FULTON FINANCIAL CORPFULT
FULTON FINANCIAL CORP Fair Value Disclosure
| NOTE 19 - FAIR VALUE MEASUREMENTS | ||||||||||||||
The following tables present assets and liabilities measured at fair value on a recurring basis and reported on the Consolidated Balance Sheets:
| 2025 | |||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||
| Loans held for sale | $ | — | $ | 16,316 | $ | — | $ | 16,316 | |||||||||||||||
| AFS investment securities: | |||||||||||||||||||||||
| State and municipal securities | — | 826,693 | — | 826,693 | |||||||||||||||||||
| Corporate debt securities | — | 214,921 | — | 214,921 | |||||||||||||||||||
| Collateralized mortgage obligations | — | 1,040,078 | — | 1,040,078 | |||||||||||||||||||
| Residential mortgage-backed securities | — | 766,717 | — | 766,717 | |||||||||||||||||||
| Commercial mortgage-backed securities | — | 559,450 | — | 559,450 | |||||||||||||||||||
| Total AFS investment securities | — | 3,407,859 | — | 3,407,859 | |||||||||||||||||||
| Investments held in Rabbi Trust | 39,395 | — | — | 39,395 | |||||||||||||||||||
| Derivative assets | 891 | 128,816 | — | 129,707 | |||||||||||||||||||
| Total assets | $ | 40,286 | $ | 3,552,991 | $ | — | $ | 3,593,277 | |||||||||||||||
| Deferred compensation liabilities | $ | 39,395 | $ | — | $ | — | $ | 39,395 | |||||||||||||||
| Derivative liabilities | 720 | 170,289 | — | 171,009 | |||||||||||||||||||
| Total liabilities | $ | 40,115 | $ | 170,289 | $ | — | $ | 210,404 | |||||||||||||||
| 2024 | |||||||||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||
| (dollars in thousands) | |||||||||||||||||||||||
| Loans held for sale | $ | — | $ | 25,618 | $ | — | $ | 25,618 | |||||||||||||||
| AFS investment securities: | |||||||||||||||||||||||
| State and municipal securities | — | 814,887 | — | 814,887 | |||||||||||||||||||
| Corporate debt securities | — | 300,370 | — | 300,370 | |||||||||||||||||||
| Collateralized mortgage obligations | — | 788,885 | — | 788,885 | |||||||||||||||||||
| Residential mortgage-backed securities | — | 989,875 | — | 989,875 | |||||||||||||||||||
| Commercial mortgage-backed securities | — | 516,882 | — | 516,882 | |||||||||||||||||||
| Total AFS investment securities | — | 3,410,899 | — | 3,410,899 | |||||||||||||||||||
| Investments held in Rabbi Trust | 35,093 | — | — | 35,093 | |||||||||||||||||||
| Derivative assets | 1,682 | 159,939 | — | 161,621 | |||||||||||||||||||
| Total assets | $ | 36,775 | $ | 3,596,456 | $ | — | $ | 3,633,231 | |||||||||||||||
| Deferred compensation liabilities | $ | 35,093 | $ | — | $ | — | $ | 35,093 | |||||||||||||||
| Derivative liabilities | 1,596 | 252,821 | — | 254,417 | |||||||||||||||||||
| Total liabilities | $ | 36,689 | $ | 252,821 | $ | — | $ | 289,510 | |||||||||||||||
The valuation techniques used to measure fair value for the items in the preceding tables are as follows:
Loans held for sale - This category includes mortgage loans held for sale that are measured at fair value. Fair values as of December 31, 2025 and 2024, were measured as the price that secondary market investors were offering for loans with similar characteristics. See "Note 1 - Summary of Significant Accounting Policies" for details related to the Corporation's election to measure assets and liabilities at fair value.
AFS investment securities - Included in this asset category are debt securities. Level 2 investment securities are valued by a third-party pricing service. The pricing service uses pricing models that vary based on asset class and incorporate available market information, including quoted prices of investment securities with similar characteristics. Because many fixed income securities do not trade on a daily basis, pricing models use available information, as applicable, through processes such as benchmark yield curves, benchmarking of like securities, sector groupings and matrix pricing.
Standard market inputs include: benchmark yields, reported trades, broker/dealer quotes, issuer spreads, two-sided markets, benchmark securities, bids, offers and reference data, including market research publications. For certain security types, additional inputs may be used or some of the standard market inputs may not be applicable.
•State and municipal securities/Collateralized mortgage obligations/Residential mortgage-backed securities/Commercial mortgage-backed securities - These debt securities are classified as Level 2. Fair values are determined by a third-party pricing service, as detailed above.
•Corporate debt securities - These securities are classified as Level 2. This category consists of subordinated and senior debt issued by financial institutions ($207.5 million at December 31, 2025 and $293.1 million at December 31, 2024) and other corporate debt issued by non-financial institutions ($7.4 million at December 31, 2025 and $7.3 million at December 31, 2024). The fair values for corporate debt securities are determined by a third-party pricing service as detailed above.
Investments held in Rabbi Trust - This category consists of mutual funds that are held in trust for employee deferred compensation plans that the Corporation has elected to measure at fair value. Shares of mutual funds are valued based on net asset value, which represents quoted market prices for the underlying shares held in the mutual funds, and as such, are classified as Level 1.
Derivative assets - Fair value of foreign currency exchange contracts classified as Level 1 assets ($0.9 million at December 31, 2025 and $1.7 million at December 31, 2024). The foreign exchange prices used to measure these items at fair value are based on quoted prices for identical instruments in active markets.
Level 2 assets represent the fair value of mortgage banking derivatives in the form of interest rate locks and forward commitments with secondary market investors ($0.6 million at December 31, 2025 and $0.8 million at December 31, 2024) and the fair value of interest rate derivatives ($128.3 million at December 31, 2025 and $159.2 million at December 31, 2024). The fair values of the interest rate locks, forward commitments and interest rate derivatives represent the amounts that would be required to settle the derivative financial instruments at the balance sheet date. See "Note 11 - Derivative Financial Instruments," for additional information.
Deferred compensation liabilities - Fair value of amounts due to employees under deferred compensation plans, classified as Level 1 liabilities and are included in other liabilities on the Consolidated Balance Sheets. The fair values of these liabilities are determined in the same manner as the related assets, as described under the heading "Investments held in Rabbi Trust" above.
Derivative liabilities - Level 1 liabilities represent the fair value of foreign currency exchange contracts ($0.7 million and $1.6 million at December 31, 2025 and 2024, respectively).
Level 2 liabilities represent the fair value of mortgage banking derivatives in the form of interest rate locks and forward commitments with secondary market investors ($0.2 million at December 31, 2025 and $0.1 million at December 31, 2024) and the fair value of interest rate derivatives ($170.1 million at December 31, 2025 and $252.8 million at December 31, 2024).
The fair values of these liabilities are determined in the same manner as the related assets, as described under the heading "Derivative assets" above.
Certain financial instruments are not measured at fair value on an ongoing basis but are subject to fair value measurement in certain circumstances, such as upon their acquisition or when there is evidence of impairment. The following table presents Level 3 financial assets measured at fair value on a nonrecurring basis:
| 2025 | 2024 | ||||||||||
| (dollars in thousands) | |||||||||||
| Loans, Net | $ | 135,993 | $ | 168,668 | |||||||
| OREO | 1,365 | 2,621 | |||||||||
MSRs(1) | 49,861 | 53,972 | |||||||||
| SBA servicing asset | 2,256 | 3,120 | |||||||||
| Total assets | $ | 189,475 | $ | 228,381 | |||||||
(1) Amounts shown are estimated fair value. MSRs are recorded on the Corporation's Consolidated Balance Sheets at lower of amortized cost or fair value. See
"Note 8 - Mortgage Servicing Rights" for additional information.
The valuation techniques used to measure fair value for the items in the table above are as follows:
•Loans, net – This category consists of loans that were individually evaluated for impairment and have been classified as Level 3 assets. The amount shown is the balance of non-accrual loans, net of related ACL. See "Note 5 - Loans and Allowance for Credit Losses," for additional details.
•OREO – This category consists of OREO classified as Level 3 assets, for which the fair values were based on estimated selling prices less estimated selling costs for similar assets in active markets.
•MSRs – This category consists of MSRs, which were initially recorded at fair value upon the sale of residential mortgage loans to secondary market investors, and subsequently carried at the lower of amortized cost or fair value. MSRs are amortized as a reduction to servicing income over the estimated lives of the underlying loans. MSRs are stratified by product type and evaluated for impairment by comparing each stratum's carrying amount to its estimated fair value. Fair values are determined at the end of each quarter through a discounted cash flows valuation performed by a third-party valuation expert. Significant inputs to the valuation included expected net servicing income, the discount rate and the expected life of the underlying loans. Expected life is based on the contractual terms of the loans, as adjusted for prepayment projections. The weighted average annual constant prepayment rate and the weighted average discount rate used in the December 31, 2025 valuation were 7.0% and 8.6%, respectively. Management reviews the reasonableness of the significant inputs to the third-party valuation in comparison to market data. See "Note 8 - Mortgage Servicing Rights," for additional information. Changes in any of those inputs, in isolation, could result in a significantly different fair value measurement, as depicted in the table below:
| Significant Input | Scenario Shock | % Change in Valuation | |||||||||||||||
| Prepayment Rate | + 15% | (5)% | |||||||||||||||
| Prepayment Rate | - 15% | 5% | |||||||||||||||
| Discount Rate | - 200 bps | 10% | |||||||||||||||
| Discount Rate | + 200 bps | (8)% | |||||||||||||||
•SBA servicing asset – This category consists of the retained servicing rights on SBA-guaranteed loans sold to investors. The standard sale structure under the SBA Secondary Participation Guaranty Agreement provides for the Corporation to retain a portion of the cash flow from the interest payment received on the SBA guaranteed portion of the loan, which is commonly known as a servicing spread. A third-party valuation expert is utilized to perform the modeling to estimate the fair value of the SBA servicing asset. Because the valuation model uses significant unobservable inputs, the SBA servicing asset is classified within Level 3.
The following table details the book values and the estimated fair values of the Corporation's financial instruments as of December 31, 2025 and 2024. A general description of the methods and assumptions used to estimate such fair values is also provided.
| 2025 | |||||||||||||||||||||||||||||
| Estimated Fair Value | |||||||||||||||||||||||||||||
| Carrying Amount | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||||
| FINANCIAL ASSETS | (dollars in thousands) | ||||||||||||||||||||||||||||
| Cash and cash equivalents | $ | 1,061,609 | $ | 1,061,609 | $ | — | $ | — | $ | 1,061,609 | |||||||||||||||||||
| FRB and FHLB stock | 121,009 | — | 121,009 | — | 121,009 | ||||||||||||||||||||||||
| Loans held for sale | 16,316 | — | 16,316 | — | 16,316 | ||||||||||||||||||||||||
| AFS investment securities | 3,407,859 | — | 3,407,859 | — | 3,407,859 | ||||||||||||||||||||||||
| HTM investment securities | 1,425,885 | — | 1,267,578 | — | 1,267,578 | ||||||||||||||||||||||||
| Loans, net | 23,780,422 | — | — | 22,590,142 | 22,590,142 | ||||||||||||||||||||||||
| Accrued interest receivable | 113,698 | 113,698 | — | — | 113,698 | ||||||||||||||||||||||||
| Other assets | 721,469 | 556,071 | 132,043 | 53,482 | 741,596 | ||||||||||||||||||||||||
| FINANCIAL LIABILITIES | |||||||||||||||||||||||||||||
| Demand and savings deposits | $ | 21,739,113 | $ | 21,739,113 | $ | — | $ | — | $ | 21,739,113 | |||||||||||||||||||
| Brokered deposits | 855,042 | 80,215 | 774,914 | — | 855,129 | ||||||||||||||||||||||||
| Time deposits | 3,995,252 | — | 3,991,203 | — | 3,991,203 | ||||||||||||||||||||||||
| Accrued interest payable | 17,130 | 17,130 | — | — | 17,130 | ||||||||||||||||||||||||
| FHLB advances | 250,000 | 251,991 | — | — | 251,991 | ||||||||||||||||||||||||
| Senior debt and subordinated debt | 367,637 | — | 351,870 | — | 351,870 | ||||||||||||||||||||||||
| Other borrowings | 679,738 | 654,238 | 916 | — | 655,154 | ||||||||||||||||||||||||
| Other liabilities | 247,490 | 62,228 | 170,290 | 14,972 | 247,490 | ||||||||||||||||||||||||
| 2024 | |||||||||||||||||||||||||||||
| Estimated Fair Value | |||||||||||||||||||||||||||||
| Carrying Amount | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||||
| FINANCIAL ASSETS | (dollars in thousands) | ||||||||||||||||||||||||||||
| Cash and cash equivalents | $ | 1,063,871 | $ | 1,063,871 | $ | — | $ | — | $ | 1,063,871 | |||||||||||||||||||
| FRB and FHLB stock | 139,574 | — | 139,574 | — | 139,574 | ||||||||||||||||||||||||
| Loans held for sale | 25,618 | — | 25,618 | — | 25,618 | ||||||||||||||||||||||||
| AFS investment securities | 3,410,899 | — | 3,410,899 | — | 3,410,899 | ||||||||||||||||||||||||
| HTM investment securities | 1,395,569 | — | 1,183,449 | — | 1,183,449 | ||||||||||||||||||||||||
| Loans, net | 23,665,763 | — | — | 22,555,687 | 22,555,687 | ||||||||||||||||||||||||
| Accrued interest receivable | 117,029 | 117,029 | — | — | 117,029 | ||||||||||||||||||||||||
| Other assets | 736,502 | 543,251 | 159,939 | 59,713 | 762,903 | ||||||||||||||||||||||||
| FINANCIAL LIABILITIES | |||||||||||||||||||||||||||||
| Demand and savings deposits | $ | 21,135,478 | $ | 21,135,478 | $ | — | $ | — | $ | 21,135,478 | |||||||||||||||||||
| Brokered deposits | 843,857 | 145,056 | 698,647 | — | 843,703 | ||||||||||||||||||||||||
| Time deposits | 4,150,098 | — | 4,154,726 | — | 4,154,726 | ||||||||||||||||||||||||
| Accrued interest payable | 31,620 | 31,620 | — | — | 31,620 | ||||||||||||||||||||||||
| FHLB advances | 850,000 | 851,470 | — | — | 851,470 | ||||||||||||||||||||||||
| Senior debt and subordinated debt | 367,316 | — | 253,818 | — | 253,818 | ||||||||||||||||||||||||
| Other borrowings | 564,732 | 544,908 | 901 | — | 545,809 | ||||||||||||||||||||||||
| Other liabilities | 467,011 | 200,029 | 252,821 | 14,161 | 467,011 | ||||||||||||||||||||||||
Fair values of financial instruments are significantly affected by the assumptions used, principally the timing of future cash flows and discount rates. Because assumptions are inherently subjective in nature, the estimated fair values cannot be substantiated by comparison to independent market quotes and, in many cases, the estimated fair values could not necessarily be realized in an immediate sale or settlement of the instrument. The aggregate fair value amounts presented do not necessarily represent management's estimate of the underlying value of the Corporation.
For short-term financial instruments, defined as those with remaining maturities of 90 days or less, and excluding those recorded at fair value on the Corporation's Consolidated Balance Sheets, book value was considered to be a reasonable estimate of fair value.
The following instruments are predominantly short-term:
| Assets | Liabilities | |||||||
| Cash and cash equivalents | Demand and savings deposits | |||||||
| Accrued interest receivable | Other borrowings | |||||||
| Accrued interest payable | ||||||||
FRB and FHLB stock represent restricted investments and are carried at cost on the Consolidated Balance Sheets, which is a reasonable estimate of fair value.
As of December 31, 2025, fair values for loans and time deposits were estimated by discounting future cash flows using the current rates, as adjusted for liquidity considerations, at which similar loans would be made to borrowers and similar deposits would be issued to customers for the same remaining maturities. Fair values of loans also include estimated credit losses that would be assumed in a market transaction, which represents estimated exit prices.
Brokered deposits consist of demand and saving deposits, which are classified as Level 1, and time deposits, which are classified as Level 2. The fair value of these deposits is determined in a manner consistent with the respective type of deposit discussed above.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 27, 2026 | Showing above |
| 2024 | Feb 28, 2025 | |
| 2023 | Mar 1, 2024 | |
| 2022 | Mar 1, 2023 | |
| 2021 | Feb 28, 2022 | |
| 2020 | Mar 1, 2021 | |
| 2019 | Feb 21, 2020 | |
| 2018 | Mar 1, 2019 | |
| 2017 | Mar 1, 2018 | |
| 2016 | Feb 27, 2017 | |
| 2015 | Feb 26, 2016 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.