Fulton Financial (US:FULT)2023-10-18 20:03Financial Data and Key Metrics Changes - Operating earnings per share for Q3 2023 were $0.43, down from $0.47 in Q2 2023 [18] - Pre-provision net revenue decreased by 4% due to a decline in fee income [10] - Net interest income was $214 million, a slight increase from the previous quarter [44] - Net interest margin remained stable at 3.40% [44] - Total deposits grew by $215 million, with interest-bearing deposits increasing by approximately 13% [19][22] Business Line Data and Key Metrics Changes - Total loan growth was $133 million or 2.5% annualized, with commercial loans growing modestly [13][24] - Wealth management revenues increased to $19.4 million from $18.7 million in the previous quarter [46] - Commercial banking fees declined to $19.7 million due to reduced loan originations [26] - Consumer loan growth moderated to $86 million or 4.7%, primarily driven by residential mortgages [41] Market Data and Key Metrics Changes - Noninterest-bearing deposits decreased by $290 million, showing a shift towards interest-bearing deposits [25] - The loan-to-deposit ratio ended at 98.9%, down from 99.2% in the previous quarter [20][22] - The overall concentration in commercial real estate is approximately 185% of total capital, which is below the peer average [16] Company Strategy and Development Direction - The company is focused on organic growth, with plans to open new financial centers in Philadelphia, Richmond, and Wilmington [15] - There is a commitment to managing core operating expenses and realizing benefits from technology investments [11][72] - The company aims to maintain a disciplined approach to credit and pricing in the commercial real estate sector, viewing current market conditions as an opportunity [76] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the impact of a higher interest rate environment on loan growth and emphasized the importance of risk-adjusted spreads [14] - Credit quality metrics remained stable, with net charge-offs at $5 million [38] - The company expects net interest income to be in the range of $845 million to $855 million for 2023, with a provision for credit losses estimated between $55 million and $65 million [47][48] Other Important Information - The company repurchased 2.2 million shares in Q3 2023, with $29 million remaining from the $100 million repurchase authorization [12] - The investment portfolio declined by approximately $200 million during the quarter, closing at $3.7 billion [43] - The tangible common equity ratio was 6.8% at quarter-end, down from the prior quarter due to higher long-term interest rates [32] Q&A Session Summary Question: What is the company's capital strategy moving forward? - The company will support organic growth first and then consider buybacks based on pricing and capital use [37] Question: What is the impact of potential new regulations on interchange fees? - Management has not yet assessed the potential impact as it depends on legislative outcomes, but previous regulations resulted in a net reduction that was not material [52] Question: Can you provide insights on upcoming loan maturities and their rates? - Maturities are expected to come off at rates between 5.5% to 7%, while new loans are being issued at rates between 7% and 8.5% [64] Question: How does the company view the current credit trends in the office portfolio? - The office portfolio remains stable, with no material changes quarter-to-quarter, but management continues to monitor the macroeconomic environment [77] Question: What are the expectations for net interest margin (NIM) moving forward? - The company expects NIM to drift down slightly, with a potential bottoming out in mid-2024 [81]