Fulton Financial (US:FULT)2025-10-22 15:00Financial Data and Key Metrics Changes - Operating earnings for Q3 2025 were $101.3 million, or $0.55 per share, reflecting strong profitability and positive operating leverage [4][10] - Total revenue reached an all-time high, driven by growth in net interest income and fee income, with an efficiency ratio of 56.5% and an operating ROA of 1.29% [5][10] - The company repurchased 1.65 million shares at a weighted average cost of $18.67, while tangible book value per share grew 18% on a linked quarter annualized basis [5][10] Business Line Data and Key Metrics Changes - Total loan balances increased by $29 million, with residential and commercial mortgages driving growth, despite declines in commercial and industrial loans [10][11] - Deposits grew by $194 million, primarily from demand and savings products, while timed deposits declined [11][12] - Non-interest income for the quarter was $70.4 million, representing 21% of total revenue, with growth driven by wealth and consumer businesses [15] Market Data and Key Metrics Changes - The loan-to-deposit ratio ended the quarter at 91%, with non-interest-bearing balances declining to 19.5% of total deposits [12] - The net interest margin increased by 10 basis points to 3.57%, with net interest income on a non-FTE basis at $264.2 million [12][13] - The provision for loan losses remained stable, with net charge-offs declining to 18 basis points and non-performing assets improving to 0.63% of total assets [16] Company Strategy and Development Direction - The company continues to focus on organic growth and maintaining a diversified balance sheet to drive positive operating leverage [24][44] - Strategic actions taken throughout the year have created headwinds to loan growth, but the company expects these to moderate, allowing for a return to long-term growth trends [7][11] - The company is actively seeking acquisition opportunities within the $1 billion to $5 billion asset bank segment to enhance market penetration [29] Management's Comments on Operating Environment and Future Outlook - Management expressed caution regarding credit quality due to economic uncertainties but noted steady performance in the loan portfolio [8][9] - The company updated its 2025 operating guidance, increasing net interest income expectations while tightening provisions and operating expenses [17][18] - Management remains focused on generating organic growth and managing expenses to achieve positive operating leverage [24][44] Other Important Information - The company maintains a healthy capital position, with a tangible common equity to tangible asset ratio of 8.3% and a CET1 ratio of 11.5% [16][17] - The company anticipates seasonal outflows in municipal balances in Q4, which could impact deposit levels [12][56] Q&A Session Summary Question: Impact of net interest income guidance revision - Management acknowledged that the revised guidance implies some margin compression in Q4 due to rate cuts, estimating a $2 million annualized NII headwind for every 25 basis points [20][21] Question: Positive operating leverage in 2026 - Management emphasized the goal of generating positive operating leverage consistently, focusing on organic growth and managing expense levels [23][24] Question: Cumulative interest-bearing deposit beta expectations - Management aims to maintain the cumulative interest-bearing deposit beta around 30% as loan growth normalizes [26] Question: Organic growth opportunities in specific markets - Management highlighted opportunities for organic growth in Virginia, Maryland, and Philadelphia, driven by customer acquisition and talent recruitment [31][32] Question: Current exposure levels to NDFIs - Management reported very low exposure to NDFIs, primarily involving loans to community bank holding companies [50][51] Question: Deposit costs and management strategies - Management indicated that they will manage deposit costs effectively, considering seasonal trends and customer deposits [54][56]