FULTON FINANCIAL CORP

Three months ended March 31, 2025 compared to the three months ended March 31, 2024

Net Interest Income

FTE net interest income was $255.5 million for the three months ended March 31, 2025, an increase of $44.0 million, compared to $211.5 million for the same period in 2024. For the three months ended March 31, 2025, NIM increased to 3.43%, or 11 bps, compared to the same period in 2024. The Corporation manages the risk associated with changes in interest rates through the techniques described within Part 1, "Item 3, Quantitative and Qualitative Disclosures About Market Risk" in this Quarterly Report on Form 10-Q. The following table provides a comparative average balance sheet and net interest income analysis for the three months ended March 31, 2025 compared to the same period in 2024. Interest income and yields are presented on an FTE basis using a 21% federal tax rate as well as statutory interest expense disallowances. The discussion following this table is based on these taxable-equivalent amounts.

(1) Presented on a FTE basis using a 21% federal tax rate and statutory interest expense disallowances.

(2)Average balance includes non-performing loans.

(3) Average balances include amortized historical cost for AFS investment securities; the related unrealized holding gains (losses) are included in other assets.

(4) ACL - loans relates to the ACL specifically for net loans and does not include the ACL for OBS credit exposures, which is included in other liabilities.

The following table summarizes the changes in FTE interest income and interest expense resulting from changes in average balances (volume) and changes in yields and rates for the three months ended March 31, 2025 compared to the same period in 2024:

(1) Average balance includes non-performing loans.

Note: Changes which are partially attributable to both volume and rate are allocated to the volume and rate components presented above based on the percentage of direct changes that are attributable to each component.

Compared to the first quarter of 2024, FTE total interest income for the first quarter of 2025 increased $59.8 million, or 17.4%, due to an increase of $125.9 million attributable to changes in volume, partially offset by a decrease of $66.2 million attributable to changes in yield. The increase due to changes in volume was largely due to an increase in average net loans primarily attributable to loans acquired in the Republic First Transaction. The decrease due to changes in yield was primarily due to a decline in interest rates.

The yield on average interest-earning assets increased 4 bps for the three months ended March 31, 2025 compared to the same period in 2024.

In the first quarter of 2025, interest expense increased $15.8 million compared to the first quarter of 2024, primarily driven by an increase of $38.9 million attributable to changes in volume, partially offset by a decrease of $23.1 million attributable to changes in rate. The increase in interest expense attributable to changes in volume was driven by increases in average savings and money market deposits, average time deposits and average demand deposits primarily due to deposits assumed in the Republic First Transaction. The decrease in interest expense attributable to changes in rate was primarily due to a decline in interest rates.

The rate on average interest-bearing liabilities decreased 15 bps for the three months ended March 31, 2025 compared to the same period in 2024.

Average loans and average FTE yields, by type, are summarized in the following table:

(1) Consists of equipment lease financing, overdrafts and net origination fees and costs.

During the first quarter of 2025, average netloans increased $2.6 billion, or 12.3%, compared to the same period in 2024. The increase in average net loans was primarily due to increases of $1.5 billion and $1.0 billion in average commercial mortgage loans and average residential mortgage loans, respectively. The increase in average net loans was largely due to loans acquired in the Republic First Transaction.

The yield on total loans decreased 4 bps to 5.86% for the first quarter of 2025 compared to 5.90% for the same period in 2024.

Average deposits and average interest rates, by type, are summarized in the following table:

The cost of deposits increased 8 bps to 2.03% in the first quarter of 2025 compared to 1.95% for the same period in 2024, primarily due to a change in the mix of deposits.

Average total deposits increased $4.8 billion, or 22.4%, in the first quarter of 2025 compared to the same period in 2024. The increase in average total deposits was primarily due to increases of $2.2 billion, $1.3 billion and $1.2 billion in average interest-bearing demand deposits, average savings and money market deposits and average time deposits, respectively. The increase in average deposits is primarily due to deposits assumed in the Republic First Transaction.

Average borrowings and interest rates, by type, are summarized in the following table:

(1) Includes repurchase agreements, short-term promissory notes, capital leases and collateral liabilities.

Average borrowings and other interest-bearing liabilities decreased $853.5 million, or 32.7%, in the first quarter of 2025 compared to the same period in 2024. The decrease in average borrowings and other interest-bearing liabilities was due to decreases of $318.2 million, $193.5 million, $173.7 million and $168.1 million in average other borrowings and interest-bearing liabilities, average FHLB advances, average Federal funds purchased and average senior debt and subordinated debt, respectively.

In November 2024, the Corporation retired $168.8 million of subordinated notes issued in November 2014 and June 2015 which matured on November 15, 2024.

Provision for Credit Losses

The provision for credit losses was $13.9 million for the three months ended March 31, 2025 resulting in a $379.7 million allowance for credit losses attributable to net loans, or 1.59% of total net loans as of March 31, 2025, compared to a provision for credit losses of $10.9 million for the same period in 2024, resulting in a $297.9 million allowance for credit losses attributable to net loans, or 1.39% of total net loans as of March 31, 2024.

Non-Interest Income

The following table presents the components of non-interest income:

Compared to the three months ended March 31, 2024, non-interest income before investment securities losses increased $10.1 million, or 17.7%. The increase in non-interest income was primarily due to a $4.1 million increase in income from equity method investments, reflected in other non-interest income, a $1.6 million increase in wealth management revenues due to an increase in assets under management, a $1.5 million increase in cash management fee income due to an increase in account analysis fees as commercial customers elected to move funds to interest-bearing deposit accounts and a $0.9 million increase in consumer card income largely due to an increase in transaction volume primarily attributable to customer accounts acquired in the Republic First Transaction.

Non-Interest Expense

The following table presents the components of non-interest expense:

Non-interest expense increased $11.9 million, or 6.7%, for the three months ended March 31, 2025 compared to the same period in 2024. The increase in non-interest expense was primarily due to $8.3 million in salaries and employee benefits expense driven by employee incentive compensation and employee base salaries expense, in part due to the Republic First Transaction, $5.7 million in intangible amortization expense attributable to an increase in CDI amortization expense resulting from the Republic First Transaction and $2.1 million in net occupancy expense largely due to an increase in rent expense resulting from the Sale-Leaseback Transaction and leases assumed in the Republic First Transaction, partially offset by a decrease in professional fees of $3.3 million primarily due to a recovery during the first quarter of 2025 of previously incurred fees.

Income Taxes

Income tax expense for the three months ended March 31, 2025 was $22.1 million, an $8.5 million increase compared to the same period in 2024. The Corporation's ETR was 19.2% for the three months ended March 31, 2025 compared to 18.0% for the same period in 2024.

FINANCIAL CONDITION

The table below presents condensed consolidated ending balance sheets:

Investment Securities

The following table presents the carrying amount of investment securities:

Compared to December 31, 2024, total AFS investment securities at March 31, 2025 increased $164.1 million, or 4.8%. The increase in AFS investment securities at March 31, 2025 compared to December 31, 2024 was primarily due an $218.0 million increase in collateralized mortgage obligations, partially offset by decreases of $23.2 million, $16.5 million and $15.6 million in state and municipal securities, residential mortgage-backed securities and corporate debt securities, respectively.

Compared to December 31, 2024, total HTM investment securities at March 31, 2025 increased $100.7 million, or 7.2%. The increase in HTM investment securities at March 31, 2025 compared to December 31, 2024 was driven by an increase of $102.4 million in residential mortgage-backed securities.

Loans

The following table presents ending net loans outstanding by type:

(1) Includes no unearned income for March 31, 2025 and December 31, 2024.

(2) Includes unearned income of $35.9 million and $35.6 million as of March 31, 2025 and December 31, 2024, respectively.

During the three months ended March 31, 2025, net loans decreased $182.3 million, or 0.8%, compared to December 31, 2024. The decrease in net loans during the first quarter of 2025 was primarily due to decreases of $219.5 million in construction loans, $74.3 million in commercial and industrial loans and $19.6 million in consumer loans, partially offset by increases of $74.7 million in commercial mortgage loans and $60.0 million in residential mortgage loans. The decrease in net loans is partially due to the repayments of $94.2 million of special mention loans and substandard loans in the first quarter of 2025.

The Corporation does not have a significant concentration of credit risk with any single borrower. As of March 31, 2025, approximately $10.9 billion, or 45.5%, of the loan portfolio was comprised of commercial mortgage loans and construction loans.

The Corporation has established lower total lending limits for certain types of commercial lending commitments and lower total lending limits based on the Corporation's internal risk rating of an individual borrower at the time the lending commitment is approved. The Corporation adheres to loan portfolio management practices, which include requiring an annual review of the majority of loans. Additionally, management monitors the loan portfolio throughout the year taking into account, among other things, the size, complexity and risk of loans and individual borrowers. An independent loan review function assesses the portfolio for internal risk rating accuracy and loan servicing policy requirements. The Corporation consolidates risk migrations to identify emerging risks by industry and real estate property types, taking into consideration economic forecasts and industry trends. The Corporation takes a risk-based approach when reviewing a specific loan portfolio, such as the commercial office loan portfolio or multi-family loan portfolio. The Corporation reviews portfolio concentrations and adjusts the lending limits based on asset quality, economic forecasts and industry outlook.

The following table summarizes the industry concentrations within the commercial mortgage and the commercial and industrial loan portfolios:

(1) Includes commercial loans to borrowers engaged in the business of renting, leasing or managing real estate for others, selling and/or buying real estate for

others and appraising real estate.

(2) Includes commercial loans to borrowers engaged in the construction industry.

The commercial mortgage loan portfolio consists of 45.0% owner occupied commercial mortgage loans and 55.0% of non-owner occupied commercial mortgage loans as of March 31, 2025. The following table summarizes the non-owner occupied commercial mortgage loan portfolio and the percent to total net loans.

The following table summarizes the commercial mortgage office non-owner occupied loan portfolio outstanding balance, total commitment and LTV ratio by Metropolitan Statistical Area:

(1)Weighted average LTV as of origination.

(2)Philadelphia-Camden-Wilmington, PA-NJ-DE-MD.

(3) New York-Newark-Jersey City, NY-NJ-PA.

(4)Washington-Arlington-Alexandria, DC-VA-MD-WV.

(5) Baltimore-Columbia-Towson, MD.

The non-owner occupied commercial mortgage office loan portfolio table above excludes commercial construction loans secured by office property collateral with a total outstanding balance of $1.7 million and outstanding loan commitment of $2.8 million as of March 31, 2025.

The following table summarizes the non-owner occupied commercial mortgage multi-family loan portfolio outstanding balance, total commitment and LTV ratio by Metropolitan Statistical Area:

(1) Weighted average LTV as of origination.

(2)Philadelphia-Camden-Wilmington, PA-NJ-DE-MD.

(3) New York-Newark-Jersey City, NY-NJ-PA.

(4) Baltimore-Columbia-Towson, MD.

(5)Washington-Arlington-Alexandria, DC-VA-MD-WV.

The non-owner occupied commercial mortgage multi-family loan table above excludes commercial construction loans secured by multi-family property collateral with a total outstanding loan balance of $347.4 million and outstanding loan commitments of $605.8 million as of March 31, 2025.

The following table presents the changes in non-accrual loans for the three months ended March 31, 2025:

During the three months ended March 31, 2025, non-accrual loans decreased by approximately $26.9 million, or 14.2%, largely due to $73.1 million in payments and $20.0 million in charge-offs, partially offset by $69.8 million in additions. During the three months ended March 31, 2025, non-accrual loans as a percentage of total net loans decreased to 0.68% compared to 0.79% as of December 31, 2024.

The following table presents non-performing assets for the periods shown below:

(1) Excludes $16.5 million and $17.5 million of residential mortgage properties for which formal foreclosure proceedings were in process as of March 31, 2025 and December 31, 2024, respectively.

Non-performing loans as of March 31, 2025 decreased $23.3 million, or 10.6%, compared to $220.1 million as of December 31, 2024. The decrease in non-performing loans during the first three months of 2025 was primarily due to payments and charge-offs, partially offset by additions. Non-performing loans as a percentage of total net loans was 0.82% and 0.92% as of March 31, 2025 and December 31, 2024, respectively.

The Corporation's ability to identify potential problem loans in a timely manner is important to maintaining an adequate ACL. For commercial and industrial loans, commercial mortgage loans and commercial construction loans to commercial borrowers, an internal risk rating process is used to monitor credit quality. The evaluation of credit risk for residential mortgages, home equity loans, construction loans to individuals, consumer loans and leases and other loans is based on payment history through the monitoring of delinquency levels and trends.

Total internally risk-rated loans were $15.2 billion and $15.4 billion as of March 31, 2025 and December 31, 2024, respectively, of which $1.8 billion were criticized and classified in both periods.

The following table presents criticized and classified loans, or those with internal risk ratings of special mention or substandard or lower for commercial mortgage loans, commercial and industrial loans and construction loans to commercial borrowers, by class segment:

(1) Considered "criticized" loans by banking regulators.

(2) Considered "classified" loans by banking regulators.

(3) Excludes residential real estate - construction.

Compared to December 31, 2024, total criticized and classified loans decreased $65.2 million driven by a decrease of $88.0 million in special mention loans, partially offset by an increase of $22.8 million in substandard or lower loans. The decrease in total criticized and classified loans was in part due to $94.2 million in repayments during the quarter.

The Corporation accounts for the credit risk associated with lending activities through the ACL and the provision for credit losses.

The following table presents the activity in the ACL:

(1) These amounts are reflected in the provision for credit losses in the Consolidated Statements of Income.

(2) Provision for credit losses includes only the portion related to net loans.

(3) Reserve for OBS credit exposures is recorded within other liabilities on the Consolidated Balance Sheets.

The provision for credit losses, specific to net loans, for the three months ended March 31, 2025 and March 31, 2024 was $13.1 million.

The ACL includes qualitative adjustments, as appropriate, intended to capture the impact of uncertainties not reflected in the quantitative models. See "Note 5 - Loans and Allowance for Credit Losses" of the Notes to Consolidated Financial Statements in Part I, "Item 1. Financial Statements" for additional details.

The following table summarizes the allocation of the ACL - loans:

(1) Ending ACL - loan portfolio segment balance as a percentage of total ACL - loans.

(2) Ending loan portfolio segment balances as a percentage of total net loans for the periods presented.

Deposits and Borrowings

The following table presents ending deposits by type:

During the three months ended March 31, 2025, total deposits increased by $199.5 million, or 0.8%, compared to December 31, 2024. The increase in total deposits was primarily due to an increase of $416.4 million in savings and money market deposits, partially offset by decreases of $105.4 million, $63.8 million and $39.2 million in brokered deposits, noninterest-bearing demand deposits and interest-bearing demand deposits, respectively.

Total uninsured deposits (excluding intra-Company deposits) as of March 31, 2025 and December 31, 2024 were estimated to be $9.4 billion.

Time deposits of $250 thousand or more were $1.1 billion and $1.0 billion as of March 31, 2025 and December 31, 2024, respectively.

The following table presents ending borrowings by type:

(1) Includes repurchase agreements, short-term promissory notes and capital leases.

During the three months ended March 31, 2025, total borrowings decreased $124.8 million, or 7.0%, compared to December 31, 2024. The decrease in total borrowings was primarily due to decreases in FHLB advances and other borrowings of $100.0 million and $24.9 million, respectively.

Shareholders' Equity

On December 17, 2024, the Corporation announced that its Board of Directors approved the 2025 Repurchase Program. The 2025 Repurchase Program will expire on December 31, 2025. Under the 2025 Repurchase Program, the Corporation is authorized to repurchase up to $125.0 million of shares of its common stock. Under the 2025 Repurchase Program up to $25.0 million may be used to repurchase shares of the Corporation's preferred stock.

On April 15, 2025, the Corporation announced that its Board of Directors approved a supplemental authorization under the 2025 Repurchase Program to repurchase up to $25 million of the Subordinated Notes due 2030; provided that the purchase price of the Corporation's preferred stock and the Subordinated Notes due 2030 may not exceed, in the aggregate, $25 million.

The 2025 Repurchase Program may be discontinued at any time.

During the three months ended March 31, 2025, 31,467 shares of common stock were repurchased under the 2025 Repurchase Program at a total cost of $0.6 million or $17.64 per share.

On May 1, 2024, the Corporation completed its underwritten public offering of 19,166,667 shares of its common stock at a price to the public of $15.00 per share, before underwriting discounts. The net proceeds to the Corporation from the offering after deducting underwriting discounts and transaction expenses were approximately $272.6 million.

Regulatory Capital

The Corporation and its wholly owned subsidiary bank, Fulton Bank, are subject to the Capital Rules administered by banking regulators. Failure to meet minimum capital requirements can trigger certain actions by regulators that could have a material effect on the Corporation's financial statements.

The Capital Rules require the Corporation and Fulton Bank to:

•Meet a minimum Common Equity Tier 1 capital ratio of 4.50% of risk-weighted assets;

•Meet a minimum Tier 1 Leverage capital ratio of 4.00% of average assets;

•Meet a minimum Total capital ratio of 8.00% of risk-weighted assets and a minimum Tier 1 capital ratio of 6.00% of risk-weighted assets;

•Maintain a "capital conservation buffer" of 2.50% above the minimum risk-based capital requirements, which must be maintained to avoid restrictions on capital distributions and certain discretionary bonus payments; and

•Comply with a revised definition of capital to improve the ability of regulatory capital instruments to absorb losses. Certain non-qualifying capital instruments, including cumulative preferred stock and TruPS, are excluded as a component of Tier 1 capital for institutions of the Corporation's size.

As of March 31, 2025, the Corporation's capital levels met the minimum capital requirements, including the capital conservation buffers, as prescribed in the Capital Rules.

As of March 31, 2025, Fulton Bank met the well-capitalized requirements under the regulatory framework for prompt corrective action. To be categorized as well-capitalized, a bank must maintain minimum Total risk-based, Tier I risk-based, Common Equity Tier I risk-based and Tier I leverage ratios as set forth in the Capital Rules. There were no other conditions or events since March 31, 2025 that management believes have changed the Corporation's capital categories.

The following table summarizes the Corporation's capital ratios in comparison to regulatory requirements: