Fulton Financial (FULT)

Regional banking company Fulton Financial (NASDAQ:FULT) beat Wall Street’s revenue expectations in Q3 CY2025, with sales up 6.7% year on year to $338.9 million. Its GAAP profit of $1.62 per share was significantly above analysts’ consensus estimates.

Company Overview

Tracing its roots back to 1882 in the heart of Pennsylvania, Fulton Financial (NASDAQ:FULT) is a financial holding company that provides banking, lending, and wealth management services to consumers and businesses across five Mid-Atlantic states.

Regional banks, financial institutions operating within specific geographic areas, serve as intermediaries between local depositors and borrowers. They benefit from rising interest rates that improve net interest margins (the difference between loan yields and deposit costs), digital transformation reducing operational expenses, and local economic growth driving loan demand. However, these banks face headwinds from fintech competition, deposit outflows to higher-yielding alternatives, credit deterioration (increasing loan defaults) during economic slowdowns, and regulatory compliance costs. Recent concerns about regional bank stability following high-profile failures and significant commercial real estate exposure present additional challenges.

Fulton Financial competes with other regional banks operating in the Mid-Atlantic region, including M&T Bank (NYSE:MTB), PNC Financial Services (NYSE:PNC), Truist Financial (NYSE:TFC), and smaller community banks throughout its five-state footprint.

Two primary revenue streams drive bank earnings. While net interest income, which is earned by charging higher rates on loans than paid on deposits, forms the foundation, fee-based services across banking, credit, wealth management, and trading operations provide additional income. Over the last five years, Fulton Financial grew its revenue at a solid 8.7% compounded annual growth rate. Its growth beat the average banking company and shows its offerings resonate with customers.

Long-term growth is the most important, but within financials, a half-decade historical view may miss recent interest rate changes and market returns. Fulton Financial’s annualized revenue growth of 9.2% over the last two years aligns with its five-year trend, suggesting its demand was predictably strong. Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.

This quarter, Fulton Financial reported year-on-year revenue growth of 6.7%, and its $338.9 million of revenue exceeded Wall Street’s estimates by 3.2%.

Net interest income made up 76.5% of the company’s total revenue during the last five years, meaning lending operations are Fulton Financial’s largest source of revenue.

Markets consistently prioritize net interest income growth over fee-based revenue, recognizing its superior quality and recurring nature compared to the more unpredictable non-interest income streams.

Topline growth alone doesn't tell the complete story - the profitability of that growth shapes actual earnings impact. Banks track this dynamic through efficiency ratios, which compare non-interest expenses such as personnel, rent, IT, and marketing costs to total revenue streams.

Investors place greater emphasis on efficiency ratio movements than absolute values, understanding that expense structures reflect revenue mix variations. Lower ratios represent better operational performance since they show banks generating more revenue per dollar of expense.

Over the last five years, Fulton Financial’s efficiency ratio has swelled by 7.5 percentage points, going from 62.4% to 56.8%. Said differently, the company’s expenses have grown at a slower rate than revenue, which typically signals prudent management.

Fulton Financial’s efficiency ratio came in at 56.5% this quarter, beating analysts’ expectations by 292 basis points (100 basis points = 1 percentage point). This result was 3.1 percentage points better than the same quarter last year.

For the next 12 months, Wall Street expects Fulton Financial to become less profitable as it anticipates an efficiency ratio of 59.6%.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Fulton Financial’s EPS grew at an astounding 22.9% compounded annual growth rate over the last five years, higher than its 8.7% annualized revenue growth. However, we take this with a grain of salt because its efficiency ratio didn’t improve and it didn’t repurchase its shares, meaning the delta came from factors we consider non-core or less sustainable over the long term.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For Fulton Financial, its two-year annual EPS growth of 31.3% was higher than its five-year trend. We love it when earnings growth accelerates, especially when it accelerates off an already high base.

In Q3, Fulton Financial reported EPS of $1.62, up from $0.33 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Fulton Financial’s full-year EPS of $3.00 to shrink by 34.5%. This is unusual as its revenue and operating margin are anticipated to increase, signaling the fall likely stems from "below-the-line" items such as taxes.

Banks profit by intermediating between depositors and borrowers, making them fundamentally balance sheet-driven enterprises. Market participants emphasize balance sheet quality and sustained book value growth when evaluating these institutions.

This explains why tangible book value per share (TBVPS) stands as the premier banking metric. TBVPS strips away questionable intangible assets, revealing concrete per-share net worth that investors can trust. Other (and more commonly known) per-share metrics like EPS can sometimes be murky due to M&A or accounting rules allowing for loan losses to be spread out.

Fulton Financial’s TBVPS grew at a solid 6.1% annual clip over the last five years. TBVPS growth has also accelerated recently, growing by 18% annually over the last two years from $11.05 to $15.39 per share.

Over the next 12 months, Consensus estimates call for Fulton Financial’s TBVPS to shrink by 2% to $15.08, a sour projection.

Leverage is core to a financial firm’s business model (loans funded by deposits). To ensure economic stability and avoid a repeat of the 2008 GFC, regulators require certain levels of capital and liquidity, focusing on the Tier 1 capital ratio.

Tier 1 capital is the highest-quality capital that a firm holds, consisting primarily of common stock and retained earnings, but also physical gold. It serves as the primary cushion against losses and is the first line of defense in times of financial distress.

This capital is divided by risk-weighted assets to derive the Tier 1 capital ratio. Risk-weighted means that cash and US treasury securities are assigned little risk while unsecured consumer loans and equity investments get much higher risk weights, for example.

New regulation after the 2008 financial crisis requires that all firms must maintain a Tier 1 capital ratio greater than 4.5%. On top of this, there are additional buffers based on scale, risk profile, and other regulatory classifications, so that at the end of the day, firms generally must maintain a 7-10% ratio at minimum.

Over the last two years, Fulton Financial has averaged a Tier 1 capital ratio of 10.8%, which is considered safe and well capitalized in the event that macro or market conditions suddenly deteriorate.

Return on equity (ROE) reveals the profit generated per dollar of shareholder equity, which represents a key source of bank funding. Banks maintaining elevated ROE levels tend to accelerate wealth creation for shareholders via earnings retention, buybacks, and distributions.

Over the last five years, Fulton Financial has averaged an ROE of 10.6%, impressive for a company operating in a sector where the average shakes out around 7.5% and those putting up 15%+ are greatly admired. This is a bright spot for Fulton Financial.

It was good to see Fulton Financial beat analysts’ EPS expectations this quarter. We were also glad its revenue outperformed Wall Street’s estimates. Zooming out, we think this was a good print with some key areas of upside. The stock remained flat at $17.88 immediately after reporting.

Updated: December 4, 2025 at 11:21 PM EST

We think that the latest earnings result is only one piece of the bigger puzzle. If you’re deciding whether to own Fulton Financial, you should also grasp the company’s longer-term business quality and valuation.

Fulton Financial isn’t a terrible business, but it doesn’t pass our quality test. First off, its revenue growth was mediocre over the last five years, and analysts expect its demand to deteriorate over the next 12 months. And while its improving efficiency ratio shows the business has become more productive, the downside is its projected EPS for the next year is lacking. On top of that, its anticipated efficiency ratio over the next year signals its day-to-day expenses will rise.

Fulton Financial’s P/B ratio based on the next 12 months is 1x. This valuation is reasonable, but the company’s shakier fundamentals present too much downside risk. We're pretty confident there are superior stocks to buy right now.

Wall Street analysts have a consensus one-year price target of $21 on the company (compared to the current share price of $19.01).