Financial Performance Summary Fulton Financial Corporation reported a net income of $59.4 million and operating net income of $65.4 million for Q1 2024, with the CEO noting solid earnings and stable asset quality | Metric | Q1 2024 | Q4 2023 | Change | | :--- | :--- | :--- | :--- | | Net Income Available to Common Shareholders | $59.4M | $61.7M | -3.8% | | Diluted EPS | $0.36 | $0.37 | -2.7% | | Operating Net Income Available to Common Shareholders | $65.4M | $68.9M | -5.0% | | Operating Diluted EPS | $0.40 | $0.42 | -4.8% | - CEO Curtis J. Myers expressed satisfaction with the Q1 results, noting them as a "good start to the year" and emphasizing progress on strategic initiatives41 Detailed Financial Analysis Q1 2024 detailed financial analysis shows declining net interest income due to margin compression, stable asset quality, mixed non-interest income, and reduced non-interest expenses quarter-over-quarter Net Interest Income and Balance Sheet Net interest income for Q1 2024 decreased to $206.9 million quarter-over-quarter and year-over-year, primarily due to a 4 basis point decline in net interest margin from higher funding costs - NII decreased by $5.1 million compared to Q4 2023, attributed to slight decreases in both average interest-earning assets and the net interest margin2 - The NIM fell by 4 basis points to 3.32% compared to Q4 2023, mainly due to higher rates on interest-bearing deposits and a funding mix shift, partially offset by higher loan yields47 - Compared to Q1 2023, NII decreased by $8.7 million; while interest income grew by $49.8 million, interest expense surged by $58.5 million, primarily driven by rising interest rates on deposits57 - Total average interest-bearing liabilities increased by $1.9 billion year-over-year, driven by a $2.4 billion increase in average interest-bearing deposits6 Asset Quality Asset quality remained stable in Q1 2024, with non-performing assets at $156.4 million (0.57% of total assets) and a provision for credit losses of $10.9 million | Metric | Q1 2024 | Q4 2023 | Q1 2023 | | :--- | :--- | :--- | :--- | | Provision for Credit Losses | $10.9M | $9.8M | $24.5M | | Net Charge-offs to Avg. Loans | 0.16% | 0.15% | 0.27% | | Non-performing Assets / Total Assets | 0.57% | 0.56% | 0.62% | - The Q1 2024 provision for credit losses was primarily driven by net charge-offs of $8.6 million and overall loan growth9 Non-Interest Income Non-interest income was $57.1 million, decreasing 5.0% quarter-over-quarter due to lower swap fees but increasing 10.5% year-over-year from wealth and mortgage banking - QoQ non-interest income decreased by $3.0 million (5.0%), mainly from a $2.0 million drop in commercial customer interest rate swap fees and a $2.2 million decrease in other income11 - YoY non-interest income increased by $5.4 million (10.5%), led by a $2.1 million increase in wealth management revenues and a $1.1 million increase in mortgage banking income54 Non-Interest Expense Non-interest expense decreased 1.6% quarter-over-quarter to $177.6 million due to lower FDIC insurance, but increased 7.3% year-over-year (excluding FultonFirst costs) - QoQ non-interest expense decreased by $3.0 million, primarily due to a $5.0 million lower FDIC insurance expense, with the FDIC special assessment at $1.0 million in Q1 2024 versus $6.5 million in Q4 20231213 - The QoQ decrease was partly offset by a $3.1 million increase in FultonFirst implementation costs and loss on asset disposals, which totaled $6.3 million in Q1 202413 - YoY non-interest expense, excluding FultonFirst costs, increased by $11.7 million (7.3%), driven by a $6.0 million increase in salaries and benefits, a $1.9 million increase in data processing/software, and a $1.7 million increase in net occupancy expense14 Income Tax Expense The effective tax rate for Q1 2024 was 18.0%, a slight decrease from the 18.5% effective tax rate for the full year 2023 - The effective tax rate was 18.0% for Q1 2024, compared to 18.5% for the full-year 202315 Financial Statements and Data This section presents detailed unaudited financial tables for the five quarters ending March 31, 2024, covering consolidated balance sheets, income statements, average balance sheet analysis, and credit quality data Consolidated Financial Highlights Key financial highlights for Q1 2024 include a return on average assets of 0.91%, a net interest margin of 3.32%, and diluted EPS of $0.36 | Profitability & Capital Ratios | Q1 2024 | Q4 2023 | Q1 2023 | | :--- | :--- | :--- | :--- | | Return on average assets | 0.91% | 0.93% | 1.03% | | Net interest margin | 3.32% | 3.36% | 3.53% | | Efficiency ratio (Operating) | 63.2% | 62.0% | 58.5% | | Common equity Tier 1 capital ratio | 10.2% | 10.3% | 9.8% | | Total risk-based capital ratio | 13.9% | 14.0% | 13.4% | | Per Share Data | Q1 2024 | Q4 2023 | Q1 2023 | | :--- | :--- | :--- | :--- | | Diluted EPS | $0.36 | $0.37 | $0.39 | | Cash dividends | $0.17 | $0.17 | $0.15 | Consolidated Balance Sheets As of March 31, 2024, total assets were $27.64 billion, with net loans at $21.44 billion, total deposits at $21.74 billion, and total shareholders' equity at $2.76 billion | (in thousands) | Mar 31, 2024 | Dec 31, 2023 | Mar 31, 2023 | | :--- | :--- | :--- | :--- | | Total Assets | $27,642,957 | $27,571,915 | $27,112,176 | | Net Loans | $21,444,483 | $21,351,094 | $20,670,188 | | Total Deposits | $21,741,950 | $21,537,623 | $21,316,584 | | Total Shareholders' Equity | $2,757,679 | $2,760,139 | $2,618,998 | - The loan portfolio's largest segments are commercial mortgage ($8.25 billion) and residential mortgage ($5.40 billion); noninterest-bearing demand deposits decreased to $5.09 billion from $6.40 billion a year ago, while time deposits grew to $3.14 billion from $1.89 billion over the same period23 Consolidated Statements of Income Q1 2024 consolidated income statement reports net interest income of $206.9 million, provision for credit losses of $10.9 million, and net income available to common shareholders of $59.4 million | (in thousands) | Q1 2024 | Q4 2023 | Q1 2023 | | :--- | :--- | :--- | :--- | | Net Interest Income | $206,937 | $212,006 | $215,587 | | Provision for credit losses | $10,925 | $9,808 | $24,544 | | Total Non-Interest Income | $57,140 | $59,378 | $51,753 | | Total Non-Interest Expense | $177,600 | $180,552 | $159,616 | | Net Income Available to Common Shareholders | $59,379 | $61,701 | $65,752 | Average Balance Sheet and Net Interest Margin Analysis Average balance analysis for Q1 2024 shows a fully taxable equivalent net interest margin of 3.32%, with a yield on interest-earning assets of 5.40% and a cost of interest-bearing liabilities of 2.82% | Metric | Q1 2024 | Q4 2023 | Q1 2023 | | :--- | :--- | :--- | :--- | | Yield on Interest-Earning Assets | 5.40% | 5.31% | 4.73% | | Cost of Interest-Bearing Liabilities | 2.82% | 2.69% | 1.78% | | Net Interest Margin (FTE) | 3.32% | 3.36% | 3.53% | - Average net loans increased to $21.4 billion in Q1 2024 from $20.5 billion in Q1 2023, while average noninterest-bearing demand deposits decreased significantly to $5.1 billion from $6.6 billion over the same period3233 Credit Quality Data Credit quality data for Q1 2024 shows the allowance for credit losses at $297.9 million and total non-performing loans at $156.1 million, with slight increases from the prior quarter | Allowance for Credit Losses (in thousands) | Q1 2024 | | :--- | :--- | | Beginning Balance | $293,404 | | Net Charge-offs | ($8,598) | | Provision for credit losses | $13,082 | | Ending Balance | $297,888 | | Non-Performing Assets (in thousands) | Mar 31, 2024 | Dec 31, 2023 | Mar 31, 2023 | | :--- | :--- | :--- | :--- | | Non-accrual loans | $129,628 | $121,620 | $134,303 | | Loans 90+ days past due | $26,521 | $31,721 | $30,336 | | Total non-performing loans | $156,149 | $153,341 | $164,639 | | Total non-performing assets | $156,426 | $154,237 | $167,943 | Non-GAAP Financial Measures Reconciliation This section reconciles GAAP results to non-GAAP measures, with Q1 2024 operating net income available to common shareholders at $65.4 million ($0.40 per diluted share) after adjustments for items like FultonFirst costs and FDIC assessment - The company presents non-GAAP measures to provide useful and comparative information for assessing operational trends, consistent with internal performance evaluation71 | Reconciliation to Operating EPS (Q1 2024) | Per Share | | :--- | :--- | | GAAP Diluted EPS | $0.36 | | Adjustments (net of tax) | +$0.04 | | Operating Diluted EPS | $0.40 | - Significant pre-tax adjustments to calculate operating income in Q1 2024 included the FultonFirst implementation and asset disposals ($6.3 million) and the FDIC special assessment ($1.0 million)37 - The Tangible Common Equity (TCE) ratio, a non-GAAP measure, was 7.40% at March 31, 2024, slightly down from 7.43% at December 31, 202338 Forward-Looking Statements This section provides a safe harbor statement, cautioning that forward-looking statements are subject to inherent risks and uncertainties, and actual results may differ materially - The report contains forward-looking statements regarding financial condition, results, and business, which are not guarantees of future performance17 - Investors are warned not to place undue reliance on these statements as they are subject to risks and uncertainties that could cause actual results to differ materially59 - For a discussion of risks and uncertainties, readers are referred to the "Risk Factors" and "MD&A" sections of the Corporation's Annual Report on Form 10-K18
Fulton Financial (FULT) - 2024 Q1 - Quarterly Results