Fulton Financial Corporation (FULT) Earnings

Management highlights

### Strategic Milestones - Successfully completed the Blue Foundry acquisition on April 1, 2026, with full system conversion and integration of Blue Foundry Bank completed on July 11, 2026. - The acquisition expands Fulton's presence in the attractive, growing Northern New Jersey market, enhances its community banking model, and is expected to drive long-term growth and value creation. - Completed a capital structure refinancing: issued $300 million of fixed-to-floating rate subordinated notes due 2036 and redeemed $195 million of older subordinated notes due 2030, enhancing capital flexibility. ### Overall Financial Performance - Delivered record operating profitability in Q2 2026: operating earnings available to common shareholders reached $115.9 million ($0.60 per diluted share), up from $0.55 per diluted share in Q1 2026. - Key profitability metrics improved: operating return on average tangible common equity hit 15.71%, operating return on average assets reached 1.39%, and tangible book value per share grew 13% linked quarter (annualized). - Net interest margin expanded 2 basis points to 3.6% quarter over quarter, and 13 basis points year over year, demonstrating effective management of earning asset yields and funding costs. - Capital position strengthened: common equity tier 1 ratio increased to 12.1% from 11.9% in Q1, and tangible common equity rose 26 basis points to 8.8%. - Repurchased $11.1 million of common stock in Q2, with $115 million remaining in the 2026 repurchase authorization as of June 30. ### Credit Quality - Overall credit performance remains solid, with favorable asset quality metrics. Provision expense fell to $4.9 million from $14.4 million in Q1, with $31 million of the provision attributable to the 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 Q1, while non-performing assets held steady at 0.54% of total assets. The allowance for credit losses equals 1.48% of total loans, providing strong reserve coverage. ### Integration Progress - Blue Foundry integration was completed on schedule, with management currently focused on realizing targeted cost savings and operational efficiencies. As of Q2, 24% of expected cost savings have been realized.

Guidance

Management updated full-year 2026 guidance based on H1 performance, with the following changes: - Narrowed the net interest income guidance range to $1.12 billion to $1.135 billion (no prior range provided for comparison) - Adjusted full-year total loan growth guidance to a low single-digit percentage increase, down from a prior mid-single-digit target - Lowered the loan loss provision guidance range to $40 million to $60 million - Raised the lower bound of the non-interest income guidance range to $290 million from the prior $285 million - Tightened the operating non-interest expense guidance range to $810 million to $830 million - Full-year effective tax rate guidance remained unchanged - Management expects stable to slightly expanding net interest margin over the next two quarters, and forecasts a generally stable net interest margin through at least 2027 in the current market environment

Segment performance

Fulton Financial reports results across core banking and wealth segments for Q2 2026: 1. **Net Interest Income**: $284.3 million, an 8% increase linked quarter, with the Blue Foundry acquisition contributing $17.5 million of this growth. This segment accounted for 78.2% of total revenue (net interest income + non-interest income) in the quarter. 2. **Non-Interest Income**: $79.3 million, up $9.5 million linked quarter, representing 21.8% of total revenue. Commercial fee income rose 9% quarter over quarter, consumer fee income rose 8%, and wealth management AUM reached a record $18.4 billion at quarter end. A $6.9 million gain from a sold equity method investment drove most of the quarter-over-quarter increase. 3. **Loan Portfolio**: Ending total loans reached $25.9 billion, up $1.7 billion from Q1 2026, with $1.6 billion of the increase from the Blue Foundry acquisition. Organic loan growth was $103 million, with strength in consumer lending (residential mortgage and home equity) and a modest decline in commercial loan balances. 4. **Deposit Franchise**: Ending total deposits hit $28.3 billion, up $1.5 billion from Q1 2026, almost entirely from the Blue Foundry acquisition. This segment remains a core competitive advantage for the firm, supporting profitable balance sheet growth.

Risks & headwinds

• Ongoing competitive pressure in deposit pricing, which is expected to continue pushing funding costs modestly higher in the second half of 2026 • Disciplined credit underwriting and margin defense are limiting near-term loan origination volume, leading to slower than expected first half organic growth • Broader macroeconomic conditions and Federal Reserve policy changes create uncertainty for long-term net interest margin trajectory beyond 2027 • Integration of the Blue Foundry acquisition carries near-term execution risk, with potential for delays in realizing targeted cost savings • Loan paydowns and prepayments are projected to increase modestly in Q3 2026 due to scheduled large loan maturities, which could impact balance sheet growth

Analyst Q&A

• Q: The full-year 2026 loan growth guidance was lowered to low single digits. What is driving this revision, what is the baseline long-term normalized growth expectation, and how consistent are current paydown levels? /

  A: The guidance revision only reflects slower than expected first half growth, which was due to seasonal Q1 softness and Q2 integration activity for Blue Foundry. Management maintains an expected mid-single-digit organic growth rate for back half 2026 and for 2027, and remains disciplined on credit terms and loan pricing that will weigh on origination volume when terms do not meet requirements. Second quarter paydowns averaged $250 million monthly plus an additional $100 million monthly in prepayments, with a minor expected increase in Q3 due to scheduled large loan maturities. Total Blue Foundry loan growth headwinds are immaterial to the full-year guidance.

• Q: What deposit trends and pricing competition are you seeing, and what is your ongoing M&A strategy after closing Blue Foundry? /

  A: Deposit flows were stronger than expected in Q2, supported by a diversified deposit base and relationship-based business model. Deposit costs are expected to continue rising at the same modest 2 basis points per quarter trend seen in Q2, with a minor temporary benefit from seasonal reversal of municipal deposit outflows in Q3. M&A strategy remains unchanged: management prioritizes acquiring $1 billion to $5 billion in assets community banks that expand geographic footprint (like Blue Foundry), and is also open to evaluating opportunistic deals for $5 billion to $15 billion in asset banks when available.

• Q: The rise in Q2 net charge-offs to 0.34% and repricing of existing assets: what is driving the charge-off increase, and what is the outlook for asset yields? /

  A: The higher Q2 charge-off level is purely driven by timing of loan resolution and no new systemic credit issues have been identified; charge-offs are expected to return to the historical normal operating range for the full year. Approximately $5 billion in loans will reprice over the next 12 months, with an expected 70 basis points of yield improvement as new originations are currently in the low 6% range, versus a 5.5% yield on the maturing portfolio. The securities portfolio will also see more than 100 basis points of yield improvement upon reinvestment of maturing low-yield securities.

• Q: What are the key swing factors for the new 2026 operating expense guidance range, and is there room for the allowance for credit losses ratio to decline further? /

  A: The guidance midpoint is management's best estimate, with the upper end of the range reflecting planned hiring of new talent for the expanded Northern New Jersey footprint, and the lower end reflecting faster than expected Blue Foundry cost savings and delayed spending pushed into 2027. Management expects to exceed 50% of Blue Foundry cost savings by Q4 2026, up from 24% in Q2. Given current low delinquency trends and stable economic forecasts, there is modest room for the allowance for credit losses ratio to decline slightly, though the final amount will depend on future loan growth.