Fulton Financial Corporation Q1 FY2026 earnings call

High-level observations - Pleased with first quarter start, strength of foundation and consistent strategy execution. - Maintained focus on long-term value creation, community banking model benefits evident. - Teams focused on serving customers and operating efficiently. ### Operating highlights - First quarter operating earnings $0.55 per diluted share. - Strong revenue generation and prudent expense management drove positive operating leverage. - Loan activity solid, led by commercial mortgage growth; origination activity healthy. - Deposit trends positive, driven by strong customer base engagement. - Non-interest income steady, over 20% of total revenue. - Expense management: total non-interest expense down from fourth quarter. - Credit performance stable. - Closed acquisition of Blue Foundry Bancorp on April 1, integration progressing well.

Operating earnings were $0.55 per diluted share. Operating return on average assets was 1.30%, and operating return on tangible common equity was 14.76%. Efficiency ratio improved to 56.7%. Pre-provision net revenue increased $9.2 million linked quarter to $141 million. Loan activity: solid, led by commercial mortgage growth, partially offset by construction balance decline and indirect auto portfolio runoff; origination activity healthy. Deposit trends positive. Non-interest income steady, over 20% of total revenue. Expenses: total non-interest expense $200.3 million, down $12.7 million from fourth quarter; operating expenses $190.7 million. Credit performance stable, non-performing assets improved to 55 basis points of total assets.

Forward-looking statements - Affirming full year 2026 operating guidance with update to interest rate assumptions: 25 basis point cut in July instead of March. - Expect annualized mid single digit loan growth, controlled expense growth, and strong capital generation. - Acquisition of Blue Foundry Bancorp expected to be immediately earnings and tangible book accretive, revenue enhancements from relationship expansion.

Risks - Broader landscape including ongoing geopolitical developments and their potential impact on economic conditions, customer sentiment, and market volatility. - Credit decision-making needs to be disciplined, balanced, and prudent due to these dynamics. - Composition of Blue Foundry deposits in the near term may impact pro forma metrics.

Q: Daniel Tomeo of Raymond James asked about expenses, classified and criticized loans, and deposits.

A: Rick responded on expense progression, classified and criticized loans trending down, and deposit trends with note on Blue Foundry deposits.

Q: David J. Bishop of Ho Group asked about geographies driving loan growth and prepayments/payoffs, and capital planning.

A: Kurt and Rick discussed loan growth drivers, construction maturity schedule, and capital planning with no specific target levels.

Q: Jackson Singleton on behalf of Casey Hare asked about NIM, TQ, and Basel III proposal impact.

A: Rick said NIM directionally higher with Blue Foundry impact, and Basel III proposal modestly beneficial.

Q: Matthew Breeze of Stevens Inc. asked about commercial portfolio purchase, loan growth outlook with Blue Foundry, and share repurchases.

A: Kurt discussed commercial portfolio purchase, Blue Foundry's market impact and loan growth outlook, and share repurchases with consideration of organic growth and market dynamics