FULTON FINANCIAL CORP

Fulton Financial Corporation (the "Corporation") operates as a financial holding company, primarily delivering a full range of consumer and commercial financial services through its wholly-owned banking subsidiary, Fulton Bank, within a five-state market area comprising Pennsylvania, Delaware, Maryland, New Jersey, and Virginia. The Corporation's business model emphasizes relationship banking and serves a diverse customer base, including small- and medium-sized businesses with annual gross revenue generally less than $500 million. Revenue is primarily generated through net interest income, which is the difference between interest earned on loans and investments and interest paid on deposits and borrowings, supplemented by fees from various services and products, and gains on asset sales. The Corporation is not dependent on a single or a few customers, and its loan portfolio, while largely commercial, is diversified across various industries such as manufacturing, healthcare, and agriculture.

The Corporation offers a diversified suite of consumer banking products and services, including checking and savings deposit products, certificates of deposit, home equity loans and lines of credit, fixed, variable, and adjustable rate mortgage products (including construction and jumbo residential mortgage loans), automobile loans, student loans, personal loans and lines of credit, and checking account overdraft protection. Commercial banking products and services are provided primarily to small- and medium-sized businesses and include commercial real estate loans, commercial and industrial loans, construction loans, equipment lease financing, letters of credit, cash management services, and traditional deposit products. Wealth management services, encompassing investment management, trust, brokerage, insurance, and investment advisory services, are offered to both consumer and commercial customers through Fulton Financial Advisors and Fulton Private Bank. These services are delivered through a network of 204 financial centers, a main office in Lancaster, Pennsylvania, and electronic channels including ATMs, telephone, mobile, and online banking.

For the fiscal year ended December 31, 2025, the Corporation reported net income of $391.609 million ¹, an increase from $288.743 million ² in 2024. Net income available to common shareholders was $381.361 million ³, up from $278.495 million ⁴ in the prior year. Diluted earnings per share (EPS) for common shareholders increased to $2.08 ⁵ in 2025 from $1.57 ⁶ in 2024. The net interest margin (NIM) for 2025 was 3.51% ⁷, a nine basis point increase from 3.42% ⁸ in 2024. Net interest income grew to $1.036 billion ⁹ from $960.325 million ¹⁰ in 2024. The provision for credit losses decreased to $35.698 million ¹¹ in 2025 from $71.636 million ¹² in 2024. Non-interest income saw a slight increase to $276.766 million ¹³ from $275.731 million ¹⁴ in 2024, while non-interest expense decreased by $28.0 million ¹⁵ to $791.829 million ¹⁶ from $819.791 million ¹⁷ in 2024. As of December 31, 2025, cash and cash equivalents stood at $1.061 billion ¹⁸, total deposits were $26.589 billion ¹⁹, and total borrowings were $1.297 billion ²⁰. Total shareholders' equity was $3.490 billion ²¹.

Comparing 2025 to 2024, net interest income increased by $76.0 million ²². This was driven by a $66.5 million ²³ increase from changes in average interest-earning asset volumes, partially offset by a $32.1 million ²⁴ decrease from changes in yields. The yield on average interest-earning assets decreased by 15 basis points ²⁵. Total interest expense decreased by $41.3 million ²⁶, primarily due to a $53.0 million ²⁷ decrease from lower rates on interest-bearing liabilities, partially offset by an $11.6 million ²⁸ increase from higher average interest-bearing liabilities volumes. The cost of total deposits decreased by 17 basis points ²⁹ to 1.96% ³⁰. Average net loans increased by $850.1 million ³¹, or 3.7% ³², largely due to the full-year impact of loans acquired in the Republic First Transaction. Average deposits increased by $1.7 billion ³³, or 7.1% ³⁴, also influenced by the Republic First Transaction. Non-interest income, excluding investment securities losses and acquisition gain, increased by $17.8 million ³⁵, or 6.9% ³⁶, with notable increases in wealth management revenues ($5.8 million ³⁷), cash management fee income ($4.8 million ³⁸), and consumer banking overdraft fees ($1.6 million ³⁹). Non-interest expense, excluding certain one-time items, increased by $18.0 million ⁴⁰, or 2.3% ⁴¹, mainly due to higher salaries and employee benefits ($18.0 million ⁴²) and intangible amortization ($4.6 million ⁴³).

During 2025, the Corporation undertook several operational developments. On November 24, 2025, the Corporation entered into a Merger Agreement with Blue Foundry Bancorp, with the merger expected to close around April 1, 2026, and Blue Foundry Bank merging into Fulton Bank in the third quarter of 2026. Direct costs related to this merger totaled $1.1 million ⁴⁴ for the year ended December 31, 2025. In May 2024, the Corporation sold $345.7 million ⁴⁵ of available-for-sale (AFS) investment securities, incurring a pre-tax loss of $20.3 million ⁴⁶, and reinvested the proceeds into higher-yielding securities. The Corporation also repurchased approximately 3.3 million ⁴⁷ shares of common stock at a total cost of $59.7 million ⁴⁸, or an average cost of $18.16 ⁴⁹ per share, under the 2025 Repurchase Program.

The Corporation expects the merger with Blue Foundry Bancorp to close on or about April 1, 2026, with Blue Foundry Bank subsequently merging into Fulton Bank in the third quarter of 2026. This strategic acquisition is anticipated to enhance the Corporation's presence and operations.

The Corporation's growth plans include the pursuit of profitable growth, which may involve new lines of business or new products or services. These new activities can entail significant costs, uncertainties, and risks, and may not generate the anticipated return on investment. Successful implementation and management of new activities are crucial, and external factors such as regulatory compliance, competitive alternatives, and customer preferences could impact success.

Operationally, the Corporation's net interest income simulation for the upcoming 12-month period, under a parallel instantaneous shock, is limited to 10% ⁵⁰ of base-case net interest income for a 100 basis points (bps) shock, 15% ⁵¹ for a 200 bps shock, 20% ⁵² for a 300 bps shock, and 25% ⁵³ for a 400 bps shock. The economic value of equity policy limits the risk to 10% ⁵⁴ of the base-case economic value of equity for a 100 bps shock, 20% ⁵⁵ for a 200 bps shock, 30% ⁵⁶ for a 300 bps shock, and 40% ⁵⁷ for a 400 bps shock. As of December 31, 2025, the Corporation was within these economic value of equity policy limits for every 100 bps parallel instantaneous shock presented. The Corporation estimates that an additional $1.8 million ⁵⁸ will be reclassified as a decrease to interest income over the next twelve months due to cash flow hedge terminations.

For capital allocation, the Board of Directors approved the 2026 Repurchase Program on December 16, 2025, authorizing the repurchase of up to $150.0 million ⁵⁹ of common stock, with up to $25.0 million ⁶⁰ of this authorization potentially used for preferred stock and outstanding subordinated notes. The program is set to expire on January 31, 2027.

The Corporation faces structural headwinds and execution risks, including the potential for increased competition for and costs of deposits and other funding sources, more stringent regulatory requirements relating to liquidity and interest rate risk management, and capital adequacy, as well as increased FDIC insurance expenses. The composition of the loan portfolio, with a majority in commercial loans, commercial mortgage loans, and construction loans, may expose the Corporation to increased credit risk, particularly sensitive to broader economic factors and real estate market conditions. Changes in interest rates could also increase funding costs, reduce net interest margin, or create liquidity challenges. Geopolitical conditions, including military conflicts and ongoing tensions in the Middle East, could impact business and economic conditions.

The Corporation faces material risks from difficult conditions in the economy and financial markets, including elevated interest rates and trade policies, which can impact loan portfolio performance and demand for services. Interest rate risk is significant, with changes in market rates potentially affecting net interest income and the fair value of financial assets and liabilities. For instance, as of December 31, 2025, unrealized losses on AFS investment securities totaled approximately $206 million ⁶¹, reducing total shareholders' equity. Credit risk is elevated due to the loan portfolio's composition, with approximately 63% ⁶² in commercial loans, commercial mortgage loans, and residential and commercial construction loans, which are sensitive to economic and real estate market conditions. Liquidity risks include dependence on customer deposits and the potential for increased funding costs or deposit withdrawals, especially for uninsured deposits, which constituted approximately 36% ⁶³ of total deposits (excluding intra-Company deposits) at December 31, 2025. Operational risks, including human error, system failures, and reliance on third-party vendors, could lead to financial loss, reputational damage, or regulatory intervention. Cybersecurity threats are ongoing and sophisticated, posing risks of data breaches, service disruptions, and regulatory penalties. The Corporation is also subject to extensive and evolving regulation, with non-compliance potentially leading to fines, enforcement actions, or restrictions on activities. Changes in tax laws, such as the 1% ⁶⁴ excise tax on share repurchases exceeding $1 million ⁶⁵ from the Inflation Reduction Act of 2022, could negatively impact financial performance. Risks related to the pending merger with Blue Foundry Bancorp include substantial integration costs, potential failure to realize anticipated benefits and cost savings, and challenges in retaining key personnel.

Management's message to shareholders emphasizes a focus on relationship banking and strategic growth, as evidenced by the pending merger with Blue Foundry Bancorp. The Corporation is actively managing its interest rate risk, with policies limiting potential exposure of net interest income to 10% ⁶⁶ for a 100 bps shock, 15% ⁶⁷ for a 200 bps shock, 20% ⁶⁸ for a 300 bps shock, and 25% ⁶⁹ for a 400 bps shock, and economic value of equity risk to 10% ⁷⁰ for a 100 bps shock, 20% ⁷¹ for a 200 bps shock, 30% ⁷² for a 300 bps shock, and 40% ⁷³ for a 400 bps shock. A key strategic priority is capital management, demonstrated by the approval of the 2026 Repurchase Program, authorizing up to $150.0 million ⁷⁴ for common stock repurchases, with up to $25.0 million ⁷⁵ potentially allocated to preferred stock and subordinated notes. The Corporation also highlights its commitment to cybersecurity, with a comprehensive risk management program integrated into its enterprise risk management framework, utilizing industry standards like NIST Cybersecurity Framework.