Fulton Financial Corp: Form 10-Q for the period ended Mar 31, 2026
Filed with the SEC on May 8, 2026 and accepted by EDGAR at May 8, 2026, 16:31 ET.
Management's discussion and analysis
As filed, 52,514 characters, with its headings, lists and tables. Extracted from the main document; charts and exhibits are in the original on sec.gov.
This Management's Discussion relates to the Corporation, a financial holding company registered under the BHCA and incorporated under the laws of the Commonwealth of Pennsylvania, and its wholly owned subsidiaries. Management's Discussion should be read in conjunction with the Consolidated Financial Statements and other financial information presented in this Quarterly Report on Form 10-Q.
OVERVIEW
The Corporation is a financial holding company, which, through its wholly owned banking subsidiary, provides a full range of consumer and commercial financial services in Pennsylvania, Delaware, Maryland, New Jersey and Virginia.
The Corporation generates the majority of its revenue through net interest income, or the difference between interest earned on loans and investments and interest paid on deposits and borrowings. Growth in net interest income is dependent upon balance sheet growth and maintaining or increasing the NIM, which is FTE net interest income as a percentage of average interest-earning assets. The Corporation also generates revenue through fees earned on the various services and products offered to its customers and through gains on sales of assets, such as loans, investments and properties. Offsetting these revenue sources are provisions for credit losses on loans and OBS credit risks, non-interest expenses and income taxes.
The following table presents a summary of the Corporation's earnings and selected performance ratios:
(dollars in thousands, except per share data)
| Three months ended March 31, 2026 | 2025 | |
|---|---|---|
| Net income | $94,761 | $92,987 |
| Net income available to common shareholders | 92,199 | 90,425 |
| Net income available to common shareholders per share (diluted) | 0.51 | 0.49 |
| Operating net income available to common shareholders per share(1) | 0.55 | 0.52 |
| Return on average assets, annualized | 1.20% | 1.18% |
| Operating return on average assets, annualized(1) | 1.30% | 1.25% |
| Return on average common shareholders' equity, annualized | 11.16% | 11.98% |
| Operating return on average common shareholders' equity (tangible), annualized(1) | 14.76% | 15.95% |
| Net interest margin(2) | 3.58% | 3.43% |
| Efficiency ratio(1) | 56.7% | 56.7% |
| Non-performing assets to total assets | 0.55% | 0.62% |
| Net charge-offs to average loans, annualized | 0.25% | 0.21% |
(1) Represents a financial measure derived by methods other than GAAP. See reconciliation of this non-GAAP financial measure to the most directly
comparable GAAP measure under the "Supplemental Reporting of Non-GAAP Based Financial Measures" section of Management's Discussion.
(2) Presented on a FTE basis using a 21% federal tax rate and statutory interest expense disallowances.
Blue Foundry Bancorp
On April 1, 2026, the Corporation completed its acquisition of Blue Foundry and Blue Foundry Bank became a wholly owned subsidiary of the Corporation. Blue Foundry Bank is expected to be merged with and into Fulton Bank in the third quarter of 2026.
See "Note 2 - Business Combinations" in the Notes to Consolidated Financial Statements in Part I, "Item 1. Financial Statements."
Financial Highlights
Net Income Available to Common Shareholders and Net Income Per Share - Net income available to common shareholders was $92.2 million for the three months ended March 31, 2026, a $1.8 million increase compared to $90.4 million for the same period in 2025. Net income available to common shareholders per diluted share was $0.51 for the three months ended March 31, 2026, a $0.02 increase compared to the same period in 2025.
Three Months Ended March 31, 2026 Results were Impacted by the Following Items:
- NIM of 3.58%, a 15 bps increase compared to 3.43% for the same period in 2025.
- Net interest income of $262.0 million, a $10.8 million increase compared to $251.2 million for the same period in 2025.
- Provision for credit losses of $14.4 million resulting in an ACL attributable to net loans of $367.5 million, or 1.51% of total net loans as of March 31, 2026.
- Non-interest income of $69.8 million, a $2.6 million increase compared to $67.2 million for the same period in 2025.
- Non-interest expense of $200.3 million, a $10.8 million increase compared to $189.5 million for the same period in 2025.
- During the three months ended March 31, 2026, 1,212,650 shares of the Corporation's common stock were repurchased under the 2026 Repurchase Program at a cost of $24.5 million or an average of $20.21 per share.
Critical Accounting Policies
The Corporation's accounting policies are fundamental to understanding Management’s Discussion. Critical policies are those that the Corporation considers to be most important to the presentation of its financial condition and results of operations, because they require management's most difficult judgments as a result of the need to make estimates about the effects of matters that are inherently uncertain.
The Corporation's critical accounting policies are described in Part II, "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" under the heading "Critical Accounting Policies" in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2025.
Supplemental Reporting of Non-GAAP Based Financial Measures
This Quarterly Report on Form 10-Q contains supplemental financial information, as detailed below, that has been derived by methods other than GAAP. The Corporation has presented these non-GAAP financial measures because it believes that these measures provide useful and comparative information to assess trends in the Corporation's results of operations. Presentation of these non-GAAP financial measures is consistent with how the Corporation evaluates its performance internally and these non-GAAP financial measures are frequently used by securities analysts, investors and other interested parties in the evaluation of companies in the Corporation's industry. Management believes that these non-GAAP financial measures, in addition to GAAP measures, are also useful to investors to evaluate the Corporation's results. Investors should recognize that the Corporation's presentation of these non-GAAP financial measures might not be comparable to similarly-titled measures of other companies. These non-GAAP financial measures should not be considered a substitute for GAAP basis measures, and the Corporation strongly encourages a review of its Consolidated Financial Statements in their entirety.
Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measure follow:
(dollars in thousands, except per share data and share data)
Operating net income available to common shareholders
| Three months ended March 31, 2026 | 2025 | |
|---|---|---|
| Net income available to common shareholders | $92,199 | $90,425 |
| Less: Other | — | (122) |
| Plus: Core deposit intangible amortization | 5,255 | 6,155 |
| Plus: Acquisition-related expense | 2,644 | 380 |
| Plus: FultonFirst implementation and asset disposals | 1,556 | (47) |
| Less: Tax impact of adjustments | (1,985) | (1,337) |
| Operating net income available to common shareholders (numerator) | $99,669 | $95,454 |
| Weighted average shares (diluted) (denominator) | 181,655 | 184,077 |
| Operating net income available to common shareholders, per share (diluted) | $0.55 | $0.52 |
| Operating return on average assets | ||
| Net income | $94,761 | $92,987 |
| Less: Other | — | (122) |
| Plus: Core deposit intangible amortization | 5,255 | 6,155 |
| Plus: Acquisition-related expense | 2,644 | 380 |
| Plus: FultonFirst implementation and asset disposals | 1,556 | (47) |
| Less: Tax impact of adjustments | (1,985) | (1,337) |
| Operating net income (numerator) | $102,231 | $98,016 |
| Total average assets | $31,999,228 | $31,971,601 |
| Less: Average net core deposit intangible | (54,629) | (77,039) |
| Total operating average assets (denominator) | $31,944,599 | $31,894,562 |
| Operating return on average assets(1) | 1.30% | 1.25% |
32
(dollars in thousands, except per share data and share data)
| Operating return on average common shareholders' equity (tangible) | Three months ended March 31, 2026 | 2025 |
|---|---|---|
| Net income available to common shareholders | $92,199 | $90,425 |
| Less: Other | — | (122) |
| Plus: Intangible amortization | 5,349 | 6,269 |
| Plus: Acquisition-related expense | 2,644 | 380 |
| Plus: FultonFirst implementation and asset disposals | 1,556 | (47) |
| Less: Tax impact of adjustments | (2,005) | (1,361) |
| Adjusted net income available to common shareholders (numerator) | $99,743 | $95,544 |
| Average shareholders' equity | $3,543,911 | $3,254,125 |
| Less: Average preferred stock | (192,878) | (192,878) |
| Less: Average goodwill and intangible assets | (610,262) | (632,254) |
| Average tangible common shareholders' equity (denominator) | $2,740,771 | $2,428,993 |
| Operating return on average common shareholders' equity (tangible)(1) | 14.76% | 15.95% |
| Efficiency ratio | ||
| Non-interest expense | $200,294 | $189,460 |
| Less: Acquisition-related expense | (2,644) | (380) |
| Less: Intangible amortization | (5,349) | (6,269) |
| Less: FultonFirst implementation and asset disposals | (1,556) | 47 |
| Operating non-interest expense (numerator) | $190,745 | $182,858 |
| Net interest income | $262,023 | $251,187 |
| Tax equivalent adjustment | 4,303 | 4,340 |
| Plus: Total non-interest income | 69,841 | 67,232 |
| Less: Other revenue | — | (122) |
| Plus: Investment securities losses (gains), net | — | 2 |
| Total revenue (denominator) | $336,167 | $322,639 |
| Efficiency ratio | 56.7% | 56.7% |
| (1) Results are annualized. |
33
RESULTS OF OPERATIONS
Three months ended March 31, 2026 compared to the three months ended March 31, 2025
Net Interest Income
FTE net interest income was $266.3 million for the three months ended March 31, 2026, an increase of $10.8 million, compared to $255.5 million for the same period in 2025. For the three months ended March 31, 2026, NIM increased to 3.58%, or 15 bps, compared to the same period in 2025. The Corporation manages the risk associated with changes in interest rates through the techniques described within Part 1, "Item 3. Quantitative and Qualitative Disclosures About Market Risk" in this Quarterly Report on Form 10-Q. The following table provides a comparative average balance sheet and net interest income analysis for the three months ended March 31, 2026 compared to the same period in 2025. Interest income and yields are presented on an FTE basis using a 21% federal tax rate as well as statutory interest expense disallowances. The discussion following this table is based on these taxable-equivalent amounts.
(dollars in thousands)
| ASSETS Interest-earning assets: | Three months ended March 31, 2026 Average Balance | Interest | Yield/ Rate | 2025 Average Balance | Interest | Yield/ Rate |
|---|---|---|---|---|---|---|
| Net loans(1) | $24,225,655 | $341,843 | 5.70% | $24,006,863 | $347,626 | 5.86% |
| Investment securities(2) | 5,001,079 | 44,771 | 3.58 | 5,199,000 | 47,242 | 3.63 |
| Other interest-earning assets | 773,171 | 7,745 | 4.05 | 793,126 | 9,164 | 4.67 |
| Total interest-earning assets | 29,999,905 | 394,359 | 5.31 | 29,998,989 | 404,032 | 5.44 |
| Noninterest-earning assets: | ||||||
| Cash and due from banks | 300,074 | 301,897 | ||||
| Premises and equipment | 173,203 | 191,248 | ||||
| Other assets | 1,896,687 | 1,864,996 | ||||
| Less: ACL - loans(3) | (370,641) | (385,529) | ||||
| Total Assets | $31,999,228 | $31,971,601 | ||||
| LIABILITIES AND SHAREHOLDERS' EQUITY | ||||||
| Interest-bearing liabilities: | ||||||
| Demand deposits | $7,774,121 | $29,036 | 1.51% | $7,753,586 | $34,189 | 1.79% |
| Savings and money market deposits | 8,684,478 | 44,663 | 2.09 | 7,971,728 | 45,101 | 2.29 |
| Brokered deposits | 856,823 | 8,210 | 3.89 | 904,722 | 10,038 | 4.50 |
| Time deposits | 4,015,644 | 33,896 | 3.42 | 4,127,784 | 41,564 | 4.08 |
| Total interest-bearing deposits | 21,331,066 | 115,805 | 2.20 | 20,757,820 | 130,892 | 2.56 |
| Borrowings and other interest-bearing liabilities | 1,359,113 | 12,228 | 3.65 | 1,754,900 | 17,613 | 4.07 |
| Total interest-bearing liabilities | 22,690,179 | 128,033 | 2.29 | 22,512,720 | 148,505 | 2.67 |
| Noninterest-bearing liabilities: | ||||||
| Demand deposits | 5,120,028 | 5,412,063 | ||||
| Other liabilities | 645,110 | 792,693 | ||||
| Total Liabilities | 28,455,317 | 28,717,476 | ||||
| Total deposits | 26,451,094 | 1.78% | 26,169,883 | 2.03% | ||
| Total interest-bearing liabilities and non-interest bearing deposits (cost of funds) | 27,810,207 | 1.87% | 27,924,783 | 2.15% | ||
| Shareholders’ equity | 3,543,911 | 3,254,125 | ||||
| Total Liabilities and Shareholders’ Equity | $31,999,228 | $31,971,601 | ||||
| Net interest income/net interest margin (FTE) | 266,326 | 3.58% | 255,527 | 3.43% | ||
| Tax equivalent adjustment | (4,303) | (4,340) | ||||
| Net interest income | $262,023 | $251,187 |
(1) Average balance includes non-performing loans and loan fees.
(2) Average balances include amortized historical cost for AFS investment securities; the related unrealized holding gains (losses) are included in other assets.
(3) ACL - loans relates to the ACL specifically for net loans and does not include the ACL for OBS credit exposures, which is included in other liabilities.
The following table summarizes the changes in FTE interest income and interest expense resulting from changes in average balances (volume) and changes in yields and rates for the three months ended March 31, 2026 compared to the same period in 2025:
(dollars in thousands)
| FTE Interest income on: | 2026 versus 2025 Increase (decrease) due to change in Volume | Yield/Rate | Net |
|---|---|---|---|
| Net loans(1) | $3,293 | $(9,076) | $(5,783) |
| Investment securities | (1,814) | (657) | (2,471) |
| Other interest-earning assets | (226) | (1,193) | (1,419) |
| Total interest income | $1,253 | $(10,926) | $(9,673) |
| Interest expense on: | |||
| Demand deposits | $92 | $(5,245) | $(5,153) |
| Savings and money market deposits | 3,756 | (4,194) | (438) |
| Brokered deposits | (513) | (1,315) | (1,828) |
| Time deposits | (1,103) | (6,565) | (7,668) |
| Borrowings and other interest-bearing liabilities | (3,695) | (1,690) | (5,385) |
| Total interest expense | $(1,463) | $(19,009) | $(20,472) |
(1) Average balance includes non-performing loans.
Note: Changes which are partially attributable to both volume and rate are allocated to the volume and rate components presented above based on the percentage of direct changes that are attributable to each component.
Compared to the first quarter of 2025, FTE total interest income for the first quarter of 2026 decreased $9.7 million, or 2.4%, due to a $10.9 million decrease attributable to changes in yield, partially offset by a $1.3 million increase attributable to changes in volume. The decrease due to changes in yield was primarily due to a decline in interest rates on average net loans. The increase due to changes in volume was largely due to an increase in average net loans offset by a decrease in average investment securities and average other interest-earning assets.
The yield on average total interest-earning assets decreased 13 bps for the three months ended March 31, 2026 compared to the same period in 2025 primarily due to lower interest rates.
In the first quarter of 2026, interest expense decreased $20.5 million compared to the first quarter of 2025, primarily driven by a $19.0 million decrease attributable to changes in rate and a $1.5 million decrease attributable to changes in volume. The decrease in interest expense attributable to changes in rate was primarily due to lower interest rates. The decrease in interest expense attributable to changes in volume was driven by decreases in average borrowings and other interest-bearing liabilities, average time deposits and average brokered deposits, partially offset by an increase in average savings and money market deposits.
The rate on average total interest-bearing liabilities decreased 38 bps for the three months ended March 31, 2026 compared to the same period in 2025 primarily due to lower interest rates.
Average loans and FTE yields, by type, are summarized in the following table:
(dollars in thousands)
| Three months ended March 31, 2026 Balance | Yield | 2025 Balance | Yield | Increase (Decrease) $% | ||
|---|---|---|---|---|---|---|
| Real estate – commercial mortgage | $9,930,713 | 5.95% | $9,655,283 | 6.23% | $275,430 | 2.9% |
| Commercial and industrial | 4,522,694 | 6.08 | 4,608,401 | 6.29 | (85,707) | (1.9) |
| Real estate – residential mortgage | 6,696,646 | 4.67 | 6,367,978 | 4.47 | 328,668 | 5.2 |
| Real estate – home equity | 1,235,977 | 6.31 | 1,160,713 | 6.84 | 75,264 | 6.5 |
| Real estate – construction | 926,026 | 6.45 | 1,296,090 | 7.10 | (370,064) | (28.6) |
| Consumer | 576,852 | 8.11 | 615,741 | 7.02 | (38,889) | (6.3) |
| Leases and other loans(1) | 336,747 | 5.55 | 302,657 | 4.99 | 34,090 | 11.3 |
| Total loans | $24,225,655 | 5.70% | $24,006,863 | 5.86% | $218,792 | 0.9% |
(1) Consists of equipment lease financing, overdrafts and net origination fees and costs.
During the first quarter of 2026, average net loans increased $218.8 million, or 0.9%, compared to the same period in 2025. The increase in average net loans was primarily due to a $328.7 million increase and a $275.4 million increase in average residential mortgage loans and average commercial mortgage loans, respectively, partially offset by a $370.1 million decrease in average construction loans. The increase in average commercial mortgage loans was in part due to a $207.7 million purchase of in-market loans during the quarter ended March 31, 2026, which primarily consisted of commercial mortgage loans.
The yield on total loans decreased 16 bps to 5.70% for the first quarter of 2026 compared to 5.86% for the same period in 2025.
Average deposits and interest rates, by type, are summarized in the following table:
(dollars in thousands)
| Three months ended March 31, 2026 Balance | Rate | 2025 Balance | Rate | Increase (Decrease) $% | ||
|---|---|---|---|---|---|---|
| Noninterest-bearing demand | $5,120,028 | —% | $5,412,063 | —% | $(292,035) | (5.4)% |
| Interest-bearing demand | 7,774,121 | 1.51 | 7,753,586 | 1.79 | 20,535 | 0.3 |
| Savings and money market deposits | 8,684,478 | 2.09 | 7,971,728 | 2.29 | 712,750 | 8.9 |
| Total demand deposits and savings and money market deposits | 21,578,627 | 1.39 | 21,137,377 | 1.52 | 441,250 | 2.1 |
| Brokered deposits | 856,823 | 3.89 | 904,722 | 4.50 | (47,899) | (5.3) |
| Time deposits | 4,015,644 | 3.42 | 4,127,784 | 4.08 | (112,140) | (2.7) |
| Total deposits | $26,451,094 | 1.78% | $26,169,883 | 2.03% | $281,211 | 1.1% |
Average total deposits increased $281.2 million, or 1.1%, in the first quarter of 2026 compared to the same period in 2025. The increase in average total deposits was primarily due to a $712.8 million increase and a $20.5 million increase in average savings and money market deposits and average interest-bearing demand deposits, respectively, partially offset by a $292.0 million decrease and a $112.1 million decrease in average noninterest-bearing demand deposits and average time deposits, respectively.
The cost of deposits decreased 25 bps to 1.78% in the first quarter of 2026 compared to 2.03% for the same period in 2025 primarily due to lower interest rates.
Average borrowings and other interest-bearing liabilities and interest rates, by type, are summarized in the following table:
(dollars in thousands)
| Three months ended March 31, 2026 Balance | Rate | 2025 Balance | Rate | Increase (Decrease) $% | ||
|---|---|---|---|---|---|---|
| FHLB advances | $221,039 | 3.99% | $709,367 | 4.59% | $(488,328) | (68.8)% |
| Senior debt and subordinated debt | 367,679 | 5.11 | 367,357 | 3.90 | 322 | 0.1 |
| Other borrowings and interest-bearing liabilities(1) | 770,395 | 2.84 | 678,176 | 3.60 | 92,219 | 13.6 |
| Total borrowings and other interest-bearing liabilities | $1,359,113 | 3.65% | $1,754,900 | 4.07% | $(395,787) | (22.6)% |
(1) Includes repurchase agreements, short-term promissory notes, capital leases and collateral liabilities.
Average total borrowings and other interest-bearing liabilities decreased $395.8 million, or 22.6%, in the first quarter of 2026 compared to the same period in 2025. The decrease in average total borrowings and other interest-bearing liabilities was due to a $488.3 million decrease in average FHLB advances, partially offset by a $92.2 million increase in average other borrowings and interest-bearing liabilities.
Provision for Credit Losses
The provision for credit losses was $14.4 million for the three months ended March 31, 2026 resulting in a $367.5 million allowance for credit losses attributable to net loans, or 1.51% of total net loans as of March 31, 2026, compared to a provision for credit losses of $13.9 million for the same period in 2025, resulting in a $379.7 million allowance for credit losses attributable to net loans, or 1.59% of total net loans as of March 31, 2025.
Non-Interest Income
The following table presents the components of non-interest income:
(dollars in thousands)
| Three months ended March 31, 2026 | 2025 | Increase (Decrease) $% | ||
|---|---|---|---|---|
| Wealth management | $24,496 | $21,785 | $2,711 | 12.4% |
| Commercial banking: | ||||
| Merchant and card | 6,343 | 6,591 | (248) | (3.8) |
| Cash management | 8,363 | 7,799 | 564 | 7.2 |
| Capital markets | 3,614 | 2,411 | 1,203 | 49.9 |
| Other commercial banking | 4,486 | 4,528 | (42) | (0.9) |
| Total commercial banking | 22,806 | 21,329 | 1,477 | 6.9 |
| Consumer banking: | ||||
| Card | 7,887 | 7,544 | 343 | 4.5 |
| Overdraft | 3,798 | 3,295 | 503 | 15.3 |
| Other consumer banking | 2,491 | 2,229 | 262 | 11.8 |
| Total consumer banking | 14,176 | 13,068 | 1,108 | 8.5 |
| Mortgage banking | 3,955 | 3,138 | 817 | 26.0 |
| Other | 4,408 | 7,914 | (3,506) | (44.3) |
| Non-interest income before investment securities (losses) gains, net | 69,841 | 67,234 | 2,607 | 3.9 |
| Investment securities (losses) gains, net | — | (2) | 2 | N/M |
| Total Non-Interest Income | $69,841 | $67,232 | $2,609 | 3.9% |
Non-interest income for the three months ended March 31, 2026 increased $2.6 million, or 3.9%, compared to the same period in 2025. The increase in non-interest income was primarily due to a $2.7 million increase in wealth management revenues as a result of an increase in assets under management, a $1.2 million increase in commercial customer derivative fee income reflected in capital markets, and a $1.1 million increase in consumer banking income, partially offset by a $3.4 million decrease in income from equity method investments reflected in other non-interest income.
Non-Interest Expense
The following table presents the components of non-interest expense:
(dollars in thousands)
| Three months ended March 31, 2026 | 2025 | Increase (Decrease) $% | ||
|---|---|---|---|---|
| Salaries and employee benefits | $109,704 | $103,525 | $6,179 | 6.0% |
| Data processing and software | 18,662 | 18,599 | 63 | 0.3 |
| Net occupancy | 18,229 | 18,207 | 22 | 0.1 |
| Other outside services | 12,530 | 11,704 | 826 | 7.1 |
| Intangible amortization | 5,349 | 6,269 | (920) | (14.7) |
| FDIC insurance | 4,249 | 5,597 | (1,348) | (24.1) |
| Equipment | 3,924 | 4,150 | (226) | (5.4) |
| Marketing | 2,331 | 2,521 | (190) | (7.5) |
| Professional fees | 2,239 | (1,208) | 3,447 | N/M |
| Other | 18,877 | 19,763 | (886) | (4.5) |
| Subtotal | 196,094 | 189,127 | 6,967 | 3.7 |
| FultonFirst implementation and asset disposals | 1,556 | (47) | 1,603 | N/M |
| Acquisition-related expenses | 2,644 | 380 | 2,264 | N/M |
| Total non-interest expense | $200,294 | $189,460 | $10,834 | 5.7% |
Non-interest expense for the three months ended March 31, 2026 increased $10.8 million, or 5.7%, compared to the same period in 2025. Excluding FultonFirst implementation and asset disposals and acquisition-related expenses, non-interest expense increased $7.0 million, or 3.7%. The increase in non-interest expense before FultonFirst implementation and asset disposals and acquisition-related expenses was primarily due to a $6.2 million increase in salaries and employee benefits expense driven by increases in base salaries and commissions expense and a $3.4 million increase in professional fees primarily due to a prior year recovery of previously incurred fees, partially offset by a $1.3 million decrease in FDIC insurance expense and a $0.9 million decrease in intangible amortization expense.
Income Taxes
Income tax expense for the three months ended March 31, 2026 was $22.4 million, a $0.3 million increase compared to the same period in 2025. The Corporation's ETR was 19.1% for the three months ended March 31, 2026 compared to 19.2% for the same period in 2025.
FINANCIAL CONDITION
The table below presents condensed consolidated ending balance sheets:
(dollars in thousands)
| Assets | March 31, 2026 | December 31, 2025 $% | Increase (Decrease) | |
|---|---|---|---|---|
| Cash and cash equivalents | $1,062,910 | $1,061,609 | $1,301 | 0.1% |
| FRB and FHLB Stock | 119,952 | 121,009 | (1,057) | (0.9) |
| Loans held for sale | 11,887 | 16,316 | (4,429) | (27.1) |
| Investment securities | 4,861,967 | 4,833,744 | 28,223 | 0.6 |
| Net loans, less ACL - loans | 23,898,856 | 23,780,422 | 118,434 | 0.5 |
| Net premises and equipment | 168,941 | 175,240 | (6,299) | (3.6) |
| Goodwill and intangibles | 607,647 | 612,996 | (5,349) | (0.9) |
| Other assets | 1,505,278 | 1,517,064 | (11,786) | (0.8) |
| Total Assets | $32,237,438 | $32,118,400 | $119,038 | 0.4% |
| Liabilities and Shareholders' Equity | ||||
| Deposits | $26,768,335 | $26,589,407 | $178,928 | 0.7% |
| Borrowings | 1,252,579 | 1,297,375 | (44,796) | (3.5) |
| Other liabilities | 711,241 | 741,171 | (29,930) | (4.0) |
| Total Liabilities | 28,732,155 | 28,627,953 | 104,202 | 0.4 |
| Total Shareholders' Equity | 3,505,283 | 3,490,447 | 14,836 | 0.4 |
| Total Liabilities and Shareholders' Equity | $32,237,438 | $32,118,400 | $119,038 | 0.4% |
Investment Securities
The following table presents the carrying amount of investment securities:
(dollars in thousands)
| Available for Sale | March 31, 2026 | December 31, 2025 $% | Increase (Decrease) | |
|---|---|---|---|---|
| State and municipal securities | $797,981 | $826,693 | $(28,712) | (3.5)% |
| Corporate debt securities | 196,481 | 214,921 | (18,440) | (8.6) |
| Collateralized mortgage obligations | 1,018,661 | 1,040,078 | (21,417) | (2.1) |
| Residential mortgage-backed securities | 707,660 | 766,717 | (59,057) | (7.7) |
| Commercial mortgage-backed securities | 548,137 | 559,450 | (11,313) | (2.0) |
| Total AFS investment securities | 3,268,920 | 3,407,859 | (138,939) | (4.1) |
| Held to Maturity | ||||
| Residential mortgage-backed securities | 543,048 | 573,636 | (30,588) | (5.3) |
| Collateralized mortgage obligations | 166,041 | — | 166,041 | N/M |
| Commercial mortgage-backed securities | 883,958 | 852,249 | 31,709 | 3.7 |
| Total HTM securities | 1,593,047 | 1,425,885 | 167,162 | 11.7 |
| Total Investment Securities | $4,861,967 | $4,833,744 | $28,223 | 0.6% |
Compared to December 31, 2025, total AFS investment securities at March 31, 2026 decreased $138.9 million, or 4.1%. The decrease in AFS investment securities at March 31, 2026 compared to December 31, 2025 was primarily due to decreases of $59.1 million, $28.7 million and $21.4 million in residential mortgage-backed securities, state and municipal securities and collateralized mortgage obligations, respectively.
Compared to December 31, 2025, total HTM investment securities at March 31, 2026 increased $167.2 million, or 11.7%. The increase in HTM investment securities at March 31, 2026 compared to December 31, 2025 was driven by the purchase of approximately $166.0 million of collateralized mortgage obligations during the quarter ended March 31, 2026.
Loans
The following table presents ending net loans outstanding by type:
(dollars in thousands)
| March 31, 2026 | December 31, 2025 $% | Increase (Decrease) | ||
|---|---|---|---|---|
| Real estate - commercial mortgage | $9,985,368 | $9,820,944 | $164,424 | 1.7% |
| Commercial and industrial | 4,494,031 | 4,539,060 | (45,029) | (1.0)% |
| Real estate - residential mortgage | 6,735,338 | 6,669,993 | 65,345 | 1.0% |
| Real estate - home equity | 1,253,192 | 1,242,831 | 10,361 | 0.8% |
| Real estate - construction | 876,498 | 970,298 | (93,800) | (9.7)% |
| Consumer | 565,041 | 564,349 | 692 | 0.1% |
| Leases and other loans(1) | 356,877 | 337,409 | 19,468 | 5.8% |
| Net loans | $24,266,345 | $24,144,884 | $121,461 | 0.5% |
(1) Includes unearned income of $41.3 million and $36.8 million as of March 31, 2026 and December 31, 2025, respectively.
During the three months ended March 31, 2026, net loans increased $121.5 million compared to December 31, 2025. The increase in net loans during the three months of 2026 was primarily due to a $164.4 million increase in commercial mortgage loans and a $65.3 million increase in residential mortgage loans, partially offset by a $93.8 million decrease in construction loans and a $45.0 million decrease in commercial and industrial loans. The Bank purchased $207.7 million of in-market loans during the quarter ended March 31, 2026, which consisted primarily of commercial mortgage loans.
The Corporation does not have a significant concentration of credit risk with any single borrower. As of March 31, 2026, approximately $10.9 billion, or 44.8%, of the loan portfolio was comprised of commercial mortgage loans and construction loans.
The Corporation has established lower total lending limits for certain types of commercial lending commitments and lower total lending limits based on the Corporation's internal risk rating of an individual borrower at the time the lending commitment is approved. The Corporation adheres to loan portfolio management practices, which include requiring an annual review of the majority of commercial loans. Additionally, management monitors the loan portfolio throughout the year taking into account, among other things, the size, complexity and risk of loans and individual borrowers. An independent loan review function assesses the portfolio for internal risk rating accuracy and loan servicing policy requirements. The Corporation consolidates risk migrations to identify emerging risks by industry and real estate property types, taking into consideration economic forecasts and industry trends. The Corporation takes a risk-based approach when reviewing a specific loan portfolio, such as the commercial office loan portfolio or multi-family loan portfolio. The Corporation reviews portfolio concentrations and adjusts the lending limits based on asset quality, economic forecasts and industry outlook.
The following table summarizes the industry concentrations within the commercial mortgage and the commercial and industrial loan portfolios:
| March 31, 2026 | December 31, 2025 | |
|---|---|---|
| Real estate(1) | 42.2% | 42.3% |
| Health care | 7.1 | 7.0 |
| Manufacturing | 7.0 | 7.0 |
| Retail | 5.9 | 6.0 |
| Agriculture | 5.1 | 5.2 |
| Construction(2) | 4.8 | 4.6 |
| Wholesale trade | 4.4 | 4.2 |
| Other services | 4.3 | 4.5 |
| Hospitality and food services | 4.2 | 3.9 |
| Educational services | 3.0 | 3.0 |
| Arts, entertainment and recreation | 2.6 | 2.4 |
| Professional, scientific and technical services | 2.5 | 2.6 |
| Public administration | 1.3 | 1.3 |
| Transportation and warehousing | 1.3 | 1.3 |
| Finance and insurance | 1.2 | 1.4 |
| Administrative and Support | 1.0 | 1.0 |
| Other | 2.1 | 2.3 |
| Total | 100.0% | 100.0% |
(1) Includes commercial loans to borrowers engaged in the business of renting, leasing or managing real estate for others, selling and/or buying real estate for
others and appraising real estate.
(2) Includes commercial loans to borrowers engaged in the construction industry.
The commercial mortgage loan portfolio consists of 44.8% owner occupied commercial mortgage loans and 55.2% of non-owner occupied commercial mortgage loans as of March 31, 2026. The following table summarizes the non-owner occupied commercial mortgage loan portfolio outstanding balance and the percent to total net loans.
(dollars in thousands)
| March 31, 2026 $% of Total Net Loans | December 31, 2025 $% of Total Net Loans | |||
|---|---|---|---|---|
| Multi-family | $1,519,905 | 6.3% | $1,589,802 | 6.6% |
| Retail trade | 1,175,934 | 4.8 | 1,109,612 | 4.6 |
| Industrial | 1,021,610 | 4.2 | 944,807 | 3.9 |
| Office | 730,220 | 3.0 | 730,803 | 3.0 |
| Hospitality and food services | 480,728 | 2.0 | 450,273 | 1.9 |
| Other | 582,417 | 2.4 | 571,371 | 2.4 |
| Total non-owner occupied commercial mortgage loans | $5,510,814 | 22.7% | $5,396,668 | 22.4% |
42
The following table summarizes the commercial mortgage office non-owner occupied loan portfolio outstanding balance, total commitment and LTV ratio by Metropolitan Statistical Area:
(dollars in thousands)
| March 31, 2026 Outstanding Balance | Total Commitment | Weighted Average LTV(1) | December 31, 2025 Outstanding Balance | Total Commitment | Weighted Average LTV(1) | |
|---|---|---|---|---|---|---|
| Philadelphia(2) | $350,840 | $371,724 | 63% | $345,981 | $357,190 | 63% |
| Washington, D.C.(3) | 77,454 | 80,489 | 72 | 77,908 | 80,943 | 72 |
| Baltimore (4) | 73,125 | 74,338 | 63 | 73,161 | 74,214 | 63 |
| New York (5) | 71,419 | 73,309 | 61 | 69,213 | 71,370 | 60 |
| Other | 157,382 | 169,117 | 60 | 164,540 | 190,325 | 60 |
| Total office non-owner occupied commercial real estate | $730,220 | $768,977 | 63% | $730,803 | $774,042 | 63% |
(1) Weighted average LTV as of origination.
(2) Philadelphia-Camden-Wilmington, PA-NJ-DE-MD.
(3) Washington-Arlington-Alexandria, DC-VA-MD-WV.
(4) Baltimore-Columbia-Towson, MD.
(5) New York-Newark-Jersey City, NY-NJ-PA.
The non-owner occupied commercial mortgage office loan portfolio table above excludes commercial construction loans secured by office property collateral with a total outstanding balance of $0.4 million and outstanding loan commitment of $4.1 million as of March 31, 2026.
The following table summarizes the non-owner occupied commercial mortgage multi-family loan portfolio outstanding balance, total commitment and LTV ratio by Metropolitan Statistical Area:
(dollars in thousands)
| March 31, 2026 Outstanding Balance | Total Commitment | Weighted Average LTV(1) | December 31, 2025 Outstanding Balance | Total Commitment | Weighted Average LTV(1) | |
|---|---|---|---|---|---|---|
| Philadelphia(2) | $679,154 | $692,133 | 62% | $706,637 | $723,133 | 61% |
| Lancaster, PA | 145,923 | 147,112 | 48 | 157,997 | 159,485 | 47 |
| New York(3) | 109,064 | 110,120 | 60 | 117,055 | 118,819 | 59 |
| Baltimore(4) | 116,431 | 116,431 | 54 | 114,523 | 114,523 | 54 |
| Washington, D.C.(5) | 68,178 | 69,631 | 51 | 67,666 | 72,190 | 51 |
| Other | 401,155 | 448,696 | 57 | 425,924 | 477,162 | 57 |
| Total multi-family non-owner occupied commercial real estate | $1,519,905 | $1,584,123 | 58% | $1,589,802 | $1,665,312 | 58% |
(1) Weighted average LTV as of origination.
(2) Philadelphia-Camden-Wilmington, PA-NJ-DE-MD.
(3) New York-Newark-Jersey City, NY-NJ-PA.
(4) Baltimore-Columbia-Towson, MD.
(5) Washington-Arlington-Alexandria, DC-VA-MD-WV.
The non-owner occupied commercial mortgage multi-family loan table above excludes commercial construction loans secured by multi-family property collateral with a total outstanding loan balance of $175.8 million and outstanding loan commitments of $348.8 million as of March 31, 2026.
The following table presents the changes in non-accrual loans for the three months ended March 31, 2026:
(dollars in thousands)
| Three months ended March 31, 2026 | Commercial and Industrial | Real Estate - Commercial Mortgage | Real Estate - Construction | Real Estate - Residential Mortgage | Consumer and Real Estate - Home Equity | Leases and other loans | Total |
|---|---|---|---|---|---|---|---|
| Balance at December 31, 2025 | $44,103 | $72,050 | $1,661 | $27,751 | $7,129 | $1,178 | $153,872 |
| Additions | 16,810 | 23,095 | — | 2,656 | 2,014 | 222 | 44,797 |
| Payments | (4,998) | (31,762) | (255) | (1,013) | (483) | (1,153) | (39,664) |
| Charge-offs (1) | (10,545) | (4,102) | — | (391) | (1,350) | (222) | (16,610) |
| Transfers to accrual status | — | — | — | — | — | — | — |
| Transfers to OREO | — | — | — | (360) | — | — | (360) |
| Balance at March 31, 2026 | $45,370 | $59,281 | $1,406 | $28,643 | $7,310 | $25 | $142,035 |
| (1) Overdrafts excluded from charge-offs. |
During the three months ended March 31, 2026, non-accrual loans decreased by approximately $11.8 million, or 7.7%, primarily due to $39.7 million in payments and $16.6 million in charge-offs, partially offset by $44.8 million in additions. During the three months ended March 31, 2026, non-accrual loans as a percentage of total net loans decreased to 0.59% compared to 0.64% as of December 31, 2025.
The following table presents non-performing assets for the periods shown below:
(dollars in thousands)
| March 31, 2026 | December 31, 2025 | |
|---|---|---|
| Non-accrual loans | $142,035 | $153,872 |
| Loans 90 days or more past due and still accruing | 33,816 | 29,924 |
| Total non-performing loans and leases | 175,851 | 183,796 |
| OREO(1) | 1,648 | 1,365 |
| Total non-performing assets | $177,499 | $185,161 |
| Non-accrual loans to total net loans | 0.59% | 0.64% |
| Non-performing loans to total net loans | 0.72% | 0.76% |
| Non-performing assets to total assets | 0.55% | 0.58% |
| ACL - loans to non-performing loans | 209% | 198% |
(1) Excludes $19.0 million and $19.1 million of residential mortgage properties for which formal foreclosure proceedings were in process as of March 31, 2026 and December 31, 2025, respectively.
Non-performing loans and leases as of March 31, 2026 were $175.9 million, a decrease of $7.9 million, or 4.3%, compared to $183.8 million as of December 31, 2025. The decrease in non-performing loans and leases during the first three months of 2026 was primarily due to payments and charge-offs, partially offset by additions. Non-performing loans and leases as a percentage of total net loans was 0.72% and 0.76% as of March 31, 2026 and December 31, 2025, respectively.
The Corporation's ability to identify potential problem loans in a timely manner is important to maintaining an adequate ACL. For commercial and industrial loans, commercial mortgage loans, commercial construction loans and leases and other loans, an internal risk rating process is used to monitor credit quality. The evaluation of credit risk for residential mortgages, home equity loans, construction loans to individuals and consumer loans is based on payment history through the monitoring of delinquency levels and trends.
Total internally risk-rated loans were $15.5 billion and $15.4 billion as of March 31, 2026 and December 31, 2025, respectively, of which $1.4 billion were criticized and classified loans at March 31, 2026 compared to $1.5 billion at December 31, 2025.
The following table presents criticized and classified loans, or those with internal risk ratings of special mention or substandard or lower for commercial mortgage loans, commercial and industrial loans, construction loans to commercial borrowers and leases and other loans by class segment:
(dollars in thousands)
| Special Mention(1) March 31, 2026 | December 31, 2025 | Increase (Decrease) $% | Substandard or Lower(2) March 31, 2026 | December 31, 2025 | Increase (Decrease) $% | Total Criticized and Classified Loans March 31, 2026 | December 31, 2025 | |||
|---|---|---|---|---|---|---|---|---|---|---|
| Real estate - commercial mortgage | $321,106 | $412,685 | $(91,579) | (22.2)% | $556,298 | $531,491 | $24,807 | 4.7% | $877,404 | $944,176 |
| Commercial and industrial | 186,310 | 220,022 | (33,712) | (15.3) | 256,109 | 243,786 | 12,323 | 5.1 | 442,419 | 463,808 |
| Real estate -construction(3) | 34,771 | 30,416 | 4,355 | 14.3 | 8,850 | 9,142 | (292) | (3.2) | 43,621 | 39,558 |
| Leases and other loans | 3,178 | 3,415 | (237) | (6.9) | 7,292 | 6,487 | 805 | 12.4 | 10,470 | 9,902 |
| Total | $545,365 | $666,538 | $(121,173) | (18.2)% | $828,549 | $790,906 | $37,643 | 4.8% | $1,373,914 | $1,457,444 |
| % of total risk rated loans | 3.5% | 4.3% | 5.4% | 5.1% | 8.9% | 9.4% |
(1) Considered "criticized" loans by banking regulators.
(2) Considered "classified" loans by banking regulators.
(3) Excludes residential real estate - construction.
Compared to December 31, 2025, total criticized and classified loans as of March 31, 2026 decreased $83.5 million driven by a $121.2 million decrease in special mention loans, partially offset by a $37.6 million increase in substandard or lower loans.
The Corporation accounts for the credit risk associated with lending activities through the ACL and the provision for credit losses.
The following table presents the activity in the ACL:
(dollars in thousands)
| Three months ended March 31, 2026 | 2025 | |
|---|---|---|
| Average balance of net loans | $24,225,655 | $24,006,863 |
| Balance of ACL at beginning of period | $364,462 | $379,156 |
| Initial allowance for credit losses on purchased loans | 3,351 | — |
| Loans charged off: | ||
| Real estate - commercial mortgage | (4,102) | (12,106) |
| Commercial and industrial | (10,545) | (3,865) |
| Real estate - residential mortgage | (391) | (343) |
| Consumer and real estate - home equity | (2,164) | (2,193) |
| Real estate - construction | — | — |
| Leases and other loans | (1,116) | (1,527) |
| Total loans charged off | (18,318) | (20,034) |
| Recoveries of loans previously charged off: | ||
| Real estate - commercial mortgage | 701 | 374 |
| Commercial and industrial | 740 | 5,952 |
| Real estate - residential mortgage | 72 | 174 |
| Consumer and real estate - home equity | 584 | 660 |
| Real estate - construction | 884 | 82 |
| Leases and other loans | 429 | 201 |
| Total recoveries of loans previously charged-off | 3,410 | 7,443 |
| Net loans charged off (recoveries) | (14,908) | (12,591) |
| Provision for credit losses(1)(2) | 14,584 | 13,112 |
| Balance of ACL at end of period | $367,489 | $379,677 |
| Provision for OBS credit exposures(1) | $(142) | $786 |
| Reserve for OBS credit exposures(3) | $14,830 | $14,947 |
| Net charge-offs to average loans (annualized) | 0.25% | 0.21% |
(1) These amounts are reflected in the provision for credit losses in the Consolidated Statements of Income.
(2) Provision for credit losses includes only the portion related to net loans.
(3) Reserve for OBS credit exposures is recorded within other liabilities on the Consolidated Balance Sheets.
The provision for credit losses for the portion related to net loans for the three months ended March 31, 2026 was $14.6 million compared to a provision of $13.1 million for the same period in 2025.
An initial allowance for credit losses on purchased loans of $3.4 million for the three months ended March 31, 2026 was recorded due to the $207.7 million in-market commercial loan portfolio purchase.
The ACL includes qualitative adjustments, as appropriate, intended to capture the impact of uncertainties not reflected in the quantitative models. See "Note 5 - Loans and Allowance for Credit Losses" of the Notes to Consolidated Financial Statements in Part I, "Item 1. Financial Statements" for additional details.
The following table summarizes the allocation of the ACL - loans:
(dollars in thousands)
| March 31, 2026 ACL - loans | % to Total ACL - loans(1) | % to Total Net loans(2) | December 31, 2025 ACL - loans | % to Total ACL - loans(1) | % to Total Net loans(2) | |
|---|---|---|---|---|---|---|
| Real estate - commercial mortgage | $159,042 | 43.3% | 41.1% | $157,302 | 43.2% | 40.7% |
| Commercial and industrial | 78,978 | 21.5 | 18.5 | 77,740 | 21.3 | 18.8 |
| Real estate - residential mortgage | 89,860 | 24.5 | 27.8 | 88,961 | 24.4 | 27.6 |
| Consumer, home equity and leases and other loans | 30,256 | 8.2 | 9.0 | 29,563 | 8.1 | 8.9 |
| Real estate - construction | 9,353 | 2.5 | 3.6 | 10,896 | 3.0 | 4.0 |
| Total ACL - loans | $367,489 | 100.0% | 100.0% | $364,462 | 100.0% | 100.0% |
(1) Ending ACL - loan portfolio segment balance as a percentage of total ACL - loans.
(2) Ending loan portfolio segment balances as a percentage of total net loans for the periods presented.
Deposits and Borrowings
The following table presents ending deposits by type:
(dollars in thousands)
| March 31, 2026 | December 31, 2025 $% | Increase (Decrease) | ||
|---|---|---|---|---|
| Noninterest-bearing demand | $5,334,920 | $5,256,096 | $78,824 | 1.5% |
| Interest-bearing demand | 7,823,683 | 7,970,188 | (146,505) | (1.8) |
| Savings and money market deposits | 8,875,256 | 8,512,829 | 362,427 | 4.3 |
| Total demand and savings | 22,033,859 | 21,739,113 | 294,746 | 1.4 |
| Brokered deposits | 715,850 | 855,042 | (139,192) | (16.3) |
| Time deposits | 4,018,626 | 3,995,252 | 23,374 | 0.6 |
| Total deposits | $26,768,335 | $26,589,407 | $178,928 | 0.7% |
During the three months ended March 31, 2026, total deposits increased by $178.9 million compared to December 31, 2025. The increase in total deposits was primarily due to a $362.4 million increase in savings and money market deposits and a $78.8 million increase in noninterest-bearing demand deposits, partially offset by a $146.5 million decrease in interest-bearing demand deposits and a $139.2 million decrease in brokered deposits.
Total uninsured deposits (excluding intra-Company deposits) were estimated to be $9.6 billion and $9.7 billion as of March 31, 2026 and December 31, 2025, respectively.
Time deposits of $250 thousand or more were $1.1 billion at March 31, 2026 and December 31, 2025.
The following table presents ending borrowings by type:
(dollars in thousands)
| March 31, 2026 | December 31, 2025 $% | Increase (Decrease) | ||
|---|---|---|---|---|
| FHLB advances | $200,000 | $250,000 | $(50,000) | (20.0)% |
| Senior debt and subordinated debt | 367,720 | 367,637 | 83 | N/M |
| Other borrowings(1) | 684,859 | 679,738 | 5,121 | 0.8 |
| Total borrowings | $1,252,579 | $1,297,375 | $(44,796) | (3.5)% |
(1) Includes repurchase agreements, short-term promissory notes and capital leases.
During the three months ended March 31, 2026, total borrowings decreased $44.8 million, or 3.5%, compared to December 31, 2025. The decrease in total borrowings was primarily due to a $50.0 million decrease in FHLB advances, partially offset by a $5.1 million increase in other borrowings.
Shareholders' Equity
On December 16, 2025, the Corporation announced that its board of directors approved the 2026 Repurchase Program. The 2026 Repurchase Program will expire on January 31, 2027. Under the 2026 Repurchase Program, the Corporation is authorized to repurchase up to $150.0 million of shares of its common stock. Under this authorization, up to $25.0 million of the $150.0 million authorization may be used to repurchase the Corporation's preferred stock and outstanding subordinated notes. The 2026 Repurchase Program may be discontinued at any time.
During the three months ended March 31, 2026, 1,212,650 shares of the Corporation's common stock were repurchased under the 2026 Repurchase Program at a cost of $24.5 million or an average of $20.21 per share.
Regulatory Capital
The Corporation and its wholly owned subsidiary bank, Fulton Bank, are subject to the Capital Rules administered by banking regulators. Failure to meet minimum capital requirements can trigger certain actions by regulators that could have a material effect on the Corporation's financial statements.
The Capital Rules require the Corporation and Fulton Bank to:
- Meet a minimum Common Equity Tier 1 capital ratio of 4.50% of risk-weighted assets;
- Meet a minimum Tier 1 Leverage capital ratio of 4.00% of average assets;
- Meet a minimum Total capital ratio of 8.00% of risk-weighted assets and a minimum Tier 1 capital ratio of 6.00% of risk-weighted assets;
- Maintain a "capital conservation buffer" of 2.50% above the minimum risk-based capital requirements, which must be maintained to avoid restrictions on capital distributions and certain discretionary bonus payments; and
- Comply with a revised definition of capital to improve the ability of regulatory capital instruments to absorb losses. Certain non-qualifying capital instruments, including cumulative preferred stock and TruPS, are excluded as a component of Tier 1 capital for institutions of the Corporation's size.
As of March 31, 2026, the Corporation's capital levels met the minimum capital requirements, including the capital conservation buffers, as prescribed in the Capital Rules.
As of March 31, 2026, Fulton Bank met the well-capitalized requirements under the regulatory framework for prompt corrective action. To be categorized as well-capitalized, a bank must maintain minimum Total risk-based, Tier I risk-based, Common Equity Tier I risk-based and Tier I leverage ratios as set forth in the Capital Rules. There were no other conditions or events since March 31, 2026 that management believes have changed the Corporation's capital categories.
The following table summarizes the Corporation's capital ratios in comparison to regulatory requirements:
| March 31, 2026 | December 31, 2025 | Regulatory Minimum for Capital Adequacy | With Capital Conservation Buffer | |
|---|---|---|---|---|
| Total Risk-Based Capital (to Risk-Weighted Assets) | 15.2% | 15.2% | 8.0% | 10.5% |
| Tier I Risk-Based Capital (to Risk-Weighted Assets) | 12.7% | 12.6% | 6.0% | 8.5% |
| Common Equity Tier I (to Risk-Weighted Assets) | 11.9% | 11.8% | 4.5% | 7.0% |
| Tier I Leverage Capital (to Average Assets) | 9.9% | 9.7% | 4.0% | 4.0% |
Market risk
As filed, 14,495 characters, with its headings, lists and tables. Extracted from the main document; charts and exhibits are in the original on sec.gov.
Market risk is the exposure to economic loss that arises from changes in the values of certain financial instruments. The types of market risk exposures generally faced by financial institutions include interest rate risk, equity market price risk, debt security market price risk, foreign currency price risk and commodity price risk. Due to the nature of its operations, foreign currency price risk and commodity price risk are not significant to the Corporation.
Interest Rate Risk, Asset/Liability Management and Liquidity
Interest rate risk creates exposure in two primary areas. First, changes in rates have an impact on the Corporation's liquidity position and could affect its ability to meet obligations and continue to grow. Second, movements in interest rates can create fluctuations in the Corporation's net interest income and changes in the economic value of its equity.
The Corporation employs various management techniques to minimize its exposure to interest rate risk. The Corporation's ALCO is responsible for reviewing the interest rate sensitivity and liquidity positions of the Corporation, approving asset and liability management policies, and overseeing the formulation and implementation of strategies regarding balance sheet positions.
The Corporation uses two complementary methods to measure and manage interest rate risk: simulation of net interest income and estimates of economic value of equity. Using these measurements in tandem provides a reasonably comprehensive summary of the magnitude of the Corporation's interest rate risk, level of risk as time evolves, and exposure to changes in interest rates.
Net interest income simulation is performed for the following 12-month period using various interest rate scenarios. These scenarios measure the effects of sudden and gradual parallel movements upward and downward in the yield curve and are compared to results under a flat or unchanged interest rate scenario. Simulation of net interest income is used primarily to assess the Corporation's short-term earnings exposure to rate movements.
The Corporation's policy to measure its interest rate risk profile uses parallel instantaneous shocks. The potential exposure of net interest income under a parallel instantaneous shock is limited to:
- 10% of base-case net interest income for a 100 bps shock,
- 15% for a 200 bps shock,
- 20% for a 300 bps shock, and
- 25% for a 400 bps shock.
A "shock" is an immediate upward or downward movement of interest rates. These shocks do not incorporate potential changes in customer behavior that could result in changes to mix and/or volumes in the balance sheet or potential effects of competition on the pricing of deposits and loans over the forward 12-month period. Rate shocks resulting in negative interest rates that have been deemed impractical are omitted from presentation.
The simulation model incorporates contractual maturities and repricing opportunities for loans as well as prepayment assumptions, maturity data and call options embedded in the investment portfolio. Assumptions for non-maturity deposit accounts based on historical experience are incorporated into the model. The assumptions used are inherently uncertain and, as a result, the model cannot precisely predict future net interest income or the impact of fluctuations in market interest rates on net interest income. Actual results will differ from the model's simulated results due to timing, amount and frequency of interest rate changes as well as changes in market conditions and the application and timing of various management strategies.
The following table summarizes the expected impact of interest rate changes in rate-ramp scenarios over a 12-month period, that is a gradual parallel shift, on net interest income as of March 31, 2026:
| Rate Ramp(1) +400 bp +300 bp +200 bp +100 bp | Annual change in net interest income + $29.9 million + $24.8 million + $18.8 million + $11.6 million | % change in net interest income +2.6% +2.2% +1.6% +1.0% |
|---|---|---|
| –100 bp | - $5.1 million | -0.4% |
| –200 bp | - $9.7 million | -0.8% |
| –300 bp | - $14.1 million | -1.2% |
(1) Results include the effect of implicit and explicit interest rate floors that limit further reduction in interest rates.
The following table summarizes the expected impact of abrupt interest rate changes, that is a parallel instantaneous shock, on net interest income as of March 31, 2026:
| Rate Shock(1) +400 bp +300 bp +200 bp +100 bp | Annual change in net interest income + $70.1 million + $58.0 million + $43.3 million + $27.4 million | % change in net interest income +6.1% +5.1% +3.8% +2.4% |
|---|---|---|
| –100 bp | - $15.8 million | -1.4% |
| –200 bp | - $32.7 million | -2.9% |
| –300 bp | - $52.2 million | -4.6% |
(1) Results include the effect of implicit and explicit interest rate floors that limit further reduction in interest rates.
The economic value of equity analysis estimates the discounted present value of asset and liability cash flows using discount rates derived from market pricing for like assets and liabilities. Abrupt changes or "shocks" in interest rates, both upward and downward, are applied to evaluate the comparative effect of such interest rate movements relative to the unchanged environment. This measurement tool is used primarily to evaluate the longer-term repricing risks and options in the Corporation's Consolidated Balance Sheets. The Corporation's policy limits the economic value of equity that may be at risk in a parallel instantaneous shock to:
- 10% of the base-case economic value of equity for a 100 bps shock,
- 20% for a 200 bps shock,
- 30% for a 300 bps shock, and
- 40% for a 400 bps shock.
As of March 31, 2026, the Corporation was within all policy limits for net interest income and economic value of equity.
The following table disaggregates net loans by interest rate type at March 31, 2026:
(dollars in thousands)
| Fixed Rate | Adjustable/Variable Rate | Other(1) | Total | |
|---|---|---|---|---|
| Real estate - commercial mortgage | $2,007,041 | $7,964,049 | $14,278 | $9,985,368 |
| Commercial and industrial | 799,916 | 3,649,090 | 45,025 | 4,494,031 |
| Real estate - residential mortgage | 3,910,114 | 2,943,643 | (118,419) | 6,735,338 |
| Real estate - home equity | 136,935 | 1,113,026 | 3,231 | 1,253,192 |
| Real estate - construction | 275,978 | 599,848 | 672 | 876,498 |
| Consumer | 481,293 | 83,940 | (192) | 565,041 |
| Leases and other loans | 313,858 | 101 | 42,918 | 356,877 |
| Net loans | $7,925,135 | $16,353,697 | $(12,487) | $24,266,345 |
(1) Other includes unearned income, non-accrual loans, deferred fees/costs, purchase accounting fair value adjustment balances and loans in-process.
Interest Rate Derivatives
The Corporation enters into interest rate derivatives with certain qualifying commercial loan customers to meet their interest rate risk management needs. The Corporation simultaneously enters into interest rate derivatives with dealer counterparties with identical notional amounts and terms. The net result of these interest rate derivatives is that the customer pays a fixed rate of interest and the Corporation receives a floating rate. These interest rate derivatives are derivative financial instruments, and the gross fair values are recorded in other assets and liabilities on the Consolidated Balance Sheets.
Cash Flow Hedges
The Corporation's objectives in using interest rate derivatives are to reduce volatility in net interest income and net interest expense and to manage its exposure to interest rate movements. To accomplish this objective, the Corporation primarily uses interest rate derivatives as part of its interest rate risk management strategy. The Corporation enters into interest rate derivatives designated as cash flow hedges to hedge the cash flows associated with existing loans and borrowings.
For derivatives designated and that qualify as cash flow hedges of interest rate risk, the unrealized gain or loss on the derivative is recorded in AOCI and subsequently reclassified into interest income or interest expense in the same period during which the hedged transaction affects earnings. Amounts reported in AOCI related to derivatives will be reclassified to interest income or interest expense as interest payments are received or made on the Corporation's loans and borrowings.
In January 2023, the Corporation terminated interest rate derivatives designated as cash flow hedges with a combined notional amount of $1.0 billion. As the hedged transaction continues to be probable, the unrealized losses that have been recorded in AOCI are recognized as a reduction to interest income, including fees, when the previously forecasted hedged item affects earnings in future periods. During the three months ended March 31, 2026, $3.2 million of these unrealized losses have been reclassified as a reduction of interest income on loans, including fees, on the Consolidated Statements of Income. During the year ended December 31, 2025, $13.0 million of these unrealized losses have been reclassified as a reduction of interest income on loans, including fees, on the Consolidated Statements of Income.
Liquidity
The Corporation must maintain a sufficient level of liquid assets to meet the cash needs of its customers, who, as depositors, may want to withdraw funds or who, as borrowers, need credit availability. Liquidity is provided on a continuous basis through scheduled and unscheduled principal and interest payments on investments and outstanding loans and through the availability of deposits and borrowings. The Corporation also maintains secondary sources that provide liquidity on a secured and unsecured basis to meet short- and long-term needs.
The Corporation maintains liquidity sources in the form of interest-bearing deposits and customer funding (short-term promissory notes). The Corporation can access additional liquidity from these sources, if necessary, by increasing the rates of interest paid on those instruments. The positive impact to liquidity resulting from paying higher interest rates could have a detrimental impact on NIM and net interest income if rates on interest-earning assets do not experience a proportionate increase.
Borrowing availability with the FHLB and the FRB, along with federal funds lines at various correspondent banks, provides the Corporation with additional liquidity.
Fulton Bank is a member of the FHLB and has access to FHLB overnight and term credit facilities. As of March 31, 2026, the Bank had total borrowing capacity of approximately $11.8 billion with $4.3 billion of advances and letters of credit outstanding, for a remaining available borrowing capacity of approximately $7.4 billion under these facilities. Advances from the FHLB, when utilized, are secured by qualifying commercial real estate and residential mortgage loans, investments and other assets.
As of March 31, 2026, the Corporation had aggregate federal funds lines borrowing capacity of $2.6 billion with no amounts outstanding against that amount. As of March 31, 2026, the Corporation had $3.7 billion of collateralized borrowing capacity at the FRB discount window with no amounts outstanding.
A combination of commercial real estate loans, commercial loans, consumer loans and securities are pledged to the FRB of Philadelphia to provide access to FRB discount window borrowings. Securities carried at $469.8 million at March 31, 2026 were pledged as collateral to secure public and trust deposits.
Liquidity must also be managed at the Parent Company. For safety and soundness reasons, banking regulations limit the amount of cash that can be transferred from subsidiary banks to the parent company in the form of loans and dividends. Generally, these limitations are based on the subsidiary banks’ regulatory capital levels and their net income. Management continues to monitor the liquidity and capital needs of the Parent Company including monitoring the granularity of the deposit portfolio and level of uninsured deposits. Management will implement appropriate strategies, as necessary, to remain adequately capitalized and to meet its cash needs.
The Consolidated Statements of Cash Flows in Part I. "Item 1. Financial Statements" provide additional information. The Corporation's operating activities during the three months ended March 31, 2026 generated $114.7 million of cash primarily from net income. Cash used in investing activities was $188.2 million primarily due to the purchase of HTM securities. Cash provided in financing activities was $74.8 million.
Debt Security Market Price Risk
Debt security market price risk is the risk that changes in the values of debt securities, unrelated to interest rate changes, could have a material impact on the financial position or results of operations of the Corporation. The Corporation's debt security investments consist primarily of GSEs issued mortgage-backed securities and collateralized mortgage obligations, state and municipal securities, and corporate debt securities. All of the Corporation's investments in mortgage-backed securities and collateralized mortgage obligations have principal payments that are guaranteed by GSEs.
State and Municipal Securities
As of March 31, 2026, the Corporation owned securities issued by various states and municipalities with a total fair value of $798.0 million. Uncertainty with respect to the financial strength of state and municipal bond insurers places emphasis on the underlying strength of issuers. Pressure on local tax revenues of issuers due to adverse economic conditions could have an adverse impact on the underlying credit quality of issuers. The Corporation evaluates existing and potential holdings primarily based on the underlying creditworthiness of the issuing state or municipality and then, to a lesser extent, on any credit enhancement. State and municipal securities can be supported by the general obligation of the issuing state or municipality, allowing the securities to be repaid by any means available to the issuing state or municipality. As of March 31, 2026, approximately 100% of state and municipal securities were supported by the general obligation of corresponding states or municipalities. Approximately 73% of these securities were school district issuances, which are also supported by the states of the issuing municipalities.
Controls and procedures
As filed, 938 characters, with its headings, lists and tables. Extracted from the main document; charts and exhibits are in the original on sec.gov.
Evaluation of Disclosure Controls and Procedures
The Corporation carried out an evaluation, under the supervision and with the participation of the Corporation's management, including the Corporation's Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Corporation's disclosure controls and procedures pursuant to Rule 13a-15, promulgated under the Exchange Act. Based upon that evaluation, the Corporation's Chief Executive Officer and Chief Financial Officer concluded that, as of March 31, 2026, the Corporation's disclosure controls and procedures are effective. Disclosure controls and procedures are controls and procedures that are designed to ensure that information required to be disclosed in Corporation reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms.
Risk factors
As filed, 195 characters, with its headings, lists and tables. Extracted from the main document; charts and exhibits are in the original on sec.gov.
There have been no material changes to the risk factors previously disclosed in Part I, Item 1A. Risk Factors of the Corporation's Annual Report on Form 10-K for the year ended December 31, 2025.
Figures reported in this filing
Standardized line items from the XBRL in this filing, for the period ended 2026-03-31. Comparative periods it repeats are left out.
| Line item | Period | Value | XBRL concept |
|---|---|---|---|
| Revenue | 3 months2026-01-01 to 2026-03-31 | $69.8m | us-gaap:RevenueFromContractWithCustomerIncludingAssessedTax |
| Income tax | 3 months2026-01-01 to 2026-03-31 | $22.4m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months2026-01-01 to 2026-03-31 | $94.8m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months2026-01-01 to 2026-03-31 | $0.51 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months2026-01-01 to 2026-03-31 | $0.51 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months2026-01-01 to 2026-03-31 | 181,655,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months2026-01-01 to 2026-03-31 | $114.7m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Dividends paid | 3 months2026-01-01 to 2026-03-31 | $36.7m | us-gaap:PaymentsOfDividends |
| Share repurchases | 3 months2026-01-01 to 2026-03-31 | $24.6m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Total assets | At period end2026-03-31 | $32.24bn | us-gaap:Assets |
| Total liabilities | At period end2026-03-31 | $28.73bn | us-gaap:Liabilities |
| Shareholders' equity | At period end2026-03-31 | $3.51bn | us-gaap:StockholdersEquity |
Source: SEC EDGAR, the filing index for accession 0000700564-26-000016. Last ingested by Listed: Nov 6, 2026, 17:29 ET. Listed shows no prices and gives no investment advice.