Fulton Financial Corporation (NASDAQ:FULT) Q3 2017 Earnings Conference Call Transcript

Oct 18, 2017 • 10:00 am ET

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Fulton Financial Corporation (NASDAQ:FULT) Q3 2017 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Good morning, ladies and gentlemen, and welcome to the Fulton Financial's third quarter results conference call. This call is being recorded.

I will now turn the call over to Jason Weber. Please go ahead, sir.

Executive
Jason Weber

Thank you, Payton. Good morning. Thanks for joining us for Fulton Financial's conference call and webcast to discuss our earnings for the third quarter of 2017. Your host for today's conference call is Phil Wenger, Chairman, President and Chief Executive Officer of Fulton Financial Corporation; joining Phil Wenger is Phil Rohrbaugh, Senior Executive Vice President, Chief Operating Officer and Interim Chief Financial Officer.

Our comments today will refer to the financial information and related slide presentation included with our earnings announcement, which we released at 4:30 p.m. yesterday afternoon. These documents can be found on our website at fult.com by clicking on Investor Relations, then on News. The slides can also be found on the Presentations page under Investor Relations on our website.

(Forward-Looking Cautionary 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 12 and 13 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, Phil Wenger.

Executive
Philip Wenger

Thanks, Jason, and good morning, everyone. I want to thank you for joining us. I have a few prepared remarks before our interim CFO, Phil Rohrbaugh, shares the detailed information on our third quarter results and discusses our 2017 outlook. When he concludes, we'll open the phone lines for questions.

We reported diluted per share earnings of $0.28, an increase of 7.7% linked quarter and 16.7% year-over-year. Pre-provision net revenue increased approximately $2.6 million or 4.1% linked quarter and $6.7 million or 11.3% year-over-year. Our return on average assets was 0.98%, and our return on average tangible equity was 11.52% for the quarter. Overall, we were pleased with our financial performance for the third quarter, although there were certain areas we expected to do better. We continued to focus on growth, efficiency and profitability to drive shareholder value.

During the quarter, we grew total revenue to a record level while reducing our overall noninterest expenses. The diluted per share earnings of $0.28 equals our all-time high that was set in the third quarter of 2006. Average loans increased 1.8% or $265 million linked quarter and 8.3% or $1.2 billion year-over-year. Loan growth and ending balances moderated during the quarter. C&I loan demand is typically softer in the third quarter, and our line borrowings and total originations declined, reflecting this seasonality. In addition, we had some criticized and classified credits payoff that created downward pressure on loan growth.

Our average commercial mortgage portfolio increased 0.7% or $45 million linked quarter and 9.5% or $538 million year-over-year. Growth year-over-year was throughout our footprint but primarily in our Pennsylvania market. As we have mentioned in prior quarters, our owner-occupied commercial mortgages