Fulton Financial Q2 Earnings Call Highlights

Key Points

• Fulton Financial posted record second-quarter operating earnings of $115.9 million, or $0.60 per share, helped by higher net interest income, stronger fee revenue, and the Blue Foundry acquisition. Net interest income rose 8% sequentially to $284.3 million, and the net interest margin expanded to 3.60%.
• Blue Foundry significantly boosted the balance sheet, with ending loans increasing to $25.9 billion and deposits rising to $28.3 billion. Management said the deal strengthens Fulton’s presence in Northern New Jersey and supports its relationship-based community banking strategy.
• Credit quality and capital remained solid, with CET1 improving to about 12.1% and tangible common equity rising to 8.8%. Fulton also narrowed its 2026 guidance, lifting the low end of non-interest income outlook while lowering expected provision expense and tightening operating expense guidance.

Fulton Financial NASDAQ: FULT reported record operating earnings for the second quarter of 2026, with management citing higher net interest income, expanded fee revenue, stronger capital levels and the completed acquisition of Blue Foundry as key contributors to the quarter.

Chairman, Chief Executive Officer and President Curt Myers said the company delivered “continued strong performance” in the quarter ended June 30, pointing to solid growth, favorable overall credit performance and progress on strategic initiatives. The company completed the Blue Foundry acquisition on April 1 and later completed the merger and integration of Blue Foundry Bank on July 11.

“This transaction advances our strategy by expanding our presence in Northern New Jersey, enhancing our community banking model, and increasing our ability to serve customers in an attractive and growing market,” Myers said.

Operating Earnings Reach Record Level

Chief Financial Officer Rick Kraemer said net income available to common shareholders was $99.9 million, or $0.52 per diluted share. Operating earnings were $115.9 million, or $0.60 per diluted share, compared with $0.55 per diluted share in the first quarter.

Myers said operating earnings on average tangible common equity improved to 15.71%, while operating return on average assets rose to 1.39%. Tangible book value per share increased 13% on a linked-quarter annualized basis.

Net interest income rose $22.2 million, or about 8% from the prior quarter, to $284.3 million. Kraemer said most of that increase came from Blue Foundry, which contributed approximately $17.5 million during the period. Total loan interest income increased $32.6 million, reflecting both acquisition-related growth and higher average balances.

Fulton’s net interest margin expanded to 3.60%, up 2 basis points from the first quarter and 13 basis points from the year-earlier period. Kraemer said the second-quarter margin was reduced by 1 basis point because the company carried overlapping subordinated debt expense for part of the period.

Blue Foundry Adds Loans and Deposits

Ending loans totaled $25.9 billion, up $1.7 billion from March 31. Kraemer said approximately $1.6 billion of the increase came from acquired Blue Foundry balances, while organic loan growth was about $103 million. Consumer-related lending, including residential mortgage and home equity production, showed strength, while commercial loan balances declined modestly.

Deposits increased $1.5 billion during the quarter to $28.3 billion, mostly due to the Blue Foundry acquisition. Myers said organic deposit trends were in line with seasonal expectations and that deposit competition in Fulton’s markets was consistent with recent quarters.

During the question-and-answer session, Myers said Fulton remains focused on relationship-based deposit gathering and benefits from a diversified deposit base. Kraemer said deposit costs at quarter-end were about 2 basis points higher than the quarterly average and that a similar trend could continue into the third quarter. He also noted that municipal deposits typically reach a low point in the second quarter and can improve in the third quarter.

Asked about Blue Foundry’s funding profile, Kraemer said Fulton had reduced brokered deposits on a combined basis during the quarter and had paid off most of Blue Foundry’s wholesale funding since the acquisition. He said Fulton has used targeted promotional deposit offers in select markets, including Northern New Jersey, as part of its customer acquisition strategy.

Fee Revenue and Wealth Assets Increase

Non-interest income increased to $79.3 million, up $9.5 million from the first quarter. Kraemer said the largest driver was a $7.3 million increase in income from equity method investments, including about $6.9 million of gain related to an investment sold during the quarter. Mortgage banking revenue improved by roughly $1 million.

Myers said commercial fee income rose 9% from the prior quarter, consumer fee income increased 8%, and wealth management assets under management and administration reached a record $18.4 billion at quarter-end.

Responding to a question about investment management fees, Myers said the quarter’s fee movement reflected timing and market dynamics, noting that brokerage business fees are billed at quarter-end and that assets under management increased $1.3 billion from the first quarter to the second quarter.

Expenses, Credit and Capital

Total non-interest expense was $231 million, compared with $200.3 million in the prior quarter. Operating non-interest expense was $210.6 million. Excluded from operating results were $13.8 million of acquisition-related expenses, $5.9 million of intangible amortization and about $0.8 million of debt extinguishment costs tied to the redemption of subordinated debt. Kraemer said a $2.1 million pension plan charge was included in operating non-interest expense.

On credit, provision expense totaled $4.9 million, down from $14.4 million in the first quarter. The allowance for credit losses on loans was $382.6 million, or 1.48% of total loans. The quarter included about $31 million of initial allowance for credit losses on acquired Blue Foundry loans. Annualized net charge-offs were 0.34% of average loans, up from 0.25% in the previous quarter, while non-performing assets were $187.1 million, or 0.54% of total assets.

Myers said the rise in charge-offs reflected timing on resolutions and updated information on previously identified accounts, rather than newly identified issues. He said Fulton expects charge-offs to remain within its normal operating range.

Fulton’s common equity Tier 1 ratio improved to approximately 12.1% from 11.9% in the prior quarter, and tangible common equity rose to 8.8%. The company issued $300 million of fixed-to-floating rate subordinated notes due 2036 and redeemed $195 million of subordinated notes due 2030. Fulton also repurchased 525,000 shares during the quarter at an average price of $21.19, totaling about $11.1 million. Total repurchases under the 2026 authorization reached $35.6 million through June 30, leaving approximately $115 million available.

Guidance Narrowed for 2026

Kraemer said Fulton’s outlook for the remainder of 2026 remains positive, with management making “minor adjustments” to full-year guidance after the first half of the year.

• Net interest income guidance was narrowed to $1.12 billion to $1.135 billion.
• Full-year loan growth was adjusted to low single digits.
• Loan loss provision guidance was lowered to $40 million to $60 million.
• The low end of non-interest income guidance was raised to $290 million from $285 million.
• Operating non-interest expense guidance was tightened to $810 million to $830 million.
• The full-year tax range was unchanged.

In response to an analyst question, Myers said the lower loan growth outlook reflected modest growth in the first half, including a seasonally slower first quarter and the Blue Foundry integration in the second quarter. He said management expects growth in the back half of the year to return to prior expectations.

Asked about merger and acquisition strategy following Blue Foundry, Myers said Fulton remains interested in community banks in the $1 billion to $5 billion asset range, with Blue Foundry serving as an example of the type of deal that can expand the company in targeted markets. He also said Fulton would be interested in opportunities involving banks in the $5 billion to $15 billion range if they become available.

About Fulton Financial (NASDAQ:FULT)

Fulton Financial Corporation, trading on the NASDAQ under the ticker FULT, is the financial holding company for Fulton Bank, headquartered in Lancaster, Pennsylvania. The company delivers a broad range of banking and financial services through its subsidiary, Fulton Bank, targeting both individual and corporate clients. Fulton Financial's offerings include deposit accounts, lending solutions, treasury management, and specialized banking services designed to support personal wealth goals and business growth initiatives.

Through Fulton Bank, the company provides retail banking services such as checking and savings accounts, consumer and residential mortgage loans, and home equity products.

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