Fulton Financial (FULT)

Regional banking company Fulton Financial (NASDAQ:FULT) met Wall Streets revenue expectations in Q4 CY2025, with sales up 3% year on year to $336 million. Its non-GAAP profit of $0.55 per share was 7.8% 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.

Net interest income and and fee-based revenue are the two pillars supporting bank earnings. The former captures profit from the gap between lending rates and deposit costs, while the latter encompasses charges for banking services, credit products, wealth management, and trading activities. Over the last five years, Fulton Financial grew its revenue at a mediocre 8.6% compounded annual growth rate. This fell short of our benchmark for the banking sector and is a tough starting point for our analysis.

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 9.7% over the last two years is above its five-year trend, but we were still disappointed by the results. 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 grew its revenue by 3% year on year, and its $336 million of revenue was in line with Wall Street’s estimates.

Net interest income made up 76.4% 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 is certainly important, but the overall profitability of this growth matters for the bottom line. For banks, we look at efficiency ratio, which is non-interest expense (salaries, rent, IT, marketing, excluding interest paid out to depositors) as a percentage of total revenue.

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 6.7 percentage points, going from 62.4% to 57.6%. 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 60% this quarter, falling short of analysts’ expectations by 115 basis points (100 basis points = 1 percentage point).

For the next 12 months, Wall Street expects Fulton Financial to become less profitable as it anticipates an efficiency ratio of 59.7%.

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Fulton Financial’s EPS grew at a remarkable 13.3% compounded annual growth rate over the last five years, higher than its 8.6% 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 shorter period to see if we are missing a change in the business.

For Fulton Financial, its two-year annual EPS growth of 13% is similar to its five-year trend, implying stable earnings power.

In Q4, Fulton Financial reported adjusted EPS of $0.55, up from $0.48 in the same quarter last year. This print beat analysts’ estimates by 7.8%. Over the next 12 months, Wall Street expects Fulton Financial’s full-year EPS of $2.17 to shrink by 6.5%. 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.

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 11%, which is considered safe and well capitalized in the event that macro or market conditions suddenly deteriorate.

Return on equity (ROE) measures how effectively banks generate profit from each dollar of shareholder equity - a critical funding source. High-ROE institutions typically compound shareholder wealth faster over time through retained earnings, share repurchases, and dividend payments.

Over the last five years, Fulton Financial has averaged an ROE of 10.8%, respectable for a company operating in a sector where the average shakes out around 7.5% and those putting up 15%+ are greatly admired.

It was good to see Fulton Financial beat analysts’ EPS expectations this quarter. Zooming out, we think this was a decent quarter. The stock traded up 1.7% to $20.86 immediately after reporting.

Updated: January 21, 2026 at 4:46 PM EST

Before deciding whether to buy Fulton Financial or pass, we urge investors to consider business quality, valuation, and the latest quarterly results.

Fulton Financial isn’t a terrible business, but it doesn’t pass our quality test. To kick things 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 1.1x. While this valuation is reasonable, we don’t really see a big opportunity at the moment. We're pretty confident there are more exciting stocks to buy at the moment.

Wall Street analysts have a consensus one-year price target of $21.10 on the company (compared to the current share price of $20.86).