Fulton Financial Q1 2025 Earnings Call Transcript

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April 16, 2025
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Operator

Good day and thank you for standing by. Welcome to the Fulton Financial First Quarter twenty twenty five 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.

Operator

I would now like to hand the conference over to your speaker today, Matt Joswak, Director of Investor Relations.

Matt Jozwiak
Matt Jozwiak
Director, Investor Relations at Fulton Financial

Good morning and thanks for joining us for Fulton Financial's conference call and webcast to discuss our earnings for the first quarter ending 03/31/2025. Your host for today's conference call is Curt Myers, Chairman and Executive Officer. Joining Curt is Rick Kramer, 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.

Matt Jozwiak
Matt Jozwiak
Director, Investor Relations at Fulton Financial

The slides can also be found on the Presentations page under Investor Relations on our website. On this call, 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.

Matt Jozwiak
Matt Jozwiak
Director, Investor Relations at Fulton Financial

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 slide 16 through 22 of today's presentation, for a 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, Curt Myers.

Curtis Myers
Curtis Myers
CEO & Chairman at Fulton Financial

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 Rick 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.

Curtis Myers
Curtis Myers
CEO & Chairman at Fulton Financial

We continue to remain customer focused, deliver solid operating performance and execute on our strategy. Operating earnings per share of $0.52 represents a $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.

Curtis Myers
Curtis Myers
CEO & Chairman at Fulton Financial

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 transformation 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.

Curtis Myers
Curtis Myers
CEO & Chairman at Fulton Financial

We are seeing positive benefits and outcomes both operationally and financially. Now 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.

Curtis Myers
Curtis Myers
CEO & Chairman at Fulton Financial

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 $38,000,000 decline in indirect auto balances as we've previously forecasted. We also saw a $231,000,000 decline in commercial construction balances as there were certain projects we elected not to convert to permanent. And finally, overall balances were also impacted by accelerated resolutions of troubled assets. Given these strategic decisions and the overall current environment, loan growth is expected to be in the low single digit range for the year.

Curtis Myers
Curtis Myers
CEO & Chairman at Fulton Financial

Turning to the income statement, while 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 non performing loans. Even with the accelerated non performing loan resolutions, net charge declined one basis point linked quarter.

Curtis Myers
Curtis Myers
CEO & Chairman at Fulton Financial

Saying all of that, we remain cautious in our outlook for credit quality as customers navigate the current volatile environment. Now I'll turn the call over to Rick to discuss the impact of these initiatives on our financial results and provide comments on our 2025 operating guidance in more detail.

Richard Kraemer
Richard Kraemer
Senior Executive VP & CFO at Fulton Financial

Thank you, Kurt, and good morning. Unless I note otherwise, the quarterly comparisons I discuss are with the fourth quarter of twenty twenty four. 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 $95,500,000 of operating net income available to common shareholders. Consistent revenue, a stable balance sheet and net interest margin, combined with a decline in operating expenses, drove positive operating leverage again this quarter.

Richard Kraemer
Richard Kraemer
Senior Executive VP & CFO at Fulton Financial

Deposit growth of $200,000,000 or 3% was driven by strong growth in interest bearing money market products, offset by modest declines in municipal and a $105,000,000 decline in brokered deposits. Our non interest bearing balances ended the quarter at 20.6% of total deposits, down marginally. Total loans declined $182,000,000 during the quarter, due in part to the portfolio management activities Kurt 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%.

Richard Kraemer
Richard Kraemer
Senior Executive VP & CFO at Fulton Financial

As part of our on balance sheet liquidity by way of additional investment securities. The weighted average coupon on 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 $251,000,000 a two point five million dollars decrease linked quarter, while net interest margin increased two basis points to 3.43%. Loan yields declined 11 basis points linked quarter to 5.86%.

Richard Kraemer
Richard Kraemer
Senior Executive VP & CFO at Fulton Financial

Included in the loan yield is $13,100,000 of accretion attributable to the purchase accounting marks on the acquired Republic loan portfolio. Our average cost of total deposits decreased 11 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 discipline while balancing the potential for future balance sheet

Richard Kraemer
Richard Kraemer
Senior Executive VP & CFO at Fulton Financial

growth.

Richard Kraemer
Richard Kraemer
Senior Executive VP & CFO at Fulton Financial

Turning to slide six. Non interest income for the quarter was $67,200,000 This included $2,500,000 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.

Richard Kraemer
Richard Kraemer
Senior Executive VP & CFO at Fulton Financial

Non interest expense on an operating basis was $182,900,000 a decrease of $7,800,000 linked quarter. This decline was impacted by the timing of realized savings and the benefit of a $4,400,000 decline related to professional fees this quarter. When excluding this and several smaller items, operating expenses for the quarter would have been 187,200,000.0 Material items excluded from operating expenses as listed on slide seven were charges of $6,200,000 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 $190,000,000 and $195,000,000 for the remaining three quarters of twenty twenty five.

Richard Kraemer
Richard Kraemer
Senior Executive VP & CFO at Fulton Financial

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 $14,000,000 of additional Fulton First non operating expense. Turning to reserve metrics. Provision expense declined approximately $2,800,000 linked quarter to $13,900,000 Our allowance for credit losses to total loans ratio increased to 159%. And our ACL to non performing loan coverage increased to 193%.

Richard Kraemer
Richard Kraemer
Senior Executive VP & CFO at Fulton Financial

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 $77,000,000 in total equity, including the benefit of $16,000,000 of other comprehensive income. AOCI ended the quarter at $272,000,000 and our CET1 ratio at 11%. On slide 10, we are confirming our operating guidance ranges for 2025.

Richard Kraemer
Richard Kraemer
Senior Executive VP & CFO at Fulton Financial

Our original guidance incorporated a projected decrease in Fed funds of 25 basis points in March and '25 basis points in June of twenty twenty five. Considering more recent events, we have updated our rate forecast to include four twenty five 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. With that, we'll now turn the call over to the operator Josh for questions.

Operator

Thank you. Our first question comes from Frank Schiraldi with Piper Sandler. You may proceed.

Frank Schiraldi
Frank Schiraldi
Managing Director at Piper Sandler Companies

Thanks. Good morning. Good morning, Frank. Wondering if you guys can talk a little bit more about loan growth here. Do you still have some strategic offsets that make growth more of a second half of the year story?

Frank Schiraldi
Frank Schiraldi
Managing Director at Piper Sandler Companies

Are you assuming a 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?

Curtis Myers
Curtis Myers
CEO & Chairman at Fulton Financial

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 because of the strategic headwinds and the specific actions that we took.

Frank Schiraldi
Frank Schiraldi
Managing Director at Piper Sandler Companies

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

Richard Kraemer
Richard Kraemer
Senior Executive VP & CFO at Fulton Financial

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.

Frank Schiraldi
Frank Schiraldi
Managing Director at Piper Sandler Companies

Okay. And then just last question on that, a follow-up there. What would you say in terms of still, I guess, you're retained some asset sensitivity. What does a 25 basis point cut, how does that impact total NII at this point, would you say?

Richard Kraemer
Richard Kraemer
Senior Executive VP & CFO at Fulton Financial

It would be a headwind of about $1,700,000 annual.

Frank Schiraldi
Frank Schiraldi
Managing Director at Piper Sandler Companies

A 25 basis point?

Richard Kraemer
Richard Kraemer
Senior Executive VP & CFO at Fulton Financial

Correct.

Frank Schiraldi
Frank Schiraldi
Managing Director at Piper Sandler Companies

Okay. All right. Great.

Frank Schiraldi
Frank Schiraldi
Managing Director at Piper Sandler Companies

Appreciate the color. Thanks.

Operator

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

Daniel Tamayo
Daniel Tamayo
Vice President at Raymond James Financial

Hey, good morning, guys.

Curtis Myers
Curtis Myers
CEO & Chairman at Fulton Financial

Hey, Danny.

Daniel Tamayo
Daniel Tamayo
Vice President at Raymond James Financial

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

Curtis Myers
Curtis Myers
CEO & Chairman at Fulton Financial

Yeah, so really two regards. So we're looking at the credit portfolio, working through making sure we understand potential tariff impact, potential government cost cutting impact on our portfolio. So 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. Looking forward, we're really monitoring what impact it's going to have on growth, on margins and underlying performance of each individual business.

Curtis Myers
Curtis Myers
CEO & Chairman at Fulton Financial

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.

Daniel Tamayo
Daniel Tamayo
Vice President at Raymond James Financial

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

Curtis Myers
Curtis Myers
CEO & Chairman at Fulton Financial

Well, biggest one that we look at first or looked at first is the Ag portfolio. It's about a billion dollar portfolio. It's been one of our strongest portfolios for decades. That portfolio is impacted by commodity prices. And we also have an equipment business underlying there.

Curtis Myers
Curtis Myers
CEO & Chairman at Fulton Financial

So we're looking at that business. Portfolio is very domestic. 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.

Curtis Myers
Curtis Myers
CEO & Chairman at Fulton Financial

But that has been a strong portfolio, very well diversified and granular and 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 manufacturing business and we're looking at margins and procurement. And again, we don't do a lot of importexport, so it's really the impact of cost for those businesses and we're working through it in 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're no longer doing business with and I think that reflects some actions that we've taken as well.

Daniel Tamayo
Daniel Tamayo
Vice President at Raymond James Financial

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?

Daniel Tamayo
Daniel Tamayo
Vice President at Raymond James Financial

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 into a recession given the strength the balances already?

Richard Kraemer
Richard Kraemer
Senior Executive VP & CFO at Fulton Financial

Yes, Danny, let me take that. So I think specifically for the quarter, there was a couple of pluses and minus, I think benefiting the ACL We're really, you know, one declining loan balances to some migration out of construction, and obviously lower non accruals. And then offsetting that is, you know, the more qualitative or the forecasted element in terms of where Moody's goes on their on their forecast going forward and our usage of more, call it more impactful economic or downside scenarios, right? So, yeah, I don't know that we'll see a substantial change on the surface. There's obviously pieces, lot of moving pieces underneath.

Richard Kraemer
Richard Kraemer
Senior Executive VP & CFO at Fulton Financial

I would expect Moody's to get incrementally negative and call it more current periods, next quarter or two based on where they've been trending. That will have an impact for everybody.

Daniel Tamayo
Daniel Tamayo
Vice President at Raymond James Financial

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

Curtis Myers
Curtis Myers
CEO & Chairman at Fulton Financial

Thanks, Dave.

Operator

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

Andrew Leischner
Assistant Vice President - Equity Research at Keefe, Bruyette & Woods (KBW)

Hey, how's going? This is Andrew Eisner on for Chris McGratty.

Curtis Myers
Curtis Myers
CEO & Chairman at Fulton Financial

Morning.

Andrew Leischner
Assistant Vice President - Equity Research at Keefe, Bruyette & Woods (KBW)

Just on the buyback, with the stock trading at one two tangible book, CET one at 11% and credit trends pretty stable. I guess what's preventing you from resuming the buyback right now?

Andrew Leischner
Assistant Vice President - Equity Research at Keefe, Bruyette & Woods (KBW)

Thanks.

Curtis Myers
Curtis Myers
CEO & Chairman at Fulton Financial

Yes, so our capital strategy is the same. First, we want to support organic growth, then any corporate initiatives, then buybacks would follow that. 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 30,000 shares in the first quarter, right at the end of the quarter when we start to see the stock price go down.

Andrew Leischner
Assistant Vice President - Equity Research at Keefe, Bruyette & Woods (KBW)

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 continue to grow the investment portfolio. But 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 what is the base number there is that the 2024 average or end of period

Richard Kraemer
Richard Kraemer
Senior Executive VP & CFO at Fulton Financial

Period. The last part is period end. And then your first part, your first question. Yeah, I would expect it candidly, reinvesting cash flows is kind of priority number one, and those have been looking on a monthly basis 40,000,000 to $50,000,000 In terms of additions to securities, I think it's going to be somewhat market dependent. And my guess is it will slow as the year goes on.

Andrew Leischner
Assistant Vice President - Equity Research at Keefe, Bruyette & Woods (KBW)

Okay, great. Thank you.

Operator

Thank you. Our next question comes from Manuel Navas with D. A. Davidson. You may proceed.

Manuel Navas
MD & Senior Research Analyst at D.A. Davidson

Hey, good morning.

Manuel Navas
MD & Senior Research Analyst at D.A. Davidson

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

Richard Kraemer
Richard Kraemer
Senior Executive VP & CFO at Fulton Financial

I think there's potentially a little give on really on timing. So whether it occurs in 2025, or it gets pushed out, I mean, you saw some of the delayed spend in 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.

Manuel Navas
MD & Senior Research Analyst at D.A. Davidson

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

Richard Kraemer
Richard Kraemer
Senior Executive VP & CFO at Fulton Financial

I'm sorry, could you repeat that?

Manuel Navas
MD & Senior Research Analyst at D.A. Davidson

Where is sentiment, this kind of more dour sentiment around tariffs, slowing any part of the fee guide?

Curtis Myers
Curtis Myers
CEO & Chairman at Fulton Financial

Yeah, the fee income business overall, if you look first quarter of last year to first quarter of this year, we've had nice growth over 10% growth. 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 recurring fees that are on a portfolio balance. So there's some headwinds there. Interest rates have had some volatility and that really affects our mortgage business.

Curtis Myers
Curtis Myers
CEO & Chairman at Fulton Financial

So there are potentials that there's headwinds in the fee income overall. I think that's why we're guiding to lower half of the range in fee income. As we look at those business that they may be impacted as we move forward. But those underlying businesses are strong, but they do have some market sensitivity.

Manuel Navas
MD & Senior Research Analyst at D.A. Davidson

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 those together for a near term NIM expectation?

Richard Kraemer
Richard Kraemer
Senior Executive VP & CFO at Fulton Financial

Yeah, I think without giving guidance on NIM, I would point to a couple of things. Our spot rate on deposit costs at the 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, I think it March 15.

Richard Kraemer
Richard Kraemer
Senior Executive VP & CFO at Fulton Financial

So we had $195,000,000 move from fixed to float. And that was at a three twenty five basis point moving to SOFR plus two thirty. So call it three thirty five, three 40 basis points upwards. So that's a little over 6 plus million dollars of annual interest expense as well that you have to factor in. So all else equal margin should be a little pressured from here.

Manuel Navas
MD & Senior Research Analyst at D.A. Davidson

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

Richard Kraemer
Richard Kraemer
Senior Executive VP & CFO at Fulton Financial

Yeah, I think about 80% of it was retail or 85 of those retail.

Manuel Navas
MD & Senior Research Analyst at D.A. Davidson

So 80% last quarter, but how about in the second quarter?

Richard Kraemer
Richard Kraemer
Senior Executive VP & CFO at Fulton Financial

It's a similar number.

Manuel Navas
MD & Senior Research Analyst at D.A. Davidson

Great. Okay. I appreciate it. I'll step back into the queue. Thanks for the questions.

Operator

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

Matt Breese
Managing Director & Research Analyst at Stephens Inc

Hey, good morning.

Richard Kraemer
Richard Kraemer
Senior Executive VP & CFO at Fulton Financial

Good morning, Just

Matt Breese
Managing Director & Research Analyst at Stephens Inc

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

Richard Kraemer
Richard Kraemer
Senior Executive VP & CFO at Fulton Financial

No, nothing material in there, Matt.

Matt Breese
Managing Director & Research Analyst at Stephens Inc

Got it. Okay. And then Curt, you had mentioned in your prepared remarks a couple of times and it's also in the presentation that 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.

Matt Breese
Managing Director & Research Analyst at Stephens Inc

What are you being more careful on? And to what extent is that driving the lower loan growth outlook?

Curtis Myers
Curtis Myers
CEO & Chairman at Fulton Financial

Yeah, so really in the quarter, I mean, we're always working the challenged loan book. In this quarter, we had more than typical resolutions 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 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.

Curtis Myers
Curtis Myers
CEO & Chairman at Fulton Financial

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 fourth quarter to first quarter. So those actions were really highlighting just to show the impact on growth.

Matt Breese
Managing Director & Research Analyst at Stephens Inc

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

Curtis Myers
Curtis Myers
CEO & Chairman at Fulton Financial

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 $105,000,000 in the DC Metro and that's really the surrounding areas of DC.

Curtis Myers
Curtis Myers
CEO & Chairman at Fulton Financial

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.

Matt Breese
Managing Director & Research Analyst at Stephens Inc

Great. If I could just squeeze in one more, just on the professional fee reversal. Rick, I'm assuming that that line can go back to kind of the $3,000,000 range on a quarterly basis. Is that fair?

Richard Kraemer
Richard Kraemer
Senior Executive VP & CFO at Fulton Financial

Yes, I would say historical run rate is more going to be more accurate moving forward.

Matt Breese
Managing Director & Research Analyst at Stephens Inc

Perfect. Thank you.

Curtis Myers
Curtis Myers
CEO & Chairman at Fulton Financial

Thanks.

Operator

Thank you. Our next question comes from David Bishop with Hovde Group. You may proceed.

David Bishop
Director at Hovde Group

Yes. Good morning, gentlemen. Most of my questions have been asked and answered. Curious that the indirect auto portfolio, just a reminder, that remains a runoff and just curious the overall size of that exiting the quarter?

Richard Kraemer
Richard Kraemer
Senior Executive VP & CFO at Fulton Financial

Yes. It's about it does remain. We're estimating around $40,000,000 per quarter. It's around $260,000,000 remaining.

David Bishop
Director at Hovde Group

Yes.

David Bishop
Director at Hovde Group

Got it. The one housekeeping item, I think last quarter, ring fencing purchase accounting accretion in that $13,000,000 range for the year. Is that sort of holds true on a quarterly basis? Thanks.

Richard Kraemer
Richard Kraemer
Senior Executive VP & CFO at Fulton Financial

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 $12,000,000 closer to $12,000,000 for the rest of the year.

David Bishop
Director at Hovde Group

Great. Thank you.

Richard Kraemer
Richard Kraemer
Senior Executive VP & CFO at Fulton Financial

Welcome.

Curtis Myers
Curtis Myers
CEO & Chairman at Fulton Financial

You're welcome.

Operator

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

Curtis Myers
Curtis Myers
CEO & Chairman at Fulton Financial

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.

Operator

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

Executives
    • Matt Jozwiak
      Matt Jozwiak
      Director, Investor Relations
    • Curtis Myers
      Curtis Myers
      CEO & Chairman
    • Richard Kraemer
      Richard Kraemer
      Senior Executive VP & CFO
Analysts
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