FULTON FINANCIAL CORP Q1 FY2024 earnings call

• Operating earnings were $0.40 per share, with deposit and loan growth, net interest margin in line, stable asset quality, and strong capital. Repurchased 1.9 million shares. - Fulton First initiative: Three tenets (simplicity, focus, productivity), progress made, 18-24 month journey. - Credit: Provision for credit losses $10.9 million, criticized/classified loans drifted higher, cautious outlook for 2024.

Loan Growth: Loan growth was $93 million, or 2% annualized. Commercial lending contributed $73 million, with commercial real estate at $124 million (6%) and construction loan growth at $24 million (9%), offset by a $78 million decline in C&I loans. Consumer lending grew $20 million, or 1%. Deposits: Total deposits increased $204 million, with time deposits (maturities <1 year) offsetting $137 million in municipal deposit outflows. Non-interest-bearing DDA balances ended at $5.1 billion, 23.4% of total deposits. Net Interest Margin: 3.32%, down 4 basis points. Loan yields increased to 5.9%, and the cost of total deposits was 195 basis points. Asset Quality: NPLs increased $2.8 million, NPL to loans ratio was 73 basis points, net charge-offs were $8.6 million, and the allowance for credit losses was 1.39% of loans. Non-Interest Income: Wealth management revenue was $20.2 million (record), commercial banking fees $18.8 million (down), consumer banking fees $11.7 million (down), mortgage banking revenue $3.1 million (up), and other income had a $1.6 million loss.

• 2024 net interest income expected $790M-$820M. - Provision for credit losses $45M-$65M. - Non-interest income (excluding security gains) $235M-$250M. - Non-interest expenses $670M-$690M. - Effective tax rate 17%-18%. Assumes 75 basis points Fed funds cuts in second half of 2024.

• Market pricing pressures. - Migration in credit metrics. - Impact of higher rates/costs on customers. - Uncertainties in Fulton First implementation with potential one-time costs.

Q: On the Fulton First initiative, how do expense saves impact the guide and the timeline?

A: Expense saves in the back half, 18-24 month journey, with investment in plan development.

Q: On loan growth and deposit muni outflows, what's the outlook?

A: Loan growth in low end of long-term range, muni outflows $137M with seasonal impact.

Q: NII guidance without rate cuts, what's the impact?

A: Tilt towards high end of range, deposit mix impact.

Q: Office portfolio trends?

A: Stable, diversified, no significant concerns.

Q: CD roll-offs and deposit mix?

A: CD roll-offs $1.9B, weighted avg rate ~440bps, stabilizing impact.

Q: Fulton First revenue enhancements?

A: Focus on growth in high-value areas.

Q: Occupancy expense?

A: Weather related, should moderate.

Q: M&A appetite?

A: Focus on $1B-$5B community banks, strategic partnerships.

Q: Loan growth drivers?

A: Borrower caution, pull-through rate challenge.

Q: Non-interest-bearing mix?

A: Ended at 23.4%, 22% reasonable long-term.

Q: Fulton First one-time costs?

A: Concentrated at front end of 18-24 month project.

Q: Office portfolio largest relationships?

A: Largest ~$30M, no immediate concerns.

Q: Asset disposals and commercial swap activity?

A: 5 branches closing, swap income depends on large originations