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Fulton Financial's CEO Discusses Q1 2011 Results - Earnings Call Transcript

This quarter, our credit challenges are certainly not behind us, but we were encouraged to see the reductions in four key metrics: Nonperforming loans, charge-offs, overall delinquency and in the provision. If the economy continues to expand at a reasonable pace, we believe we will continue to see reductions in our overall credit costs. We were also pleased to see the gross on an average basis in the CNI and Commercial Real Estate portfolios although those increases were offset by decreases in our Construction and Consumer portfolios, making overall loan growth difficult. Phil will provide you with details in credit in a few minutes.

Our solid performance this quarter reflects the basics of low core cost funding, improved interest margin, good expense control and improved operating efficiency. It is important to note that our $0.17 was achieved despite a significant link quarter reduction in residential mortgage activity and a generally unfriendly regulatory environment that seems intent on reducing our non-interest income, while simultaneously laying on an ever-increasing compliance cost.

The people in this company have always responded effectively to past challenges and I know they will do so in the future. As a team, we believe we can continue to improve our earnings performance as we get some help from the economy and as the overall confidence levels improve. However, since confidence levels have a tendency to fluctuate based on national and world events, we will be ready for any eventuality.

From a funding standpoint, our continued core deposit growth and strong liquidity enabled us to reduce our reliance on wholesale funding. We worked to achieve an optimal deposit mix that deemphasizes higher cost time deposits and that rewards customers as they expand their core banking relationship with us. These initiatives enabled us to expand our net interest margin this quarter, and we feel we can further reduce funding costs through certificate of deposit repricing in this rate of environment, but not at a pace we've seen over the last several quarters.

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