Q2 2026 Fulton Financial Corp Earnings Call

July 23, 2026

Operator: Hello, and welcome to Fulton Financial Q2 2026 conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star one one on your telephone. You will hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. I would now like to hand the conference over to Pat Lafferty. Sir, you may begin.

Speaker #1: Hello, and welcome to the Fulton Financial Q2 2026 conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session.

Speaker #1: To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised.

Operator: To ask a question during the session, you will need to press star one one on your telephone. You will hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. I would now like to hand the conference over to Pat Lafferty. Sir, you may begin.

Speaker #1: To withdraw your question, please press *11 again. I would now like to hand the conference over to Pat Lafferty. Sir, you may begin.

Speaker #2: Good morning, and thank you for joining us for FULTON FINANCIAL's conference call and webcast to discuss our earnings for the second quarter ending June 30, 2026.

Pat Lafferty: Good morning, and thanks for joining us for Fulton Financial's conference call and webcast to discuss our earnings for the Q2 ending 30 June 2026. Your host for today's conference call is Curt Myers, Chairman, Chief Executive Officer, and President. Joining Curt is Richard Kraemer, Chief Financial Officer. Our comments today will refer to the financial information and related slide presentation included with our earnings announcement, which we released yesterday afternoon. These documents can be found on our website at FULT.com by clicking on Investor Relations and then on News. These slides can also be found on the Events and Presentations page under Investor Relations on our website. Today's conference call will contain forward-looking statements. These statements represent our expectations about the future, and are subject to risk and uncertainty. Our actual results may differ materially from these statements.

Speaker #2: Your host for today's conference call is Curt Myers, Chairman, Chief Executive Officer, and President. Joining Curt is Rick Kramer, Chief Financial Officer. Our comments today will refer to the financial information and related slide presentation included with our earnings announcement, which we released yesterday afternoon.

Pat Lafferty: Joining Curtis is Rick Kraemer, Chief Financial Officer. Our comments today will refer to the financial information and related slide presentation included with our earnings announcement, which we released yesterday afternoon.

Speaker #2: These documents can be found on our website at fult.com by clicking on Investor Relations and then on News. These slides can also be found on the Events and Presentations page under Investor Relations on our website.

Pat Lafferty: These documents can be found on our website at FULT.com by clicking on Investor Relations and then on News. These slides can also be found on the Events and Presentations page under Investor Relations on our website. Today's conference call will contain forward-looking statements. These statements represent our expectations about the future, and are subject to risk and uncertainty. Our actual results may differ materially from these statements.

Speaker #2: Today's conference call will contain forward-looking statements. These statements represent our expectations about the future and are subject to risk and uncertainty. Our actual results may differ materially from these statements.

Speaker #2: Please refer to our earnings release and related slide presentation under the heading "Forward-Looking Statements" for a discussion of the factors that could cause actual results to differ.

Pat Lafferty: Please refer to our earnings release and related slide presentation under the heading Forward-Looking Statements for a discussion of the factors that could cause actual results to differ. In discussing Fulton's performance, representatives of Fulton may refer to certain non-GAAP financial measures. Please refer to the supplemental financial information included with Fulton's earnings announcement released yesterday in slides 26 through 33 of today's presentation for a reconciliation of those non-GAAP financial measures to the most comparable GAAP measures. I would like to turn the call over to your host, Curt Myers.

Speaker #2: In discussing FULTON's performance, representatives of FULTON may refer to certain non-GAAP financial measures. Please refer to the supplemental financial information included with FULTON's earnings announcement released yesterday and slides 26 through 33 of today's presentation for a reconciliation of those non-GAAP financial measures to the most comparable GAAP measures.

Pat Lafferty: Please refer to the supplemental financial information included with Fulton's earnings announcement released yesterday in slides 26 through 33 of today's presentation for a reconciliation of those non-GAAP financial measures to the most comparable GAAP measures. I would like to turn the call over to your host, Curtis Myers.

Speaker #2: Now I would like to turn the call over to your host, Curt Myers.

Speaker #3: Well, thanks, Pat, and good morning, everyone. For today's call, I'll share a few details on our second quarter performance and provide some observations on current business trends.

Curtis Myers: Well, thanks, Pat, and good morning, everyone. For today's call, I'll share a few details on our Q2 performance and provide some observations on current business trends. Rick will review our financial results in more detail and discuss our outlook for the remainder of 2026. After our prepared remarks, we'll be happy to take any questions you may have. Q2 represented continued strong performance for Fulton. We delivered strong financial results. We maintained focus on supporting our customers, team members, and communities. We are proud of the positive impact we're making within our company and throughout our markets. We encourage you to view our recently published corporate social responsibility report, which is available on our investor relations website. This report highlights the many ways our company makes a positive impact.

Speaker #3: Then Rick will review our financial results in more detail and discuss our outlook for the remainder of 2026. After our prepared remarks, we'll be happy to take any questions you may have.

Speaker #3: The second quarter represented continued strong performance for FULTON. We delivered strong financial results. We maintained focus on supporting our customers, team members, and communities.

Curtis Myers: Q2 represented continued strong performance for Fulton. We delivered strong financial results. We maintained focus on supporting our customers, team members, and communities. We are proud of the positive impact we're making within our company and throughout our markets.

Speaker #3: We are proud of the positive impact we're making within our company and throughout our markets. We encourage you to view our recently published Corporate Social Responsibility Report, which is available on our investor relations website.

Curtis Myers: We encourage you to view our recently published corporate social responsibility report, which is available on our investor relations website. This report highlights the many ways our company makes a positive impact.

Speaker #3: This report highlights the many ways our company makes a positive impact. Our strong performance reflects the dedication of our team members and the disciplined execution of our strategy, which continues to guide our decisions and position the company for long-term success.

Curtis Myers: Our strong performance reflects the dedication of our team members and the disciplined execution of our strategy, which continues to guide our decisions and position the company for long-term success. We continue to focus on growing the company, delivering effectively for customers, operating with excellence so that we can continue to serve all of our stakeholders. We made meaningful progress in each of these areas during the quarter. Operating earnings improved as growth was solid. Capital levels continued to grow, and overall credit performance was favorable. Our teams continue to deepen customer relationships and delivered exceptional service while identifying new opportunities for growth across our footprint. We also achieved an important milestone during the quarter with the successful completion of the Blue Foundry acquisition on 1 April and the subsequent merger and integration of Blue Foundry Bank on 11 July.

Speaker #3: We continue to focus on growing the company, delivering effectively for customers, operating with excellence so that we can continue to serve all of our stakeholders.

Speaker #3: We made meaningful progress in each of these areas during the quarter. Operating earnings improved as growth was solid, capital levels continued to grow, and overall credit performance was favorable.

Curtis Myers: We made meaningful progress in each of these areas during the quarter. Operating earnings improved as growth was solid. Capital levels continued to grow, and overall credit performance was favorable. Our teams continue to deepen customer relationships and delivered exceptional service while identifying new opportunities for growth across our footprint.

Speaker #3: Our teams continued to deepen customer relationships and deliver exceptional service, while identifying new opportunities for growth across our footprint. We also achieved an important milestone during the quarter with the successful completion of the Blue Foundry acquisition on April 1, and the subsequent merger and integration of Blue Foundry Bank on July 11.

Curtis Myers: We also achieved an important milestone during the quarter with the successful completion of the Blue Foundry acquisition on 1 April and the subsequent merger and integration of Blue Foundry Bank on 11 July.

Speaker #3: This transaction advances our strategy by expanding our presence in Northern New Jersey and enhancing our community banking model and increasing our ability to serve customers in an attractive and growing market.

Curtis Myers: 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. We believe the combination creates meaningful opportunities for growth and long-term value creation. I want to thank our team for their efforts throughout this process. Completing this transaction in such a timely manner requires a tremendous amount of work, teamwork, and collaboration and positions us for continued growth. Our results this quarter reflect strong performance across a number of key areas. Profitability was a record high for the quarter. Operating net income available to common shareholders grew to $115.9 million, or $0.60 per diluted share. Operating earnings on average tangible common equity improved to 15.71%. Operating return on average assets increased to 1.39%, and tangible book value per share grew 13% linked quarter annualized.

Speaker #3: We believe the combination creates meaningful opportunities for growth and long-term value creation. I want to thank our team for their effort throughout this process. Completing this transaction in such a timely manner requires a tremendous amount of work, teamwork, and collaboration, and positions us for continued growth.

Curtis Myers: Completing this transaction in such a timely manner requires a tremendous amount of work, teamwork, and collaboration and positions us for continued growth. Our results this quarter reflect strong performance across a number of key areas. Profitability was a record high for the quarter.

Speaker #3: Our results this quarter reflect strong performance across a number of key areas. Profitability was a record high for the quarter. Operating net income available to common shareholders grew to $115.9 million, or 60 cents, per diluted share.

Curtis Myers: Operating net income available to common shareholders grew to $115.9 million, or $0.60 per diluted share. Operating earnings on average tangible common equity improved to 15.71%. Operating return on average assets increased to 1.39%, and tangible book value per share grew 13% linked quarter annualized.

Speaker #3: Operating earnings on average tangible common equity improved to 15.71%. Operating return on average assets increased to 1.39%, and tangible book value per share grew 13% linked quarter annualized.

Speaker #3: Loan growth was solid during the quarter, including the positive effect from Blue Foundry. Organic growth was driven primarily by our consumer business. Overall, loan activity remains broad-based and across all of our markets.

Curtis Myers: Loan growth was solid during the quarter, including the positive effect from Blue Foundry. Organic growth was driven primarily by our consumer business. Overall loan activity remains broad-based and across all of our markets. Our team members continue to have productive discussions with customers regarding growth, investment, and capital needs. We believe Fulton is well-positioned to support those opportunities and to continue to generate disciplined growth moving forward. Deposit balances increased from the prior quarter, including the benefit from the Blue Foundry transaction. Organic deposit trends were as expected on a seasonal basis. Deposit competition within our market has been consistent with recent quarters, and we continue to benefit from strong customer relationships and a diversified funding base across both our consumer, wealth management, and commercial businesses. Additionally, our non-interest income business continued to generate steady fee income, further diversifying revenue sources and strengthening overall financial performance.

Speaker #3: Our team members continue to have productive discussions with customers regarding growth, investment, and capital needs. We believe Fulton is well positioned to support those opportunities and to continue to generate disciplined growth moving forward.

Curtis Myers: We believe Fulton is well-positioned to support those opportunities and to continue to generate disciplined growth moving forward. Deposit balances increased from the prior quarter, including the benefit from the Blue Foundry transaction. Organic deposit trends were as expected on a seasonal basis.

Speaker #3: Deposit balances increased from the prior quarter, including the benefit from the Blue Foundry transaction. Organic deposit trends were as expected on a seasonal basis.

Speaker #3: Deposit competition within our market has been consistent with recent quarters, and we continue to benefit from strong customer relationships and a diversified funding base across both our consumer wealth management and commercial businesses.

Curtis Myers: Deposit competition within our market has been consistent with recent quarters, and we continue to benefit from strong customer relationships and a diversified funding base across both our consumer, wealth management, and commercial businesses.

Speaker #3: Additionally, our non-interest income business continued to generate steady fee income, further diversifying revenue sources and strengthening overall financial performance. Compared to the prior quarter, commercial fee income increased 9%.

Curtis Myers: Additionally, our non-interest income business continued to generate steady fee income, further diversifying revenue sources and strengthening overall financial performance.

Curtis Myers: Compared to the prior quarter, commercial fee income increased 9%, consumer fee income increased 8%, and wealth management assets under management administration reached a record $18.4 billion at quarter end. Our capital position further strengthened during the quarter. We repurchased $11.1 million of common stock while increasing tangible book value and improving our Common Equity Tier 1 ratio to approximately 12.1%. Our solid capital position provides meaningful flexibility to support customer growth, execute strategic initiatives, and drive long-term shareholder value. Finally, I'd like to touch on the credit environment. Our credit performance remains solid, and overall asset quality metrics remain favorable. As we move through the H2 of the year, we remain focused on executing on our strategy and building on the strong performance delivered this quarter. With that, I'll turn the call over to Rick to review our Q2 financial results in more detail.

Speaker #3: Consumer fee income increased 8%, and wealth management assets under management and administration reached a record $18.4 billion at quarter-end. Our capital position further strengthened during the quarter.

Speaker #3: We repurchased $11.1 million of common stock, while increasing tangible book value and improving our common equity Tier 1 ratio to approximately 12.1%. Our solid capital position provides meaningful flexibility to support customer growth, execute strategic initiatives, and drive long-term shareholder value.

Curtis Myers: Our solid capital position provides meaningful flexibility to support customer growth, execute strategic initiatives, and drive long-term shareholder value. Finally, I'd like to touch on the credit environment.

Speaker #3: Finally, I'd like to touch on the credit environment. Our credit performance remains solid and overall asset quality metrics remain favorable. As we move through the second half of the year, we remain focused on executing on our strategy and building on the strong performance delivered this quarter.

Curtis Myers: Our credit performance remains solid, and overall asset quality metrics remain favorable. As we move through the H2 of the year, we remain focused on executing on our strategy and building on the strong performance delivered this quarter. With that, I'll turn the call over to Rick to review our Q2 financial results in more detail.

Speaker #3: With that, I'll turn the call over to Rick to review our second quarter financial results in more detail.

Speaker #4: Thank you, Curt, and good morning, everyone. Fulton delivered another quarter of strong financial performance, highlighted by record operating earnings and continued balance sheet growth.

Richard Kraemer: Thank you, Curt, and good morning, everyone. Fulton delivered another quarter of strong financial performance, highlighted by record operating earnings and continued balance sheet growth. For Q2, 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, up from $0.55 per diluted share in Q1. The improvement in the operating performance was driven primarily by higher Net Interest Income, expanded fee revenue, and continued disciplined balance sheet management. Net Interest Income increased $22.2 million, or approximately 8%, linked quarter to $284.3 million. The majority of this growth was attributable to the Blue Foundry acquisition, which contributed approximately $17.5 million during the quarter. Total loan interest income increased by $32.6 million, reflecting both acquisition-related growth and higher average balances.

Rick Kraemer: Thank you, Curt, and good morning, everyone. Fulton delivered another quarter of strong financial performance, highlighted by record operating earnings and continued balance sheet growth. For Q2, 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, up from $0.55 per diluted share in Q1.

Speaker #4: For the second quarter, 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, up from $0.55 per diluted share in the first quarter.

Speaker #4: The improvement in operating performance was driven primarily by higher net interest income, expanded fee revenue, and continued disciplined balance sheet management. Net interest income increased 22.2 million or approximately 8% linked quarter to $284.3 million.

Rick Kraemer: The improvement in the operating performance was driven primarily by higher Net Interest Income, expanded fee revenue, and continued disciplined balance sheet management. Net Interest Income increased $22.2 million, or approximately 8%, linked quarter to $284.3 million.

Speaker #4: The majority of this growth was attributable to the Blue Foundry acquisition, which contributed approximately $17.5 million during the quarter. Total loan interest income increased by $32.6 million.

Rick Kraemer: The majority of this growth was attributable to the Blue Foundry acquisition, which contributed approximately $17.5 million during the quarter. Total loan interest income increased by $32.6 million, reflecting both acquisition-related growth and higher average balances.

Speaker #4: Reflecting both acquisition-related growth and higher average balances. We also benefited from $5.2 million of purchase accounting accretion from the acquired Blue Foundry loans, in addition to $9.9 million of accretion associated with the Republic acquisition.

Richard Kraemer: We also benefited from $5.2 million of purchase accounting accretion from the acquired Blue Foundry loans, in addition to $9.9 million of accretion associated with the Republic acquisition. Our net interest margin expanded to 3.6%, up 2 basis points from Q1 and up 13 basis points from the year prior period. The Q2 NIM was impacted by 1 basis point due to carrying overlapping sub-debt expense for a portion of the period. Overall, this performance demonstrates our ability to maintain strong earning asset yields while effectively managing funding costs. Deposit costs increased modestly during the quarter and overall funding costs remained well controlled. Ending loans totaled $25.9 billion, an increase of $1.7 billion from 31 March. Approximately $1.6 billion of the increase came from the acquired Blue Foundry balances. Excluding the acquisition, organic loan growth was approximately $103 million.

Rick Kraemer: We also benefited from $5.2 million of purchase accounting accretion from the acquired Blue Foundry loans, in addition to $9.9 million of accretion associated with the Republic acquisition. Our net interest margin expanded to 3.6%, up 2 basis points from Q1 and up 13 basis points from the year prior period. The Q2 NIM was impacted by 1 basis point due to carrying overlapping sub-debt expense for a portion of the period.

Speaker #4: Our net interest margin expanded to 3.6%, up 2 basis points from the first quarter, and up 13 basis points from the year prior period.

Speaker #4: The second quarter NIM was impacted by 1 basis point due to carrying overlapping sub debt expense for a portion of the period. Overall, this performance demonstrates our ability to maintain strong earning asset yields while effectively managing funding costs.

Rick Kraemer: Overall, this performance demonstrates our ability to maintain strong earning asset yields while effectively managing funding costs. Deposit costs increased modestly during the quarter and overall funding costs remained well controlled. Ending loans totaled $25.9 billion, an increase of $1.7 billion from 31 March.

Speaker #4: Deposit costs increased modestly during the quarter, and overall funding costs remained well controlled. Ending loans totaled $25.9 billion, an increase of $1.7 billion from March 31.

Speaker #4: Approximately $1.6 billion of the increase came from the acquired Blue Foundry balances. Excluding the acquisition, organic loan growth was approximately $103 million. Within the portfolio, we continue to see strength in consumer-related lending, including residential mortgage and home equity production.

Rick Kraemer: Approximately $1.6 billion of the increase came from the acquired Blue Foundry balances. Excluding the acquisition, organic loan growth was approximately $103 million.

Richard Kraemer: Within the portfolio, we continue to see strength in consumer-related lending, including residential mortgage and home equity production. While commercial loan balances declined modestly during the quarter. Deposits increased $1.5 billion during the quarter to $28.3 billion, mostly attributable to the Blue Foundry acquisition. Our deposit franchise remains a key competitive advantage and continues to support profitable balance sheet growth. Non-interest income increased to $79.3 million, up $9.5 million from Q1. The largest driver was a $7.3 million increase in income from equity method investments, including approximately $6.9 million of gain related to an investment sold during the quarter. Mortgage banking revenue also improved by approximately $1 million, reflecting stronger production activity. Across our fee businesses, treasury management, card services, and commercial banking revenues increased and continued to provide meaningful diversification to our revenue stream.

Rick Kraemer: Within the portfolio, we continue to see strength in consumer-related lending, including residential mortgage and home equity production. While commercial loan balances declined modestly during the quarter. Deposits increased $1.5 billion during the quarter to $28.3 billion, mostly attributable to the Blue Foundry acquisition. Our deposit franchise remains a key competitive advantage and continues to support profitable balance sheet growth.

Speaker #4: While commercial loan balances declined modestly during the quarter. Deposits increased 1.5 billion during the quarter to 28.3 billion, mostly attributable to the Blue Foundry acquisition.

Speaker #4: Our deposit franchise remains a key competitive advantage and continues to support profitable balance sheet growth. Non-interest income increased to 79.3 million up 9.5 million from the first quarter.

Rick Kraemer: Non-interest income increased to $79.3 million, up $9.5 million from Q1. The largest driver was a $7.3 million increase in income from equity method investments, including approximately $6.9 million of gain related to an investment sold during the quarter.

Speaker #4: The largest driver was a $7.3 million increase in income from equity method investments, including approximately $6.9 million of gain related to an investment sold during the quarter.

Speaker #4: Mortgage banking revenue also improved by approximately 1 million reflecting stronger production activity. Across our fee businesses, treasury management, card services, and commercial banking revenues increased, and continued to provide meaningful diversification to our revenue stream.

Rick Kraemer: Mortgage banking revenue also improved by approximately $1 million, reflecting stronger production activity. Across our fee businesses, treasury management, card services, and commercial banking revenues increased and continued to provide meaningful diversification to our revenue stream.

Speaker #4: Total non-interest expense was $231 million, compared with $200.3 million in the prior quarter. Operating non-interest expense was $210.6 million. Items excluded from operating results included 13.8 million of acquisition-related expenses; 5.9 million of intangible amortization; and approximately 0.8 million of debt extinguishment costs associated with the redemption of subordinate debt.

Richard Kraemer: Total non-interest expense was $231 million, compared with $200.3 million in the prior quarter. Operating non-interest expense was $210.6 million. Items excluded from operating results included $13.8 million of acquisition-related expenses, $5.9 million of intangible amortization, and approximately $0.8 million of debt extinguishment costs associated with the redemption of subordinated debt. Notably, a $2.1 million pension plan charge was recorded during the quarter and is included in operating non-interest expense. As Curt mentioned, the Blue Foundry system conversion was completed successfully on 11 July, and we remain focused on realizing anticipated cost savings and operational efficiencies going forward. Credit quality remains sound and generally consistent with our expectations. Provision expense totaled $4.9 million, compared with $14.4 million in Q1. The allowance for credit losses on loans ended the quarter at $382.6 million, representing 1.48% of total loans.

Rick Kraemer: Total non-interest expense was $231 million, compared with $200.3 million in the prior quarter. Operating non-interest expense was $210.6 million. Items excluded from operating results included $13.8 million of acquisition-related expenses, $5.9 million of intangible amortization, and approximately $0.8 million of debt extinguishment costs associated with the redemption of subordinated debt.

Speaker #4: Notably, a $2.1 million pension plan charge was recorded during the quarter and is included in operating non-interest expense. As Curt mentioned, the Blue Foundry system conversion was completed successfully on July 11, and we remain focused on realizing anticipated cost savings and operational efficiencies going forward.

Rick Kraemer: Notably, a $2.1 million pension plan charge was recorded during the quarter and is included in operating non-interest expense. As Curt mentioned, the Blue Foundry system conversion was completed successfully on 11 July, and we remain focused on realizing anticipated cost savings and operational efficiencies going forward.

Speaker #4: Credit quality remains sound and generally consistent with our expectations. Provision expense totaled 4.9 million compared with 14.4 million in the first quarter. The allowance for credit losses on loans ended the quarter at $382.6 million, representing 1.48% of total loans.

Rick Kraemer: Credit quality remains sound and generally consistent with our expectations. Provision expense totaled $4.9 million, compared with $14.4 million in Q1. The allowance for credit losses on loans ended the quarter at $382.6 million, representing 1.48% of total loans.

Speaker #4: The quarter included the establishment of approximately $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.

Richard Kraemer: The quarter included the establishment of approximately $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. Non-performing assets totaled $187.1 million or 0.54% of total assets, remaining relatively stable as a percentage of assets. Overall, portfolio performance remains healthy, reserve coverage is strong, and our credit outlook remains stable. Our capital position remains a significant source of strength. Common Equity Tier 1 ratio of approximately 12.1% increased from 11.9% in the prior quarter. Tangible common equity improved to 8.8%, up 26 basis points quarter over quarter. During the quarter, we issued $300 million of fixed to floating rate subordinated notes due 2036 and redeemed $195 million of subordinated notes due 2030, enhancing our capital structure while maintaining balance sheet flexibility.

Rick Kraemer: The quarter included the establishment of approximately $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. Non-performing assets totaled $187.1 million or 0.54% of total assets, remaining relatively stable as a percentage of assets.

Speaker #4: Non-performing assets totaled $187.1 million, or 0.54% of total assets, remaining relatively stable as a percentage of assets. Overall, portfolio performance remains healthy, reserve coverage is strong, and our credit outlook remains stable.

Rick Kraemer: Overall, portfolio performance remains healthy, reserve coverage is strong, and our credit outlook remains stable. Our capital position remains a significant source of strength. Common Equity Tier 1 ratio of approximately 12.1% increased from 11.9% in the prior quarter. Tangible common equity improved to 8.8%, up 26 basis points quarter over quarter.

Speaker #4: Our capital position remains a significant source of strength. Common equity Tier 1 ratio of approximately 12.1% increased from 11.9% in the prior quarter. Tangible common equity improved to 8.8% up 26 basis points quarter over quarter.

Speaker #4: During the quarter, we issued 300 million of fixed to floating rate subordinated notes due 2036 and redeemed 195 million of subordinated notes due 2030, enhancing our capital structure while maintaining balance sheet flexibility.

Rick Kraemer: During the quarter, we issued $300 million of fixed to floating rate subordinated notes due 2036 and redeemed $195 million of subordinated notes due 2030, enhancing our capital structure while maintaining balance sheet flexibility.

Speaker #4: We also continue returning capital to shareholders through share repurchases, buying back 525,000 shares during the quarter at an average price of $21.19 per share, representing approximately $11.1 million of capital.

Richard Kraemer: We also continue returning capital to shareholders through share repurchases, buying back 525,000 shares during the quarter at an average price of $21.19 per share, representing approximately $11.1 million of capital. Total repurchases under the 2026 authorization reached $35.6 million through 30 June. We have approximately $115 million remaining under the current program. Looking ahead to the remainder of 2026, our outlook remains positive. Given our performance during the H1 of the year, we are making some minor adjustments to guidance to reflect performance through the midpoint of the year. We are narrowing our range for net interest income to $1.12 billion to $1.135 billion and adjusting our full-year loan growth to low single digits. We are lowering our range for loan loss provision to $40 million to $60 million.

Rick Kraemer: We also continue returning capital to shareholders through share repurchases, buying back 525,000 shares during the quarter at an average price of $21.19 per share, representing approximately $11.1 million of capital. Total repurchases under the 2026 authorization reached $35.6 million through 30 June. We have approximately $115 million remaining under the current program. Looking ahead to the remainder of 2026, our outlook remains positive.

Speaker #4: Total repurchases under the 2026 authorization reached $35.6 million through June 30. We have approximately 115 million dollars remaining under the current program. Looking ahead to the remainder of 2026, our outlook remains positive.

Speaker #4: Given our performance during the first half of the year, we are making some minor adjustments to guidance to reflect performance through the midpoint of the year.

Rick Kraemer: Given our performance during the H1 of the year, we are making some minor adjustments to guidance to reflect performance through the midpoint of the year. We are narrowing our range for net interest income to $1.12 billion to $1.135 billion and adjusting our full-year loan growth to low single digits. We are lowering our range for loan loss provision to $40 million to $60 million.

Speaker #4: We are narrowing our range for net interest income to 1.12 billion to 1.135 billion. And adjusting our full year loan growth to low single digits.

Speaker #4: We are lowering our range for loan loss provision to $40 million to $60 million. We are raising the low end of the non-interest income range to $290 million.

Richard Kraemer: We are raising the low end of the non-interest income range to $290 million from $285 million, we are tightening our range for operating non-interest expense to $810 million to $830 million. There is no change to our full-year tax range. With that, I'll turn the call back to Curt.

Rick Kraemer: We are raising the low end of the non-interest income range to $290 million from $285 million, we are tightening our range for operating non-interest expense to $810 million to $830 million. There is no change to our full-year tax range. With that, I'll turn the call back to Curt.

Speaker #4: And we are tightening our range for operating non-interest expense to $810 million to $830 million. There is no change to our full year tax range.

Speaker #4: With that, I'll turn the call back to Curt.

Speaker #1: In summary, the second quarter results reflect strong execution across the organization. We generate a record operating earnings, expanded our balance sheet through the Blue Foundry acquisition, maintained solid asset quality, increased capital levels, and successfully completed a major integration effort.

Curtis Myers: In summary, the Q2 results reflect strong execution across the organization. We generated record operating earnings, expanded our balance sheet through the Blue Foundry acquisition, maintained solid asset quality, increased capital levels, and successfully completed a major integration effort. As we move forward into the H2 of 2026, our focus will be on capturing the strategic and financial benefits of Blue Foundry, continuing disciplined organic growth, maintaining credit quality, and delivering sustainable shareholder value. Thank you for your continued interest in Fulton. Now operator, I'll turn the call over to you for questions.

Speaker #1: As we move forward into the second half of 2026, our focus will be on capturing the strategic and financial benefits of Blue Foundry, continuing disciplined organic growth, maintaining credit quality, and delivering sustainable shareholder value.

Curtis Myers: As we move forward into the H2 of 2026, our focus will be on capturing the strategic and financial benefits of Blue Foundry, continuing disciplined organic growth, maintaining credit quality, and delivering sustainable shareholder value. Thank you for your continued interest in Fulton. Now operator, I'll turn the call over to you for questions.

Speaker #1: Thank you for your continued interest in FULTON and operator Alterna call over to you for questions.

Speaker #3: Thank you. Ladies and gentlemen, as a reminder, to ask a question, please press star one one (*11) on your telephone, then wait for your name to be announced.

Operator: Thank you. Ladies and gentlemen, as a reminder to ask the question, please press star 11 on your telephone, then wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Daniel Tamayo with Raymond James. Your line is open.

Speaker #3: To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. Our first question comes from Milan of Daniel T. Mayo with Raymond James. Your line is open.

Speaker #5: Thank you. Good morning, everyone.

Daniel Tamayo: Thank you. Good morning, everyone.

Speaker #1: Good morning, Daniel.

Curtis Myers: Good morning, Dan.

Speaker #5: Yeah, maybe starting just on the balance sheet growth side, specifically on the loans. So I guess reducing the guidance for the back half to the low single digit range.

Daniel Tamayo: Yeah, maybe starting just on the balance sheet growth side, specifically on the loans. I guess reducing the guidance for H2 to the low single-digit range. As we think about, well, I guess first, what's the driver of that? Second, as we think about a more normalized growth rate for you guys in 2027 and just overall, what would it take to be able to accelerate back into the mid-single-digit type range for you guys?

Speaker #5: As we think about—well, I guess first, what's the driver of that? And then second, as we think about kind of a more normalized growth rate for you guys in 2027, and just overall, what would it take to be able to get to a mid-single-digit type range for you guys?

Daniel Tamayo: Second, as we think about a more normalized growth rate for you guys in 2027 and just overall, what would it take to be able to accelerate back into the mid-single-digit type range for you guys?

Speaker #1: Yeah, Danny, we're really modifying the annual guidance, so it's really just reflective of the performance in the first six months. We had more modest growth in the first six months.

Curtis Myers: Yeah, Danny. We're really modifying the annual guidance. It's really just reflective of the performance in the first 6 months. We had more modest growth in the first 6 months, and we expect the H2 growth to go back to previous expectations. It's really the annual guide. We remain disciplined on credit terms and defending the margin on pricing. This can impact individual loan originations. I think the key thing is we have good customer retention. We're adding people, we're adding customers. It's really the moderation in that target is just reflective of Q1. We just did the successful integration in Q2. You think about it, you have a Q1 is typically seasonally slower. We have an integration in Q2. We just expect H1 to go back to what our expectations were.

Speaker #1: And we expect the back half growth to kind of go back to what previous expectations. So it's really the annual guide. We remain disciplined on credit terms and defending the margin on pricing.

Curtis Myers: This can impact individual loan originations. I think the key thing is we have good customer retention. We're adding people, we're adding customers. It's really the moderation in that target is just reflective of Q1. We just did the successful integration in Q2. You think about it, you have a Q1 is typically seasonally slower. We have an integration in Q2. We just expect H1 to go back to what our expectations were.

Speaker #1: This can impact individual loan originations. I think the key thing is we have good customer retention. We're adding people, we're adding customers, and really the moderation in that target is just reflective of the first quarter.

Speaker #1: We just completed the successful integration in the second quarter. So, if you think about it, the first quarter is typically seasonally slower. We had the integration in the second quarter.

Speaker #1: We just expect first half to go back to what our expectations were on an annual basis, that moderates it to low single digit. That's really all that's there.

Curtis Myers: On an annual basis, that moderates it to low single-digit. That's really all that's there.

Speaker #5: Okay. All right. Well, thank you for that clarification then. So it sounds like expectations still in kind of that mid single digit range going forward, which is great.

Daniel Tamayo: Okay. All right. Well, thank you for that clarification then. It sounds like expectations still in that mid-single-digit range going forward, which is great. I guess my 2nd question was a little bit framed around potentially a slower revenue growth, but maybe that's not the case given the loan growth. Just your thoughts on being able to generate positive operating leverage going forward. Assuming, and I'm sure we'll get into the margin with someone else, but assuming maybe a tighter margin path from the increase in competition that we've been seeing.

Speaker #5: And I guess my second question was a little bit framed around potentially a slower revenue growth, but maybe that's not the case given the loan growth.

Speaker #5: But just your thoughts on being able to generate positive operating leverage going forward. Assuming, and I'm sure we'll get into the margin with someone else, but assuming maybe a tighter margin path from the increase in competition that we've been seeing.

Daniel Tamayo: Just your thoughts on being able to generate positive operating leverage going forward. Assuming, and I'm sure we'll get into the margin with someone else, but assuming maybe a tighter margin path from the increase in competition that we've been seeing.

Speaker #1: Yeah. So as we look forward, we think we can continue to generate positive operating leverage. We have some things in the back half of the year, as we do the full integration and get the full cost saves from Blue Foundry.

Curtis Myers: Yeah. As we look forward, we think we continue to generate positive operating leverage. We have some things in the H2 of the year as we do the full integration, get the full cost saves from Blue Foundry. We get organic growth trending up from the H1 of the year. We really think we're positioned well. The change in guidance is really we have 6 months of actual and trying to give you a feel for what the full year looks like from here.

Speaker #1: We get organic growth trending up from the first half of the year. We really think we're positioned well. I mean, the change in guidance is really we have six months of actual and trying to give you a feel for kind of what the full year looks like from here.

Speaker #5: Great, and sorry—if I can just go back to the loan growth guide quickly, and then I'll step back. But just on the—I don't know if I saw a number of paydowns or payoffs in the second quarter.

Daniel Tamayo: Great. Sorry, if I can just go back to the loan growth guide quickly, then I'll step back. Just on the-- I don't know if I saw a number of pay-downs or payoffs in Q2. If you have what those were and what you're assuming in H2, that'd be helpful as well.

Speaker #5: If you have what those were and what you're assuming in the back half, that'd be helpful as well.

Speaker #4: Yeah, Danny, so actual payoffs, in the second quarter, were around they're running around $200, call it $50 million a month. So that's amortization. And pay downs.

Richard Kraemer: Yeah, Danny. Actual payoffs in Q2 were running around 250 million a month. That's amortization and pay-downs. Then you have another, call it 100 a month of prepayments. We would expect that to remain fairly constant. Potentially accelerating a little bit in Q3, just because of some larger loans now that are maturing. It's been pretty steady.

Rick Kraemer: Yeah, Danny. Actual payoffs in Q2 were running around 250 million a month. That's amortization and pay-downs. Then you have another, call it 100 a month of prepayments. We would expect that to remain fairly constant. Potentially accelerating a little bit in Q3, just because of some larger loans now that are maturing. It's been pretty steady.

Speaker #4: And then you have another call it $100 a month of prepayments. We would expect that to remain fairly constant. Potentially, accelerating a little bit in third quarter.

Speaker #4: Just because of some larger loans, knowing that they are maturing. But it's been pretty steady.

Speaker #5: Okay. That's helpful. Thanks, Rick. All right. I'll step back. Appreciate the call, guys.

Daniel Tamayo: Okay. That's helpful. Thanks, Rick. All right, I'll step back. Appreciate the color, guys.

Speaker #3: Thank you. Please stand back for our next question. Our next question comes from Milan of David Bishop with Hub Group. Your line is open.

Operator: Thank you. Please stand by for our next question. Our next question comes from the line of David Bishop with Hovde Group. Your line is open.

Speaker #1: Yeah. Good morning, gentlemen.

David Bishop: Yeah. Good morning, gentlemen.

Speaker #6: Morning.

Curtis Myers: Morning.

Speaker #1: Hey, I was wondering if you could speak to maybe what you're seeing in terms of the funding side of the balance sheet—deposit pricing competition.

David Bishop: I was wondering if you could speak to maybe what you're seeing in terms of the funding side of the balance sheet, deposit pricing competition. Just curious where you see the direction in terms of overall funding costs moving into H2. Thanks.

Speaker #1: Just curious where you see the direction of overall funding costs moving into the second half of the year. Thanks.

Speaker #6: Yeah, just a little bit on the market overall. I mean, we had a pretty good quarter on deposit growth, because we had tended to trend down within the quarter on our municipal business.

Curtis Myers: Yeah, just a little bit on market overall. We had a pretty good quarter on deposit growth because we tend to trend down within the quarter on our municipal business. You look on an overall basis. We were pretty pleased with funding and deposit flows in Q2. We're effectively competing in the marketplace and our relational strategy and the diversification of our deposit base is serving us really well. We feel it's a real strength, and it was a good quarter. As we look forward on pricing, it's a competitive market. We ticked up a little bit of basis points. That trend probably continues, and I give to Rick to give you a little more details on pricing and impact.

Speaker #6: So, you look on an overall basis, we were pretty pleased with funding and deposit flows in the second quarter. We're effectively competing in the marketplace, and our relational strategy and the diversification of our deposit base is serving us really well.

Curtis Myers: We're effectively competing in the marketplace and our relational strategy and the diversification of our deposit base is serving us really well. We feel it's a real strength, and it was a good quarter. As we look forward on pricing, it's a competitive market. We ticked up a little bit of basis points. That trend probably continues, and I give to Rick to give you a little more details on pricing and impact.

Speaker #6: We feel it's a real strength, and it was a good quarter. As we look forward on pricing, it's a competitive market. We ticked up a little bit on basis points.

Speaker #6: That trend probably continues. I'll turn it over to Rick to give you a little more detail on pricing and impact.

Speaker #4: Yeah, yeah, excuse me. I would say, so ending the quarter, deposit costs were about two basis points higher than the average. Would expect kind of a similar trend in terms of deposit costs from what you saw in the second quarter into the third quarter.

Richard Kraemer: Yeah. Excuse me. I would say, ending the quarter, deposit costs were about 2 basis points higher than the average. Would expect a similar trend in terms of deposit costs from what you saw in Q2 into Q3. There are some benefits we see, obviously. Q2 tends to be a low in municipal, and often the offset to that is funding with some shorter-term, higher wholesale. That will reverse in Q3, which does help a little bit on the incremental funding. Generally speaking, a similar trend to what we saw in Q2, I think, is a reasonable expectation going forward.

Rick Kraemer: Yeah. Excuse me. I would say, ending the quarter, deposit costs were about 2 basis points higher than the average. Would expect a similar trend in terms of deposit costs from what you saw in Q2 into Q3. There are some benefits we see, obviously.

Speaker #4: There are some benefits we see, obviously. The second quarter tends to be a low in municipal, and often the offset to that is funding with some shorter-term, higher wholesale.

Rick Kraemer: Q2 tends to be a low in municipal, and often the offset to that is funding with some shorter-term, higher wholesale. That will reverse in Q3, which does help a little bit on the incremental funding. Generally speaking, a similar trend to what we saw in Q2, I think, is a reasonable expectation going forward.

Speaker #4: So that will reverse in the third quarter, which does help a little bit on the incremental funding. But generally speaking, a similar trend to what we saw in Q2, I think, is a reasonable expectation.

Speaker #4: Going forward.

Speaker #1: Okay. Got it. Then a follow-up maybe, Kurt, in terms of M&A focus, with Blue Foundry and the review mirror. Just curious, maybe less size or maybe inclusive of size.

David Bishop: Okay. Got it. A follow-up maybe, Curtis, in terms of M&A focus with Blue Foundry in the rear view mirror. Just curious, maybe less size or maybe inclusive of size and regions that maybe whet your appetite more than others. Thanks.

Speaker #1: In regions, that may whet your appetite more than others. Thanks.

Speaker #6: Yeah. I mean, our strategy remains the same. We've talked about it. I think our strategy will probably always be the same. One to $5 billion community banks.

Curtis Myers: Yeah. Our strategy remains the same. We've talked about it. I think our strategy will probably always be the same. 1 to $5 billion community banks. Blue Foundry is a great example of that. Then it sets us up for accelerated growth in those markets as we add people and product, and capability in those markets. We saw that happen in Philadelphia post the Republic First Bank acquisition, and we got really good momentum in all of our business lines. Because of that, we see the same thing with North Jersey and Blue Foundry over time. We really like those. We've also talked about the $5 to $15 billion companies. We'd be interested there. There's less of them. There's some really good banks in that space.

Speaker #6: Blue Foundry is a great example of that. It really gives us great opportunities to expand in certain markets. And then it sets us up for accelerated growth in those markets as we add people, product, and capability in those markets.

Speaker #6: We saw that happen in Philadelphia after the Republic acquisition, and we got really good momentum in all of our business lines because of that.

Curtis Myers: We saw that happen in Philadelphia post the Republic First Bank acquisition, and we got really good momentum in all of our business lines. Because of that, we see the same thing with North Jersey and Blue Foundry over time. We really like those. We've also talked about the $5 to $15 billion companies. We'd be interested there. There's less of them. There's some really good banks in that space.

Speaker #6: We see the same thing with North Jersey and Blue Foundry over time, so we really like those. We've also talked about the $5 to $15 billion companies.

Speaker #6: We’d be interested there. There are less of them, but there are some really good banks in that space. We always just want to be ready and capable of looking at those things if they’re available.

Curtis Myers: We always just want to be ready and capable of looking at those things if they're available. I think that strategy's worked really well for us and will continue to be our strategy.

Speaker #6: And I think that strategy has worked really well for us, and it will continue to be our strategy.

Speaker #1: Great. Appreciate the color.

David Bishop: Great. Appreciate the color.

Speaker #3: Thank you. Our next question comes from Milan of David Conrad with KBW. Your line is open.

Operator: Thank you. Our next question comes from the line of David Konrad with KBW. Your line is open.

David Konrad: Hey, good morning. Just a quick one from me. Just a follow-up on the back half on the loan growth. Just curious if that includes or are there any headwinds from Blue Foundry? I know they have that structured consumer book. I don't know if you guys are growing that or maybe letting that roll off. But just curious on the Blue Foundry side if there's any headwinds in your loan growth.

Speaker #7: Hey, good morning. Just a quick one from me. On the—just a follow-up on the back half of the loan growth. Just curious if that includes, or if there are any headwinds from Blue Foundry?

Speaker #7: I know they have that structured consumer book. I don't know if you guys are growing that, or maybe letting that roll off. But just curious, on the Blue Foundry side, if there's any headwinds in your loan growth.

Speaker #6: Yeah. So in the quarter, the first quarter operating there, I think deposit and loan flows have been as expected. As we've modeled out, there's always some headwind on any integration.

Curtis Myers: Yeah. In Q1 operating there, I think deposit and loan flows have been as expected as we've modeled out. There's always some headwind on any integration just with that change. But it's really been positive to date, and we would expect it to be pretty immaterial from an overall standpoint as we look at the back half of the year.

Speaker #6: Just with that change. But it's really been positive to date, and we would expect it to be pretty immaterial from an overall standpoint as we look at the back half of the year.

Speaker #7: Okay. Perfect. Thank you.

David Konrad: Okay, perfect. Thank you.

Speaker #3: Thank you. Please stand by for our next question. Our next question comes from Manuel Navas with Piper Sandler. Your line is open.

Operator: Thank you. Please stand by for our next question. Our next question comes from the line of Manuel Navas with Piper Sandler. Your line is open.

Manuel Navas: Hi, good morning.

Speaker #7: Hi, good morning. I just wanted to get a little bit more color on the rise in the charge-offs—they picked up to 34 basis points.

Curtis Myers: Good morning.

Manuel Navas: Just want to have a little bit more color on the rise in net charge-offs. They picked up to 34 basis points. Is that some from Blue Foundry? What kind of drove that?

Speaker #7: Is that some of that from Blue Foundry? What kind of drove that?

Speaker #6: Yeah. So, overall in credit, we feel really good about the numbers. Credit metrics are continuing to trend in the right direction, and they're all at historically strong levels.

Curtis Myers: Overall in credit, we feel really good about the numbers. Credit metrics continue to trend in the right direction, and they're all at historically strong levels. Charge-offs is really just timing on resolutions and updated information on identified accounts. The key thing for us, there's no newly identified issues driving that. It really is just timing, and we would expect charge-offs to be in our normal operating range as we look at the whole year overall, and even quarter by quarter as we move forward.

Speaker #6: Charge-offs is really just timing. On resolutions and updated information on identified accounts, I mean, the key thing for us is there's no newly identified issues.

Curtis Myers: The key thing for us, there's no newly identified issues driving that. It really is just timing, and we would expect charge-offs to be in our normal operating range as we look at the whole year overall, and even quarter by quarter as we move forward.

Speaker #6: Driving that, it really is just timing, and we would expect charge-offs to be in our normal operating range as we look at the whole year overall, and even quarter by quarter as we move forward.

Speaker #7: Okay, I appreciate that. With growth potentially accelerating in the back half—being better than the first half—does that change the pace of buybacks at all?

Manuel Navas: Okay. I appreciate that. With growth potentially accelerating in H2 being better than H1, does that change the pace of buybacks at all? What should be the right pace for buybacks?

Speaker #7: And what should be the right pace for buybacks?

Speaker #6: Yeah, I mean, I would really just kind of point to the capital position that we have right now. We have strong capital levels, and we're generating strong capital on a quarterly basis.

Curtis Myers: I would really just point to the capital position that we have right now. We have strong capital levels. We're generating strong capital on a quarterly basis. It really gives us the opportunity, we think, to support any level of organic growth that we get and continue executing on our $115 million buyback. At our current stock price, buybacks remain a real good use of capital.

Speaker #6: It really gives us the opportunity, we think, to support any level of organic growth that we get and continue executing on our 115 million dollar buyback.

Speaker #6: At our current stock price, buybacks remain a real good use of capital.

Manuel Navas: I appreciate that. You talked a little bit about the funding side of the NIM. What are you seeing on new loan yields? What are some expectations on the asset side going forward in terms of back book repricing, ways that the direction of asset yields can go from here?

Speaker #7: I appreciate that. At the moment, you talked a little bit about the funding side of the NIM. What are you seeing on new loan yields?

Speaker #7: What are kind of some expectations on the asset side going forward in terms of backbook repricing? Ways that the direction of asset yields can go from here?

Speaker #4: Yeah. Hey, Manuel. It's Rick. Yeah. So a positive trend there. We've got all over the next 12 months, just on the loan side, 5 billion in assets roughly that will reprice.

Richard Kraemer: Hey, Manuel. It's Rick. A positive trend there. We've got all over the next 12 months, just on the loan side, $5 billion in assets roughly that will reprice. If current origination levels hold, those would have approximately 70 basis points of improvement. Right? New loan originations in the low sixes overall, and those are in that sub five and a half level right now. There's some positive tailwind there. I would say on the other assets component, there's still another between securities and cash and opportunity to put some things to work. Our securities portfolio maturing over the next year has a yield of sub four. Call it like 385 level, and that's got upwards of more than 100 basis points of repricing opportunity as well. There's good tailwind there.

Rick Kraemer: Hey, Manuel. It's Rick. A positive trend there. We've got all over the next 12 months, just on the loan side, $5 billion in assets roughly that will reprice. If current origination levels hold, those would have approximately 70 basis points of improvement. Right? New loan originations in the low sixes overall, and those are in that sub five and a half level right now.

Speaker #4: Those are if current origination levels hold; those would have approximately 70 basis points of improvement. So, new loan originations in the low sixes overall.

Speaker #4: And those are kind of in that sub-5.5% level right now, so there's some positive tailwind there. And then I would say on the other assets component, there's still another, between security cash and opportunity, to put some things to work.

Rick Kraemer: There's some positive tailwind there. I would say on the other assets component, there's still another between securities and cash and opportunity to put some things to work. Our securities portfolio maturing over the next year has a yield of sub four. Call it like 385 level, and that's got upwards of more than 100 basis points of repricing opportunity as well. There's good tailwind there.

Speaker #4: Our securities portfolio, maturing over the next year, has a yield of sub-4%, so call it like 3.85% level. And that's got upwards of 100, more than 100 basis points of repricing opportunity as well.

Speaker #4: So there's good tailwind there. Overall, when we look at it, I think that would imply a stable to slightly higher margin over the next couple of quarters.

Richard Kraemer: Overall, when we look at it, I think that would imply a stable to slightly higher margin over the next couple of quarters. Feel good about that trend.

Rick Kraemer: Overall, when we look at it, I think that would imply a stable to slightly higher margin over the next couple of quarters. Feel good about that trend.

Speaker #4: So feel good about that trend.

Speaker #7: I appreciate the commentary. I'll step back into the queue.

Manuel Navas: I appreciate the commentary. I'll step back to the queue.

Speaker #3: Thank you. Our next question comes from Milan of Matthew Beef with Stevens. Your line is open.

Operator: Thank you. Our next question comes from the line of Matthew B. with Stephens. Your line is open.

Speaker #6: Hey, good morning.

Matthew Breese: Hey, good morning.

Speaker #7: Morning, Matt.

Richard Kraemer: Morning.

Rick Kraemer: Morning.

Curtis Myers: Morning, Matt.

Speaker #6: A few from me. Rick, maybe just on deposit costs and mix—Blue Foundry was obviously a little heavier on brokered money and CDs, not as strong as you on the deposit front.

Matthew Breese: A few from me. Rick, maybe just on deposit costs and mix. Blue Foundry was obviously a little heavier on brokered money and CDs, not as strong as you on the deposit front. Could you just talk a little bit about what you expect to work off on their end versus retain? I noticed some more aggressive promotional deposit offerings from Fulton this quarter. I think there was a couple of four-handle promo rates. Is that kind of working towards remixing some of Blue Foundry's stuff? Maybe talk a little bit about that.

Speaker #6: Could you just talk a little bit about what you expect to run off on their end versus retain? And then I noticed some more aggressive promotional deposit offerings from Fulton this quarter.

Matthew Breese: I noticed some more aggressive promotional deposit offerings from Fulton this quarter. I think there was a couple of four-handle promo rates. Is that kind of working towards remixing some of Blue Foundry's stuff? Maybe talk a little bit about that.

Speaker #6: I think there was a couple of four-handle promo rates. Is that kind of working towards remixing some of Blue Foundry's stuff? And maybe talk a little bit about that.

Speaker #4: Yeah. I think over to the initial question, yeah, obviously they were a little bit more reliant on wholesale I would kind of target the overall math.

Richard Kraemer: Yeah. I think to the initial question, yeah, obviously they were a little bit more reliant on wholesale. I would target that the overall, Matt, we actually were able to, on a combined basis, bring brokers down a little bit quarter-over-quarter. Continue since have worked and paid off pretty much a majority of their wholesale as well. Mind you, on a quarter-over-quarter basis, our municipal deposits in the Q2 were down $240 million. Customer deposits growth was actually very strong. You are correct. Yeah, we have had some promos in more targeted markets. One of those being Northern New Jersey as more of an entry rate. Yeah, there's an opportunity to pick up customers there. When you think about an all-in cost of acquisition, it's far more attractive to do it that way.

Rick Kraemer: Yeah. I think to the initial question, yeah, obviously they were a little bit more reliant on wholesale. I would target that the overall, Matt, we actually were able to, on a combined basis, bring brokers down a little bit quarter-over-quarter. Continue since have worked and paid off pretty much a majority of their wholesale as well.

Speaker #4: We actually were able to, on a combined basis, bring brokered down a little bit quarter over quarter. Continued since, have worked and paid off pretty much a majority of their wholesale as well.

Speaker #4: And mind you, on a quarter-over-quarter basis, our municipal deposits in the second quarter were down $240 million. So customer deposit growth was actually very strong.

Rick Kraemer: Mind you, on a quarter-over-quarter basis, our municipal deposits in the Q2 were down $240 million. Customer deposits growth was actually very strong. You are correct. Yeah, we have had some promos in more targeted markets. One of those being Northern New Jersey as more of an entry rate. Yeah, there's an opportunity to pick up customers there. When you think about an all-in cost of acquisition, it's far more attractive to do it that way.

Speaker #4: You are correct. Yeah. We have had some promos in more targeted markets. One of those being Northern New Jersey. As more of an entry rate.

Speaker #4: So yeah, there's an opportunity to pick up customers there. When you think about an all-in cost of acquisition, it's far more attractive to do it that way.

Speaker #4: But ultimately, as we focus on direct originations on the commercial side, in that market, which candidly, Blue Foundry did not have a lot of.

Richard Kraemer: Ultimately, as we focus on direct originations on the commercial side in that market, which candidly Blue Foundry did not have a lot of, there is an opportunity to improve mix as well as we pick up customers. Kind of tackling it from a lot of different directions, but feel really good about the underlying customer growth that we saw during the quarter.

Rick Kraemer: Ultimately, as we focus on direct originations on the commercial side in that market, which candidly Blue Foundry did not have a lot of, there is an opportunity to improve mix as well as we pick up customers. Kind of tackling it from a lot of different directions, but feel really good about the underlying customer growth that we saw during the quarter.

Speaker #4: There's an opportunity to improve mix, as well as pick up customers, so we're kind of tackling it from a lot of different directions. But we feel really good about the underlying customer growth that we saw during the quarter.

Speaker #7: Got it. Okay. And then, Curt, you had mentioned the Blue Foundry North Jersey markets allow for stronger growth through team hires and client acquisition, and maybe a well-positioned balance sheet for those markets.

Matthew Breese: Got it. Okay. Curt, you had mentioned the Blue Foundry New Jersey markets allow for stronger growth through team hires and client acquisition and maybe a well-positioned balance sheet for those markets. Maybe talk about that and how it sets you up for 2027 and beyond from a loan growth perspective. Historically, Fulton has been low- to mid-single-digit growth all-in organically. Do these new markets kind of make you firmly mid-single digits, or might we see something better given the footprint there?

Speaker #7: Maybe talk about that, and how it sets you up for 2027 and beyond from a loan growth perspective. Historically, Fulton has been kind of low- to mid-single digit growth all-in organically.

Matthew Breese: Maybe talk about that and how it sets you up for 2027 and beyond from a loan growth perspective. Historically, Fulton has been low- to mid-single-digit growth all-in organically. Do these new markets kind of make you firmly mid-single digits, or might we see something better given the footprint there?

Speaker #7: Do these new markets kind of make you firmly mid-single digits or might we see something better given the footprint there?

Speaker #6: Yeah. We really look at it across the board. So loans, deposits, and fees. And just using that market as an example, I think we had four financial centers and a couple of bankers business bankers or commercial bankers.

Curtis Myers: Yeah. We really look at it across the board, so loans, deposits, and fees. Just using that market as an example, I think we had 4 financial centers and a couple bankers, business bankers or commercial bankers, no investment advisors really in that market. Now we have 20-plus financial centers. Because of that, we can hire more commercial bankers, we can hire more investment bankers because we had that base of customer of certain products that they did not have available. When we do this, we see broad-based growth, wealth, fees overall, loans, and deposits. We have good proof points around that in Philadelphia with Republic. It is really driving wealth, transactional fees, deposits, and loans. We expect the same in a little different scale in Northern New Jersey. We think we can really be a strong player in that market.

Speaker #6: There were no investment advisors, really, in that market. Now we have 20-plus financial centers. Because of that, we can hire more commercial bankers. We can hire more investment bankers because we had that base of customers for certain products that they did not have available.

Curtis Myers: Because of that, we can hire more commercial bankers, we can hire more investment bankers because we had that base of customer of certain products that they did not have available. When we do this, we see broad-based growth, wealth, fees overall, loans, and deposits.

Speaker #6: So we see when we do this, we see broad-based growth, wealth, fees, overall loans, and deposits and we have good proof points around that in Philadelphia, with Republic.

Curtis Myers: We have good proof points around that in Philadelphia with Republic. It is really driving wealth, transactional fees, deposits, and loans. We expect the same in a little different scale in Northern New Jersey. We think we can really be a strong player in that market.

Speaker #6: It's really driving wealth transactional fees, deposits, and loans. We expect the same in a little different scale. In Northern New Jersey, we think we can really be a strong player in that market.

Speaker #7: You had mentioned wealth investment management fees for the quarter were down a little bit, which I was surprised by considering equity markets were pretty strong.

Matthew Breese: You had mentioned wealth. Investment management fees for the quarter were down a little bit, which I was surprised at considering equity markets were pretty strong. Is that just a function of timing? Did you waive some stuff for Blue Foundry folks? Not that they had a big investment management presence. I am just trying to make heads or tails of that.

Speaker #7: Is that just a function of timing? Did you waive some stuff for Blue Foundry folks? Not that they had a big investment management presence.

Speaker #7: I'm just trying to make heads or tails of that.

Speaker #6: Yeah. And glad you pointed that out. Because it doesn't kind of hang together. It's really fees in the it's timing. Certain fees in the hit in the first quarter.

Curtis Myers: Glad you pointed that out because it doesn't hang together. It's really fees in the. It's timing. Certain fees hit in Q1. The market, the brokerage business, which is a big part of our business, is quarterly fees at quarter-end. If you remember back at quarter-end last year, balances were down. We saw AUM from Q4 to Q1 went down, then Q1 to now Q2 increased $1.3 billion up to $18.4 billion. It's really just timing and market dynamics in how a certain part of that business gets billed. We feel really good about where we're at, our momentum there, and you would see consistent performance in that business.

Speaker #6: And then the market, the brokerage business—which is a big, big part of our business—is quarterly fees, at quarter end. And if you remember back at quarter end last year, balances were down.

Speaker #6: So we saw AUM from fourth quarter to first quarter go down. And then from first quarter to now, second quarter, it increased $1.3 billion, up to $18.4 billion.

Curtis Myers: We saw AUM from Q4 to Q1 went down, then Q1 to now Q2 increased $1.3 billion up to $18.4 billion. It's really just timing and market dynamics in how a certain part of that business gets billed. We feel really good about where we're at, our momentum there, and you would see consistent performance in that business.

Speaker #6: So it's really just timing and market dynamics in how a certain part of that business gets billed. But we feel really good about where we're at, our momentum there, and you would see consistent performance in that business.

Speaker #7: Got it. Okay. And then Rick, one for you — just longer term on that NIM. It sounds like stable to up near term. As we think about longer term, '27, maybe even '28, thinking about those repricing dynamics for the industry, we saw loan yields kind of peak out in '23.

Matthew Breese: Got it. Okay. Then Rick, one for you, just longer term on that NIM. It sounds like stable to up near term. As we think about longer term 2027, maybe even 2028, thinking about those repricing dynamics for the industry, we saw loan yields kind of peak out in 2023. As that stuff rolls off, do we start to see the NIM more in the stable to down? Or do you think you can maintain kind of an up and to the right 2027 to 2028?

Speaker #7: As that stuff kind of rolls off, do we start to see the NIM more in the stable to down range? Or do you think you can maintain kind of an up-and-to-the-right trend into '27 or '28?

Speaker #4: Yeah. I think, Matt, you're challenging my crystal ball going out to '28. But I do think, look, I think steady to up in the near term is very reasonable.

Richard Kraemer: Yeah. I think, Matt, you're challenging my crystal ball going out to 2028. I think steady to up in the near term is very reasonable. A lot's going to depend, honestly, on what happens in just broader market dynamics, whether it's whatever happens with the Fed and/or deposit pricing. I do think through 2027 at least, in current environment, a stable-ish margin is very reasonable. You could have some very minor repricing lower over the, call it 18 months, but I would say it would be within the range we've been in over the last several quarters.

Rick Kraemer: Yeah. I think, Matt, you're challenging my crystal ball going out to 2028. I think steady to up in the near term is very reasonable. A lot's going to depend, honestly, on what happens in just broader market dynamics, whether it's whatever happens with the Fed and/or deposit pricing.

Speaker #4: A lot's going to depend, honestly, on what happens in just broader market dynamics, whether it's whatever happens with the Fed and/or deposit pricing. But I do think through '27 at least, in the current environment, yeah, a stable-ish margin is very reasonable.

Rick Kraemer: I do think through 2027 at least, in current environment, a stable-ish margin is very reasonable. You could have some very minor repricing lower over the, call it 18 months, but I would say it would be within the range we've been in over the last several quarters.

Speaker #4: So you could have some very minor repricing lower over the, call it, 18 months. But I would say it would be within the range we've been in over the last several quarters.

Speaker #7: I appreciate that. I know it's far out. I'm just thinking big picture. Thank you, everybody.

Matthew Breese: I appreciate that. I know it's far out. I'm just thinking big picture.

Richard Kraemer: Yeah.

Rick Kraemer: Yeah.

Richard Kraemer: Thank you, everybody.

Matthew Breese: Thank you, everybody.

Speaker #6: Thanks.

Richard Kraemer: Thanks.

Rick Kraemer: Thanks.

Curtis Myers: Thanks, Matt.

Curtis Myers: Thank you. Our next question comes from the line of Casey Haire with Autonomous Research. Your line is open.

Operator: Thank you. Our next question comes from the line of Casey Haire with Autonomous Research. Your line is open.

Speaker #2: Thank you. Our next question comes from Elan of Casey Hare with Autonomous Research. Elan is open.

Speaker #1: Yeah. Great. Thanks. Good morning, guys. I wanted to touch on expenses. So if we use the midpoint of the guide, basically assumes the run rate kind of holds this level, maybe a little bit of pressure on the back half.

Casey Haire: Yeah, great. Thanks. Good morning, guys. Wanted to touch on expenses. If we use the midpoint of the guide, basically assumes the run rate kind of holds this level, maybe a little bit of pressure on the back half. The high point and the bookends, if you will, imply some decent leverage if you hit the low end and a little bit of pressure if you hit the high end. Just wondering, what are the swing factors that deliver those extremes?

Speaker #1: But the high point and the bookends, if you will, imply some decent leverage if you hit the low end, and a little bit of pressure if you hit the high end.

Speaker #1: Just wondering, what are the swing factors that deliver those extremes?

Speaker #6: Yeah. Casey's right. I think you I mean, I think your initial thought is more spot on. The go forward third quarter, fourth quarter would imply something pretty constant.

Richard Kraemer: Casey, it's Rick Kraemer. I think your initial thought is more spot on, like the go forward Q3, Q4 would imply something pretty constant. I think that's where we're at. If you look at that 210, call it 210.6 operating number, there's $2.1 million of the pension merger charge in there. That's a non-recurring item. Call it $2.8 million. We'll have a little bit of, just kind of on a standalone basis, call it we'd have a little bit of upwards pressure. You have the offsetting feature of Blue Foundry cost saves as we've kind of rolled throughout the year. We're at $10.5 million for Blue Foundry on a standalone basis this quarter. I would say by Q4, that'll get below $7 million. We're at roughly 24% cost save today, and we'll be above the 50% run rate by Q4.

Rick Kraemer: Casey, it's Rick Kraemer. I think your initial thought is more spot on, like the go forward Q3, Q4 would imply something pretty constant. I think that's where we're at. If you look at that 210, call it 210.6 operating number, there's $2.1 million of the pension merger charge in there. That's a non-recurring item. Call it $2.8 million.

Speaker #6: And I think that's where we're at. If you look at that 210, call it 210.6 operating number, there's 2.1 million of the pension merger charge in there.

Speaker #6: That's a non-recurring item, so call it 28. We'll have a little bit of, just kind of on a standalone basis, we'd have a little bit of upwards pressure.

Rick Kraemer: We'll have a little bit of, just kind of on a standalone basis, call it we'd have a little bit of upwards pressure. You have the offsetting feature of Blue Foundry cost saves as we've kind of rolled throughout the year. We're at $10.5 million for Blue Foundry on a standalone basis this quarter. I would say by Q4, that'll get below $7 million. We're at roughly 24% cost save today, and we'll be above the 50% run rate by Q4.

Speaker #6: But then you have an offsetting the offsetting feature of Blue Foundry cost saves as we've kind of rolled throughout the year. We're at 10 and a half million dollars for Blue Foundry on a standalone basis this quarter.

Speaker #6: I would say by the fourth quarter, that'll get below $7 million. And so we're at roughly 24% cost saves today, and we'll be above the 50% run rate by the fourth quarter.

Speaker #6: So yeah, I think that's I think that's a good run rate. The extremes would be the top end is that we are in the process of hiring more teams and bringing on more talent.

Richard Kraemer: Yeah, I think that's a good run rate. The extremes would be the top end is that we are in the process of hiring more teams and bringing on more talent. On the low end would be that we can get greater cost saves and some probably more timing of some spend gets pushed out into 2027. I think the midpoint is really where we're trying to suggest.

Rick Kraemer: Yeah, I think that's a good run rate. The extremes would be the top end is that we are in the process of hiring more teams and bringing on more talent. On the low end would be that we can get greater cost saves and some probably more timing of some spend gets pushed out into 2027. I think the midpoint is really where we're trying to suggest.

Speaker #6: And on the low end would be that we can get greater cost saves and some probably more timing of some spend gets pushed out into '27.

Speaker #6: But I think the midpoint is really where we're trying to suggest.

Speaker #1: Okay. Great. And then just last one for me on the ACL. Came down a little bit. It's still pretty strong, relative to your risk profile and peer group.

Casey Haire: Okay, great. Just last one from me. On the ACL came down a little bit. It's still pretty strong relative to your risk profile and peer group. Just I guess some updated thoughts on can we get some more leverage? Can that ratio drive lower?

Speaker #1: Just, I guess, some updated thoughts on can we get some more leverage? Can that ratio drive lower?

Speaker #6: Yeah, I think some of that's going to depend on growth going forward. But in current trends, and even for—call it—projected, a little bit higher loan growth, directionally, yeah, I think, I mean, there's a limit and a level.

Richard Kraemer: Yeah, I think some of that's going to depend on growth going forward. In current trends, even call it predicted a little bit higher loan growth, directionally, yeah, I think there's a limit and a level. With what we see right now in terms of delinquency trends and on a multi-quarter basis and what some of the economic data would suggest, there's probably a little room there.

Rick Kraemer: Yeah, I think some of that's going to depend on growth going forward. In current trends, even call it predicted a little bit higher loan growth, directionally, yeah, I think there's a limit and a level. With what we see right now in terms of delinquency trends and on a multi-quarter basis and what some of the economic data would suggest, there's probably a little room there.

Speaker #6: But with what we see right now in terms of delinquency trends and on a multi-quarter basis and what some of the economic data would suggest, there's probably a little room there.

Speaker #1: Great. Thank you.

Casey Haire: Great. Thank you.

Speaker #6: Sure.

Richard Kraemer: Sure.

Rick Kraemer: Sure.

Speaker #2: Thank you, ladies and gentlemen. I'm Sean. There are no further questions in the queue. I would now like to turn the call back over to Curt Myers for closing remarks.

Operator: Thank you. Ladies and gentlemen, I'm showing no further questions in the queue. I would now like to turn the call back over to Curtis Myers for closing remarks.

Speaker #5: Well, thank you again for joining us today. We hope you will be able to join us to discuss third quarter results in October.

Curtis Myers: Well, thank you again for joining us today. We hope you'll be able to be with us to discuss Q3 results in October. Thank you all.

Speaker #5: Thank you all.

Operator: That concludes today's conference call. Thank you for your participation. You may now disconnect.

Q2 2026 Fulton Financial Corp Earnings Call

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