Fulton Financial (FULT) came out with quarterly earnings of $0.40 per share, beating the Zacks Consensus Estimate of $0.39 per share. This compares to earnings of $0.39 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 2.56%. A quarter ago, it was expected that this financial holding company would post earnings of $0.42 per share when it actually produced earnings of $0.42, delivering no surprise.Over the last four quarters, the ...

[Financial Performance Summary](index=1&type=section&id=Financial%20Performance%20Summary) Fulton Financial Corporation reported a net income of $59.4 million and operating net income of $65.4 million for Q1 2024, with the CEO noting solid earnings and stable asset quality | Metric | Q1 2024 | Q4 2023 | Change | | :--- | :--- | :--- | :--- | | Net Income Available to Common Shareholders | $59.4M | $61.7M | -3.8% | | Diluted EPS | $0.36 | $0.37 | -2.7% | | Operating Net Income Available to Common Shareholders | $65.4M | $68.9M | -5.0% | | Operating Diluted EPS | $0.40 | $0.42 | -4.8% | - CEO Curtis J. Myers expressed satisfaction with the Q1 results, noting them as a "good start to the year" and emphasizing progress on strategic initiatives[41](index=41&type=chunk) [Detailed Financial Analysis](index=1&type=section&id=Detailed%20Financial%20Analysis) Q1 2024 detailed financial analysis shows declining net interest income due to margin compression, stable asset quality, mixed non-interest income, and reduced non-interest expenses quarter-over-quarter [Net Interest Income and Balance Sheet](index=1&type=section&id=Net%20Interest%20Income%20and%20Balance%20Sheet) Net interest income for Q1 2024 decreased to $206.9 million quarter-over-quarter and year-over-year, primarily due to a 4 basis point decline in net interest margin from higher funding costs - NII decreased by **$5.1 million** compared to Q4 2023, attributed to slight decreases in both average interest-earning assets and the net interest margin[2](index=2&type=chunk) - The NIM fell by **4 basis points** to **3.32%** compared to Q4 2023, mainly due to higher rates on interest-bearing deposits and a funding mix shift, partially offset by higher loan yields[47](index=47&type=chunk) - Compared to Q1 2023, NII decreased by **$8.7 million**; while interest income grew by **$49.8 million**, interest expense surged by **$58.5 million**, primarily driven by rising interest rates on deposits[5](index=5&type=chunk)[7](index=7&type=chunk) - Total average interest-bearing liabilities increased by **$1.9 billion** year-over-year, driven by a **$2.4 billion** increase in average interest-bearing deposits[6](index=6&type=chunk) [Asset Quality](index=3&type=section&id=Asset%20Quality) Asset quality remained stable in Q1 2024, with non-performing assets at $156.4 million (0.57% of total assets) and a provision for credit losses of $10.9 million | Metric | Q1 2024 | Q4 2023 | Q1 2023 | | :--- | :--- | :--- | :--- | | Provision for Credit Losses | $10.9M | $9.8M | $24.5M | | Net Charge-offs to Avg. Loans | 0.16% | 0.15% | 0.27% | | Non-performing Assets / Total Assets | 0.57% | 0.56% | 0.62% | - The Q1 2024 provision for credit losses was primarily driven by net charge-offs of **$8.6 million** and overall loan growth[9](index=9&type=chunk) [Non-Interest Income](index=3&type=section&id=Non-interest%20Income) Non-interest income was $57.1 million, decreasing 5.0% quarter-over-quarter due to lower swap fees but increasing 10.5% year-over-year from wealth and mortgage banking - QoQ non-interest income decreased by **$3.0 million (5.0%)**, mainly from a **$2.0 million** drop in commercial customer interest rate swap fees and a **$2.2 million** decrease in other income[11](index=11&type=chunk) - YoY non-interest income increased by **$5.4 million (10.5%)**, led by a **$2.1 million** increase in wealth management revenues and a **$1.1 million** increase in mortgage banking income[54](index=54&type=chunk) [Non-Interest Expense](index=3&type=section&id=Non-interest%20Expense) Non-interest expense decreased 1.6% quarter-over-quarter to $177.6 million due to lower FDIC insurance, but increased 7.3% year-over-year (excluding FultonFirst costs) - QoQ non-interest expense decreased by **$3.0 million**, primarily due to a **$5.0 million** lower FDIC insurance expense, with the FDIC special assessment at **$1.0 million** in Q1 2024 versus **$6.5 million** in Q4 2023[12](index=12&type=chunk)[13](index=13&type=chunk) - The QoQ decrease was partly offset by a **$3.1 million** increase in FultonFirst implementation costs and loss on asset disposals, which totaled **$6.3 million** in Q1 2024[13](index=13&type=chunk) - YoY non-interest expense, excluding FultonFirst costs, increased by **$11.7 million (7.3%)**, driven by a **$6.0 million** increase in salaries and benefits, a **$1.9 million** increase in data processing/software, and a **$1.7 million** increase in net occupancy expense[14](index=14&type=chunk) [Income Tax Expense](index=4&type=section&id=Income%20Tax%20Expense) The effective tax rate for Q1 2024 was 18.0%, a slight decrease from the 18.5% effective tax rate for the full year 2023 - The effective tax rate was **18.0%** for Q1 2024, compared to **18.5%** for the full-year 2023[15](index=15&type=chunk) [Financial Statements and Data](index=6&type=section&id=Financial%20Statements%20and%20Data) This section presents detailed unaudited financial tables for the five quarters ending March 31, 2024, covering consolidated balance sheets, income statements, average balance sheet analysis, and credit quality data [Consolidated Financial Highlights](index=6&type=section&id=Consolidated%20Financial%20Highlights) Key financial highlights for Q1 2024 include a return on average assets of 0.91%, a net interest margin of 3.32%, and diluted EPS of $0.36 | Profitability & Capital Ratios | Q1 2024 | Q4 2023 | Q1 2023 | | :--- | :--- | :--- | :--- | | Return on average assets | 0.91% | 0.93% | 1.03% | | Net interest margin | 3.32% | 3.36% | 3.53% | | Efficiency ratio (Operating) | 63.2% | 62.0% | 58.5% | | Common equity Tier 1 capital ratio | 10.2% | 10.3% | 9.8% | | Total risk-based capital ratio | 13.9% | 14.0% | 13.4% | | Per Share Data | Q1 2024 | Q4 2023 | Q1 2023 | | :--- | :--- | :--- | :--- | | Diluted EPS | $0.36 | $0.37 | $0.39 | | Cash dividends | $0.17 | $0.17 | $0.15 | [Consolidated Balance Sheets](index=8&type=section&id=Consolidated%20Balance%20Sheets) As of March 31, 2024, total assets were **$27.64 billion**, with net loans at **$21.44 billion**, total deposits at **$21.74 billion**, and total shareholders' equity at **$2.76 billion** | (in thousands) | Mar 31, 2024 | Dec 31, 2023 | Mar 31, 2023 | | :--- | :--- | :--- | :--- | | Total Assets | $27,642,957 | $27,571,915 | $27,112,176 | | Net Loans | $21,444,483 | $21,351,094 | $20,670,188 | | Total Deposits | $21,741,950 | $21,537,623 | $21,316,584 | | Total Shareholders' Equity | $2,757,679 | $2,760,139 | $2,618,998 | - The loan portfolio's largest segments are commercial mortgage (**$8.25 billion**) and residential mortgage (**$5.40 billion**); noninterest-bearing demand deposits decreased to **$5.09 billion** from **$6.40 billion** a year ago, while time deposits grew to **$3.14 billion** from **$1.89 billion** over the same period[23](index=23&type=chunk) [Consolidated Statements of Income](index=9&type=section&id=Consolidated%20Statements%20of%20Income) Q1 2024 consolidated income statement reports net interest income of **$206.9 million**, provision for credit losses of **$10.9 million**, and net income available to common shareholders of **$59.4 million** | (in thousands) | Q1 2024 | Q4 2023 | Q1 2023 | | :--- | :--- | :--- | :--- | | Net Interest Income | $206,937 | $212,006 | $215,587 | | Provision for credit losses | $10,925 | $9,808 | $24,544 | | Total Non-Interest Income | $57,140 | $59,378 | $51,753 | | Total Non-Interest Expense | $177,600 | $180,552 | $159,616 | | Net Income Available to Common Shareholders | $59,379 | $61,701 | $65,752 | [Average Balance Sheet and Net Interest Margin Analysis](index=11&type=section&id=Average%20Balance%20Sheet%20and%20Net%20Interest%20Margin%20Analysis) Average balance analysis for Q1 2024 shows a fully taxable equivalent net interest margin of **3.32%**, with a yield on interest-earning assets of **5.40%** and a cost of interest-bearing liabilities of **2.82%** | Metric | Q1 2024 | Q4 2023 | Q1 2023 | | :--- | :--- | :--- | :--- | | Yield on Interest-Earning Assets | 5.40% | 5.31% | 4.73% | | Cost of Interest-Bearing Liabilities | 2.82% | 2.69% | 1.78% | | Net Interest Margin (FTE) | 3.32% | 3.36% | 3.53% | - Average net loans increased to **$21.4 billion** in Q1 2024 from **$20.5 billion** in Q1 2023, while average noninterest-bearing demand deposits decreased significantly to **$5.1 billion** from **$6.6 billion** over the same period[32](index=32&type=chunk)[33](index=33&type=chunk) [Credit Quality Data](index=13&type=section&id=Credit%20Quality%20Data) Credit quality data for Q1 2024 shows the allowance for credit losses at **$297.9 million** and total non-performing loans at **$156.1 million**, with slight increases from the prior quarter | Allowance for Credit Losses (in thousands) | Q1 2024 | | :--- | :--- | | Beginning Balance | $293,404 | | Net Charge-offs | ($8,598) | | Provision for credit losses | $13,082 | | Ending Balance | $297,888 | | Non-Performing Assets (in thousands) | Mar 31, 2024 | Dec 31, 2023 | Mar 31, 2023 | | :--- | :--- | :--- | :--- | | Non-accrual loans | $129,628 | $121,620 | $134,303 | | Loans 90+ days past due | $26,521 | $31,721 | $30,336 | | Total non-performing loans | $156,149 | $153,341 | $164,639 | | Total non-performing assets | $156,426 | $154,237 | $167,943 | [Non-GAAP Financial Measures Reconciliation](index=14&type=section&id=Non-GAAP%20Financial%20Measures%20Reconciliation) This section reconciles GAAP results to non-GAAP measures, with Q1 2024 operating net income available to common shareholders at **$65.4 million** ($0.40 per diluted share) after adjustments for items like FultonFirst costs and FDIC assessment - The company presents non-GAAP measures to provide useful and comparative information for assessing operational trends, consistent with internal performance evaluation[71](index=71&type=chunk) | Reconciliation to Operating EPS (Q1 2024) | Per Share | | :--- | :--- | | GAAP Diluted EPS | $0.36 | | Adjustments (net of tax) | +$0.04 | | **Operating Diluted EPS** | **$0.40** | - Significant pre-tax adjustments to calculate operating income in Q1 2024 included the FultonFirst implementation and asset disposals (**$6.3 million**) and the FDIC special assessment (**$1.0 million**)[37](index=37&type=chunk) - The Tangible Common Equity (TCE) ratio, a non-GAAP measure, was **7.40%** at March 31, 2024, slightly down from **7.43%** at December 31, 2023[38](index=38&type=chunk) [Forward-Looking Statements](index=5&type=section&id=Safe%20Harbor%20Statement) This section provides a safe harbor statement, cautioning that forward-looking statements are subject to inherent risks and uncertainties, and actual results may differ materially - The report contains forward-looking statements regarding financial condition, results, and business, which are not guarantees of future performance[17](index=17&type=chunk) - Investors are warned not to place undue reliance on these statements as they are subject to risks and uncertainties that could cause actual results to differ materially[59](index=59&type=chunk) - For a discussion of risks and uncertainties, readers are referred to the "Risk Factors" and "MD&A" sections of the Corporation's Annual Report on Form 10-K[18](index=18&type=chunk)

Fulton Financials Corporation (FULT Quick Quote - Investors are always looking for stocks that are poised to beat at earnings season and Free Report ) may be one such company. The firm has earnings coming up pretty soon, and events are shaping up quite nicely for their report. That is because Fulton Financials is seeing favorable earnings estimate revision activity as of late, which is generally a precursor to an earnings beat. After all, analysts raising estimates right before earnings — with the most up ...

The upcoming report from Fulton Financial (FULT) is expected to reveal quarterly earnings of $0.39 per share, indicating no change from the year-ago quarter compared to the year-ago period. Analysts forecast revenues of $268.9 million, representing a decrease of 1.1% year over year.The consensus EPS estimate for the quarter has remained unchanged over the last 30 days. This reflects how the analysts covering the stock have collectively reevaluated their initial estimates during this timeframe.Prior to a com ...

The market expects Fulton Financial (FULT) to deliver flat earnings compared to the year-ago quarter on lower revenues when it reports results for the quarter ended March 2024. This widely-known consensus outlook is important in assessing the company's earnings picture, but a powerful factor that might influence its near-term stock price is how the actual results compare to these estimates.The stock might move higher if these key numbers top expectations in the upcoming earnings report, which is expected to ...

Fulton Financial (FULT) could be a solid choice for investors given its recent upgrade to a Zacks Rank #1 (Strong Buy). This upgrade is essentially a reflection of an upward trend in earnings estimates -- one of the most powerful forces impacting stock prices.The Zacks rating relies solely on a company's changing earnings picture. It tracks EPS estimates for the current and following years from the sell-side analysts covering the stock through a consensus measure -- the Zacks Consensus Estimate.Since a chan ...

PART I [Item 1. Business](index=9&type=section&id=Item%201.%20Business) Fulton Financial Corporation operates through its subsidiary Fulton Bank, offering comprehensive financial and wealth management services across five states - The company was incorporated on February 8, 1982, and became a financial holding company under the GLBA[18](index=18&type=chunk) - The acquisition of Prudential Bancorp was completed on July 1, 2022, with Prudential Bank merging into Fulton Bank on November 5, 2022[19](index=19&type=chunk) - As of December 31, 2023, Fulton Bank operated **208 financial centers** across Pennsylvania, Delaware, Maryland, New Jersey, and Virginia[21](index=21&type=chunk)[25](index=25&type=chunk) - The company offers a diverse range of consumer and commercial banking products, including various loans, deposit accounts, and cash management services[22](index=22&type=chunk)[23](index=23&type=chunk) - Wealth management services are provided through Fulton Financial Advisors and Fulton Private Bank, covering investment, trust, brokerage, and advisory services[24](index=24&type=chunk) - The workforce comprised approximately **3,400 employees** as of December 31, 2023, with a focus on engagement, diversity, and professional development[26](index=26&type=chunk)[27](index=27&type=chunk)[29](index=29&type=chunk)[30](index=30&type=chunk)[31](index=31&type=chunk) - A comprehensive cybersecurity strategy is maintained, integrated into overall risk management with continuous monitoring and third-party oversight[33](index=33&type=chunk) - The Corporation faces intense competition from various financial institutions, including banks, credit unions, Fintechs, and marketplace lenders[36](index=36&type=chunk)[37](index=37&type=chunk) - The Corporation's common stock (FULT) and preferred stock (FULTP) are traded on the Nasdaq Stock Market, LLC[3](index=3&type=chunk) [Supervision and Regulation](index=12&type=section&id=Supervision%20and%20Regulation) The Corporation and its subsidiaries are subject to a comprehensive regulatory framework by federal and state authorities - Fulton Financial Corporation is regulated by the **Federal Reserve Board**, while Fulton Bank, N.A. is primarily regulated by the **OCC and CFPB**[40](index=40&type=chunk) - The company is subject to federal statutes including GLBA, BHCA, and the Dodd-Frank Act for depositor and banking system protection[42](index=42&type=chunk) - The Economic Growth Act raised the asset threshold for enhanced prudential standards to **$250 billion**, exempting the Corporation from certain stress testing[46](index=46&type=chunk)[47](index=47&type=chunk) - The CFPB has supervisory authority over Fulton Bank due to its assets exceeding **$10 billion**, enforcing consumer protection laws[49](index=49&type=chunk)[52](index=52&type=chunk) - Basel III Rules impose minimum capital ratios, which the Corporation and Fulton Bank exceeded as of December 31, 2023[58](index=58&type=chunk)[62](index=62&type=chunk) - The FDIC's special assessment in November 2023 resulted in a **$6.5 million** ($5.1 million after tax) accrual for Fulton Financial in Q4 2023[76](index=76&type=chunk) - The NDAA of 2021 overhauled AML laws, requiring corporate entities to report beneficial ownership information to FinCEN[80](index=80&type=chunk) - Fulton Bank received an **'outstanding' rating** under the Community Reinvestment Act (CRA) as of December 31, 2023[83](index=83&type=chunk)[84](index=84&type=chunk) - Federal banking agencies are increasing focus on integrating climate-related risk management into governance and strategic planning[107](index=107&type=chunk)[108](index=108&type=chunk) [Item 1A. Risk Factors](index=26&type=section&id=Item%201A.%20Risk%20Factors) The Corporation faces significant risks from economic conditions, interest rates, credit quality, liquidity, operations, and regulatory compliance - Difficult economic conditions, including inflation and higher interest rates, could adversely affect loan portfolio quality and require increased credit loss provisions[113](index=113&type=chunk)[114](index=114&type=chunk) - The Fed Funds Rate increase to **5.25%-5.50%** has impacted net interest income and led to **$275 million** in unrealized losses on AFS securities as of year-end 2023[116](index=116&type=chunk)[117](index=117&type=chunk)[122](index=122&type=chunk) - Approximately **65% of the loan portfolio** consists of commercial, commercial mortgage, and construction loans, which carry higher credit risk[128](index=128&type=chunk) - The company is dependent on customer deposits, with approximately **33% uninsured** as of December 31, 2023, creating vulnerability to deposit outflows[131](index=131&type=chunk)[133](index=133&type=chunk) - Operational risks include human error, fraud, system failures, and evolving cybersecurity threats, with reliance on third-party vendors[138](index=138&type=chunk)[141](index=141&type=chunk)[142](index=142&type=chunk) - Extensive regulation by federal and state agencies could increase compliance costs and limit business activities[157](index=157&type=chunk)[159](index=159&type=chunk) - Climate change effects could disrupt operations, devalue assets, increase credit risk, and lead to higher compliance costs from new regulations[152](index=152&type=chunk)[153](index=153&type=chunk)[154](index=154&type=chunk) [Item 1B. Unresolved Staff Comments](index=32&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) There are no unresolved staff comments from the SEC [Item 1C. Cybersecurity](index=33&type=section&id=Item%201C.%20Cybersecurity) The Corporation's cybersecurity program is integrated into its enterprise risk management, focusing on identifying, analyzing, and protecting against security threats - The cybersecurity program is integrated into enterprise risk management, using the **NIST Cybersecurity Framework**[179](index=179&type=chunk) - A **Chief Information Security Officer (CISO)** leads the program, which includes regular employee training and continuous monitoring[179](index=179&type=chunk)[180](index=180&type=chunk) - The **Integrated Cybersecurity Incident Response Plan (ICIRP)** guides timely response to incidents and coordination with the Board[180](index=180&type=chunk)[183](index=183&type=chunk) - Third-party risk management includes due diligence, service level agreements, and indemnification for data breaches with vendors[179](index=179&type=chunk)[181](index=181&type=chunk) - To date, **no cybersecurity incidents have materially affected** the Corporation's business strategy, financial condition, or results of operations[184](index=184&type=chunk) [Item 2. Properties](index=34&type=section&id=Item%202.%20Properties) As of December 31, 2023, the Corporation operated 208 financial centers, with a mix of owned and leased properties across its service area - As of December 31, 2023, the Corporation had **208 financial centers** (88 owned, 120 leased) and two owned operations centers[185](index=185&type=chunk) [Item 3. Legal Proceedings](index=34&type=section&id=Item%203.%20Legal%20Proceedings) The Corporation is involved in various legal and regulatory matters for which loss reserves are established when probable and estimable - The Corporation is involved in various pending and threatened legal proceedings and regulatory inquiries in the ordinary course of business[593](index=593&type=chunk)[594](index=594&type=chunk) - Loss reserves are established for matters where a loss is **probable and reasonably estimable**; otherwise, no reserve is made[593](index=593&type=chunk) - Management believes current liabilities from legal matters will not materially adversely affect financial condition, but future outcomes are unpredictable[595](index=595&type=chunk) [Item 4. Mine Safety Disclosures](index=34&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the Corporation PART II [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=35&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) This section outlines the Corporation's common stock market, dividend policy, equity compensation plans, and share repurchase activities - The Corporation's ability to pay common stock dividends depends on federal regulatory requirements and dividends received from its subsidiaries, particularly Fulton Bank[190](index=190&type=chunk)[176](index=176&type=chunk) - The Board approved a **$125 million repurchase program for 2024**, allowing repurchases of common stock, preferred stock, and subordinated notes[199](index=199&type=chunk) Common Stock Information (as of December 31, 2023) | Metric | Value | | :--------------------------------- | :------------------- | | Shares Outstanding | 163.8 million | | Holders of Record | ~42,078 | | Closing Price (Feb 16, 2024) | $15.70 | | Authorized Common Stock Shares | 600 million | | Authorized Preferred Stock Shares | 10 million | | Outstanding Preferred Stock Shares | ~200,000 | Equity Compensation Plans (as of December 31, 2023) | Plan Category | Securities to be Issued (1) | Weighted-Average Exercise Price (2) | Securities Remaining Available (3) | | :------------------------------------------ | :-------------------------- | :---------------------------------- | :------------------------------- | | Approved by security holders | 2,702,606 | $12.61 | 5,766,366 | | Not approved by security holders | — | — | — | Issuer Purchases of Equity Securities (Q4 2023) | Period | Total Shares Purchased | Average Price Paid per Share | Total Shares Purchased (Announced Plans) | Approximate Dollar Value Remaining | | :------------------------------------ | :--------------------- | :--------------------------- | :--------------------------------------- | :--------------------------------- | | Oct 1, 2023 to Oct 31, 2023 | — | $— | — | $29,060,105 | | Nov 1, 2023 to Nov 30, 2023 | 441,638 | $13.85 | 441,638 | $22,943,716 | | Dec 1, 2023 to Dec 31, 2023 | — | $— | — | — | | **Total** | **441,638** | **$13.85** | **441,638** | | [Item 6. [Reserved]](index=38&type=section&id=Item%206.%20%5BReserved%5D) This item is reserved and contains no information [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=38&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section analyzes the Corporation's financial condition and results of operations, covering performance metrics, revenue, expenses, and balance sheet changes - The Corporation generates most of its revenue from net interest income, supplemented by fees and asset sales, offset by credit loss provisions, non-interest expenses, and taxes[204](index=204&type=chunk) - The FOMC increased the Fed Funds Rate eleven times since March 2022, reaching **5.25% - 5.50%** by February 29, 2024, and the Corporation transitioned all products away from LIBOR to SOFR-based benchmarks by June 30, 2023[206](index=206&type=chunk)[207](index=207&type=chunk) Summary of Earnings and Selected Performance Ratios | Metric | 2023 | 2022 | 2021 | | :------------------------------------------------ | :---------- | :---------- | :---------- | | Net income (in thousands) | $284,280 | $286,981 | $275,497 | | Net income available to common shareholders (in thousands) | $274,032 | $276,733 | $265,220 | | Net income available to common shareholders per share (diluted) | $1.64 | $1.67 | $1.62 | | Return on average assets | 1.04 % | 1.10 % | 1.05 % | | Return on average common shareholders' equity | 11.24 % | 11.69 % | 10.64 % | | Net interest margin | 3.42 % | 3.27 % | 2.78 % | | Efficiency ratio | 60.5 % | 60.5 % | 63.1 % | | Non-performing assets to total assets | 0.56 % | 0.66 % | 0.60 % | | Net charge-offs (recoveries) to average loans | 0.14 % | 0.04 % | 0.07 % | [Financial Highlights](index=39&type=section&id=Financial%20Highlights) The Corporation's 2023 financial performance was shaped by interest rate dynamics, loan growth, and specific expense items - Net income available to common shareholders decreased by **$2.7 million** to **$274.0 million** in 2023 compared to 2022[209](index=209&type=chunk) - Net interest income increased by **$72.7 million (9.3%)** to **$854.3 million** in 2023, driven by higher interest rates and average loan balances[209](index=209&type=chunk) - Net Interest Margin (NIM) increased by **15 bps to 3.42%** in 2023, due to higher yields on assets, partially offset by increased liability costs[209](index=209&type=chunk) - Average net loans increased by **$1.8 billion (9.3%)** in 2023, primarily from residential mortgage, commercial and industrial, and commercial mortgage loans[209](index=209&type=chunk) - Average deposits decreased by **$297.7 million (1.4%)** in 2023, mainly due to a **$1.6 billion** decrease in noninterest-bearing demand deposits[209](index=209&type=chunk) - Non-performing assets decreased by **$23.5 million (13.2%)** to **0.56%** of total assets in 2023, while net charge-offs increased to **0.14%**[209](index=209&type=chunk) - The provision for credit losses was **$54.0 million** in 2023, up from **$28.0 million** in 2022[209](index=209&type=chunk) - Non-interest income (excluding investment securities losses) increased by **$1.3 million (0.6%)** in 2023[209](index=209&type=chunk) - Non-interest expense increased by **$45.5 million (7.2%)** in 2023, driven by higher salaries, FDIC insurance, and data processing costs[209](index=209&type=chunk)[210](index=210&type=chunk) - The Effective Tax Rate (ETR) was **18.5%** in 2023, up from **17.3%** in 2022, remaining below the federal statutory rate[210](index=210&type=chunk) [Supplemental Reporting of Non-GAAP Based Financial Measures](index=40&type=section&id=Supplemental%20Reporting%20of%20Non-GAAP%20Based%20Financial%20Measures) Non-GAAP measures are presented to provide comparative information for assessing operational trends - The Corporation presents non-GAAP financial measures to provide useful and comparative information for assessing operational trends, consistent with internal evaluation and industry practices[211](index=211&type=chunk) Operating Net Income Available to Common Shareholders (Non-GAAP Reconciliation) | Metric (in thousands) | 2023 | 2022 | 2021 | | :------------------------------------------------ | :---------- | :---------- | :---------- | | Net income available to common shareholders | $274,032 | $276,733 | $265,220 | | Plus: Core deposit intangible amortization | $2,308 | $1,029 | — | | Plus: Merger-related expenses | — | $10,328 | — | | Plus: CECL Day 1 Provision expense | — | $7,954 | — | | Plus: Interest rate derivative transition valuation | $1,855 | — | — | | Plus: FDIC special assessment | $6,494 | — | — | | Plus: FultonFirst initiative expenses | $3,197 | — | — | | Less: Tax impact of adjustments | $(2,909) | $(4,055) | — | | **Operating net income available to common shareholders** | **$284,977**| **$291,989**| **$265,220**| | Operating net income available to common shareholders, per share (diluted) | $1.71 | $1.76 | $1.62 | Operating Return on Average Assets (Non-GAAP Reconciliation) | Metric (in thousands) | 2023 | 2022 | 2021 | | :------------------------------------------------ | :---------- | :---------- | :---------- | | Net income | $284,280 | $286,981 | $275,497 | | Plus: Core deposit intangible amortization | $2,308 | $1,029 | — | | Plus: Merger-related expenses | — | $10,328 | — | | Plus: CECL Day 1 Provision expense | — | $7,954 | — | | Plus: Interest rate derivative transition valuation | $1,855 | — | — | | Plus: FDIC special assessment | $6,494 | — | — | | Plus: FultonFirst initiative expenses | $3,197 | — | — | | Less: Tax impact of adjustments | $(2,909) | $(4,055) | — | | **Operating net income** | **$295,225**| **$302,237**| **$275,497**| | Total average operating assets | $27,223,708 | $25,967,569 | $26,170,333 | | **Operating return on average assets** | **1.08 %** | **1.16 %** | **1.05 %** | Return on Average Common Shareholders' Equity (Tangible) (Non-GAAP Reconciliation) | Metric (in thousands) | 2023 | 2022 | 2021 | | :------------------------------------------------ | :---------- | :---------- | :---------- | | Net income available to common shareholders | $274,032 | $276,733 | $265,220 | | Plus: Intangible amortization | $2,944 | $1,731 | $589 | | Plus: Merger-related expenses | — | $10,328 | — | | Plus: CECL Day 1 Provision expense | — | $7,954 | — | | Plus: Interest rate derivative transition valuation | $1,855 | — | — | | Plus: FDIC special assessment | $6,494 | — | — | | Plus: FultonFirst initiative expenses | $3,197 | — | — | | Less: Tax impact of adjustments | $(3,043) | $(4,203) | $(127) | | **Adjusted net income available to common shareholders** | **$285,479**| **$292,543**| **$265,682**| | Average tangible common shareholders' equity | $1,876,513 | $1,819,343 | $1,956,447 | | **Return on average common shareholders' equity (tangible)** | **15.21 %** | **16.08 %** | **13.58 %** | Efficiency Ratio (Non-GAAP Reconciliation) | Metric (in thousands) | 2023 | 2022 | 2021 | | :------------------------------------------------ | :---------- | :---------- | :---------- | | Non-interest expense | $679,207 | $633,728 | $617,830 | | Less: Amortization of tax credit investments | — | $(2,783) | $(6,187) | | Less: Intangible amortization | $(2,944) | $(1,731) | $(589) | | Less: Merger-related expenses | — | $(10,328) | — | | Less: Debt extinguishment gain (cost) | $720 | — | $(33,249) | | Less: FDIC special assessment | $(6,494) | — | — | | Less: FultonFirst initiative expenses | $(3,197) | — | — | | **Non-interest expense (numerator)** | **$667,292**| **$618,886**| **$577,805**| | Total revenue (denominator) | $1,102,363 | $1,023,786 | $916,255 | | **Efficiency ratio** | **60.5 %** | **60.5 %** | **63.1 %** | [Critical Accounting Policies](index=42&type=section&id=Critical%20Accounting%20Policies) Key accounting policies involve significant management judgment, particularly for the Allowance for Credit Losses and income taxes - The **Allowance for Credit Losses (ACL)** is a critical policy, based on estimated losses over the life of loans using historical data and economic forecasts[217](index=217&type=chunk)[220](index=220&type=chunk) - The ACL for loans increased by **$24.0 million to $293.4 million** as of December 31, 2023, due to loan growth and macroeconomic outlook changes[223](index=223&type=chunk) - Income tax expense is based on income before taxes, adjusted for tax-exempt income, non-deductible expenses, and credits[225](index=225&type=chunk) - The Corporation adopted several new accounting standards in 2023, none of which had a material impact on its consolidated financial statements[411](index=411&type=chunk)[412](index=412&type=chunk)[413](index=413&type=chunk)[414](index=414&type=chunk)[415](index=415&type=chunk) [Results of Operations](index=44&type=section&id=RESULTS%20OF%20OPERATIONS) This section details the components of the Corporation's operational results, including net interest income, non-interest income, and expenses [Net Interest Income](index=44&type=section&id=Net%20Interest%20Income) Net interest income, the primary driver of earnings, is managed through interest rate sensitivity and liquidity positions - Net interest income is the most significant component of the Corporation's net income, with risk managed through interest rate sensitivity and liquidity positions[230](index=230&type=chunk) Net Interest Income Analysis (2023 vs. 2022) (in thousands) | Metric | 2023 | 2022 | Change (Volume) | Change (Yield/Rate) | Net Change | | :------------------------------------ | :---------- | :---------- | :-------------- | :------------------ | :---------- | | FTE Total Interest Income | $1,291,047 | $879,833 | $66,547 | $344,667 | $411,214 | | FTE Total Interest Expense | $418,950 | $83,204 | $82,855 | $252,891 | $335,746 | | **FTE Net Interest Income** | **$872,097**| **$796,629**| | | **$76,000** | | Yield on average interest-earning assets | 5.06 % | 3.61 % | | +145 bps | | | Rate on average interest-bearing liabilities | 2.32 % | 0.54 % | | +178 bps | | Average Loans and FTE Yields by Type (2023 vs. 2022) (dollars in thousands) | Loan Type | 2023 Balance | 2023 Yield | 2022 Balance | 2022 Yield | Increase (Decrease) $ | Increase (Decrease) % | | :------------------------------ | :----------- | :--------- | :----------- | :--------- | :-------------------- | :-------------------- | | Real estate - commercial mortgage | $7,876,076 | 5.97 % | $7,523,806 | 4.00 % | $352,270 | 4.7 % | | Commercial and industrial | $4,596,742 | 6.27 | $4,230,133 | 4.13 | $366,609 | 8.7 | | Real estate - residential mortgage | $5,079,739 | 3.76 | $4,261,527 | 3.38 | $818,212 | 19.2 | | Real estate - home equity | $1,060,396 | 6.95 | $1,101,142 | 4.60 | $(40,746) | (3.7) | | Real estate - construction | $1,247,336 | 6.81 | $1,178,550 | 4.14 | $68,786 | 5.8 | | Consumer | $748,089 | 5.94 | $569,305 | 5.11 | $178,784 | 31.4 | | Leases and other loans | $320,924 | 4.37 | $288,277 | 6.04 | $32,647 | 11.3 | | **Total loans** | **$20,929,302**| **5.57 %** | **$19,152,740**| **4.00 %** | **$1,776,562** | **9.3 %** | Average Deposits and Interest Rates by Type (2023 vs. 2022) (dollars in thousands) | Deposit Type | 2023 Balance | 2023 Rate | 2022 Balance | 2022 Rate | Increase (Decrease) $ | Increase (Decrease) % | | :-------------------------------- | :----------- | :-------- | :----------- | :-------- | :-------------------- | :-------------------- | | Noninterest-bearing demand | $5,939,799 | — % | $7,522,304 | — % | $(1,582,505) | (21.0)% | | Interest-bearing demand | $5,582,930 | 1.12 | $5,593,942 | 0.15 | $(11,012) | (0.2) | | Savings and money market deposits | $6,616,087 | 1.85 | $6,458,165 | 0.26 | $157,922 | 2.4 | | Brokered deposits | $847,795 | 5.15 | $262,359 | 1.56 | $585,436 | N/M | | Time deposits | $2,170,245 | 2.94 | $1,617,804 | 0.92 | $552,441 | 34.1 | | **Total deposits** | **$21,156,856**| **1.38 %**| **$21,454,574**| **0.20 %**| **$(297,718)** | **(1.4)%** | Average Borrowings and Interest Rates by Type (2023 vs. 2022) (dollars in thousands) | Borrowing Type | 2023 Balance | 2023 Rate | 2022 Balance | 2022 Rate | Increase (Decrease) $ | Increase (Decrease) % | | :-------------------------------------- | :----------- | :-------- | :----------- | :-------- | :-------------------- | :-------------------- | | Federal funds purchased | $566,379 | 5.30 % | $91,125 | 3.21 % | $475,254 | N/M | | Federal Home Loan Bank advances | $922,164 | 5.05 | $194,295 | 3.77 | $727,869 | N/M | | Senior debt and subordinated debt | $539,726 | 3.96 | $564,337 | 3.94 | $(24,611) | (4.4) | | Other borrowings and other interest-bearing liabilities | $743,061 | 3.77 | $508,600 | 1.34 | $234,461 | 46.1 | | **Total borrowings and other interest-bearing liabilities** | **$2,771,330**| **4.54 %**| **$1,358,357**| **2.89 %**| **$1,412,973** | **104.0 %** | [Non-Interest Income](index=47&type=section&id=Non-Interest%20Income) Non-interest income remained stable, with growth in commercial banking and wealth management offsetting declines in other areas - The increase in commercial banking revenue was largely driven by commercial customer interest rate swap fee income[242](index=242&type=chunk) - Wealth management income increased due to higher assets under management[242](index=242&type=chunk) - Mortgage banking income decreased due to lower sales volumes and lower gains on sales margins[242](index=242&type=chunk) - Consumer banking income decreased primarily due to a decline in overdraft fees[242](index=242&type=chunk) Non-Interest Income Components (2023 vs. 2022) (in thousands) | Category | 2023 | 2022 | Increase (Decrease) $ | Increase (Decrease) % | | :---------------------------------------- | :---------- | :---------- | :-------------------- | :-------------------- | | Commercial banking | $81,160 | $75,779 | $5,381 | 7.1 % | | Wealth management | $75,541 | $72,843 | $2,698 | 3.7 | | Consumer banking | $47,197 | $49,496 | $(2,299) | (4.6) | | Mortgage banking | $10,388 | $14,204 | $(3,816) | (26.9) | | Other | $14,125 | $14,835 | $(710) | (4.8) | | Non-interest income before investment securities gains (losses) | $228,411 | $227,157 | $1,254 | 0.6 | | Investment securities gains (losses), net | $(733) | $(27) | $(706) | N/M | | **Total Non-Interest Income** | **$227,678**| **$227,130**| **$548** | **0.2 %** | [Non-Interest Expense](index=48&type=section&id=Non-Interest%20Expense) Non-interest expenses rose due to higher compensation, FDIC insurance costs including a special assessment, and other service fees - Excluding merger-related expenses, non-interest expense increased by **$55.8 million (9.0%)** in 2023[244](index=244&type=chunk) - The increase in salaries and employee benefits was due to annual merit increases, higher employee count, increased healthcare claims, and higher pension expense[244](index=244&type=chunk) - FDIC insurance expense more than doubled due to increased base assessment rates and a **$6.5 million special assessment** related to 2023 bank closures[244](index=244&type=chunk) Non-Interest Expense Components (2023 vs. 2022) (in thousands) | Category | 2023 | 2022 | Increase (Decrease) $ | Increase (Decrease) % | | :-------------------------------- | :---------- | :---------- | :-------------------- | :-------------------- | | Salaries and employee benefits | $377,417 | $356,884 | $20,533 | 5.8 % | | Data processing and software | $66,471 | $60,255 | $6,216 | 10.3 | | Net occupancy | $58,019 | $56,195 | $1,824 | 3.2 | | Other outside services | $47,724 | $37,152 | $10,572 | 28.5 | | FDIC insurance | $25,565 | $12,547 | $13,018 | 103.8 | | Equipment | $14,390 | $14,033 | $357 | 2.5 | | Marketing | $9,004 | $6,885 | $2,119 | 30.8 | | Professional fees | $8,392 | $9,123 | $(731) | (8.0) | | Intangible amortization | $2,944 | $1,731 | $1,213 | 70.1 | | Merger-related expenses | — | $10,328 | $(10,328) | N/M | | Other | $69,281 | $68,595 | $686 | 1.0 | | **Total Non-Interest Expense** | **$679,207**| **$633,728**| **$45,479** | **7.2 %** | [Income Taxes](index=48&type=section&id=Income%20Taxes) Income tax expense increased in 2023, driven by a higher effective tax rate compared to the prior year - Income tax expense increased by **$4.4 million to $64.4 million** in 2023 compared to 2022[245](index=245&type=chunk) - The Effective Tax Rate (ETR) was **18.5%** in 2023, up from **17.3%** in 2022, primarily due to the higher ETR[245](index=245&type=chunk) - The ETR remains lower than the **21% federal statutory rate** due to tax-exempt interest income and tax credit investments[245](index=245&type=chunk) [Comparison of 2022 to 2021](index=49&type=section&id=Comparison%20of%202022%20to%202021) This section provides a comparative analysis of financial performance between fiscal years 2022 and 2021 - Income tax expense increased by **$1.3 million to $60.0 million** in 2022, with an ETR of **17.3%** (vs. 17.6% in 2021)[259](index=259&type=chunk) Net Interest Income Analysis (2022 vs. 2021) (in thousands) | Metric | 2022 | 2021 | Change (Volume) | Change (Yield/Rate) | Net Change | | :------------------------------------ | :---------- | :---------- | :-------------- | :------------------ | :---------- | | FTE Total Interest Income | $879,833 | $735,708 | $30,935 | $113,190 | $144,125 | | FTE Total Interest Expense | $83,204 | $59,682 | $(1,886) | $25,408 | $23,522 | | **FTE Net Interest Income** | **$796,629**| **$676,026**| | | **$120,603**| | Yield on average interest-earning assets | 3.61 % | 3.02 % | | +59 bps | | | Rate on average interest-bearing liabilities | 0.54 % | 0.38 % | | +16 bps | | Average Loans and FTE Yields by Type (2022 vs. 2021) (dollars in thousands) | Loan Type | 2022 Balance | 2022 Yield | 2021 Balance | 2021 Yield | Increase (Decrease) $ | Increase (Decrease) % | | :------------------------------ | :----------- | :--------- | :----------- | :--------- | :-------------------- | :-------------------- | | Real estate - commercial mortgage | $7,523,806 | 4.00 % | $7,149,712 | 3.14 % | $374,094 | 5.2 % | | Commercial and industrial | $4,230,133 | 4.13 | $5,052,856 | 2.73 | $(822,723) | (16.3) | | Real estate - residential mortgage | $4,261,527 | 3.38 | $3,501,072 | 3.40 | $760,455 | 21.7 | | Real estate - home equity | $1,101,142 | 4.60 | $1,141,042 | 3.85 | $(39,900) | (3.5) | | Real estate - construction | $1,178,550 | 4.14 | $1,078,350 | 3.08 | $100,200 | 9.3 | | Consumer | $569,305 | 5.11 | $456,427 | 3.99 | $112,878 | 24.7 | | Equipment finance leasing | $249,595 | 3.99 | $252,104 | 3.89 | $(2,509) | (1.0) | | Other | $38,682 | — | $(3,776) | — | $42,458 | N/M | | **Total loans** | **$19,152,740**| **4.00 %** | **$18,627,787**| **3.46 %** | **$524,953** | **2.8 %** | Average Deposits and Interest Rates by Type (2022 vs. 2021) (dollars in thousands) | Deposit Type | 2022 Balance | 2022 Rate | 2021 Balance | 2021 Rate | Increase (Decrease) $ | Increase (Decrease) % | | :-------------------------------- | :----------- | :-------- | :----------- | :-------- | :-------------------- | :-------------------- | | Noninterest-bearing demand | $7,522,304 | — % | $7,211,153 | — % | $311,151 | 4.3 % | | Interest-bearing demand | $5,593,942 | 0.15 | $5,979,479 | 0.06 | $(385,537) | (6.4) | | Savings and money market deposits | $6,458,165 | 0.26 | $6,306,967 | 0.08 | $151,198 | 2.4 | | Brokered deposits | $262,359 | 1.56 | $286,901 | 0.38 | $(24,542) | (8.6) | | Time deposits | $1,617,804 | 0.92 | $1,939,446 | 1.05 | $(321,642) | (16.6) | | **Total deposits** | **$21,454,574**| **0.20 %**| **$21,723,946**| **0.14 %**| **$(269,372)** | **(1.2)%** | Average Borrowings and Interest Rates by Type (2022 vs. 2021) (dollars in thousands) | Borrowing Type | 2022 Balance | 2022 Rate | 2021 Balance | 2021 Rate | Increase (Decrease) $ | Increase (Decrease) % | | :-------------------------------------- | :----------- | :-------- | :----------- | :-------- | :-------------------- | :-------------------- | | Federal funds purchased | $91,125 | 3.21 % | — | — % | $91,125 | N/M | | Federal Home Loan Bank advances | $194,295 | 3.77 | $126,677 | 1.80 | $67,618 | 53.4 | | Senior debt and subordinated debt | $564,337 | 3.94 | $657,386 | 4.07 | $(93,049) | (14.2) | | Other borrowings and other interest-bearing liabilities | $508,600 | 1.34 | $513,900 | 0.12 | $(5,300) | (1.0) | | **Total borrowings and other interest-bearing liabilities** | **$1,358,357**| **2.89 %**| **$1,297,963**| **2.29 %**| **$60,394** | **4.7 %** | Non-Interest Income Components (2022 vs. 2021) (in thousands) | Category | 2022 | 2021 | Increase (Decrease) $ | Increase (Decrease) % | | :---------------------------------------- | :---------- | :---------- | :-------------------- | :-------------------- | | Commercial banking | $75,779 | $68,689 | $7,090 | 10.3 % | | Wealth management | $72,843 | $71,798 | $1,045 | 1.5 | | Consumer banking | $49,496 | $45,544 | $3,952 | 8.7 | | Mortgage banking | $14,204 | $33,576 | $(19,372) | (57.7) | | Other | $14,835 | $20,622 | $(5,787) | (28.1) | | Non-interest income before investment securities gains (losses) | $227,157 | $240,229 | $(13,072) | (5.4) | | Investment securities gains (losses), net | $(27) | $33,516 | $(33,543) | (100.1) | | **Total Non-Interest Income** | **$227,130**| **$273,745**| **$(46,615)** | **(17.0)%** | Non-Interest Expense Components (2022 vs. 2021) (in thousands) | Category | 2022 | 2021 | Increase (Decrease) $ | Increase (Decrease) % | | :-------------------------------- | :---------- | :---------- | :-------------------- | :-------------------- | | Salaries and employee benefits | $356,884 | $329,138 | $27,746 | 8.4 % | | Data processing and software | $60,255 | $56,440 | $3,815 | 6.8 | | Net occupancy | $56,195 | $53,799 | $2,396 | 4.5 | | Other outside services | $37,152 | $34,194 | $2,958 | 8.7 | | Equipment | $14,033 | $13,807 | $226 | 1.6 | | FDIC insurance | $12,547 | $10,665 | $1,882 | 17.6 | | Professional fees | $9,123 | $9,647 | $(524) | (5.4) | | Marketing | $6,885 | $5,275 | $1,610 | 30.5 | | Intangible amortization | $1,731 | $589 | $1,142 | N/M | | Debt extinguishment | — | $33,249 | $(33,249) | N/M | | Merger-related expenses | $10,328 | — | $10,328 | N/M | | Other | $68,595 | $71,027 | $(2,432) | (3.4) | | **Total non-interest expense** | **$633,728**| **$617,830**| **$15,898** | **2.6 %** | [Financial Condition](index=53&type=section&id=FINANCIAL%20CONDITION) This section provides a detailed analysis of the Corporation's balance sheet components and financial health [Condensed Consolidated Ending Balance Sheets](index=53&type=section&id=Condensed%20Consolidated%20Ending%20Balance%20Sheets) The Corporation's balance sheet reflects growth in total assets, driven by an increase in net loans and deposits Condensed Consolidated Ending Balance Sheets (2023 vs. 2022) (in thousands) | Category | Dec 31, 2023 | Dec 31, 2022 | Increase (Decrease) $ | Increase (Decrease) % | | :-------------------------------- | :----------- | :----------- | :-------------------- | :-------------------- | | **Assets** | | | | | | Cash and cash equivalents | $549,710 | $681,921 | $(132,211) | (19.4)% | | Investment securities | $3,666,274 | $3,968,023 | $(301,749) | (7.6) | | Net loans, less ACL - loans | $21,057,690 | $20,010,181 | $1,047,509 | 5.2 | | Goodwill and intangibles | $560,687 | $560,824 | $(137) | — | | **Total Assets** | **$27,571,915**| **$26,931,702**| **$640,213** | **2.4 %** | | **Liabilities** | | | | | | Deposits | $21,537,623 | $20,649,538 | $888,085 | 4.3 | | Borrowings | $2,487,526 | $2,871,207 | $(383,681) | (13.4) | | **Total Liabilities** | **$24,811,776**| **$24,351,945**| **$459,831** | **1.9 %** | | **Total Shareholders' Equity** | **$2,760,139**| **$2,579,757**| **$180,382** | **7.0 %** | [Investment Securities](index=53&type=section&id=Investment%20Securities) The investment securities portfolio decreased, primarily due to reductions in U.S. Government and municipal securities - The decrease in AFS securities was primarily due to reductions in U.S. Government securities and state and municipal securities[263](index=263&type=chunk) - The decrease in HTM securities was mainly driven by payments on residential mortgage-backed securities[264](index=264&type=chunk) Investment Securities Carrying Amount (2023 vs. 2022) (in thousands) | Security Type | Dec 31, 2023 | Dec 31, 2022 | Increase (Decrease) $ | Increase (Decrease) % | | :-------------------------------------- | :----------- | :----------- | :-------------------- | :-------------------- | | **Available for Sale (AFS)** | | | | | | U.S. Government securities | $42,161 | $218,485 | $(176,324) | (80.7)% | | State and municipal securities | $1,072,013 | $1,105,712 | $(33,699) | (3.0) | | Collateralized mortgage obligations | $111,434 | $134,033 | $(22,599) | (16.9) | | Residential mortgage-backed securities | $196,795 | $212,698 | $(15,903) | (7.5) | | Commercial mortgage-backed securities | $534,388 | $552,522 | $(18,134) | (3.3) | | **Total AFS securities** | **$2,398,352**| **$2,646,767**| **$(248,415)** | **(9.4)%** | | **Held to Maturity (HTM)** | | | | | | Residential mortgage-backed securities | $407,075 | $457,325 | $(50,250) | (11.0)% | | Commercial mortgage-backed securities | $860,847 | $863,931 | $(3,084) | (0.4) | | **Total HTM securities** | **$1,267,922**| **$1,321,256**| **$(53,334)** | **(4.0)%** | | **Total investment securities** | **$3,666,274**| **$3,968,023**| **$(301,749)** | **(7.6)%** | [Loans](index=54&type=section&id=Loans) The loan portfolio grew, driven by residential and commercial mortgage lending, while non-performing assets showed improvement - Net loans increased by **$1.1 billion (5.3%)** in 2023, primarily driven by residential mortgage, commercial mortgage, and commercial and industrial loans[266](index=266&type=chunk) - Commercial mortgage and construction loans constituted **43.9%** of the loan portfolio as of December 31, 2023[267](index=267&type=chunk) - Non-accrual loans decreased by **$22.8 million (15.8%)** in 2023, with non-accrual loans as a percentage of net loans decreasing to **0.57%** from 0.71%[270](index=270&type=chunk) - Total criticized and classified loans increased by **$172.9 million (23.0%)** in 2023, primarily due to borrower performance in commercial loans[275](index=275&type=chunk) Ending Loans Outstanding by Type (2023 vs. 2022) (in thousands) | Loan Type | Dec 31, 2023 | Dec 31, 2022 | Increase (Decrease) $ | Increase (Decrease) % | | :------------------------------ | :----------- | :----------- | :-------------------- | :-------------------- | | Real estate - commercial mortgage | $8,127,728 | $7,693,835 | $433,893 | 5.6 % | | Commercial and industrial | $4,545,552 | $4,473,004 | $72,548 | 1.6 | | Real estate - residential mortgage | $5,325,923 | $4,737,279 | $588,644 | 12.4 | | Real estate - home equity | $1,047,184 | $1,102,838 | $(55,654) | (5.0) | | Real estate - construction | $1,239,075 | $1,269,925 | $(30,850) | (2.4) | | Consumer | $729,318 | $699,179 | $30,139 | 4.3 | | Leases and other loans | $336,314 | $303,487 | $32,827 | 10.8 | | **Net loans** | **$21,351,094**| **$20,279,547**| **$1,071,547** | **5.3 %** | Industry Concentrations in Commercial Mortgage and C&I Loan Portfolios (2023 vs. 2022) | Industry | Dec 31, 2023 | Dec 31, 2022 | | :---------------------------------------- | :----------- | :----------- | | Real estate | 46.6 % | 43.9 % | | Health care | 6.6 | 6.5 | | Manufacturing | 6.1 | 6.8 | | Agriculture | 5.6 | 5.4 | | Other services | 4.5 | 4.7 | | Construction | 4.1 | 4.7 | | Hospitality and food services | 3.6 | 3.6 | | Retail | 3.3 | 3.1 | | Wholesale trade | 3.2 | 3.1 | | Educational services | 2.9 | 2.8 | | Professional, scientific and technical services | 2.2 | 1.8 | | Arts, entertainment and recreation | 1.9 | 2.0 | | Transportation and warehousing | 1.7 | 1.3 | | Finance and Insurance | 1.3 | 0.9 | | Administrative and Support | 1.1 | 1.1 | | Public administration | 1.0 | 1.2 | | Other | 4.3 | 7.1 | | **Total** | **100.0 %** | **100.0 %** | Non-Performing Assets (2023 vs. 2022) (in thousands) | Category | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | | :---------------------------------------- | :----------- | :----------- | :----------- | | Non-accrual loans | $121,620 | $144,443 | $143,666 | | Loans 90 days or more past due and still accruing | $31,721 | $27,463 | $27,463 | | **Total non-performing loans and leases** | **$153,341**| **$171,906**| **$152,119**| | OREO | $896 | $5,790 | $1,817 | | **Total non-performing assets** | **$154,237**| **$177,696**| **$153,936**| | Non-performing assets to total assets | 0.56 % | 0.66 % | 0.60 % | | ACL to non-performing loans | 191 % | 157 % | 164 % | [Loans and Allowance for Credit Losses](index=62&type=section&id=Loans%20and%20Allowance%20for%20Credit%20Losses) The Allowance for Credit Losses increased in 2023 due to loan growth, macroeconomic factors, and higher net charge-offs - The increase in the provision for credit losses for net loans in 2023 was driven by loan growth, changes to the macroeconomic outlook, higher net loan charge-offs, and migration of internally risk-rated loans[280](index=280&type=chunk) - Management believes the **$293.4 million ACL for loans** as of December 31, 2023, is sufficient to cover expected credit losses[281](index=281&type=chunk) Allowance for Credit Losses (ACL) and Reserve for OBS Credit Exposures (2023 vs. 2022) (in thousands) | Category | Dec 31, 2023 | Dec 31, 2022 | | :-------------------------------------- | :----------- | :----------- | | ACL - loans | $293,404 | $269,366 | | Reserve for OBS credit exposures | $17,254 | $16,328 | Activity in ACL - Loans Balances (2023 vs. 2022 vs. 2021) (in thousands) | Activity | 2023 | 2022 | 2021 | | :---------------------------------------- | :---------- | :---------- | :---------- | | Balance at beginning of period | $269,366 | $249,001 | $277,567 | | CECL Day 1 Provision expense | — | $7,954 | — | | Initial purchased credit deteriorated loans | — | $1,135 | — | | Loans charged off | $(39,201) | $(21,472) | $(30,952) | | Recoveries of loans previously charged off | $10,129 | $14,092 | $17,146 | | Net loans (charged off) recovered | $(29,072) | $(7,380) | $(13,806) | | Provision for credit losses | $53,110 | $18,656 | $(14,760) | | **Balance at end of period** | **$293,404**| **$269,366**| **$249,001**| | Net charge-offs to average loans | 0.14 % | 0.04 % | 0.07 % | | ACL - loans to total net loans | 1.37 | 1.33 | 1.36 | | ACL - loans to non-performing loans | 191 | 157 | 164 | | ACL - loans to non-accrual loans | 241 | 186 | 173 | [Deposits and Borrowings](index=63&type=section&id=Deposits%20and%20Borrowings) Total deposits grew, driven by time and brokered deposits, while borrowings decreased due to reductions in FHLB advances and other borrowings - Total deposits increased by **$888.1 million (4.3%)** in 2023, driven by increases in time and brokered deposits, partially offset by a significant decrease in noninterest-bearing demand deposits[282](index=282&type=chunk) - Total uninsured deposits were estimated at **$7.2 billion** as of December 31, 2023, down from $7.8 billion in 2022[283](index=283&type=chunk) - Total borrowings decreased by **$383.7 million (13.4%)** in 2023, mainly due to reductions in other borrowings and FHLB advances[285](index=285&type=chunk) Ending Deposits by Type (2023 vs. 2022) (in thousands) | Deposit Type | Dec 31, 2023 | Dec 31, 2022 | Increase (Decrease) $ | Increase (Decrease) % | | :-------------------------------- | :----------- | :----------- | :-------------------- | :-------------------- | | Noninterest-bearing demand | $5,314,094 | $7,006,388 | $(1,692,294) | (24.2)% | | Interest-bearing demand | $5,722,695 | $5,410,903 | $311,792 | 5.8 | | Savings and money market deposits | $6,616,901 | $6,434,621 | $182,280 | 2.8 | | Brokered deposits | $1,144,692 | $208,416 | $936,276 | N/M | | Time deposits | $2,739,241 | $1,589,210 | $1,150,031 | 72.4 | | **Total deposits** | **$21,537,623**| **$20,649,538**| **$888,085** | **4.3 %** | Ending Borrowings by Type (2023 vs. 2022) (in thousands) | Borrowing Type | Dec 31, 2023 | Dec 31, 2022 | Increase (Decrease) $ | Increase (Decrease) % | | :-------------------------------------- | :----------- | :----------- | :-------------------- | :-------------------- | | Federal funds purchased | $240,000 | $191,000 | $49,000 | 25.7 | | Federal Home Loan Bank advances | $1,100,000 | $1,250,000 | $(150,000) | (12.0) | | Senior debt and subordinated debt | $535,384 | $539,634 | $(4,250) | (0.8) | | Other borrowings | $612,142 | $890,573 | $(278,431) | (31.3) | | **Total borrowings** | **$2,487,526**| **$2,871,207**| **$(383,681)** | **(13.4)%** | [Other Liabilities](index=64&type=section&id=Other%20Liabilities) Other liabilities decreased primarily due to a reduction in derivative-related liabilities - Other liabilities decreased by **$69.5 million (8.5%)** in 2023, primarily due to a decrease in derivative-related liabilities[286](index=286&type=chunk) [Shareholders' Equity](index=64&type=section&id=Shareholders'%20Equity) Shareholders' equity increased due to retained earnings growth and a reduction in accumulated other comprehensive loss - Total shareholders' equity increased by **$180.4 million (7.0%)** to **$2.8 billion** (10.0% of total assets) as of December 31, 2023[287](index=287&type=chunk) - The increase was primarily due to a **$168.5 million** increase in retained earnings and a **$73.2 million** reduction in accumulated other comprehensive loss[287](index=287&type=chunk) [Regulatory Capital](index=64&type=section&id=Regulatory%20Capital) The Corporation and Fulton Bank maintained capital levels well above all regulatory requirements - The Corporation and Fulton Bank are subject to Basel III Rules, requiring minimum capital ratios and a capital conservation buffer[288](index=288&type=chunk)[292](index=292&type=chunk) - As of December 31, 2023, both the Corporation and Fulton Bank met all minimum capital requirements and were categorized as **'well-capitalized'**[289](index=289&type=chunk)[290](index=290&type=chunk)[291](index=291&type=chunk) Corporation's Capital Ratios vs. Regulatory Requirements (Dec 31, 2023) | Capital Ratio | Actual (2023) | Regulatory Minimum | Fully Phased-in, with Capital Conservation Buffers | | :------------------------------------------ | :------------ | :----------------- | :------------------------------------------------- | | Total Risk-Based Capital (to RWA) | 14.0% | 8.0% | 10.5% | | Tier I Risk-Based Capital (to RWA) | 11.2% | 6.0% | 8.5% | | Common Equity Tier I (to RWA) | 10.3% | 4.5% | 7.0% | | Tier I Leverage Capital (to Average Assets) | 9.5% | 4.0% | 4.0% | [Item 7A. Quantitative and Qualitative Disclosures About Market Risk](index=63&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The Corporation manages market risks, primarily interest rate risk, through simulation modeling, hedging, and liquidity management - Market risk exposure for the Corporation primarily stems from interest rate changes, impacting liquidity, net interest income, and economic value of equity[299](index=299&type=chunk) - The **Asset/Liability Management Committee (ALCO)** is responsible for reviewing and managing interest rate sensitivity and liquidity positions[300](index=300&type=chunk) - The Corporation uses net interest income simulation and economic value of equity estimates to measure and manage interest rate risk[301](index=301&type=chunk)[302](index=302&type=chunk)[305](index=305&type=chunk) - The Corporation uses interest rate derivatives as cash flow hedges to reduce volatility in net interest income and expense[307](index=307&type=chunk)[308](index=308&type=chunk) - In January 2023, the Corporation terminated **$1.0 billion** in cash flow hedges, with **$22.1 million** of unrealized losses reclassified as a reduction to interest income in 2023[309](index=309&type=chunk) - Liquidity is maintained through core deposits and secondary sources like FHLB advances (**$4.9 billion available capacity**) and federal funds lines (**$2.4 billion available capacity**)[310](index=310&type=chunk)[312](index=312&type=chunk)[313](index=313&type=chunk) - Operating activities generated **$363.0 million** in cash in 2023, while investing activities used **$809.2 million**, and financing activities provided **$314.0 million**[318](index=318&type=chunk) - The investment portfolio primarily consists of state and municipal securities, commercial mortgage-backed securities, and residential mortgage-backed securities[320](index=320&type=chunk) Expected Impact of Abrupt Interest Rate Changes on Net Interest Income (Dec 31, 2023) | Rate Shock | Annual change in net interest income | % Change in net interest income | | :--------- | :----------------------------------- | :------------------------------ | | +400 bp | +$38.1 million | +4.2% | | +300 bp | +$29.7 million | +3.3% | | +200 bp | +$22.5 million | +2.5% | | +100 bp | +$14.0 million | +1.6% | | -100 bp | -$38.1 million | -4.2% | | -200 bp | -$76.8 million | -8.5% | | -300 bp | -$105.9 million | -11.7% | | -400 bp | -$124.8 million | -13.8% | [Item 8. Financial Statements and Supplementary Data](index=68&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the Corporation's audited consolidated financial statements and detailed notes, providing a comprehensive view of its financial position and performance [Consolidated Balance Sheets](index=68&type=section&id=CONSOLIDATED%20BALANCE%20SHEETS) The consolidated balance sheets detail the Corporation's assets, liabilities, and shareholders' equity at year-end Consolidated Balance Sheets (as of December 31, 2023 and 2022) | ASSETS (in thousands) | 2023 | 2022 | | :-------------------------------- | :------------ | :------------ | | Cash and cash equivalents | $549,710 | $681,921 | | Investment securities | $3,666,274 | $3,968,023 | | Loans, net | $21,057,690 | $20,010,181 | | Goodwill and net intangible assets| $560,687 | $560,824 | | Total Assets | $27,571,915 | $26,931,702 | | LIABILITIES (in thousands) | | | | Total Deposits | $21,537,623 | $20,649,538 | | Total Borrowings | $2,487,526 | $2,871,207 | | Total Liabilities | $24,811,776 | $24,351,945 | | SHAREHOLDERS' EQUITY (in thousands)| | | | Total Shareholders' Equity | $2,760,139 | $2,579,757 | [Consolidated Statements of Income](index=69&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20INCOME) The statements of income present the Corporation's revenues, expenses, and net income over the past three fiscal years Consolidated Statements of Income (Years Ended December 31, 2023, 2022, 2021) | Metric (in thousands) | 2023 | 2022 | 2021 | | :---------------------------------------- | :------------ | :------------ | :------------ | | Total Interest Income | $1,273,236 | $864,838 | $723,412 | | Total Interest Expense | $418,950 | $83,204 | $59,682 | | Net Interest Income | $854,286 | $781,634 | $663,730 | | Provision for credit losses | $54,036 | $28,021 | $(14,600) | | Total Non-Interest Income | $227,678 | $227,130 | $273,745 | | Total Non-Interest Expense | $679,207 | $633,728 | $617,830 | | Income Before Income Taxes | $348,721 | $347,015 | $334,245 | | Income taxes | $64,441 | $60,034 | $58,748 | | Net Income | $284,280 | $286,981 | $275,497 | | Net Income Available to Common Shareholders | $274,032 | $276,733 | $265,220 | | Net income available to common shareholders (diluted) | $1.64 | $1.67 | $1.62 | [Consolidated Statements of Comprehensive Income](index=70&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20COMPREHENSIVE%20INCOME) These statements report net income and other comprehensive income, including unrealized gains and losses on securities and derivatives Consolidated Statements of Comprehensive Income (Years Ended December 31, 2023, 2022, 2021) | Metric (in thousands) | 2023 | 2022 | 2021 | | :-------------------------------------------------------- | :---------- | :------------ | :------------ | | Net Income | $284,280 | $286,981 | $275,497 | | Other Comprehensive Income/(Loss), net of tax: | | | | | Net unrealized gains (losses) on AFS investment securities| $41,369 | $(356,672) | $(41,163) | | Net unrealized gains (losses) on interest rate derivatives used in cash flow hedges | $26,993 | $(56,959) | $(4,817) | | Net unrealized (losses) gains on defined benefit pension and postretirement plans | $4,834 | $744 | $8,300 | | **Other Comprehensive Income (Loss)** | **$73,196** | **$(412,887)**| **$(37,680)** | | **Total Comprehensive Income (Loss)** | **$357,476**| **$(125,906)**| **$237,817** | [Consolidated Statements of Shareholders' Equity](index=71&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20SHAREHOLDERS'%20EQUITY) These statements detail the changes in shareholders' equity accounts, including common stock, retained earnings, and accumulated other comprehensive loss Consolidated Statements of Shareholders' Equity (Years Ended December 31, 2023, 2022, 2021) | Category (in thousands) | Dec 31, 2023 | Dec 31, 2022 | Dec 31, 2021 | | :---------------------------------------- | :----------- | :----------- | :----------- | | Preferred Stock | $192,878 | $192,878 | $192,878 | | Common Stock | $564,402 | $561,511 | $559,766 | | Additional Paid-in Capital | $1,552,860 | $1,541,840 | $1,519,873 | | Retained Earnings | $1,619,300 | $1,450,758 | $1,282,383 | | Accumulated Other Comprehensive Loss | $(312,280) | $(385,476) | $27,411 | | Treasury Stock | $(857,021) | $(781,754) | $(869,631) | | **Total Shareholders' Equity** | **$2,760,139**| **$2,579,757**| **$2,712,680**| [Consolidated Statements of Cash Flows](index=72&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) These statements show the sources and uses of cash from operating, investing, and financing activities over the past three years Consolidated Statements of Cash Flows (Years Ended December 31, 2023, 2022, 2021) | Cash Flow Activity (in thousands) | 2023 | 2022 | 2021 | | :---------------------------------------- | :------------ | :------------ | :------------ | | Net cash provided by operating activities | $362,984 | $594,791 | $338,391 | | Net cash used in investing activities | $(809,215) | $(1,535,583) | $(210,086) | | Net cash provided by (used in) financing activities | $314,020 | $(15,901) | $(337,523) | | Net decrease in Cash and Cash Equivalents | $(132,211) | $(956,693) | $(209,218) | | Cash and Cash Equivalents at End of Period| $549,710 | $681,921 | $1,638,614 | [NOTE 1 - Summary of Significant Accounting Policies](index=73&type=section&id=NOTE%201%20-%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note outlines the key accounting principles and practices used in preparing the consolidated financial statements - The Corporation is a financial holding company providing banking and financial services through its subsidiaries across five states[332](index=332&type=chunk)[334](index=334&type=chunk) - Financial statements are prepared in accordance with **GAAP**, requiring management estimates and assumptions[335](index=335&type=chunk) - Debt securities are classified as **Held-to-Maturity (HTM)** or **Available-for-Sale (AFS)**; AFS securities are carried at fair value with unrealized gains/losses in OCI[338](index=338&type=chunk) - Loans are stated at amortized cost and are generally placed on non-accrual status after **90 days delinquency**[342](index=342&type=chunk)[343](index=343&type=chunk) - The **Allowance for Credit Losses (ACL)** is an estimate of expected losses over the life of loans, determined using PD, LGD, and EAD models[349](index=349&type=chunk)[352](index=352&type=chunk)[353](index=353&type=chunk)[354](index=354&type=chunk)[355](index=355&type=chunk) - The Corporation uses interest rate derivatives to manage interest rate risk, with cash flow hedges recognizing changes in fair value in OCI[371](index=371&type=chunk)[372](index=372&type=chunk)[378](index=378&type=chunk)[379](index=379&type=chunk) - The Corporation adopted several new FASB ASUs in 2023, none of which had a material impact on its consolidated financial statements[411](index=411&type=chunk)[412](index=412&type=chunk)[413](index=413&type=chunk)[414](index=414&type=chunk)[415](index=415&type=chunk) [NOTE 2 - Business Combinations](index=82&type=section&id=NOTE%202%20-%20BUSINESS%20COMBINATIONS) This note details the acquisition of Prudential Bancorp and its accounting treatment - On July 1, 2022, the Corporation acquired Prudential Bancorp, with Prudential Bank merging into Fulton Bank in Q4 2022[424](index=424&type=chunk) - The acquisition was accounted for using the acquisition method, with the excess purchase price of **$19.1 million** recorded as goodwill[426](index=426&type=chunk) - Goodwill increased to **$553.3 million** as of December 31, 2023, from $550.5 million in 2022, due to adjustments from the merger[430](index=430&type=chunk) Prudential Bancorp Acquisition Summary (July 1, 2022) | Category (in thousands) | Fair Value | | :-------------------------------- | :----------- | | **Consideration transferred:** | | | Common stock shares issued | $89,713 | | Cash paid to shareholders | $29,343 | | **Value of consideration** | **$119,056** | | **Assets acquired:** | | | Investment securities | $287,126 | | Loans | $554,091 | | Total assets | $930,627 | | **Liabilities assumed:** | | | Deposits | $532,170 | | Borrowings | $284,000 | | Total liabilities | $830,652 | | **Net assets acquired** | **$99,975** | | **Goodwill resulting from the Merger** | **$19,081** | [NOTE 3 - Restrictions on Cash and Cash Equivalents](index=84&type=section&id=NOTE%203%20-%20RESTRICTIONS%20ON%20CASH%20AND%20CASH%20EQUIVALENTS) This note describes restrictions on cash balances held as collateral - Cash collateral posted with counterparties for derivatives and other contracts was **$17.4 million** as of December 31, 2023[431](index=431&type=chunk) [NOTE 4 - Investment Securities](index=85&type=section&id=NOTE%204%20-%20INVESTMENT%20SECURITIES) This note provides a detailed breakdown of the Corporation's investment securities portfolio by type, cost, and fair value - Securities totaling **$0.4 billion** (2023) and **$1.1 billion** (2022) were pledged as collateral for public and trust deposits[434](index=434&type=chunk) - As of December 31, 2023, there were **727 AFS and 180 HTM positions** with unrealized losses, which the Corporation does not intend to sell prior to recovery[438](index=438&type=chunk)[440](index=440&type=chunk)[441](index=441&type=chunk)[442](index=442&type=chunk) Investment Securities Amortized Cost and Fair Values (as of December 31, 2023) (in thousands) | Security Type | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | | :-------------------------------------- | :------------- | :--------------------- | :---------------------- | :------------------- | | **Available for Sale (AFS)** | | | | | | U.S. Government securities | $42,475 | — | $(314) | $42,161 | | State and municipal securities | $1,200,571 | $1,089 | $(129,647) | $1,072,013 | | Corporate debt securities | $480,714 | $473 | $(40,636) | $440,551 | | Collateralized mortgage obligations | $122,824 | — | $(11,390) | $111,434 | | Residential mortgage-backed securities | $223,273 | $7 | $(26,485) | $196,795 | | Commercial mortgage-backed securities | $627,364 | — | $(92,976) | $534,388 | | **Total AFS** | **$2,698,259** | **$1,569** | **$(301,476)** | **$2,398,352** | | **Held to Maturity (HTM)** | | | | | | Residential mortgage-backed securities | $407,075 | — | $(51,805) | $355,270 | | Commercial mortgage-backed securities | $860,847 | — | $(143,910) | $716,937 | | **Total HTM** | **$1,267,922** | **—** | **$(195,715)** | **$1,072,207** | Gross Gains and Losses on Securities Sales (Years Ended December 31) (in thousands) | Year | Gross Realized Gains | Gross Realized Losses | Net Gains (Losses) | | :--- | :------------------- | :-------------------- | :----------------- | | 2023 | $283 | $(1,016) | $(733) | | 2022 | $1,587 | $(1,614) | $(27) | | 2021 | $35,593 | $(2,077) | $33,516 | [NOTE 5 - Loans and Allowance for Credit Losses](index=88&type=section&id=NOTE%205%20-%20LOANS%20AND%20ALLOWANCE%20FOR%20CREDIT%20LOSSES) This note details the composition of the loan portfolio, credit quality metrics, and activity in the allowance for credit losses - Related-party loans to officers, directors, and associates totaled **$162.5 million** as of December 31, 2023, made on substantially the same terms as unrelated transactions[443](index=443&type=chunk) - Non-accrual loans without a specific valuation allowance within the ACL totaled **$52.8 million** (2023) and **$53.6 million** (2022)[451](index=451&type=chunk) - No loans modified due to financial difficulty defaulted in 2023, and no principal balance forgiveness was provided[464](index=464&type=chunk)[465](index=465&type=chunk) Loans and Leases, Net of Unearned Income (as of December 31) (in thousands) | Loan Type | 2023 | 2022 | | :------------------------------ | :------------ | :------------ | | Real estate - commercial mortgage | $8,127,728 | $7,693,835 | | Commercial and industrial | $4,545,552 | $4,473,004 | | Real-estate - residential mortgage | $5,325,923 | $4,737,279 | | Real-estate - home equity | $1,047,184 | $1,102,838 | | Real-estate - construction | $1,239,075 | $1,269,925 | | Consumer | $729,318 | $699,179 | | Leases and other loans | $336,314 | $303,487 | | **Net loans** | **$21,351,094**| **$20,279,547**| Activity in ACL - Loans by Portfolio Segment (2023) (in thousands) | Portfolio Segment | Balance at Dec 31, 2022 | Loans Charged Off | Recoveries | Net Loans (Charged Off) Recovered | Provision for Loan Losses | Balance at Dec 31, 2023 | | :------------------------------------ | :---------------------- | :---------------- | :--------- | :-------------------------------- | :------------------------ | :---------------------- | | Real estate - commercial mortgage | $69,456 | $(17,999) | $1,076 | $(16,923) | $60,032 | $112,565 | | Commercial and industrial | $70,116 | $(9,246) | $3,473 | $(5,773) | $9,923 | $74,266 | | Consumer and real estate - home equity| $26,429 | $(7,514) | $3,198 | $(4,316) | $(4,509) | $17,604 | | Real estate - residential mortgage | $83,250 | $(62) | $421 | $359 | $(10,323) | $73,286 | | Real estate - construction | $10,743 | — | $858 | $858 | $694 | $12,295 | | Leases and other loans | $9,372 | $(4,380) | $1,103 | $(3,277) | $(2,707) | $3,388 | | **Total** | **$269,366** | **$(39,201)** | **$10,129**| **$(29,072)** | **$53,110** | **$293,404** | Non-Accrual Loans by Class Segment (as of December 31) (in thousands) | Loan Class | 2023 (with related allowance) | 2023 (without related allowance) | 2023 Total | 2022 (with related allowance) | 2022 (without related allowance) | 2022 Total | | :-------------------------------- | :---------------------------- | :------------------------------- | :--------- | :---------------------------- | :------------------------------- | :--------- | | Real estate - commercial mortgage | $23,338 | $21,467 | $44,805 | $39,722 | $30,439 | $70,161 | | Commercial and industrial | $12,410 | $27,542 | $39,952 | $14,804 | $12,312 | $27,116 | | Real estate - residential mortgage| $18,806 | $2,018 | $20,824 | $25,315 | $979 | $26,294 | | Real estate - home equity | $4,649 | $104 | $4,753 | $5,975 | $130 | $6,105 | | Real estate - construction | $341 | $1,000 | $1,341 | $866 | $502 | $1,368 | | Consumer | $52 | — | $52 | $92 | — | $92 | | Leases and other loans | $9,255 | $638 | $9,893 | $4,052 | $9,255 | $13,307 | | **Total** | **$68,851** | **$52,769** | **$121,620**| **$90,826** | **$53,617** | **$144,443**| Non-Performing Assets (as of December 31) (in thousands) | Category | 2023 | 2022 | | :---------------------------------------- | :------------ | :------------ | | Non-accrual loans | $121,620 | $144,443 | | Loans 90 days or more past due and still accruing | $31,721 | $27,463 | | **Total non-performing loans** | **$153,341** | **$171,906** | | OREO | $896 | $5,790 | | **Total non-performing assets** | **$154,237** | **$177,696** | Aging of Amortized Cost Basis of Loans (as of December 31, 2023) (in thousands) | Loan Class | 30-59 Days Past Due | 60-89 Days Past Due | ≥ 90 Days Past Due and Accruing | Non Accrual | Current | Total | | :-------------------------------- | :------------------ | :------------------ | :------------------------------ | :---------- | :------------ | :------------ | | Real estate - commercial mortgage | $4,408 | $1,341 | $1,722 | $44,805 | $8,075,452 | $8,127,728 | | Commercial and industrial | $5,620 | $1,656 | $1,068 | $39,952 | $4,497,256 | $4,545,552 | | Real estate - residential mortgage| $49,145 | $10,838 | $21,205 | $20,824 | $5,223,911 | $5,325,923 | | Real estate - home equity | $8,142 | $2,075 | $5,326 | $4,753 | $1,026,888 | $1,047,184 | | Real estate - construction | $4,185 | $451 | $1,535 | $1,341 | $1,231,563 | $1,239,075 | | Consumer | $8,361 | $1,767 | $747 | $52 | $718,391 | $729,318 | | Leases and other loans | $146 | $722 | $118 | $9,893 | $325,435 | $336,314 | | **Total** | **$80,007** | **$18,850** | **$31,721** | **$121,620**| **$21,098,896**| **$21,351,094**| Loans Modified to Borrowers Experiencing Financial Difficulty (2023) | Concession Type | Amortized Cost Basis (in thousands) | % of Class of Financing Receivable | | :---------------------------------- | :---------------------------------- | :--------------------------------- | | Term Extension | $23,096 | | | Real estate - commercial mortgage | $2,944 | 0.04 % | | Commercial and industrial | $11,970 | 0.26 | | Real estate - residential mortgage | $8,182 | 0.15 | | Interest Rate Reduction and Term Extension | $910 | | | Real estate - residential mortgage | $910 | 0.02 % | [NOTE 6 - Premises and Equipment](index=97&type=section&id=NOTE%206%20-%20PREMISES%20AND%20EQUIPMENT) This note provides a summary of the Corporation's investment in physical assets Premises and Equipment (as of December 31) | Category (in thousands) | 2023 | 2022 | | :-------------------------------------- | :---------- | :---------- | | Land | $39,742 | $39,752 | | Buildings and improvements |

Financial Data and Key Metrics Changes - Operating earnings per share for Q4 2023 was $0.42, a slight decrease from $0.43 in Q3 2023 [24] - Pre-provision net revenue reached a record of over $400 million in 2023, with an operating EPS of $1.71, the second-best in the company's history [34] - Net interest income for Q4 was $212 million, a decline of $2 million from the previous quarter, with a net interest margin of 3.36% [41] Business Line Data and Key Metrics Changes - Loan growth moderated to $174 million or 3% annualized in Q4, with commercial lending contributing $120 million [65] - Consumer lending grew by $54 million or 3% during the quarter, while mortgage banking revenues declined to $2.3 million due to seasonal factors [40][42] - Non-interest income was $59.4 million, with wealth management revenues consistent with the previous quarter at $19.4 million [36][67] Market Data and Key Metrics Changes - Non-performing loans increased by $12.7 million, leading to an NPL to loans ratio increase from 67 basis points to 72 basis points [26] - Non-interest-bearing deposits ended the year at $5.3 billion, or 24.7% of total deposits, with expectations for this to decrease to approximately 22% by the end of 2024 [25] Company Strategy and Development Direction - The company is focused on growth and profitability while managing credit and improving efficiency, with the FultonFirst initiative aimed at streamlining operations and enhancing productivity [21][37] - The company plans to maintain a disciplined approach to capital management, having increased its common dividend and repurchased over 5 million shares in 2023 [19] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism for 2024, acknowledging the need to grow appropriately in the current market while improving productivity [21] - The company anticipates a total of 75 basis points of Fed funds decreases in the second half of 2024, impacting net interest income guidance [28] Other Important Information - The company maintained strong capital ratios, with a tangible common equity ratio of 7.4% at year-end, reflecting solid earnings and a decrease in accumulated other comprehensive income [68] - The company has a buyback program of $125 million, which will be utilized opportunistically throughout the year [92] Q&A Session All Questions and Answers Question: What are the profitability targets associated with the FultonFirst initiative? - Management indicated that there are no specific targets at this point, but the initiative is expected to lead to long-term sustained improved efficiency [44][46] Question: How do you expect the provision for credit losses to vary? - The provision is primarily driven by charge-offs normalizing, with a long-term average of around 20 basis points [49][50] Question: What are the expectations for loan growth going forward? - The company expects loan growth to continue in the 4% to 6% range, with a focus on maintaining profitability [58][65] Question: How will the company manage deposit costs in the current environment? - Management noted that deposit costs are expected to lessen throughout 2024 as maturing CDs roll off at lower rates [102] Question: What is the outlook for the M&A market? - The company is open to M&A opportunities, particularly in the $1 billion to $5 billion range, but finds it challenging to make the math work in the current environment [130][179]

A STABLE DEPOSIT PORTFOLIO THAT REMAINS GRANULAR, TENURED Deposit Mix By Customer Deposit Portfolio Highlights(1) 11.2 years average deposit account age 23% estimated uninsured deposits 260% coverage of estimated uninsured deposits FORWARD-LOOKING STATEMENT A discussion of certain risks and uncertainties affecting the Corporation, and some of the factors that could cause the Corporation's actual results to differ materially from those described in the forward-looking statements, can be found in the sections ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2023, or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File No. 001-39680 FULTON FINANCIAL CORPORATION (Exact name of registrant as specified in its charter) Pennsylvania 23-2195389 (State or o ...