Fulton Financial Corporation (FULT) Q3 2026 earnings review
Fulton's profit rises on lower credit losses, but lending stalls
Fulton Financial Corporation, a Mid-Atlantic regional bank, grew its profit by repricing loans and cutting credit losses even though business lending stalled. Profit per share excluding one-offs rose 13% from a year ago to $0.62 as wealth management fees reached a record and loan write-offs dropped by more than half. Chief executive Curtis J. Myers highlighted customer funding growth after integrating Blue Foundry Bank, and the lender lifted the bottom of its full-year net interest income and fee plans while cutting its expected credit loss provision.
| Net interest income | $290.0M +3.2% from a year ago excluding Blue Foundry (by our math) |
|---|---|
| Profit per share, excluding one-offs | $0.62 +13% from a year ago |
| Net loan write-offs (annualized) | 0.14% 0.34% last quarter |
| Full-year net interest income outlook | Raised $5M at low end middle of the range: $1.13B (+9%) |
⚖️ Verdict: 🟢 Bullish
The story got better because core loan yields and clean credit resolved the two biggest worries from the spring. Repricing older loans more than covered a drop in merger accounting gains, and the sharp fall in loan write-offs allowed a $15 million cut to the full-year credit provision outlook. The bad news: commercial loan balances shrank during the quarter, and higher employee bonuses and deposit rates ate up the early cost savings from the Blue Foundry merger.
The question now is whether Fulton can grow its loan book without buying another bank. Bulls point to newly hired commercial bankers in New Jersey and repricing loans, while skeptics see business loans shrinking and free checking accounts drifting into higher-rate savings. Fourth-quarter commercial loan balances and the upcoming filing's credit commitment tables will show if borrower demand is returning.
🐂 Bull Case
Core Lending Spreads Offset Fading Merger Gains
Fulton's net interest margin, the spread between what the bank earns on loans and pays on deposits, dipped 0.02 percentage points to 3.58%. Net interest income still rose $5.8 million from last quarter to $290.0 million. That gain came from core lending rather than accounting boosts from acquired banks, which are fading as older loans pay off.
- Core net interest income excluding merger accounting gains: $277.1 million, up $8.0 million from last quarter by our math
- Merger loan accounting gains: $12.9 million ($8.3 million from Republic and $4.6 million from Blue Foundry), down $2.2 million from last quarter
- Average loan yield: 5.82%, up 0.02 percentage points from last quarter
This matters because skeptics worried that fading gains from the 2024 Republic deal would drag down interest income. Instead, new loans and bonds are repricing at higher rates fast enough to absorb both the $2.2 million accounting step-down and higher deposit costs. The bank also lifted the bottom of its full-year net interest income outlook by $5 million.
What to watch: purchase accounting accretion in the fourth quarter, which the full-year outlook implies will drop to about $9.6 million by our math. If net interest income still reaches the implied $293.7 million fourth-quarter target, core lending spreads are carrying the bank into 2027.
Credit Losses Fell and Lowered the Provision Plan
Earlier this year, rising loan write-offs raised concerns that credit quality was worsening across the bank's commercial borrowers. In the third quarter, net charge-offs, which are loans the bank writes off as uncollectible, fell by more than half to an annualized 0.14% of average loans, down from 0.34% in the second quarter and 0.25% in the first.
Commercial and industrial loans actually recorded net recoveries of $0.5 million after $10.7 million of net write-offs last quarter. Because fewer loans went bad, Fulton set aside just $4.1 million for future credit losses and cut its full-year provision outlook by $15 million at the middle of the range, to $30–40 million. Both the quarterly numbers and the full-year plan confirm the spring write-offs were isolated.
What to watch: fourth-quarter provision expense, which the revised full-year outlook implies will be $6.6–16.6 million by our math. Staying near the bottom of that range would show that commercial credit remains clean.
Wealth Management Lifted Underlying Fee Income
Reported non-interest income, the fees Fulton earns outside of lending, dipped $2.1 million from last quarter to $77.2 million. That drop happened only because the second quarter included a $6.9 million one-time gain from selling an investment. Excluding that sale, underlying fee income rose 6.7% from last quarter, led by wealth management fees jumping 9.2% to $25.3 million.
Wealth management assets under management and administration reached $18.6 billion, and mortgage banking revenue rose 37.7% from a year ago to $5.1 million. Those steady fee streams make up 21% of total revenue and prompted the bank to raise its full-year fee outlook by $5 million, reducing its reliance on loan volume.
What to watch: wealth management fees in the fourth quarter. Holding the $25 million quarterly level would prove the growth came from new client money rather than market prices alone.
Buybacks Accelerated and Trimmed the Share Count
Issuing stock to buy Blue Foundry in April increased Fulton's share count by about 5% from a year ago. In the third quarter, the bank stepped up share buybacks, repurchasing 2.33 million shares for $56.1 million at an average price of $24.14, more than quadruple the $11.1 million spent in the second quarter.
That reduced ending common shares by 1.1% in a single quarter while Common Equity Tier 1 capital, the bank's core loss-absorbing buffer, held steady at 12.2%. Strong earnings let Fulton return cash and chip away at merger dilution without weakening its balance sheet.
What to watch: how much of the remaining $58 million buyback authorization Fulton uses before it expires on January 31, 2027. Completing the program would erase nearly a third of the shares issued for Blue Foundry.
🐻 Bear Case
Commercial Loans Shrank as Lending Stalled
Chief executive Curtis J. Myers said performance reflects "robust demand for our community banking model". Yet total net loans rose just $43.6 million, or 0.2%, from last quarter to $26.0 billion. Stripping out the $1.55 billion of loans acquired with Blue Foundry at close, underlying loans grew 1.6% from a year ago by our math, against 8.1% headline growth.
- Commercial loans: down $63.3 million from last quarter, led by a $66.4 million drop in commercial construction and $12.4 million in business loans
- Consumer and residential loans: up $107.0 million, driven by $81.1 million in home mortgages and $19.9 million in home equity
- Full-year loan outlook: kept at "low, single-digit organic loan growth"
This matters because commercial banking is Fulton's core franchise, and business lending is shrinking while lower-yielding home mortgages provide all the growth. Without loan volume, revenue growth depends entirely on repricing older loans and buying other banks.
What to watch: commercial and industrial and commercial mortgage balances in the fourth quarter. A second straight drop in business loans would mean newly hired bankers in New Jersey are not yet offsetting customer payoffs.
Customer Deposit Growth Came at Higher Rates
Total deposits grew $571.0 million from last quarter to $28.8 billion, driven by "solid commercial deposit growth and seasonal trends in the municipal deposit portfolio", Fulton said. The bank used that cash to cut expensive brokered deposits by $428.5 million, but its average cost of deposits still rose 0.06 percentage points to 1.87%.
Costs rose because non-interest-bearing checking accounts shrank by another $45.8 million to 18.0% of total deposits, down from 18.6% last quarter. Meanwhile, customers put $601.0 million into savings accounts where the average rate jumped from 2.08% to 2.20%, pressuring the net interest margin.
What to watch: non-interest-bearing demand deposits in the fourth quarter, when municipal cash typically flows back out. If free checking balances fall below $5.1 billion, funding costs will keep climbing.
Pay and Recruiting Raised the Cost Outlook
Fulton completed the Blue Foundry systems integration in July and said "Blue Foundry Bancorp Transaction targeted cost-saves remain favorable to original estimates". Even so, operating non-interest expense, which excludes merger charges and intangible amortization, ticked up $0.6 million from last quarter to $211.2 million, and the bank raised the bottom of its full-year operating expense outlook by $10 million.
Salaries and employee benefits climbed $5.6 million from last quarter to $125.8 million, rising 1.2 percentage points of total revenue to 33.8% by our math. Higher bonus accruals added $3.9 million and recruiting added $0.8 million, showing that hiring and compensation are eating up the merger savings.
What to watch: operating non-interest expense in the fourth quarter, which the full-year outlook implies will be about $212.4 million by our math. A reading at or above that level would show that cost savings are not lowering the bank's total expense base.
Risks this quarter didn't answer
Three standing balance-sheet and cost questions cannot be checked until the quarterly Form 10-Q filing arrives.
- Unfunded loan commitments: not in the release or presentation; the filing's commitments footnote will show whether the commercial pipeline grew organically.
- Gross non-accrual loan additions: only net non-performing loans ($173.8 million) are in the release; the credit footnote will show if new commercial mortgage defaults slowed from last quarter's $64.1 million.
- New York and New Jersey multi-family loan concentration: regional property tables are only in the filing; they will show exposure to rent-regulated apartments.
👓 Other Themes
Interest Rate Outlook Assumes Two Federal Reserve Hikes
In the presentation's outlook table, Fulton notes that its 2026 net interest income forecast "Incorporates federal funds target rate hikes of 25 bps in September 2026 and December 2026". Earlier in the year, the bank's plan assumed rate cuts. Because half of Fulton's loan book carries floating rates, higher short-term rates immediately lift loan yields while also keeping upward pressure on savings and time deposit rates.
💲 Other KPIs
Fell 3.0% from $15.61 last quarter, though still up 5.2% from $14.39 a year ago. Tangible book value measures net worth per share after stripping out goodwill from acquisitions. The quarterly drop came from $56.1 million of share buybacks above book value and a wider unrealized loss on the bond portfolio ($369.7 million vs $213.1 million last quarter).
Dropped 28.1% from $1,714 million at the end of June and 16.2% from $1,472 million a year ago. Because customer deposits grew by $571 million during the quarter, the Pennsylvania bank paid off all $552.5 million of its ending Federal Home Loan Bank advances, trimming quarterly borrowing interest expense by $2.1 million.
Declined from 0.54% of total assets ($187.1 million) in the second quarter and 0.63% ($201.0 million) a year ago, to $179.4 million. Non-performing assets are loans no longer paying interest plus foreclosed property; their steady decline alongside a 216% reserve coverage ratio supports the lower credit provision.
🔮 Guidance
Raised. Fulton lifted the bottom of the range by $5 million, putting the middle at $1.130 billion, or 9.0% growth from 2025. By our math, that leaves $293.7 million for the fourth quarter, up 1.3% from the third quarter and 10.4% from a year ago. The outlook embeds ~$50 million of purchase accounting accretion (down from ~$55 million previously), leaving ~$9.6 million for Q4.
Cut. Management lowered the expected credit loss provision by $15 million at the middle of the range after booking just $23.4 million across the first nine months. It is the second straight $15 million reduction: from $65 million in Q1 to $50 million in Q2, and now $35 million. By our math, the new range implies $6.6–16.6 million of provision expense in the fourth quarter.
Raised. Both ends of the fee-income outlook moved up by $5 million, following a $2.5 million midpoint raise last quarter. By our math, the $300 million midpoint leaves $73.6 million for the fourth quarter, down 4.7% from the third quarter's $77.2 million run rate, making the full-year target easily achievable if wealth management holds steady.
Raised. The bank lifted the bottom of its operating cost range by $10 million, moving the midpoint up $5 million to $825 million after a $2.5 million increase in Q2. By our math, that implies $212.4 million of operating expense in the fourth quarter, slightly above Q3's $211.2 million, even as Blue Foundry legacy expenses were trimmed from ~$27 million to ~$25 million.
Cut. Expected merger and FultonFirst restructuring charges fell by $13.4 million to ~$25.0 million, and core deposit intangible amortization dropped by $1.9 million to ~$22.0 million. Through nine months, Fulton has booked $19.6 million of merger and implementation costs, leaving about $5.4 million for the fourth quarter by our math.
Unchanged. The full-year tax rate plan stays at 18.5%–19.5% for a fourth straight quarter. For the first nine months, the effective tax rate was 19.4% ($75.7 million on $389.5 million of pre-tax income), sitting right at the top of the guided band.
❓ Key Questions
Why did commercial loans shrink after the Blue Foundry deal?
Commercial construction and business loans fell by $78.8 million combined in the third quarter. Investors need to know whether higher borrower payoffs or deliberate credit tightening caused the drop, and when the newly hired New Jersey commercial teams will grow the book.
Where did Blue Foundry's cost savings go?
The presentation says Blue Foundry cost savings are ahead of schedule and cuts the acquired bank's full-year expense assumption by $2 million, yet Fulton raised its total operating expense outlook by $5 million at the midpoint. How much of the savings went to new hires versus bonus accruals?
What happened to gross non-accrual commercial mortgage additions?
In the second quarter, $64.1 million of commercial mortgages entered non-accrual status, hidden behind high payoffs in the net number. Until the Form 10-Q arrives, what was the gross inflow of troubled commercial real estate loans in the third quarter?
Why did unrealized bond losses widen by $157 million?
Accumulated other comprehensive loss widened from $213.1 million in June to $369.7 million in September, pulling tangible book value per share down 3%. What drove the mark-to-market drop in the available-for-sale securities portfolio, and how fast will those bonds mature?