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    FULT
    Earnings call· Mar 2026(Q1 FY26)

    FULTON FINANCIAL Q1 FY26 earnings call FULT

    Apr 23, 2026 Source

    Executive summary

    Fulton Financial Q1 FY26 — Solid Execution Drives Profitability and Capital Strength

    Fulton Financial delivered a strong start to the year, showcasing consistent execution and strategic progress. The company achieved solid profitability and capital generation, driven by effective balance sheet management and cost discipline. The recent acquisition of Blue Foundry Bancorp is expected to be immediately accretive, further strengthening the franchise and providing deeper market penetration in Northern New Jersey.

    Highlights

    5

    • Operating earnings were $0.55 per diluted share, consistent with the prior quarter.

    • Operating return on average assets was 1.30% and operating return on tangible common equity was 14.76%.

    • Efficiency ratio improved to 56.7% due to strong revenue generation and prudent expense management.

    • Pre-provision net revenue (PPNR) increased $9.2 million linked quarter to $141 million.

    • Fee income grew more than 9% year-over-year, led by a 12% increase in wealth management.

    Concerns

    4

    • Net interest income declined approximately $4 million linked quarter, largely due to day count.

    • Net interest margin decreased by 1 basis point from the fourth quarter to 3.58%.

    • Loan growth was partially offset by a decline in construction balances and continued planned runoff of the indirect auto portfolio.

    • Borrower sentiment was noted as 'a little apprehensive' in the first quarter.

    Guidance & targets

    7
    CategoryTargetConfidence
    Full-year 2026 Operating Guidance
    Affirmed
    high materiality
    High
    Interest Rate Assumption
    25 basis point cut in July
    medium materiality
    High
    Loan Growth
    Annualized mid-single-digit growth
    high materiality
    Medium
    Expense Growth
    Controlled growth
    medium materiality
    Medium
    Capital Generation
    Strong generation
    high materiality
    High
    Blue Foundry Acquisition Financial Impact
    Immediately earnings and tangible book accretive
    high materiality
    High
    Blue Foundry Cost Savings Run Rate
    50% cost save run rate
    medium materiality
    High

    Operational metrics

    20
    Operating Earnings Per Diluted Share
    $0.55consistent with last quarter
    Q1 FY26

    Reflects solid execution across the business.

    Operating Return on Average Assets
    1.30%
    Q1 FY26

    Reflects strong profitability.

    Pre-Provision Net Revenue (PPNR)
    $141Mup $9.2M linked quarter
    Q1 FY26

    Supported by strong revenue generation and prudent expense management.

    Total Cost of Funds
    9 bpsdecreased
    Q1 FY26

    Reflecting both pricing actions and favorable mix.

    Loan Balances Increase
    $121M
    Q1 FY26

    Driven by commercial mortgage growth, partially offset by construction and indirect auto runoff.

    Securities Increase
    $28M
    Q1 FY26

    Investments as a percentage of total assets remained at 15%.

    Noninterest Income
    $69.8Meffectively flat with prior quarter
    Q1 FY26

    Represented just over 20% of total revenue.

    Fee Income Growth
    >9%YoY
    Q1 FY26 vs Q1 FY25

    Across all businesses, led by wealth management.

    Wealth Management Fee Growth
    12%YoY
    Q1 FY26 vs Q1 FY25

    Led overall fee income growth.

    Total Noninterest Expense
    $200.3Mdown $12.7M in Q4 FY25
    Q1 FY26

    Driven primarily by lower incentive compensation and discipline, partially offset by acquisition expenses.

    Operating Expenses
    $190.7M
    Q1 FY26

    Used to calculate the improved efficiency ratio.

    Provision for Credit Losses
    $14.4M
    Q1 FY26

    Reflects a balanced and prudent assessment of portfolio performance.

    Allowance for Credit Losses
    $367.5M
    Q1 FY26

    Reflects a balanced and prudent assessment of portfolio performance.

    Tangible Common Equity Ratio
    8.6%improved
    Q1 FY26

    Reflects strong capital position.

    Share Repurchases Executed
    $24.5M
    Q1 FY26

    Under the 2026 authorization.

    Remaining Share Repurchase Authorization
    $125M
    Q1 FY26

    Provides flexibility for future capital deployment.

    Construction Maturity Wall
    50% or lessvs prior year
    Next 4 quarters

    Expected reduction in maturities for construction loans, alleviating future pressure.

    Fixed Asset Repricing Benefit
    50-60 bps
    Next 12 months

    Expected benefit on the back book at current market rates and spreads.

    Blue Foundry Acquisition Expenses
    $2.6M
    Q1 FY26

    Partially offset the decline in total noninterest expense.

    Blue Foundry Combined Expenses
    $27M
    Q2-Q4 FY26

    Expected for the second, third, and fourth quarters combined.

    Industry KPIs

    13
    MetricValueDetails
    Loans$121MUSD
    Deposits$179MUSD
    Rotce ROE14.76%%
    Cet1 ratio11.9%%
    Capital returns$24.5MUSD
    Fee income lines$69.8MUSD
    Allowance reserves$367.5MUSD
    Net interest income$262MUSD
    Net interest margin3.58%%
    Net charge offs npls25 bpsbps
    Total operating expenses$200.3MUSD
    Provision for credit losses$14.4MUSD
    Efficiency ratio operating leverage56.7%%

    Deals & partnerships

    2
    Blue Foundry BancorpAcquisition of a bank to expand market presence in Northern New Jersey.

    The acquisition closed on April 1, 2026. Integration planning is progressing well, with systems conversion expected in mid-July. Management anticipates achieving a 50% cost savings run rate by the end of Q4 FY26.

    High-quality institutionOpportunistic purchase of a commercial loan portfolio.$200M

    The portfolio consists of granular commercial loans, with an average loan size of $1.2 million, located right in the heart of Fulton's franchise. It represents a similar customer base to Fulton's existing clients.

    Risks & headwinds

    6
    Geopolitical developments and economic conditionsOngoing

    Unquantified

    Mitigation: Disciplined, balanced, and prudent credit decision-making.

    Decline in construction loan balancesQ1 FY26

    Partially offset overall loan growth

    Mitigation: Increased origination activity and building pipelines in other areas.

    Continued planned runoff of indirect auto portfolioQ1 FY26 and ongoing

    Partially offset overall loan growth

    Mitigation: Focus on disciplined smart growth in other loan categories.

    Apprehensive borrower sentimentQ1 FY26

    Unquantified, leading to a 'little softer' Q1 overall

    Mitigation: Strong origination activity and building pipelines to generate disciplined growth.

    Competitive permanent market for loansOngoing

    Unquantified, leading to prudence and selectivity

    Mitigation: Being prudent and selective in permanent market, focusing on disciplined pricing and return thresholds.

    Blue Foundry deposit mix impact on noninterest-bearing percentageNear term (Q2 FY26)

    Lower concentration in noninterest-bearing deposits

    Mitigation: Management acknowledges the change but expects core deposit trends to remain consistent long-term.

    What to watch in Q2 FY26

    5

    Expense Run Rate Post-Blue Foundry Integration

    Q2 FY26 and Q4 FY26
    CurrentOperating expenses $190.7M (Q1 FY26 stand-alone)
    TargetCloser to $200M (stand-alone) and 50% cost save run rate for Blue Foundry by end of Q4 FY26

    Why it matters

    This will indicate the success of integration efforts and the realization of anticipated cost synergies, impacting overall profitability and efficiency.

    My gut reaction is that, that's a little high based on where we should be on a run rate basis and hitting that 50% cost saves.

    Q&A highlights

    5

    Can you provide more detail on the expected pace of expense adds and cost savings throughout the year, especially the run rate post-Blue Foundry integration, given the Q1 performance and reiterated guidance?

    Management expects the stand-alone operating expense base to increase from $191 million to closer to $200 million by year-end. For Blue Foundry, they anticipate $27 million in combined expenses for Q2, Q3, and Q4, and expect to reach a 50% cost save run rate by the end of Q4 FY26, suggesting consensus estimates around $215 million for Q4 might be high.

    “My gut reaction is that, that's a little high based on where we should be on a run rate basis and hitting that 50% cost saves.”

    asked by Daniel Tamayo · answered by Richard Kraemer

    2 min read6 chapters

    Detailed Narrative

    01

    Strategic Execution and Performance

    Fulton Financial reported a strong Q1 FY26, with operating earnings of $0.55 per diluted share, consistent with the prior quarter. The company achieved an operating return on average assets of 1.30% and an operating return on tangible common equity of 14.76%. These results were driven by solid execution, disciplined balance sheet management, and effective capital deployment, including share repurchases while growing tangible book value.

    02

    Loan and Deposit Dynamics

    Loan balances increased by $121 million during the quarter, primarily led by growth in commercial mortgage, including an opportunistic $200 million in-market portfolio purchase. This growth was partially offset by declines in construction balances and the planned runoff of the indirect auto portfolio. Deposit trends were positive, with ending balances increasing $179 million, driven by higher savings and noninterest-bearing demand deposits. The total cost of funds decreased by 9 basis points.

    03

    Net Interest Margin and Rate Sensitivity

    Net interest income totaled $262 million, a $4 million decline linked quarter primarily due to day count. The net interest margin (NIM) was 3.58%, down just 1 basis point from Q4 FY25, reflecting underlying structural stability. Management noted that deposit repricing discipline continues to mostly offset asset yield pressure. The company's interest rate risk profile remains relatively neutral, and a significant portion of the fixed-rate loan book is expected to reprice favorably over the next 12 months.

    04

    Expense Management and Efficiency

    Total noninterest expense was $200.3 million, down $12.7 million from the prior quarter, driven by lower incentive compensation and cost discipline, partially offset by $2.6 million in acquisition-related expenses. On an operating basis, expenses were $190.7 million, and the efficiency ratio improved to 56.7%. Management believes this efficiency level is sustainable, balancing targeted investments with overall cost control.

    05

    Credit Quality and Capital Position

    Credit performance remained stable, with the provision for credit losses at $14.4 million and the allowance for credit losses at $367.5 million, or 1.51% of total loans. Nonperforming assets improved to 55 basis points of total assets from 58 basis points. The CET1 ratio increased to approximately 11.9%, and the tangible common equity ratio improved to 8.6%, providing strong capital flexibility for organic growth, strategic opportunities, and share repurchases.

    06

    Blue Foundry Bancorp Acquisition

    Fulton successfully closed the acquisition of Blue Foundry Bancorp on April 1, 2026. The deal is expected to be immediately earnings and tangible book accretive, with revenue enhancements driven by relationship expansion. Integration planning is progressing well, with systems conversion anticipated in mid-July, and the company expects to achieve a 50% cost savings run rate by the end of Q4 FY26.

    AI-generated summary of the company’s earnings call. Not investment advice.