v3.26.1
Business Combinations
 6 Months Ended
Jun. 30, 2026
Business Combination, Asset Acquisition, Transaction between Entities under Common Control, and Joint Venture Formation [Abstract]  
Business Combinations Business Combinations
Blue Foundry Bancorp

On the Acquisition Date, the Corporation completed the Blue Foundry Merger, and Blue Foundry Bank became a wholly owned subsidiary of the Corporation. On July 11, 2026, Blue Foundry Bank merged with and into Fulton Bank at the time of systems conversion.

Pursuant to the terms of the Blue Foundry Merger Agreement, each share of Blue Foundry common stock was converted into the right to receive 0.650 of a share of the Corporation's common stock, with cash paid in lieu of fractional shares. On the Acquisition Date, the Corporation issued an aggregate of 12,435,551 shares of common stock.

The Blue Foundry Merger was accounted for as a business combination using the acquisition method of accounting, and, accordingly, the assets acquired, the liabilities assumed, and consideration transferred were recorded at their estimated fair values as of the Acquisition Date. The $13.9 million excess of merger consideration over the fair value of net assets acquired in the Blue Foundry Merger was recorded as goodwill and is neither amortizable nor deductible for tax purposes.

The following table summarizes the consideration transferred and the estimated fair values of identifiable assets acquired and liabilities assumed in connection with the Blue Foundry Merger on the Acquisition Date:
Estimated Fair Value
(dollars in thousands)
Consideration transferred:
Common stock issued (12,435,551)
$252,940 
Cash paid to Blue Foundry Bancorp shareholders5 
     Value of consideration252,945 
Assets acquired:
     Cash and due from banks9,109 
Interest bearing deposits with banks118,219 
FHLB Stock14,478 
     Investment securities226,456 
     Loans,net1,552,046 
     Premises and equipment19,472 
     Other assets143,192 
          Total assets 2,082,972 
Liabilities assumed:
     Deposits1,532,465 
Borrowings276,000 
     Other liabilities35,511 
          Total liabilities1,843,976 
Net assets acquired238,996 
Goodwill resulting from acquisition$13,949 

The values assigned to assets acquired and liabilities assumed and the impact on associated income taxes are preliminary and subject to change up to one year from the Acquisition Date as the Corporation continues to finalize the valuation of loans, premises and equipment, intangible assets and deferred taxes. Adjustments recorded during the measurement period will be recognized retrospectively as if the accounting was completed as of the Acquisition Date.

Goodwill recognized in connection with the Blue Foundry Merger is primarily attributable to the expected synergies from combining operations, including cost savings from systems integration and anticipated growth opportunities.

The following is a description of the valuation methodologies used to estimate the fair values of major categories of assets acquired and liabilities assumed in the Blue Foundry Merger.
Cash and due from banks: The fair value of cash and due from banks approximates its book value.

Investment securities: A portion of the investment securities portfolio acquired in the Blue Foundry Merger, with a fair value of $142.2 million, was sold shortly after the Acquisition Date. The fair value of the sold portion of the investment portfolio was determined based on the proceeds received from the sale. The remaining investment securities, with a fair value of $84.3 million, were retained in the AFS portfolio and valued using quoted market prices, dealer quotations and pricing information obtained from independent pricing services.

Loans: The Corporation recorded $1.6 billion of acquired loans at their estimated fair values as of the Acquisition Date. The estimated fair value of the loans was based on a discounted cash flow methodology that considered credit loss and prepayment expectations, market interest rates and other market factors from the perspective of a market participant. Loan cash flows were generated on an individual loan basis. The PD, LGD, exposure at default and prepayment assumptions are the key factors driving credit losses that are embedded in the estimated cash flows.

The following table presents information with respect to the estimated fair value and unpaid principal balance of acquired loans and leases:

April 1, 2026
Unpaid Principal BalanceEstimated Fair Value
(dollars in thousands)
Real estate - commercial mortgage$1,016,045 $939,966 
Commercial and industrial140,765 123,093 
Real-estate - residential mortgage428,399 389,599 
Real-estate - home equity35,980 33,285 
Real-estate - construction66,970 66,091 
Consumer12 12 
     Total acquired loans$1,688,171 $1,552,046 

The following table summarizes PCD Loans:
April 1, 2026
(dollars in thousands)
Book balance of loans with deteriorated credit quality at acquisition$83,522 
Fair value of loans with deteriorated credit quality at acquisition72,785 
Fair value discount10,737 
PCD loans credit discount(4,136)
Non-credit discount$6,601 

The Blue Foundry Merger resulted in the addition of $31.0 million to the ACL, including the $4.1 million identified with respect to PCD Loans.

Intangible Assets: The Corporation recorded a $17.8 million CDI reflected in other assets that is being amortized over seven years using the sum-of-the-years digits method. The CDI estimated fair value was determined using the net cost savings method. The net cost savings method is defined as the difference between the cost of funds of core deposits and an alternative cost of funds for those deposits. The CDI estimated fair value was determined by projecting discounted net cash flows that included assumptions related to customer attrition rates, discount rates, deposit interest rates, deposit account maintenance costs and alternative cost of funding rates.

FHLB stock: The Corporation acquired $14.5 million of FHLB stock. The estimated fair value of the FHLB stock approximated its book value.
Accrued interest receivable: The Corporation acquired $9.2 million accrued interest receivable. The fair value of the accrued interest receivable approximated its book value.

Premises and equipment: The Corporation acquired $19.5 million of premises and equipment. The fair value was measured using comparative market analysis.

Leases: The Corporation acquired a $20.4 million operating lease right-of-use asset reflected in other assets in the Consolidated Balance Sheet and a $22.7 million operating lease liability reflected in other liabilities. The fair value of the operating lease right-of-use asset is measured at the present value of the remaining lease payments adjusted for market terms. The fair value of the operating lease liability is measured at the present value of the remaining lease payments.

Deferred tax assets: The Corporation acquired $57.2 million of deferred tax assets reflected in other assets. The deferred tax assets are deemed to be fully realizable.

Deposits: Demand deposits, savings and money market deposits and time deposits were recorded at book value which approximated their fair value. The Corporation recorded $17.8 million of CDI in other assets for these core deposits.

Borrowings: The Corporation assumed borrowings with a fair value of $276.0 million, which approximated their stated value because these were short-term advances.

Acquisition-related expenses:

The Corporation developed a comprehensive integration plan under which it incurred direct costs that are expensed as incurred. Costs related to the Blue Foundry Merger are included in acquisition-related expenses in the Consolidated Statements of Income.

The following table details the costs incurred and classified as acquisition-related expenses:

Three months ended Six months ended
June 30, 2026June 30, 2026
(dollars in thousands)
Salaries and employee benefits$2,918 $2,918 
Net occupancy42 42 
Professional fees2,750 3,994 
Charitable donation1,500 1,500 
Other6,629 8,029 
$13,839 $16,483 

In connection with the Blue Foundry Merger, the Corporation made a $1.5 million donation to the Fulton Forward Foundation designated to be used to provide impact grants in support of nonprofit community organizations in New Jersey.

The following table presents the change in goodwill during the period:

Six months ended
June 30, 2026
(dollars in thousands)
Goodwill at December 31, 2025$553,346 
Goodwill from Blue Foundry Merger13,949 
Goodwill at June 30, 2026$567,295 
Unaudited Pro Forma Information:

The following table summarizes the results of operations contributed by Blue Foundry Merger presented in the unaudited Consolidated Statements of Income:

Three months ended
June 30, 2026
(dollars in thousands)
Total interest income$28,468 
Total interest expense11,006 
 Net interest income17,462 
Provision for credit losses(2,403)
     Net Interest Income After Provision for Credit Losses19,865 
Total non-interest income314 
Total non-interest expense11,991 
     Income Before Income Taxes8,188 
Income taxes2,318 
     Net Income$5,870 

Unaudited Pro Forma Statements of Income

The table below presents the pro forma results of the operations of the combined institutions (Blue Foundry and the Corporation) as if the Blue Foundry Merger occurred on January 1, 2025. The pro forma adjustments in the tables below are limited to the effects of fair value mark amortization and accretion and intangible asset amortization and do not consider future cost savings the Corporation expects to achieve from the Blue Foundry Merger. No additional acquisition-related expenses have been included in the pro forma results of operations.

Three Months Ended June 30,Six Months Ended June 30,
2026202520262025
(dollars in thousands)
Net interest income$283,205 $271,060 $561,319 $538,207 
Provision for credit losses4,897 9,070 20,682 23,169 
     Net Interest Income After Provision for Credit Losses278,308 261,990 540,637 515,038 
Total non-interest income79,306 69,553 149,671 137,179 
Total non-interest expense216,956 221,301 431,831 428,145 
     Income Before Income Taxes140,658 110,242 258,477 224,072 
Income tax expense27,858 21,080 50,316 42,915 
     Net Income$112,800 $89,162 $208,161 $181,157 
Schedule of Estimated Fair Value and Unpaid Principal Balance
The following table presents information with respect to the estimated fair value and unpaid principal balance of acquired loans and leases:

April 1, 2026
Unpaid Principal BalanceEstimated Fair Value
(dollars in thousands)
Real estate - commercial mortgage$1,016,045 $939,966 
Commercial and industrial140,765 123,093 
Real-estate - residential mortgage428,399 389,599 
Real-estate - home equity35,980 33,285 
Real-estate - construction66,970 66,091 
Consumer12 12 
     Total acquired loans$1,688,171 $1,552,046