Financial Performance Overview

Fulton Financial Corporation, a regional bank holding company, has reported strong financial results for the first quarter of 2025. The company’s net income available to common shareholders increased by $31.0 million, or 52.2%, to $90.4 million compared to the same period in 2024. This translated to earnings per diluted share of $0.49, up $0.13 from the prior year.

The improved financial performance was driven by several factors. Net interest income, the company’s primary revenue source, grew by $44.3 million or 21.4% year-over-year. This was due to an 11 basis point increase in net interest margin to 3.43% and a $2.6 billion, or 12.3%, increase in average net loans. The growth in loans was largely attributable to the acquisition of Republic First Bank in 2024.

Non-interest income also increased, rising $10.1 million or 17.7% compared to the first quarter of 2024. This was primarily due to higher wealth management fees, commercial banking fees, and consumer banking fees. The company’s efficiency ratio improved to 56.7% from 63.2% in the prior year period, reflecting good cost control.

The provision for credit losses was $13.9 million in the first quarter of 2025, up slightly from $10.9 million in the same period of 2024. The allowance for credit losses as a percentage of total net loans increased to 1.59% from 1.39% a year earlier. Non-performing loans declined to 0.82% of total loans from 0.92% at the end of 2024.

Overall, Fulton Financial delivered a strong start to the year, growing both its top and bottom lines while maintaining solid asset quality. The company’s financial position remains healthy, with strong capital and liquidity levels to support future growth.

Revenue and Profit Trends

Fulton Financial’s net interest income, which accounts for over 75% of total revenue, was the primary driver of the company’s improved financial performance in the first quarter. Net interest income rose to $251.2 million, up $44.3 million or 21.4% compared to the same period in 2024.

The increase in net interest income was due to both volume and yield factors. Average net loans grew by $2.6 billion or 12.3%, led by increases in commercial mortgage, residential mortgage, and home equity loans. This loan growth was largely the result of the Republic First Bank acquisition.

At the same time, the net interest margin expanded by 11 basis points to 3.43%. While the yield on interest-earning assets increased by 4 basis points, the cost of interest-bearing liabilities declined by 15 basis points. This was driven by a shift in the deposit mix, with higher-cost brokered deposits and borrowings declining as a percentage of the funding base.

Non-interest income also contributed to the company’s revenue growth, increasing by $10.1 million or 17.7% year-over-year. The largest drivers were higher wealth management fees, commercial banking fees (including cash management and capital markets), and consumer banking fees (including card and overdraft fees). These increases were partially offset by lower professional fees.

On the expense side, non-interest expense rose by $11.9 million or 6.7% compared to the first quarter of 2024. This was primarily due to higher salaries and employee benefits, intangible amortization, and occupancy costs, partially offset by a decrease in professional fees. The company’s efficiency ratio improved to 56.7% from 63.2% in the prior year period, reflecting good expense management.

Overall, Fulton Financial’s revenue growth outpaced its expense growth, leading to a 52.2% increase in net income available to common shareholders. The company’s profitability, as measured by return on average assets and return on average tangible common equity, also improved year-over-year.

Strengths and Weaknesses

Strengths:

• Strong loan growth, particularly in commercial and residential real estate, driving higher net interest income
• Improved net interest margin due to favorable shifts in the deposit and funding mix
• Diversified revenue streams, with solid contributions from non-interest income sources like wealth management and commercial banking
• Disciplined expense management, as evidenced by the improved efficiency ratio
• Solid asset quality, with declining non-performing loans and adequate allowance for credit losses

Weaknesses:

• Reliance on the acquisition of Republic First Bank to fuel a significant portion of the loan growth
• Potential interest rate risk exposure, as the company’s interest rate sensitivity analysis shows sizable impacts on net interest income from both upward and downward rate shocks
• Concentration in commercial real estate lending, which could expose the company to risks in that sector
• Regulatory compliance and operational costs associated with the Republic First Bank integration

Outlook and Future Considerations

Fulton Financial’s strong first-quarter performance positions the company well for the remainder of 2025. The continued loan growth, improved net interest margin, and diversified revenue streams suggest the company is poised to deliver solid financial results going forward.

However, the company faces several challenges and risks that merit close monitoring. The reliance on the Republic First Bank acquisition to drive a significant portion of the loan growth raises questions about the sustainability of this growth trajectory. The company will need to demonstrate its ability to generate organic loan growth to maintain its momentum.

Additionally, the interest rate sensitivity analysis highlights the company’s exposure to both rising and falling interest rates. While the company appears to be within its policy limits for interest rate risk, a significant and sustained shift in rates could have a material impact on net interest income and profitability.

The concentration in commercial real estate lending, particularly in the office and multi-family sectors, also presents a potential risk. The company will need to closely monitor economic conditions and property market trends in its key metropolitan areas to ensure the quality of this loan portfolio.

Finally, the integration of Republic First Bank will likely continue to be a focus for the company, requiring ongoing investments in compliance, technology, and operations. Successful execution of this integration will be crucial to realizing the full benefits of the acquisition.

Overall, Fulton Financial’s strong first-quarter performance is a positive sign, but the company will need to navigate these challenges and risks to sustain its growth and profitability in the long term. Investors and analysts will be closely watching the company’s progress in the coming quarters.