-day occur. is approval will we deferral just those based requested, additional risk thorough expiration of underwriting If commercial an a XX-day customers, starting

will we were materially the for meaningfully While to deferrals. that by to our second level be it PPP is strong, the but than requests, less quarter the early loan deferral program. confident trends initial growth loan too the was determine are overall impacted total the of growth, Shifting

commercial average decreasing balances $XXX the during for quarter. second PPP, declined period. driven with loan the largely was the by balances utilization during This quarter, million Excluding line reduced

to seen and a decline or XX% use in have commercial gradual the their economy able down from within We borrowings. funding the pay XX% to certain PPP were line million. businesses of With our footprint, reopening $XXX

you see commercial the the loan the in accounted during when PPP As for can decrease exclude quarter. majority line funding decline of you utilization this

billion our to customer in Deposits in producing of quarter In activity. first this business, strong, mortgage results over quarter loan deposits; points during continue in the has very commercial loan pleased commercial X% funding relatively from our checks pipeline XX refinance basis consumer consumer and during deposit in reductions non-interest also to-date has flat remains been our a the our at our deposits We're as in essentially $X.X June also progress in declined year growth the a forward, very points. XX, Deposit deposit basis our spending. XX unchanged the linked-quarter accounts coming is ago. growth -- $X.X re-pricing has billion basis costs PPP from quarter and the well approximately largely consumer quarter have Looking benefited grew been growth spite -- remained residential stimulus for lending very and the to bearing strong as XXXX, of down with accounts. from of from with points be significant XX

XXXX of a million, XX% strong of residential an sales our to fees, were Refinance in the compared accounted the of year. mortgage XX% originations same originations second to Turning the quarter quarter spreads. same year. elevated of with period increase second and for last $XXX strong for originations period very XX% for last XXXX activity the mortgage on from Total both company quarter gain had

mortgage Our $XXX ever. end, is sits which pipeline level highest at at quarter the million

also quicker we market we see the recurring Our continue of as the business. high this fee and performed stock to than had we our level rebounded had than anticipated better benefit expected, quarter, of Wealth business Management has

management billion Our end. administration and $XX.X assets under were at at quarter

over certain Moving improvement metrics quarter. showed to the credit credit,

and down million an X loans points and a linked-quarter million quarter $X represented annualized were from basis charge-offs down on were million $XX last ago. $X non-performing from Net flat Our basis. fully the remains too impact economy regional Despite on trends, positive our outlook COVID-XX on impact related borrowers. the our our cautious. It and of early is these near-term credit assess to year

As see portfolio have that to we Slides on have those limited COVID-XX. X, by impacted the been industries some exposure you most X and can of

collateral, sub of by mitigate which should from of are areas on quarter our details and Most of real disclosure We of have secured other expanded estate event focus. or default. the last loans sectors to provide in help to forms losses additional the

loan million maintain from limit Our portfolio. helped is we internal product I geographic size. believe will a is relationship, that portfolio strategy or us This diversified anyone to lower a house other $XX is than collateral which remind you banks diversified borrowing our has perspective. and

occupied our close owner overall of commercial In represent commercial portfolio. addition, mortgages half mortgage to our

land equity continue flow experienced have sizable borrowers cash generally positions. We to to and that stable

discuss Now to financial Mark I'd to like Mark? detail. in turn the results more over to call the

Mark McCollom

you, Thank morning the to everyone good and call. Curt, in

Starting today's were taken will the quarter per comparisons I feedback reflected otherwise, with provide to $X.XX related quarterly it Slide I quarter know XXXX. this quarters in of is first Unless from and of discuss $XX.X net the share you two disclosures this diluted of are have X, past additional earnings income We on many the COVID on during million. presentation.

Second comparison quarter to quarter provision the a for lower from in losses. first credit benefited earnings

and by operating results core our interest, income. than were better were Our fee strong a These linked-quarter in income our expectations our basis. a offset produce decline expenses trends on also net positive

decrease interest excluding commercial the was a overall XXX Moving decline income in rapid loans to with $X quarter-to-quarter. in and linked-quarter net basis line million due of decline point interest quarter of in our line our guidance. interest loans income impact a utilization to X, Slide decline in this decline net well PPP full $XXX rates, the A million, drove as as in

as linked-quarter Our projections rates was for compression versus The X.XX% we net influx are PPP the loans, by than the quarter. was interest well first margin in our our interest sharp in quarter, slightly income the net higher the internal for of liquidity interest the experiencing. decline XX driven points of and quarter currently and was X.XX% as basis excess

Our loan-to-deposit the declined XX.X% quarter to ratio during from XX.X%.

maturities CD at deposits of the maturities addition lower, believe million liability our year. over approximately we the the made can On next during our as the average costs, a we in deposit blended in side, half two this to quarters, of occur progress $XXX re-price total still X.X%. approximately These second quarter lowering the rate

credit million as on X, outlook second to was the quarter, ago. charge-offs a pace the to million lower Turning losses last This as quarter. decline by second million first well during Slide year credit net of economic provision and provision in quarter for decrease $XX our as the loan quarter the $X was quarter during versus $XX compared in the driven

Our loans. to methodology based declined under macroeconomic CECL drive PPP qualitative basis loans and on financial compared decreased percentage year to review Moody's of of a we PPP including models models XX as utilizes consider total an loans comprehensive data. points Non-performing loans basis overlays assumptions our a and excluding points for also the the a additional and to that originated ago XX economic to employee XX our points, basis

for percentage XXX% a of Our as loans basis at from The XXXX. June at as balances, the of loan loans loss prior from for excludes loans allowance percentage of non-performing coverage related ratio X.XX% total loss the June This points was XX calculation. credit ratio PPP XX credit XX, an total to was allowance increase quarter.

company. quarter, With Management on high $X.X than utilization, securities from a off markets million time which $XX $X.X million Despite swaps This interest year quarter, for which decline sharp assets. result. we than mortgage to see mortgage drop loans originations and reporting a to small the higher revenue, balances, servicing of Capital mortgages was quarter We million quarter decline predicted and in did investment quarter cost banking, banking which gains new increased. down prepay we last primarily million reinvestment rates for X% despite anticipated coming all recent of $XXX the Mortgage $X from during respect otherwise, also Moving rapidly has in million Wealth increased charge on ago. during compared sold similar as last between mortgage in of solid interest significantly gain securities. securities did during and million and trend, than rates in higher we demand loan and quarter, the the investment our execute was markets revenue guidance portfolio by mortgage the offset in rights result our better a XX% quarter. and FHLB to million gains to declined this up capital the recognizing at $XX our drove approximately resulted $X.X which the prior for restructuring for Slide was sale is revenues million composed revenues. were excluding This expense spread a line commitments X, X.XX% for driven higher And involving $X of impacted were impairment of that amount Advances. by sale, non-interest sale as the some $XX for $XX expectations was of income were the originate our have an million, million a outperformance pre-payments of X%

to in Slide XX, Included expenses second million noted $XXX Moving as in prepayment the amount non-interest penalties FHLB was above. were $X.X our million this of quarter.

year. and levels end second first Excluding $X.X were this declined of at our guidance quarter of the $X quarter and total million the from low from expenses cost, million last

contributions safe approximately our These quarter. keep COVID-XX, frontline many related the charities, and have $X employees to and result as expenses other PPE costs. million certain for pandemic a the expenses of result special for While to bonuses as of expenses our customers totaled of including COVID a declining expenses increased certain have been personnel,

tax And stabilization day. XX% the $XXX rate markets, net the million a on per XX million until Slide for to has PPP XXXX. PPP you second detail deposit liquidity liquidity funds registered than the the maintain maintained as quarter on mid-March, in quarter, liquidity. Reserve, to have source to the higher have balances capital use to maintaining not our quarter. we compared tap increased expected. our current clearer the due be maintain in a of runoff XX% and margin originally Slide in and our primarily effective will strong $XXX And funding was loan utilized. the scenarios. first to company bank This dividend moderately. as picture of approximately to would common we sufficient extra was Our the is second cash variety in yet through PPP capital in of had anticipate currently focuses we've our seen despite when on as Federal we we XX interest This the intention. quarter, This earnings capital more under impacted not throughout We've we've our Since number excess quarter. we've gives throughout which funding holding We liquidity stress ratios. facility but had models, evaluated all a our shareholder regulatory that both and pre-tax

Lastly, the to guidance not are forward about this like the third With quarter. guidance the time. third still on XX, Slide provide beyond would thoughts quarter our we at significant existing providing in for economy, uncertainty we

third Our as guidance is follows. quarter

offset deposit to in seasonal the declines would X% continue municipal the X% growth loan flat commercial to inflows expect experience the to growth third we expect minus loans to Deposits, modest with loans quarter, X%. to X% deposits PPP positive lead by deposit runoff. overall to or For plus in mortgages with be quarter, we for way growth. producing third growth with will Residential of modest

to quarter XXXX. million $XXX million the be $XXX net third We expect of the our of interest to income in range for

to activity currently loan to quarter the fourth the amounts not We forgiveness quarter. as third increase expect anticipating occur loan forgiveness in in of material are PPP we

stay our and levels we quarter of to spot our is be a to expect non-interest operating seasonally quarter our We than to range as million. year. Overall, pipeline lower $XXX the should or in second to income million. busy consistent quarter in a continue be the to time expect strong, expenses third million $XXX of Mortgage million range $XX the of bright to second very $XX similar banking is slightly the

the tax XX.X% operator call With Lastly, we third between expect the to our to back be the quarter. rate now for and for questions. over XX.X% that, I’ll effective turn

Operator

Instructions]. [Operator Thank you.

Our first question comes from Frank Piper with Sandler. Schiraldi

You with question. proceed your may

Frank Schiraldi

morning. Good

Phil Wenger

morning. Good

Curt Myers

Good morning Frank.

Mark McCollom

morning Good Frank.

Frank Schiraldi

asked -- the your last it's the too maybe thinking quarter for know quarter just realized you -- I of of and terms I update the on provisioning. with just us third and half past Starting Mark, the I year. going I back you if with -- guys could wondered if guidance. really in wildcard you But, the aren't

any your thoughts you maybe, quarter? a world CECL the give in could third in for So in color the provisioning

Mark McCollom

model, CECL Yes, as providing losses. know, a so your quarter you each current Frank, you're expected, under credit future for

we've our get exactly and all we then books. provisioning the covered if right, our loans things So future on already periods,

entry becomes your just third provision really you for last the needs quarter the that once or what that the becomes be our allowance to equation. So calculate part of

growth And in the used factor forward is in So your referring being changes changes you mix, portfolio on your you net in are then your charge-offs. model. factor wildcard that loan in factor assumptions in you you're to macroeconomic factor look in what or you to

have think if we've right. both that, say of I the and we all that gotten on would company based we been things industry say So you and our

to and current quarter seen incidence can And levels, this terms changing guidance which non-performing round is to staying portfolio, not another in deferrals charge-offs, that. to et then our as is in changes wildcard that charge-offs of cetera. be quarter loans in rate net of other giving terms next our accounting were to just this you're certainly you've a performance your which -- see going is what deteriorate. things, deferral. loan on whether or start off macroeconomic come of all which then quarter, we those for factors But net if What imply start This you're was those those second

Frank Schiraldi

fourth the way the of potentially the the you've thinking face so it the CECL world at in if some models, in right. things, about even right you're And even in charge-offs you higher point Okay, gotten third could see or life sort alone as provisioning, not taken have already charge-offs reserves the is quarter, covered we those of been world actually that have see in -- -- reasonable? might

Mark McCollom

possibility. That Yes. is

Frank Schiraldi

And be. fee conservative of your then might and sense to wanted income a get just try how guide

the talked guess You about the at impairments based-off of point. is model MSR I mortgage record into baked already expected this like seems which the pipelines pre-payments,

So in result? bit sort the you wondered a just income maybe of in line the XQ if being with a and fee about puts could I takes XQ little talk in

Mark McCollom

mortgage banking conservative this the think aggressive. you're judge down think included the you write-down right. or at point. call kind – [indiscernible] where basis point to is again written I impairment But, Frank, that that of where range the we had past Yes, our million $X.X value in and current revenues this we're when on quarter, XX MSR folks here of in mid being of that

quarter So further wildcard impairment how really quarter, I third quarter and those use numbers. occur be third of guess. could of the to sort your much in anyone's in have where to But, write-downs further level think there MSR on depending – might third that's in is as the

second Management We so that's the revenues then on where also the and another stable, fee the would would on that And maintains last as Wealth the are income Curt originations valuations. tied because stock stock call, are about strong, market in quarter were revenues that noted quarter to relatively of factor. swaps third be thing had revenues what our our I is XX% depending on really market mention pipeline

as the quarter, for that market relatively a strong business bode July should the Although so fact early had we those kind paid well. in earlier stock fairly of a of that lot in are well

Frank Schiraldi

I the a to I one [key] right, was just rate if we was final quarter. wondered significant color there there just loans and down the XX%] okay. that in if book to within [XX% yield variable you from just the -- looks of loan little then to related is I give book, surprised that portfolio it funky quick came saw linked-quarter, within just compression like point, All And could, see sort if in that from anything a

Mark McCollom

billion another to so $X.X X are mean both Frank, tied have dropping loans year dropped Yes, kind a real we with one tied of particularly we commercial tied rates of one billion loans I have, lot to those of swaps. and to LIBOR LIBOR obviously pretty month fast from mid-May $X.X of estate those

is but rate So then that portfolio most that. our swaps variable revenue strong, with of a higher being account percentage would for of that

Frank Schiraldi

Got you.

Mark McCollom

Okay. Thank you.

Operator

Thank you.

next with Our Casey question Haire from comes Jefferies.

in proceed may You question. your

Casey Haire

guys. morning, Good Thanks.

Phil Wenger

Hey, Casey.

Casey Haire

the third I some Mark, Yes, growth, there. given the appreciate yes? just on but CD so NIM I in know mentioned some wanted the that here think NIM re-pricing benefits, got -- to the guide in NII be tailwinds touch about quarter, the and headwinds but just might you wide I we variance as as help, outlook the you we loan some

Mark McCollom

yes. Sure,

margin either some you of the interest second about basis that. I for non-maturity manage data bit our points NIM second When down give margin to continued you to the that about give well. quarter, the show billion those don't we see by interest actively points sitting little and liquidity will other is on impact but month negatively for we addition about we that basis June, CDs I NII quarter So very and non-maturity the of savings. we expect loans we've Those X PPP to to would bearing deposits in to as about lower bearing to And help, also $XX.X a X for that have points guidance, price -- we so the comment or for you basis have X thing points XX basis consider to impacted we're averaged points but would guidance in demand give deposits margin, were continue XX excess quarter. currently demand one

knew funds So they think PPP economy. the utilize the for the liquidity, other them, those that this part not we an and little when right securities the we higher come of margin which starts case to year will take to become sure, those a down loan customers mentioned, it's we to as to we're then to as going use really half measures through in again, do then that thing do for other But still hold until of back or over continue just position. that do question unknown maturities cash at I

Casey Haire

get that. I Yes,

the on I yield but the for blended the if loan in So on PPP, this sorry, missed release deck, the that?

Mark McCollom

Yes.

and so that's million So as that our blended so comes to PPP amortizing be our X.X%. million. years, about quarter two know, X% fees would $XX just we're yield about on a We're over $X.X you that coupon in, the about

Casey Haire

got Okay, you.

about front, again can say, in Okay. mean, I gotten -- what months last as fluid better? to can I forecast gotten of for credit me, it have one guys you talking in us the about it's think All terms stimulus and guys of like the it's down that the at situation, it on right, more we just what does three to have does the you macro your used but what -- and three know can you current look line it's or and we you months that that GDP like, factors sort that a point forecast tell any worse that

Mark McCollom

macroeconomic at using We're Yes, our currently that variables. as we we well additional look for don't some of Casey. models, variables the there. overlays. our employ qualitative the in that both all stimulus sure, for And we have as in Moody's any macroeconomic Yes,

So X.X%. model XX.X%, of at end June of of we're using of model the and the Moody's December of assumes end that X, of the an as unemployment rate XXXX

our in actually economic we the the BBB of rely et overlays that on embedded we use all models, comes that rate, also cetera, for used housing other starts, assumptions Moody's larger not analysis upon. one is it And through qualitative we unemployment for all Now, but really then consider. data their bond is that

Casey Haire

Thank you.

Operator

you. Thank

with comes Our next from KBW. Chris question McGratty

You question. with proceed may your

Chris McGratty

morning. Good

Phil Wenger

Chris. Hey,

Curt Myers

Hey, Chris.

Mark McCollom

Chris. Hey,

Chris McGratty

The NII go guidance that back number a guess is Mark, Is want to that I'm to question, number? GAAP gave make clear. Hey, you QX, just just I for the Curt. I FTE an or first comment sure to

Mark McCollom

number. That's a GAAP

Chris McGratty

I there QX does come any of will to And about way the Okay. fees and most the know you think realizing that PPP in said right QX. assume fees it? that Was X.X that's guide

Mark McCollom

We've does. the been we've have time. over on two and it -- been that board been amortized years those -- loans started Yes, we at as

Chris McGratty

Okay.

Okay. And to quarter? have in loans do the balance average PPP the for you the

Mark McCollom

was and Yes, between billion $X.X average billion. about balance $X.X

Chris McGratty

maybe And my question. last then Okay, great.

lot headwinds. -- collapse just a I you on of back. branches, terms branch revenue guys where gotten Can years in few remind Your you the you thoughts has us of at level a attention given where charters the know the industry you're are

to get the your or sense ability next year want out so? over to expenses Just on the run

Mark McCollom

we're they down we to going at for and XXX look continue branches And I opportunities from believe consolidation do so that to XXX. Yes, exist.

So out. expenses more drive we do believe we can

Chris McGratty

you Understood, much. thank so

Operator

you. Thank

Our Tamayo comes next from question with James. Daniel Raymond

may You question. with proceed your

Daniel Tamayo

guys. morning, Hi, good

Phil Wenger

Good morning.

Daniel Tamayo

been being in amount, to Just an touch what's many re-deferrals if that expectation there. -- there's on post amount down, kind versus the you if that there of but appreciate there? there's current come deferrals of of you all of and said renewal in wanted will for trend disclosed. -- terms continuing deferral number what's the any that will the those the the How information going the what's disclosures of Are and you to you renewed

Curt Myers

Hey, Dan is Curt.

of third those have request have deferrals. a deferral to expire than started more less we a second and it's -- reduction a to expired them first insight are request been second the have XX-day meaningful in little a deferrals Just of those and evaluating we just for that,

we that for process, decline as we are starting seeing a deferrals. third the are quarter. think I you data a But have meaningful in in second we better

Daniel Tamayo

criticizing I'm then you. Slide as look And looking at -- loans X. thank we on Okay, at the classified

So why I of to criticizing What's surprised was estate. kind in held no well? hotel bucket has there real read within your the that investor classified up segment motel see on

Curt Myers

market portfolio flow PPP underwriting mean, things. have strong that are been have of of a PPP. a in conservative I been add have received lower have business that cost very that's specific support we hotels overall. very cash has or affected those we XX% time. Yes, significantly don't performing our has have then have any also and we lot also over I large originate portion and of we value a and received those They origination when Again, in

Daniel Tamayo

me. Okay. That's All for Thank all you. right.

Operator

Thank you.

question Zwick Erik Boenning Scattergood. next comes with Our & from

may with your You question. proceed

Erik Zwick

guys. Good morning,

Phil Wenger

Erik. Hi,

Erik Zwick

First just a follow up on the deferral discussion.

Curt, prepared underwriting in and your request, that through received risk they'll kind think of a of a second I have you deferral those go comments for based process. that any mentioned thorough make

may impacted what today need and new request be businesses there's that businesses some point entail or make decision who've the be at the in at with Given typical the what that I’m risk that underwriting you're considered at factors may -- a loans below to based looking you charge-off of your flow requirements? out you their likely what of of may does loans had to curious how them if normal, meet this point do and cash those these significantly you operating take kind not that just your look since are would plays were at revenue that severely process make second consumers what kind

Curt Myers

Yes, a question. great

a a crisis. So through looking looking stocks we standpoint, and are like the from the of to at liquidity looking it markets guarantor bank now. We're looking at at We're from the kind right support capital those standpoint. borrower get at

it's flow, those mitigating understand cash ongoing beyond very performing that it's or really just now. factors to cash flow establish right so difficult with borrowers those So

looking and at those So this. capital, keep looking to guarantor liquidity ability at we're loans we're we're looking through performing at

Erik Zwick

And XX, this turning plus range the X% or the that at point. pipeline just Slide minus of growth helpful. to remains I stable That's mentioned X%. And loan you've your think you then on to got

is you're range lead any or what particular at loan growth seeing curious, to the the sectors the that pipeline where or of there's if it than you'd stronger and coming factors what that what outlook. potentially could top for potentially Just end bottom weaker expect that your

Curt Myers

still diversified. very certain There very pipeline things we stable, are pipeline remains they've Yes, the are it pipeline not look that pipeline. at but as is because is diversified been in impacted businesses, the a the

lower upper the range. have on line how have, early we growth be I have we and our [refi] the down It's mortgage towards think pre-payment much pay much that I to the of that or quarter. in same how move going end depend this that's us we will think as that how variability will residential much essentially what

Erik Zwick

Got it.

last expense on value even XQ sheet with be balance FDIC And of today. to curious the quarter-over-quarter kind similar just insurance if should the XQ? one Just down small that one was that getting largest, what's the driving calculation

Curt Myers

of to function the bank. we be values XQ quarter in XQ some our money and actually a downstream sub it raise the the similar first was should our of of and tail-end that that to Yes,

level FDIC that one So bank of the ratio capital ratio at the now way factors. bank those look level the at becomes ratios leverage they calculates the

and company with downstream some excess the lower assessment. that raised and ratio lower at the of or So the holding capital

Erik Zwick

taking my for Thanks questions.

Operator

Thank you.

from next Davidson. Russell question Gunther Our comes with D.A.

your You may with question. proceed

Russell Gunther

morning, guys. good Hey,

Phil Wenger

Hey, Russell.

Mark McCollom

Hi, Russell.

Russell Gunther

follow on deferrals. Just up a the

today, third forbearance they're it and you today? guys in So given accounted current in do where level like, given quarter, stand customers the that and a headed lower higher in that the the program likely sounds second risk these is reserve if they in so consider

Curt Myers

current clarify just question. The deferral, level to of the

So in risk. high worth the deferrals them all are considering current

Russell Gunther

teams others think context terms Yes. answers gives question get understanding different this you XX% how for an That's answers very these different Bank the question, I've received of trying they process to we to good maybe deferral what money right. of terms a Management answer. and my and from I'm in handled in some are of to just and

whether in curious, or they're in because and just the is are reflected level not there high is the maybe reserves? terms they forbearance of this view risk you that they're think higher level if deferral program So I'm current in and your of

Curt Myers

for Thanks clarifying.

time, offered that. initial accommodate unknown deferral did customers factors a that underwriting process at credit all customers program we So our and to deferral limited very to given was to for made we do simple to obtain very the

to thorough seeing will a are deferrals we we deferrals. the second have now So round for decline of and deferrals. meaningful second customers for first a of accommodating -- the round The round very deferral second are of credit in underwriting again qualify to

the there's not be feel customer your first potential So then round risk. And deferrals accommodation. It of of we do risk in this factor. a to answer is emerging more question a deferrals directly was line where will with credit round

Mark McCollom

this Russell, And Mark. is then

to I think how your of deferrals. we related your second and CECL part question think about those

it's that the loan not the reflected is model, CECL so part but qualitative the While in up as reflected the deferrals showing in not because our methodology. overall one not in of our it is delinquent are overlays base system. It's deferral it's

provision So it would our be captured the in quarter. for

Russell Gunther

That's color, on I last for just questions. one, fees. switching consumers guys. with great I thanks as gears appreciate me the And My bearing it. asked the

So give I if of how waivers was from of But of maybe decline you to full what quarter? April June third run -- guide. versus in lower rate update a and exit just an get sense kind end percentage us the picture terms quarter at the fee versus rates what could was the the for activity get

Curt Myers

for we that participated the very program to all very accommodating. that a the there impact were five from CARES was minimal accommodating operate, We in so waivers. were We of states Yes, we customers. fee

card that more waivers were revenue month-by-month for credit the is limited. those overall. activity debit overdraft and was activity activity. And do of driver as both requests climbing the We of fee card, fees based really there very However, customer see

Russell Gunther

Great. very That's Thank much. you it for me.

Operator

Instructions]. [Operator you. Thank

Breese question Inc. Stephens from Matthew next comes Our from

your with You question. may proceed

Matthew Breese

up Good questions. morning. A follow couple of

the you deteriorating and are meet those So on re-deferral into additional criticize move the about loans don't that forbearance round on the therefore next that deferrals those asset don't buckets? expect those traditional buckets thinking or classified need the how “process” NPA or or hurdles into either traditional cure moving we NPL and should to go through quality

Curt Myers

see it's that, process. but again, you'll think underwriting of some I

will the of and their their support. may request deferral their So based we on grant some capital, borrowers second liquidity that those guarantor

necessarily So it mean point. borrower are that a that or non-performing they this at won't distressed

grant Some them process. the their adjust classified potentially each That But of we probably criticized will one customers non-performing. an it's of look or them next as those we at be us will risk to them re-underwrite again, we have and underwriting deferral. rating

Matthew Breese

and businesses Do that from or be of to sectors we have carrying then you could mid-XXXX? extend Understood. flexibility how like for Act these the you out, regulator's for deferrals well and be now seems talk CARES the economy deferrals And into likely it about there's from to have XXXX. And push going could the long? you to into impacted out the much just that flexibility meaning

Curt Myers

and with regards work have existed just to regulators willingness in banks ‘XX, flexibility to ‘XX in period. then would the time ‘XX, say, more I Well, they much

hard ability it really the to have how is extend we'll think I So long to lasts say.

Matthew Breese

have stabilize just to to if sense evolved the question and moving? forecast in a forecasts July been Moody's going for or just wanted a sense And have they have May and become started a the want have for how been as were to Okay. to bit you provision, little get then them get in volatile have they Frank's back more how on consistent into the as XQ and they April

Curt Myers

Matt, days to model on was one they I were in they the think and were were XXrd midsize fast think that using for that you because last that banks say like developed perspective, so out in the lot of now one my some another quarter From stabilized this couple there stabilized for I end March, macroeconomic were rely using on every the coming and have and I for everyone things there there know mean, June if would they furious. Moody's XXth was quarter of I was was again a X, that the variables. that there's And Moody's their model banks was

the some of down just pace, future still they're uncertainty better the certainly lens me slightly there. lot a to there's you're out although that into slowing getting implies fact again that the So

Matthew Breese

of sense that then some even looking where last one is me, I equity. in you're well you're give excess at? of capital tangible, just us common or comfortable something to for just down And moving regulatory you Understood. minimums, are ratios know that Could

Curt Myers

as impact low both and Tier watermark. deposits leverage funding loans a it's Yes, the so, expected to still a loans PPP think obviously we've using the But you're we TCE ratio X% around. ratios. haven't to use the regulatory a and your your had are really which be And X to going function unless sticking PPPLF was because those for source quarter TCE risk from really is asset this there to yet weighted I that of climb putting on me PPP back the

So common equity knew short a as tangible X.X that well we nature short-term end. of PPP, closer leverage the in result seven, as the eightish that right down year view range in then run, communities, the and to do dropped would program coming Tier with both the climbing here as of both probably those comfortable of we've by potentially number towards X our as because were to ratios we thing but back to

Matthew Breese

all I Great. all That's had. that. I you. Thank appreciate

Operator

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

Phil Wenger

Well, be thank to hope you. you'll discuss with you we able today. We us joining Thank when all results us October. third be for in quarter

Operator

Thank Ladies for you participating. you. this today's concludes call. Thank conference and gentlemen,

You may now disconnect.

Fulton Financial (FULT) 22 Jul 202020 Q2 Earnings call transcript