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 a diversified balance sheet [7][14] - Total revenue reached an all-time high, driven by increased net interest income and fee income, with an efficiency ratio of 56.5% and an operating ROA of 1.29% [7][11] - Tangible book value per share grew 18% on a linked quarter annualized basis despite share repurchases [8][23] Business Line Data and Key Metrics Changes - Deposit growth outpaced loan growth, increasing by $194 million, primarily from demand and savings accounts, while total loan balances grew by $29 million [9][16] - Non-interest income for the quarter was $70.4 million, accounting for 21% of total revenue, with significant contributions from the wealth management business [21] - Non-interest expense increased to $191.4 million, mainly due to higher salaries and benefits [22] 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 [17] - The average cost of total deposits decreased to 1.96%, while the total cost of funds declined by four basis points [20] Company Strategy and Development Direction - The company continues to focus on organic growth and maintaining positive operating leverage, with a strategy to manage expenses and revenue effectively [33][34] - The company is actively seeking acquisition opportunities in the $1 billion to $5 billion asset bank segment to enhance market penetration [42] 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 [12][22] - The company updated its 2025 operating guidance, increasing net interest income expectations while tightening provisions and operating expenses [24] Other Important Information - The company repurchased 1.65 million shares at an average cost of $18.67, with remaining buyback authorization of $86 million [8][23] - The allowance for credit losses to total loans ratio remained stable at 1.57%, with non-performing assets improving to 0.63% [22] Q&A Session Summary Question: Impact of net interest income guidance revision - Management acknowledged that the revised guidance implies some margin pressure in Q4 due to rate cuts, estimating a $2 million annualized NII headwind for every 25 basis points cut [28][30] Question: Positive operating leverage in 2026 - Management aims to generate positive operating leverage consistently, focusing on organic growth and managing expense levels [32][34] Question: Cumulative interest-bearing deposit beta - Management targets maintaining the cumulative interest-bearing deposit beta around 30% as loan growth normalizes [38] Question: Organic growth opportunities - Management highlighted opportunities for organic growth in Virginia, Maryland, and Philadelphia, focusing on customer acquisition and talent recruitment [44] Question: Current exposure levels to NDFIs - Management reported very low exposure to NDFIs, primarily involving loans to community bank holding companies [70] Question: Deposit costs and brokered CDs - Management indicated that deposit costs decreased due to the runoff of brokered CDs and will manage the loan-deposit ratio effectively in Q4 [76]