Fulton Prints a Record Quarter While Its Loan Book Goes Sideways
A $1 billion customer-deposit quarter, a record $0.62 in operating EPS — and a multifamily payoff problem that has management pushing loan growth into 2027 just as the Fed flips from cutting to hiking.
FULT · Earnings Call · 2026-10-22
The best quarter, and the number that didn't cooperate
Fulton Financial put up the cleanest print in its recent history on October 22. Operating net income available to common reached $119.8 million, or $0.62 per diluted share; operating PPNR hit $156 million; operating return on tangible common equity touched 15.94% and return on assets 1.4%. Net interest income rose $5.8 million linked quarter to $290 million. Curt Myers did not undersell it: “The third quarter represented another period of strong performance for Fulton.” — Curt Myers, Chairman, Chief Executive Officer, and President · 2026-10-22
The real victory was on the liability side. Total deposits ended at $28.8 billion, up $571 million — but that understates the story, because the company simultaneously shrank brokered deposits by $428 million (to $547 million) and paid off $553 million of Federal Home Loan Bank advances entirely. Customer deposits grew by roughly $1 billion. Myers split it cleanly: “Overall, just commercial growth was almost $600 million. Muni flows are about $400 million.” — Curt Myers, Chairman, Chief Executive Officer, and President · 2026-10-22 That is customer deposits doing the work of wholesale funding, and it is why broker deposit reduction and funding profile reshuffling now occupy four of the top five slots in this company's keyword ranking — a configuration that did not exist in any recent quarter, when funding cost, capital position and credit quality led.
Then the number that did not cooperate. Total loans grew $44 million on a $21 billion book. Consumer portfolios added $107 million; commercial balances fell $63 million. Originations were up 23% linked quarter, which makes the flat net balance less a demand problem than a runoff problem.
Commercial balances trailed expectations, mostly due to accelerated CRE payoffs above what we thought they were going to be in the quarter... it's really multifamily. If you look linked quarter and year-over-year, multifamily payoffs were higher than we expected. And that market is competitive.
Insurance companies and non-banks competing in multifamily means Fulton's own customers are refinancing away from it while staying customers. That is a defensible choice — Myers framed it as pricing and credit discipline — but it is a choice that costs balance sheet growth in the exact quarter the tape wanted it.
The regime flipped, and Fulton's deposit base feels it first
Here is the genuine inflection. Twelve months ago the question on this call was what Fed cuts would do to the margin. Rick Kraemer's answer then was a clean sensitivity: “for every 25 basis points on an annualized basis, it's about $2 million of annualized NII headwind.” — Richard Kraemer, Chief Financial Officer · 2025-10-22 That framework is now obsolete. The Q3 2026 call references a September Fed hike, a hike cycle with rate hikes potentially still ahead, and a curve shape that management calls a tailwind rather than a drag.
This is not a company-unique insight — it is the market's dominant theme. The global keyword board for the quarter is topped by Fed rate hike at rank two, with hiking cycle and hiking-cycle mechanics scattered through the top twenty. And Fulton is one of a crowd of regional banks working the same question this week: Amalgamated and Civic both led with deposit beta, Webster with higher interest rates, HWC and BWB with rate hikes, SSB and UCB with the September Fed move specifically. Fulton is riding the wave, not creating it.
What is company-specific is how fast its liabilities reprice. Kraemer flagged that roughly 70% of the municipal deposit portfolio is indexed, meaning “the cost on those move more immediate, obviously following the September Fed hike” — Rick Kraemer, Chief Financial Officer · 2026-10-22 — faster than loan yields reprice. Against a historical interest-bearing beta of just under 40% across the last cycle, spot deposit costs sat at $1.90 in September and averaged 1.87% for the quarter, while new commercial deposit relationships are being written in the mid-to-upper 2s. Net interest margin slipped to 3.58% from 3.60%, and roughly two basis points of that was self-inflicted: average cash balances ran $1.1 billion versus $842 million, a quarter-end liquidity build that will abate. Kraemer's forward view is “stable to slightly higher” — Rick Kraemer, Chief Financial Officer · 2026-10-22 — an honest, unexciting answer.
The 2027 promise, asked for the third time
The most revealing pattern in the prior calls is a promise that keeps sliding right. In January, Myers was “confident getting back into that mid-single-digit range” — Curtis Myers, Chairman, Chief Executive Officer and President · 2026-01-22 for 2026. By the July call, the annual guide had been trimmed: “On an annual basis, that moderates it to low single digit.” — Curt Myers, Chairman, Chief Executive Officer, and President · 2026-07-23 Now, with one quarter left in 2026, the framing has moved again: “we're really building for 2027 at this point.” — Curt Myers, Chairman, Chief Executive Officer, and President · 2026-10-22
The investment behind that promise is real and quantifiable — a 14% year-to-date increase in the commercial sales force, over two-thirds of it landing in Q3, roughly 30 bankers, layered on top of the Northern New Jersey franchise from Blue Foundry. But the market has now heard mid-single-digit loan growth described as imminent across three consecutive calls while the commercial book contracted. Payoffs were running about $250 million a month plus $100 million of prepayments as of July; management's claim that this abates is the load-bearing assumption of the entire 2027 thesis.
The quiet items — and a stock that refuses to celebrate
Two things went conspicuously quiet. First, credit. Net charge-offs fell to 0.14% of average loans from 0.34%, non-performing assets improved to 0.52% of total assets, the allowance eased to 1.45%, and the full-year provision guide was cut to $30 million–$40 million. Strong — and largely unremarked, because deposits crowded it out of the narrative.
Second, capital return. Fulton bought back $56.1 million of stock at an average $24.14, roughly triple the pace implied by the $18 million repurchased in the prior quarter. Yet Myers pre-emptively guided it down — “we would probably expect that to moderate linked quarter” — Curt Myers, Chairman, Chief Executive Officer, and President · 2026-10-22 — and buybacks never cracked the top thirty keywords. When a company's single largest capital action of the quarter is treated as housekeeping, that tells you where management believes the story lives.
The tape agrees with the ambivalence. Fulton's stock is up 1.1% over the last ninety trading days, essentially flat, and sits 7.3% below its July 16 high of $25.19 despite delivering record earnings. The valuation is not stretched: 11.7x trailing earnings against a ten-year peak near 18.7x, and 1.3x book. Meanwhile the balance sheet it is being asked to grow has doubled deposits in nine years to $28.3 billion while loans sit at $21.1 billion.
That is the tension in one line: Fulton is exceptionally good at gathering deposits and increasingly good at generating fees — wealth AUM at a record $18.6 billion, wealth revenue up more than 9% linked quarter, non-interest income at 21% of revenue — and merely adequate at converting all of it into earning assets. The efficiency ratio, at 56.8% on an operating basis, and the raised NII floor of $1.125 billion, buy management time. But three quarters of deferred loan growth, a flat stock, and a rate regime that reprices 70% of the municipal book immediately is not a combination that rewards patience indefinitely. The 2027 promise now has to be cashed.