Fulton Financial Could Use More Core Growth Leverage

It’s still early in the fourth quarter reporting cycle, but so far the bank sector is not having the easiest time. The main drivers aren’t all that surprising to me – I’ve been writing about the threats presented by rising deposit betas, weaker operating leverage, and slowing loan demand for some time, but it seems as though the Street is taking it more seriously now.

Fulton Financial (NASDAQ:FULT) came up short on fourth quarter results and 2023 guidance, although the bank is actually performing well with respect to its deposit beta. Leveraging the Prudential Bancorp deal will be an important driver in 2023, as will the health of the economy in the Philadelphia region, but this remains a bank that has something to prove to the Street where operating leverage and organic growth are concerned.

These shares have fallen about 10% since my last update, more or less matching regional bank peers. I do think the shares are likely undervalued here, but with a challenging 2023 ahead and not a lot of clear positives to tie a bullish thesis to, I can’t really muster that much enthusiasm today.

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Fulton Financial Could Use More Core Growth Leverage