Fulton Financial Q2 2025 Earnings Call Transcript

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Provided by Quartr
July 16, 2025

Key Takeaways

  • Positive Sentiment: The company delivered record operating earnings of $100.6 million (0.55 EPS), marking its first $100 million quarter, with improved efficiency (57.1%) and strong returns (ROAA 1.3%, ROTCE 16.3%).
  • Neutral Sentiment: Total loans grew 2.5% sequentially to $150 million, driven by mortgage and home equity, while deposits dipped 2.9% seasonally, with management expecting low single-digit loan growth and long-term deposit expansion.
  • Positive Sentiment: Net interest margin rose four basis points to 3.47%, supporting higher net interest income, even as accretion from the acquired portfolio declined and subordinated debt repriced to a ~6.6% floating rate.
  • Positive Sentiment: Noninterest income climbed across all categories, with wealth management and commercial banking fees each reaching all-time quarterly highs and solid contributions from consumer banking and mortgage.
  • Neutral Sentiment: Updated 2025 guidance assumes two Fed rate cuts, raises net interest income and lowers provisions and operating expenses, while increasing the effective tax rate to 18.5–19.5%.
AI Generated. May Contain Errors.
Earnings Conference Call
Fulton Financial Q2 2025
00:00 / 00:00

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Operator

Welcome to the Fulton Financial Second Quarter twenty twenty five Results Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Matt Jozwak, Director of Investor Relations. Please go ahead.

Matthew Jozwiak
Matthew Jozwiak
Director - IR & Corporate Development at Fulton Financial

Good morning, and thanks for joining us for Fulton Financial's conference call and webcast to discuss our earnings for the second quarter ending 06/30/2025. Your host for today's conference call is Curt Myers, Chairman and Chief Executive Officer. Joining Curt is Rick Kramer, Chief Financial Officer. Our comments today will refer to the financial information and related slide presentation included with our earnings announcement, which we released yesterday afternoon. These documents can be found on our website at fult.com by clicking on Investor Relations and then on News.

Matthew Jozwiak
Matthew Jozwiak
Director - IR & Corporate Development at Fulton Financial

The slides can also be found on the Presentations page under Investor Relations on our website. On this call, representatives of Fulton may make forward looking statements with respect to Fulton's financial condition, results of operations and business. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, and actual results could differ materially. Please refer to the Safe Harbor statement on forward looking statements in our earnings release and on Slide two of today's presentation for additional information regarding these risks, uncertainties and other factors. Fulton undertakes no obligation other than as required by law to update or revise any forward looking statements.

Matthew Jozwiak
Matthew Jozwiak
Director - IR & Corporate Development at Fulton Financial

In discussing Fulton's performance, representatives of Fulton may refer to certain non GAAP financial measures. Please refer to the supplemental financial information included with Fulton's earnings announcement released yesterday and Slides 16 through 22 of today's presentation for reconciliation of those non GAAP financial measures to the most comparable GAAP measures. Now I'd like to turn the call over to your host, Curt Myers.

Curtis Myers
Curtis Myers
CEO & Chairman at Fulton Financial

Well, thanks, Matt, and good morning, everyone. For today's call, I'll be providing a few high level comments as well as some operating highlights for the quarter. Then Rick will review our financial results in more detail and discuss updates to our 2025 operating guidance. After our prepared remarks, we'll be happy to take any questions you may have. We are pleased with our strong second quarter operating earnings. Our Community Banking strategy continues to attract and retain valuable customers. We are delivering great customer outcomes, which translate into strong results for our shareholders. We are also proud to reinvest in our communities, making a positive impact and changing lives for the better. This impact is made clear by the many stories in our Corporate Social Responsibility Report, which we released in June and you can find on our Investor Relations website.

Curtis Myers
Curtis Myers
CEO & Chairman at Fulton Financial

So let me turn to the numbers. Operating earnings of $100,600,000 or $0.55 per share represents a $03 linked quarter increase and a record for the company. These results demonstrate the impact of consistent positive operating leverage, while maintaining a strong balance sheet. Total revenue increased linked quarter as we delivered growth in net interest income and fee income. Effective expense management continues to contribute nicely to our overall profitability as well.

Curtis Myers
Curtis Myers
CEO & Chairman at Fulton Financial

Combining those positive trends, our quarterly efficiency ratio was 57.1%. Our operating return on average assets increased to 1.3% and operating return on average tangible common equity increased to 16.26. With these results, we were able to deliver our first $100,000,000 operating net income quarter in company history. During the quarter, we were opportunistic and repurchased shares while growing tangible book value per share 9.5% on a linked quarter annualized basis. Our strong performance, disciplined approach to balance sheet management, diversified business model and strong liquidity and capital position the company for continued success.

Curtis Myers
Curtis Myers
CEO & Chairman at Fulton Financial

Now let me provide a few more comments on the quarter. Total loans grew $150,000,000 or 2.5% as originations were solid. This growth was more than offset the strategic runoff of our indirect auto portfolio and managed reductions in certain commercial loans. Based on our year to date performance and our origination trends, we continue to expect low single digit loan growth for the year. Turning to deposits, we remain focused on balancing long term deposit growth with prudent interest cost management.

Curtis Myers
Curtis Myers
CEO & Chairman at Fulton Financial

During the quarter, we saw a modest decline in balances largely due to seasonal trends. Based on new customer acquisition and overall customer sentiment, we continue to be positioned for long term deposit growth. Turning to the income statement. Revenue growth was driven by a strong net interest margin and a solid linked quarter increase in non interest income. All non interest income categories grew linked quarter.

Curtis Myers
Curtis Myers
CEO & Chairman at Fulton Financial

Wealth Management hit an all time high in quarterly revenue. We're adding team members and continuing to grow our customer base. Commercial banking fees also hit an all time high as customer activity continues to drive growth. Consumer banking and our residential mortgage business delivered solid linked quarter growth as well. Overall, our non interest income businesses continue to make a consistent and meaningful contribution to overall revenue, and we have a solid strategy for continued growth.

Curtis Myers
Curtis Myers
CEO & Chairman at Fulton Financial

Lastly, let me touch on credit. Overall, we remain cautious given general economic and geopolitical uncertainty. However, we continue to see steady performance in our portfolio. Charge offs and or provision expense were down linked quarter. We experienced an uptick in accrual non accrual loans.

Curtis Myers
Curtis Myers
CEO & Chairman at Fulton Financial

However, these balances remain in line with recent periods. Overall, our coverage ratio remains appropriate given our cautious outlook. Now I'll turn the call over to Rick to discuss the details of our financial results and provide comments on our 2025 operating guidance in a little more detail.

Richard Kraemer
Richard Kraemer
SEVP & CFO at Fulton Financial

Thank you, Kurt, and good morning. Unless I note otherwise, the quarterly comparisons I discuss are with the first quarter of twenty twenty five. Loan and deposit growth numbers I reference are annualized percentages on a linked quarter basis. Starting on Slide four. Operating earnings per diluted share was $0.55 or $100,600,000 of operating net income available to common shareholders.

Richard Kraemer
Richard Kraemer
SEVP & CFO at Fulton Financial

Revenue growth, a stable balance sheet and an increase in net interest margin offset a modest increase in operating expenses, driving positive operating leverage when compared to the year ago period. Total end of period loans increased $150,000,000 or 2.5% during the quarter, primarily in our residential mortgage portfolio, home equity portfolio and certain commercial categories. Deposits declined $191,000,000 or 2.9%. Growth of $120,000,000 in money market balances and an increase of $89,000,000 in wholesale channels were offset by seasonal declines in municipal balances of $135,000,000 and non interest bearing balances of $98,000,000 Our non interest bearing balances ended the quarter at 20% of total deposits. We expect to see municipal balance inflows in line with historical trends in the third quarter.

Richard Kraemer
Richard Kraemer
SEVP & CFO at Fulton Financial

With these results, our loan to deposit ratio ended the quarter at 92%. As part of our ongoing balance sheet management, we added $117,000,000 of securities to offset investment portfolio cash flows and to maintain our on balance sheet liquidity. The weighted average coupon on new purchases this quarter was approximately 5.44%. These additions carried an effective duration of approximately three point two years. The impact of these balance sheet trends are shown on Slide five.

Richard Kraemer
Richard Kraemer
SEVP & CFO at Fulton Financial

Net interest income on a non FTE basis was $254,900,000 a $3,700,000 increase linked quarter, while net interest margin increased four basis points to 3.47%. Loan yields remained steady at 5.86%. While fixed rate asset repricing represented a tailwind during the quarter, accretion interest attributable to the acquired Republic portfolio declined $1,700,000 linked quarter to $11,400,000 offsetting most of that benefit. For the quarter, our average cost of total deposits decreased five basis points to 1.98%. Through the cycle, our total deposit beta has been 28%.

Richard Kraemer
Richard Kraemer
SEVP & CFO at Fulton Financial

We continue to identify opportunities and manage deposit costs with discipline and to be supportive of our overall balance sheet growth. As a reminder, we had $195,000,000 of subordinated debt reset to floating rate in late March, repricing from a fixed 3.25% to approximately 6.6%. This security is SOFR based and will float at 2.3% over three month term SOFR. Turning to slide six. Noninterest income for the quarter was $69,100,000 The linked quarter increase was broad based. When excluding the benefit from equity method investment adjustment of $2,700,000 in the first quarter of twenty twenty five, fee income increased 7% linked quarter.

Richard Kraemer
Richard Kraemer
SEVP & CFO at Fulton Financial

Noninterest income as a percentage of total revenue remained at 21% during the second quarter. Moving to Slide seven. Noninterest expense on an operating basis was $187,600,000 an increase of $4,800,000 linked quarter. As we indicated last quarter, we expected operating expenses to fall in the 190,000,000 to $195,000,000 per quarter range for the remaining three quarters of twenty twenty five. While the second quarter was below that range, we are confirming the range for both the third and fourth quarters of twenty twenty five.

Richard Kraemer
Richard Kraemer
SEVP & CFO at Fulton Financial

When looking at our expense base, items excluded from operating expenses as listed on slide seven include $5,500,000 of core deposit intangible amortization and a $270,000 benefit of other items. Turning to asset quality. Provision expense declined approximately $5,300,000 linked quarter to $8,600,000 As Kurt mentioned, modest loan growth combined with no material changes to our outlook contributed to lower provisioning linked quarter. Our allowance for credit losses to total loans ratio ended the period at 1.57%, and our ACL to non performing loan coverage was 177%. Slide nine shows a snapshot of our capital base.

Richard Kraemer
Richard Kraemer
SEVP & CFO at Fulton Financial

As of June 30, we maintain a solid capital position that provides us with future balance sheet flexibility. During the quarter, we repurchased 522,000 shares at a weighted average price of $16.9 Including repurchases, internal capital generation added $55,000,000 in total equity. AOCI ended the quarter flat at $272,000,000 and our CET1 increased to 11.3%. On Slide 10, we are updating our operating guidance for 2025. Considering more recent events and additional economic data, we have updated our rate forecast to now include 02/25 basis point rate cuts in 2025, one in September and one in December.

Richard Kraemer
Richard Kraemer
SEVP & CFO at Fulton Financial

This is down from four assumed cuts previously. In addition to this macro assumption, we have made the following adjustments to our guidance: increasing net interest income to a range of 1,050,000,000 to $1,025,000,000 We are lowering provision expense to a range of $50,000,000 to $70,000,000 There is no change to the fee income range remaining at $265,000,000 to $280,000,000 We are lowering our operating expense to a range of $750,000,000 to $765,000,000 We are increasing our effective tax rate to a range of 18.5% to 19.5%. And lastly, lowering our estimate of nonoperating expenses from $14,000,000 to $10,000,000 And with that, we'll now turn the call over to our operator, Gigi, to open up for questions.

Operator

Thank you. Our first question comes from the line of Daniel Tamayo from Raymond James.

Daniel Tamayo
Daniel Tamayo
Vice President at Raymond James Financial

Thank you. Good morning, everyone.

Richard Kraemer
Richard Kraemer
SEVP & CFO at Fulton Financial

Good morning, Daniel.

Daniel Tamayo
Daniel Tamayo
Vice President at Raymond James Financial

Maybe just starting on expense guidance. You had a nice quarter, and you talked about kind of keeping the back half in that 190,000,000 to 195,000,000 range. And you lowered the overall $2,025,000,000 range as well. But I guess just curious how you see the pace in the back half of the year getting there. It's been a you had the kind of a steep decline in the first quarter and then there's been a little bit of a ramp since then implied in the back half of the year as well.

Daniel Tamayo
Daniel Tamayo
Vice President at Raymond James Financial

So just curious kind of if there was if there's like some help you can give us on geography and timing of the increase in the expenses in the back half.

Richard Kraemer
Richard Kraemer
SEVP & CFO at Fulton Financial

Yeah. Thanks, Danny. Look, I think you're right. All else equal, I think the range of 190 and 195 should land below the midpoint of that. A little bit of timing just on day count alone, obviously additional day, but recognize the magnitude of increase in 2Q had a lot to do with merit in the second quarter, which accounted for a couple of million dollars of the increase.

Richard Kraemer
Richard Kraemer
SEVP & CFO at Fulton Financial

So you don't have that kind of step up in 3Q and 4Q. I think what we're trying to do is provide a little bit of optionality for some initiatives that may start in the second half, so which could increase a little bit. But I don't expect geographically, I guess, on the expense line to see any major outlier moves for the second half.

Daniel Tamayo
Daniel Tamayo
Vice President at Raymond James Financial

Okay. So if you end up kind of below that midpoint, then that points us to, I guess, below the midpoint of the overall range for the year. Is that a fair way to think about it?

Richard Kraemer
Richard Kraemer
SEVP & CFO at Fulton Financial

That's a fair way to think about it. With the caveat of there are obviously, we're leaving ourselves a little room to start certain projects in the second half, which could incur cost more immediately and and move that up a little higher.

Daniel Tamayo
Daniel Tamayo
Vice President at Raymond James Financial

Okay. Alright. Fair enough. Appreciate that color. And then kind of a similar question on on the fee income guidance.

Daniel Tamayo
Daniel Tamayo
Vice President at Raymond James Financial

You know, just assuming kind of a modest pace of increase in the back half gets us to kind of above the midpoint of of the guidance that that you guys have in there. Yeah. It's been a certainly a nice quarter, a nice year of growth on the wealth management side. But just wanna make sure, you know, as we're working our way through the models that we're not missing any kind of, you know, onetime increases that you think may back off. You know, cash management looks like it was pretty strong in the second quarter.

Daniel Tamayo
Daniel Tamayo
Vice President at Raymond James Financial

Card income bounced back. But just as we look through the fee income side, if there's anything that you'd point us towards in terms of moving parts in the back half of the year?

Curtis Myers
Curtis Myers
CEO & Chairman at Fulton Financial

Yes, Danny, the second quarter was good across the board, as you mentioned, in fee income. As we look forward, we feel we have good strategies in place. As we look forward, if we get that kind of consistent outperformance in each category, we're going to trend to the top end of that range. If we hit any headwinds in any one of those business units, we would trend to the midpoint or low end of the range. We feel pretty good about the overall outlook there.

Curtis Myers
Curtis Myers
CEO & Chairman at Fulton Financial

And again, that's one of the outlook items that we did not change. So we think we are tracking tracking as expected and are pretty happy about the quarter and the consistent performance in each of the fee income categories.

Daniel Tamayo
Daniel Tamayo
Vice President at Raymond James Financial

Great. Alright. Well, thanks for all the color. Appreciate it, guys. You bet.

Operator

Thank you. One moment for our next question. Our next question comes from the line of David Bishop from Hovde Group.

David Bishop
David Bishop
Director - Research Department at Hovde Group

Yeah. Good morning, gentlemen.

Richard Kraemer
Richard Kraemer
SEVP & CFO at Fulton Financial

Good morning, David.

David Bishop
David Bishop
Director - Research Department at Hovde Group

Hey. I was just curious, for Rick, maybe, just to bring us up to speed on the the status of the the loan pipeline. Just curious what you're seeing and hearing from your relationship managers and your commercial clients if we're starting to see any impact from some of the uncertainty from tariff talks starting to impact pipeline and loan demand. Thanks.

Curtis Myers
Curtis Myers
CEO & Chairman at Fulton Financial

Yeah. Pipeline linked quarter is up. So we we feel that that's encouraging in this environment. But again, we still have the pull through rate being below historical norms as customers are cautious about new projects. The more certainty we get in the marketplace, whether it's taxes or tariffs or all of the many things that you could point to, We're hoping that that pull through rate increases and we get some tailwinds for loan growth linked quarter.

Curtis Myers
Curtis Myers
CEO & Chairman at Fulton Financial

We were pleased with our loan growth in the second quarter and we're hoping that continues. But pipelines are up, and we're really monitoring pull through rates. It really comes down to customers deciding to spend that money and move forward with that project.

David Bishop
David Bishop
Director - Research Department at Hovde Group

Got it. And then a follow-up. Kurt, maybe just remind us appetite for M and A here with Republic in the rearview mirror. Just curious where any sort of M and A focus might be sort of geographically and maybe size parameters.

Curtis Myers
Curtis Myers
CEO & Chairman at Fulton Financial

Yes. So our M and A strategy remains the same. We will stick to that strategy. As a reminder, we look at community banks in the 1,000,000,000 to $5,000,000,000 range. Are really the focal point for our strategy.

Curtis Myers
Curtis Myers
CEO & Chairman at Fulton Financial

They add to the company. We're predominantly focused on in market, and we think those opportunities would be additive. And then we would look at bigger deals, but they're very you know, there's few few of them, so we we monitor that. But our our primary focus remains the same. I think the key message is, as usual, we will be disciplined in metrics, and we'll be disciplined on strategy.

David Bishop
David Bishop
Director - Research Department at Hovde Group

Perfect. Thanks.

Operator

Thank you. One moment for our next question. Our next question comes from the line of David Conrad from KBW.

David Konrad
Managing Director at Keefe, Bruyette & Woods (KBW)

Hi, good morning. Good

Curtis Myers
Curtis Myers
CEO & Chairman at Fulton Financial

morning, David.

David Konrad
Managing Director at Keefe, Bruyette & Woods (KBW)

Just wanted to talk a little bit about the deposits and the outlook there. This quarter, you saw about three bps increase in savings, but really good growth and able to push down really expensive brokered deposits. So just wondering as you kind of look at the NIM outlook, kind of your ability to continue to remix the deposits.

Richard Kraemer
Richard Kraemer
SEVP & CFO at Fulton Financial

Yes. Thanks, David. I think there's a couple of things to consider when it comes to the cost. Obviously, we do have some seasonality in our portfolio driven by the municipal kind of inflows and outflows. And at times to offset that, we do utilize some more wholesale methods and more costly methods in short term.

Richard Kraemer
Richard Kraemer
SEVP & CFO at Fulton Financial

So that obviously has a mitigating effect on lower cost. I think we still kind of there's still as rates stay higher, this drift that is occurring in non interest bearing. So that's a trend on mix you're kind of consistently fighting. But we are seeing, I think, competition across the board for deposits more recently. And candidly, our desire is to fund all of our future loan growth with customer deposits.

Richard Kraemer
Richard Kraemer
SEVP & CFO at Fulton Financial

So that may amplify a little bit. So our betas are slowing. I don't it may be too early to say there's a trough in deposit cost, but I think we're closer to the bottom, barring any future rate cuts.

David Konrad
Managing Director at Keefe, Bruyette & Woods (KBW)

Got it. Thanks. And then on the NII guide, I guess it feels like if you held things flat here for a couple of quarters, you'd be kind of the midpoint above the midpoint and towards the higher end. So just maybe some comments on the exit rate of this year. And I think you have two cuts in, the December cut probably doesn't matter too much.

David Konrad
Managing Director at Keefe, Bruyette & Woods (KBW)

So maybe just some thoughts on the exit rate of NII.

Richard Kraemer
Richard Kraemer
SEVP & CFO at Fulton Financial

Yeah. Look, I think obviously, what I just mentioned on the funding side is a little bit of a headwind. I think we fully recognize the tailwind from the fixed rate asset repricing. What I would say there is though, there are also competitive pressures that ebb and flow at any given time, which can impact yields and spreads. It's a tough business and spreads are not always expanding.

Richard Kraemer
Richard Kraemer
SEVP & CFO at Fulton Financial

So I think you'll see a natural assuming no Fed moves, see this kind of steady state modest growth in NII from here on out. But obviously, there's lots of things from the macro that can change that.

David Konrad
Managing Director at Keefe, Bruyette & Woods (KBW)

Okay. Thank you.

Operator

Thank you. One moment for our next question. Our next question comes from the line of Matthew Breese from Stephens Inc.

Matthew Breese
Matthew Breese
Managing Director at Stephens Inc

Good morning.

David Bishop
David Bishop
Director - Research Department at Hovde Group

Hi, Matt.

Matthew Breese
Matthew Breese
Managing Director at Stephens Inc

I was hoping we could go back to the pipeline for just a second, you know, maybe discuss, you know, the components. More recently, we've seen growth in the form of commercial real estate and resi. And, historically, I know, you know, Fulton has has been more of a c and I focused type bank. So I wanted to get a sense for what we might see in terms of near term loan growth. And then secondly, you know, Rick, you had mentioned spreads are not always constant.

Matthew Breese
Matthew Breese
Managing Director at Stephens Inc

What are you seeing for for new loan spreads? Are you seeing competition kind of erode spreads in the hunt for growth?

Curtis Myers
Curtis Myers
CEO & Chairman at Fulton Financial

Matt, I'll first respond just on growth and strategy. We're very committed to diversified loan book. I think it served us well over time. So we're looking to grow each category as appropriate from a risk standpoint. Quarter to quarter that ebbs and flows based on where loan originations are and opportunities are.

Curtis Myers
Curtis Myers
CEO & Chairman at Fulton Financial

You mentioned C and I loan growth. We are focused on C and I loan growth. We it's a good business for us in Drive to Treasury and a lot of our other business lines. So strategically C and I is really important. C and I customers, it's very competitive right now and it also is where they're dealing most with tariffs and costs and uncertainty.

Curtis Myers
Curtis Myers
CEO & Chairman at Fulton Financial

We're looking at each segment, trying to grow that prudently and responsibly. And we think we have opportunities in each. We have market disruption. We've got good pipelines. So I think we can grow each category, but you're really you're gonna see quarter to quarter, maybe even year to year, our ability to grow certain segments more than others.

Curtis Myers
Curtis Myers
CEO & Chairman at Fulton Financial

But again, the strategic focus is to grow each segment appropriately. Maybe Matt, I'll comment quickly on spreads.

Richard Kraemer
Richard Kraemer
SEVP & CFO at Fulton Financial

I think, what I would say is spreads are still healthy and overall yields are still healthy. But when we go back maybe to the third, fourth quarter of last year, you probably were seeing new origination spreads and we were in the seven plus. And so over time, that was probably unsustainable certain categories. So you're seeing, I think quarter over quarter compression on new origination yields of around an eighth to a quarter depending on what portfolios you're looking at. Now that that is a little bit choppy, and this is probably more normalized, but, you know, recognizing that just industry pressure and competitive pressure puts overall pressure on that for everybody.

Matthew Breese
Matthew Breese
Managing Director at Stephens Inc

Got it.

Matthew Breese
Matthew Breese
Managing Director at Stephens Inc

Okay. And and, Rick, you'd also mentioned, and it's in the release too, but accretable yield step down. Should we use this 11,400,000.0 as a new starting point? And and maybe you could just help us out for the new trend. Is it, you know, down into the right?

Matthew Breese
Matthew Breese
Managing Director at Stephens Inc

What does the accretable yield look like, you know, three, four quarters from now?

Richard Kraemer
Richard Kraemer
SEVP & CFO at Fulton Financial

Yeah. I think 11,000,000 to $12,000,000 is a reasonable range assuming some level of prepayments. Obviously, we are there is an estimate there in terms of prepayment speeds. If you had no prepayments, that number would be closer to 10,500,000.0 to high $10,000,000

Matthew Breese
Matthew Breese
Managing Director at Stephens Inc

And then last one for me. You bought back some stock this quarter. You still have, I think, around 100,000,000 $125,000,000 repurchase authorization. I I noticed that that authorization also includes preferred and sub debt. You've mentioned sub debt is now floating or a portion is now floating.

Matthew Breese
Matthew Breese
Managing Director at Stephens Inc

Curious if there's an appetite, one, for additional common repurchases or alternative forms of capital repurchase, that sub debt. What circumstances would you kind of execute on those?

Curtis Myers
Curtis Myers
CEO & Chairman at Fulton Financial

Yeah. So the overall capital planning strategy is the same. We wanna support organic growth. You know, we'd really like organic growth to continue to to the growth rates continue to improve. So that's always the, you know, first use capital.

Curtis Myers
Curtis Myers
CEO & Chairman at Fulton Financial

And then any corporate initiatives that we would want to invest in and then we would get to buybacks. And we look at those opportunistically. We had some opportunity in the second quarter. We used about $10,000,000 of that. So we have $115,000,000 remaining for stock buybacks or for other uses.

Curtis Myers
Curtis Myers
CEO & Chairman at Fulton Financial

So we are evaluating that. As we move forward, it really depends on outlook and overall capital and balance sheet strategy.

Matthew Breese
Matthew Breese
Managing Director at Stephens Inc

Great. That's all I had. Thanks for taking my questions.

Richard Kraemer
Richard Kraemer
SEVP & CFO at Fulton Financial

Thanks, Mitch.

Operator

Thank you. One moment for our next question. Our next question comes from the line of Manuel Navas from D. A. Davidson.

Manuel Navas
Manuel Navas
MD & Senior Research Analyst at D.A. Davidson

Hey. How would you describe, like, kind of the consumer pipelines? That was pretty strong this quarter. Is that still going to have some seasonality or kind of carry over to the third quarter? And with the pipelines building on commercial, are you going to kind of see a handoff in better growth there in the back half of the year? Just kind of talk about those dynamics, please.

Curtis Myers
Curtis Myers
CEO & Chairman at Fulton Financial

Yes. So there's definitely some seasonal effect on the consumer business. The second quarter is good. Home buying opportunity projects consumer projects for the driving the home equity, we referenced both of those categories growing nicely in the second quarter. So there is some seasonality to the business, but all of those underlying businesses were focused on attracting customers, adding new customers and driving business organically.

Curtis Myers
Curtis Myers
CEO & Chairman at Fulton Financial

So I think there's base level of growth in each of those businesses. And then it'll be either more significant or lower quarter to quarter based on seasonality. We really didn't see anything specific in the second quarter that would be an anomaly. That was a good solid second quarter consumer growth.

Manuel Navas
Manuel Navas
MD & Senior Research Analyst at D.A. Davidson

Is, kind of shifting over, to pretty strong performance in fees and OpEx. Could you kind of map out if any of that outperformance has been kind of driven by the Fulton First initiative?

Curtis Myers
Curtis Myers
CEO & Chairman at Fulton Financial

On the fee side, we talked about a little bit before. It was a good quarter for us. We grew in each category. You know, we we feel we have just good underlying strategies there. There there are some Fulton First initiatives that, you know, we're focused on accelerating growth over over time. It's hard to separate those from from core business. But, you know, as we move forward, the the the growth related initiatives for First will show up in in accelerating growth rates in certain categories.

Curtis Myers
Curtis Myers
CEO & Chairman at Fulton Financial

There's really not anything specific, Fulton First, to that that growth rate that we would call out. It's just really managing those businesses in a way that our long term growth trajectory is is higher than expected.

Manuel Navas
Manuel Navas
MD & Senior Research Analyst at D.A. Davidson

On the expense side?

Richard Kraemer
Richard Kraemer
SEVP & CFO at Fulton Financial

Yeah. On the expense side, there's about you know, but we're about 8 and a half million dollars in net realized benefit from Fulton First in February. So, you know, still still remain well on track, obviously, just annualizing that number, well ahead of our original $25,000,000 net save for 2025. So, you know, I don't I don't I wouldn't necessarily say that the program in total has grown. I think a lot of that is just getting pulled forward in 2025 versus '26.

Manuel Navas
Manuel Navas
MD & Senior Research Analyst at D.A. Davidson

That's helpful. Any you you talked about credit trends being very solid. There was a little bit of tick up in NPLs, I think, in construction. Any color there? Just kind of and any broader comments on credit.

Curtis Myers
Curtis Myers
CEO & Chairman at Fulton Financial

Yeah. Most of that increase in commercial construction, most of that was one project. It's a mixed use project, predominantly multifamily, but mixed use project. We feel we have an appropriate reserve. It's an identified issue that we've been working on.

Curtis Myers
Curtis Myers
CEO & Chairman at Fulton Financial

So we already have a reserve for and are working towards resolution. But what you see there is just that migration from classified criticized to to non accrual for the quarter. So it's an identified issue we're we're working through to resolution. And then the second part of your question, just more broadly in credit. You know, metrics have have remained stable.

Curtis Myers
Curtis Myers
CEO & Chairman at Fulton Financial

We feel good about the credit performance, but we remain cautious. There's just a lot of moving parts in the marketplace, a lot of factors that consumers and businesses are dealing with. But at this point, the portfolio has been very resilient and the credit metrics are holding strong, but we still do have a cautious outlook just based on the overall environment.

Manuel Navas
Manuel Navas
MD & Senior Research Analyst at D.A. Davidson

Thank you very much. I appreciate the comments.

Operator

Thank you. At this time, I would now like to turn the conference back over to Curt Myers for closing remarks.

Curtis Myers
Curtis Myers
CEO & Chairman at Fulton Financial

Well, thank you again for joining us today. We hope you'll be able to be with us when we discuss third quarter results in October. Thank you.

Operator

This concludes today's conference call. Thank you for participating. You may now disconnect.

Executives
    • Matthew Jozwiak
      Matthew Jozwiak
      Director - IR & Corporate Development
    • Curtis Myers
      Curtis Myers
      CEO & Chairman
    • Richard Kraemer
      Richard Kraemer
      SEVP & CFO
Analysts
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