Good day, and thank you for standing by. Welcome to the Fulton Financial First Quarter 2025 Results Conference Call. At this time, all participants are in a listen-only mode. Please be advised that today's conference is being recorded. After the speakers' presentation, there will be a question and answer session. To withdraw your question, please press star one one again. I would now like to hand the conference over to your speaker today, Curtis Myers, Chairman and Executive Officer.

Thanks, Matt, and good morning, everyone. For today's call, I'll be providing a summary of the first quarter operating highlights and an update on certain corporate initiatives. Then, Richard will review our financial results and discuss our 2025 operating guidance. After our prepared remarks, we'll be happy to take any questions you may have. We were pleased with our first quarter operating results and encouraged by the strong start of the year. We continue to remain customer-focused, deliver solid operating performance, and execute on our strategy. Operating earnings per share of $0.52 represents a $0.04 increase linked quarter. As we continue to produce positive operating leverage and maintain a strong balance sheet. With revenue exceeding expectations and a continued reduction in total operating expenses, PPNR increased nicely and we continue to become more efficient. The quarterly operating efficiency ratio dropped to 56.7%, operating return on assets increased to 1.25%, and operating return on average tangible common equity grew to 15.95%. Through disciplined management of the balance sheet, we maintained historically strong liquidity and grew our equity base. We remain focused on creating long-term value for our customers, communities, and our shareholders. And our team performed well for all stakeholders again this quarter, growing our tangible book value per share 13.8% on an annualized basis. So now let me turn and provide a few highlights of the quarter. We continue to execute on our strategic initiatives through the implementation of Fulton First. During the quarter, we made tangible progress in areas related to talent alignment, reinvestment for growth, and operational simplification. We are seeing positive benefits and outcomes both operationally and financially. Let me turn to the balance sheet. Customer deposit growth was solid this quarter as we continue to win new customers while effectively managing overall deposit costs. Deposit accounts and balances are up, while deposit costs are down. On the lending side, we remain focused on relationship lending to generate prudent and profitable loan growth over the long term. During this past quarter, total loans declined even though originations were relatively consistent linked quarter, as several strategic actions impacted overall balances. During the quarter, we saw a $38 million decline in indirect auto balances, as we've previously forecast. We also saw a $231 million decline in commercial construction balances, as there were certain projects we elected not to convert to permanent financing. And finally, overall balances were also impacted by accelerated resolution of troubled assets. Given these strategic decisions and the overall current environment, loan growth is expected to be in the low single-digit range. Turning to the income statement. While relative revenue was relatively consistent, we've seen strong performance generated through a meaningful expense reduction linked quarter. Finally, let me provide some updates on our credit performance. As a result of several portfolio management actions, many of our asset quality metrics improved. Our NPL to total loan ratio declined as we resolved certain nonperforming loans. Even with the accelerated nonperforming loan resolutions, net charge-offs declined one basis point linked quarter. Saying all of that, we remain cautious in our outlook for quality as customers navigate the current volatile environment. Now I'll turn the call over to Richard Kraemer to discuss the impact of these initiatives on our financial results and provide comments on our 2025 operating guidance in more detail.

Thank you, Curtis, and good morning. Unless I note otherwise, the quarterly comparisons I discussed are with the fourth quarter of 2024. Loan and deposit growth numbers I may reference are annualized percentages on a linked quarter basis. Starting on Slide four, operating earnings per diluted share was $0.52 or $95.5 million of operating net income available to common shareholders. We achieved consistent revenue, a stable balance sheet, and net interest margin combined with a decline in operating expenses that drove positive operating leverage again this quarter. Deposit growth of $200 million or 3% was driven by strong growth in interest-bearing money market products, offset by modest declines in municipal and a $105 million decline in broker deposits. Our non-interest-bearing balances ended the quarter at 20.6% of total deposits, down marginally. Total loans declined $182 million during the quarter, due in part to the portfolio management activities Curtis discussed earlier. Offsetting some of those declines was growth in commercial mortgage and residential mortgage. With these results, our loan to deposit ratio declined this quarter to 91%. As part of our broader balance sheet management, we continue to strengthen our on-balance sheet liquidity by way of additional investment securities. The weighted average coupon in new purchases this quarter was approximately 5.56% and carried an effective duration of approximately three years. The impact of these balance sheet trends are shown on slide five. Net interest income on a non-FTE basis was $251 million, a $2.5 million decrease from the prior quarter, while net interest margin increased two basis points to 3.43%. Our yields declined eleven basis points linked quarter to 5.86%. Included in the loan yield is $13.1 million of accretion attributable to the purchase accounting marks on the acquired Republic loan portfolio. Our average cost of total deposits decreased eleven basis points to 2.03% linked quarter. Through the cycle, our cumulative non-maturity deposit beta has been 29% and our total deposit beta has been 25%. We continue to manage deposit costs with this. Turning to slide six, non-interest income for the quarter was $67.2 million. This included $2.5 million from income distributions and fair value adjustment related to equity method investments. Excluding this adjustment, fee income declined modestly, primarily due to day count and transactional activity. Fee income as a percentage of revenue was 21% for the quarter. Moving to slide seven, non-interest expense on an operating basis was $182.9 million, a decrease of $7.8 million linked quarter. This decline was impacted by the timing of realized savings and the benefit of a $4.4 million decline related to professional fees this quarter. When excluding this and several smaller items, operating expense for the quarter would have been $187.2 million. Material items excluded from operating expenses as listed on slide seven were charges of $6.2 million of core deposit intangible amortization. As a reminder, in the second quarter, we will realize the full impact of annual merit and related increases as well as the impact of an increased day count on our expense base. Giving effect to these items, we expect operating expenses to range between $190 million and $195 million for the remaining three quarters of 2025. These items and trends have been factored into our annual operating guidance. Also, as a reminder, for the remainder of 2025, we expect to incur up to $14 million of additional Fulton First non-operating expense. Turning to reserve metrics. Provision expense declined approximately $2.8 million linked quarter to $13.9 million. Our allowance for credit losses to total loans ratio increased to 159%. And our ACL to non-performing loan coverage increased 193%. Slide nine shows a snapshot of our capital base. As of March 31, we maintained solid cushions over the regulatory minimums. During the quarter, total internal capital generation added $77 million in total equity, including the benefit of $16 million of other comprehensive income. AOCI ended the quarter at $272 million and our CET1 ratio at 11%. On slide ten, we are confirming our operating guidance ranges for 2025. Our original guidance incorporated a projected decrease in Fed Funds of 25 basis points in March, and 25 basis points in June of 2025. Considering more recent events, we have updated our rate forecast to include four 25 basis point cuts in 2025 with the first beginning in June. Inclusive of these changes, we remain comfortable with our current guidance ranges. That said, our net interest income and non-interest income could trend towards the lower half of the respective ranges given the potential for a prolonged slower growth environment.

Star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Our first question comes from Frank Schiraldi with Piper Sandler. You may proceed.

Thanks. Good morning. Good morning, Curtis. What about loan growth here? Do you still have some strategic offsets that make growth more of a second half of the year story? Are you assuming return to net growth in the second quarter? Can you just talk a little bit more about what you're seeing in terms of loan demand amid some of this macro uncertainty?

Yeah, Frank. I'll give you a little more color on that. Overall, pipelines actually went up a little bit year over year. And we continue to be cautious in the pull-through rate as customers are really deciding whether to move forward with projects. So we have a good pipeline, and we're just not sure on how that will convert given the environment. Our originations linked quarter were pretty consistent. So we do think we have momentum, and most of the first quarter was affected by the strategic headwinds and the specific actions that we took.

Okay. And just in terms of, I mean, I don't want to try to split hairs here, but Richard, you mentioned you talked about, you know, comfortable with the range on NII and could trend towards the lower end just given some risk to growth. You know, would you say that the low single digits is kind of the base case here? Can you, you know, is getting to the lower end of the range with flattish balances, I guess, is what I'm trying to ask here.

I'd say, Frank, yes. Depending on what happens with rates, right? So it'll be more challenging if you get no growth and four cuts. Still feel comfortable at the very low end of that but otherwise, you should be above that. So I think it's, you know, definitely balance sheet growth helps. The interest rates have, at this point, have a more muted effect on our NII just given what we've done on some hedging and repositioning.

Okay. And then just last question on that. A follow-up there. What would you say in terms of you know, still, I guess, your retained some asset sensitivity? What does a twenty twenty-five basis point cut how does that impact total NII at this point?

It would be a headwind of about $1.7 million annually.

A twenty-five basis point?

Correct.

Okay. Alright. Great. Appreciate the color. Thanks.

Thank you.

Our next question comes from Daniel Tamayo with Raymond James. You may proceed.

Hey, good morning, guys.

Hi, Danny.

It may be just switching over to the credit side. I mean, things seem to be just still strong for you guys. Certainly, everything is trending in the right direction. But just curious your thoughts on you know, the environment, what's happening with tariffs and in terms of you know, what you're seeing from the borrowers, how that could change depending on you know, how the environment changes as the year goes on?

Yeah. So there are really two regards. So we're looking at the credit portfolio. You know, working through, making sure we understand potential tariff impacts, potential government cost cutting. Impact on our portfolio. So, you know, that work is ongoing. Like you would expect us to do, really know the portfolio; we really benefit from a very granular portfolio and a deep understanding of the originations in that portfolio. From a looking forward, we're really monitoring what impact it's gonna have on growth on margins, and underlying performance of each individual business. But at this point, it's really analyzing and understanding the portfolio so that we can react to things that happen within the credit book.

Is there anywhere in the portfolio that you've identified that is most at risk? Should these tariffs stay on? And I know they're changing almost daily, but you know, what have you zeroed in on know, a segment or a, you know, part of the portfolio that you think might be at risk? And have you changed your risk ratings at all on those portfolios?

Well, the biggest one that we look at first is the Ag portfolio. About a billion-dollar portfolio. You know, it's been, you know, one of our strongest portfolios for decades. You know, that portfolio is impacted by commodity prices. And we also have an equipment business underlying there. So we're looking at that business. Our portfolio is very domestic. You know, it doesn't have a lot of import-export actual business. But commodity price changes would impact that. So we are always following commodity prices. Tariffs could impact that, and we're doing sensitivity and really understanding that from our portfolio. But that has been a strong portfolio, very well diversified, and granular, and, you know, we're used to weathering cycles with the Ag portfolio. But that's probably where we would see it the most. We also look at our business and we're looking at margins and procurement. And, again, we don't do a lot of import/export, so it's really the impact of cost for those businesses. And we're working through it on a real granular basis. But we really haven't seen impact yet. The one other thing I would point to is auto dealers. Part of those headwinds on loan growth for the first quarter is a few car dealers that we were no longer doing business with, and I think that reflects some actions that we've taken as well.

Okay. Great. And then I guess, lastly, just on credit as well. You've got pretty strong reserves here. You basically stable in the quarter. Really above where you guys were in the pandemic. Does it feel like the reserves are at the point now where even if things got worse, you'd probably be okay? I know it's CECL driven to a large extent, but just curious your thoughts on where reserves may have to go if we go under a recession given the strength of the balances already.

Yeah. Danny, let me take that. So I think specifically for the quarter, there was a, you know, there's a couple pluses and minuses. I think benefiting the ACL we're really, you know, one, defining loan balances. Two, some migration out of construction and obviously lower non-accruals. And then offsetting that is, you know, the more qualitative part of the forecasted elements in terms of where Moody's goes on their forecast going forward and, you know, our usage of more impactful economic or downside scenarios. Right? So I don't know that we'll see a substantial change on the surface. There are obviously pieces, a lot of moving pieces underneath. I would expect Moody's to get incrementally negative and call it more, you know, current periods or next quarter or two based on where they've been trending. So that will have an impact for everybody.

Okay. Alright. Well, thank you for all the color. Very helpful.

Thanks, Danny. Thank you.

Our next question comes from Chris McGratty with KBW. You may proceed.

Hey. How's it going? This is Angel for Chris McGratty.

Great.

Just on the buyback, you know, with the stock trading at one-two tangible book, CET1 at eleven percent and credit trends pretty stable. I guess, what's preventing you from resuming the buyback right now? Thanks.

Yes. So our capital strategy is the same. You know, first, we want to support organic growth, then any corporate initiatives, and then buybacks would follow that. You know, in an environment like this where there's limited or organic growth opportunities, maybe limited other corporate opportunities as well. Buybacks certainly make a lot more sense right now, especially given the prices that we're trading at. We did purchase a few shares, about thirty thousand shares in the first quarter right at the end of the quarter when we started to see the stock price go down.

Okay. Great. Thank you. And then just shifting back to the balance sheet, I know in your opening remarks, you mentioned your broader balance sheet strategy to grow the investment portfolio. I guess one from here, should we expect a similar level of growth this quarter? Going forward? And on that low single-digit interest earning asset guide, what is the base number there? Is that the 2024 average or end of period?

Period. The last part is period end and then your first part your first question. Yeah. I would expect it candidly. Well, you know, reinvesting cash flows is kind of priority number one. And those have been looking on a monthly basis forty to fifty million dollars in terms of additions to securities, I think it's gonna be somewhat market dependent. And my guess is it will slow as the year goes on.

Okay. Great. Thank you.

Our next question comes from Manuel Navas with DA Davidson. You may proceed.

Hey. Good morning. Is there any give in the OpEx guide if the revenue comes in at the lower end? There would have to be a little bit more drastic fall. Just kind of talk about flexibility on OpEx under different maybe there's a downside scenario.

I think there's, you know, there's potentially a little give on really on timing. So whether it occurs in 2025 or it gets pushed out. I mean, as we use you saw some of the delayed spend in the first quarter when we talked about realized timing. Right? So we'll start to catch up on a little bit of that. But we're pretty comfortable overall with that midpoint of our expense range for now.

And where is sentiment potentially impacting these? Can you add a little bit of color there?

I'm sorry. Could you repeat that?

Where is sentiment? This kind of more DAO or something around tariffs? Slowing the any part of the fee guide.

Yeah. The fee income business overall, if you look first quarter last year, first quarter this year, we've had nice growth over ten percent growth. You know, linked quarter, you have some seasonal changes in fees. So as we look forward in fees, obviously, our wealth business has some market dependence on recurrent recurring fees that are on a portfolio balance. So there's some headwinds there. Interest rates, you know, have had some volatility and that really affects our mortgage business. You know, so there are potentials that there's headwinds in the fee income overall. I think that's why we're guiding to the lower half of the range in fee income. As we look at those businesses that they may be impacted as we move forward. But those underlying businesses are strong. But they do have some market sensitivity.

Switching over to the margin for a moment. You don't have a cut expected in the second quarter. The loan betas are seemingly performing better than they did in the prior cycle. Deposit costs have come down. Can you kind of put that those together for a year-term vision expectation?

Yeah. I think without giving guidance on NIM, I would point to a couple of things. Our spot rate on deposit cost at the end of March finished, I think, one or two basis points below our quarterly average. So you don't have that kind of initial tailwind headed into 2Q. So that would imply that deposit betas are slowing from here. You also have, I'm not sure if it's been contemplated, but the sub debt feature we had in March, so I think it's March fifteenth. So we had a hundred and ninety five million move from fixed to float and that was at a three hundred and twenty-five basis point moving to so for plus two thirty. So call it three hundred and thirty-five, three hundred forty basis points upwards. So that's a little, you know, six plus million dollars of annual interest expense as well that you have to factor in. So all I'll say, well, margin should be a little pressure.

And last piece is the CD renewals in the second quarter. How much of that is brokered versus retail CD renewals?

Yeah. About, I think about eighty percent of it was retail or eighty-five percent of it is retail.

So eighty percent last quarter, but how about in the second quarter?

It's a similar number.

Great. Okay. I appreciate it. I'll step back into the team. Thanks for the question.

Thank you.

Our next question comes from Matthew Breese with Stephens. You may proceed.

Hey. Good morning.

Good morning, Matthew.

Just sticking with the NIM for a second. Did net interest income include any sort of interest recaps from the payoffs you saw in special in the substandard? And if so, how much did it impact the NIM?

No. No nothing material in there, Matt.

Got it. Okay. And then, Curtis, you had mentioned in your prepared remarks a couple of times, and it's also in the presentation, that, you know, risk management actions impacted loan growth. Can you provide a little bit more color on what's going on there? It's mentioned on page three. What are you being more careful on and to what extent is that driving the lower loan growth outlook?

Yeah. So, really, in the quarter, I mean, we're always working to challenge the loan book. In this quarter, we had more than typical resolutions that just happened to hit this quarter. But it really is ongoing management, of the credit book to get resolutions on troubled assets. So really just highlighting that was a pretty successful quarter for us to be able to move some assets out. I also referenced a couple of the things that we did that weren't troubled assets. The auto dealer book and a couple of things like that and the conversion of commercial construction to permanent financing. We're being very prudent in what we commit to long term. As we look at those portfolios. So it's really just active management that had a more significant result, which created a headwind for growth for the quarter. Again, I mentioned that originations were pretty similar from the fourth quarter to the first quarter. So those actions were really highlighting just to show the impact on growth.

Got it. Okay. And then last one for me in your kind of bigger-picture concern bucket. I didn't hear you talk about it at all, but I was curious about all the government efficiency stuff going on. Could you remind us your exposures to DC office or anything DC government with government exposure?

Yeah. So federal government exposure in that DC market was very limited. We have historically been very cautious of government leases on real estate because they can be canceled. I think that's what we're seeing in this marketplace. But because we've been cautious in that, our portfolio is very limited. For overall federal, whether it's office or other types of business for federal government leases. In office, we have a hundred and five million in the DC metro, and that's really the surrounding areas of DC. Those loans have been performing. We don't have any reason to believe there's more risk this quarter than in prior quarters in that portfolio, and it's pretty small and granular for that market.

Great. If I could just squeeze in one more, just on the professional fee reversal. Richard, I'm assuming that that line can go back to kind of the three million dollar range on a quarterly basis? Is that fair?

Yeah. I would say historical run rate is more is gonna be more accurate moving forward.

Thanks.

Thank you. And as a reminder, to ask a question, please press star one one on your telephone. Our next question comes from David Bishop with Hovde Group. You may proceed.

Yeah. Good morning, gentlemen. Been asked and answered. But curious that the indirect auto portfolio is just a reminder, that remains a runoff. I'm just curious the overall size of that exiting the quarter.

Yeah. It's about, it does remain we're estimating around four forty million per quarter. It's around two hundred and sixty million remaining.

Got it. The one housekeeping item about think, last quarter, ring-fencing purchase accounting accretion in that thirteen million dollar range for the year. Is that sort of hold true on a quarterly basis? Thanks.

Yeah. It'll trend a little bit lower over the remainder of the year. So I think probably a good quarterly run rate is in that twelve closer to twelve million for the rest of the year.

Great. Thank you.

Welcome. You're welcome.

Thank you. I would now like to turn the call back over to Curtis Myers for any closing remarks.

Well, thank you again for joining us today. We hope you're able to be with us when we discuss second-quarter results in July. Thank you.

Thank you. This concludes the conference. Thank you for your participation. You may now disconnect.