Fulton Q3 2026 Earnings: Net Interest Income Rises as Credit Quality Improves

Fulton Financial (NASDAQ: FULT) reported Q3 2026 revenue of $367.3 million, up about 9.8% from $334.6 million a year earlier, while diluted EPS increased to $0.59 from $0.53. Net income available to common shareholders rose 16.6% to $114.1 million, supported by higher net interest and fee income as well as a lower provision for credit losses.

Core Financial Results

Net interest income and non-interest income both increased by nearly 10% year over year. Those gains more than offset an 11.2% increase in non-interest expense, while the credit-loss provision declined to $4.1 million from $10.2 million.

The quarter also benefited from lower acquisition-related costs compared with Q2. On a non-GAAP basis, operating diluted EPS was $0.62, up from $0.55 in the prior-year quarter.

*Revenue is calculated as net interest income plus non-interest income. Operating EPS is a non-GAAP measure.

Lower Acquisition Costs Drove Most of the Sequential GAAP Improvement

Compared with Q2 2026, GAAP net income available to common shareholders increased by $14.2 million, while non-GAAP operating net income rose by a smaller $3.9 million. The difference largely reflected acquisition-related expenses falling by $12.1 million to $1.7 million after Fulton completed the Blue Foundry Bank integration during the quarter.

Total non-interest expense consequently declined by $12.4 million sequentially to $218.5 million. However, operating non-interest expense edged up by $0.6 million to $211.2 million, indicating that most of the reported expense improvement came from fewer acquisition adjustments rather than a broad reduction in the underlying cost base. Salaries and benefits increased by $5.6 million from Q2, primarily because of higher incentive compensation, an additional calendar day, and recruiting costs.

Net interest income increased by $5.8 million sequentially even though net interest margin slipped two basis points to 3.58%. Higher interest income from loans, securities, and other earning assets, together with lower borrowing costs, outweighed a $9.0 million increase in deposit interest expense. Purchase loan mark accretion from the Republic and Blue Foundry transactions declined to a combined $12.9 million from $15.1 million in Q2.

Loan, Deposit, and Fee Businesses

Ending net loans increased by only $43.6 million from June to $26.0 billion, with meaningful differences across categories. Consumer loans rose by $107.0 million, led by an $81.1 million increase in residential mortgages and a $19.9 million increase in home-equity loans. Commercial loans declined by $63.3 million, primarily because commercial construction loans fell by $66.4 million.

Fee businesses generally grew from the prior-year quarter. Wealth management revenue increased to $25.3 million from $22.6 million, commercial banking revenue rose to $25.0 million from $23.2 million, and mortgage banking revenue reached $5.1 million compared with $3.7 million.

Sequentially, however, total non-interest income declined by $2.1 million. The prior quarter included $6.9 million of income from an equity-method investment that was subsequently sold, partially offset in Q3 by a $2.1 million increase in wealth management revenue.

Funding, Credit Quality, and Capital

Deposits increased by $571.0 million during the quarter to $28.8 billion. Savings deposits rose by $601.0 million, interest-bearing demand deposits by $324.1 million, and time deposits by $120.3 million. Those gains more than offset a $428.5 million reduction in brokered deposits and a $45.8 million decline in noninterest-bearing demand deposits. Management attributed the overall increase to commercial deposit growth and seasonal municipal deposit trends.

The stronger deposit base coincided with total borrowings declining by $481.1 million to $1.23 billion. Federal Home Loan Bank advances fell from $552.5 million at the end of Q2 to zero at September 30. Nevertheless, the average cost of total deposits increased to 1.87% from 1.81%, contributing to the modest sequential decline in net interest margin.

Credit indicators improved from Q2. Non-performing assets declined to $179.4 million, or 0.52% of assets, from $187.1 million, or 0.54%. Annualized net charge-offs fell to 0.14% of average loans from 0.34%, while the allowance for credit losses declined to $375.6 million, equal to 1.45% of net loans versus 1.48% in June.

Fulton’s preliminary common equity Tier 1 ratio remained at 12.2%, while its tangible common equity ratio decreased to 8.4% from 8.8%. The company repurchased 2.325 million common shares during Q3 for $56.1 million, at an average price of $24.14 per share.

Recent Insider Transactions

The supplied six-month insider summary showed 339,194 shares purchased across 19 transactions and 52,410 shares sold across four transactions, resulting in net purchases of 286,784 shares. Separately, the itemized records included the following recent transactions with disclosed actions and values; the source did not provide share quantities for these entries.

These transactions describe reported activity only and do not establish insiders’ views about the company’s outlook.

Risks Investors Should Monitor

• Deposit costs remain a margin constraint. Deposit interest expense increased by $9.0 million from Q2, and the average cost of deposits rose even as Fulton reduced brokered deposits and borrowings.
• Underlying expenses did not decline with reported expenses. Operating non-interest expense was slightly higher sequentially and 10.3% above the prior-year quarter, with compensation representing a significant source of pressure.
• Loan growth was uneven. Consumer lending expanded, but commercial balances contracted, leaving total sequential loan growth at just $43.6 million.
• Reserve and tangible capital ratios declined. The allowance-to-loan ratio fell to 1.45%, while the tangible common equity ratio decreased to 8.4%. These measures warrant attention alongside future credit trends and capital distributions.

Summary

Fulton’s Q3 2026 results reflected higher net interest and fee income, improving credit metrics, and a sharp reduction in acquisition-related expenses following the Blue Foundry integration. Deposit growth allowed the company to reduce brokered funding and borrowings, but rising deposit costs, higher underlying operating expenses, and mixed loan growth remain the principal areas to monitor.