Fulton's Blue Foundry Integration Unlocks Record Earnings, But Loan Growth Remains the Watch Item
The regionals' acquisition-driven quarter delivered a record operating print and a stable margin, even as management trimmed full-year loan growth guidance.
FULT · Earnings Call · 2026-07-23
Record Quarter, Timely Integration
Fulton Financial delivered a record second quarter, with operating earnings per share of $0.60 and an operating return on tangible common equity of 15.71%. The quarter was defined by the successful completion and early integration of the Blue Foundry acquisition, which added approximately $1.6 billion in loans and deposits and positioned the bank for deeper penetration of Northern New Jersey. As CEO Curt Myers put it:
We also achieved an important milestone during the quarter with the successful completion of the Blue Foundry acquisition on April 1st and the subsequent merger and integration of Blue Foundry Bank on July 11th.
The stock has responded positively, rising 9.7% over the last 90 days, though it remains 6.2% below its July peak. The market is clearly rewarding the bank's ability to execute on a transformative deal while still generating record profitability.
Loan Growth: A Timing Story or a Structural Shift?
The one blemish on the quarter was the downward revision to full-year loan growth, now expected to be "low single digits" versus the prior mid-single-digit guide. Management attributed this to a slower first half rather than a change in trajectory. “We're really modifying the annual guidance. It's really just reflective of the performance in the first 6 months. We had more modest growth in the first 6 months, and we expect the back half growth to go back to previous expectations.” — Curt Myers, Chairman, Chief Executive Officer, and President · 2026-07-23 This is a familiar refrain; a year ago, the bank was battling headwinds from strategic portfolio actions. As Curt Myers noted on the January 2026 call, “As we look back on last year, we had more than $800 million of headwinds around strategic actions that we took derisk the portfolio.” — Curtis Myers, Chairman, Chief Executive Officer and President · 2026-01-22 While the drag from those actions has faded, organic growth remains lumpy, with strength in the Consumer business offsetting modest commercial declines. Still, management points to a strong pipeline and productive customer conversations as reasons to expect reacceleration into the back half, supported by the Blue Foundry footprint expansion. The Credit quality backdrop remains favorable, which should allow the bank to lean into growth without taking on excess risk.
Margin Stability and Funding Discipline
Net interest margin expanded to 3.60%, up two basis points quarter-over-quarter and 13 basis points year-over-year, despite a modestly higher funding cost. The bank is benefiting from a favorable repricing environment: roughly $5 billion in loans are set to reprice over the next twelve months, with new originations running in the low sixes versus sub-five on the existing book. “There's good tailwind there. Overall, when we look at it, I think that would imply a stable to slightly higher margin over the next couple of quarters.” — Rick Kraemer, Chief Financial Officer · 2026-07-23 On the liability side, the funding cost is expected to drift modestly higher, but management is focused on customer deposits and disciplined pricing. As CFO Rick Kraemer said, “Ending the quarter, deposit costs were about two basis points higher than the average. Would expect a kind of similar trend in terms of deposit costs from what you saw in second quarter into third quarter.” — Rick Kraemer, Chief Financial Officer · 2026-07-23 The combination of asset repricing and controlled funding should keep NIM in a tight range, supporting net interest income growth. With asset yield set to benefit from repricing, the bank is well positioned to defend margins in a competitive deposit market.
Credit Quality, Capital, and the Path Forward
Credit quality remains sound. Annualized net charge-offs ticked up to 0.34% from 0.25%, but management is confident this is a timing issue. “Charge-offs is really just timing on resolutions and updated information on identified accounts. I mean, the key thing for us, there's no newly identified issues driving that.” — Curt Myers, Chairman, Chief Executive Officer, and President · 2026-07-23 The allowance for credit losses stands at 1.48% of loans, providing a solid buffer. Meanwhile, the bank's capital position strengthened further, with CET1 rising to ~12.1% and tangible common equity improving to 8.8%. Management repurchased $11.1 million of stock in the quarter and notes that buybacks remain an attractive use of capital. As Myers reiterated on the January call, “Our priorities are the same. Organic growth and corporate activities... and then buybacks.” — Curtis Myers, Chairman and Chief Executive Officer · 2025-10-22 This disciplined capital deployment, combined with expected cost saves from Blue Foundry, sets the stage for positive operating leverage in the second half. The bank's efficiency ratio, which has improved from over 60% a decade ago to the mid-40s, underscores the operating discipline. The efficiency ratio sits at 43.6%, near historic lows, and should benefit further as acquisition synergies are realized.