8-K/A: Fulton Financial Achieves Record Operating Net Income in Strong Second Quarter

Fulton Financial Corporation reported record operating net income of $100.6 million, or $0.55 per diluted share, for the second quarter of 2025, driven by solid net interest margin and increased non-interest income.

Summary

• Net income available to common shareholders for the second quarter of 2025 was $96.6 million, or $0.53 per diluted share, an increase of $6.2 million, or $0.04 per diluted share, compared to the first quarter of 2025.
• Operating net income available to common shareholders for the second quarter of 2025 was a record $100.6 million, or $0.55 per diluted share, an increase of $5.2 million, or $0.03 per diluted share, compared to the first quarter of 2025.
• For the six months ended June 30, 2025, net income available to common shareholders was $187.1 million, or $1.02 per diluted share, an increase of $35.3 million, or $0.13 per diluted share, compared to the six months ended June 30, 2024.
• Operating net income available to common shareholders for the six months ended June 30, 2025, was $196.1 million, or $1.07 per diluted share, an increase of $48.2 million, or $0.20 per diluted share, compared to the six months ended June 30, 2024.
• Net interest margin (NIM) was 3.47% in the second quarter of 2025, increasing four basis points compared to the first quarter of 2025, with a two basis point decrease in total cost of funds.
• Non-interest income increased $1.9 million to $69.1 million compared to $67.2 million in the prior quarter.
• Non-interest expense increased $3.4 million to $192.8 million compared to $189.5 million in the prior quarter, primarily due to a $3.6 million increase in salaries and employee benefits.
• Operating non-interest expense increased $4.8 million to $187.6 million compared to $182.9 million in the prior quarter.
• Provision for credit losses was $8.6 million in the second quarter of 2025, resulting in an allowance for credit losses attributable to net loans of $377.3 million, or 1.57% of total net loans as of June 30, 2025.
• Net loans increased $150.0 million, or 2.5% annualized, to $24.0 billion compared to the prior quarter, driven by increases in consumer loans ($117.4 million) and commercial and other loans ($32.6 million).
• Deposits totaled $26.1 billion, a decrease of $190.9 million compared to the prior quarter, primarily due to decreases in interest-bearing demand deposits ($211.3 million) and noninterest-bearing demand deposits ($98.2 million).
• The common equity tier 1 capital ratio increased to approximately 11.3% compared to 11.1% in the prior quarter.
• Non-performing assets were $215.6 million, or 0.67% of total assets, as of June 30, 2025, in comparison to $199.0 million, or 0.62% of total assets, as of March 31, 2025.
• Annualized net charge-offs for the second quarter of 2025 were 0.20% of total average loans, compared to 0.21% in the prior quarter.

Sentiment

Score: 8

Explanation: The company reported record operating net income, improved net interest margin, increased non-interest income, and strengthened capital ratios. While non-performing assets saw a slight increase and deposits decreased, the overall financial performance for the quarter and the updated positive outlook for several key guidance metrics suggest a strong positive sentiment.

Positives

• Achieved a new company record with operating net income of $100.6 million, or $0.55 per diluted share, in the second quarter of 2025.
• Net income available to common shareholders increased by $6.2 million, or $0.04 per diluted share, quarter-over-quarter.
• Solid net interest margin of 3.47%, benefiting from a two basis point decrease in total cost of funds compared to the prior quarter.
• Non-interest income increased $1.9 million, driven by growth in mortgage banking income, merchant and card fee income, cash management fee income, overdraft fee income, wealth management revenues, other consumer deposit banking fees, debit card fee income, and commercial customer interest rate derivative fee income.
• Net loans increased $150.0 million, or 2.5% annualized, demonstrating disciplined growth.
• Common equity tier 1 capital ratio increased to approximately 11.3%, indicating strong capital adequacy.
• Annualized net charge-offs slightly decreased to 0.20% from 0.21% in the prior quarter, reflecting stable asset quality.
• Robust liquidity profile with total available liquidity of $16.619 billion, providing 270% coverage of net estimated uninsured deposits ($6.162 billion).
• Loan portfolio remains diversified and granular, with low office concentration at 3% of total loans.
• Multi-family loans, representing 8% of the total loan portfolio, exhibit strong credit metrics with an average loan size of $3.3 million, weighted average LTV of 61%, and weighted average DSCR of 1.32x.

Negatives

• Non-interest expense increased $3.4 million to $192.8 million, primarily due to a $3.6 million increase in salaries and employee benefits expense, largely driven by annual merit increases, one additional calendar day, and an increase in incentive compensation.
• Deposits decreased $190.9 million to $26.1 billion, mainly due to decreases in interest-bearing demand deposits ($211.3 million) and noninterest-bearing demand deposits ($98.2 million).
• Non-performing assets increased to $215.6 million, or 0.67% of total assets, from $199.0 million, or 0.62% of total assets, in the prior quarter.
• Income from equity method investments decreased by $2.7 million, reflected in other income.

Risks

• Forward-looking statements are subject to inherent uncertainties, risks, and changes in circumstances that are difficult to predict and many of which are outside of the Corporation's control.
• Actual results and financial condition may differ materially from those indicated in forward-looking statements.
• Specific risks and uncertainties affecting the Corporation are detailed in the 'Risk Factors' and 'Management's Discussion and Analysis of Financial Condition and Results of Operations' sections of the Corporation's Annual Report on Form 10-K for the year ended December 31, 2024, and Quarterly Report on Form 10-Q for the quarter ended March 31, 2025.

Future Outlook

The 2025 operating guidance for Non-FTE Net Interest Income (NII) is an expected range of $1.005 billion to $1.025 billion, incorporating Fed Funds Rate cuts of 25 basis points in September and 25 basis points in December (down from four 25 bps cuts previously). The company anticipates low single-digit interest-earning asset growth. The provision for credit losses range has been lowered to $50 million $70 million, reflecting actual performance to date and low single-digit loan growth. Non-interest income is expected to be in the range of $265 million $280 million, assuming steady market activity and interest rate environment. Operating non-interest expense guidance has been lowered to $750 million $765 million, representing a low single-digit increase to 2024. Up to $10 million in FultonFirst implementation costs are projected for the remainder of 2025. The effective tax rate is expected to be between 18.5% and 19.5%, an increase from the previously guided 18% 19%.

Management Comments

• "I'm proud that our team has delivered a new company record, with operating net income of $100.6 million, or $0.55 per diluted share, this past quarter." Curt Myers, Chairman and CEO of Fulton.
• "Our community banking strategy continues to provide significant value to customers and has once again resulted in strong bottom-line results for the company." Curt Myers, Chairman and CEO of Fulton.

Industry Context

The banking sector is currently navigating a dynamic interest rate environment, with expectations of future Fed Funds Rate cuts influencing net interest income projections. Fulton Financial's focus on disciplined growth, strong capital ratios, and robust liquidity management reflects broader industry priorities amidst economic uncertainties. The company's granular and diversified deposit and loan portfolios, particularly its low office concentration and solid multi-family loan metrics, align with current industry trends emphasizing asset quality and risk mitigation in commercial real estate. The increase in non-interest income from various fee-based services also indicates a strategic effort to diversify revenue streams, a common trend among financial institutions seeking to reduce reliance on interest rate sensitive income.

Stakeholder Impact

• Shareholders are positively impacted by the increased net income, diluted EPS, record operating net income, and strengthened capital ratios, indicating strong financial performance and stability.
• Customers benefit from the company's continued community banking strategy, which management states provides significant value.
• Employees are positively impacted by the increase in salaries and employee benefits expense, which was largely due to annual merit increases and incentive compensation.

Next Steps

• A conference call and webcast will be held on Wednesday, July 16, 2025, at 10:00 a.m. Eastern Time, to discuss the second quarter and six months ended June 30, 2025 results.

Key Dates

Recommendation

Keywords

Fulton Financial, FULT, banking, financial services, regional bank, net income, earnings, net interest margin, deposits, loans, credit quality, capital ratios, SEC filing, 8-K/A, Q2 2025 results, financial performance, operating guidance