Fulton Financial Corporation Q3 FY2025 earnings call

• Strong third-quarter operating results with operating earnings $101.3 million ($0.55 per share) showing positive operating leverage. • Total revenue increased with net interest and fee income growth, and efficiency ratio down to 56.5%. • Repurchased 1,650,000 shares during the quarter at a weighted average cost of $18.67 per share. • Deposit growth $194 million driven by targeted sales campaigns and seasonal municipal deposits, offsetting declines in time and brokered deposits. • Loan originations up linked quarter but offset by strategic actions reducing loan balances by over $250 million during the quarter. • Non-interest income $70.4 million, non-interest expense $191.4 million. • Asset quality showed improvement in non-performing loans, charge-offs, risk rating migration, and reduction in classified/criticized loans.

Operating earnings were $101.3 million or $0.55 per share. Total revenue increased with net interest income and fee income growth. Deposit growth was $194 million (3%), with demand and savings balances growing $387 million offsetting declines in time and brokered deposits. Loans increased $29 million, with residential and commercial mortgage driving growth but offset by declines in C&I. Net interest income on a non-FTE basis was $264.2 million, a $9.3 million linked quarter increase, with net interest margin at 3.57%. Non-interest income for the quarter was $70.4 million. Efficiency ratio was 56.5%, operating ROA was 1.29%, and operating ROTCE was 15.79%.

• Updated 2025 operating guidance includes increasing net interest income to $1.025 billion to $1.035 billion. • Lowering and tightening provision expense to $45 million to $55 million. • Raising the bottom end of fee income to $270 million to $280 million. • Lowering the top end of operating expense to $750 million to $760 million. • Modestly increasing effective tax rate to 19% to 20%. • Lowering non-operating expenses from $10 million to $7 million.

• Forward-looking statements subject to risks, uncertainties, and other factors. • Economic and geopolitical uncertainty affecting credit quality. • Anticipated outflows in municipal balances in the fourth quarter. • Impact of rate cuts on net interest income with a lag in deposit beta adjusting to rate changes.

Q: First on the net interest income guidance being revised higher, thoughts on margin compression and impact of rate cuts.

A: Richard Kraemer said every 25 basis points annualized is about $2 million NII headwind, with deposit beta lagging, near-term pressure but leveling out after Fed stops cutting.

Q: Thoughts on positive operating leverage in 2026.

A: Curtis Myers said focused on organic growth to drive positive operating leverage, more neutral balance sheet helps, managing components to generate it.

Q: Cumulative interest-bearing deposit beta trend as Fed cuts.

A: Richard Kraemer said aim to maintain around 30% level.

Q: Color on securities yields and acceleration.

A: Richard Kraemer said securities yields in high fours, steady stream with prepayment as wild card, outer years have upside if rates elevated.

Q: Loan growth pipeline and longer-term average.

A: Curtis Myers said long-term trends 4%-6%, aiming to climb back to low end, pipelines up but pull-through rate lower, customers cautious.

Q: Capital priorities as loan growth climbs to 4%.

A: Curtis Myers said priorities include organic growth, corporate activities, and buybacks, with $86 million remaining in buyback authorization.

Q: Exposure to NDFIs.

A: Curtis Myers said very low levels, primarily loans to non-rated debt issuances of bank holding companies in market.

Q: Deposit cost and municipality seasonality.

A: Richard Kraemer said ran off brokered CDs, will manage most cost-effectively, typically see 40%-50% municipal outflows in fourth quarter