FULT - NASDAQ

Good day, and thank you for standing by. Welcome to the Second Quarter Fulton Financial Results Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. I'd now like to hand the conference over to your first speaker today, Matt Jozwiak, Director of Investor Relations. Please go ahead.

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, 2024. Your host for today's conference call is Curt Myers, Chairman and Chief Executive Officer. Joining Curt today is Betsy Chivinski, 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 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 Invest Relations on our website. On this call, representatives of Fulton may make forward-looking statements with respect to Fulton's financial condition, results of operations and business. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, and actual results could differ materially. Please refer to the Safe Harbor statement on forward-looking statements in our earnings release and on Slide 2 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. 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 19 through 22 of today's presentation for a reconciliation of those non-GAAP financial measures to the most comparable GAAP measures. Now, I'd like to turn the call over to your host, Curt Myers.

Thanks, Matt, and good morning, everyone. For today's call, I'll be providing highlights on our performance for the quarter. I'll discuss several key initiatives and I'll provide a few overall comments on the company. Then I'll turn the call over to Betsy Chivinski, Interim Chief Financial Officer, to review our financial results in more detail and step you through our guidance for 2024. After our prepared remarks, we'll be happy to take any questions you may have. Let me start by thanking both our new Republic teammates as well as our dedicated Fulton team for an exceptional effort these last few months. We've had a very active quarter on a variety of fronts. We continue to drive our strategy forward. We made great progress on key initiatives, all while delivering a strong performance for our customers, communities and our shareholders. Our team performed well and is excited about the strategic progress we are making. Operating earnings of $0.47 per diluted share this quarter was a strong performance. Following a solid first quarter, our year-to-date results are outpacing our expectations. Stable core business trends supplemented by the impact of the Republic transaction are driving these results. We saw a steady balance sheet growth as organic loans and deposits grew as expected and we added significant growth through the Republic transaction. We also generated meaningful margin, revenue and net income growth. On a linked quarter basis, net interest margin increased 11 basis points. Net interest income grew by $35 million, non-interest income grew by nearly $9 million, and operating net income grew by $17 million. Also during the quarter, we executed on a sale leaseback transaction and corresponding investment portfolio restructuring, improving the profile of our investment portfolio as well as its yield. The investment portfolio restructuring adds an estimated $8.5 million in interest income annually. We also moved forward on five planned financial center consolidations and relocated one financial center in our New Jersey market. We issued our 2023 Corporate Social Responsibility Report reflecting our commitment to the communities and stakeholders we serve. Our performance, steady business trends, and the capital raise allowed us to maintain healthy capital levels, increase our tangible book value, enhance our earnings capabilities and deliver value to our shareholders. Overall, we feel is a strong quarter for the company. Now, let me provide a bit more detail on growth. Second quarter deposit growth was $254 million, or 4.6% annualized when you exclude the $191 million of high-cost broker deposits that we were able to eliminate. Overall, when including the Republic transaction, deposits grew $3.8 billion, or 17.6% on a linked quarter basis. We did experience some deposit runoff from the acquired deposit portfolio as several large municipal deposit customers were already transitioning out of Republic, and we also purposely reduced certain high-cost non-relationship deposits. These deposit results were as they anticipated and we remain focused on customer retention and customer growth. Organic loan growth for the quarter was $124 million, or 2.3% annualized consistent with past periods. Overall loan growth was $2.7 billion, or 12.4% linked quarter on a consolidated basis including the acquired loans. Profitable loan growth and prudent credit decisions remain our focus. Our loan-to-deposit ratio ended the quarter at 94.3%. Our current loan-to-deposit ratio is below our long-term operating target of 95% to 105% and enhances our balance sheet growth opportunities and alleviates funding pressure in the near term. This was a key outcome of the Republic transaction. Non-interest income for the quarter was strong core non-interest income was up $6 million to $63 million. When including Republic, total noninterest income grew $8.8 million linked quarter. Now, let me provide some comments on credit. Overall, core Fulton credit metrics remain stable. The provision for credit losses excluding the day one credit mark associated with the Republic transaction was $8.6 million, down from $10.9 million in the first quarter. Charge-offs for the quarter were 19 basis points and criticized and classified loans were relatively flat in the Fulton portfolio. Turning to the acquired portfolio, we conducted a review of all loans over $3 million. After applying our risk rating methodology, non-accrual loans did not significantly increase and charge-offs were less than $1 million for the quarter. The initial credit mark on the acquired portfolio was supported by our review and no additional provision was needed. We continue to be cautious in our credit outlook for 2024 and are monitoring the acquired portfolio closely. The increase in our allowance for credit losses provides additional ability to absorb future losses. Now, let's look to moving forward. I'll provide updates on two key corporate initiatives. First, we are focused on the timely and effective integration of Republic and we continue to diligently follow the FDIC process. Integration of customers, teams and systems are progressing well with the majority of integration work anticipated to be completed by year-end. Next, let me turn to Fulton First. During the quarter, we've completed the design phase of the process and are now moving into the implementation phase. I want to remind you that this is a 12 to 18 month process in which we're only at about the six-month point. We look forward to providing more details on growth initiatives and operating efficiencies during the third quarter earnings call. This past quarter you see the continued investment in the initiative. This quarter's costs are for the final program design as well as certain employee-related changes. We continue to make good progress on the Fulton First initiative. Overall, a solid first half of 2024 and a transformational quarter in many respects for our company. Now, let me turn the call over to Betsy to discuss our financial performance in more detail and our guidance.

Thank you, Curt, and good morning, everyone. Unless I note otherwise, the quarterly comparisons I mentioned are with the first quarter of 2024 and loan and deposit growth numbers are annualized percentages on a linked quarter basis. Starting on Slide 4, operating earnings per diluted share this quarter were $0.47 on operating net income available to common shareholders of $82.5 million. This compares to $0.40 of operating EPS in the first quarter of 2024. As Curt noted, excluding Republic, loan growth was $124 million, or 2.3% during the quarter. Commercial lending contributed $39 million of this growth, or about 1%. Commercial construction loans grew $64 million during the quarter and was offset by slight declines in commercial real estate, C&I and equipment finance. Total commercial loans, including the acquired commercial portfolio, grew $1.8 billion, or 13% linked-quarter net of purchase accounting marks. Consumer lending produced growth of $87 million, or 5% during the quarter. An increase of $102 million in residential mortgages, primarily adjustable rate, was offset by decreases in other consumer categories. When layering in Republic consumer portfolio, total consumer loans grew by $909 million, or 12% linked quarter net of purchase accounting marks. For the total acquired loan portfolio, the yield to Fulton, including purchase accounting accretion, was in excess of 7.5% for the quarter. Total deposits increased $3.8 billion, or 17.6% linked quarter attributable to the Republic transaction. Legacy Fulton deposits grew by $254 million, or 4.6% during the quarter, excluding the runoff in brokered CDs. Growth in time deposits, money market and municipal balances more than offset a decline in non-interest-bearing products. Our non-interest-bearing DDA balances ended the quarter at $5.6 billion, or 21.9% of total deposits, which includes the deposits from Republic. Our net interest income guidance for 2024 assumes that we will continue to see migration from non-interest-bearing to interest-bearing deposits throughout 2024, but at a slower pace than we saw in 2023. On balance sheet liquidity increased to 17.6% of assets with cash and deposits in other institutions increasing by $950 million and our investment portfolio increasing by $400 million. The impact of these positive balance sheet trends is shown on Slide 6. Net interest income was $242 million, a $35 million increase, and net interest margin increased by 11 basis points to 3.43%. These meaningful increases were primarily driven by the benefit of the Republic transaction as well as the impact of the investment portfolio restructure. We sold $340 million of securities yielding 3.34% and purchased $357 million of securities of similar type and duration, yielding 5.74%. Loan yields increased 22 basis points during the period, increasing to 6.12 compared to 5.90 last quarter. Included in the loan yield is $9.8 million of accretion attributable to the interest rate marks on the acquired loan portfolio. Also, the accretion of the non-PCD discount was $571,000 during the quarter, and we do exclude that from our operating earnings calculations. Actual purchase accounting discount accretion going forward will be driven by the pace and magnitude of paydowns, payoffs, prepayments, and other decreases in the acquired balances. Our cost of total deposits increased 19 basis points to $2.14 during the quarter, primarily due to the higher cost of the acquired portfolio. Turning to asset quality on Slide 7, while NPLs increased $6.2 million during the quarter, the NPL to loans ratio decreased from 73 basis points on March 31st to 67 basis points at quarter end. Net charge-offs were $11.3 million or 19 basis points. Gross charge-offs of $14 million were granular and were offset by $2.7 million of recoveries. And our ACL as a percentage of loans increased to 1.56 at quarter end, with that increase attributable to the allowance on the Republic portfolio. Excluding the impact of the Republic transaction, ACL as a percentage of loans would have been relatively flat. The credit mark on the acquired portfolio was a total of $79 million, or 2.8% of loans as of the acquisition date. Turning to non-interest income on Slide 8. Non-interest income for the quarter was $93 million. This included a loss on sale of investments of $20.3 million, offset by the $47.4 million bargain purchase gain attributable to the Republic transaction. Excluding these non-operating items, fee income was strong for the quarter, increasing $8.8 million, including $2.8 million impact from Republic and a $6 million impact from the core business. Wealth management revenues of $21 million increased $835,000 linked quarter and other record for the company. And as a reminder, wealth management represents almost one-third of our fee-based revenues with over 80% of those revenues recurring. Market value of assets under management and administration remained at $15.5 billion as of June 30. Commercial banking fees increased in all categories, increasing $2.6 million, which included a $383,000 contribution by Republic. Merchant cash management and SBA all showed solid linked quarter growth. Consumer banking fees increased $3 million to $14.6 million with Republic contributing $2.3 million to that increase. Mortgage banking revenues increased $860,000 to $4 million and was driven by a seasonal increase in mortgage originations as well as a stable gain on sales spread. Moving to Slide 9, non-interest expenses on an operating basis were $195 million, an increase of $25 million linked quarter, which includes a $17 million operating impact from Republic. Much of the core Fulton increase was due to a $5.7 million increase in salaries and benefits, which included the impact of April 1st merit increases. Material items excluded from operating expenses as listed on Slide 19 were the following. The $20.3 million gain on the sale-leaseback, which is included in our statements as a negative expense, $13.8 million in acquisition-related expenses, $6.3 million in Fulton first costs, and $4.6 million in total core deposit intangible amortization. On Slide 10, you can see a snapshot of our capital base. And as of June 30, we maintained solid cushions over both the regulatory minimums and on a linked quarter basis, our capital ratios remain relatively flat. Moving to Slide 11, we are revising our operating earnings guidance upward to reflect the impact of the acquisition, the investment restructure, as well as a change in the interest rate forecast. Our guidance now assumes a single 25 basis point decrease in Fed funds in September. Our operating guidance -- earnings guidance for 2024 is as follows. We expect net interest income on a non-fully tax equivalent basis to be in the range of $925 million to $950 million. We expect the provision for credit losses to be in the range of $40 million to $60 million, which excludes the $23 million non-PCD provision here in the second quarter. We expect non-interest income, excluding security gains and the bargain purchase gain, to be in the range of $240 million to $260 million. We expect non-interest expense on an operating basis to be in the range of $750 million to $770 million for the year. And lastly, we expect our effective tax rate to be in the range of 16% to 18% for the year. And I will note that our second quarter effective tax rate was considerably lower, primarily due to the bargain purchase gain and how that is taxed related to the Republic transaction. With that, we'll now turn the call back over to the operator for your questions.

Thank you. At this time, we'll conduct the question-and-answer session. [Operator Instructions] Our first question comes from the line of Daniel Tamayo of Raymond James. Your line is now open.

Thank you. Good morning, everyone. Just wanted to start…

Good morning, Daniel.

Yeah. Good morning. I just wanted to start on the net interest income guidance. I know you guys normally don't break that out into margin and balance sheet, but just hoping you could give us a little more detail, given all the puts and takes happening with the acquisition and the restructurings. It appears that the margin would be coming down given your guidance in the third quarter, obviously, you've got accretion built into that number as well. But I'm just curious if you could give us any more detail on how we should be thinking about the margin in the balance sheet in the back half of the year.

Yeah, Daniel. It's Curt. Good question. We do have a lot of different factors this quarter. So we do not give forward guidance on net interest margin. However, the continued trend of non-interest-bearing flowing into interest-bearing, we expect to continue and we have one rate cut in the forecast and we continue to be asset sensitive. We're less asset-sensitive as we stand right now, but we are asset-sensitive. So those two factors would put pressure on the margin as we move forward. And that's why we really focus on the NII guide. We feel comfortable with the update there and target those NII levels.

Okay. Well, maybe just zoom in on the balance sheet. I think you guys are done with the restructurings, but if you could just kind of make sure we're clear on, from an average balance sheet perspective, how much impact is left from those restructurings?

And you're talking about the sale-leaseback and investment portfolio restructure.

Correct.

So we have fully reinvested those funds and then that net interest -- positive net interest income impact is in the guide.

Got it. Okay.

And you could really look at our investments on an ending balance basis to see where we ended up.

Okay.

And then what their deals would be going.

Okay. All right. Well, thank you for all that. I guess, just lastly, from a perspective of deposits, just curious -- you mentioned some runoff from Republic related to municipal relationships. That sounded like those were expected. Should we expect any other -- any incremental runoff from Republic relationships?

Well, we had -- in the investment deck for the transaction, we had modeled in $600 million of deposit runoff over a period of time. The deposit runoff is coming down. That was very much initial days when -- right after the assumption. So the runoff continues to diminish and we'll feel comfortable with our original estimates.

Okay. All right. Well, thank you for taking my questions. I appreciate it.

Thanks, Dan.

Thank you. One moment for our next question. Our next question comes from the line of Frank Schiraldi of Piper Sandler. Your line is now open.

Good morning.

Hey, Frank.

Just on the expense guide and -- as we think about cost saves coming through from FRBK, I think initially you talked about that franchise, ultimately the expense load from that franchise looking like maybe a $60 million run rate, which I assume you get to sometime next year. You obviously give the full-year range for 2024 for the combined organization. But just wondering if you can give any thoughts around how that steps down through the back half of the year? And maybe where you anticipate exiting the year on that with Fulton First and acquisition cost saves baked in?

Yes, Frank. We are shooting for having the cost saves implemented by January 1 of '25. There's obviously a process to that. We are targeting to integrate in the fourth quarter. The expense guide -- we really looked at that as confirming our run rate in expenses and then incorporating the current run rate of Republic. The way the numbers were finalized in the deal deck, we had $112 million of annual expenses, and that was pretty close to the target. So we're factoring in our eight months of those expenses into the guide. We are working as diligently as we can to bring the costs down over the period of time, but we have integration to work through. We have financial centers to work through. And again, our focus is to retain customers and retain talent and work through that diligently. So we're really shooting for that January 1st to have it in the run rate. But we will be able to get some cost saves this year, but we really want to be at that point, and we feel comfortable being at that 40% cost saves that we had laid out originally.

Okay. And then that's -- so that's still around $60 million. Let's talk about $60 million a year in run rate, is that what it still got --

Yes, it'd be -- yeah, plus or minus $60 million.

Okay. And then just on the, purchase accounting accretion in the quarter did come a little bit ahead of my expectations. I don't necessarily recall what you guys were -- if you guys gave specifics during the deal. But wondered, maybe if you could give any color there, around purchase accounting accretion. Was it any different than your expectations? And anything else that maybe has surprised you either positively or negatively, obviously, early days here, but following the deal?

So speaking to the purchase accounting kind of compared to what we projected in the bid process and the acquisition, all the marks came in real -- almost right online with where we had been -- where we had projected. So that's great news. We are happy to see that both the interest rate mark, the CDI, as well as the credit marks. And then we have a pretty granular process to calculate that accretion, which really is done on a loan-by-loan basis. So it's based on how those loans repay changes in balances during the quarter. But again, that can change -- every quarter, that'll change based on prepayment experience. But again, it was in line with our -- what we were projecting.

Okay. And then, yes, and then anything else that's surprised positively or negatively in the early days here, following the deal?

Yeah. We're working through it diligently. I don't think we've had any big surprises. We conducted the credit review overall on the portfolio, so that went as anticipated. And we continue to work diligently through the process.

Okay. All right. Thank you.

Thanks, Frank.

Thank you. One moment for the next question. Our next question comes from the line of Chris McGratty of KBW. Your line is now open.

Great. Thanks. Curt, I just wanted to go back for a second on the balance sheet repositioning. Beyond the communicated restructuring, are you actively adding to the bond portfolio? Is that something we should be thinking about or shrinking it, either way?

So I don't want to say we're actively adding to the bond portfolio. So clearly, liquidity is on everyone's mind at this point where we feel really comfortable where we are with liquidity, but we'll make those decisions monthly based on ALCO. Overall, our long-term target for investments is 15% of total assets. We're not quite there, but we don't have definitive plans. We monitor that month in, month out, based on our liquidity position and everything else with the balance sheet.

Okay. Thank you for that. And just going back to the accretion income, just sorry for the follow up here. I think at the time of the merger, it was roughly 20% of the 20% accretion goes through accretion. I believe the deal was in for roughly two months, so is it a simple near term? I know it usually comes in a little higher to think about this quarter's accretion on a full quarter's basis, at least in the back half of the year. Is that kind of what's in your guide?

So it's too early to tell. I think annualizing the two months for the rest of the year might be a little bit rich. But, I mean, that's obviously a starting point. But I think, and again, depends what rates do and what prepayments do on the portfolio. So it may very well come in a little bit less compared to annualizing for two months. I'd be cautious doing that.

Understood. Thank you. And then maybe last one, Curt, on the buyback. I think, is it fair to assume you're kind of on hold for the rest of the year as you guys go through the integration and kind of figure out where you're at.

Yeah, definitely. Our team is focused on integration right now. We had said previously that we probably wouldn't look at buybacks until next year. We do have an authorization in place, but capital liquidity and effective integration are really what our focus is right now.

All right. Awesome. Thank you.

Thank you. One moment for our next question. Our next question comes from the line of David Bishop of Hovde Group. Your line is now open.

Hey, good morning.

Hey, David.

Just curious, Curt and Betsy, maybe, hasn't been a lot of focus, but the loan pipeline and sort of legacy loan demand. Just curious what you're seeing and hearing from your commercial, not only relationship managers but your borrowing base.

Yeah. The pipeline is steady. I mean, we've had pretty modest growth organically. We expect that to continue. Customers are being conservative and we are being diligent on what we add to the portfolio right now. So that the low single-digit organic growth rate is what we would expect from the legacy Fulton portfolio. And then we're working through the Republic portfolio, getting to know those customers, and then growing from that point forward. So we would expect limited or single-digit organic loan growth going forward. And our pipelines and customer activities seem to support us being able to do that.

Got it. I appreciate that. And then, sort of harkening back to the earlier question about liquidity. I know, Betsy, as expected, liquidity cash built pretty materially here. How should we think about that balance, that billion dollars or so over the course of the rest of the year?

So we talked about in the acquisition that we were planning on letting our brokered CD portfolio roll-off, which is at Fulton. There -- we have an additional $800 million in brokered CDs, most of that rolls off third and fourth quarter. Again, our initial intention was to let that roll off, but there is just incredible, as you know, incredible discussion around liquidity and what we need to maintain. And we're working through that. And those expectations continue to migrate a little bit. So depending upon how all that flows together, but -- if we lap, we would not use that liquidity for -- we've not let that go down more than letting those brokered maturities roll off, which, again, is about $800 million or $750 million before the end of the year.

Got it. Do you know the weighted average rate on those brokered CDs?

I sure do, about 5.28%.

5.28%. Great. Appreciate that color.

Sure.

Thank you. One moment for our next question. Our next question comes from the line of Manuel Navas of D.A Davidson & Co. Your line is now open.

Hey, good morning. What would it take to drive a pickup in loan growth? You have strength in resident real estate and construction this quarter, but that could fall off, it would be based on prior pipelines. But do you need rate cuts to drive broader loan growth or do you have, like, less -- do you have a limited appetite at the moment as you integrate?

Well, we are being very prudent in this market, specifically on real estate lending, and being very diligent about credit decisions right now. It's a combination of borrower demand and us navigating prudently on what we put on the portfolio. So it's a combination of those two things. But we really think, given our position and the market. Right now, that low single-digit loan demand is an appropriate growth rate to make sure we're not putting on undue risk in a market like this.

I appreciate that. With the attrition target on the deposit side was roughly modeled at $600 million. Do you expect to get to that or is the $400 million that you've already seen kind of the most that you're going to have?

Yeah. So the attrition has flattened out for sure. There were big chunks -- and early on. But we're continuing to work through integration. We will get to the point we're going to grow the portfolio and customer base, but we're still very early on in the acquisition. And again, this was an FDIC-assisted deal. Customers had a lot of concern going into it. We alleviated a lot of those concerns, but there were a lot of moving parts that our teams done just an outstanding job. And when I say our team, I mean the Fulton team and the Republic team, has done an outstanding job taking care of customers, staying close to customers. And we feel really good moving forward that we'll reach a base and then we'll be able to grow as we grow the overall franchise from that point. We're just trying to get our footing. And it's certainly -- the runoff is certainly diminishing. And again, it was a handful of customers and proactive measures from our standpoint to as we got in and really knew the portfolio to get rid of nonrelational, brokered, wholesale, Internet-driven kind of things to clean that up. So we feel good about where we're headed and we still are confident in the original pro forma for the deal.

Okay. Can I shift over a question on credit? There's a little bit of just a modest step up in net charge-offs, mainly on the commercial side. Can you just talk through that a little bit? And it seems like you're guiding to provision costs much lower than consensus heading into the quarter. Just kind of talk about that thought process overall.

Yeah. So charge-offs for the quarter, it's really just timing on -- we have it allocated whether we take the charge off or not. So those things are just timing. We look at the provision, run the model, look at the provision and we've had pretty stable credit metrics in the core portfolio. And we don't see anything right now that would change those. I mean, we'll see how we move forward. I mean it is the biggest variable in this market, but we've been pretty consistent around that $10 million a quarter in provision need given our growth rates and given the credit portfolio. We feel good about the credit mark that we have on the Republic portfolio as we integrate those two. So we feel we're moving forward in provisioning for changes in either economic conditions or individual borrowers is how the provision will change going forward. But that -- we have no reason to not continue to commit to our guidance -- initial guidance in credit.

I appreciate that. Thank you.

Thank you. One moment for our next question. [Operator Instructions] Our next question comes from the line of David Mirochnick of Stephens. Your line is now open.

Good morning, guys. This is David Mirochnick on for Matt Breese.

Good morning.

Good morning.

I was wondering if we could start on the loan side. If you guys could give us an update on what percent of the book's floating rate? And then, if you have the yield for the floating rate book versus the fixed rate book?

Certainly. They're grabbing the overall. I know on the Republic, 85% of the Republic book is fixed. So that would move the -- that's what I said in my earlier comment around taking a little asset sensitivity off the table for us. But the overall -- Betsy can give you the overall report.

Yeah. Just as of June 30, about 68% of the portfolio is tied to the short end of the curve, one year or less, and 30% is fixed rate.

And again, that's overall. So that would include the Republic portfolio, which I mentioned before.

Right.

Great. And then by chance, do you have the yield that on the floating book and the fixed rate book?

We do not have that handy.

No worries. And I guess kind of touching on the same thing as well. Is there any chance you had the yield on the roll-on versus roll-off yields for this quarter?

We do not have those handy.

You mean on the loans or roll-off loans for CDs loans?

Yes.

We typically have not talked at that spot rate basis, and we do not have that handy.

Yeah. We don't have the details, but I think we're comfortable that what's coming on is at a higher rate than what we're rolling off.

Right.

Got it. And then you talked a little bit on the deposit side of expecting non-interest-bearing deposits to kind of shift out throughout the end of the year. What's your expectation on where you think deposit costs are going to speak and at what level?

Yeah. We had -- we continued to drift down. The linked quarter reduction was pretty muted, and we just expect to drift down from here. I think we ended the quarter at 21.9%. And the underlying customer trends seem to continue that we'll have that migration, but we have not seen significant. We look -- we provide in the overall earnings deck and things the long-term trend. And you can see that that lands us if you look at that over the long term, 30 plus years, we should land in the low 20%. We're there right now. We expect to be in this range 20% to 22%, but we'll see higher for longer rates. We have not had that for a long time. So customers will continue to seek yield, and we'll see how that plays out if rates stay higher for longer.

Great. And are you thinking the cost of those deposits will kind of peak out by the end of the year?

Yeah. There's a lot of noise in this quarter because we added the Republic deposits. But if you look at the underlying Core Fulton, the deposit, delta and betas, are moderating.

Got it. Awesome. Appreciate the time.

Thank you.

Thank you. I'm showing no further questions at this time. I'd now like to turn it back to Curt Myers for closing remarks.

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. Thanks, everyone.