Fulton Financial (FULT) - 2025 Q2 - Quarterly Report

Glossary of Terms The glossary defines key acronyms and terms used throughout the report, including financial, regulatory, and program-specific terminology - The glossary provides definitions for key acronyms and terms used throughout the report, such as '2025 Repurchase Program', 'ACL' (Allowance for credit losses), 'Republic First Transaction', and various financial and regulatory terms[8][9] Forward-Looking Statements This section highlights that forward-looking statements are subject to uncertainties and risks that could cause actual results to differ materially - The Corporation's forward-looking statements are based on current beliefs and expectations, but actual results may differ materially due to inherent uncertainties, risks, and changes in circumstances beyond its control[11][12] - Key factors that could affect future financial results include adverse economic and financial market conditions (e.g., elevated interest rates), increased competition for deposits, regulatory changes, interest rate impacts on Net Interest Margin (NIM), credit risk in the loan portfolio, operational risks (e.g., cybersecurity), and potential impacts from acquisitions and geopolitical events[13][14] PART I. FINANCIAL INFORMATION This part presents the Corporation's unaudited consolidated financial statements and management's discussion and analysis of financial performance Item 1. Financial Statements This section presents the unaudited consolidated financial statements, including balance sheets, income statements, and detailed notes Consolidated Balance Sheets This table provides a snapshot of the Corporation's assets, liabilities, and shareholders' equity at specific reporting dates Consolidated Balance Sheet Highlights (June 30, 2025 vs. December 31, 2024) | Item | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (in thousands) | % Change | | :-------------------------------- | :----------------------------- | :------------------------------- | :-------------------- | :------- | | ASSETS | | | | | | Cash and Cash Equivalents | $804,664 | $1,063,871 | $(259,207) | -24.4% | | Investment securities (AFS) | $3,619,869 | $3,410,899 | $208,970 | 6.1% | | Investment securities (HTM) | $1,473,158 | $1,395,569 | $77,589 | 5.6% | | Loans, Net | $23,635,202 | $23,665,763 | $(30,561) | -0.1% | | Total Assets | $32,040,448 | $32,071,810 | $(31,362) | -0.1% | | LIABILITIES | | | | | | Total Deposits | $26,138,067 | $26,129,433 | $8,634 | 0.0% | | Total Borrowings | $1,773,900 | $1,782,048 | $(8,148) | -0.5% | | Total Liabilities | $28,711,202 | $28,874,485 | $(163,283) | -0.6% | | SHAREHOLDERS' EQUITY | | | | | | Total Shareholders' Equity | $3,329,246 | $3,197,325 | $131,921 | 4.1% | | Total Liabilities and Shareholders' Equity | $32,040,448 | $32,071,810 | $(31,362) | -0.1% | Consolidated Statements of Income This table presents the Corporation's revenues, expenses, and net income over specific reporting periods Consolidated Statements of Income Highlights (Three and Six Months Ended June 30, 2025 vs. 2024) | Item (in thousands, except per-share data) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :----------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Total Interest Income | $402,761 | $400,506 | $802,452 | $740,172 | | Total Interest Expense | $147,840 | $158,786 | $296,345 | $291,515 | | Net Interest Income | $254,921 | $241,720 | $506,107 | $448,657 | | Provision for credit losses | $8,607 | $32,056 | $22,505 | $42,981 | | Total Non-Interest Income | $69,148 | $92,994 | $136,380 | $150,133 | | Total Non-Interest Expense | $192,811 | $199,488 | $382,270 | $377,087 | | Net Income | $99,198 | $94,975 | $192,185 | $156,916 | | Net Income Available to Common Shareholders | $96,636 | $92,413 | $187,061 | $151,792 | | Basic EPS | $0.53 | $0.53 | $1.03 | $0.90 | | Diluted EPS | $0.53 | $0.52 | $1.02 | $0.89 | Consolidated Statements of Comprehensive Income This table details the components of comprehensive income, including net income and other comprehensive income items Consolidated Statements of Comprehensive Income Highlights (Three and Six Months Ended June 30, 2025 vs. 2024) | Item (in thousands) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net Income | $99,198 | $94,975 | $192,185 | $156,916 | | Net Unrealized (Losses) Gains on AFS Investment Securities | $(4,015) | $2,892 | $7,084 | $(12,386) | | Net Unrealized Gains on Interest Rate Derivatives Used in Cash Flow Hedges | $3,999 | $6,147 | $9,278 | $14,343 | | Defined benefit pension plan and postretirement benefits | $(106) | $(105) | $(212) | $(211) | | Other Comprehensive (Loss) Income, Net of Tax | $(122) | $8,934 | $16,150 | $1,746 | | Total Comprehensive Income | $99,076 | $103,909 | $208,335 | $158,662 | Consolidated Statements of Shareholders' Equity This table outlines the changes in each component of shareholders' equity over the reporting period Shareholders' Equity Changes (Six Months Ended June 30, 2025 vs. 2024) | Item (in thousands) | Balance at Dec 31, 2024 | Net Income | Other Comprehensive Income | Common Stock Issued | Dividend Reinvestment | Stock-Based Comp. (Repurchases) | Treasury Stock Acquisition | Preferred Stock Dividend | Common Stock Dividends | Balance at June 30, 2025 | | :-------------------------------- | :---------------------- | :--------- | :----------------------- | :------------------ | :-------------------- | :------------------------------ | :------------------------- | :----------------------- | :--------------------- | :----------------------- | | Preferred Stock | $192,878 | — | — | — | — | — | — | — | — | $192,878 | | Common Stock | $614,866 | — | — | $173 | — | $2,462 | — | — | — | $617,501 | | Additional Paid-in Capital | $1,789,214 | — | — | $1,031 | $612 | $3,052 | — | — | — | $1,793,909 | | Retained Earnings | $1,775,620 | $192,185 | — | — | — | — | — | $(5,124) | $(65,629) | $1,897,052 | | Accumulated Other Comprehensive Loss | $(287,819) | — | $16,150 | — | — | — | — | — | — | $(271,669) | | Treasury Stock | $(887,434) | — | — | — | $2,084 | $(6,150) | $(8,925) | — | — | $(900,425) | | Total Shareholders' Equity | $3,197,325 | $192,185 | $16,150 | $1,204 | $2,696 | $(636) | $(8,925) | $(5,124) | $(65,629) | $3,329,246 | Consolidated Statements of Cash Flows This table summarizes cash inflows and outflows from operating, investing, and financing activities Consolidated Statements of Cash Flows Highlights (Six Months Ended June 30, 2025 vs. 2024) | Item (in thousands) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------ | :--------------------------- | :--------------------------- | | Net Cash Provided by Operating Activities | $92,452 | $310,658 | | Net Cash (Used in) Provided by Investing Activities | $(270,001) | $2,195,486 | | Net Cash Used in Financing Activities | $(81,658) | $(1,659,572) | | Net (decrease) increase in Cash and Cash Equivalents | $(259,207) | $846,572 | | Cash and Cash Equivalents at End of Period | $804,664 | $1,396,282 | Notes to Consolidated Financial Statements These notes provide detailed explanations and disclosures supporting the consolidated financial statements NOTE 1 – Basis of Presentation This note outlines the basis for preparing the unaudited interim financial statements, confirming GAAP and SEC conformity - The unaudited Consolidated Financial Statements are prepared in conformity with GAAP for interim financial information and SEC regulations, requiring management estimates and assumptions[20] - Significant accounting policies remain unchanged from the 2024 Annual Report on Form 10-K[21] - Recently adopted ASUs (2023-07, 2023-08, 2024-01, 2025-02) had no material impact, with ASU 2023-08 and 2025-02 having no impact as the Corporation does not own crypto assets[22][23][24][25] - Recently issued ASUs (2023-09, 2024-03, 2024-04, 2025-01, 2025-03, 2025-04) are not expected to have a material impact upon adoption in future periods[26][27][28][29][30][31] NOTE 2 – Business Combinations This note details the Republic First Transaction, including acquired assets, assumed liabilities, and the resulting gain on acquisition - On the Acquisition Date (April 26, 2024), Fulton Bank acquired approximately $4.8 billion of assets and assumed $5.6 billion of liabilities from Republic First Bank, receiving $0.8 billion cash from the FDIC[33] - The Republic First Transaction enhanced the Bank's presence in Philadelphia, Pennsylvania, and New Jersey[34] - The transaction resulted in a preliminary gain on acquisition of $37.0 million, net of income taxes, with the financial settlement process concluded on April 25, 2025, without additional adjustments[36] Republic First Transaction: Assets Acquired and Liabilities Assumed (April 26, 2024) | Item | Estimated Fair Value (in thousands) | | :-------------------------------- | :-------------------------------- | | Cash payment received from FDIC | $809,920 | | Assets acquired: | | | Cash and due from banks | $208,451 | | Investment securities | $1,938,571 | | Loans | $2,495,810 | | CDI | $92,600 | | Total assets acquired | $4,799,890 | | Liabilities assumed: | | | Deposits | $4,112,143 | | Borrowings | $1,413,751 | | Total liabilities assumed | $5,561,979 | | Net assets acquired | $(762,089) | | Gain on acquisition, before income taxes | $47,831 | | Gain on acquisition, net of income taxes | $36,996 | - The transaction added $78.1 million to the ACL, including $54.6 million for PCD Loans and $23.4 million for non-PCD Loans[38] NOTE 3 – Restrictions on Cash and Cash Equivalents This note details cash collateral posted by the Corporation to secure derivatives and other contracts Cash Collateral Posted (in thousands) | Date | Amount | | :----------- | :------- | | June 30, 2025 | $23,700 | | Dec 31, 2024 | $4,000 | NOTE 4 – Investment Securities This note details investment securities, including AFS and HTM categories, fair values, and credit quality Investment Securities (June 30, 2025 vs. December 31, 2024, in thousands) | Category | Amortized Cost (Jun 30, 2025) | Estimated Fair Value (Jun 30, 2025) | Amortized Cost (Dec 31, 2024) | Estimated Fair Value (Dec 31, 2024) | | :-------------------------------- | :---------------------------- | :------------------------------ | :---------------------------- | :------------------------------ | | Available for Sale | | | | | | State and municipal securities | $956,015 | $774,749 | $960,227 | $814,887 | | Corporate debt securities | $274,981 | $264,098 | $313,681 | $300,370 | | Collateralized mortgage obligations | $1,165,014 | $1,172,238 | $798,157 | $788,885 | | Residential mortgage-backed securities | $922,074 | $896,735 | $1,029,846 | $989,875 | | Commercial mortgage-backed securities | $604,696 | $512,049 | $617,605 | $516,882 | | Total AFS | $3,922,780 | $3,619,869 | $3,719,516 | $3,410,899 | | Held to Maturity | | | | | | Residential mortgage-backed securities | $618,955 | $569,697 | $537,856 | $477,696 | | Commercial mortgage-backed securities | $854,203 | $723,304 | $857,713 | $705,753 | | Total HTM | $1,473,158 | $1,293,001 | $1,395,569 | $1,183,449 | | Grand Total Investment Securities | $5,395,938 | $4,912,870 | $5,115,085 | $4,594,348 | - In May 2024, the Corporation sold $345.7 million of AFS investment securities, incurring a pre-tax loss of $20.3 million, and reinvested the proceeds into higher-yielding securities[42] Gross Realized Gains and Losses on Sales of Securities (in thousands) | Period | Gross Realized Gains | Gross Realized Losses | Net Gains (Losses) | | :-------------------- | :------------------- | :-------------------- | :----------------- | | 3 Months Ended Jun 30, 2025 | $— | $— | $— | | 3 Months Ended Jun 30, 2024 | $91 | $(20,373) | $(20,282) | | 6 Months Ended Jun 30, 2025 | $663 | $(665) | $(2) | | 6 Months Ended Jun 30, 2024 | $91 | $(20,373) | $(20,282) | - No Allowance for Credit Losses (ACL) was required for collateralized mortgage obligations, residential mortgage-backed securities, commercial mortgage-backed securities, state and municipal securities, or corporate debt securities as of June 30, 2025, and December 31, 2024, due to their credit quality, guarantees, and the Corporation's intent and ability to hold them[46][47][48][49] NOTE 5 - Loans and Allowance for Credit Losses This note details the loan portfolio composition, Allowance for Credit Losses (ACL), and credit quality indicators Loans and Leases, Net of Unearned Income (in thousands) | Loan Type | June 30, 2025 | December 31, 2024 | | :------------------------------ | :-------------- | :---------------- | | Real estate - commercial mortgage | $9,678,038 | $9,601,858 | | Commercial and industrial | $4,541,765 | $4,605,589 | | Real-estate - residential mortgage | $6,511,687 | $6,349,643 | | Real-estate - home equity | $1,193,410 | $1,160,616 | | Real-estate - construction | $1,155,099 | $1,394,899 | | Consumer | $583,949 | $616,856 | | Leases and other loans | $348,591 | $315,458 | | Net loans | $24,012,539 | $24,044,919 | Allowance for Credit Losses (ACL) and Reserve for OBS Credit Exposures (in thousands) | Item | June 30, 2025 | December 31, 2024 | | :-------------------------- | :-------------- | :---------------- | | ACL - loans | $377,337 | $379,156 | | Reserve for OBS credit exposures | $14,180 | $14,161 | ACL Activity (Six Months Ended June 30, 2025 vs. 2024, in thousands) | Item | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------ | :--------------------------- | :--------------------------- | | Balance at beginning of period | $379,156 | $293,404 | | CECL Day 1 Provision | — | $23,444 | | Initial PCD allowance for credit losses | — | $55,906 | | Net loans (charged off) recovered | $(24,305) | $(19,900) | | Provision for credit losses | $22,486 | $23,087 | | Balance at end of period | $377,337 | $375,941 | Non-Accrual Loans by Class Segment (in thousands) | Loan Class | June 30, 2025 | December 31, 2024 | | :------------------------------ | :-------------- | :---------------- | | Real estate - commercial mortgage | $84,035 | $99,497 | | Commercial and industrial | $39,115 | $42,217 | | Real estate - residential mortgage | $25,817 | $25,400 | | Real estate - home equity | $7,079 | $8,591 | | Real estate - construction | $24,852 | $1,746 | | Consumer | $6 | $8 | | Leases and other loans | $2,038 | $11,834 | | Total Non-Accrual Loans | $182,942 | $189,293 | - Loan modifications for borrowers experiencing financial difficulty primarily involved term extensions, with no principal forgiveness granted during the three and six months ended June 30, 2025 and 2024[70][72] NOTE 6 – Mortgage Servicing Rights This note summarizes changes in Mortgage Servicing Rights (MSRs), their fair value, and the serviced mortgage loan portfolio Mortgage Servicing Rights (MSRs) (in thousands) | Item | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Amortized cost: Beginning Balance | $30,298 | $31,057 | $30,691 | $31,602 | | Originations of MSRs | $924 | $883 | $1,625 | $1,465 | | Amortization | $(1,089) | $(1,294) | $(2,183) | $(2,421) | | Amortized cost: Ending Balance | $30,133 | $30,646 | $30,133 | $30,646 | | Estimated fair value of MSRs at end of period | $51,629 | $51,724 | $51,629 | $51,724 | - The total portfolio of mortgage loans serviced by the Corporation for unrelated third parties was $4.0 billion as of June 30, 2025, down from $4.1 billion as of December 31, 2024[76] - No valuation allowance was required for MSRs as of June 30, 2025, based on fair value analysis[77] NOTE 7 – Derivative Financial Instruments This note details the Corporation's use of derivatives to manage market risks, including interest rate and foreign currency exposures - The Corporation uses derivatives to manage interest rate and foreign currency risks and for customer risk management, not for speculative purposes[78] Summary of Notional Amounts and Fair Values of Derivative Financial Instruments (in thousands) | Derivative Type | Notional Amount (Jun 30, 2025) | Asset (Liability) Fair Value (Jun 30, 2025) | Notional Amount (Dec 31, 2024) | Asset (Liability) Fair Value (Dec 31, 2024) | | :------------------------------------------ | :----------------------------- | :------------------------------------------ | :----------------------------- | :------------------------------------------ | | Interest Rate Locks with Customers (Positive) | $214,495 | $987 | $171,933 | $389 | | Interest Rate Locks with Customers (Negative) | $511 | $(4) | $3,888 | $(58) | | Interest Rate Derivatives with Customers (Positive) | $1,657,239 | $37,670 | $767,905 | $8,480 | | Interest Rate Derivatives with Customers (Negative) | $3,146,966 | $(150,482) | $3,976,294 | $(239,058) | | Interest Rate Derivatives with Dealer Counterparties (Positive) | $3,146,966 | $88,725 | $3,976,294 | $150,480 | | Interest Rate Derivatives with Dealer Counterparties (Negative) | $1,657,239 | $(38,036) | $767,905 | $(10,734) | | Interest Rate Derivatives used in Cash Flow Hedges (Positive) | $3,300,000 | $7,415 | $2,500,000 | $227 | | Interest Rate Derivatives used in Cash Flow Hedges (Negative) | $1,100,000 | $(550) | $1,400,000 | $(2,971) | - For the six months ended June 30, 2025, $9.5 million in gains/losses from interest rate products were recognized in OCI and reclassified into interest income, and $0.1 million into interest expense[82] - The Corporation estimates an additional $13.9 million will be reclassified as a decrease to net interest income over the next twelve months from cash flow hedges[83] Net Fair Value Gains (Losses) on Derivative Financial Instruments (in thousands) | Item | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :----------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Mortgage banking derivatives | $181 | $(45) | $(134) | $1,122 | | Interest rate derivatives | $9 | $137 | $131 | $288 | | Foreign exchange contracts | $31 | $84 | $142 | $123 | | Net fair value gains (losses) | $221 | $176 | $139 | $1,533 | - Mortgage loans held for sale are measured at fair value, with gains of $0.2 million and $0.3 million for the three and six months ended June 30, 2025, respectively[85] - In January 2023, the Corporation terminated $1.0 billion in cash flow hedges, with $6.5 million of unrealized losses reclassified as a reduction to interest income on loans for the six months ended June 30, 2025[88] NOTE 8 – Accumulated Other Comprehensive (Loss) Income This note details components of Other Comprehensive Income (OCI) and changes in Accumulated Other Comprehensive (Loss) Income (AOCI) Components of OCI (Six Months Ended June 30, 2025 vs. 2024, Net of Tax, in thousands) | Item | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :---------------------------------------------------------------- | :--------------------------- | :--------------------------- | | Net unrealized gains (losses) on investment securities | $4,412 | $(30,864) | | Reclassification adjustment for securities net change included in net income | $2 | $15,688 | | Amortization of net unrealized gains on AFS investment securities transferred to HTM | $2,670 | $2,790 | | Net unrealized holding gains arising during the period on interest rate derivatives used in cash flow hedges | $1,808 | $6,553 | | Reclassification adjustment for net change realized in net income on interest rate swaps used in cash flow hedges | $7,470 | $7,790 | | Amortization of net unrecognized pension and postretirement item | $(212) | $(211) | | Total Other Comprehensive Income | $16,150 | $1,746 | Changes in AOCI, Net of Tax (Six Months Ended June 30, 2025 vs. 2024, in thousands) | Item | Balance at Dec 31, 2024 | OCI before Reclassifications | Amounts Reclassified from AOCI | Amortization of Net Unrealized Gains on AFS Transferred to HTM | Balance at June 30, 2025 | | :---------------------------------------------------------------- | :---------------------- | :--------------------------- | :----------------------------- | :------------------------------------------------------------ | :----------------------- | | Unrealized Gains (Losses) on Investment Securities | $(275,989) | $4,412 | $2 | $2,670 | $(268,905) | | Net Unrealized Gain (Loss) on Interest Rate Derivatives used in Cash Flow Hedges | $(16,052) | $1,808 | $7,470 | — | $(6,774) | | Unrecognized Pension and Postretirement Plan Income (Costs) | $4,222 | — | $(212) | — | $4,010 | | Total | $(287,819) | $6,220 | $7,260 | $2,670 | $(271,669) | NOTE 9 – Fair Value Measurements This note describes the fair value hierarchy and presents assets and liabilities measured at fair value - Fair value measurements are categorized into a three-level hierarchy: Level 1 (quoted prices in active markets), Level 2 (observable market data other than quoted prices), and Level 3 (unobservable inputs)[93][94] Assets and Liabilities Measured at Fair Value on a Recurring Basis (June 30, 2025, in thousands) | Item | Level 1 | Level 2 | Level 3 | Total | | :-------------------------------- | :------ | :-------- | :------ | :------ | | Assets: | | | | | | Loans held for sale | $— | $23,281 | $— | $23,281 | | AFS investment securities | $— | $3,619,869 | $— | $3,619,869 | | Investments held in Rabbi Trust | $37,571 | $— | $— | $37,571 | | Derivative assets | $1,867 | $134,797 | $— | $136,664 | | Total Assets | $39,438 | $3,777,947 | $— | $3,817,385 | | Liabilities: | | | | | | Deferred compensation liabilities | $37,571 | $— | $— | $37,571 | | Derivative liabilities | $1,638 | $189,496 | $— | $191,134 | | Total Liabilities | $39,209 | $189,496 | $— | $228,705 | - Valuation techniques for AFS investment securities rely on third-party pricing services using models that incorporate market information like benchmark yield curves and quoted prices of similar securities[96][97] Level 3 Financial Assets Measured at Fair Value on a Nonrecurring Basis (in thousands) | Item | June 30, 2025 | December 31, 2024 | | :------------------ | :-------------- | :---------------- | | Loans, Net | $160,009 | $168,668 | | OREO | $2,706 | $2,621 | | MSRs | $51,629 | $53,972 | | SBA servicing asset | $2,801 | $3,120 | | Total assets | $217,145 | $228,381 | - Fair values for loans and time deposits are estimated by discounting future cash flows using current rates, adjusted for liquidity and estimated credit losses[110] NOTE 10 – Net Income Per Share This note provides the calculation of basic and diluted net income per share, including weighted average shares outstanding Net Income Per Share (Three and Six Months Ended June 30, 2025 vs. 2024) | Item (in thousands, except per share data) | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :----------------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Weighted average shares outstanding (basic) | 182,261 | 175,305 | 182,220 | 169,006 | | Impact of common stock equivalents | 1,552 | 1,629 | 1,779 | 1,763 | | Weighted average shares outstanding (diluted) | 183,813 | 176,934 | 183,999 | 170,769 | | Basic EPS | $0.53 | $0.53 | $1.03 | $0.90 | | Diluted EPS | $0.53 | $0.52 | $1.02 | $0.89 | NOTE 11 – Stock-Based Compensation This note describes stock-based compensation plans for employees and directors, including expense and tax benefits - The Corporation grants equity awards (restricted stock, RSUs, PSUs) to employees and non-employee directors, recognizing compensation expense over the service period[115][116] Stock-Based Compensation Expense and Tax Benefits (in thousands) | Item | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Compensation expense | $3,257 | $2,758 | $5,189 | $3,425 | | Tax benefit | $(742) | $(620) | $(1,173) | $(764) | | Total stock-based compensation, net of tax | $2,515 | $2,138 | $4,016 | $2,661 | NOTE 12 – Employee Benefit Plans This note details the Corporation's 401(k), Pension, and Postretirement Benefits Plans, including associated expenses Employee Benefit Plan Expenses (in thousands) | Plan | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :-------------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | 401(k) Retirement Plan expense | $3,600 | $3,400 | $7,100 | $6,600 | | Net periodic pension cost | $(211) | $(186) | $(421) | $(372) | | Net periodic postretirement benefit | $(127) | $(127) | $(254) | $(252) | - The Corporation recognizes the funded status of its Pension Plan and Postretirement Plan on the Consolidated Balance Sheets, with changes recognized through OCI[120] NOTE 13 - Segment Reporting This note clarifies the Corporation operates as a single reportable segment, with performance assessed on consolidated net income - The Corporation has one reportable segment, generating revenue primarily from interest income on loans and investments, and fee income[121] - The Chief Operating Decision Maker assesses segment performance based on net income available to common shareholders and diluted EPS[123] NOTE 14 – Commitments and Contingencies This note outlines the Corporation's commitments, including credit extensions, letters of credit, and legal proceedings Commitments to Extend Credit and Letters of Credit (in thousands) | Item | June 30, 2025 | December 31, 2024 | | :-------------------------- | :-------------- | :---------------- | | Commitments to extend credit | $8,861,986 | $8,828,595 | | Standby letters of credit | $295,973 | $279,309 | | Commercial letters of credit | $36,449 | $48,993 | - The Corporation maintains a reserve for estimated losses related to residential mortgage loans sold to investors, totaling $1.4 million as of June 30, 2025[131] - The Corporation is involved in various legal proceedings and regulatory inquiries, but believes any resulting liabilities will not have a material adverse effect on its financial condition, though outcomes are unpredictable[132][135] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on financial condition and results, including key performance indicators and the Republic First Bank acquisition Overview This overview describes Fulton Financial Corporation as a financial holding company providing consumer and commercial services - Fulton Financial Corporation is a financial holding company providing consumer and commercial financial services in Pennsylvania, Delaware, Maryland, New Jersey, and Virginia through its banking subsidiary[138] - The majority of revenue is generated through net interest income, supplemented by fee income and gains on asset sales, offset by credit loss provisions, non-interest expenses, and income taxes[139] H.R. 1 (Tax Law Impact) This section addresses the impact of H.R. 1 (Tax Law) on the Corporation's financial statements - President Trump signed H.R. 1 into law on July 4, 2025, extending or reinstating certain tax provisions, but the Corporation does not expect a material impact on its Consolidated Financial Statements[140] Financial Highlights This section summarizes key earnings and performance ratios, including net income, EPS, and return on assets Summary of Earnings and Selected Performance Ratios | Item | 3 Months Ended June 30, 2025 | 3 Months Ended June 30, 2024 | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------------ | :--------------------------- | :--------------------------- | :--------------------------- | :--------------------------- | | Net income | $99,198 | $94,975 | $192,185 | $156,916 | | Net income available to common shareholders | $96,636 | $92,413 | $187,061 | $151,792 | | Diluted EPS | $0.53 | $0.52 | $1.02 | $0.89 | | Return on average assets, annualized | 1.25% | 1.24% | 1.21% | 1.08% | | Net interest margin (FTE) | 3.47% | 3.43% | 3.45% | 3.37% | | Efficiency ratio | 57.1% | 62.6% | 56.9% | 62.9% | | Non-performing assets to total assets | 0.67% | 0.55% | 0.67% | 0.55% | | Net charge-offs to average loans, annualized | 0.20% | 0.19% | 0.20% | 0.18% | - Net income available to common shareholders increased by $4.2 million to $96.6 million for the three months ended June 30, 2025, and by $35.3 million to $187.1 million for the six months ended June 30, 2025, compared to the same periods in 2024[143][144] - For the six months ended June 30, 2025, NIM increased by 8 bps to 3.45%, net interest income increased by $57.5 million to $506.1 million, and the provision for credit losses was $22.5 million[148] Acquisition of Republic First Bank This section details the acquisition of Republic First Bank's assets and liabilities by Fulton Bank - Fulton Bank completed the Republic First Transaction on the Acquisition Date, acquiring approximately $4.8 billion in assets and assuming $5.6 billion in liabilities from Republic First Bank, with $0.8 billion cash received from the FDIC[142] Critical Accounting Policies This section refers to the Corporation's critical accounting policies detailed in its Annual Report on Form 10-K - The Corporation's critical accounting policies, which involve significant management judgments and estimates, are detailed in its Annual Report on Form 10-K for the year ended December 31, 2024[145][146] Supplemental Reporting of Non-GAAP Based Financial Measures This section provides non-GAAP financial measures to offer additional insights into performance and trends - The report includes non-GAAP financial measures to provide useful comparative information and assess trends, consistent with internal evaluations and industry practices, but these should not substitute GAAP measures[147][149] Reconciliation of Non-GAAP Financial Measures (Six Months Ended June 30, 2025 vs. 2024) | Item (in thousands, except per share data) | 6 Months Ended June 30, 2025 | 6 Months Ended June 30, 2024 | | :------------------------------------------------ | :--------------------------- | :--------------------------- | | Operating net income available to common shareholders | $196,093 | $147,857 | | Operating net income available to common shareholders, per share (diluted) | $1.07 | $0.87 | | Operating net income | $201,217 | $152,981 | | Operating return on average assets | 1.27% | 1.06% | | Adjusted net income available to common shareholders | $196,273 | $148,066 | | Operating return on average common shareholders' equity (tangible) | 16.11% | 14.40% | | Operating non-interest expense | $370,478 | $364,681 | | Total revenue | $651,088 | $579,969 | | Efficiency ratio | 56.9% | 62.9% | Results of Operations (Three months ended June 30, 2025 vs. 2024) This section analyzes the Corporation's financial performance for the three months ended June 30, 2025, across key income and expense categories Net Interest Income This section analyzes the changes in net interest income, interest income, and interest expense for the three-month period - FTE net interest income increased by $13.0 million to $259.3 million for the three months ended June 30, 2025, with NIM increasing by 4 bps to 3.47%[152] - Total interest income increased by $2.1 million, driven by a $175.2 million increase from volume changes (largely average net loans from Republic First Transaction), partially offset by a $173.1 million decrease from lower yields[155] - Interest expense decreased by $10.9 million, primarily due to a $139.4 million decrease from lower interest rates, partially offset by a $128.4 million increase from volume changes (average time and savings deposits from Republic First Transaction)[157] - Average net loans increased by $553.8 million (2.4%) to $23.9 billion, partly due to the Republic First Transaction, while the yield on total loans decreased by 26 bps to 5.86%[159][160] - Average total deposits increased by $1.5 billion (6.0%) to $26.1 billion, primarily from savings, interest-bearing demand, and time deposits, partly due to the Republic First Transaction. The cost of deposits decreased by 16 bps to 1.98%[161][162] - Average total borrowings and other interest-bearing liabilities decreased by $685.4 million (28.1%) to $1.8 billion, mainly due to decreases across various borrowing types, including the retirement of $168.8 million in subordinated notes in November 2024[163][164] Provision for Credit Losses This section details the provision for credit losses and the Allowance for Credit Losses (ACL) for the three-month period - The provision for credit losses was $8.6 million for the three months ended June 30, 2025, down from $32.1 million in the same period of 2024. The ACL attributable to net loans was $377.3 million (1.57% of total net loans) as of June 30, 2025[165] Non-Interest Income This section analyzes changes in non-interest income, highlighting key drivers and contributing factors - Total non-interest income decreased by $23.8 million (25.6%) to $69.1 million, primarily due to the absence of a $47.4 million gain on acquisition and a $20.3 million investment securities loss in the prior year[167] - Excluding these items, non-interest income increased by $3.3 million (5.0%), driven by a $1.4 million increase in cash management fees and a $1.3 million increase in wealth management revenues[167] Non-Interest Expense This section analyzes changes in non-interest expense, focusing on cost savings and contributing factors - Total non-interest expense decreased by $6.7 million (3.3%) to $192.8 million[169] - Excluding the gain on Sale-Leaseback Transaction, FultonFirst implementation, and acquisition-related expenses, non-interest expense decreased by $6.5 million (3.3%), mainly due to decreases in salaries and employee benefits ($2.1 million), data processing and software ($2.1 million), FDIC insurance ($1.7 million), and net occupancy ($1.4 million), largely from cost savings related to the Republic First Transaction and FultonFirst initiative[169] Income Taxes This section details the income tax expense and effective tax rate for the three-month period - Income tax expense increased by $15.3 million to $23.5 million, with the effective tax rate (ETR) rising to 19.1% from 7.9% in the prior year (14.7% excluding the gain on acquisition)[170] Results of Operations (Six months ended June 30, 2025 vs. 2024) This section analyzes the Corporation's financial performance for the six months ended June 30, 2025, across key income and expense categories Net Interest Income This section analyzes the changes in net interest income, interest income, and interest expense for the six-month period - FTE net interest income increased by $57.0 million to $514.8 million for the six months ended June 30, 2025, with NIM increasing by 8 bps to 3.45%[171] - Total interest income increased by $61.9 million (8.3%), driven by a $148.9 million increase from volume changes (primarily average net loans from Republic First Transaction), partially offset by an $87.0 million decrease from lower yields[174] - Interest expense increased by $4.8 million, driven by a $51.5 million increase from volume changes (average savings, money market, and time deposits from Republic First Transaction), partially offset by a $46.7 million decrease from lower interest rates[176] - Average net loans increased by $1.6 billion (7.1%) to $24.0 billion, largely due to the Republic First Transaction, while the yield on total loans decreased by 16 bps to 5.86%[178][179] - Average total deposits increased by $3.1 billion (13.6%) to $26.1 billion, primarily from interest-bearing demand, savings, and money market deposits, partly due to the Republic First Transaction. The cost of deposits decreased by 4 bps to 2.01%[180][181] - Average total borrowings and other interest-bearing liabilities decreased by $769.5 million (30.5%) to $1.8 billion, mainly due to decreases across various borrowing types, including the retirement of $168.8 million in subordinated notes in November 2024[182][183] Provision for Credit Losses This section details the provision for credit losses for the six-month period, highlighting the Republic First Transaction impact - The provision for credit losses was $22.5 million for the six months ended June 30, 2025, a $20.5 million decrease from $43.0 million in the same period of 2024, primarily due to a $23.4 million provision for non-PCD loans from the Republic First Transaction in Q2 2024[184] Non-Interest Income This section analyzes changes in non-interest income, highlighting key drivers and contributing factors - Total non-interest income decreased by $13.8 million (9.2%) to $136.4 million, primarily due to the absence of a $47.4 million gain on acquisition and a $20.3 million investment securities loss in the prior year[186] - Excluding these items, non-interest income increased by $13.4 million (10.9%), driven by increases in wealth management revenues ($2.9 million), cash management fees ($2.9 million), and income from equity method investments ($4.5 million)[186] Non-Interest Expense This section analyzes changes in non-interest expense, focusing on intangible amortization and employee benefits - Total non-interest expense increased by $5.2 million (1.4%) to $382.3 million[188] - Excluding the gain on Sale-Leaseback Transaction, FultonFirst implementation, and acquisition-related expenses, non-interest expense increased by $11.3 million (3.0%), largely due to increases in intangible amortization ($6.5 million from CDI amortization related to Republic First Transaction) and salaries and employee benefits ($6.2 million from incentive compensation and merit increases)[188] Income Taxes This section details the income tax expense and effective tax rate for the six-month period - The effective tax rate (ETR) was 19.2% for the six months ended June 30, 2025, up from 12.2% in the prior year (16.6% excluding the gain on acquisition)[189] Financial Condition (June 30, 2025 vs. December 31, 2024) This section analyzes the Corporation's financial position, covering investment securities, loans, deposits, borrowings, and regulatory capital Investment Securities This section details changes in the Corporation's investment securities portfolio, including AFS and HTM categories Investment Securities Carrying Amount (June 30, 2025 vs. December 31, 2024, in thousands) | Item | June 30, 2025 | December 31, 2024 | Change | % Change | | :-------------------------------- | :-------------- | :---------------- | :----- | :------- | | Total AFS investment securities | $3,619,869 | $3,410,899 | $208,970 | 6.1% | | Total HTM securities | $1,473,158 | $1,395,569 | $77,589 | 5.6% | | Total Investment Securities | $5,093,027 | $4,806,468 | $286,559 | 6.0% | - The increase in AFS securities was primarily due to a $383.4 million increase in collateralized mortgage obligations, partially offset by decreases in residential mortgage-backed, state and municipal, and corporate debt securities[191] - The increase in HTM securities was driven by an $81.1 million increase in residential mortgage-backed securities[192] Loans This section analyzes the loan portfolio composition, non-accrual loans, and non-performing assets Ending Net Loans Outstanding by Type (June 30, 2025 vs. December 31, 2024, in thousands) | Loan Type | June 30, 2025 | December 31, 2024 | Change | % Change | | :------------------------------ | :-------------- | :---------------- | :----- | :------- | | Real estate - commercial mortgage | $9,678,038 | $9,601,858 | $76,180 | 0.8% | | Commercial and industrial | $4,541,765 | $4,605,589 | $(63,824) | -1.4% | | Real estate - residential mortgage | $6,511,687 | $6,349,643 | $162,044 | 2.6% | | Real estate - home equity | $1,193,410 | $1,160,616 | $32,794 | 2.8% | | Real estate - construction | $1,155,099 | $1,394,899 | $(239,800) | -17.2% | | Consumer | $583,949 | $616,856 | $(32,907) | -5.3% | | Leases and other loans | $348,591 | $315,458 | $33,133 | 10.5% | | Net loans | $24,012,539 | $24,044,919 | $(32,380) | -0.1% | - Net loans decreased by $32.4 million (0.1%), primarily due to decreases in construction loans ($239.8 million) and commercial and industrial loans ($63.8 million), partially offset by increases in residential mortgage loans ($162.0 million) and commercial mortgage loans ($76.2 million)[193] - Commercial mortgage and construction loans comprised approximately $10.8 billion (45.1%) of the loan portfolio as of June 30, 2025[194] Non-Accrual Loans Activity (Six Months Ended June 30, 2025, in thousands) | Item | Commercial and Industrial | Real Estate - Commercial Mortgage | Real Estate - Construction | Real Estate - Residential Mortgage | Real Estate - Home Equity | Leases and Other Loans | Total | | :-------------------------- | :------------------------ | :-------------------------------- | :------------------------- | :--------------------------------- | :------------------------ | :--------------------- | :------ | | Balance at Dec 31, 2024 | $42,217 | $99,497 | $1,746 | $25,400 | $8,599 | $11,834 | $189,293 | | Additions | $25,695 | $85,360 | $25,980 | $5,217 | $3,917 | $1,925 | $148,094 | | Payments | $(19,107) | $(77,423) | $(2,534) | $(3,173) | $(1,818) | $(9,797) | $(113,852) | | Charge-offs | $(9,645) | $(18,508) | $(100) | $(601) | $(3,309) | $(1,924) | $(34,087) | | Transfers to accrual status | $(45) | $(4,891) | $— | $(82) | $(304) | $— | $(5,322) | | Transfers to OREO | $— | $— | $(240) | $(944) | $— | $— | $(1,184) | | Balance at June 30, 2025 | $39,115 | $84,035 | $24,852 | $25,817 | $7,085 | $2,038 | $182,942 | - Non-accrual loans decreased by $6.4 million (3.4%) to $182.9 million, representing 0.76% of total net loans as of June 30, 2025[200] Non-Performing Assets (June 30, 2025 vs. December 31, 2024, in thousands) | Item | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :-------------- | :---------------- | | Non-accrual loans | $182,942 | $189,293 | | Loans 90 days or more past due and still accruing | $29,949 | $30,781 | | Total non-performing loans | $212,891 | $220,074 | | OREO | $2,706 | $2,621 | | Total non-performing assets | $215,597 | $222,695 | | Non-accrual loans to total net loans | 0.76% | 0.79% | | Non-performing loans to total net loans | 0.89% | 0.92% | | Non-performing assets to total assets | 0.67% | 0.69% | | ACL - loans to non-performing loans | 177% | 172% | - Total criticized and classified loans decreased by $149.1 million to $1.69 billion, driven by a $190.1 million decrease in special mention loans, partially offset by a $41.0 million increase in substandard or lower loans[205] Deposits and Borrowings This section details changes in the Corporation's deposit base and borrowing activities Ending Deposits by Type (June 30, 2025 vs. December 31, 2024, in thousands) | Deposit Type | June 30, 2025 | December 31, 2024 | Change | % Change | | :-------------------------- | :-------------- | :---------------- | :----- | :------- | | Noninterest-bearing demand | $5,337,771 | $5,499,760 | $(161,989) | -2.9% | | Interest-bearing demand | $7,593,083 | $7,843,604 | $(250,521) | -3.2% | | Savings and money market deposits | $8,271,925 | $7,792,114 | $479,811 | 6.2% | | Brokered deposits | $817,398 | $843,857 | $(26,459) | -3.1% | | Time deposits | $4,117,890 | $4,150,098 | $(32,208) | -0.8% | | Total deposits | $26,138,067 | $26,129,433 | $8,634 | 0.0% | - Total deposits increased by $8.6 million, driven by a $479.8 million increase in savings and money market deposits, partially offset by decreases in interest-bearing demand, noninterest-bearing demand, and time deposits[211] - Total uninsured deposits were estimated at $9.2 billion as of June 30, 2025, down from $9.4 billion at December 31, 2024[212] Ending Borrowings by Type (June 30, 2025 vs. December 31, 2024, in thousands) | Borrowing Type | June 30, 2025 | December 31, 2024 | Change | % Change | | :------------------------------ | :-------------- | :---------------- | :----- | :------- | | FHLB advances | $800,000 | $850,000 | $(50,000) | -5.9% | | Senior debt and subordinated debt | $367,476 | $367,316 | $160 | 0.0% | | Other borrowings | $606,424 | $564,732 | $41,692 | 7.4% | | Total borrowings | $1,773,900 | $1,782,048 | $(8,148) | -0.5% | - Total borrowings decreased by $8.1 million (0.5%), primarily due to a $50.0 million decrease in FHLB advances, partially offset by a $41.7 million increase in other borrowings[214] Shareholders' Equity This section discusses changes in shareholders' equity, including share repurchase programs and public offerings - The Board approved a 2025 Repurchase Program authorizing up to $125.0 million for common stock repurchases, with up to $25.0 million also available for preferred stock and Subordinated Notes due 2030[215][216] - During the six months ended June 30, 2025, 553,767 shares of common stock were repurchased under the program at a total cost of $9.0 million ($16.28 per share)[217] - In May 2024, the Corporation completed a public offering of 19,166,667 common shares, generating approximately $272.6 million in net proceeds[218] Regulatory Capital This section outlines the Corporation's regulatory capital ratios and compliance with minimum requirements - The Corporation and Fulton Bank are subject to Capital Rules requiring minimum Common Equity Tier 1, Tier 1 Leverage, and Total capital ratios, along with a 2.50% capital conservation buffer[219][220] - As of June 30, 2025, the Corporation's capital levels met all minimum regulatory requirements, including capital conservation buffers[221] Corporation's Capital Ratios vs. Regulatory Requirements (June 30, 2025 vs. December 31, 2024) | Capital Ratio | June 30, 2025 | December 31, 2024 | Regulatory Minimum for Capital Adequacy | With Capital Conservation Buffer | | :------------------------------------------ | :-------------- | :---------------- | :------------------------------------ | :------------------------------- | | Total Risk-Based Capital (to Risk-Weighted Assets) | 14.7% | 14.3% | 8.0% | 10.5% | | Tier I Risk-Based Capital (to Risk-Weighted Assets) | 12.1% | 11.5% | 6.0% | 8.5% | | Common Equity Tier I (to Risk-Weighted Assets) | 11.3% | 10.8% | 4.5% | 7.0% | | Tier I Leverage Capital (to Average Assets) | 9.4% | 9.0% | 4.0% | 4.0% | Item 3. Quantitative and Qualitative Disclosures About Market Risk This section details the Corporation's management of market risk, focusing on interest rate risk, liquidity, and debt security price risk Interest Rate Risk, Asset/Liability Management and Liquidity This section discusses interest rate risk management through simulations and ALCO's role in balance sheet strategies - Interest rate risk impacts the Corporation's liquidity and can cause fluctuations in net interest income and economic value of equity[225] - The Asset/Liability Management Committee (ALCO) reviews interest rate sensitivity and liquidity, approves policies, and oversees balance sheet strategies[226] - The Corporation uses net interest income simulations (12-month period) and economic value of equity estimates to measure and manage interest rate risk, with policy limits for potential exposure[227][228][229][231] Expected Impact of Rate-Ramp Scenarios on Net Interest Income (June 30, 2025) | Rate Ramp | Annual change in net interest income | % change in net interest income | | :-------- | :--------------------------------- | :------------------------------ | | +400 bp | +$33.5 million | +3.0% | | +300 bp | +$27.1 million | +2.4% | | +200 bp | +$20.3 million | +1.8% | | +100 bp | +$12.3 million | +1.1% | | –100 bp | -$7.9 million | -0.7% | | –200 bp | -$15.3 million | -1.4% | | –300 bp | -$22.6 million | -2.0% | | –400 bp | -$30.6 million | -2.7% | Expected Impact of Parallel Instantaneous Rate Shocks on Net Interest Income (June 30, 2025) | Rate Shock | Annual change in net interest income | % change in net interest income | | :--------- | :--------------------------------- | :------------------------------ | | +400 bp | +$60.4 million | +5.4% | | +300 bp | +$51.0 million | +4.6% | | +200 bp | +$40.6 million | +3.6% | | +100 bp | +$27.2 million | +2.4% | | –100 bp | -$19.5 million | -1.7% | | –200 bp | -$37.1 million | -3.3% | | –300 bp | -$55.7 million | -5.0% | | –400 bp | -$88.6 million | -7.9% | Interest Rate Derivatives This section explains the Corporation's use of interest rate derivatives to manage risk with customers and dealers - The Corporation uses interest rate derivatives with commercial loan customers and simultaneously with dealer counterparties to manage interest rate risk, resulting in customers paying a fixed rate and the Corporation receiving a floating rate[232] Cash Flow Hedges This section describes how cash flow hedges reduce volatility in net interest income and expense, with unrealized gains/losses in AOCI - Interest rate derivatives designated as cash flow hedges reduce volatility in net interest income and expense, with unrealized gains/losses recorded in AOCI and reclassified to interest income/expense as hedged transactions affect earnings[233][234] - Following the termination of $1.0 billion in cash flow hedges in January 2023, $6.5 million of unrealized losses were reclassified as a reduction to interest income on loans for the six months ended June 30, 2025[235] Liquidity This section outlines the Corporation's liquidity management strategies, including primary and secondary funding sources - The Corporation maintains liquidity through scheduled payments, deposits, and borrowings, supplemented by secondary sources like FHLB and FRB credit facilities, and federal funds lines[236][237] - As of June 30, 2025, Fulton Bank had approximately $6.3 billion in available borrowing capacity with the FHLB, $2.6 billion in federal funds lines (no amounts outstanding), and $3.9 billion in collateralized borrowing capacity at the FRB discount window (no amounts outstanding)[238][239] - Operating activities generated $92.5 million in cash for the six months ended June 30, 2025, while investing and financing activities used $270.0 million and $81.7 million, respectively[243] Debt Security Market Price Risk This section addresses debt security market price risk, focusing on U.S. government-sponsored agency mortgage-backed securities - Debt security market price risk arises from changes in debt security values unrelated to interest rates. The Corporation's investments are primarily U.S. government-sponsored agency mortgage-backed securities and collateralized mortgage obligations, state and municipal securities, and corporate debt securities[244] - All mortgage-backed securities and collateralized mortgage obligations have principal payments guaranteed by U.S. government-sponsored agencies[244] State and Municipal Securities This section details the Corporation's holdings in state and municipal securities, emphasizing their credit support - As of June 30, 2025, the Corporation held $774.7 million in state and municipal securities, with approximately 100% supported by the general obligation of the issuing states or municipalities, and 75% being school district issuances[245] Item 4. Controls and Procedures This section confirms the effectiveness of the Corporation's disclosure controls and procedures as evaluated by management - The Corporation's Chief Executive Officer and Chief Financial Officer concluded that the disclosure controls and procedures were effective as of June 30, 2025[246] PART II. OTHER INFORMATION This part includes disclosures on legal proceedings, risk factors, equity sales, and other relevant information Item 1. Legal Proceedings This section incorporates legal proceedings information by reference from Note 14 of the financial statements - Information on legal proceedings is incorporated by reference from Note 14 'Commitments and Contingencies' in the Notes to Consolidated Financial Statements[247] Item 1A. Risk Factors This section states that there have been no material changes to previously disclosed risk factors - No material changes to the risk factors previously disclosed in the Corporation's Annual Report on Form 10-K for the year ended December 31, 2024[248] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details the 2025 Repurchase Program, including authorization limits and shares repurchased Share Repurchase Activity (April 1, 2025 to June 30, 2025) | Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs | | :------------------------------ | :----------------------------- | :--------------------------- | :----------------------------------------------------------------------------- | :----------------------------------------------------------------------------- | | April 1, 2025 to April 30, 2025 | 500,000 | $16.15 | 500,000 | $116,368,940 | | May 1, 2025 to May 31, 2025 | — | — | — | $116,368,940 | | June 1, 2025 to June 30, 2025 | 22,300 | $17.17 | 22,300 | $115,986,150 | - The 2025 Repurchase Program authorizes repurchases of up to $125.0 million of common stock, with up to $25.0 million also available for preferred stock and Subordinated Notes due 2030[249][250] - During the six months ended June 30, 2025, 553,767 common shares were repurchased for $9.0 million ($16.28 per share)[252] Item 3. Defaults Upon Senior Securities This item is marked as not applicable Item 4. Mine Safety Disclosures This item is marked as not applicable Item 5. Other Information This section discloses a director's Rule 10b5-1 trading arrangement for common stock sales - On June 13, 2025, E. Philip Wenger, a director, adopted a Rule 10b5-1 trading arrangement to sell up