Fulton Financial (US:FULT)2024-01-17 18:16Financial Data and Key Metrics Changes - Operating earnings per share for Q4 2023 was $0.42, a slight decrease from $0.43 in Q3 2023 [24] - Pre-provision net revenue reached a record of over $400 million in 2023, with an operating EPS of $1.71, the second-best in the company's history [34] - Net interest income for Q4 was $212 million, a decline of $2 million from the previous quarter, with a net interest margin of 3.36% [41] Business Line Data and Key Metrics Changes - Loan growth moderated to $174 million or 3% annualized in Q4, with commercial lending contributing $120 million [65] - Consumer lending grew by $54 million or 3% during the quarter, while mortgage banking revenues declined to $2.3 million due to seasonal factors [40][42] - Non-interest income was $59.4 million, with wealth management revenues consistent with the previous quarter at $19.4 million [36][67] Market Data and Key Metrics Changes - Non-performing loans increased by $12.7 million, leading to an NPL to loans ratio increase from 67 basis points to 72 basis points [26] - Non-interest-bearing deposits ended the year at $5.3 billion, or 24.7% of total deposits, with expectations for this to decrease to approximately 22% by the end of 2024 [25] Company Strategy and Development Direction - The company is focused on growth and profitability while managing credit and improving efficiency, with the FultonFirst initiative aimed at streamlining operations and enhancing productivity [21][37] - The company plans to maintain a disciplined approach to capital management, having increased its common dividend and repurchased over 5 million shares in 2023 [19] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism for 2024, acknowledging the need to grow appropriately in the current market while improving productivity [21] - The company anticipates a total of 75 basis points of Fed funds decreases in the second half of 2024, impacting net interest income guidance [28] Other Important Information - The company maintained strong capital ratios, with a tangible common equity ratio of 7.4% at year-end, reflecting solid earnings and a decrease in accumulated other comprehensive income [68] - The company has a buyback program of $125 million, which will be utilized opportunistically throughout the year [92] Q&A Session All Questions and Answers Question: What are the profitability targets associated with the FultonFirst initiative? - Management indicated that there are no specific targets at this point, but the initiative is expected to lead to long-term sustained improved efficiency [44][46] Question: How do you expect the provision for credit losses to vary? - The provision is primarily driven by charge-offs normalizing, with a long-term average of around 20 basis points [49][50] Question: What are the expectations for loan growth going forward? - The company expects loan growth to continue in the 4% to 6% range, with a focus on maintaining profitability [58][65] Question: How will the company manage deposit costs in the current environment? - Management noted that deposit costs are expected to lessen throughout 2024 as maturing CDs roll off at lower rates [102] Question: What is the outlook for the M&A market? - The company is open to M&A opportunities, particularly in the $1 billion to $5 billion range, but finds it challenging to make the math work in the current environment [130][179]