Fulton Financial Corporation

good day and thank you for standing by welcome to the fulton financial second quarter 2023 results at this time all participants are in a listen only mode after the speaker's presentation there will be a question and answer session to ask a question during a session you 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 101 again please advise that today's conference is being recorded I would now like to hand the conference over to speaker today, Matt Joswak, Director of Investor Relations. Please go ahead.

Good morning, and thanks for joining us for Fulton Financial Corporation's conference call and webcast to discuss our earnings for the second quarter, which ended June 30, 2023. Your host for today's conference call is Kurt Myers, Chairman and Chief Executive Officer. Joining Kurt is 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 tab 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 takes 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 16 through 20 of today's presentation for a 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.

Thanks, Matt, and good morning, everyone. Today, I'll provide summary comments on our company and on our financial performance. Then Mark will share more details on our financial results and step through our outlook for the remainder of 2023. After our prepared remarks, we'll be happy to take any questions you may have. We were pleased with our second quarter results. We continued to support our customers and generated solid loan growth. We saw credit metrics remain stable and credit losses return to historically low levels. In addition, fee income was strong across the entire company. Operating earnings were 47 cents per share. Pre-provision net revenue, or PPNR, for the second quarter was approximately $106 million, an increase of 19% year over year. This was a result of earning asset growth and net interest margin expansion year over year. During the second quarter, we saw loan growth of $374 million and deposit declines of $110 million. As a result, our loan-to-deposit ratio increased to 99%, right in the middle of our long-term target of $95 to $105. Fee income increased $8.9 million, significantly above the first quarter levels. Commercial banking had a record quarter, driven by strong capital markets and merchant and card processing income. Wealth management continued to deliver strong results as the market value of assets under management and assets under administration reached $14.3 billion. Mortgage banking fees were up modestly late quarter, and consumer banking fees were solid as well. Expenses increased during the period. However, they were in line with our expectations for the quarter. In addition, we also had other positive notable events during the quarter. We released the second edition of our corporate social responsibility report, highlighting achievements on our purpose of changing lives for the better. We raised our quarterly common dividend by 7% to 16 cents per share. We welcomed a new member of our executive team, Karthik Sridharan, joined us as a newly created role of chief operations and technology officer. In this role, he will lead our efforts to further enhance our operational excellence for our customers and our team. We celebrated our first full-year impact of the Prudential Bancorp acquisition. In looking back on the acquisition, we were pleased with our ability to get regulatory approval and close the transaction in under four months. We achieved the systems conversion on time and on budget. We realized our cost savings and met our one-time merger cost targets. And we were pleased to have the Prudential team on board and contributing to Fulton's success every day. Our second quarter results met our expectations and we believe we are positioned well for continued success. We remain focused on growing core deposits, effectively managing our deposit mix, achieving the appropriate risk-adjusted return on our loan portfolio, and improving our operating efficiency. During the quarter, we and the industry continue to experience the migration from non-interest bearing balances into higher cost deposit products. What is critically important is to continue to grow households and customer accounts. During the quarter, we grew 4,000 total net new households and 8,000 total net new deposit accounts. We believe those are meaningful increases in this environment. On slide three, we have provided updated disclosures on our deposit base. We have approximately 742,000 deposit accounts with an average age of 11.4 years on a weighted balance basis. The average balance of these accounts is only $28,500. Our balance sheet remains strong, and our capital ratios continue to improve. Our liquidity position increased over $8.2 billion in committed funds. Turning to credit, we have provided more detail on our loan portfolio and specifically on our office portfolio on slides 4 and 5. I'd like to note our overall concentration in commercial real estate remains at approximately 180% of total capital, well below our proxy peer average. On slides 4 and 5, a small component of our CRE portfolio is the discrete office-only portfolio, which includes all loans with a primary revenue stream from office rent. As a reminder, this segment is a diversified and granular portfolio, originated consistently over time, spread throughout our footprint, and with only five individual loans in excess of $20 million. Looking at overall credit, net charge-offs were $2 million, or four basis points annualized. Overall credit performance remains within our expectations, and NPAs, NPLs, and loan delinquency have all declined for the past three quarters. While we are encouraged by these credit trends, we remain focused on potential economic headwinds that could affect future performance and our credit outlook. Now I'll turn the call over to Mark to discuss our second quarter financial performance and 2023 outlook in more detail.