FULTON FINANCIAL CORP (FULT) stock intrinsic value fair value estimate & owner earnings analysis

Fulton Financial is the holding company for Fulton Bank, a commercial bank based in Lancaster, Pennsylvania, with about $34.6 billion of assets and $28.3 billion of deposits at June 30, 2026, serving businesses and consumers in Pennsylvania, New Jersey, Delaware, Maryland and Virginia. It lends mostly to businesses and commercial real estate and says no single customer or small group of customers is material. It has grown by buying smaller banks: Prudential Bancorp (2022), the FDIC-assisted Republic First purchase (April 2024) and Blue Foundry, a merger agreed in November 2025 and scheduled to close on April 1, 2026. The second-quarter 2026 balance sheet (assets up $2.4 billion since year-end, about 193 million diluted shares versus 183 million in 2025) appears to include it. HOW WE MEASURED EARNINGS. For a bank we count what owners keep: cash from operations with balance-sheet timing swings removed, less stock compensation, less loan-loss provisions (treated as a recurring cost of lending, not a one-off), less the capital spending needed to keep operations running, and less the $10.2 million a year of preferred dividends that are paid ahead of common shareholders. Lenders' deposits and borrowings are the raw material of the business, so no debt is subtracted. We removed one-time gains (the $37.0 million Republic First bargain-purchase gain and a $20.3 million sale-leaseback gain, both in 2024) and did not count the non-cash accretion of discounts on acquired loans ($47.8 million in 2025), since that fades as those loans pay off. The filings show large swings in 'other assets and liabilities' (an inflow of $405 million in 2022, outflows of $196 million in 2019 and $131 million in 2025) that are not itemized; we treated them as timing, and over the decade they net to a small amount. Owner earnings per share were $1.02 (2016), $1.37 (2019), $1.22 (2020), $1.81 (2021), $1.83 (2022), $1.78 (2023), $1.28 (2024, held down by roughly $70 million of Republic First integration and restructuring costs) and $2.01 (2025). We anchor on the 2021-2025 median of $1.81: it covers the period since the bank reached its current size and rate environment, and includes both the 2024 trough and 2021, when loan-loss reserves were released. First-half 2026 earnings of $1.02 per diluted share matched the first half of 2025, so the level has held. STARTING LEVEL IN THE CASES. Credit costs are the weak spot in that anchor. First-half 2026 net charge-offs were $36.9 million versus $24.3 million a year earlier (second quarter: $22.0 million versus $11.7 million), yet only $19.3 million was set aside as provision, so losses are being absorbed from reserves, which cannot continue. Pricing credit costs at about 0.30% of a loan book of roughly $25 billion (about $75 million a year, versus roughly $35 million in the anchor window) lowers the base starting level by about $0.16 to $1.64 per share. Growth check: owner earnings rose 56% in 2025, but from the depressed 2024 level; the base case assumes 2.5% growth in year one off $1.64 (about $1.68), below the 2025 actual of $2.01, so no reversal of a slowdown needs to be argued. BASE CASE, $27.97 per share. Earnings of $1.64 grow 2.5% a year for ten years, to about $2.10. We credit only growth that retained earnings can fund: Fulton earns roughly 11% on its tangible capital, so growing 2.5% a year requires keeping about 23% of earnings, and only the rest is counted as available to owners. The first ten years are worth $10.48 per share. After year ten earnings stay flat at $2.10 less $0.22 a year as an allowance for the next severe credit cycle (the 2008-2011 cycle described below would cost about $4.00 per share after tax at today's scale; one such cycle roughly every 18 years is $0.22 a year); that is worth $17.49. Not credited: Blue Foundry cost savings (a management target, not yet delivered), wider margins, market-share gains and new markets. No debt is subtracted; the preferred stock is already charged. BEAR CASE, $19.32 per share. We replay Fulton's own 2008-2011 credit cycle on today's balance sheet. Then Fulton's provisions were $119.6 million (2008), $190.0 million (2009), $160.0 million (2010) and $135.0 million (2011), with net charge-offs rising from 0.45% to 1.28% of loans, and earnings per share fell to -$0.03, $0.31, $0.59 and $0.73. On a roughly $25 billion book those provisions scale to about $260 million, $395 million, $336 million and $283 million in years two to five, about $1.27 billion in total. Pre-provision earnings of about $1.95 per share then give $1.64 (year one), $0.88, $0.33, $0.57 and $0.79, then a slow recovery to $1.10, $1.30 and $1.45 (Fulton's EPS did not reach $0.93 until 2016, years after the 2011 recovery), flat after that less the same $0.22 allowance for a further cycle. No capital raise is needed: even this cycle's after-tax losses are well under the roughly $3 billion of tangible common equity, and earnings stay positive in every year. First ten years $7.87; after year ten $11.45. This is above tangible book value of $14.91 per share (December 31, 2025) because Fulton earned a profit through every year of the last cycle except 2008, so the franchise keeps earning more than the cost of its capital even in a bad cycle. BULL CASE, $37.99 per share. Earnings stay at the $2.00 per share Fulton earned in 2025 and the first half of 2026, credit costs stay near 2025's 0.21% charge-off rate, and earnings grow 4% a year for ten years (to about $2.96), funding it by keeping 31% of earnings. That is below Fulton's 7.8% a year growth in owner earnings per share from 2016 to 2025, which was helped by the 2018 tax cut and rising rates. First ten years $12.49; after year ten $25.50 (flat at $2.96 less $0.22). WHAT COULD MAKE THIS WRONG. Each extra 0.10% of loans in annual credit losses costs about $0.10 per share of earnings; commercial real estate charge-offs rose to $36.5 million in 2025 from $13.2 million in 2024; deposit costs and competition could compress the margin; and Blue Foundry integration may cost more than planned. We tested our starting level against first-half 2026 charge-offs and lowered it for that, and tested the bear case against Fulton's own recorded losses rather than an assumed number. MARGIN-OF-SAFETY PRICE, $12.50. We are fairly (not highly) sure of the earnings level: Fulton has produced positive owner earnings in each of the last ten years, but the credit-cost normalization could cost another $0.10 to $0.20 per share. The worst plausible outcome is a repeat of 2008-2011 on a book more than twice as large; the bank would survive it without raising capital, but earnings would fall to roughly a third of normal for two years and the dividend would likely be cut. If we are wrong about credit costs by 0.20% of loans or about margins by a similar amount, earnings power drops to about $1.40 per share. The price assumes a three-to-five-year holding period, during which the $0.76 annual dividend is about 6% of this price and normalized owner earnings of $1.64 are a 13% yield on it. At $12.50 the price would sit below the $14.91 tangible book value per share, so even the bear-case years of reduced earnings would be supported by balance-sheet assets, and a return to ordinary conditions implies well over a 20% annual return including dividends. The margin-of-safety price is not higher because a repeat of 2008-2011 would likely take the shares well below it before earnings recover. CHANGE SINCE OUR EARLIER PUBLISHED FIGURES. Our earlier figures ($17, $32 and $50) were built on a different basis and are not comparable. This version rebuilds the earnings history from cash flow, now prices credit costs at the level being charged off in 2026, and models the cycle from Fulton's own 2008-2011 record. Blue Foundry is now part of the share count and balance sheet.