Fulton (FULT) Q2 2025 Earnings Call Transcript

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DATE

Wednesday, July 16, 2025 at 10 a.m. ET

CALL PARTICIPANTS

Chairman and Chief Executive Officer — Curtis Myers

Chief Financial Officer — Richard Kraemer

Director of Investor Relations — Matt Jozwiak

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TAKEAWAYS

Operating Earnings: $106 million, or $0.55 per diluted share (operating, Q2 2025), marking a $0.03 increase from Q1 2025 and representing a company record for quarterly operating net income.

Revenue: Net interest income was $254.9 million for Q2 2025, a $3.7 million linked quarter increase; noninterest income was $69.1 million, increasing across all categories linked quarter.

Efficiency Ratio: 57.1% for the quarter, reflecting continued effective expense management.

Return Metrics: Operating return on average assets increased to 1.3%; Operating return on average tangible common equity reached 16.26%.

Loans: Total end-of-period loans grew by $150 million, or 2.5%, primarily from residential mortgage, home equity, and certain commercial loan segments.

Deposits: Deposits declined by $191 million, or 2.9%, with 20% of deposit balances noninterest-bearing at quarter-end.

Loan-to-Deposit Ratio: Ended at 92% after current quarter balance changes.

Net Interest Margin: Increased four basis points sequentially to 3.47%; Loan yields remained steady at 5.86%.

Deposit Costs: Average cost of total deposits decreased by five basis points sequentially to 1.98%.

Noninterest Expense: $187.6 million on an operating basis, rising $4.8 million linked quarter on an operating basis; Operating expenses were below the guided range of $190 million-$195 million set for the remainder of 2025.

Share Repurchase: 522,000 shares were repurchased at a weighted average price of $16.90; $115 million remains under authorization for repurchases and other capital uses.

Provision Expense: $8.6 million, down $5.3 million linked quarter, reflecting modest loan growth and no material credit outlook change.

Allowance for Credit Losses: Ended at 1.57% of total loans; coverage of nonperforming loans at 177%.

Capital: CET1 increased to 11.3%, with AOCI flat at $272 million at period-end.

Updated 2025 Guidance: Net interest income guidance raised to $1.005 billion–$1.025 billion for 2025, provision expense guidance lowered to $50 million–$70 million for 2025, operating expense guidance trimmed to $750 million–$765 million for 2025, effective tax rate raised to 18.5%–19.5% for 2025, and non-operating expense estimate reduced to $10 million for 2025.

Wealth Management and Commercial Banking: Both segments reached all-time highs in quarterly revenue; consumer banking and mortgage also achieved sequential growth.

Securities Portfolio: Purchased $117 million in securities with an average coupon of approximately 5.44% and duration of 3.2 years for liquidity management.

Subordinated Debt: $195 million reset to floating rate in March, now at approximately 6.6%, indexed to three-month SOFR plus 2.3%.

Fulton First Initiative: Produced a net realized expense benefit of $8.5 million, running ahead of the $25 million annualized target for 2025.

SUMMARY

Fulton Financial Corporation(NASDAQ:FULT) management raised full-year net interest income guidance and lowered both provision and operating expense guidance for 2025, reflecting ongoing revenue gains and efficiency progress. Quarterly fee income expanded across all categories, with record contributions from wealth management and commercial banking, supporting noninterest revenues at 21% of total revenue. The loan pipeline improved sequentially, though pull-through rates remain below historical averages due to client caution, while consumer loan and home equity originations benefited from seasonal demand.

Richard Kraemer said, "all else equal, I think the range of $1.90 and $1.95 should land you know, below the midpoint" indicating operating expenses may come in lower than guided for the next two quarters if project initiatives are not accelerated.

Curtis Myers confirmed, "strategy. As a reminder, we look at community banks in the $1 to $5 billion range." emphasizing ongoing discipline and a focus on in-market targets.

Richard Kraemer stated, "our betas are slowing. I don't it may be too early to say there's a trough in deposit cost, but I think we're closer to the bottom barring any future rate cuts." pointing to competitive pressures and deposit pricing stabilization.

Management attributed a modest increase in nonaccrual loans to "one project. It's a mixed-use project, predominantly multifamily." with credit metrics otherwise stable but a continued cautious portfolio outlook.

The Fulton First initiative's expense savings were described as "getting pulled forward in 2025 versus '26." accelerating net benefit realization ahead of schedule.

INDUSTRY GLOSSARY

AOCI (Accumulated Other Comprehensive Income): The component of equity that captures unrealized gains and losses on available-for-sale securities and other designated items.

SOFR (Secured Overnight Financing Rate): A broad measure of the cost of borrowing cash overnight collateralized by U.S. Treasury securities, used as a floating-rate reference index.

Pull-through Rate: The percentage of loan applications or commitments that result in funded loans within a designated pipeline.

CET1 (Common Equity Tier 1 Capital): A regulatory capital metric representing core equity capital, used to assess a bank's financial strength.

Accretable Yield: The portion of a purchased loan or portfolio discount that is expected to be recognized as interest income over time.

Fulton First Initiative: The company's operational efficiency and cost-savings program targeting annual net expense reductions.

Full Conference Call Transcript

Operator: Welcome to the Fulton Financial Second Quarter 2025 Results Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question and answer session. Please press one-one on your telephone. You will then hear an automated message that your hand is raised. To withdraw your question, please press star one-one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Matt Jozwiak, Director of Investor Relations. Please go ahead.

Matt Jozwiak: Good morning, and thanks for joining us for Fulton Financial's conference call and webcast to discuss our earnings for the second quarter ending June 30, 2025. Your host for today's conference call is Curtis Myers, Chairman and Chief Executive Officer. Joining Curtis is Richard Kraemer, 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 Investor Relations on our website.

On this call, representatives of Fulton Financial Corporation 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 Financial Corporation 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 Financial Corporation may refer to certain non-GAAP financial measures.

Please refer to the supplemental financial information included with Fulton's earnings released yesterday and Slides 16 through 22 of today's presentation for 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, Curtis Myers.

Curtis Myers: Well, thanks, Matt, and good morning, everyone. For today's call, I'll be providing a few high-level comments as well as some operating highlights for the quarter. Then Richard will review our financial results in more detail and discuss updates to our 2025 operating guide. After our prepared remarks, we'll be happy to take any questions you may have. We are pleased with our strong second-quarter operating earnings. Our community banking strategy continues to attract and retain valuable customers. We are delivering great customer outcomes, which translate into strong results for our shareholders. We are also proud to reinvest in our communities, making a positive impact and changing lives for the better.

This impact is made clear by the many stories in our Corporate Social Responsibility Report, which we released in June, and you can find on our Investor Relations website. So let me turn to the numbers. Operating earnings of $106 million or 55¢ per share represent a $0.03 linked quarter increase and a record for the company. These results demonstrate the impact of consistent positive operating leverage while maintaining a strong balance sheet. Total revenue increased linked quarter as we delivered growth in net interest income and fee income. Effective expense management continues to contribute nicely to our overall profitability as well. Combining those positive trends, our quarterly efficiency ratio was 57.1%.

Our operating return on average assets increased to 1.3%, and operating return on average tangible common equity increased to 16.26%. With these results, we were able to deliver our first $100 million operating net income quarter in company history. During the quarter, we were opportunistic and repurchased shares while growing tangible book value per share 9.5% on a linked quarter annualized basis. Our strong performance, disciplined approach to balance sheet management, diversified business model, and strong liquidity and capital position the company for continued success. Now let me provide a few more comments on the quarter. Total loans grew $150 million or 2.5% as originations were solid.

This growth more than offset the strategic runoff of our indirect auto portfolio and managed reductions in certain commercial loans. Based on our year-to-date performance and our origination trend, we continue to expect low single-digit loan growth for the year. Turning to deposits, we remain focused on balanced long-term deposit growth with prudent interest cost management. During the quarter, we saw a modest decline in balances largely due to seasonal trends. Based on new customer acquisition and overall customer sentiment, we continue to be positioned for long-term deposit growth. Turning to the income statement, revenue growth was driven by a strong net interest margin and a solid linked quarter increase in noninterest income. All noninterest income categories grew linked quarter.

Wealth management hit an all-time high in quarterly revenue. We are adding team members and continuing to grow our customer base. Commercial banking fees also hit an all-time high as customer activity continues to drive growth. Consumer banking and our residential mortgage business delivered solid linked quarter growth as well. Overall, our noninterest income businesses continue to make a consistent and meaningful contribution to overall revenue, and we have a solid strategy for continued growth. Lastly, let me touch on credit. Overall, we remain cautious given general economic and geopolitical uncertainty. However, we continue to see steady performance in our portfolio. Charge-offs and provision expense were down linked quarter. We experienced an uptick in nonaccrual loans.

However, these balances remain in line with recent periods. Overall, our coverage ratio remains appropriate given our cautious outlook. I'll turn the call over to Richard to discuss the details of our financial results and provide comments on our 2025 operating guidance in a little more detail.

Richard Kraemer: Thank you, Curtis, and good morning. Unless I note otherwise, the quarterly comparisons I discuss are with the first quarter of 2025. Loan and deposit growth numbers I reference are annualized percentages on a linked quarter basis. Starting on Slide four, operating earnings per diluted share was $0.55 or $106 million of operating net income available to common shareholders. Revenue growth, a stable balance sheet, and an increase in net interest margin offset a modest increase in operating expenses, driving positive operating leverage when compared to the year-ago period. Total end-of-period loans increased $150 million or 2.5% during the quarter, primarily in our residential mortgage portfolio, home equity portfolio, and certain commercial categories. Deposits declined $191 million or 2.9%.

Growth of $120 million in money market balances and an increase of $89 million in wholesale channels were offset by seasonal declines in municipal balances of $135 million and noninterest-bearing balances of $98 million. Our noninterest-bearing balances ended the quarter at 20% of total deposits. We expect to see municipal balance inflows in line with historical trends in the third quarter. With these results, our loan-to-deposit ratio ended the quarter at 92%. As part of our ongoing balance sheet management, we added $117 million of securities to offset investment portfolio cash flows and to maintain our on-balance-sheet liquidity. The weighted average coupon on new purchases this quarter was approximately 5.44%. These additions carried an effective duration of approximately 3.2 years.

The impact of these balance sheet trends is shown on slide five. Net interest income on a non-FTE basis was $254.9 million, a $3.7 million increase linked quarter, while net interest margin increased four basis points to 3.47%. Loan yields remained steady at 5.86%. While fixed-rate asset repricing represented a tailwind during the quarter, accretion interest attributable to the acquired Republic portfolio declined $1.7 million linked quarter to $11.4 million, offsetting most of that benefit. For the quarter, our average cost of total deposits decreased five basis points to 1.98%. Through the cycle, our total deposit beta has been 28%.

We continue to identify opportunities and manage deposit costs with discipline and to be supportive of our overall balance sheet growth. As a reminder, we had $195 million of subordinated debt reset to floating rate in late March, repricing from a fixed 3.25% to approximately 6.6%. This security is SOFR-based and will float at 2.3% over three-month term SOFR. Turning to slide six, noninterest income for the quarter was $69.1 million. The linked quarter increase was broad-based. When excluding the benefit from equity method investment adjustment of $2.7 million in the first quarter of 2025, fee income increased 7% linked quarter. Noninterest income as a percentage of total revenue remained at 21% during the second quarter.

Moving to slide seven, noninterest expense on an operating basis was $187.6 million, an increase of $4.8 million linked quarter. As we indicated last quarter, we expected operating expenses to fall in the $190 million to $195 million per quarter range for the remaining three quarters of 2025. While the second quarter was below that range, we are confirming the range for both the third and fourth quarters of 2025. When looking at our expense base, items excluded from operating expenses as listed on slide seven include $5.5 million of core deposit intangible amortization and a $270,000 benefit of other items. Turning to asset quality, provision expense declined approximately $5.3 million linked quarter to $8.6 million.

As Curtis mentioned, modest loan growth, combined with no material changes to our outlook, contributed to lower provisioning linked quarter. Our allowance for credit losses to total loans ratio ended the period at 1.57%, and our ACL to nonperforming loan coverage was 177%. Slide nine shows a snapshot of our capital base. As of June 30, we maintain a solid capital position that provides us with future balance sheet flexibility. During the quarter, we repurchased 522,000 shares at a weighted average price of $16.9. Including repurchases, internal capital generation added $5 million in total equity. AOCI ended the quarter flat at $272 million, and our CET1 increased to 11.3%. On Slide 10, we are updating our operating guidance for 2025.

Considering more recent events and additional economic data, we have updated our rate forecast to now include two 25 basis point rate cuts in 2025, one in September and one in December. This is down from four assumed cuts previously. In addition to this macro assumption, we have made the following adjustments to our guidance: increasing net interest income to a range of $1.005 billion to $1.025 billion, we are lowering provision expense to a range of $50 million to $70 million. There is no change to the fee income range remaining at $205 million to $280 million. We are lowering our operating expense to a range of $750 million to $765 million.

We are increasing our effective tax rate to a range of 18.5% to 19.5%. And lastly, lowering our estimate of non-operating expenses from $14 million to $10 million. And with that, we'll now turn the call over to our operator, Gigi, to open up for questions.

Operator: Thank you. On your telephone, and wait for your name to be announced. To withdraw your question, please press one-one again. Our first question comes from the line of Daniel Tamayo from Raymond James. Thank you. Good morning, everyone.

Daniel Tamayo: Good day. Maybe just starting on the expense guidance. You had a nice quarter, and you talked about kind of keeping the back half in that $190 million to $195 million range. And you lowered the overall 2025 range as well. But I guess just curious, you know, how you see the pace in the back half of the year getting there. You know, it's been a steep decline in the first quarter, and then it's been a little bit of a ramp since then implied in the back half of the year as well.

So just curious kind of if there was if there's, like, some help you could give us on geography and timing of the increase in the expenses in the back half?

Richard Kraemer: Yes. Thanks, Danny. Look, I think you're directionally right. I you know, all else equal, I think the range of $1.90 and $1.95 should land you know, below the midpoint of that. Little bit of timing just on day count alone, obviously, additional day. But recognize the magnitude of increase in 2Q had a lot to do with merit in the second quarter, which accounted for a couple million dollars of the increase. So you don't have that kind of step up in 3Q and 4Q.

You know, I think what we're trying to do is provide a little bit of optionality for some initiatives that may start in the you know, second half, so which could increase a little bit. But, I don't expect geographically, I guess, on the expense line to see any major outlier moves for the second half.

Daniel Tamayo: Okay. So if you end up kind of below that midpoint, then like, you know, that points us to you know, I guess, below the midpoint of the, of the overall range for the year. Is that fair way to think about it?

Richard Kraemer: That's a fair way to think about it, you know, with the caveat of there are, obviously, obviously we're leaving ourselves a little room to start certain projects in second half which could incur cost more immediately and move that up a little higher.

Daniel Tamayo: Okay. Alright. Fair enough. Appreciate that color. And then kind of a similar question on the fee income guidance. You know, just assuming kind of a modest pace of increase in the back half gets us to kind of above the midpoint of the guidance that you guys have in there. Yeah. It's been a certainly a nice quarter, a nice year of growth on the wealth management side. But just wanna make sure you know, as we're working our way through the models that we're not missing any kind of you know, onetime increases that you think may back off. I'm Cash management looks like it was pretty strong in the second quarter.

Card income bounced back, but just as we look through the fee income side, if there's anything that you'd point us towards in terms of moving parts in the back half of the year.

Curtis Myers: Yes, Danny. The second quarter was good across the board, as you mentioned, in fee income. You know, as we look forward, we feel we have good strategies in place as we look forward, if we get that kind of consistent outperformance in each category, gonna trend to the top end of that range. If we hit any headwinds in any one of those business units, we would trend you know, to the midpoint or low end of the range. We feel pretty good about the overall outlook there. And, that's one of the outlook items that did not change.

So we think we are tracking as expected and, you know, pretty happy about the quarter and the consistent performance in each of the fee income categories.

Daniel Tamayo: Great. Alright. Well, thanks for all the color. Appreciate it, guys.

Curtis Myers: You bet. Thank you.

Operator: One moment for our next question. Our next question comes from the line of David Bishop from Hovde Group.

David Bishop: Yes. Good morning, gentlemen.

Curtis Myers: Hey, David.

David Bishop: Hey. I was just curious. Curtis, Richard, maybe just to bring us up to speed on the status of the loan pipeline. Just curious what you're seeing and hearing from your relationship managers and your commercial clients if we're starting to see any impact from some of the uncertainty from tariff talk, starting to impact pipeline and loan demand. Thanks.

Curtis Myers: Yes. Pipeline linked quarter is up. So we feel that's encouraging in this environment. But, again, we still have the pull-through rate being below historical norms as customers are cautious about new projects. You know, the more certainty we get in the marketplace, whether it's taxes or tariffs or all of the many things that you could point to, we're hoping that pull-through rate increases, and we get you know, some tailwinds for loan growth linked quarter. We were pleased with our loan growth in the second quarter. And we're hoping that continues. But pipelines are up. And we're really monitoring pull-through rates.

It really comes down to customers' you know, deciding to spend that money and move forward with that project.

David Bishop: Got it. And then a follow-up. You know, Curtis, maybe just remind us appetite for M&A here with Republic in the rearview mirror. Just curious where any sort of M&A focus might be, sort of geographically and maybe size parameters?

Curtis Myers: Yeah. So our M&A strategy remains the same. We will stick to that strategy. As a reminder, we look at community banks in the $1 to $5 billion range. You know, are really the focal point for our strategy. They add to the company. We're predominantly focused on in-market, and we think those opportunities would be additive. And then we would look at bigger deals, but there are very few of them. So we monitor that. But our primary focus remains the same. I think the key message is, as usual, we will be disciplined in metrics, and we'll be disciplined on strategy.

David Bishop: Perfect. Thanks.

Operator: Thank you. One moment for our next question. Our next question comes from the line of David Conrad from KBW.

David Conrad: Hi, good morning.

Curtis Myers: Good morning.

David Conrad: Just wanna talk a little bit about the deposits and the outlook there. You know, this quarter, you saw about three bps increase in savings, but really good growth and able to push down, you know, really expensive broker deposits. So just wondering as you kinda look at the NIM outlook, kinda your ability to continue to remix the deposits.

Richard Kraemer: Yeah. Thanks, David. I think there's a couple things to consider. You know, when it comes to the cost. Obviously, you know, we do have some seasonality in our portfolio driven by the municipal kind of inflows and outflows and, you know, at times to offset that, we do utilize some more wholesale methods and more costly methods in short term. So that obviously has a mitigating effect on lower cost. You know, I think we still kinda you know, there's still as rates stay higher, this drift that is occurring in noninterest bearing. So that's a trend on mix you're kind of consistently fighting.

But, you know, we are seeing, I think, increased competition across the board for deposits more recently. And, you know, candidly, our desire is to fund all of our future loan growth with customer deposits. So that may amplify a little bit. So, you know, our betas are slowing. I don't it may be too early to say there's a trough in deposit cost, but I think we're closer to the bottom barring any future rate cuts.

David Conrad: Got it. Thanks. And then on the NII guide, I guess it feels like if you held things flat here for a couple quarters, you'd be you know, kind of the midpoint you know, above the midpoint and towards the higher end. So just maybe some comments on you know, the exit rate of this year and you know, I think, you know, you have two cuts in, but the December cut probably doesn't matter too much. So maybe just some thoughts on the exit rate of NII.

Richard Kraemer: Yeah. I look. I think I think, obviously, what I just mentioned on the funding side, is a little bit of a headwind. I think we fully recognize the tailwind from the fixed-rate asset repricing. What I would say there is though, there are also competitive pressures that ebb and flow at any given time, which can impact the yield and spread. So you know, it's a tough business and spreads are not always expanding. So I think you're you'll see a natural assuming no Fed moves, see this kind of steady state modest growth in NII from here on out, but obviously, you know, there's lots of things from the macro that can change that.

David Conrad: Okay. Thank you.

Operator: Thank you. One moment for our next question. Our next question comes from the line of Matthew Breese from Stephens Inc.

Matthew Breese: Good morning.

Curtis Myers: Hey, Matthew.

Matthew Breese: I was hoping we could go back to the pipeline for just a second. You know, maybe discuss, you know, the components. More recently, we've seen growth in the form of commercial real estate and residential. Historically, I know, you know, Fulton Financial Corporation has been more of a C&I focused type bank. So I wanted to get a sense for what we might see in terms of near-term loan growth. And then secondly, you know, Richard, you had mentioned spreads are not always constant. What are you seeing for new loan spreads? Are you seeing competition kind of erode spreads in the hunt for growth?

Curtis Myers: Matthew, I'll first respond just on growth and strategy. You know, we're very committed to a diversified loan book. I think it served well over time. So we're looking to grow each category as appropriate from a risk standpoint. You know, quarter to quarter, that ebbs and flows based on where loan originations are and opportunities are. You know, you mentioned C&I loan growth. You know, we are focused on C&I loan growth. It's a good business for us and tracks treasury and a lot of our other business lines. So strategically, C&I is really important. C&I customers, it's very competitive right now, and it also is where they're dealing most with tariffs and costs and uncertainty.

So you know, we're looking at each segment, trying to grow that prudently and responsibly. And we think we have opportunities in each. You know, we have market disruption. We've got good pipelines. You know? So I think we can grow each category, but you're really you're gonna see quarter to quarter, maybe even year to year, our ability to grow certain segments more than others. But, again, the strategic focus is to grow each segment appropriately.

Richard Kraemer: Maybe, Matthew, I'll just comment quickly on spreads. I think, you know, I would say spreads are still healthy and overall yields are still healthy. But, you know, when we go back maybe to the third, fourth quarter of last year, probably were seeing new origination spreads than we were in the, you know, seven plus. And so over time, that was probably in certain categories. So you're seeing, I think, quarter over quarter, compression on new origination yields of around an eighth to a quarter depending on what portfolios you're looking at.

Now that is a little choppy, and this is probably more normalized, but you know, recognizing that just industry pressure and competitive pressure puts overall pressure on that for everybody.

Matthew Breese: Got it. Okay. And, Richard, you'd also mentioned it's in the release too, but accretable yield step down. Should we use this $11.4 million as a new starting point and maybe you could just help us out for the new trend. Is it, you know, down into the right? What does the current deal look like, you know, three, four quarters from now?

Richard Kraemer: Yeah. I think 11 to 12 million is a reasonable range. Assuming some level of prepayments. Obviously, we are, you know, there is an estimate there in terms of prepayments. Speeds. If you had no prepayments, that number would be closer to, you know, 10 and a half to high 10 million.

Matthew Breese: And then last one for me. You bought back some stock this quarter. You still have, I think, around $225 million repurchase authorization. But I noticed that authorization also includes preferred and sub debt. You had mentioned sub debt is now floating or a portion is now floating. Curious if there's an appetite, one, for additional common repurchases or alternative forms of capital repurchase, including that sub debt. What circumstances would you kind of execute on those?

Curtis Myers: Yeah. So the overall capital planning strategy is the same. We want to support organic growth. You know, we'd really like organic growth to continue to the growth rates continue to improve. So that's always the first use of capital. And then any corporate initiatives that we would want to invest in. And then we would get to buybacks, and we look at those opportunistically. We had some opportunity in the second quarter. You know, we used about $10 million of that. So we have $115 million remaining for stock buybacks or for other uses. So we are evaluating that. Yeah. As we move forward, it really depends on outlook and overall capital and balance sheet strategy.

Matthew Breese: Great. That's all I had. Thanks for taking my questions.

Operator: Thanks, Matthew. Thank you. One moment for our next question. Our next question comes from the line of Manuel Navas from D.A. Davidson.

Manuel Navas: Hey. How would you describe, like, kind of the consumer pipelines? That was pretty strong this quarter. Is that still gonna have some seasonality or kinda carry over to the third quarter? And with the pipelines building on commercial, you're gonna kinda see a handoff in better growth there in the back half of the year? Just kinda talk about those dynamics, please.

Curtis Myers: Yes. There's definitely some seasonal effect on the consumer business. The second quarter is good. Home buying opportunity, projects, consumer projects. The help driving the home equity. We referenced both of those categories growing nicely in the second quarter. So there is some seasonality to the business, but you know, all of those underlying businesses were focused on attracting customers, adding new customers, and driving business organically. So I think there's a base level of growth in each of those businesses, and then it'll be either more significant or lower quarter to quarter based on seasonality. We really didn't see anything specific in the second quarter that would be an anomaly.

You know, that was a good solid second quarter consumer growth.

Manuel Navas: Is shifting over to pretty strong performance in fees and OpEx. Could you kinda map out if any of that outperformance has been kinda driven by the Fulton First initiative?

Curtis Myers: On the fee side, we talked about it a little bit before. It was a good quarter for us. We grew in category. You know, we feel we have just good underlying strategies there. There are some Fulton First initiatives that you know, we're focused on accelerating growth over time. It's hard to separate those from core business, but you know, as we move forward, the growth-related initiatives for Fulton First will show up in accelerating growth rates in certain categories. There's really not anything specific first to that growth rate that we would call out. It's just really managing those businesses in a way that our long-term growth trajectory is higher than expected.

Richard Kraemer: Yeah. On the expense side, it was about you know, but we're about $8.5 million in net realized benefit from Fulton First in 2Q. So, you know, still remain well on track, just annualizing that number well ahead of our original $25 million net save for 2025. So you know, I don't I wouldn't necessarily say that the program in total has grown. I think a lot of that is just getting pulled forward in 2025 versus '26.

Manuel Navas: That's helpful. Any you talked about credit trends being very solid. There was a little bit of tick up in NPLs, I think, in construction. Any color there? Just kind of and any broader comments on credit.

Curtis Myers: Yeah. Most of that increase in commercial construction, most of that was one project. It's a mixed-use project, predominantly multifamily. But mixed-use project. We feel we have an appropriate reserve. It's an identified issue that we've been working on. So we already have it reserved for and are working towards resolution. But what you see there is just that migration from classified criticized to nonaccrual for the quarter. So it did identify an issue we're working through to resolution. Then second part of your question, just more broadly in credit. You know, metrics have remained stable. We feel good about the credit performance. But we remain cautious. There's just a lot of moving parts in the marketplace.

A lot of factors that consumers and businesses are dealing with. But at this point, the portfolio has been very resilient, and the credit metrics are holding strong. But we still do have a cautious outlook just based on the overall environment.

Manuel Navas: Thank you very much. Appreciate the comments.

Operator: Welcome. Thank you. At this time, I would now like to turn the conference back over to Curtis Myers for closing remarks.

Curtis Myers: Well, thank you again for joining us today. We hope you'll be able to be with us when we discuss third-quarter results in October. Thank you.

Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.

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