What changed in this filing

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Item 1. Business

2024-03-01 compared with 2023-03-01 · 121 added, 165 removed, 300 unchanged (49% of the section changed)

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In 2000, we became a financial holding company as defined in the GLBA, which gave us the ability to expand our financial services activities under our holding company structure.

Business - General - Competition and - Supervision and Regulation.

Business - Competition and - Supervision and Regulation.

" We directly own 100% of the common stock of Fulton Bank and five non-bank entities.

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These reports, as well as any amendments thereto, are posted on our website as soon as reasonably practicable after they are electronically filed with the SEC.

The information contained on our website or in any websites linked by our website is not a part of this Annual Report on Form 10-K.

Banking and Financial Services

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We operate in areas that are home to a wide range of manufacturing, healthcare, agriculture and other service companies.

We are not dependent upon one or a few customers or any one industry, and the loss of any single customer or a few customers would not have a material adverse impact on our business.

However, a large portion of our loan portfolio is comprised of commercial loans, commercial mortgage loans and construction loans.

Although a large portion of our loan portfolio is comprised of commercial loans, commercial mortgage loans and construction loans, we are not dependent upon one or a few customers and the loss of any single customer or a few customers would not have a material adverse impact on our business.

See "Item 1A.

Risk Factors - Interest Rate and Credit Risks - Our loan portfolio composition and competition for loans subject us to credit risk ."

Risk Factors - Interest Rate and Credit Risks - Our loan portfolio composition subjects us to credit risk and A significant proportion of our loan portfolio consists of commercial mortgage loans that may pose increased credit risk."

We offer a wide range of consumer and commercial banking products and services, as well as wealth management products and services, to our customers and the communities we serve:

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We offer home equity loans and lines of credit as well as a variety of fixed, variable and adjustable rate mortgage products, including construction loans and jumbo residential mortgage loans, all of which are underwritten based upon loan-to-value limits specified in our lending policy.

Our consumer loan products include automobile loans, personal lines of credit and checking account overdraft protection.

We offer residential mortgages through Fulton Mortgage Company, an operating division of Fulton Bank.

Commercial Banking – We provide commercial banking products and services primarily to small and medium sized businesses (generally with sales of less than $150 million) in our market area.

Commercial lending products include commercial real estate loans, commercial and industrial loans, construction loans and equipment lease financing loans.

Variable, adjustable and fixed rate loans are provided, with variable and adjustable rate loans generally tied to an index, such as the Prime Rate or LIBOR, as well as interest rate derivatives.

See "Item 1A.

Risk Factors - Interest Rate and Credit Risks - The replacement of LIBOR as a financial benchmark presents risks to the financial instruments we originated or hold ." Our commercial lending policy encourages relationship banking and provides strict guidelines related to customer creditworthiness and collateral requirements for secured loans.

In addition, we offer equipment lease financing, letters of credit, cash management services and traditional deposit products to commercial customers.

As of December 31, 2022, our policies limit the maximum total lending commitment to a single borrower to $100 million, an amount that is significantly below our regulatory lending limit.

In addition, we have established lower total lending limits based on our internal risk rating of a borrower and for certain types of lending commitments.

Our consumer loan products also include automobile loans, student loans, personal loans and lines of credit and checking account overdraft protection.

Commercial Banking - We provide commercial banking products and services primarily to small and medium sized businesses (generally with annual gross revenue of less than $150 million) in our market area.

Commercial lending products include commercial real estate loans, commercial and industrial loans and construction loans.

Variable, adjustable and fixed rate loans are provided, with variable and adjustable rate loans generally tied to an index, such as the Prime Rate or SOFR, as well as interest rate derivatives.

Our commercial lending policy encourages relationship banking and provides strict guidelines related to customer creditworthiness and collateral requirements for secured loans.

We offer equipment lease financing, letters of credit, cash management services and traditional deposit products to commercial customers.

We have established lending limits based on our internal risk rating of a borrower and for certain types of lending commitments.

Wealth Management - We offer wealth management services, which include investment management, trust, brokerage, insurance and investment advisory services, to consumer and commercial customers in our market area through Fulton Financial Advisors and Fulton Private Bank, both operating divisions of Fulton Bank.

We deliver these products and services through traditional financial center banking, with a network of financial center offices.

We deliver these products and services through a network of financial center offices.

Electronic delivery channels include a network of ATMs and telephone, mobile and online banking.

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Human Capital

Our workforce, excluding temporary employees and interns, at December 31, 2022 consisted of approximately 3,300 employees, compared to approximately 3,200 employees at December 31, 2021.

In 2022, we experienced lower employee turnover than in 2021.

Our workforce, excluding temporary employees and interns, on December 31, 2023 consisted of approximately 3,400 employees, compared to approximately 3,300 employees at December 31, 2022.

Employee Engagement and Retention - We place a premium on having a highly engaged workforce because engaged employees tend to perform at a higher level, support our success, and are more likely to remain with our organization.

We conduct an annual survey of our workforce to measure employee engagement, assess employee morale, and to help identify areas of the employee experience that could be improved.

We then task our leaders with developing and implementing communication and action plans aimed at engaging with their respective teams to gain a better understanding of the results of the assessment and to foster enhanced future engagement.

Our leaders are held accountable for employee engagement scores for the teams they lead as each leader's engagement score is included in their annual performance review.

We conduct an annual survey of our workforce to measure employee engagement, assess employee morale, and help identify areas of the employee experience that could be improved.

We then task our leaders with developing and implementing communication and action plans aimed at collaborating with their respective teams to gain a better understanding of the results of the assessment and to foster enhanced future engagement.

Our leaders are held accountable for the employee engagement of their teams as each leader's engagement score is included in their annual performance review.

Additionally, aggregated employee engagement assessment results are reported to our Board of Directors as a key indicator of the health and well-being of our workforce.

Culture, Diversity and Inclusion - We believe that building relationships matters.

This belief includes relationships with clients and customers and relationships among employees.

In recent years, we have placed significant emphasis on developing our corporate culture, and we now consider our culture to be one of the primary components of our continuing success.

This belief includes relationships with customers and relationships among employees.

We place significant emphasis on developing our corporate culture, and we consider our culture to be one of the primary components of our continuing success.

Our culture-shaping program, The Fulton Experience, is a highly engaging program that is intended to create new ways of thinking about employees' individual roles, how employees collaborate, and how we and our employees grow together.

We believe that we succeed as a company because we value our employees' teamwork and foster a culture around that belief.

More recently, we have been applying that same emphasis to the development of a diverse, equitable, and inclusive workforce.

We recognize that having a diverse, equitable, and inclusive culture and workforce encourages employees to share their opinions and different perspectives, fosters a culture of respect, and are crucial elements of a successful organization.

In 2022, we continued many initiatives to increase diversity, equity, and inclusion including, but not limited to, providing allyship training to all employees and supporting several employee resource groups.

Compensation and Rewards

The Corporation invests in its workforce by offering competitive salaries, incentives, and benefits that are part of the Corporation's pay for performance culture.

This is implemented through incentive programs that are tailored to drive performance in the business units as well as at the corporate level.

Workforce Recruitment and Development – We recruit our workforce, filling both vacant and new positions, largely by posting these positions on our website and on social media platforms, through employee referrals and through talent recruiting efforts by internal and third-party recruiters.

We provide for professional development of new and existing employees largely through the efforts of our Center for Learning and Talent Development that develops and administers a wide variety of training programs for professional development.

We also provide for a number of off-site, third-party offerings in which employees can further enhance their skills, knowledge and leadership potential.

We apply that same emphasis to the development of a diverse, equitable, and inclusive workforce.

We recognize that having a diverse, equitable, and inclusive culture fosters a culture of respect and is a crucial element of a successful organization.

Compensation and Rewards - The Corporation invests in its workforce by offering a comprehensive Total Rewards program which includes competitive salaries, incentives, and benefits programs.

In line with the Corporation's pay for performance philosophy, we offer performance-based incentive programs designed to drive results in the business units as well as at the corporate level.

Workforce Recruitment and Development - We recruit our workforce, filling both vacant and new positions by posting these positions on our website and on social media platforms, through employee referrals and through talent recruiting efforts by internal and third-party recruiters.

We provide for professional development of new and existing employees largely through the efforts of our Learning and Development area that develops and administers a wide variety of training programs for professional development.

We also provide a number of third-party offerings in which employees can further enhance their skills, knowledge and leadership potential.

One such example, afforded to employees with future leadership potential, is through our participation in the Stonier School of Banking sponsored by the American Bankers Association.

Safety, Health and Wellness - The safety, health and wellness of our employees remains a top priority.

In addition to traditional healthcare, paid time off, paid parental leave and retirement benefits, we provide emotional wellness and work-life services through our Employee Assistance Program.

Through COVID-19, we implemented measures to maintain the safety of employees and customers at our financial centers and other facilities and, where appropriate, adopted remote and hybrid onsite-

remote working arrangements.

As the impacts of the COVID-19 pandemic diminish, we continue to iterate our approach to remote and hybrid working arrangements to support new ways of working while strengthening employee engagement.

In addition to traditional healthcare, paid time off, paid parental leave and retirement benefits, we provide behavioral and mental health support and work-life services through our Employee Assistance Program.

Following the end of the COVID-19 pandemic, we continue to iterate our approach to remote and hybrid working arrangements to support new ways of working while strengthening employee engagement.

Cybersecurity

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As we continue to offer new and innovative technologies for our customers, the risk of cybersecurity attacks and our oversight of this risk will remain at a high level.

See "Item 1C.

Cybersecurity."

Climate Risk Management

We recognize the potential impact climate change may have on us, our clients, employees, shareholders, and the communities we serve.

We recognize the potential impact climate change may have on us, our clients, our suppliers, employees, shareholders, and the communities we serve.

We are cognizant of our responsibility to better understand the impact of our operations on global climate change and are taking steps to help ensure our organization operates in a manner consistent with responsible environmental stewardship.

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Climate change may contribute to or exacerbate these conditions.

We are also susceptible to losses arising from the transition to a low carbon economy, including policy changes, energy costs, and shifts in market and customer sentiment that can impact us and our clients.

At this time, we have not experienced material losses from climate change.

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Fulton Bank is a national banking association chartered under the laws of the United States and is primarily regulated by the OCC.

In addition, the CFPB examines Fulton Bank for compliance with most federal consumer financial protection laws, including the laws relating to fair lending and prohibiting unfair, deceptive or abusive acts or practices in connection with the offer, sale or provision of consumer financial products or services and enforces such laws with respect to Fulton Bank and our affiliates.

In addition, the CFPB examines Fulton Bank for compliance with most federal consumer financial protection laws, including the laws relating to fair

lending and prohibiting unfair, deceptive or abusive acts or practices in connection with the offer, sale or provision of consumer financial products or services and enforces such laws with respect to Fulton Bank and our affiliates.

Federal statutes that apply to us and our subsidiaries include the GLBA, the BHCA, the Dodd-Frank Act, the Federal Reserve Act, the National Bank Act and the Federal Deposit Insurance Act, among others.

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If a bank holding company commits to a federal bank regulator that it will maintain the capital of its bank subsidiary, whether in response to the Federal Reserve Board's invoking its source of strength authority or in response to other regulatory measures, that commitment will be assumed by the bankruptcy trustee, and the bank will be entitled to priority payment in respect of that commitment.

The Economic Growth Act – In May 2018, the Economic Growth Act became law.

Among other things, the Economic Growth Act amended certain provisions of the Dodd-Frank Act to raise the total asset threshold for mandatory applicability of enhanced prudential standards for bank holding companies to $250 billion and to allow the Federal Reserve Board to apply enhanced prudential standards to bank holding companies with between $100 billion and $250 billion in total assets to address financial stability risks or safety and soundness concerns.

The Economic Growth Act - The Economic Growth Act amended certain provisions of the Dodd-Frank Act to raise the total asset threshold for mandatory applicability of enhanced prudential standards for bank holding companies to $250 billion and to allow the Federal Reserve Board to apply enhanced prudential standards to bank holding companies with between $100 billion and $250 billion in total assets to address financial stability risks or safety and soundness concerns.

The Economic Growth Act's increased threshold took effect immediately for bank holding companies with total assets of less than $100 billion, including the Corporation.

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If a pattern or practice of lending discrimination is alleged by a regulator, then that agency may refer the matter to the DOJ for investigation.

Failure to comply with these and similar statutes and regulations could subject us to formal or informal enforcement actions, the imposition of civil money penalties and consumer litigation.

Failure to comply with these and similar statutes and regulations could subject us to formal or informal enforcement actions, the imposition of civil money penalties and litigation.

The CFPB has exclusive examination and primary enforcement authority with respect to compliance with federal consumer financial protection laws and regulations by institutions under its supervision and is authorized, individually or jointly with the federal banking agencies, to conduct investigations to determine whether any person is, or has, engaged in conduct that violates such laws or regulations.

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In addition, these rules restrict the imposition of prepayment penalties and compensation practices relating to residential mortgage loan origination.

Mortgage lenders are required to determine consumers' ability to repay in one of two ways.

Mortgage lenders are required to determine a consumer's ability to repay in one of two ways.

The first alternative requires the mortgage lender to consider eight underwriting factors when making the credit decision.

The mortgage lender may also originate "qualified mortgages" which are entitled to a presumption that the creditor making the loan satisfied the ability-to-repay requirements.

In general, a QM is a residential mortgage loan that does not have certain high-risk features, such as negative

amortization, interest-only payments, balloon payments, or a term exceeding 30 years.

In general, a QM is a residential mortgage loan that does not have certain high-risk features, such as negative amortization, interest-only payments, balloon payments, or a term exceeding 30 years.

In addition, to be a QM loan, the points and fees paid by a consumer cannot exceed 3% of the total loan amount, and the borrower's total DTI ratio must be no higher than 43% (subject to certain limited exceptions for loans eligible for purchase, guarantee or insurance by a government sponsored enterprise or a federal agency).

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The second rule creates a new category of "seasoned" QM loans for those that meet certain performance requirements.

Specifically, that rule allows a non-QM loan or a "rebuttable presumption" QM loan to receive a safe harbor from APR liability at the end of a "seasoning" period of at least 36 months as a "seasoned QM" if it satisfies certain product restrictions, points-and-fees limits, and underwriting requirements, and the loan meets the designated performance and portfolio requirements during the "seasoning period." The mandatory compliance date under the first final rule was July 1, 2021, but was subsequently delayed by the CFPB to October 1, 2022.

The second final rule will apply to covered transactions for which institutions receive an application after the compliance date for the first final rule.

Specifically, that rule allows a non-QM loan or a "rebuttable presumption" QM loan to

receive a safe harbor from APR liability at the end of a "seasoning" period of at least 36 months as a "seasoned QM" if it satisfies certain product restrictions, points-and-fees limits, and underwriting requirements, and the loan meets the designated performance and portfolio requirements during the "seasoning period."

Integrated disclosures under the RESPA and the TILA - Under the CFPB rules, mortgage lenders are required to provide a loan estimate, not later than the third business day after submission of a loan application, and a closing disclosure at least three days prior to the loan closing.

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Volcker Rule - Provisions of the Dodd-Frank Act, commonly known as the "Volcker Rule," prohibit banks and their affiliates from engaging in proprietary trading and investing in and sponsoring hedge funds and private equity funds and other private funds that are, among other things, offered within specified exemptions to the Investment Company Act, known as "covered funds," subject to certain exemptions.

In October 2019, the Volcker Rule Regulators finalized amendments, effective on January 1, 2020, but with a required compliance date of January 1, 2021, to their regulations implementing the Volcker Rule, tailoring compliance requirements based on the size and scope of a banking entity's trading activities and clarifying and amending certain definitions, requirements and exemptions.

In June 2020, the Volcker Rule Regulators issued a final rule that modified the Volcker Rule's prohibition on banking entities' investing in or sponsoring "covered funds." The final rule (1) streamlined the covered funds portion of the rule;

(2) addressed the extraterritorial treatment of certain foreign funds;

and (3) permitted banking entities to offer financial services and engage in other activities that do not raise concerns that the Volcker Rule was intended to address.

Volcker Rule compliance requirements are based on the size and scope of a banking entity's trading activities.

Our investing and trading activities have and will continue to depend on, among other things, further rulemaking and guidance that may be issued by the Volcker Rule Regulators and the development of market practices and standards.

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The Basel III Rules defined the risk-weighting categories for bank holding companies and banks that follow the standardized approach, such as the Corporation and Fulton Bank, based on a risk-sensitive analysis, depending on the nature of the exposure.

The Capital Simplifications Rules eliminated the standalone prior approval requirement in the Basel III Rules for any repurchase of common stock.

In certain circumstances, repurchases of our common stock may be subject to a prior approval or notice requirement under other regulations or policies of the Federal Reserve Board.

The Capital Rules eliminated the standalone prior approval requirement in the Basel III Rules for any repurchase of common stock.

In certain circumstances, repurchases of our common stock may be subject to a prior approval or notice requirement

under other regulations or policies of the Federal Reserve Board.

Any redemption or repurchase of preferred stock or subordinated debt remains subject to the prior approval of the Federal Reserve Board.

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As of December 31, 2023, the Corporation and Fulton Bank exceeded all capital requirements necessary to be deemed "well-capitalized" for all regulatory purposes under the capital rules.

Stress Testing and Capital Planning – As a result of the Economic Growth Act and implementing regulations adopted by the Federal Reserve Board and OCC, the Corporation and Fulton Bank are no longer subject to company-run stress testing requirements under the Dodd-Frank Act.

The Federal Reserve Board continues to supervise our capital planning and risk management practices through its regular supervisory process.

CECL Transitional Provisions – In June 2016, the FASB issued an ASU, "Financial Instruments-Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments," which replaces the existing "incurred loss" model for recognizing credit losses with an "expected loss" model referred to as the CECL model.

On August 26, 2020, the federal bank regulatory agencies issued a rule that allows institutions that adopted the CECL accounting standard in 2020 the option to mitigate the estimated capital effects of CECL for two years, followed by a three-year transition period.

Stress Testing and Capital Planning - As a result of the Economic Growth Act and implementing regulations adopted by the Federal Reserve Board and the OCC, the Corporation and Fulton Bank are no longer subject to company-run stress testing requirements under the Dodd-Frank Act.

The Federal Reserve Board continues to supervise our capital planning and risk management practices through its regular supervisory process, which includes regular stress testing.

CECL Transitional Provisions – On August 26, 2020, the federal bank regulatory agencies adopted the CECL Transition Rule that provides banking institutions an optional five-year transition period to phase in the impact of the CECL standard on their regulatory capital.

The final rule gives eligible institutions the option to mitigate the estimated capital effects of CECL for two years, followed by a three-year transition period.

Taken together, these measures offer institutions a transition period of up to five years.

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Under this system, the federal banking agencies are required to take certain, and authorized to take other, prompt corrective actions against undercapitalized institutions, the severity of which increase as the capital category of an institution declines, including restrictions on growth of assets and other forms of expansion.

Generally, a capital restoration plan must be filed with the institution's primary federal regulator within 45 days of the date an institution receives notice that it is "undercapitalized,"

"significantly undercapitalized" or "critically undercapitalized." Although prompt corrective action regulations apply only to depository institutions and not to bank holding companies, bank holding companies must guarantee any such capital restoration plan in certain circumstances.

Generally, a capital restoration plan must be filed with the institution's primary federal regulator within 45 days of the date an institution receives notice that it is "undercapitalized," "significantly undercapitalized" or "critically undercapitalized." Although prompt corrective action regulations apply only to depository institutions and not to bank holding companies, bank holding companies must guarantee any such capital restoration plan in certain circumstances.

The liability of a bank holding company under any such guarantee is limited to the lesser of 5.00% of the bank's relevant assets at the time it became "undercapitalized" or the amount needed to comply.

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The characterization of deposits as "brokered" may result in the imposition of higher deposit assessments on such deposits.

As mandated by the Economic Growth Act, the FDIC adopted a final rule in February 2019 to include a limited exception for reciprocal deposits for FDIC-IDIs that are well-rated and well-capitalized (or adequately capitalized and for which the FDIC-IDI has obtained a waiver from the FDIC as mentioned above).

Under the limited exception, qualified FDIC-IDIs, like Fulton Bank, are able to except from treatment as "brokered" deposits the lesser of up to $5 billion, or 20% of the institution's total liabilities, in reciprocal deposits.

In December 2020, the FDIC issued a final rule amending its brokered deposits regulation.

The rule sought to clarify and modernize the FDIC's regulatory framework for brokered deposits.

Notable aspects of the rule included (i) the establishment of bright-line standards for determining whether an entity meets the statutory definition of "deposit broker;" (ii) the identification of a number of business relationships in which the agent or nominee is automatically not deemed to be a "deposit broker" because their primary purpose is not the placement of funds with depository institutions (the "primary purpose exception");

(iii) the establishment of a "more transparent" application process for entities that seek to rely upon the "primary purpose exception", but do not qualify for one of the identified business relationships to which the exception is automatically applicable;

and (iv) the clarification that third parties that have an exclusive deposit-placement arrangement with one IDI are not considered a "deposit broker." The final rule took effect on April 1, 2021, and full compliance was required by January 1, 2022.

There is a limited exception from the scope of “brokered” deposits for reciprocal deposits for IDIs that are well-rated and well-capitalized (or adequately capitalized and for which the IDI has obtained a waiver from the FDIC as mentioned above).

Under this limited exception, qualified IDIs, like Fulton Bank, are

able to except from treatment as "brokered" deposits the lesser of up to $5 billion, or 20% of the institution's total liabilities, in reciprocal deposits.

Loans and Dividends from Bank Subsidiary - There are various restrictions on the extent to which Fulton Bank can make loans and other extensions of credit (including credit exposure arising from repurchase and reverse repurchase agreements, securities borrowing and derivative transactions) to, or enter into certain transactions with, its affiliates, which includes the Corporation and its non-bank subsidiaries.

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In addition, the FDIC possesses backup enforcement authority over a depository institution holding company, like us, if the conduct or threatened conduct of such bank holding company poses a risk to the DIF, although such authority may not be used if the bank holding company is generally in sound condition and does not pose a foreseeable and material risk to the DIF.

FDIC assessment rates for large institutions that have more than $10 billion in assets, such as Fulton Bank, are calculated based on a "scorecard" methodology that seeks to capture both the probability that an individual large institution will fail and the magnitude of the impact on the DIF if such a failure occurs that is based primarily on the difference between the institution's average of total assets and average tangible equity.

The FDIC has the ability to make discretionary adjustments to the total score, up or down, based upon significant risk factors that are not adequately captured in the scorecard.

For large institutions, including Fulton Bank, after accounting for potential base-rate adjustments, the total assessment rate could range from 1.5 to 40 bps on an annualized basis.

An institution's assessment is determined by multiplying its assessment rate by its assessment base, which is asset based.

An institution's assessment is determined by multiplying its assessment rate by its assessment base.

In November 2023, the FDIC issued a final rule to implement a special assessment to recover losses to the DIF arising from the protection of uninsured depositors following the closures of Silicon Valley Bank and Signature Bank in 2023.

The special assessment is based on an IDI's estimated uninsured deposits as of December 31, 2022, adjusted to excluding the first $5.0 billion of estimated uninsured deposits, and will be assessed at a quarterly rate of 3.36 bps, over eight quarterly assessment periods, beginning in the first quarter of 2024.

As a result of this final rule, we accrued $6.5 million ($5.1 million after tax) related to this assessment in the fourth quarter of 2023.

This amount represents our current expectation of the full amount of the assessment based on our total uninsured deposits as of December 31, 2022.

Under the final rule, the estimated losses to the DIF may be revised from time to time, and the FDIC has retained the ability to cease collection early, extend the special assessment collection period and impose a final shortfall special assessment on a one-time basis.

The extent to which any such additional future assessments will impact our future deposit insurance expense is currently uncertain.

The Tax Act disallows the deduction of FDIC deposit insurance premium payments for banking organizations with total consolidated assets of $50 billion or more.

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We have adopted policies, procedures and controls to address compliance with the Patriot Act and other AML laws and regulations, and we will continue to revise and update our policies, procedures and controls to reflect required changes.

On January 1, 2021, the NDAA was signed into law, which enacted the most significant overhaul of the BSA and other AML-related laws since the Patriot Act.

On January 1, 2021, the NDAA was signed into law, which enacted the most significant overhaul of BSA and other AML-related laws since the Patriot Act.

Notable aspects of the NDAA include:

(i) significant changes to the collection of beneficial ownership and the establishment of a beneficial ownership registry that requires corporate entities (generally, any corporation, limited liability company, or other similar entity with 20 or fewer employees and annual gross income of $5 million or less) to report beneficial ownership information to the FinCEN (which will be maintained by the FinCEN and made available upon request to financial institutions);

(ii) enhanced whistleblower provisions that provide that one or more whistleblowers who voluntarily provide original information leading to the successful enforcement of violations of the BSA or other AML-related laws in any judicial or administrative action brought by the Secretary of the Treasury or the Attorney General resulting in monetary sanctions exceeding $1 million (including disgorgement and interest but excluding forfeiture, restitution, or compensation to victims) will receive not more than 30 percent of the monetary sanctions collected and will receive increased protections;

Attorney General resulting in monetary sanctions exceeding $1 million (including disgorgement and interest but excluding forfeiture, restitution, or compensation to victims) will receive not more than 30 percent of the monetary sanctions collected and will receive increased protections;

(iii) increased penalties for violations of the BSA;

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On September 29, 2022, the FinCEN issued a final rule establishing a beneficial ownership information reporting requirement, pursuant to the CTA.

The rule will require most corporations, limited liability companies, and other entities created in or registered to do business in the United States to report information about their beneficial owners—the persons who ultimately own or control the company, to the FinCEN.

On December 15, 2022, the FinCEN issued a notice of proposed rulemaking that would implement other provisions of the CTA that govern the access to, and protection of, beneficial ownership information.

Until a final rule is issued, it is not certain to what extent this rulemaking will impact the BSA and AML compliance activities of Fulton Bank.

The rule requires most corporations, limited liability companies, and other entities created in or registered to do business in the United States to report information about their beneficial owners—the persons who ultimately own or control the company, to the FinCEN.

On December 22, 2023, FinCEN issued a final rule regarding access by authorized recipients to BOI that will be reported to FinCEN pursuant to Sec.

6403 of the CTA, which is part of the NDAA.

The regulations implement strict protocols required by the CTA to protect sensitive personally identifiable information reported to FinCEN and establish the circumstances in which specified recipients have access to BOI, along with data protection protocols and oversight mechanisms applicable to each recipient category.

The disclosure of BOI to authorized recipients in accordance with appropriate protocols and oversight will help law enforcement and national security agencies prevent and combat money laundering, terrorist financing, tax fraud, and other illicit activity, as well as protect national security.

Commercial Real Estate Guidance — Under guidance issued by the federal banking agencies, the agencies have expressed concerns with institutions that ease commercial real estate underwriting standards and have directed financial institutions to maintain underwriting discipline and exercise risk management practices to identify, measure and monitor lending risks.

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The CRA also requires all institutions to make public disclosure of their CRA ratings.

As of December 31, 2022, Fulton Bank was rated as "outstanding." Regulations require that Fulton Bank publicly disclose certain agreements that are in fulfillment of CRA.

As of December 31, 2023, Fulton Bank was rated as "outstanding." Current regulations require that Fulton Bank publicly disclose certain agreements that are in fulfillment of CRA.

Fulton Bank is not a party to any such agreements at this time.

The federal banking agencies have expressed interest in, and the OCC has taken certain steps toward, reform of the CRA's implementing regulations;

however, the agencies have not yet agreed upon a common framework for reform.

On May 5, 2022, the OCC, in conjunction with the other federal bank regulatory agencies, issued a joint notice of proposed rulemaking to strengthen and modernize the CRA regulatory framework.

The agencies' stated goal of the joint proposal is to " update CRA regulations to strengthen the achievement of the statute's purpose;

adapt to changes in the banking industry, including the expanded role of mobile and online banking;

provide greater clarity and consistency in the application of the regulations;

tailor performance standards to account for differences in bank size and business models and local conditions;

tailor data collection and reporting requirements and use existing data whenever possible;

promote transparency and public engagement;

confirm that CRA and fair lending responsibilities are mutually reinforcing;

and create a consistent regulatory approach that applies to banks regulated by all three agencies." Until the agencies announce a final rule, it is unclear to what extent the rulemaking will create an additional compliance burden on Fulton Bank, and otherwise affect its lending, investment, retail branching, and other activities.

Standards for Safety and Soundness – Pursuant to the requirements of FDICIA, as amended by the Riegle Community Development and Regulatory Improvement Act of 1994, the federal bank regulatory agencies adopted guidelines establishing general standards relating to internal controls, information systems, internal audit systems, loan documentation, credit underwriting, interest rate risk exposure, asset growth, asset quality, earnings, compensation, fees and benefits.

On October 24, 2023, the federal banking agencies issued a final rule implementing updates to CRA reform.

Among other things, the final rule:

(a) adopts four new performance tests to evaluate the CRA performance of large banks (assets of $2 billion or more) - the Retail Lending Test, Retail Services and Products Test, Community Development Financing Test, and Community Development Services Test;

(b) retains a strategic plan option, with modifications to reflect the new performance tests and updates to the approval standards;

(c) clarifies community development activities by updating the definition of community development, providing a process by which banks may request confirmation that an activity is eligible for community development consideration, and providing for a publicly available interagency illustrative list of qualifying community development activities;

(d) updates delineation requirements for facility-based assessment areas and establishes new retail lending assessment areas for certain large banks;

(e) updates data collection, maintenance, and reporting requirements for large banks, tailoring those requirements based on large bank asset size and leveraging existing data where possible, while not imposing new data collection and reporting requirements for small and intermediate banks;

and (f) continues public file and public notice disclosure requirements and creates a new public comment process to facilitate public engagement.

The April 1, 2024, effective date is applicable to certain provisions of the final rule that are similar to the current CRA regulations:

facility-based assessment area delineations, effect of CRA on applications, public file, bank public notice, and CRA examination schedule public notice provisions, as well as the new public engagement provision.

As of January 1, 2026, banks are required to comply with all other provisions of the final rule, except for certain reporting requirements, which will be applicable on January 1, 2027.

Standards for Safety and Soundness - Pursuant to the requirements of the FDICIA, as amended by the Riegle Community Development and Regulatory Improvement Act of 1994, the federal bank regulatory agencies adopted guidelines establishing general standards relating to internal controls, information systems, internal audit systems, loan documentation, credit underwriting, interest rate risk exposure, asset growth, asset quality, earnings, compensation, fees and benefits.

In general, the guidelines require, among other things, appropriate systems and practices to identify and manage the risks and exposures specified in the guidelines.

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In addition, these regulations or guidelines must require enhanced disclosure with respect to incentive-based compensation arrangements.

The agencies have not yet finalized these rules;

however, on October 14, 2021, the SEC signaled a renewed interest in this rulemaking initiative by re-opening the comment period on a proposed rule issued originally in 2015 regarding clawbacks of incentive-based executive compensation.

On January 27, 2022, the SEC extended this comment period until March 4, 2022.

On October 15, 2022, the SEC adopted final rules implementing the incentive-based compensation recovery (clawback) provisions, which largely track the proposed rules originally announced in 2015.

On October 15, 2022, the SEC adopted final

rules implementing the incentive-based compensation recovery (clawback) provisions, which largely track the proposed rules originally announced in 2015.

Notwithstanding the issuance of these final rules, the scope and content of the federal banking agencies' policies on executive compensation may continue to evolve in the near future.

We have had a clawback policy in place since 2012 and will assess the policy against the new requirements.

We have had a clawback policy in place since 2012 and have updated such policy to comply with the new requirements.

Privacy Protection and Cybersecurity — Fulton Bank is subject to regulations implementing the privacy protection provisions of the GLBA.

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Certain states have enacted laws establishing consumer privacy protections and data security requirements in their respective states.

For example, the CCPA gives California residents new rights to receive certain disclosures regarding the collection, use, and sharing of "Personal Information," as well as rights to access, delete, and restrict the sale of certain personal information.

For example, the CCPA gives California residents rights to receive certain disclosures regarding the collection, use, and sharing of "personal information" as well as rights to access, delete, and restrict the sale of certain personal information.

The CCPA, which was amended in November 2020 by a ballot initiative titled the California Privacy Rights Act, went into effect on January 1, 2020, and Fulton Bank is required to comply with the CCPA in serving the small number of its customers that are residents of California.

Privacy and data security legislation remained a priority issue in 2021.

Attempts by state and local governments to regulate consumer privacy have the potential to create a patchwork of differing and/or conflicting state regulations.

In addition, Congress and federal regulatory agencies are considering similar laws or regulations that could create new individual privacy rights and impose increased obligations on companies handling personal data.

For example, on November 23, 2021, the federal financial regulatory agencies published a final rule that will impose on banking organizations and their service providers new notification requirements for significant cybersecurity incidents.

Specifically, the final rule requires banking organizations to promptly notify their primary federal regulator as soon as possible and no later than 36 hours after the discovery of a "computer security incident" that rises to the level of a "notification incident" within the meaning attributed to those terms by the final rule.

Banks' services providers are required under the final rule to notify any affected bank to or on behalf of which the service provider provides services "as soon as possible" after determining that it has experienced an incident that materially disrupts or degrades, or is reasonably likely to materially disrupt or degrade, covered services provided to such bank for four or more hours.

The final rule took effect on April 1, 2022, and banks and their service providers were required to be in compliance with the requirements of the rule by May 1, 2022.

In July 2023, the SEC adopted rules requiring registrants to disclose material cybersecurity incidents experienced and describe the material aspects of their nature, scope and timing.

The rules, which supersede their previously interpreted guidance published in February 2018, also require annual disclosures describing a company's cybersecurity risk management, strategy and governance.

These SEC rules, and any other regulatory guidance, are in addition to notification and disclosure requirements under state and federal banking law and regulations.

Federal Reserve System — Federal Reserve Board regulations require depository institutions to maintain cash reserves against specified deposit liabilities.

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It is currently unclear if the reduction of the reserve requirements on transaction accounts is permanent.

Any potential impact of the rule on the Bank's lending activities is also unclear.

Acquisitions — The BHCA requires a bank holding company to obtain the prior approval of the Federal Reserve Board before:

• the company may acquire direct or indirect ownership or control of any voting shares of any bank or savings and loan association, if after such acquisition the bank holding company will directly or indirectly own or control more than five percent of any class of voting securities of the institution;

• any of the company's subsidiaries, other than a bank, may acquire all or substantially all of the assets of any bank or savings and loan association;

• the company may merge or consolidate with any other bank or financial holding company.

• the company acquires direct or indirect ownership or control of any voting shares of any bank or savings and loan association, if after such acquisition the bank holding company will directly or indirectly own or control more than five percent of any class of voting securities of the institution;

• any of the company's subsidiaries, other than a bank, acquires all or substantially all of the assets of any bank or savings and loan association;

• the company merges or consolidates with any other bank or financial holding company.

Prior regulatory approval is also generally required for mergers, acquisitions and consolidations involving other IDIs.

In reviewing acquisition and merger applications, the bank regulatory authorities will consider, among other things, the competitive effect of the transaction, financial and managerial issues, the capital position of the combined organization, convenience and needs factors, including the applicant's CRA record, the effectiveness of the subject organizations in combating money laundering activities, and the transaction's effect on the stability of the U.S.

In reviewing acquisition and merger applications, bank regulatory authorities will consider, among other things, the competitive effect of the transaction, financial and managerial issues, the capital position of the combined organization, convenience and needs factors, including the applicant's CRA record, the effectiveness of the subject organizations in combating money laundering activities, and the transaction's effect on the stability of the U.S.

banking or financial system.

On July 9, 2021, President Biden issued an Executive Order on Promoting Competition in the U.S.

Among other initiatives, the Executive Order encouraged the federal banking agencies to review their current merger oversight practices under the BHCA and the Bank Merger Act and adopt a plan for revitalization of such practices.

Among other initiatives, the Executive Order encouraged the federal banking agencies to review their current merger oversight practices under the BHCA and the BMA and adopt a plan for revitalization of such practices.

There are many steps that must be taken by the agencies before any formal changes to the framework for evaluating bank mergers can be finalized, and the prospects for such action are uncertain at this time.

In January 2024, the OCC issued a notice of proposed rulemaking to amend its procedural regulations and adopt a new policy statement relating to its approach to evaluating business combinations under the BMA.

The adoption of more expansive or prescriptive standards may have an impact on our acquisition activities.

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The amended control rule has had, and will likely continue to have, a meaningful impact on control determinations related to investments in banks and bank holding companies and investments by bank holding companies in nonbank companies.

On January 29, 2024, the OCC issued a notice of proposed rulemaking and Policy Statement on Bank Mergers, wherein the OCC requested comment on a proposal to update its rules for business combinations involving national banks and federal savings associations.

The proposal also includes a policy statement to clarify the OCC's review of applications under the BMA.

The proposed rulemaking is part of the OCC's effort to enhance transparency around its process of reviewing transactions under the BMA.

It would also serve to provide additional guidance to stakeholders around the OCC's review of applications.

The proposed policy statement specifically would discuss:

(a) general principles for the OCC's review of applications under the BMA, including indicators for applications likely consistent with approval and applications that raise supervisory or regulatory concerns;

(2) the OCC's consideration of the financial stability;

managerial and financial resources and future prospects;

and convenience and needs statutory factors under the BMA;

and (3) the OCC's decision process for extending the public comment period or holding a public meeting.

Permissible Activities — As a bank holding company, the Corporation may engage in the business of banking, managing or controlling banks, performing servicing activities for subsidiaries, and engaging in activities that the Federal Reserve Board has determined, by order or regulation, are so closely related to banking as to be a proper incident thereto.

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If a financial holding company ceases to be well-capitalized and well-managed, the financial holding company must enter into a non-public confidential agreement with the Federal Reserve Board to comply with all applicable capital and management requirements.

Until the financial holding company returns to compliance, the Federal Reserve Board may impose limitations or conditions on the conduct of its

activities, and the company may not commence any new non-banking financial activities permissible for financial holding companies or acquire a company engaged in such financial activities without prior approval of the Federal Reserve Board.

Until the financial holding

company returns to compliance, the Federal Reserve Board may impose limitations or conditions on the conduct of its activities, and the company may not commence any new non-banking financial activities permissible for financial holding companies or acquire a company engaged in such financial activities without prior approval of the Federal Reserve Board.

If the company does not timely return to compliance, the Federal Reserve Board may require divestiture of the financial holding company's banking subsidiaries.

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On October 21, 2021, the FSOC published a report identifying climate-related financial risks as an "emerging threat" to financial stability.

On December 16, 2021, the OCC issued proposed principles for climate-related financial risk management for national banks with more than $100 billion in total assets.

Although these risk management principles, if adopted as proposed, would not apply to Fulton Bank based upon its current size, the OCC has indicated that all banks, regardless of their size, may have material exposures to climate-related financial and other risks that require prudent management.

The federal banking agencies, either independently or on an interagency basis, are expected to adopt a more formal climate risk management framework for larger banking organizations in the coming months.

As climate-related supervisory guidance is formalized, and relevant risk areas and corresponding control expectations are further refined, we may be required to expend significant capital and incur compliance, operating, maintenance and remediation costs in order to conform to such requirements.

On October 24, 2023, the OCC issued principles for climate-related financial risk management for national banks with more than $100 billion in total assets.

Although these risk management principles, would not apply to Fulton Bank based upon its current size, the OCC has indicated that all banks, regardless of their size, may have material exposures to climate-related financial and other risks that require prudent management.

The final guidance is substantively similar to the guidance previously proposed by the agencies, with targeted modifications in response to commenter feedback.

These modifications include clarification on the applicability to large foreign banking organizations and clarification on the role of boards of directors and management.

The final guidance contains high-level principles covering six areas:

policies, procedures, and limits;

strategic planning;

risk management;

data, risk measurement, and reporting;

Additionally, the final principles describe how climate-related financial risks can be addressed in the management of traditional risk areas.

The final principles neither prohibit nor discourage large financial institutions from providing banking services to customers of any specific class or type, as permitted by law or regulation.

The decision regarding whether to make a loan or to open, close, or maintain an account rests with the financial institution, so long as the financial institution complies with applicable laws and regulations.

The agencies are providing guidance to large financial institutions through these principles on the management of climate-related financial risks just as the agencies provide guidance to financial institutions in identifying and managing other risks.

The final principles are intended to promote a consistent understanding of the effective management of climate-related financial risks.

In addition, states are considering taking similar actions on climate-related financial risks, including certain states in which we operate.

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Further, Virginia's omnibus Virginia Clean Economy Act enacted provisions with the goal of the Commonwealth being carbon-free by 2045;

and, after the Governor of Maryland reauthorized the Greenhouse Gas Emissions Reduction Act of 2016, the Maryland Department of Environment released the 2030 Greenhouse Gas Reduction Act Plan.

after the Governor of Maryland reauthorized the Greenhouse Gas Emissions Reduction Act of 2016, the Maryland Department of Environment released the 2030 Greenhouse Gas Reduction Act Plan;

and in 2023, Delaware enacted the Delaware Climate Solutions Act of 2023 that established targets for reduction in greenhouse gas emissions.

Once fully implemented, these measures will, at least in part, focus on the greenhouse gases impact that businesses have in the respective states in which they operate.

Executive Officers

The executive officers of the Corporation as of December 31, 2022 are as follows:

Name Age Office Held and Term of Office

Philip Wenger

65 Director of the Corporation since 2009 and Director of Fulton Bank since 2019.

Chairman of the Board and Chief Executive Officer of the Corporation since January 2013.

Wenger previously served as President of the Corporation from 2008 to 2017, Chief Operating Officer of the Corporation from 2008 to 2012, Director of Fulton Bank from 2003 to 2009, Chairman of Fulton Bank from 2006 to 2009 and employed by the Corporation in a number of positions since 1979.

On December 31, 2022, Mr.

Wenger retired as Chairman of the Board and Chief Executive Officer of the Corporation.

54 Director of the Corporation since 2019 and Director of Fulton Bank since 2009.

Chairman of the Board and Chief Executive Officer of the Corporation since January 1, 2023.

Myers previously served as President and Chief Operating Officer of the Corporation from 2018 to 2022.

Chairman and Chief Executive Officer of Fulton Bank since 2018.

Myers served as Senior Executive Vice President of the Corporation from 2013 to 2017 and President and Chief Operating Officer of Fulton Bank since 2009.

Myers has been employed by Fulton Bank in a number of positions since 1990.

58 Senior Executive Vice President and Chief Financial Officer of the Corporation since 2018.

McCollom joined the Corporation in 2017 as Senior Executive Vice President and Chief Financial Officer Designee.

Before joining the Corporation Mr.

McCollom was a Senior Managing Director, Chief Administrative Officer and Chief Operating Officer of Griffin Financial Group, LLC ("Griffin").

Prior to his role at Griffin, Mr.

McCollom was the Chief Financial Officer of Sovereign Bancorp, Inc.

He has over 30 years of experience in the financial services industry.

61 Senior Executive Vice President and Director of Strategic Initiatives and Operations since 2014.

Campbell joined the Corporation in 2009 as Chief Administrative Officer of Fulton Financial Advisors, a division of Fulton Bank and was promoted to President of Fulton Financial Advisors in 2010.

He has more than 40 years of experience in the financial services industry.

62 Senior Executive Vice President and Chief Risk Officer of the Corporation since 2016.

Previously, Ms.

Chivinski served as the Corporation's Chief Audit Executive from 2013 to 2016 and was promoted to Senior Executive Vice President of the Corporation in 2014.

Chivinski served as the Corporation's Controller and Chief Accounting Officer from 1994 to 2013, having been promoted to Executive Vice President in 2004.

51 Appointed Senior Executive Vice President and Head of Consumer Banking, and as an executive officer of the Corporation, effective January 1, 2023.

Fiol previously served as Senior Executive Vice President and Head of the Consumer & Small Business Bank of the Corporation since 2022.

Fiol joined the Corporation as Director of Consumer & Small Business Channel, Segment and Product in 2018.

Prior to joining the Corporation, he served as an executive in various roles at both Capital One Bank from 2011 to 2018 and prior to that at Bank of America.

He has more than 20 years of experience in the financial services industry.

Name Age Office Held and Term of Office

48 Senior Executive Vice President, Chief Legal Officer and Corporate Secretary since 2021.

Luddington became the Senior Executive Vice President, Chief Legal Officer and Corporate Secretary Designee of the Corporation in October 2021.

Prior to joining the Corporation, Ms.

Luddington served in various positions, including Interim General Counsel and Senior Vice President, Associate General Counsel at Pacific Western Bank from 2014 to 2021.

Luddington served in various roles in CapitalSource Bank's legal department from 2007 to 2014.

Luddington has more than 20 years of legal experience.

58 Senior Executive Vice President and Head of Commercial Business since 2018.

Mueller served as Chief Credit Officer of the Corporation from 2010 to 2017.

Mueller was promoted to Senior Executive Vice President of the Corporation in 2013 and has been employed by the Corporation in a number of positions since 1996.

55 Senior Executive Vice President and Chief Information Officer of the Corporation since 2013.

Sargent served as Executive Vice President and Chief Information Officer from 2002 to 2013 and has been employed by the Corporation in a number of positions since 1992.

58 Chief Banking Officer and Senior Executive Vice President since 2022.

Snyder was Head of Consumer Banking from 2018 to 2022.

Snyder joined the Corporation in 2002 as President of Woodstown National Bank.

Snyder served as Chairwoman, President, and Chief Executive Officer of Fulton Bank of New Jersey until 2019.

Snyder has more than 30 years of experience in the financial services industry.

Bernadette M.

61 Senior Executive Vice President and Chief Human Resource Officer since 2015.

Taylor served as Executive Vice President of employee services, employment, and director of human resources prior to her promotion in 2015 to Chief Human Resources Officer.

Taylor joined the Corporation in 1994 as the Corporate Training Director.

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What changed 10-K

Item 1. Business