Fulton Financial ((FULT)) has held its Q3 earnings call. Read on for the main highlights of the call.
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Fulton Financial’s recent earnings call painted a picture of robust financial health and strategic management, with strong operating results and record revenue setting a positive tone. Despite these achievements, the company acknowledged challenges in loan growth and deposit volatility, which are being addressed through strategic measures.
Strong Operating Results
Fulton Financial reported operating earnings of $101.3 million, or $0.55 per share, showcasing strong profitability and positive operating leverage. The efficiency ratio improved to 56.5%, with an operating return on assets (ROA) of 1.29% and an operating return on tangible common equity (ROTCE) of 15.79%, highlighting the company’s effective cost management and profitability.
Record Revenue
The company achieved an all-time high in quarterly revenue, driven by a robust net interest margin and significant contributions from non-interest income. This record revenue underscores Fulton’s ability to generate income from diverse sources, bolstering its financial position.
Positive Credit Trends
Fulton Financial reported improvements in non-performing loans and charge-offs, alongside a stable allowance ratio. The coverage of non-performing loans by the allowance for credit losses (ACL) increased to 189%, reflecting prudent credit risk management.
Share Repurchase
The company repurchased 1,650,000 shares at a weighted average cost of $18.67 per share, contributing to an 18% growth in tangible book value per share on a linked quarter annualized basis. This move demonstrates Fulton’s commitment to enhancing shareholder value.
Deposit Growth
Deposits grew by $194 million, primarily driven by a $387 million increase in demand and savings products, which offset declines in brokered and time deposits. This growth indicates a strong customer base and effective deposit management strategies.
Increased Net Interest Income Guidance
Fulton revised its net interest income guidance for 2025 upwards to a range of $1.025 billion to $1.035 billion, reflecting confidence in its future financial performance and strategic direction.
Loan Growth Challenges
The company faced challenges in loan growth, with total loan balances increasing by only $29 million due to strategic actions. This represents a $600 million headwind to loan balance growth year-to-date, highlighting the need for strategic adjustments.
Municipal Deposit Volatility
Fulton anticipates outflows of municipal balances in the fourth quarter, following a seasonal increase of $450 million. This volatility is consistent with historical trends and is being managed proactively.
Non-Interest Bearing Deposit Decline
Non-interest bearing balances ended the quarter at 19.5% of total deposits, driven by normal corporate customer activity. This decline is part of the company’s ongoing deposit management strategy.
Loan Portfolio Adjustments
Fulton strategically ran off approximately $32 million of indirect auto and $40 million of small ticket equipment finance loans, along with $40 million in note sales and $139 million of C&C loans resolved. These adjustments are part of the company’s efforts to optimize its loan portfolio.
Forward-Looking Guidance
Looking ahead, Fulton Financial updated its 2025 guidance with projections of net interest income between $1.025 billion and $1.035 billion, provision expenses ranging from $45 million to $55 million, and fee income between $270 million and $280 million. The company also anticipates operating expenses between $750 million and $760 million, with an effective tax rate of 19% to 20%.
In summary, Fulton Financial’s earnings call highlighted a strong financial performance with record revenue and positive credit trends. While challenges in loan growth and deposit volatility persist, the company is taking strategic actions to address these issues. The forward-looking guidance reflects confidence in continued financial strength and strategic management.