Fulton Financial Corporation

Good morning and thanks for joining us for Fulton Financial's conference call and webcast to discuss our earnings for the third quarter of 2022. Your host for today's conference call is Phil Wenger, Chairman and Chief Executive Officer. Joining Phil are Curt Myers, President and Chief Operating Officer, and Mark McCollum, 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. 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. 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. 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 10 through 13 of today's presentation for reconciliation of those non-GAAP financial measures to the most comparable GAAP measures. Now, I would like to turn the call over to your host, Phil Wenger.

Thanks, Matt. Good morning, everyone. Earlier this year, I announced my intent to retire as CEO of Fulton Financial on December 31st. So since this will be my last earnings call with you, I wanted to take a minute to share my appreciation for your coverage of Fulton Financial. I have appreciated your interest in our company and the diligence you have displayed in learning about the company's activities to be able to provide sound advice to your investors. I've been with Fulton for 43 years, serving as CEO for the last decade. And during that time, it has been my honor and pleasure to have worked with the thousands of Fulton team members who fully understand what it takes to fulfill our company's purpose of changing lives for the better. As you know, Kurt Myers will succeed me as chairman, CEO, and president on January 1st, 2023. With Kurt at the helm, and the talented members of our senior management team adding their expertise, I am confident that Fulton will be in good hands. I look forward to continuing to serve on the holding company and bank boards of directors after I retire. And now I'll turn the program over to Kurt.

Well, thank you, Phil, and good morning, everyone. Before I discuss the quarter, I want to thank Phil for the many contributions he has made to strengthen our company. and for the legacy that he leaves behind. During his decade as CEO, Phil enhanced our company's financial strength by growing the bank significantly, doubling the quarterly run rate for operating earnings from 39.2 million a quarter to the 80.5 million this past quarter. This improvement allowed us to nearly double our quarterly common cash dividend from 8 cents to 15 cents per share over that time, plus provide shareholders with an annual special dividend almost every year over his tenure. Phil also focused on shaping our culture and empowering our team to change lives for the better. He led the formation of our Fulton Forward Initiative and the establishment and funding of the Fulton Forward Foundation. The foundation helps improve the communities we serve in the areas of affordable housing and home ownership, job training and workforce development, financial education and economic empowerment, and diversity, equity, and inclusion. Phil executed on key strategic initiatives by consolidating our six subsidiary banks into Fulton Bank to improve our operating efficiency and position the company for growth. And he also resumed our status as an active acquirer through the purchase of a number of investment advisory firms as well as Prudential Bancorp this past quarter. There are many more examples, but as you can see, Phil has made a tremendous impact, and I, along with other members of our leadership team, are committed to driving future success. Going forward, we will continue to lead your company prudently, pursue smart growth, and make the changes necessary for future success. We will remain committed to our customers, committed to our communities, committed to our employees, and committed to you, our shareholders. Thank you, Phil, for all that you have done for Fulton Financial and for me personally. Your positive impact is a lasting one that will be felt for many years to come. Now I'd like to switch gears and let's talk about Fulton's third quarter performance. The third quarter of 2022 was another good result, and we are pleased with our overall performance. Operating earnings per diluted share, which excludes merger-related expenses of the Prudential Bank Corp acquisition, were $0.48 and represent an increase of $0.06 over operating earnings last quarter and $0.03 above the year-ago period. Operating earnings this quarter represent an all-time high for Fulton. Several factors helped drive this performance. Our net interest income benefited significantly from rising interest rates. We saw solid loan growth overall. We have the first full quarter effect of the Prudential Bank Corp acquisition, and fee income was consistent with the prior quarter. These positives were all set by some of the realities of the current economic environment. Expenses continue to migrate higher due to wage pressure, and elevated performance-based compensation accrues, and our provision for loan losses increased length quarter. As of July 1, We completed the acquisition of Prudential Bank Corp, and in early November, we expect the conversion to occur. We're excited to welcome Prudential Bank's team members and customers into the Fulton family, and we believe our opportunities for continued growth in the Philadelphia region remain strong. With the Prudential Bank Corp acquisition closed, we have doubled our loan portfolio and expanded our deposit base threefold in the Philadelphia market. Turning to the quarterly business results, our overall loan growth was strong for the quarter at $776 million, or 16.4% annualized. Excluding our acquisition of Prudential Bancorp, loans still grew $232 million, or 5.2% annualized. Commercial loans were essentially flat for the third quarter as we experienced consistent originations but accelerated prepayment. Consumer loans still produce solid overall growth as we continue to book adjustable rate mortgages in the portfolio and experience slower prepayment fees. Turning to deposits, on an ending balance basis, we achieved total growth for the quarter of $233 million. Included in this total was $400 million of customer deposits from the Prudential Bancorp acquisition. So excluding that impact, we did see a decline of $167 million during the period, driven by declines in non-interest-bearing demand accounts, as well as time deposits. To date, declines in deposit balances are driven by inflationary spending pressure, rebuilding of inventories and capex spending, and are not related to customer attrition. Commercial and consumer households both showed modest organic growth during the quarter, but a decrease in average balances per account led to an overall decline in deposits. From a rate perspective, we continue to actively monitor and price our deposits in order to both retain and grow deposit customers. Moving to our fee income businesses, we were pleased with our overall performance despite a challenging economic environment for some of our businesses. Total fee-based revenue was up 771,000 from the prior quarter, or 5.3% annualized. Our card and payments businesses grew during the quarter, as did our capital markets. These positives all set a decline in wealth management and mortgage banking revenues. Moving to credit, our provision for credit losses of $19 million included $8 million related to our acquisition of Prudential Bank, Bancorp, and the CECL day one charge. Excluding this, our provision increased by $11 million, despite showing net charge-offs for the quarter of only $100,000. Factors contributing to this increase include growth in the overall portfolio, a few accounts migrating to non-performing, as well as an increase in the reserves of our office building portfolio. So now let me turn the call over to Mark to discuss our financial performance and outlook in a little more detail.