Earnings call transcript Q2 2023

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Operator

Good day, and thank you for standing by. Welcome to the Fulton Financial Second Quarter 2023 Results. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded.

to Jozwiak, conference Director like speaker to now Matt today, of would hand over the your I Investor Relations. ahead. go Please

Matt Jozwiak

Good quarter which us joining June XX, call discuss thanks Financial ended earnings and our second conference to and for the for XXXX. Corporation's webcast morning, Fulton for

Chairman host Your Myers, today's Officer. Executive call conference Chief for Curt is and

Joining Curt is Mark Officer. McCollom, Chief Financial

These included the documents with our fult.com will The today then found and Investor information Presentations be comments released on financial yesterday be on on also refer we can tab to under afternoon. earnings on found website our by Relations website. slide Investor Our announcement clicking News. which presentation Relations the can related at slides on and our

make may materially. could forward-looking of uncertainties of to Fulton of and statements condition, respect future subject factors, Fulton's are representatives results call, and performance and this operations differ not to results risks, other These financial business. statements guarantees are with and On actual

harbor or regarding Please information earnings obligation as statements. of law, additional refer for takes to the factors. and today's presentation Fulton forward-looking update Slide required statement on and other than on release to no statements risks, X revise uncertainties our these any other in forward-looking by safe

earnings most In for Fulton's measures comparable financial presentation Please announcement certain of of today's released refer XX the discussing Fulton's in XX information Fulton reconciliation measures. of with performance, yesterday GAAP to non-GAAP those to financial to financial representatives may refer included the through a supplemental measures. non-GAAP Slides

Curt call your Myers. to like Now, turn host, the to I'd over

Curtis Myers

After financial details Then company to prepared provide financial questions remarks, will our happy take I'll and on and step any for of Mark everyone. we will Thanks, on Matt, good morning, more XXXX. summary remainder comments the and may on outlook through our you results be our have. share our performance. our Today,

pleased We quarter second with results. our were

credit saw growth. losses and and metrics our low credit generated support We to solid return customers continue to remain We levels. loan historically stable

income fee addition, company. the entire In was strong across

Pre-provision quarter million, or was share. XX% and per $X.XX earning second year-over-year. net were expansion approximately for $XXX earnings margin of result interest year-over-year. the growth PPNR, revenue, asset a Operating net an increase This of was

the quarter, and million saw deposit of During of growth million. loan we second $XXX $XXX declines

our our As a result, in increased to XX%, loan-to-deposit XX% to ratio XXX%. middle target right the of long-term of

markets and million, significantly levels. $X.X increased Wealth well. $XX.X processing Commercial quarter, the the record consumer of income. card as market were and increased fees deliver assets income quarter management results reached fees solid continued under a Management linked banking under Fee Expenses billion. modestly the capital administration value Banking period. strong during first and above driven and by had merchant strong assets Mortgage up as to were banking quarter

expectations our with line in quarter. were they However, the for

notable other addition, In the during events quarter. also had we positive

newly $X.XX We quarterly responsibility member for on highlighting X% achievements welcomed by our released to purpose dividend our the raised common We lives edition of created a excellence of customers second and our he Technology our for In role, further team, of Officer. role to this as operational our lead our our Operations Sridharan Karthik changing better. report, We our the per efforts executive enhance Chief new corporate a us team. of share. joined and social will

Fulton's and met cost our every the on savings systems merger get conversion the close Prudential we acquisition. success ability were to targets, looking we on pleased regulatory realized We and In budget. approval transaction board full-year in four contributing under We with team achieved of We our back and and onetime cost have the Prudential day. time celebrated are first on Bancorp the our pleased our and the to to on months. impact acquisition,

success. continued and loan portfolio we expectations, well our operating appropriate effectively for second on on core managing return results our and growing our Our our the mix, focused met risk-adjusted deposit we positioned achieving We improving quarter remain believe deposits, efficiency. are

into the critically migration During to balances to higher important deposit products. cost quarter, continue to customer the grow is is What we and industry experience non-interest-bearing continue accounts. from households the and

During net households new We we environment. quarter, net increases those deposit X,XXX and the total grew accounts. total X,XXX believe this meaningful are new in

our updated we On Slide have X, provided on disclosures deposit base.

is weighted approximately an XXX,XXX with years basis. a of deposit XX.X these accounts on average balance We average accounts of age only balance The have $XX,XXX.

remains capital our ratios strong, improve. to and continue sheet balance Our

Our in to liquidity funds. over $X.X billion increased position committed

Turning to credit.

Slides We below like have our commercial X. on at on note office estate specifically proxy total provided more real overall our portfolio on and of well our remains average. in I'd peer approximately portfolio to and loan capital, X XXX% our detail concentration

X component portfolio a and a CRE from the office-only is loans portfolio, small office discrete, includes Slides of On which primary stream rents. X, our with revenue all

in our loans reminder, individual a of with portfolio, time, footprint a throughout As million. this five and segment over only is spread diversified originated $XX excess and consistently granular

overall credit, or were points three net within and past credit quarters. NPAs, expectations have remains annualized. and X for at Looking loan basis the $X our NPL charge-offs delinquency performance million Overall all declined

credit are that we credit outlook. economic trends, we potential these encouraged remain on headwinds could affect by performance and future While focused our

turn financial discuss in the over and quarter to our detail. outlook second more performance I'll call Now XXXX Mark to

Mark McCollom

you of the the numbers and I growth Thanks, otherwise, on basis. be all loan and call. I a note comparisons percentages linked referencing of to are and quarterly good on Unless XXXX, I will first the deposit with annualized morning quarter will are quarter the Curt, discuss

Starting on Slide X.

net $X.XX of million. of operating share to shareholders quarter $X.XX compares diluted operating This As $XX.X EPS first this Curt the in XXXX. of common were noted, operating earnings to quarter income available on per

slowed this one-third or of Looking in Commercial growth at Commercial or estate million marginally of most Loan real X% $XXX owner-occupied this lending in $XXX million commercial sheet. growth growth. second loans quarter estate. balance our the million increase annualized, coming annualized. with overall about the of or were grew $XXX to X% real

XXX% estate approximately low, real capital. earlier, concentration of remains our total As noted commercial

the the $XXX home growth produced quarter second lending during of was buying the Consumer growth season. consumer quarter. or is lending XX% Mortgage of of the peak as loan the typically majority our million

We on raise continue the focused all are on we getting products across risk-adjusted returns rates loan and new originations. to new remain

see growth back we a in mortgage overall XXXX. moderate expect both the As and of loan to during half residential result, in the portfolio

the deposits during down which growth from non-interest-bearing in of Total $XXX Interest-bearing quarter. grew declined pace DDA million a deposits This approximately our declined in accounts. quarter. the million $XXX XX%. the Non-interest-bearing period $XXX decline the is offset million or by the period, during was balances during million first $XXX decline

ratio from at XX% of end at the up quarter first quarter. Our XX.X%, the ended the loan-to-deposit

year As of many levels Slide our end up, deposit percentage. will on we've non-interest-bearing focused are investors where on a deposit XX-plus included X non-interest-bearing history ultimately

bank and grown our time. capabilities As C&I have our expanded, has over upward percentage this trended has

in an during of approximately million NII deposit of we have XXXX. end deposit June year deposits we reflected of occur from to total comments. will XX% half deposits, end percentage believe should caused guidance the around additional rates my shift at XX. shift I the shift XX% deposits This assumes is provide non-interest-bearing at $XXX mix into estimate refreshed the at This down and mix rising Recently, the as a the interest-bearing of back

during Our declined at investment $X.X modestly quarter, billion. closing portfolio the

During the our investment from build portfolio. cash flows the in first quarter, reserves we chose cash to

revert with expect cash cash to we Going reduce overnight used flows incremental to to back our targets longer-term borrowings. forward,

million quarter. those on balance net together $XXX the X, million quarter, sheet trends income interest $X Slide a our first Putting the was from for decrease

yields the has month and interest for X.XX% increasing margin quarter in the quarter. XX expanded X.XX% during versus to X.XX% of beta quarter. points last second XX%. Loan for the versus net first X.XX% been loan basis our Our both were June Cycle-to-date, period, the

ultimately XX very are during of ends the to tied the cost increased XXX Cycle-to-date, basis total percentage XX%. quarter. up to total deposit points approximately deposit up deposits will be through-the-cycle ends landing. where Where beta points closely non-interest-bearing Our our is basis beta

to of earlier on deposit drift by approximately of continue end will a and XX% But beta year, to year end between imply up of our Based we this as of expect beta estimate XX%. the the the well. loan now our the around

beta asset-sensitive due deposit our So will balance sheet. ultimately, remain ending believe meaningfully the our beta our ending of loan we to nature higher than

credit to on quality Slide Turning X.

loans basis basis points XX the ratio quarter, NPL-to-loans during from points our led XX delinquency million quarter. Overall versus June March June XXX $XX improving non-performing to XX. to which at at loan at declined XX points last XXX Our XX basis basis to points improved

changes during second allowance the positive and to modest the led loan quarter in our Despite the economic trends, increase losses. for outlook to credit growth these our

at as a March from quarter slightly XX increased ACL percentage the of X.XX% at loans of X.XX% loans during end. quarter to Our

up million, income non-interest revenues Wealth for to from first million XX. $XX.X on quarter. the Slide $XX.X were Management Turning

assets represents business, increased almost to and XX. our management fee-based The invest in $XX.X value continue one-third our now of to of and $XXX under revenues. June billion million at We administration wealth it market

see million gains bounced also revenues seasonal quarter. increased back very we Commercial from to banking during fees card first strong the quarter. Capital the and markets SBA the and revenue were strong during quarter. in merchant significantly was declines on $XX.X typically sale

quarter. fees overdraft seasonal banking by offset the continuing picked lows quarter, up pickups first from debit a for revenues and were the with seasonal in modestly banking revenues, credit Mortgage up card Consumer fees. decline in in

to and However, increases overall application influence beginning volumes are down rate XX% volumes. year-over-year, and are applications

were $XXX expenses in one second increase $X accounted from million day quarter. about increase. this for quarter, to million count The XX. the Moving Non-interest of in the increase Slide an first quarter

following the X benefits as certain also higher increases Higher we are to April In material to well costs timing $XXX,XXX healthcare of processing the merit are due data items and and self-insured salaries largely of noted. initiatives. as due IT claims higher addition, the are costs as

On capital Slides you provide liquidity. expanded XX on and to we are with metrics continuing and XX,

over on First, capital we regulatory of for minimums as the our XX, XX, June cushions ratio. regulatory solid Slide maintained all of

impact alternative you We AOCI. of ratios, our the with have provided view regulatory including of an also

this While information we maybe useful believe to not our of our size we do calculate expect to ratios way, be to required you. this banks

in tangible investment total totaled of accumulated last a at comprehensive on derivatives. million other equity quarter. after loss $XXX Our AFS common common This is number in quarter available-for-sale Included portfolio ratio X% our $X.X equity and portion end, on tax with billion. of was tangible the line portfolio

$XXX capital. is held-to-maturity at common tangible HTM XX, equity which billion portfolio include intangible would million On over our of if billion, be after June the $X.X on Slide loss our still $X.X an we ratio representing on tax investments, X.X% XX,

pledge On liquidity committed available is Slide capacity, liquidity committed program, look cash, $X.X unencumbered our window XX, FHLB comprehensive and provided combining the securities with Fed's available bank to we the profile. XX. June a billion and When you under at discount funding Fed term our at

institutions. other we In over in Fed maintained funds with addition, billion $X.X lines

providing XXXX. are we XX, our you Slide for updated On guidance

Our guidance rate XXXX point now constant guidance the of assumes on is as our July follows. year. a the balance at funds followed Fed the increase for basis meeting, this by XX rates Based outlook,

interest net our the income $XXX million expect range on basis a We in to non-FTE of to $XXX million. be

our to million. We be million to for expect losses $XX of in provision range the $XX credit

We be expect securities $XXX our million million. non-interest of income, to to range the in excluding gains $XXX

We year. expenses the for of amount in to in to range special or million the lastly, we any our second minus tax that if And year. million year expect the finalized be recorded core plus $XXX need half the assessment, for rate range XX.X%, of effective to excludes This the which period. non-interest of be may core FDIC during the to in be $XXX expect

And turn to over questions. with for call your I'll operator now the that, the

Operator

first Thank Sandler. Frank of Instructions] [Operator question you. comes line the Piper from Our from Schiraldi

open. line Your is

Frank Schiraldi

Good morning.

Curtis Myers

Frank. Good morning,

Frank Schiraldi

with focus Fulton in up? by then some end is expect – it's comfort out that's sort months, But just Just your expectations? me, the guess the as on over non-interest-bearing you starting it XX%, running rates Mark, you to would year-end, Do of that the interesting to of. slowdown seems could to wanted lower? mix guys sort are and where non-interest-bearing a it like And ultimately continue first you to the still on few stimulus I you on down, trend that last gives think who I are where see – shift well of that that have. to out shift they're running there's dollars all year-end

Mark McCollom

Yes, Frank.

I be guidance XX the which of where with reflect ends will we'll you out part So question, the XXXX, would early obviously ultimately, to answer second XXXX, But up that that. XXXX number at of tell part June, your and beyond in coming basis to months points. months, XX in that month. that of those of each points fell about average deposits total May on the and of our February, April, In increased cost average March per basis about

an lessen a are bit. So to we're month-to-month, that we see little increase still seeing but starting

are but guidance obviously, change, that still influenced the some of today. can we that certainly that Now giving

Frank Schiraldi

And interest-bearing as just you're it. of these shifting about balances from to more balances down it Got opposed when clients around? of moving here, money kind is running thinking balances into

Mark McCollom

I we're the saw mean, still going that But down I from that seeing bearing. $XXX of year. non-interest year. giving in the of shift back million again, that's out what half to mean, guidance first still some obviously, shift of the we have thinks of we're half in the we're

Frank Schiraldi

Okay. the And then capital. just on

Just given for flow a of all than about contingent the these obviously, banks focus rules, new larger in Fulton. capital

ratio CETX you ratios thoughts do of guys Just sort what your sort Thanks. curious of TCE? are, either capital here? on what the target right or And

Mark McCollom

we are depending look ratio, minimums to be basis regulatory on that. ratio, on we at our to where terms we amount. XXX and comfortable of ratios, Frank, on by have to Yes, which target, particularly we even points in then focus, house the that sit cushions minimums right primary going those our all now, above of regulatory our XXX But those, what is house

Frank Schiraldi

near-term, do another in I expect ratios build into tied the Any the color way, earnings guide? there these necessarily? you not Okay. asked guess to

Mark McCollom

that them Frank, I build the is we question then time would would Really, see capital. the think we deploy earnings stream. how with over

Our first or growth capital to then buybacks forward. we strategy as move support is use and M&A for organic

comfortable capital, to levels. ways. capital So those we that we generate with look feel in current And more as we'll deploy our

Frank Schiraldi

you. Okay. Great. Thank right. All

Operator

the comes Tamayo question of from next Daniel from line Our James. Instructions] Raymond [Operator

is line open. Your

Daniel Tamayo

guys. Hey. my Good Thanks morning, for question. taking

Mark McCollom

Hey, Danny.

Daniel Tamayo

off, growth guidance. start the a just we clarification Maybe just on loan

the and not Mark, the to to quarter? moderating. you I think, I'm from X% talking talked assuming about strong of prior about growth that relative you're X% guidance second the the in

Mark McCollom

we've relative what I'm year half a seen is in growth referring the year to to strong that what would no, be. of typical first Well, really the the

first the that half seen year. we've my pace the in So the comments on is moderation from of

Daniel Tamayo

Okay.

digit So comments? I how about half those with mid-single you're I – still of thinking mean mean for the kind then of we about you back should the think could year? that line if in what is

Mark McCollom

to we second in had in X% X% the Danny, forward, quarter. those we – would growth as targets strong very quarter. Yes, good We in first the the range had we loan again look growth

and there. expect we'll in returns pricing, we be our on us range. to But we to we're on focused risk-adjusted As appropriate that loan X% still think moderate X% from targets long-term full-year,

Daniel Tamayo

ratio Okay. your on or with range growth, if infer of funding would And lose to around end then you of we up of should Or that that maintain is in middle deposits? terms it comfortable do some drift kind something be of if you to that inclined XX%? want let you to think with brokered Is could do cost funding that the kind that – the of continue the fund of higher you mentioned that your you're – loan-to-deposit in you now. you

Curtis Myers

Yes.

is deposit base. to the goal grow Our

accounts, growing coming trend We're that accounts forward, deposit balances account down. of average referenced fighting As growing specifically. we move we're we're we

So now are is to we If and on more – been other we focused strategy doesn't in a a sources as strategy of we fully get very have to back measured to deposits kind pace that access basis at continue and loans. to is long-term loan growing to happen, in position. has equal deposits support feel loaned loans growth. what grow we But our our historical are with

Daniel Tamayo

of mix the of terms there. but income about interest you Yes, that in a the But guidance, what's that's of the we kind of talked the makes sense. and about assumes already of shift non-interest that as with bearing, kind Okay. year think rest net

with you're kind mean you loans, growing that terms it – you're of If you're of in when deposit? assumes I funding what are assuming rate?

Curtis Myers

Yes.

to grow So It's bearing this I we really want environment. difficult mean, non-interest deposits. in

And plenty to then then would we new there. look promotional rate. So have on are deposit we through customers, grow broker deposits of capacity typically acquisition of from which

think grow it's done environment, we this growth, So we Organic over really customer-by-customer. recognize to good sources. in tough job grow to We we've have time, want deposits. a and we

So we're we're return. risk-adjusted customers to have we making appropriate support continue to sure getting the if capacity loan

Daniel Tamayo

Understood.

getting Okay. me guys. the into some Well, I color appreciate funding we – there Thanks giving you side? on

Curtis Myers

Danny. Thanks,

Mark McCollom

Danny. You bet,

Operator

KBW. next of come [Operator will our the Instructions] And question Chris line from McGratty from

Your line open. is

Christopher McGratty

a XX% clarification full Great. the on Mark, just deposit That's beta. beta interest-bearing cycle?

Mark McCollom

That is the total beta. deposit

Christopher McGratty

beta. deposit Total

our it is Okay. the challenging? Thank – lever your Is costs. it or environment given but bit guidance the us little you line was in next back you. said of then like a with the was And that anything kind half considering pull Obviously, early second, what environment on beyond if heavy, in Anything can the the a touch expense if revenue stays there quarter expectations. you're you in on year? you've

Curtis Myers

Yes, Chris, it's Curt.

committed to expenses managing We are appropriately.

the manage we revenue, unfold take within have we'll an back we sure see appropriate the actions the cost that those structure. on as to we'll and being with As range target to. expenses We're make year cost half in have committed need appropriate the we to we of growth past in

Christopher McGratty

it. much. Got Thank Thanks. you very

Curtis Myers

Thanks.

Operator

[Operator Bishop Instructions] from will David line from Our Group. next of question the come Hovde

open. is line Your

David Bishop

heard I Yes. correct, the you preamble. but Good if wasn't Hey, morning, sure Mark, during gentlemen. I

outlook investments, here. and cash think I sort you maintaining In cash floor for understand that of has of terms reached your a

looking the and for be our equivalents just to You're and build here? from or curious cash liquidity investments should what expectation

Mark McCollom

be portfolio, we've liquidity to reverted of kind assets. always stretch. felt the think Yes. the with had about then March to longer-term targeted respect X crisis XX% on of past cash we had investment back we targets. I – X.X-month cash a gotten industry, for sat X, to And post like Yes. We that as our around some we the in excess as And

total step the you'll grow to sheet so balance growth. in see continue that with And

David Bishop

Got disclosures office appreciate it. the And – I portfolio. the then on CRE the

sort Just quality side degradation the curious rising with of are consumer interest any credit maybe yet the rates turning here, seeing prism perspective? on the a from you of house

Curtis Myers

we sensitivity stable doing Those at a work to Dave, positive. across We're not are of good. be customer But metrics a – scores, lot indicators continue leading we is remain board. rate the stable credit delinquency on interest pretty level. credit see

David Bishop

Got you adjusted the I question, risk think final pricing. it. mentioned maintaining And

across what maybe able loans Thanks. onboard curious new commercial at during Just the markets you're quarter? to your

Mark McCollom

bit, generally obviously, vary to new general, came Sure. little low second X – between Yes, a on mid-Xs. in But commercial loans by product. in money quarter, will the

David Bishop

Great. color. Appreciate the

Mark McCollom

bet. You

Operator

[Operator Our Montgomery. Instructions] Strickland from comes from next question Feddie Janney

open. Your line is

Feddie Strickland

morning. Thanks. Good

Curtis Myers

Hey, Feddie.

Mark McCollom

Hey, Feddie.

Feddie Strickland

Just on couple quarterly expenses, your to the walk in of third it guidance. Can just us over the quarter, sounds there should the drivers expenses next expect you like through some of we timing just given and quarters? and decline fourth

Mark McCollom

Yes.

the in second in correct. quarter drivers couple totaled there to a would items that there is, probably will the we that So things you're of the But $X million. about recur, deem which aggregate not be were

the and to we take a year. bit couple expenses would just with quarters for normal little of real we you should to which guide a If some where second also come in mid-year, the expect half There's bit. little next the of over look things down and off the the otherwise, are back estate

Feddie Strickland

know stops switching potentially margin. but guidance you potentially gears assets year That's it. hikes? reprice as the is to of end and early And provided after margin this helpful. or reasonable loans towards the see that bottoming XXXX, more I haven't the hiking the then expand with XXXX yet, to Got earning it just then the and this one Fed assumption two remix year into

Mark McCollom

crystal out. if of how – at yes, stop is start my when will bottom depending to mean to end. think the had just first pause to where what expected reasonable going will said rates Well, start XXXX we you yes, was it's the to half see be and things I you we it, comments then see somewhere declines. in assume that plays the start ball think before scenario to will the actually out I But long if you're all I that when saying know that the think way I I with

Feddie Strickland

for question some last cycle. the the Understood. And securities of discussion same and the you for as of just Have kind realizing today? potentially of on interest guess, near duration that taking restructuring we point income unrealized securities into can portfolio potentially me, hiking them? remind losses, additional you portfolio the end And I us one considered the

Mark McCollom

Yes. Yes.

at one – of to other looked haven't enough have was found We've other mean, we and that seen actually kind But institutions certainly I So we compelling mean, it. execute do I those some those on. consider transactions.

years. that of there portfolios – X around a to For bit we are little it's longer total loans We're much between because us, duration have short. the so the commercial X.X

our interest little an just interest we've portfolio – bit overall in a risk. from rate perspective, balance taken the duration risk So rate investment more to out

Feddie Strickland

my it. Got Thanks taking for questions.

Mark McCollom

bet. Thanks. You

Operator

comes [Operator Instructions] Davidson. of from next question line Our D.A. Navas Manuel from

Your line open. is

Manuel Navas

morning. Good Hey.

fast how had given Just the duration, that of that and AOCI following just rates by that rates how the build – – up if securities AOCI on paused, stayed, portfolio. XXXX? we end much back If that much given one and more of how would were hike

Mark McCollom

that of over that lot most going really where and kind kind Manuel, look depends to the you the of – is think revert assuming is, is I the the curve do level. duration really – that that AOCI rates par. do that or influence $XXX-some-odd it portion would on back stays pause inverted But intermediate the curve bleed mean, total exactly in rates what of I out stays just of if what have happens of over today to it you number A million, that, at mean, and

Manuel Navas

of half you remind helpful. year? on flows That's Okay. deposit into some in see the me coming the the seasonality of Could back you

Mark McCollom

the to then to at the kind fourth third look end we've of experienced. the third we I be between back high out. what the $XXX $XXX versus of we for see this what in typically And And that's years, of our million expect quarter, quarter. Yes, five $XXX million a year the We watermark flow most call we've and outflows lower sure. between the seen range. million that of higher quarter last of see from numbers our quarter, the $XXX because end it, that typically typically that and book. we of a the of range in over then would increase money municipal that see third Typically, if same million

Manuel Navas

And increases using in you're look looked of Have confident seeing exiting – not flows you you where deposit and probably are gone? at just flows of having you're seeing kind bank? – a net number funds? you're growing any do success staying have feel not you And lot their really one exit, of that are people and Or the it's just more you necessarily accounts.

Curtis Myers

mean, I down. we're I net comes that accounts really close we flows accounts. the Well, average growing and have or mean, new balance

impact organization. is new into average and higher-yielding new internally outflows, to and bring customers our households products. grow seeing we to we're what more see as markets of deposits of We the the aggressive balance some in So migrate are all

some won't on the we why what that's accounts need net on and time, we're pricing We And to consistently have consumer, winning. growth the over be headwinds in that aggressive because low attrition we it's average declines really average we're of balance and follow, we very adding a really based market those business then strategies in focused do account have balance, small fighting but that's accounts that.

Manuel Navas

demand that see – And you're want being loan it on and want? seeing kind are up? pricing you and growth Is Are commercial see of more pricing. you come on And just you're side the do down? a pricing to on the seeing fast you growth getting you at pricing – selective – uptake follow-up you how

Curtis Myers

market. would much the mortgage. we're be impact it's of just more a mean rate-sensitive I Where residential biggest seeing

we growth the long moderating pull-through see So most actually until took where hit rate actions those based the quarter. as in sheet. you we second on adjust the a There's those, and balance would that's first

to So half volatility that's see the first where in you'll loan growth. second most half from

to as customers, all loan we generate can marketplace the higher organic within going reasonable commercial. On commercial at continue we we continue we originations if in continue yields support to generate growth, support organic continue can think to think we even forward steady growth steady segments to

Manuel Navas

XX%. is follow-up on you And like loan rate just constant with old loans each see beta you that level the up actually as or towards a re-price around Do creeping that that higher? the hike your staying see comment XX%

Mark McCollom

was that we that Yes, exactly. see comment than We little point by of that deposit would bit the creep the still up end why earlier beta. loan see of the to a expect expect beta my and cycle, to higher higher, that

Manuel Navas

it. appreciate I Thank guys. you

Mark McCollom

You bet.

Curtis Myers

bet. You

Operator

will Instructions] next Matthew come [Operator from from the line Stephens. Breese Our of question

open. line Your is

Matthew Breese

Hey. Good morning.

Curtis Myers

Hey, morning. Matt. Good

Matthew Breese

idea the you margin, June, Just for quarter? could or the the does to give June throughout end how on progressed curious, some that the the of compare me for of full for quarter? margin how the And month

Mark McCollom

Yes.

the So in second we on the X.XX% in full quarter average, went from X.XX% the first to quarter quarter.

in of saw month our deposits the we earlier, noted XX a increase in point cost of basis I April. As

just impact of that quarter. the that kind was deposits of of of quarter we first Some put some full on in really the broker

saw points that of points. in XX basis only So months increased the X cost we then May of saw deposits we basis and and June,

then on was margin the we progression well. was of June at average month the the So X.XX%, which as ended quarter our that for

did we month average finish So the not than June the of for quarter. lower the

Matthew Breese

Understood.

And Okay. more appears it incremental today one maybe to then be. Fed thinking range. low hike to – mid-X% the loan about in yields There's maybe

quarters? over that last should we've of seen about versus handful past Beyond pause the increase in a quarterly loan how thinking Fed in what be yields scenario the we hike,

Mark McCollom

want I repeat I Can right. Yes. make just again? got that sure just it you to

Matthew Breese

Yes.

go about in once mix? average Fed loan extent we to So yields? the is be will they done continue the thinking in quarters, ensuing ramp To should What's how the the what higher?

Mark McCollom

Yes.

still – we we that starting come and both the mature are I new quarters commercial have loans bit, past to a – higher for as consumer narrow to little still We on seeing see we reprice while that's the several loans off. look mean, side. and the side

Matthew Breese

Okay.

going think X.XX%. at NIM of end back to flat I the June

NII implies for towards, the bottoming? $XXX million about do NII When year, you in a the Where And it, think that ramp quarterly you Just call even the million $XXX in there's year, maybe the $XXX it thinking do bottoming? of to you that you of can see million. that do down see per quarter hold NII through the beginning end guide in XXXX?

Mark McCollom

like a percentage this, comes feel bearing Matt. ultimately really I Really, back It such non-interest ends on to broken that record where up. Yes.

feel of quarter here closely for guide for to year, track we really quarter the third give able the of comfortable going able we're to over quarter and We're to revise giving that then tracking final going guidance to the really And then the so with the balance be kind and for year. XXXX. we're the be the to be again of our closely that fourth

But that, from does runoff, bearing into non-interest there's be slow to seen. the that remains of billion $X.X – in but first year of next a end billion $X.X was year half year, it the nominal declines to it to by over be number trickle that's to in appears the the which the some appears slow, starting or going

start is rate does in or factor your truly how Fed other one to increases question then two rate pause more declines. until is, the the we after the The see long pause and

Matthew Breese

it? that? in strong just swap fees, as And as in commercial curious ramp what was caused swap quarter, behind Okay. Switching seen this time. is very what fees, sustainable some One, to how we've two, the strong commercial

Curtis Myers

when the of drive they get they loans really you tied depend to really loans, and swap originations Yes, mix or typically are they the some predominantly Matt, and larger CRE originations, they're number. C&I on

to to timing really in So that the second quarter. tied originations was

have historical that that we more So see but moderating, we feel levels. can do we in land

and fourth we good quarter, great third, but good we off So the maybe that expect have a will would performance, quarter. pipeline come still not performance probably in see linked

expecting and hit a for For to we're item year, the meaningful that full be targets our line have us.

Matthew Breese

Okay. What was when loan customers? in to And out are prudent picture, Bigger on it. how accommodations the What disclosed from terms be on the the this FDIC, you, and June, expected look on occur. guess estate that from I it wanted use? it and can you that are not thoughts and how but tools these wanted late of perspective In I you joint practical And I Fed, guidance the your commercial help plays accommodations your if interagency standpoint? OCC they applies how does workouts just workouts. there like real a

Curtis Myers

Yes.

we we more there that best bank time. over lot resolution be bridge individual to for when a than loan standards. could we us would on to really historical there's I And mean borrowers what and work to learn with borrowers think the different the do the customer. try the with I work

it But So it workout standards, are new strategy. or on if tools that we that change and our there look that, really we strategy. new at anticipate how we'll at can don't our that impacts would or see based look customer things strategy certainly regulatory

Matthew Breese

expect of that allowable in Do out beyond you kind these what's where by those will cases somebody do the help be disclosed? market you loans

Curtis Myers

disclosures how disclose of We certainly new these will would as be we or how accommodations. changes that impact them rules developed be we would Again, if – developed any would to. have

the pandemic changes You the deferrals. granted the response where we COVID go are ability back to during to due and TDR

the we and had these effect out. think really, had were how marketplace, see allowance exactly regulatory in on very transparent we event, was a we're deferrals a that overall that made it We'll But really about how play and thinking disclose what I that. that sense. rules done, positive

out, same rules thing. we these the would do would play As

Matthew Breese

conversations to ongoing, or any me, that one for of had. depressed, this are Thank M&A, think levels type you. That's for – I all terms obviously, how Last about M&A of multiples and sense are environment? across whether increased in a have industry you Okay. not get in are if but just conversation the just wanted there

Curtis Myers

Yes, Matt.

opportunities always at. have that M&A we looking we're so And

the now there think for take There book book those loan opportunities us in be to on will marketplace. do based on price right to headwinds the certainly are investment happen. would we based marks and we that make So stock need on

positioned time. make right credit opportunities will working analysis have we're very sure I we take to feel as deal. positioned up those to challenging this we discussions. take we We sense now us. more come we our as just make But overall advantage book we're in be this will that you for market know, on the any guess advantage review of and of we're And opportunities hard opportunities we want stabilize, to where sure and certainly that in – those engage are of make to is environment the we a thorough in prudent would, would and of

Operator

Thank closing you. queue. for looks remarks. [Operator there's call Myers Instructions] right. like I'd like Curt turn the over back It All no questions more the to to in

Curtis Myers

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

Operator

concludes conference Thank participating. today's for call. This you

disconnect. great Everyone, You have a may day. now

Fulton Financial (FULT) 19 Jul 232023 Q2 Earnings call transcript