FULTON FINANCIAL CORPFULT
FULTON FINANCIAL CORP Income Taxes Disclosure
| NOTE 13 - INCOME TAXES | ||||||||||||||
The components of income tax expense are as follows:
| 2025 | 2024 | 2023 | |||||||||||||||
| (dollars in thousands) | |||||||||||||||||
| Income before income tax expense (benefit) | |||||||||||||||||
| U.S. | $ | 485,586 | $ | 344,629 | $ | 348,721 | |||||||||||
| Income tax expense (benefit) | |||||||||||||||||
| Current tax expense | |||||||||||||||||
| U.S. federal | $ | 84,652 | $ | 66,817 | $ | 49,707 | |||||||||||
| U.S. state and local | 13,493 | 12,256 | 11,137 | ||||||||||||||
| Total current tax expense | 98,145 | 79,073 | 60,844 | ||||||||||||||
| Deferred tax (benefit) expense | |||||||||||||||||
| U.S. federal | (2,685) | (20,248) | 3,021 | ||||||||||||||
| U.S. state and local | (1,483) | (2,939) | 576 | ||||||||||||||
| Total deferred tax (benefit) expense | (4,168) | (23,187) | 3,597 | ||||||||||||||
| Total income tax expense (benefit) | |||||||||||||||||
| U.S. federal | 81,967 | 46,569 | 52,728 | ||||||||||||||
| U.S. state and local | 12,010 | 9,317 | 11,713 | ||||||||||||||
| Total income tax expense (benefit) | $ | 93,977 | $ | 55,886 | $ | 64,441 | |||||||||||
There was no income from foreign countries for the years ended December 31, 2025, 2024 and 2023.
The differences between the effective income tax rate and the federal statutory income tax rate are as follows:
| 2025 | 2024 | 2023 | ||||||||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||||||||
| U.S. federal statutory tax rate | $ | 101,973 | 21.0 | % | $ | 72,372 | 21.0 | % | $ | 73,231 | 21.0 | % | ||||||||||||||
| Federal | ||||||||||||||||||||||||||
| Tax credits | ||||||||||||||||||||||||||
| Low-income housing tax credits, net | (4,051) | (0.8) | (1,163) | (0.3) | $ | (4,716) | (1.3) | |||||||||||||||||||
| Other, net | 6 | — | 29 | — | 24 | — | ||||||||||||||||||||
| Non-taxable or non-deductible items | ||||||||||||||||||||||||||
| Tax-exempt income on loans | (9,875) | (2.0) | (9,636) | (2.8) | (8,445) | (2.4) | ||||||||||||||||||||
| Tax-exempt income on securities | (4,700) | (1.0) | (5,224) | (1.5) | (6,120) | (1.8) | ||||||||||||||||||||
| Bargain purchase gain | — | — | (7,769) | (2.3) | — | — | ||||||||||||||||||||
| Other | 1,643 | 0.3 | 833 | 0.2 | 1,415 | 0.4 | ||||||||||||||||||||
| Domestic state and local income tax, net of federal | 8,981 | 1.9 | 6,444 | 1.9 | 9,052 | 2.6 | ||||||||||||||||||||
| Total income tax expense | $ | 93,977 | 19.4 | % | $ | 55,886 | 16.2 | % | $ | 64,441 | 18.5 | % | ||||||||||||||
There were no domestic federal reconciling items related to the effect of cross-border tax laws, the effect of changes in tax laws or rates enacted in the current period, changes in valuation allowance, foreign tax effects, or changes in unrecognized tax benefits.
State and local income taxes in New Jersey, Maryland and Delaware comprised the majority of the domestic state and local income taxes, net of federal effect for the years 2025, 2024 and 2023, respectively.
The components of income taxes paid are as follows:
| 2025 | 2024 | 2023 | |||||||||||||||
| (dollars in thousands) | |||||||||||||||||
| U.S. federal, net of refunds | $ | 96,396 | $ | 11,656 | $ | 10,423 | |||||||||||
| U.S. state and local, net of refunds | |||||||||||||||||
| New Jersey | 8,110 | 5,638 | 3,671 | ||||||||||||||
| Maryland | 5,508 | 2,488 | 2,329 | ||||||||||||||
| Delaware | 2,452 | 2,476 | 1,939 | ||||||||||||||
| Other | 222 | 505 | 78 | ||||||||||||||
| Total U.S. state and local, net of refunds | 16,292 | 11,107 | 8,017 | ||||||||||||||
| Total income taxes paid | $ | 112,688 | $ | 22,763 | $ | 18,440 | |||||||||||
The net DTA recorded by the Corporation is included in other assets and consists of the following tax effects of temporary differences as of December 31:
| 2025 | 2024 | ||||||||||
| (dollars in thousands) | |||||||||||
| Deferred tax assets: | |||||||||||
| Allowance for credit losses | $ | 89,053 | $ | 90,148 | |||||||
| Unrealized holding losses on securities | 62,962 | 85,516 | |||||||||
| Lease liability | 35,969 | 34,921 | |||||||||
| State loss carryforwards | 27,964 | 26,118 | |||||||||
| Other accrued expenses | 14,908 | 16,142 | |||||||||
| Deferred compensation | 12,683 | 11,138 | |||||||||
| Stock-based compensation | 5,042 | 5,458 | |||||||||
| Intangible assets | 4,403 | 5,889 | |||||||||
| New Jersey FAS 109 deduction | 2,412 | 2,412 | |||||||||
| Other | 6,916 | 5,032 | |||||||||
| Total gross deferred tax assets | $ | 262,312 | $ | 282,774 | |||||||
| Deferred tax liabilities: | |||||||||||
| Equipment lease financing | 50,366 | 45,644 | |||||||||
| Right-of-use-asset | 32,875 | 31,960 | |||||||||
| Acquisition premiums/discounts | 8,999 | 16,360 | |||||||||
| Postretirement and defined benefit plans | 7,320 | 5,560 | |||||||||
| MSRs | 6,978 | 6,952 | |||||||||
| Tax credit investments | 1,241 | 2,033 | |||||||||
| Premises and equipment | — | 736 | |||||||||
| Total gross deferred tax liabilities | $ | 107,779 | $ | 109,245 | |||||||
| Net deferred tax asset, before valuation allowance | 154,533 | 173,529 | |||||||||
| Valuation allowance | (27,964) | (26,118) | |||||||||
| Net deferred tax asset | $ | 126,569 | $ | 147,411 | |||||||
In assessing the realizability of DTAs, management considers whether it is more likely than not that some or all of the DTAs will not be realized. The ultimate realization of DTAs is dependent upon the generation of future taxable income and/or capital gain income during periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies, such as those that may be implemented to generate capital gains, in making this assessment.
The valuation allowance relates to state net operating loss carryforwards for which realizability is uncertain. As of December 31, 2025 and 2024, the Corporation had state net operating loss carryforwards of approximately $416.8 million and $389.3 million, respectively, which are available to offset future state taxable income, and expire at various dates through 2045.
As of December 31, 2025, based on the level of historical taxable income and projections for future taxable income over the periods in which the DTAs are deductible, management believes it is more likely than not that the Corporation will realize the benefits of its DTAs, net of the valuation allowance.
Uncertain Tax Positions
The following table summarizes the changes in unrecognized tax benefits for the years ended December 31:
| 2025 | 2024 | 2023 | |||||||||||||||
| (dollars in thousands) | |||||||||||||||||
| Balance at beginning of year | $ | 1,060 | $ | 1,044 | $ | 1,228 | |||||||||||
| Current period tax positions | 114 | 120 | 147 | ||||||||||||||
| Lapse of statute of limitations | (82) | (104) | (331) | ||||||||||||||
| Balance at end of year | $ | 1,092 | $ | 1,060 | $ | 1,044 | |||||||||||
Virtually all of the Corporation's unrecognized tax benefits are for positions that are taken on an annual basis on state tax returns. Increases to unrecognized tax benefits will occur as a result of accruing for the nonrecognition of the position for the current year.
Decreases will occur as a result of the lapsing of the statute of limitations for the oldest outstanding year which includes the position. Decreases can also occur throughout the settlement of positions with taxing authorities.
As of December 31, 2025, if recognized, all of the Corporation's unrecognized tax benefits would impact the effective tax rate. Not included in the table above is $131 thousand of federal income tax benefit on unrecognized state tax benefits which, if recognized, would also impact the effective tax rate. Interest accrued related to unrecognized tax benefits is recorded as a component of income tax expense. Penalties, if incurred, would also be recognized in income tax expense. The Corporation recognized approximately $45 thousand and $168 thousand of recoveries in 2025 and 2024, respectively, for interest and penalties in income tax expense related to unrecognized tax positions. As of December 31, 2025 and 2024, total accrued interest and penalties related to unrecognized tax positions were approximately $133 thousand and $177 thousand, respectively.
The Corporation files income tax returns in the federal and various state jurisdictions. In most cases, unrecognized tax benefits are related to tax years that remain subject to examination by the relevant taxing authorities. With few exceptions, the Corporation is no longer subject to federal, state and local examinations by tax authorities for years before 2022.
Tax Credit Investments
The TCIs are included in other assets, with any unfunded equity commitments recorded in other liabilities on the Consolidated Balance Sheets and changes are reflected in change in in the Consolidated Statements of Cash Flows.
In 2023, the Corporation adopted ASU 2023-02, which allows all TCIs to qualify for the proportional amortization method if: (1) it is probable that the income tax credits allocatable to the Corporation will be available; (2) the Corporation does not have the ability to exercise significant influence over the operating and financial policies of the underlying project; (3) substantially all of the projected benefits are from income tax credits and other income tax benefits; (4) the Corporation's projected yield based solely on the cash flows from the income tax credits and other income tax benefits is positive; and (5) the Corporation is a limited liability investor in the limited liability entity for both legal and tax purposes, and the Corporation’s liability is limited to its capital investment. See "Note 1 - Summary of Significant Accounting Policies" in the Notes to the Consolidated Financial Statements.
All TCIs held as of December 31, 2025 and 2024 that qualify for the proportional amortization method are amortized over the period the Corporation expects to receive the tax credits, with the expense included within income taxes on the Consolidated Statements of Income and net income in the Consolidated Statements of Cash Flows.
All TCIs are evaluated for impairment at the end of each reporting period. There were no impairments recorded against TCIs during 2025.
The following table presents the balances of the Corporation's TCIs and related unfunded commitments as of December 31:
| 2025 | 2024 | ||||||||||||||||
| (dollars in thousands) | |||||||||||||||||
| Affordable housing tax credit investments, net | $ | 218,810 | $ | 211,572 | |||||||||||||
| Other tax credit investments, net | 35,652 | 29,649 | |||||||||||||||
| Total TCIs, net | $ | 254,462 | $ | 241,221 | |||||||||||||
| Included in other liabilities: | |||||||||||||||||
| Unfunded affordable housing tax credit commitments | $ | 78,702 | $ | 84,572 | |||||||||||||
| Other tax credit liabilities | 29,551 | 24,109 | |||||||||||||||
| Total unfunded tax credit commitments and liabilities | $ | 108,253 | $ | 108,681 | |||||||||||||
The following table presents other information relating to the Corporation's TCIs for the years ended December 31:
| 2025 | 2024 | 2023 | ||||||||||||||||||
| (dollars in thousands) | ||||||||||||||||||||
| Components of income taxes: | ||||||||||||||||||||
| Tax credits and benefits | $ | (32,143) | $ | (26,762) | $ | (28,748) | ||||||||||||||
| Amortization of tax credits and benefits, net of tax benefits | 27,536 | 25,069 | 23,446 | |||||||||||||||||
| Deferred tax expense | 566 | 559 | 610 | |||||||||||||||||
| $ | (4,041) | $ | (1,134) | $ | (4,692) | |||||||||||||||
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 Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.