Q3 2024 Fulton Financial Corp Earnings Call
i
Unknown Executive: Quarter, 2024 results conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session.
Speaker Change: Good day, and thank you for standing by. Welcome to the Fulton Financial at 3rd quarter 2024 Results Conference Call.
Unknown Executive: To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again.
Unknown Executive: Please be advised that today's conference is being recorded.
Matthew Jozwiak: I would now like to hand the conference over to Matt Jozwiak, Director of Investor Relations. Please go ahead.
Curtis Myers: Good morning and thanks for joining our Fulton Financial's conference call and webcasts to discuss our earnings for the third quarter ending September 30th, 2024.
Speaker Change: Good morning, and thank you for joining us for the Financial Conference call and webcast to discuss our earnings for the third quarter ending September 30, 2024. Your host for today's conference call is Kurt Myers, Chairman and Chief Executive Officer.
Curtis Myers: Your host for today's conference call is Kurt Myers, chairman and chief executive officer. Joining for today is Rick Kramer, Chief Financial Officer, designee, and Betsy Chivinski, Interim Chief Financial Officer. Our comments today will refer to the Financial Information and Related Slide Presentation, including with our earnings announcement, which we released yesterday afternoon. These documents can be found on our website at fult.com by clicking on the best relations and then on News. The slides can also be found on the presentations page under the Investor Relations website. On this call, representatives of Fulton may make forward-looking statements with respect to Fulton's financial condition, results of operations, and business.
Speaker Change: Joining her today is Rick Kramer, Chief Financial Officer, Designee and Beth Chivinski, Inter at Chief Financial Officer.
Speaker Change: Our comments today will refer to the financial information and related slide presentation, included with our earnings announcement, which we released yesterday afternoon.
Speaker Change: These documents can be found on our website at f-u-l-t.com by clicking one of the best relations in the non-nids. The slides can also be found on the presentations page under the Investor Relations website.
Speaker Change: On this call, representatives of Poland, may be forward-looking statements with respect to Poland's financial condition, results of operations, and business. These statements are not guarantees of future performance and are subject to risks on certain other factors, and actual results could differ with here.
Curtis J. Myers: These statements are not guarantees of future performance and are subject to risks, uncertainties, and other factors; in actual results could differ materially. Please refer to the state harbor statement on the 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. In discussing Fulton's performance, representatives of Fulton may refer to certain non-GAAP financial measures. Please refer to the supplemental financial information, including with Fulton's earnings announcement, released yesterday, and slides twenty through twenty-six of today's presentation for reconciliation of those non-GAAP financial measures to the most comparable GAAP measures.
Speaker Change: Please refer to the State Carver Statement on the public looking statements in our earnings release, and on slide two of today's presentation, for additional information regarding these risks on certainties and other factors.
Speaker Change: Fulm undertakes no obligation other than as required by law to update or revise any forward-cut constituents.
Speaker Change: in discussing police performance, representatives of full and may refer to certain nine-gap financial measures.
Speaker Change: Please refer to the supplemental financial information included with Fulton's earnings at announcement released yesterday, and slides 2326 of today's presentation for reconciliation of those non-gap financial measures to the most comparable gap measures.
Curtis J. Myers: Now I'd like to turn the call over to your host, Kurt Meyers. Well, thanks, Matt, and good morning, everyone. For today's call, I'll be providing highlights on our performance for the quarter, updates on several key initiatives, and a few overall comments on the company. Then I'll turn the call over to Rick Framer to review our financial results in more detail and step you through our twenty-four guidance. After our prepared remarks, we'd be happy to take any questions you may have.
Speaker Change: Now I'd like to turn the call over to your host, Kurt Myers.
Kurt Myers: Well, thanks Matt, and good morning, everyone, for today's call I'll be providing highlights on our performance for the quarter updates on several key initiatives and a few overall comments on the company. Then I'll turn the call over to Rick Primer to review our financial results in more detail and step you through our 2024 guidance.
Curtis Myers: Let me start by thanking our new Republic teammates, as well as a dedicated Fulton team for an exceptional effort this year. We are delivering for our customers, communities, and for you, our shareholders. Our team's impact is evident in our record-setting results this quarter, and we are making great progress on several key initiatives. We're excited about the strategic steps we're taking, and I'd like to illustrate that by sharing some highlights of the quarter. Operating earnings of fifty cents per deluded share of this quarter was a record for the company. We were especially pleased to see the momentum continuing following a strong second quarter.
Kurt Myers: After our prepare remarks, we'd be happy to take any questions you may have.
Kurt Myers: Let me start by thanking our new Republican teammates, as well as a dedicated full-contain for an exceptional effort this year.
Kurt Myers: We are delivering for our customers, communities and for you our shareholders.
Kurt Myers: Our team's impact is evident in our record setting results this quarter and we are making great progress on several key initiatives. We're excited about the strategic steps we're taking and I'd like to illustrate that by sharing some highlights of the quarter.
Kurt Myers: Operating earnings of 50 cents per diluted share of this quarter was a record for the company.
Kurt Myers: We're especially pleased to see the momentum continuing following a strong second quarter.
Curtis Myers: We saw a loan growth in line with our expectations. Deposit growth exceeded our expectations, driven in part by growth in the Republic Deposit portfolio. Through five months, Republic deposit balances remained comfortably within our original modeling. Our net interest income and net interest margin exceeded our expectations. On a linked quarter basis, the net interest income grew by 16 million, while net interest margin increased six basis points. These increases were attributable to a full quarter impact of the Republic transaction, the benefit of recent balance sheet restructurings, and our organic growth. Non-interest income grew 1.5 million linked quarter when excluding the bargain purchase gain adjustment.
Kurt Myers: We saw a loan growth in line with our expectations, deposit growth exceeded our expectations, driven in part by growth in the Republic Deposit portfolio. Through five months, Republic Deposit balances remain comfortably within our original model.
Kurt Myers: Our net interest income and net interest margin exceeded our expectations.
Kurt Myers: On a linked quarter basis, the net interest income grew by 16 million, while net interest margin increase six basis points.
Kurt Myers: These increases were attributable to a full quarter impact of the Republican transaction, the benefit of recent balance sheet restructurings, and our organic growth.
Kurt Myers: Non-interesting cum grew 1.5 million length quarter when excluding the bargain purchase gain adjustment. Most categories were up-length quarter and non-interesting cum remains a meaningful and stable component of our overall revenue stream.
Curtis Myers: Most categories were up linked quarter, and non-interest income remained a meaningful and stable component of our overall revenue stream. Operating non-interest expense increased 1.3 million, or 2.7%, on an annualized basis. This increase includes a full quarter of Republic expenses offset by a decline in Fulton organic expenses. Provision expense declined to 11.9 million and was relatively in line with recent quarters. As a result, operating net income grew 9 million to 91.3 million. During the quarter, as part of the Republic integration and the Fulton First initiative, we consolidated 16 financial centers, which exceeded our original estimate. Additionally, as part of Fulton First, we announced several leadership appointments within commercial banking, business banking, credit, and market leadership.
Kurt Myers: Operating non-interest expense increased 1.3 million or 2.7% on an annualized basis.
Kurt Myers: This increase includes a full quarter of Republican expenses, offset by decline in both in organic expenses.
Kurt Myers: Provision expense declined to $11.9 million and was relatively in line with recent quarters.
Kurt Myers: As a result, operating net income grew 9 million to 91.3 million.
Kurt Myers: During the quarter, as part of the Republic Integration and the Fulton First Initiative, we consolidated 16 financial centers which exceeded our original estimate.
Kurt Myers: Additionally, as part of Fulton First, we announce several leadership appointments within commercial banking, business banking, credit, and market leadership. These appointments have been increased focused to core areas of our business and positions us for continued growth.
Curtis J. Myers: These appointments being increased focus to core areas of our business and positions us for continued growth. Our performance allowed us to increase our already healthy capital levels, grow our tangible book value, reinvest in our business, and deliver strong results for our shareholders. Overall, another strong quarter for our company.
Kurt Myers: Our performance allowed us to increase our already healthy capital levels, grow our tangible book value, reinvest in our business, and deliver strong results for our shareholders.
Curtis Myers: Now, let me provide a bit more detail on our growth. Third quarter deposit growth was 745 million or 12% annualized when excluding 153 million planned reduction in broker deposits. We delivered growth in both the legacy Republic deposit portfolio as well as growth in the Fulton portfolio. This growth was further enhanced via seasonal inflow of municipal deposits. As always, we remained focused on customer retention and customer growth. Loan growth for the quarter was 70 million, or 1% annualized, slightly below recent periods. As part of our Fulton First initiative, we evaluated and exited our indirect auto lending channel during the quarter as we're focused on higher margin and relational products.
Kurt Myers: Overall, another strong quarter for our company.
Kurt Myers: Now, let me provide a bit more detail on our growth, third quarter deposit growth was 745 million or 12% annualized when excluding 153 million planned reduction in broker deposits.
Kurt Myers: We deliver growth in both the legacy of republic deposit portfolio, as well as growth in the republic deposit portfolio.
Kurt Myers: This growth was further enhanced by our seasonal influence of municipal deposits.
Kurt Myers: As always, we remain focused on customer retention and customer growth.
Kurt Myers: Lone growth for the quarter was 70 million or 1% annualized, slightly below recent periods. As part of our full and first initiative, we evaluated and exited our indirect auto lending channel during the quarter, as we're focused on higher margin and relational products.
Curtis Myers: Our loan-to-deposit ratio ended the quarter at 92.4%, with low or long-term operating target of 95 to 105%. We continue to feel as appropriate in this environment to operate below our long-term targets.
Kurt Myers: Our loan to deposit ratio ended the quarter at 92.4%, but although our long-term operating target of 95-105%.
Kurt Myers: We continue to feel it as appropriate in this environment to operate below our long-term targets.
Curtis Myers: Now, let me provide some comments on credit. Next charge offs of 11 million or 18 basis points was stable on a length quarter basis, non-performing loans increased 30 million, or 12 basis points to 0.84% of total loans. This increase was due to a mix of borrowers, geographies, and loan types, and not concentrated in any one portfolio or industry. Certain customers continue to struggle in this higher interest rate and higher cost environment.
Kurt Myers: Now, let me provide some comments on credit. Next charge off of 11 million or 18 basis points with stable on a length quarter basis, non-performing loans increased 30 million or 12 basis points to 0.84% of total loans.
Kurt Myers: This increase was due to a mix of borrowers, geographies and loan types and not concentrated in any one portfolio or industry.
Kurt Myers: Certain customers continue to struggle in this higher interest rate and higher cost environment.
Curtis J. Myers: Department. We continue to be diligent on our credit monitoring and are managing the portfolio closely.
Kurt Myers: We continue to be diligent on our credit monitoring and remanaging the portfolio closely.
Curtis Myers: Now moving forward, I will provide updates on two key corporate initiatives. First, we are focused on the timely and effective integration of the Republic transaction. We accomplish a lot in a short amount of time and anticipate systems conversion in the fourth quarter. This will be the last major milestone of the integration process. We expect to have all material integration benefits implemented by your end, and we remain confident in our 40% cost savings estimate. Next, let me turn to Fulton First. Fulton First is a transformational change to how we operate. Accordingly, implementation requires a thoughtful and paste approached over time.
Kurt Myers: Now moving forward, I will provide updates on two key corporate initiatives.
Kurt Myers: First, we're focused on the timely and effective integration of the Republic Transaction.
Kurt Myers: We accomplished a lot in a short amount of time and anticipate systems conversion in the fourth quarter. This will be the last major milestone of the integration process.
Kurt Myers: We expect to have all material integration benefits implemented by your end and we remain confident in our 40% cost savings estimate.
Kurt Myers: Next, let me turn to Fulton first.
Kurt Myers: Fulton First is a transformational change to how we operate.
Curtis Myers: We're encouraged by early results and optimistic about the impact to our growth and to our efficiency over the short and long term. It's important to reinforce a few key themes that drive this initiative. This is a critical step in our journey to be the bank of choice for not only who we are, but also how we operate. This initiative deepens our commitment to our purpose, our vision, and our strategic execution by simplifying our operating model, focusing on core relationships, and improving productivity across the bank. During the quarter, we've made progress towards implementation of this strategic Fulton First initiative.
Kurt Myers: Accordantly, implementation requires a thoughtful and past approach to over time, wearing courage by early results and optimistic about the impact to our growth and to our efficiency over the short and long term.
Kurt Myers: It's important to reinforce a few key themes that drive this initiative.
Kurt Myers: This is a critical step in our journey to be the bank of choice for not only who we are, but also how we operate. This initiative deepens our commitment to our purpose, our vision and our strategic execution by simplifying our operating model.
Kurt Myers: focusing on core relationships and improving productivity across the bank.
Kurt Myers: During the quarter, we've made progress towards implementation of this strategic foot and first initiative.
Curtis Myers: We've created one credit organization to streamline underwriting processes and deliver prudent and faster credit decision, which will provide a platform to support long term growth as well as deliver near term efficiency. We've re-aligned our commercial segments to focus our talented team with specific customer segments to drive customer value and growth at an even faster pace. We further invested in our business banking segment. We have over 65,000 business banking customers and a market opportunity of more than 1.5 million. With enhanced focus, we will attract, serve and grow even faster in this highly attractive segment. These actions will position us to accelerate our growth and improve how we operate.
Kurt Myers: We've created one credit organization to streamline underwriting processes and deliver prudent and faster credit decision, which will provide a platform to support long-term growth as well as deliver near-term efficiency.
Kurt Myers: We've re-aligned our commercial segments to focus our talented team with specific customer segments to drive customer value and growth at an even faster pace.
Kurt Myers: We further invested in our business banking segment, we have over 65,000 business banking customers and a market opportunity of more than 1.5 million.
Kurt Myers: With enhanced focus, we will track, serve, and grow even faster in this highly attractive segment.
Kurt Myers: These actions will position us to accelerate our growth and improve how we operate.
Curtis J. Myers: Overall, we are making progress on all strategic initiatives, and we are pleased with our results year to date.
Kurt Myers: Overall, we are making progress on all strategic initiatives and we are pleased with our results, you're the date.
Curtis J. Myers: Before I turn the call over to Rick to discuss our financial performance and 2024 guidance in more detail, I'd like to say a special thank you to Betsy Chappinsky. Betsy served in many roles with the organization for over 30 years, most recently as Interim CFL. Thank you, Betsy, for your dedicated service to our company, your commitment to this organization, and the positive impact that you have made.
Kurt Myers: Before I turn the caller over to Rick to discuss our financial performance and 2024 guidance in more detail, I'd like to say a special thank you to Beth Chivinski.
Kurt Myers: Betsy Served in many roles with the organization for over 30 years.
Kurt Myers: Most recently, as interim CFO.
Kurt Myers: Thank you, Betsy, for your dedicated service to our company, your commitment to this organization and the positive impact that you have made.
Richard Kraemer: Now I'll turn things over to Rick for more details on our financial results. Thank you, Kurt, and good morning. Unless I note otherwise, the quarterly comparisons I discuss are with the second quarter of 2024. Loan and deposit growth numbers I will be referencing are annualized percentages I linked quarter basis. Starting on slide five, operating earnings per share, diluted what's 50 cents. S, or 91.3 million of operating net income available to common shareholders. This compares to 47 cents of operating EPS in the prior quarter. As Kurt noted, loan growth was modest during the quarter, growing 70 million, or 1%.
Kurt Myers: Now I'll turn things over to Rick for more details on our funding at your results.
Rick: Thank you, Kurt, and good morning. Unless I note otherwise, the quarterly comparisons I discuss are with the second quarter of 2024. Loan and deposit growth numbers, I will be referencing our annualized percentages on a linked quarter basis.
Rick: Starting on slide five, operating earnings per share, diluted with 50 cents.
Rick: or 91.3 million of operating net income available to common shareholders.
Rick: This compares to 47th sense of operating EPS in the prior quarter.
Rick: As Kurt knew it, Lone Growth was modest during the quarter, growing 70 million or 1%.
Richard Kraemer: Loan growth was split between commercial and consumer lending, with 29 million and 41 million, respectively. On the consumer side, we saw 41 million runoff in our indirect auto portfolio. We expect this portfolio runoff to moderate consumer loan growth slightly going forward. This portfolio was 403 million at September 30, with an average duration of approximately 2.5 years. Whole deposits increased 592 million or 9% length quarter. Growth in time deposits, money market products, and interest bearing demand accounts offset the clients in non-interest bearing products and broker deposits. Our non-interest bearing DDA balances ended the quarter at 5.5 billion or 21% of total deposits.
Rick: Long growth is split between commercial and consumer lending with 29 million and 41 million respectively.
Rick: On the consumer side, we saw 41 million run-offs in our indirect auto portfolio.
Rick: We expect this portfolio runoff to moderate consumer loan growth slightly going forward.
Rick: This portfolio was 430 million at September 30 with an average duration of approximately 2.5 years.
Rick: told the progress increase 592 million or 9% linked quarter.
Rick: Gross in time deposits, money market products, and interspereying demand accounts. Offset the quines in non-interspereying products and broker deposits.
Rick: Our non-interest bearing DDA balances into the quarter at 5.5 billion or 21% of total positive.
Richard Kraemer: Our NII guidance for 2024 assumes we will continue to see migration from non-interest-bearing deposits into interest-bearing products, but adding moderating pace. On balance sheet, liquidity increased to 18.9% of assets and included an increase in cash and securities of 406 million.
Rick: Our NI-I guidance for 2024 assumes we will continue to see migration from non-insurced bearing deposits into ingest bearing products, but adding moderating pace.
Rick: On balance sheet liquidity increased to 18.9% of assets and included it increased in cash and securities of 46 million.
Richard Kraemer: The impact of these positive balance sheet trends are shown on Flat Six. Net interest income was 258 million. A $16 million increased length quarter, while net interest margin increased by six basis points to 3.49%. These increases were primarily driven by the full quarter effect of the public transaction, the second quarter investment portfolio restructuring, and the previously mentioned balance sheet growth. Loan yields increased eight basis point point quarter growing to 6.2%. Included in the loan yield is 13.7 million of accretion attributable to the interest rate marks on the acquired loan portfolio. Additionally, the non-PCB discount accretion was approximately 815,000 during the quarter.
Rick: The impact of these positive-valenciate trends are shown in Black Sitz.
Rick: Net interest income was $258 million, a $15 million increase went quarter, while net interest margin increased by six basis points to 3.49 percent.
Rick: These increases for primarily driven by the full quarter effect of the public transaction, the second quarter investment portfolio restructuring, and the previously mentioned balance sheet growth.
Rick: Longnials increase 8 basis points when quarter, growing to 6.2%.
Rick: Included in the loan yield is 13.7 million of accretion attributable to the interest rate marks on the acquired loan court bullet. Additionally, the non-PCD discount accretion was approximately 815,000 during the quarter. However, is excluded from our operating earnings calculation.
Richard Kraemer: However, it is excluded from our operating earnings calculation. Actual interest rates discount accretion will be driven by the pace and magnitude of paydown, payoffs, prepayments, and other decreases in acquired balances. Our cost of total deposits increased 10 basis points to 2.24% quarter, primarily due to strong growth in interest bearing categories. Given the robust funding profile combined with the declining market rates, we expect greater flexibility around funding costs in future quarters. In anticipation and as a result of the Fed easing of 50 basis points in late September, we weren't prepared to manage the positive cost prudently on key products.
Rick: Actual interest rates discount accretion will be driven by the pace and magnitude of pay-down, pay-offs, pre-payments, and other decreases in acquired balances.
Rick: Our cost of total deposit increased 10 basis points to 2.24% in quarter.
Rick: primarily due to strong growth in the interest-bearing categories.
Rick: Given the robust funding profile combined with the quining market rates, we expect greater flexibility around funding costs in future quarters.
Rick: and Beth Chivinski.
Rick: An anticipation and as a result of the feds easing of 50-based points in late September.
Richard Kraemer: Post-bed announcement, we began lowering pricing on our more rate-sensitive products. We will continue to actively manage our deposit costs.
Rick: We were prepared to manage the public called prudently on key products.
Rick: Post that announcement, we begin lowering pricing on our more rate sensitive products.
Richard Kraemer: Turning to non-interesting income on slide seven, non-interesting income for the quarter was $59.7 million. This included a fair value adjustment to the bargain purchase gain, attributable to the Republic transaction. The original estimate of the bargain purchase gain recorded in 2Q24 remains subject to potential revaluation for up to 12 months post-close the transaction, excluding this adjustment being come strong for the quarter, increasing 1.5 million from the second quarter. Wealth management revenues of 21.6 million increased 606,000 in quarter, primarily due to increases in market value of assets under management. Wealth management AUM equals approximately $16 billion at quarter end and represents a new record high for the company.
Rick: We will continue to actively manage our deposit cost.
Speaker Change: Turning to non-interesting come on slide 7, not just income for the quarter with 59.7 million. This included a fair value adjustment to the bargain purchase game attributable to the Republic Transaction.
Speaker Change: The original estimate of the bargain purchase gain recorded in 2Q24 remains subject to potential re-daluations for up to 12 months post-closed the transaction.
Speaker Change: Excluding this adjustment, being come strong for the quarter, increasing 1.5 million from the second quarter.
Speaker Change: Both management revenue is a 21.6 million increase, 660,000 when quarter primarily due to increases at market value of assets under management.
Speaker Change: Well-Smanagement AUM equals approximately $16 billion at quarter-end and represents a new record high for the company.
Richard Kraemer: Commercial banking fees increase 879,000, driven mostly by an increase in commercial customer swap income. All other commercial categories were relatively in line with the past quarter. Consumer banking fees increase modestly to 14.9 million and are largely transaction-based income items. Mortgage banking revenues declined 809,000 based on a combination of lower volumes and spreads. Moving to slide 8, non-intersects spent on an operating basis was 196.2 million, an increase of 1.3 million linked quarter. We are beginning to see the cost-aid realization of the Republic transaction and early efficiency benefits from Fulton first. As noted on slide 8, linked quarter organic Fulton operating expense declined $4.6 million.
Speaker Change: Commercial banking fees increase 879,000, driven mostly by an increase in commercial customer swap income.
Speaker Change: All other commercial categories were relatively in line with the past quarter.
Speaker Change: Consumer Banking Feeds increase modestly to 14.9 million and our largely transaction-based income items.
Speaker Change: Morgan's Banking Revenue declined 809,000 based on a combination of lower volumes and spreads.
Speaker Change: Moving to slide 8, non-interest expense on an operating basis was 196.2 million and increased of 1.3 million length quarter.
Speaker Change: We are beginning to see the cost of realization of the Republic Transaction and early efficiency benefits from potent first.
Speaker Change: As noted on Flight 8, Link's Quarter Organic Foulton operating expense declined $4.6 million.
Richard Kraemer: Republic cost-aids remain on track, looking down approximately 20% based on our started point. We expect the remainder of cost-aidings related to Republic transaction to be fully realized beginning in January of 2025.
Speaker Change: Republic Costas remain on track, looking down approximately 20% based on our starting point. We expect the remainder of cost savings related to the Republic Transaction to be fully realized beginning in January of 2025.
Richard Kraemer: Material items excluded from operating expenses, as listed on slide 8, were charges of 14.2 million of acquisition-related expenses, 9.4 million of Fulton First implementation and asset disposal expense, and 6.3 million of core deposits in tangible amortization. As previously mentioned, non-operating expenses related to both Republic Bank and Fulton First should abate over the next year. Specifically, we expect to achieve our full cost-aid run rate for Republic Bank in January of 2025 and remain confident in our original 40% cost-aid projection.
Speaker Change: Materials items excluded from operating expenses as listed on slide 8 were charges of 14.2 million of acquisition related expenses.
Speaker Change: 9.4 million of Fulton First Implementation and AFTER disposal extends.
Speaker Change: and 6.3 million of core deposit and tangible amortization.
Speaker Change: As previously mentioned, non-operating expenses related to both Republican banks and Fulton 1st should abate over the next year.
Speaker Change: Specifically, we expect to achieve our full cost-save run rate for Republic Bank in January of 2025 and remain confident in our original 40% cost-save projection.
Richard Kraemer: Turning your attention to slide 9, I'd like to walk through some additional information regarding Fulton first. This transformational program, which began over a year ago, was beginning to accelerate. The implementation cost to date of approximately 24 million have been attributable to a combination of consulting costs, real estate disposition, and severance charges. As outlined in the deck, we expect additional charges of approximately 10 million and 4Q24, followed by materially lower implementation costs in 2025. Importantly, we expect to see a fully realized annual recurring cost-aid benefit of more than $50 million. We expect to realize that full amount in 2026.
Speaker Change: Turning your attention to Slide 9, I'd like to walk through some additional information regarding Fulton's first.
Speaker Change: This transformation program, which began over a year ago, was beginning to accelerate.
Speaker Change: The implementation cost to date of approximately 24 million have been attributable to a combination of consulting costs, real estate disposition, and severance charges.
Speaker Change: As outlined in the deck, we expect additional charges of approximately 10 million in 4Q24, followed by materially lower implementation cost in 2025.
Speaker Change: Importantly, we expect to see a fully-realized annual recurring cost-based benefit of more than $50 million. We expect to realize that full amount in 2026.
Richard Kraemer: In the shorter term, we anticipate cost savings of approximately 25 million dollars, realized in 2025. Work noting our 25 million in expected saves in 2025 is net of more than $10 million being reinvested back into the bank for future growth. While we are not providing the official 2025 expense guidance until we close out 2024, we feel comfortable suggesting that total operating expenses for 2025 should remain largely in line with where we finish 2024.
Speaker Change: In the shorter term, we anticipate costizing of approximately $25 million, realized in 2025.
Speaker Change: worth noting our 25 million and expected saves in 2025 is net of more than $10 million being reinvested back into the bank for future growth initiatives.
Speaker Change: While we are not providing official 2025 expense guidance until we close out 2024, we feel comfortable suggesting that total operating expenses for 2025 should remain largely in line with where we finish 2024.
Richard Kraemer: Turning to asset quality, as Kurt mentioned, Netchard also relatively stable at 18 basis points. The non-performing loans, the loans ratio, increased by 12 basis points to 84 basis points at quarter-end. Our coverage ratio is remaining here at historical highs, with our ACL to total loans ratio at 1.56% and ACL to non-performing loans at 186%. While the 11 shows a snapshot of our capital base, as of September 30, we maintain solid cushions over the regulatory minimum, and on a linked quarter basis, most of our ratio is expanded nicely. Additionally, our tangible capital ratio benefit from an OCI reversal of approximately $67 million linked quarter.
Speaker Change: Turning to asset quality. As Kurt mentioned, Netsor Ardons were relatively stable at 18 basis points.
Speaker Change: The non-performing loans, the loans ratio, increased by 12 basis points to 84 basis points at quarter-end.
Speaker Change: Our coverage ratios remain here historical highs with our ACL to total loans ratio at 1.56% and ACL to non-performing loans at 186%.
Speaker Change: Flight 11 shows a snapshot of our capital base as a September 30, we maintain solid cushions over the regulatory minimum and on a linked quarter basis, most of our ratio is expanded nicely.
Speaker Change: Additionally, our tangible capital ratio of benefits from an OCI reversal of approximately $67 million
Richard Kraemer: On flight 12, we are confirming our operating earnings guidance. However, we do note a change in the interest rate forecast. Our guidance now incorporates a 50 basis point decrease in Fed funds in September, and two additional 25 basis point cuts, one in November and one in December. Our 2024 operating guidance remains unchanged as followed. We expect our net interest income on a non-FTE basis to be in the range of 925 to 950 million. However, coming in at the high end of our guidance. We expect our provision for credit losses to be in the range of 40 to 60 million, which excludes the 23 million feeful day one provision in the second quarter.
Speaker Change: On Flight 12, we are confirming our operating earnings guidance, however, we do not change in the integrated forecast.
Speaker Change: Our guidance now incorporates a 50-based appointee priest in Fed Fund in September, and two additional 25-based point cuts, one in November and one in December.
Speaker Change: Our 2024 operating guidance remains unchanged as follows.
Speaker Change: We expect our net interest income on a non-FTE basis to be in the range of 925-950 million. However, coming in at the high end of our guidance.
Speaker Change: We expect our provision for credit losses to be in the range of 40 to 60 million, which excludes the 23 million Seasel Day 1 provision in the second quarter.
Richard Kraemer: We expect our non-interest income excluding security gains and bargain purchase gain to be in the range of 240 to 260 million. We expect non-interest expense on an operating basis to be in the range of 750 to 770 million for the year. As stated in past quarters, this estimate excludes potential non-operate charges we may encourage during the fourth quarter and excludes CDI amortization. And lastly, we expect our effective tax rate to be in the range of 16 to 18% for the year, excluding the impact of the far end purchase.
Speaker Change: We expect our non-interest income, excluding security gains and bargain purchase gain to be in the range of 240 to 260 million.
Speaker Change: We expect non-interest expense on an operating basis to be in the range of 750 to 770 million for the year. At state and past quarters, this estimate excludes potential non-operative charges we may incur during the fourth quarter and excludes CDI amortization.
Speaker Change: and lastly, we expect our effective tax rate to be in the range of 16 to 18% for the year excluding the impact of the foreign purchase.
Unknown Executive: With that, we'll now turn over the call to live for any questions. As a reminder, to ask a question, you'll need to press star 1, 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1, 1 again. Please stand by while we compile the Q&A roster.
Speaker Change: with that. We'll now turn over the call to live for any questions.
Speaker Change: As a reminder, to ask a question, you'll need to press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again.
Speaker Change: Please stand by when we compile the Q&A roster.
Frank Schiraldi: Our first question comes from the line of Frank Sheraldi. Thank you. Good morning. I wonder if you guys could just Rick, I think you said the NRI now is expected at the high end of that range and just wondered if you could. Yeah, so on the long-growth side, we expect to continue to have modest, long-growth as we look forward. Pipelines and originations are consistent, but we are in a low-growth environment. Customers continue to be cautious as we move forward. So we feel good about our organic business, but where we are in this environment in cycle, we expect kind of that low, single-digit loan growth to continue.
Speaker Change: Our first question comes from the line of Frank Sheraldi with Piper Sandler, your line is open.
Speaker Change: Good morning.
Frank Sheraldi: I wonder if you guys could just, Rick, I think you said the NRI now is expected at the high end of that range and just wondered if you could.
Frank Sheraldi: Talk a little bit about that in terms of I guess that driven by the strong quarter and then because I would still think that all of equal additional rate cuts are would be a negative, a slight negative to my I guess they're coming later in the year but could you just you know confirm that maybe just talk about how sensitive you are in terms of asset sensitivity to the first few rate cuts here. [inaudible]
Speaker Change: Sure. Yeah, thanks for the questions. So yeah, we are confirming the guidance range and at the high end. The reason for that, Frank, is really given the early cuts in September . If we look at our sensitivity based on rate shocks, so think about a 25 point rate shock, that would people on an annualized basis, roughly $7,000,000,000 of NII headwind. So, you know, with those cuts on which front loaded, we do anticipate some near-term pressure. That said, I would suggest that our sensitivity has declined dramatically and we're moving closer to neutral. So on a year-to-day basis, we've cut our asses sensitivity by almost 45%.
Speaker Change: and that's driven really by a combination of a couple things. Obviously, a public transaction helped that but then adding to, you know, a little bit of duration on the asset side from investment security portfolio, too. So we've been here today, we're up about 900 million and have continued some of that in early October . So I think if you compare us to about a year ago, far more neutral in comparison, I would also add that
Speaker Change: While very early on, we've seen good reaction and good movement on our deposit cost. So I think we're certainly being diligent there, but the magnitude in the fourth quarter with potentially 100 basis points is so that's some year-term pressure.
Speaker Change: Okay, and then just as a follow up, just had a couple of quick questions on Fulton first. You got the 25 million in expense saves in 2025 and then another 25 million, I guess, beyond that. So is that all expense saves and then is there some revenue enhancements as well that you would expect to pick up there? Is that a smaller number or just want to make sure I understand that part of it? [inaudible]
Kurt Myers: Yeah, Frank's Kurt. So, you were implementing the various strategies and cost-aves over a period of time. So, really, the 25 impact next year is the impact as we implement these throughout the year. So, the things that we've already implemented, having the full year benefit of that, and the new initiative is having a partial year benefit of that. So, that's really the ramp up. We've done the design, phase, and we're working through the implementation at this point, so it's really a timing.
Kurt Myers: of how those cause hit the or saves hit the P&L. And they are all efficiencies and cause saves. We do have revenue targets there. We're working on. We will build that end, the guidance as we move forward. So this is a growth and deficiency initiative and you'll see both of those over time.
Speaker Change: Great, okay, and then just the lastly on that same front, I just want to make sure I heard you're correctly wrecked on them.
Speaker Change: on the expense outlook. I mean, you know, not specific guide, but you talked about, and you talked about in the deck about expenses, operating expenses, being about in line. I just want to make sure I'm understanding what that's in line with when I think about 2025. So is that a, you know, operating expenses for the full year 2024, is that, you know, where you're going to be at the end of the year 2024, any sort of clarification there? Yeah.
Speaker Change: So it's going to be, well, it'll be where we end the total of 2024, so, you know, given we affirmed our guide, think about the midpoint guide in there and expect on a core basis or XDI, that's a pretty good run right, for next year.
Speaker Change: Okay, all right, thank you.
Speaker Change: Thank you.
Speaker Change: Our next question comes from a line of Daniel Tamayo with Raymond James. For line of open.
Daniel Tamayo: Thank you. Good morning everybody. I apologize for going back to the expenses, but I just want to make sure that we have this correctly here in terms of how we should be thinking about it.
Daniel Tamayo: just kind of running through the numbers. You guys had 202 million in a half, right? Kind of on a core basis by my calculation. And so the midpoint of the guidance suggests that would just come up a bit next quarter and then to be able to to get that flatish for the year number, then we have a step down in 2025, and you mentioned kind of some in the first half and some in the second half. And so should we think about that as being [inaudible]
Speaker Change: Relatively um...
Speaker Change: on a stuff-wise basis in 2025 where you're seeing a little bit more benefit each quarter in that absolute number of expenses on a core basis that you're talking about comes down on every quarter through 2025 or is it more lumpy? But just want to make sure that I'm thinking about that process correctly. Daniel, let me go back to the beginning real quick. So the 202-year reference, that's including CDI, so our guide into the X-CDI.
Speaker Change: for service. So we can get everybody on the same page. What we're thinking about is on a year over your basis, a 25 compared to 24, continuing to be in that rough midpoint of the range. I don't expect it to be lumpy because there's a portion of those 25 million and saves technically already in the run rate. So we'll continue to see a progression in that. I think what we laid out is probably 45% in first half and then the balance in the second half of the year.
Speaker Change: Okay, that's helpful, yes, sorry, and thanks for the clarification, you're absolutely right on this.
Speaker Change: My number did not include this.
Speaker Change: CDI, okay.
Speaker Change: Alright, yeah, that's helpful. And then I guess secondly, just switching back over to the NII.
Speaker Change: Discussion and...
Speaker Change: So, you know, the guidance was for quarter. Obviously implies a step down there. You talked about, you've got the headwind on the margin from Ray cuts, but the deposit growth was certainly strong in the third quarter. You had some benefit from the municipalities, the seasonality there, but curious how we should think about kind of balance sheet growth or deposit growth going forward and how that impacts the total number just given, you know, the headwind on margin.
Speaker Change: Yes, so on the long-growth side, we expect to continue to have modest.
Speaker Change: Long Road.
Speaker Change: as we look forward to pipelines and originations are consistent, but we are in a low-growth environment, customers continue to be cautious.
Speaker Change: as we move forward. So we feel good about our organic business, but where we are in this environment and cycle, we expect kind of that low single digit loan growth to continue. It was a little lower this past quarter as we added that headwind of the consumer indirect runoff, which will continue as we move forward. But we would expect low single digit on the loan side. On deposits, we have the seasonal change from third quarter to fourth quarter on minisables. So we get a minisable rundown in the fourth quarter, but we expect our deposit that flows to be as anticipated, the growth.
Frank Schiraldi: It was a little lower this past quarter as we added that headwind of the consumer indirect runoff, which will continue as we move forward. But we would expect low-single-digit on the long side. On deposits, we have the seasonal change from third quarter to fourth quarter on municipal. So we get a municipal run-down in the fourth quarter, but we expect our deposit flows to be as anticipated. The growth will not be significant, certainly, as the third quarter. But we expect a consistent move from third to fourth quarter. So you're saying basically the, you think deposit growth matches the long-growth on a kind of rolling 12-month basis going forward to the right expectation.
Speaker Change: will not be a significant certainly as the third quarter, but we expect a consistent move from third to fourth quarter.
Speaker Change: So you're saying basically the, you think deposit growth matches long growth on a kind of.
Speaker Change: Rolling 12-month basis going forward is at the right expectation.
Frank Schiraldi: Yes, I mean we deposit growth is far exceeded low-growth. So far this year, I think going just a normal quarter, we're trying to target low-growth and deposit growth in line with each other, you know, in that low-single-digit. Okay, perfect. And I'll just remind you. Without the seasonal effects of immunity, we're looking at the underlying customer non-seasonal activity. Right, yep, and the on my last question was just, what remind us of you, what that number you expect to be in the fourth quarter, the seasonal impact. So it's going to be approximately $300 million a round. It's about $400 million in growth during the quarter.
Speaker Change: Yes, I mean, we've, the positive growth is far exceeded, long growth, so far this year. I think going just a normal quarter, we're trying to target long growth and the positive growth in line with each other.
Speaker Change: you know in that low single digit.
Speaker Change: Okay, perfect. And I'll just remind you, without the seasonal effects of the meeting, we were looking at the underlying customer, non-seasonal activity.
Speaker Change: Right, yep, and beyond my last question, I'm just, what remind us of you, well, what that, what that number you expect to be in the fourth quarter. This season will impact.
Speaker Change: So it's going to be approximately $3 million a round.
Frank Schiraldi: Correct. Perfect. All right, thank you for all the color. Appreciate it. Thank you.
Speaker Change: was about as about 400 million in growth during the quarter.
Speaker Change: Perfect. All right, thank you for all the color, appreciate it.
David Jason Bishop: Our next question will come from the line of David Bishop with Healthy Group. Your line is open. Yeah, good morning, gentlemen. Sticky with that, maybe same line of question. I think I heard cash and investments were over 18%. Maybe if you 0.4% this quarter, do you think you see someone down in some of that short term liquidity, you know, given some of those, some of the deposit flows you are expecting this quarter? Yeah, I think that's reasonably; you could take a small step back, but generally speaking, we're, you know, we hope to manage that ratio roughly in line.
Speaker Change: Thank you.
Speaker Change: Our next question will come from the line of David Bishop with Healthy Group. Your line is open.
Speaker Change: Yeah, good morning, gentlemen. Sticky with that family, maybe same line of questions. I think I heard cash and investments were over 18%, maybe 18.4% this quarter. Do you think you see some run down in some of that short term liquidity given some of those, some of the deposit flows you are expecting this quarter? [inaudible]
Speaker Change: I think that's reasonably, you could take a small step back, but generally speaking, we're, you know.
Speaker Change: We hope to manage that ratio roughly in line.
David Bishop: Got it. And then I know, in the preamble, there were some discussion in terms of some of the. The presentation and the increase in non-accruals, just curious if there’s any more detail, I think there was in the earnings slide, it looked like it was more concentrated in the commercial real estate segment. Any commentary there in terms of the types of credits or industries or sectors that might have been things. Some struggles here that we're alluded to in the common. Dean, that immediate impact, but it is possible, you know, that as rates moved down depending on the cadence, we could see lower betas, just given the shift of the balance sheet.
Speaker Change: oh
Speaker Change: Got it and then I know in the preamble there was some discussion in terms of some of the the puts and takes and the increase in non accruals just curious if there's any more detail I think there was in the the earning slide it looked like it was more concentrated the commercial real estate segment any commentary there in terms of the types of credits or industries or sectors that might have been seeing some some struggles here that were alluded to in the commentary.
Speaker Change: Yeah, so the length quarter increase there is really pretty diverse. So it was C&I and commercial real estate. We really didn't see any trends in a certain industry or certain portfolio. You know, really the commonality is in a higher cost, higher interest rate environment, you know, certain borrowers are struggling or in a bad position we continue to work with them. So it's really more of the macro environment and individual borrowers being able to navigate that, but there really are not any themes in that migration from quarter to quarter.
Speaker Change: One final question, saw the, in the narrative, the increase on an organic basis from a public bank looks like they saw sequential growth, did that sort of match in terms of the types of deposit segments, the overall bank in terms of driving into the CD, you know, a valid money market, just curious, any commentary, yes, where the growth came from.
Speaker Change: Yeah, thanks for that. We were really encouraged by that. You know, we saw growth in the quarter. Now they have a mini book as well. So that part of that portfolio is municipal. So you get a little bit of seasonality. There's not quite as much seasonality in that book as the core Fulton won. But there was a little impact there, but just overall trends around customer behavior and retention has really moderated into the point where, you know, we're seeing stabilization and growth. It was a really good outcome for the quarter.
Speaker Change: Great appreciate dollar.
Speaker Change: Welcome.
Speaker Change: Our next question will come from the line of Manuel Nathas, with the A-Dabitson, your line is open.
Manuel Nathas: Given that you're approaching a little more neutral positioning, is there kind of an updated thoughts on when NII could trough in the next couple quarters? Is it just really depending on rate cuts? Just kind of any color on that kind of topic?
Speaker Change: Yeah, it really depends on what rates do as we move forward. We did take some interest rate sensitivity off the table and moving that to a more neutral position which we think is prudent given the current expectations, but it's really hard to give a prediction because we just don't know where rates are going at this point. We're trying to be as neutral as positive, or as neutral as possible so that we don't have a lot of fluctuation in earnings.
Speaker Change: to man on your side peek, is that going to...
Speaker Change: Drive a little bit higher to pause the cloth next quarter. He talked through that user to the speedy book.
Speaker Change: Yeah, it's really in in a higher rate environment, this CD product is just more popular. It is a product for folks to get increased yield. So we really manage things on a client by client basis to meet what their expectations are if they can tie their money up for a period of time. It's a really good product. So it's natural to see more CD origination in an environment like this. [inaudible]
Speaker Change: We have a lot of CD maturities in the fourth quarter, I'll recommend probably walk you through those numbers just to see from a link quarter what we expect on an overall growth, but that trend of customer seeing the value in a CD will continue to manage that appropriately.
Speaker Change: Yeah, I might just add then, well, there's, so we do have about 1.4 billion maturing in the fourth quarter at a rate of around 491. So some of our efforts in the third quarter were truly intended on getting ahead of that and pulling a little bit of that forward. So, we, you know, I'll also throw out there in the first quarter of 25. We have another billion three at around a 480. So depending on what happens from a Fed perspective, obviously significant downward repricing opportunity there.
Speaker Change: and what it did.
Speaker Change: See these are we're at a discorder kind of roughly get out of that.
Speaker Change: in terms of that. Roughly low force, so it depends on whether they were new or renewals, but a low force anywhere, you know, wider range, but call it forward 20.
Speaker Change: Okay, that's helpful, thank you.
Speaker Change: D.
Speaker Change: on the Fulton First Initiative is, is there any like give or take on kind of the pace could, could you advance revenue, could you advance cost days? Like how do you feel that? How much flexibility could you have with that initiative over time?
Speaker Change: Yes, I mean, we have very detailed plan will work through the process in timing as appropriate for implementation. We really haven't built any growth in, we'll build that into our targets.
Speaker Change: for next year. I mean, we just want to be clear about the point that it is focus and growth orientation and not just a cost saving.
Speaker Change: and this is really transformation, how we're doing things, how we're focusing.
Speaker Change: and moving forward. So the implementation that have cost impact will be done as we can over time. Then we'll build the revenue into our targets on an overall basis.
Speaker Change: I appreciate that. My last question is this capital building. Can you just reset your position on capital deployment? What are your updated thoughts there across any use of capital?
Speaker Change: Yeah, so our capital strategy remains the same support, organic growth, support any corporate initiatives that would require capital, and then we have a buyback program in place. I think we've been...
Speaker Change: I'm pretty direct about we would not use that for the remainder of the year, do not anticipate using that for the remainder of the year and then we'll look into 25 and what is appropriate but that is our third use of capital.
Speaker Change: I appreciate that, thank you.
Speaker Change: Whoops.
Speaker Change: Our next question comes from the line of Chris McRattie with KVW, your line is open. Well great morning.
Chris McRattie: Kurt, just on the capital.
Chris McRattie: Was there any kind of bucket in that second?
Chris McRattie: You know corporate initiative? Is that something that's even on the table given what you're doing with Republican and the initiative on phone first?
Speaker Change: Yeah, so it would certainly be in that bucket. There's a lot of different things that we could do, but bank or full bank M&A would be in that bucket. We are focused on full integration of Republic right now. That's our primary focus, but we've kept the Fulton First initiative progressing as intended while we stepped in and did the Republic acquisition. So we would be able to do that again some point next year if opportunities, if we want to pursue any opportunities, we certainly would not do anything until next year.
Speaker Change: and then on the...
Speaker Change: You know, ideal kind of candidate, what would it look like? Assuming you don't find a transaction like a Republican again, which might be a footprint size.
Speaker Change: and Eddrich's coming, that's up, thanks.
Speaker Change: Yeah, so that strategy is the same as well. We kind of think about it in two different buckets.
Speaker Change: the community bank, $1 to $5 billion.
Speaker Change: Similar operating model is, and us, we provide more capacity, maybe more product, and that would be a good upstream partner for them. That, I would say, is probably our primary focus, Republic, fit right into that in-market community bank.
Speaker Change: So it was a little different structure in how we purchased that organization, you know, but that fit that strategy and is a proven strategy for us, we feel. Then we do look at the five to fifteen billion dollar banks as well. There are very few of those, but we feel we could be a good partner for banks of that size and would evaluate that, but again our primary focus is the one to five billion billion dollar community banks.
Speaker Change: Perfect, maybe just one more, I'm a modeling question, Rick the um...
Speaker Change: Do you have the spot, I'm going to miss this spot, IBD costs in the quarter, and then on the broker, the numbers that you gave.
Speaker Change: I guess expectations are for a good runoff with that community being included in that or is that totally separate.
Speaker Change: So the broker is included in the earlier $1.4 billion and $1.3 billion numbers that gave the next two quarters So
Speaker Change: It's about 350 million a broker for Q and 300 million a.m.
Speaker Change: in the next quarter. And in terms of spot rate, yeah, so September total deposits ended around 225, so 2.2% at down, obviously the average for the quarter was 224. We kind of peeked out in August , the spot rate actually declined from August about nine basis points, so pretty appropriately paced moves towards the end of the quarter on some of the, you know, the richer products out there. And happy with at least the immediate data we're seeing on those portfolios, so.
Speaker Change: Mordekov.
Speaker Change: Great, thank you
Speaker Change: As a reminder to ask a question, please press star 1-1.
Speaker Change: Our next question will come from the line of Matthew Braves with Stevens. The line of open.
Matthew Braves: Hey, good morning.
Matthew Braves: just getting into kind of the nothing bulge.
Matthew Braves: behind the margin. So, you know, with the 50-bit cup, with the 50-basic point cut and more expected, I was hoping you could talk one a little bit about where you have room to reduce deposit costs. You're already addressed CDs, but could you give us some sense for how you adjusted money market or or higher cost savings deposit rates during the quarter? And then secondly, I was hoping for, you know, some, I know it's really some early help on expectations around deposit bidders over the next 12 to 18 months.
Speaker Change: Sure. So I look, I would say in terms of where we've made...
Speaker Change: but I would consider to be considerable progress during the quarter and granted that was basically five days or so. And the end of the quarter, call it about $10 billion worth of deposits where we moved to rates anywhere from 20 to 40 basis points.
Speaker Change: from...
Speaker Change: So that's a fairly meaningful chunk and then obviously a relatively high data on those portfolios. That's excluding cities.
Speaker Change: I'm sorry, Matt, we'll deal with party questions.
Speaker Change: Yeah, just given some of those early moves, given your deposit beta for the hiking cycle, just in expectations with thoughts around what you think the deposit beta will be on the down cycle.
Speaker Change: Yeah, over the long term, I think we're thinking about something closer to 30%, but in the shorter term, really only modeling something closer to 10%.
Speaker Change: So, you know, obviously given the numbers I just pointed out, we're seeing on some larger work only as we've seen better data than that in the short term. And I might just add too, the number I threw out earlier in terms of the shock scenario as you move into a more gradual pacing of rate reduction, some more of a ramp scenario, that annualized number on every 25 basis points gets cut in about half. So it's far more manageable. It's really that pressure comes more upfront, just given the magnitude of cuts in some
Speaker Change: Got it. Okay. And then let's switch to the opposite side. So, you know, Rick, you had mentioned the bank is incrementally more interest rate neutral. And just the level set I have in my model about 45% clothing rate loans. And obviously that will move with the shorter than the curve and then absolutely of 55% fixed rate or adjustable rate loans. These appear to be well below market rates. And so for the rate hiking cycle, your loan beta was around 50%. I'm curious what that bouquet might be for the down rate cycle. It feels like 50% would be far too heavy given your commentary around interest rate neutrality. Could you address that a little bit? Give us some range there.
Speaker Change: Yeah, look, I think what we're anticipating and modeling is similar to what you pointed out as the upside data. So around that, 50 to 55 was that beta. It could be two aggressive.
Speaker Change: potentially, right? So there is, you know, we called out, we have about $9 billion at six rate loans now. And then the overnight, really the overnight pricing, so either so far crime, is just over six billion. So that's where you're seeing that immediate impact, but it is possible, you know, that as rates moved to how depending on the cadence, we could see lower betas.
David Bishop: Got it.
David Jason Bishop: Okay. The last one, and I, I hate to go back to the clarifying on expenses, but, you know, the presentation guidance for 2024, as it relates to expenses, says it includes CDI. So, I wanted to confirm that, and then secondarily, you know, the second part, which is, you know, expenses will be flat, essentially from 2024 to 25. I would assume that excludes CDI, because of the change given the public first. I just wanted to clarify that those moving parts. Yeah, I'll apologize for the maybe the poor choice of wording in the footnote. So, excludes non-operating expenses, including court deposit.
Speaker Change: just giving the shit to the balance sheet.
Speaker Change: I wanted to confirm that, and then secondly, the second part which is expenses will be flat, essentially from 24 to 25. I would assume that excludes.
Speaker Change: See the odds because of the change given the public first. I just wanted to clarify that.
Speaker Change: It's moving forward.
Speaker Change: Yeah, Matt, I'll apologize for the maybe the poor choice of wording in the footnote. So, excludes non-operating expenses, comma, including for deposit. That means the exclusion is, or the exclusion is including, right? So, it excludes both. That should say, excluding court deposit and the bill as well.
David Bishop: That means the inclusion is, or the exclusion is including, right? So, it excludes both; it should say, excluding court deposit and cannibal as well.
David Bishop: Understood.
David Bishop: Okay.
David Bishop: I'll leave it there.
David Bishop: Thank you so much.
Speaker Change: I'll leave it there. Thank you so much.
Unknown Executive: That concludes today's question-and-answer session.
Curtis Myers: I'd like to turn the call back to Kurt Meyers, closing remarks. Well, thank you again for joining us today. We hope you'll be able to be with us when we discuss fourth quarter results in January. Thank you.
Speaker Change: That concludes today's question and answer session. I'd like to turn the call back to Kurt Myers, closing remarks.
Kurt Myers: We'll thank you again for joining us today. We hope you'll be able to be with us when we discuss 4th quarter results in January.
Unknown Executive: This concludes today's conference call. Thank you for participating.
Kurt Myers: Thank you.
David Bishop: You may now disconnect. Thank you. Dean, that immediate impact, but it is possible, you know, those rates moved down depending on the cadence; we could see lower betas, just given the shift of the balance sheet. Got it. Okay.
Speaker Change: This concludes today's conference call. Thank you for participating. You may now disconnect.
Speaker Change: Thank you for watching! Thank you for watching!
Speaker Change: Thank you for watching.
Speaker Change: Thank you for watching! Thank you for watching!
Speaker Change: Good day, and thank you for standing by. Welcome to the Fulton Financial at 3rd quarter, 2024 Results Conference Call.
Speaker Change: At this time, all participants are an illicit only mode.
Speaker Change: After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again.
Speaker Change: Please be advised that today's conference is being recorded.
Speaker Change: Good morning, and thank you for joining our full financials conference call on webcast to discuss our earnings for the third quarter ending September 30, 2024. Your host for today's conference call is Kurt Myers, Chairman and Chief Executive Officer.
Speaker Change: Joining her today is Rick Kramer, Chief Financial Officer, Designee and Beth Chivinski, Inter at Chief Financial Officer.
Speaker Change: Our comments today will refer to the financial information and related slide presentation, included with our earnings announcement, which we released yesterday afternoon.
Speaker Change: These documents can be found on our website at fut.com by clicking one of the best relations in the non-nids. The slides can also be found on the presentations page under the Investor Relations website.
Speaker Change: On this call, representatives of full debate forward looking statements with respect to full financial conditions, results of operations in business.
Speaker Change: These statements are not guarantees of future performance and are subject to risks on certain these and other factors, and actual results could differ materially.
Speaker Change: Please refer to the State Carver Statement on the public looking statements in our earnings release, and on slide two of today's presentation. For additional information regarding these risks on certain these and other factors.
Speaker Change: Film undertakes no obligation other than as required by law to update or revise any forward-looking statements.
Speaker Change: In discussing Fulton's performance, representatives of Fulton may refer to certain 9GAP financial measures.
Speaker Change: Please refer to the supplemental financial information included with Fulton's earnings announcement released yesterday in slides 2326 of today's presentation.
Speaker Change: for reconciliation of those nine gap financial measures to the most comparable gap measures.
Speaker Change: Now I'd like to turn the call over to your host, Curt Myers.
Curt Myers: Well, thanks Matt and good morning, everyone. For today's call I'll be providing highlights on our performance for the quarter, updates on several key initiatives and a few overall comments on the company. Then I'll turn the call over to Rick Primer to review our financial results in more detail and step-by-through our 2024 guidance.
David Bishop: The last one is, and I hate to go back to the clarifying on expenses, but, you know, the presentation guidance for 2024, as it relates to expenses, says it includes CDI. So, I wanted to confirm that, and then, secondarily, you know, the second part, which is, you know, expenses will be flat, essentially from 2024 to 25. I would assume that excludes CDI because of the change given the public first. I just wanted to clarify that those moving parts. Yeah, I'll apologize for the maybe the poor choice of wording in the footnote. So excludes non-operating expenses, including poor deposit.
David Bishop: That means the inclusion is, or the exclusion is including, right? So, it excludes both; it should say, excluding poor deposit and tangible as well. Okay.
David Bishop: I'll leave it there. Thank you so much.
Unknown Executive: That concludes today's question-and-answer session.
Curtis J. Myers: I'd like to turn the call back to Kurt Myers, closing remarks. Well, thank you again for joining us today. We hope you'll be able to be with us when we discuss four quarter results in January. Thank you.
Unknown Executive: This concludes today's conference call. Thank you for participating. You may now disconnect.