FULTON FINANCIAL CORP Management’s Discussion and Analysis of Financial Condition and Results of Operations (Form 10-Q)

This MD&A relates to the Company, a financial holding company registered under the BHCA and incorporated under the laws of
Commonwealth of Pennsylvania in 1982, and its wholly owned subsidiaries. The management report should be read in conjunction with the consolidated financial statements and the other financial information presented in this report.


FORWARD-LOOKING STATEMENTS

The Corporation has made, and may continue to make, certain forward-looking
statements with respect to its financial condition, results of operations and
business. Do not unduly rely on forward-looking statements. Forward-looking
statements can be identified by the use of words such as "may," "should,"
"will," "could," "estimates," "predicts," "potential," "continue,"
"anticipates," "believes," "plans," "expects," "future," "intends," "projects,"
the negative of these terms and other comparable terminology. These
forward-looking statements may include projections of, or guidance on, the
Corporation's future financial performance, expected levels of future expenses,
including future credit losses, anticipated growth strategies, descriptions of
new business initiatives and anticipated trends in the Corporation's business or
financial results.

Forward-looking statements are neither historical facts, nor assurance of future
performance. Instead, the statements are based on current beliefs, expectations
and assumptions regarding the future of the Corporation's business, future plans
and strategies, projections, anticipated events and trends, the economy and
other future conditions. Because forward-looking statements relate to the
future, they are subject to inherent uncertainties, risks and changes in
circumstances that are difficult to predict and many of which are outside of the
Corporation's control, and actual results and financial condition may differ
materially from those indicated in the forward-looking statements. Therefore,
you should not unduly rely on any of these forward-looking statements. Any
forward-looking statement is based only on information currently available and
speaks only as of the date when made. The Corporation undertakes no obligation,
other than as required by law, to update or revise any forward-looking
statements, whether as a result of new information, future events or otherwise.
Many factors could affect future financial results including, without
limitation:

•the impact of adverse conditions in the economy and financial markets on the
performance of the Corporation's loan portfolio and demand for the Corporation's
products and services;
•the scope and duration of the COVID-19 pandemic, actions taken by governmental
authorities in response to the pandemic, the Corporation's participation in the
PPP and other COVID-19 relief programs, and the direct and indirect impacts of
the pandemic on the Corporation, its customers and third parties;
•the determination of the ACL, which depends significantly upon assumptions and
judgments with respect to a variety of factors, including the performance of the
loan portfolio, the weighted-average remaining lives of different
classifications of loans within the loan portfolio and current and forecasted
economic conditions, among other factors;
•increases in non-performing assets, which may require the Corporation to
increase the allowance for credit losses, charge-off loans and incur elevated
collection and carrying costs related to such non-performing assets;
•investment securities gains and losses, including other-than-temporary declines
in the value of securities which may result in charges to earnings;
•the effects of market interest rates, and the relative balances of interest
rate-sensitive assets to interest rate-sensitive liabilities, on net interest
margin and net interest income;
•the replacement of LIBOR as a benchmark reference rate;
•the effects of changes in interest rates on demand for the Corporation's
products and services;
•the effects of changes in interest rates or disruptions in liquidity markets on
the Corporation's sources of funding;
•the effects of the extensive level of regulation and supervision to which the
Corporation and Fulton Bank are subject;
•the effects of the significant amounts of time and expense associated with
regulatory compliance and risk management;
•the potential for negative consequences resulting from regulatory violations,
investigations and examinations, including potential supervisory actions, the
assessment of fines and penalties, the imposition of sanctions, the need to
undertake remedial actions and possible damage to the Corporation's reputation;
•the continuing impact of the Dodd-Frank Act on the Corporation's business and
results of operations;
•the effects of, and uncertainty surrounding, new legislation, changes in
regulation and government policy, which could result in significant changes in
banking and financial services regulation;
•the effects of actions by the federal government, including those of the
Federal Reserve Board and other government agencies, that impact money supply
and market interest rates;
•the effects of changes in U.S. federal, state or local tax laws;
•the effects of negative publicity on the Corporation's reputation;
•the effects of adverse outcomes in litigation and governmental or
administrative proceedings;
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•the potential to incur losses in connection with repurchase and indemnification
payments related to sold loans;
•the Corporation's ability to achieve its growth plans;
•completed and potential acquisitions may affect costs and the Corporation may
not be able to successfully integrate the acquired business or realize the
anticipated benefits from such acquisitions;
•the potential effects of climate change on the Corporation's business and
results of operations;
•the effects of concerns relating to the Corporation's ESG posture, including
potential adverse impacts on the Corporation's reputation and the market value
of its securities;
•the effects of competition on deposit rates and growth, loan rates and growth
and net interest margin;
•the Corporation's ability to manage the level of non-interest expenses,
including salaries and employee benefits expenses, operating risk losses and
goodwill impairment;
•the effects of changes in accounting policies, standards, and interpretations
on the Corporation's reporting of its financial condition and results of
operations;
•the impact of operational risks, including the risk of human error, inadequate
or failed internal processes and systems, computer and telecommunications
systems failures, faulty or incomplete data and an inadequate risk management
framework;
•the impact of failures of third parties upon which the Corporation relies to
perform in accordance with contractual arrangements;
•the failure or circumvention of the Corporation's system of internal controls;
•the loss of, or failure to safeguard, confidential or proprietary information;
•the Corporation's failure to identify and adequately and promptly address
cybersecurity risks, including data breaches and cyber-attacks;
•the Corporation's ability to keep pace with technological changes;
•the Corporation's ability to attract and retain talented personnel;
•capital and liquidity strategies, including the Corporation's ability to comply
with applicable capital and liquidity requirements, and the Corporation's
ability to generate capital internally or raise capital on favorable terms;
•the Corporation's reliance on its subsidiaries for substantially all of its
revenues and its ability to pay dividends or other distributions;
•the effects of any downgrade in the Corporation or Fulton Bank's credit ratings
on each of their borrowing costs or access to capital markets;
•the possibility that the anticipated benefits of the Merger, including
anticipated cost savings and strategic gains, are not realized when expected or
at all, including as a result of the impact of, or challenges arising from, the
integration of Prudential into the Corporation or as a result of the strength of
the economy, competitive factors in the areas where the Corporation and
Prudential do business, or as a result of other unexpected factors or events;
•the timing and completion of the Merger is dependent on the satisfaction of
customary closing conditions, including approval by Prudential shareholders,
which cannot be assured, and various other factors that cannot be predicted with
precision at this point;
•the occurrence of any event, change or other circumstances that could give rise
to the right of one or both of the parties to terminate the Merger Agreement;
•completion of the Merger is subject to bank regulatory approvals and such
approvals may not be obtained in a timely manner or at all or may be subject to
conditions which may cause additional significant expense or delay the
consummation of the Merger;
•potential adverse reactions or changes to business or employee relationships,
including those resulting from the announcement or completion of the Merger;
•the outcome of any legal proceedings related to the Merger which may be
instituted against the Corporation or Prudential;
•unanticipated challenges or delays in the integration of Prudential's business
into the Corporation's business and or the conversion of Prudential's operating
systems and customer data onto the Corporation's may significantly increase the
expense associated with the Merger; and
•other factors that may affect future results of the Corporation and Prudential.

Additional information regarding these as well as other factors that could
affect future financial results can be found in the sections entitled "Risk
Factors" and "Management's Discussion and Analysis of Financial Condition and
Results of Operations" in the Corporation's Annual Report on Form 10-K for the
year ended December 31, 2021 and elsewhere in this report, including in Note 13
"Commitments and Contingencies" of the Notes to Consolidated Financial
Statements and in Item 1A. "Risk Factors".

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PREVIEW

The Corporation is a financial holding company, which, through its wholly-owned
banking subsidiary, provides a full range of retail and commercial financial
services primarily in Pennsylvania, Delaware, Maryland, New Jersey and Virginia.

The Corporation generates the majority of its revenue through net interest
income, or the difference between interest earned on loans and investments and
interest paid on deposits and borrowings. Growth in net interest income is
dependent upon balance sheet growth and maintaining or increasing the net
interest margin, which is FTE net interest income as a percentage of average
interest-earning assets. The Corporation also generates revenue through fees
earned on the various services and products offered to its customers and through
gains on sales of assets, such as loans, investments and properties. Offsetting
these revenue sources are provisions for credit losses on loans and OBS credit
risks, non-interest expenses and income taxes.

The following table provides a summary of the Corporation’s selected results and performance ratios:

                                                                                  Three months ended March 31
                                                                                    2022                  2021

Net income (in thousands)                                                    $           64,288       $     73,063
Net income available to common shareholders (in thousands)                   $           61,726       $     70,472
Diluted net income available to common shareholders per share                $             0.38       $       0.43
Return on average assets, annualized                                                   1.02   %           1.14   %
Return on average common shareholders' equity, annualized                             10.03   %          11.73   %
Return on average common shareholders' equity (tangible), annualized (1)              12.88   %          15.00   %
Net interest margin (2)                                                                2.78   %           2.79   %
Efficiency ratio (1)                                                                   65.8   %           63.0   %
Non-performing assets to total assets                                                  0.64   %           0.60   %
Annualized net charge-offs to average loans                                           (0.02)  %           0.13   %


(1)Ratio represents a financial measure derived by methods other than GAAP. See
reconciliation of this non-GAAP financial measure to the most directly
comparable GAAP measure under the heading, "Supplemental Reporting of Non-GAAP
Based Financial Measures "
(2)Presented on a FTE basis, using a 21% federal tax rate and statutory interest
expense disallowances. See also the "Net Interest Income" section of the
Management's Discussion.

Federal funds rate

the FOMC raised the target range for the federal funds rate by 25 basis points to 0.25%-0.50% at its March 2022 meeting and 50 bps at 0.75%-1.00% at its May 2022 Meet.

Business combinations

On March 2, 2022, the Corporation announced that it had entered into the Merger
Agreement with Prudential. Under the terms of the Merger Agreement, Prudential
will merge with and into the Corporation. The parties anticipate the Merger will
close in the third quarter of 2022, subject to regulatory approvals, Prudential
shareholder approval and the satisfaction of other customary conditions.

Non-interest expense for the first quarter of 2022 included $0.4 million
for Merger-related expenses.


COVID-19

The COVID-19 pandemic has caused substantial disruptions in economic and social
activity, both globally and in the United States. The spread of COVID-19, and
related governmental actions to respond to the pandemic have caused severe
disruptions in the U.S. economy, which have, in turn, disrupted the business,
activities, and operations of the Corporation's customers as well as the
Corporation's own business and operations. The resulting impacts of the pandemic
have continued to cause changes in consumer and business spending, borrowing
needs and saving habits that have and will likely continue to affect the demand
for loans and other products and services the Corporation offers, as well as the
creditworthiness of its borrowers. The significant impact on commercial activity
and disruptions in supply chains associated with the pandemic, both nationally
and in the Corporation's markets, may cause customers, vendors and
counterparties to be unable to meet existing payment or other obligations to the
Corporation.

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While the impacts from the COVID-19 pandemic have diminished, there remains
significant uncertainty concerning the breadth and duration of the economic and
social disruptions caused by the COVID-19 pandemic and their impact on the U.S.
economy. The extent to which the pandemic continues to impact the Corporation's
operations will depend on future developments, which are highly uncertain and
cannot be predicted, including new information which may emerge concerning the
continuing progression of the COVID-19 pandemic, whether there are additional
outbreaks of COVID-19 and its variants, including vaccine-resistant variants,
and the actions taken to contain it or treat its impact. If the pandemic
continues to cause significant negative impacts to economic conditions, the
Corporation's results of operations, financial condition and cash flows could be
materially adversely impacted.

See additional discussion in “Results of Operations” and “Financial Condition” of the MD&A.

Financial Highlights

Here is a summary of financial highlights for the three months ended
March 31, 2022:

•Net Income Available to Common Shareholders and Net Income Per Share - Net
income available to common shareholders was $61.7 million for the three months
ended March 31, 2022, an $8.7 million decrease compared to $70.5 million for the
same period in 2021. Diluted net income per share was $0.38, a $0.05 decrease
compared to the same period in 2021.

•Net Interest Income - Net interest income decreased $3.1 million, or 1.9%, for
the three months ended March 31, 2022 compared to the same period in 2021. The
decrease was driven by a decline of $15.0 million in PPP loan fees, partially
offset by a decline in interest expense on interest-bearing deposits and
long-term borrowings of $4.0 million and $4.7 million, respectively. Overall,
net interest margin decreased 1 bp for the three months ended March 31, 2022
compared to the same period in 2021.

• Net interest margin – For the three months ended March 31, 2022the yield on interest-earning assets fell by 15 basis points to 2.98% and the rate on interest-bearing liabilities fell by 20 basis points to 0.31%.

•Loan Growth - Average Net loans decreased by $597.5 million, or 3.1%, for the
three months ended March 31, 2022 compared to the same period in 2021. The
decrease was largely driven by a $1.5 billion decline in PPP loans due to the
repayment of these loans upon forgiveness by the SBA, partially offset by
increases in residential mortgage loans and commercial mortgage loans of $703.8
million and $165.9 million, respectively.

•Deposit Growth - Average deposits grew $363.2 million, or 1.7%, for the three
months ended March 31, 2022 compared to the same period in 2021, driven by
growth in non-interest bearing demand deposits and savings and money market
deposits of $758.4 million and $299.5 million, respectively, partially offset by
a decline in time deposits of $0.5 million. At March 31, 2022, the
loan-to-deposit ratio was 85.8% as compared to 84.9% at December 31, 2021.

•Asset Quality - Non-performing assets increased $9.1 million, or 5.9%, as of
March 31, 2022 compared to December 31, 2021, and were 0.64% and 0.60% of total
assets as of those dates, respectively. For the three months ended March 31,
2022 and 2021, annualized net charge-offs to average loans outstanding were
(0.02)% and 0.13%, respectively. The provision for credit losses was a negative
$7.0 million for the three months ended March 31, 2022, a decrease of $1.5
million from the same period of 2021. The negative provision for credit losses
for the first quarter of 2022 was recorded to adjust the ACL as a result of
improved economic conditions.

•Non-interest Income - For the three months ended March 31, 2022, non-interest
income, excluding net investment securities gains, decreased $6.7 million, or
10.8%, compared to the same period in 2021. The decrease was primarily the
result of a decrease in mortgage banking income of $9.4 million, partially
offset by an increase of $2.1 million in wealth management revenues.

•Non-interest Expense - Non-interest expense decreased $32.4 million, or 18.2%,
for the three months ended March 31, 2022 compared to the same period in 2021.
The decrease during the quarter was largely driven by debt extinguishment
expenses in 2021 of $32.2 million.

•Income Taxes - Income tax expense for the three months ended March 31, 2022 was
$13.3 million, a $0.6 million decrease from $13.9 million for the same period in
2021. The Corporation's ETR was 17.1% for the three months ended March 31, 2022
compared to 16.0% in the same period in 2021. The ETR is generally lower than
the federal
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statutory rate of 21% due to tax-exempt interest income earned on loans, investments in tax-free municipal securities, and investments in community development projects that generate tax credits under various federal programs.

Supplementary Report on Non-GAAP Financial Measures

This Quarterly Report on Form 10-Q contains supplemental financial information,
as detailed below, which has been derived by methods other than GAAP. The
Corporation has presented these non-GAAP financial measures because it believes
that these measures provide useful and comparative information to assess trends
in the Corporation's results of operations and financial condition. Presentation
of these non-GAAP financial measures is consistent with how the Corporation
evaluates its performance internally, and these non-GAAP financial measures are
frequently used by securities analysts, investors and other interested parties
in the evaluation of the Corporation and companies in the Corporation's
industry. Management believes that these non-GAAP financial measures, in
addition to GAAP measures, are also useful to investors to evaluate the
Corporation's results. Investors should recognize that the Corporation's
presentation of these non-GAAP financial measures might not be comparable to
similarly-titled measures at other companies. These non-GAAP financial measures
should not be considered a substitute for GAAP basis measures, and the
Corporation strongly encourages a review of its consolidated financial
statements in their entirety.

Below are reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measure:

                                                                       Three months ended March 31
                                                                        2022                   2021
                                                                         

(in thousands of dollars) Return on average common shareholders’ equity (tangible) Net earnings available to common shareholders

                       $       61,726          $    70,472
Plus: Merger-related expenses, net of tax                                    317                    -
Plus: Intangible amortization, net of tax                                    138                   90
Numerator                                                         $       

62,181 $70,562

Average common shareholders' equity                               $    

2,688,834 $2,637,098

Less: Average goodwill and intangible assets                            (537,976)            (536,601)
Less: Average preferred stock                                           (192,878)            (192,878)
Average tangible common shareholders' equity (denominator)        $    1,957,980          $ 1,907,619
Return on average common shareholders' equity (tangible),
annualized                                                                 12.88  %             15.00  %

Efficiency ratio
Non-interest expense                                              $      145,978          $   178,384
Less: Amortization of tax credit investments                                (696)              (1,531)
Less: Merger-related expenses                                               (401)                   -
Less: Intangible amortization                                               (176)                (115)
Less: Debt extinguishment cost                                                 -              (32,163)
Numerator                                                         $      144,705          $   144,575

Net interest income                                               $      161,310          $   164,449
Tax equivalent adjustment                                                  3,288                2,979
Plus: Total non-interest income                                           55,256               95,397
Less: Investment securities gains, net                                       (19)             (33,475)
Denominator                                                       $      219,835          $   229,350
Efficiency ratio                                                            65.8  %              63.0  %


Reported on an FTE basis, using a federal tax rate of 21%.

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RESULTS OF OPERATIONS

Three months completed March 31, 2022 compared to the three months ended March 31, 2021

Net Interest Income

FTE net interest income decreased $2.8 million to $164.6 million for the three
months ended March 31, 2022, from $167.4 million in the same period in 2021. The
NIM decreased 1 bp, to 2.78%, compared to 2.79% for the same period in 2021. The
following table provides a comparative average balance sheet and net interest
income analysis for those periods. Interest income and yields are presented on
an FTE basis, using a 21% federal tax rate, and statutory interest expense
disallowances. The discussion following this table is based on these
taxable-equivalent amounts.

                                                                                            Three months ended March 31
                                                                         2022                                                        2021
                                                     Average                                 Yield/              Average                                 Yield/
                                                     Balance             Interest             Rate               Balance             Interest             Rate
ASSETS                                                                                        (dollars in thousands)
Interest-earning assets:
Net loans (1)                                    $ 18,383,118          $ 151,127               3.32  %       $ 18,980,586          $ 165,462               3.53  %
Taxable investment securities (2)                   3,073,643             15,213               1.71             2,438,496             13,691          

2.08

Tax-exempt investment securities (2)                1,152,709              9,038               3.13               911,648              7,156               3.13

Total investment securities                         4,226,352             24,251               2.29             3,350,144             20,847               2.49
Loans held for sale                                    28,549                241               3.37                53,465                471               3.53
Other interest-earning assets                       1,258,174                671               0.22             1,900,199              1,136            

0.24

Total interest-earning assets                      23,896,193            176,290               2.98            24,284,394            187,916               3.13
Noninterest-earning assets:
Cash and due from banks                               162,320                                                     120,181
Premises and equipment                                219,932                                                     230,649
Other assets                                        1,595,039                                                   1,728,473
Less: ACL - loans (3)                                (251,022)                                                   (280,881)
Total Assets                                     $ 25,622,462                                                $ 26,082,816
LIABILITIES AND SHAREHOLDERS' EQUITY
Interest-bearing liabilities:
Demand deposits                                  $  5,664,987          $     728               0.05  %       $  5,832,174          $   1,160               0.08  %
Savings and money market deposits                   6,436,548              1,021               0.06             6,137,084              1,526               0.10
Brokered deposits                                     250,350                216               0.35               324,364                395               0.49
Time deposits                                       1,697,063              3,640               0.87             2,150,570              6,521               1.23
Total interest-bearing deposits                    14,048,948              5,605               0.16            14,444,192              9,602               0.27
Short-term borrowings                                 423,949                121               0.12               570,775                188               0.13
 Long-term borrowings                                 609,866              5,966               3.91             1,271,170             10,698               3.38
Total interest-bearing liabilities                 15,082,763             11,692               0.31            16,286,137             20,488          

0.51

Noninterest-bearing liabilities:
Demand deposits                                     7,431,235                                                   6,672,832
Other liabilities                                     419,630                                                     486,749
Total Liabilities                                  22,933,628                                                  23,445,718
Total Deposits/Cost of deposits                    21,480,183                                  0.11            21,117,024                               

0.18

Total Interest-bearing liabilities and
non-interest bearing deposits/Cost of funds        22,513,998                                  0.21            22,958,969                               

0.36

Shareholders' equity                                2,688,834                                                   2,637,098
Total Liabilities and Shareholders' Equity       $ 25,622,462                                                $ 26,082,816
Net interest income/FTE NIM                                              164,598               2.78  %                               167,428               2.79  %
Tax equivalent adjustment                                                 (3,288)                                                     (2,979)
Net interest income                                                    $ 161,310                                                   $ 164,449


(1)Average balance includes non-performing loans.
(2)Balances include amortized historical cost for AFS. The related unrealized
holding gains (losses) are included in other assets.
(3)ACL - loans relates to the ACL specifically for Net loans and does not
include the ACL for OBS credit exposures, which is included in other
liabilities.

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The following table summarizes the changes in FTE interest income and interest
expense resulting from changes in average balances (volume) and changes in
yields and rates for the three months ended March 31, 2022 in comparison to the
same period in 2021:

                                                 2022 vs. 2021
                                            Increase (Decrease) due
                                                  to change in
                                      Volume         Rate            Net
                                                 (in thousands)
FTE Interest income on:
Net loans (1)                       $ (4,960)     $  (9,375)     $ (14,335)

Taxable investment securities 3,548 (2,026) 1,522 Exempt investment securities 1,882

              -          1,882

Loans held for sale                     (210)           (20)          (230)
Other interest-earning assets           (373)           (92)          (465)
Total interest income               $   (113)     $ (11,513)     $ (11,626)
Interest expense on:
Demand deposits                     $    (31)     $    (401)     $    (432)
Savings and money market deposits         77           (582)          (505)
Brokered deposits                        (79)          (100)          (179)
Time deposits                         (1,206)        (1,675)        (2,881)
Short-term borrowings                    (52)           (15)           (67)
Long-term borrowings                  (6,189)         1,457         (4,732)
Total interest expense              $ (7,480)     $  (1,316)     $  (8,796)

(1) The average balance includes bad debts.

Note: Changes partially attributable to volume and price are attributed to the volume and price components shown above based on the percentage of direct changes attributable to each component.

Compared to the first quarter of 2021, FTE total interest income in the first
quarter of 2022 decreased $11.6 million, or 6.2%, primarily due to a decrease of
$11.5 million attributable to changes in rate of which $9.4 million related to
Net loans. The yield on average interest-earning assets declined 15 basis points
in the first quarter of 2022 compared to the same period in 2021.

In the first quarter of 2022, interest expense decreased $8.8 million compared
to the first quarter of 2021, primarily due to the decrease in the volume of
interest-bearing liabilities of $7.5 million. The decrease attributable to
volume was primarily driven by the $661.3 million decrease in average long-term
borrowings that resulted in a $6.2 million decrease in interest expense,
partially offset by a $1.5 million increase in interest expense attributable to
changes in the rate on long-term borrowings, which increased 53 bps. The
Corporation completed a balance sheet restructuring in March of 2021, which
included the prepayment of $536.0 million of FHLB advances and the cash tender
for $75.0 million and $60.0 million of subordinated debt and senior notes,
respectively.

















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Average loans and average FTE yields, by type, are summarized in the following
table:

                                                                 Three months ended March 31                                     Increase (Decrease)
                                                         2022                                    2021                                 in Balance
                                              Balance               Yield              Balance              Yield                $                  %
                                                                                       (dollars in thousands)
Real estate - commercial mortgage         $   7,294,914              3.19  %       $  7,128,997              3.15  %       $   165,917              2.3  %
Commercial and industrial (1)                 4,213,014              3.06             5,722,080              2.57           (1,509,066)           (26.4)
Real estate - residential mortgage            3,887,428              3.30             3,183,585              3.52              703,843             22.1
Real estate - home equity                     1,106,319              3.74             1,175,218              3.75              (68,899)            (5.9)
Real estate - construction                    1,137,649              3.05             1,054,718              3.09               82,931              7.9
Consumer                                        471,129              5.15               459,038              4.13               12,091              2.6
Equipment lease financing                       236,388              3.79               266,405              4.11              (30,017)           (11.3)
Other (2)                                        36,277                 -                (9,455)                -               45,732                 N/M
Total loans                               $  18,383,118              3.32  %       $ 18,980,586              3.53  %       $  (597,468)            (3.1) %

(1) Includes average PPP loans of $0.2 billion and $1.7 billion for the three months ended March 31, 2022 and 2021, respectively. (2) Includes overdrafts and net origination commissions and costs.

During the first quarter of 2022, average loans decreased $597.5 million, or
3.1%, compared to the same period in 2021. The decrease was largely driven by a
$1.5 billion decline in PPP loans due to the repayment of these loans upon
forgiveness by the SBA, partially offset by increases in residential mortgage
loans and commercial mortgage loans of $703.8 million and $165.9 million,
respectively.

Average deposits and average interest rates, by type, are summarized in the
following table:

                                                                       Three months ended March 31                                      Increase (Decrease)
                                                              2022                                      2021                                 in Balance
                                                   Balance                Rate               Balance               Rate                 $                  %
                                                                                             (dollars in thousands)
Noninterest-bearing demand                     $   7,431,235                  -  %       $  6,672,832                  -  %       $  758,403              11.4  %
Interest-bearing demand                            5,664,987               0.05             5,832,174               0.08            (167,187)             (2.9)
Savings and money market deposits                  6,436,548               0.06             6,137,084               0.10             299,464               4.9
Total demand and savings                          19,532,770               0.04            18,642,090               0.06             890,680               4.8
Brokered deposits                                    250,350               0.35               324,364               0.49             (74,014)            (22.8)
Time deposits                                      1,697,063               0.87             2,150,570               1.23            (453,507)            (21.1)
Total deposits                                 $  21,480,183               0.11  %       $ 21,117,024               0.18  %       $  363,159               1.7  %



The cost of total deposits decreased 7 bps, to 0.11%, for the first quarter of
2022, compared to 0.18% for the same period in 2021, primarily due to the change
in mix of deposits with increases in noninterest-bearing demand deposits and
savings and money market deposits of $758.4 million and $299.5 million,
respectively, and a $453.5 million decrease in time deposits.















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Average borrowings and interest rates, by type, are summarized in the following
table:

                                                                    Three months ended March 31                                     Increase (Decrease)
                                                            2022                                     2021                               in Balance
                                                 Balance                Rate              Balance              Rate                 $                  %
Short-term borrowings:                                                                   (dollars in thousands)

Customer funding(1)                         $      423,949               0.12  %       $   570,775              0.13  %       $  (146,826)           (25.7) %

Long-term borrowings:
FHLB advances                                            -                  -              513,744              1.80             (513,744)                N/M
Other long-term debt                               609,866               3.91              757,426              4.44             (147,560)           (19.5)
Total long-term borrowings                         609,866               3.91            1,271,170              3.38             (661,304)           (52.0)
Total borrowings                            $    1,033,815               2.36  %       $ 1,841,945              2.37  %       $  (808,130)           (43.9) %

(1) Includes repurchase agreements and short-term promissory notes.

Average total short-term borrowing decreased $146.8 millioni.e. 25.7%, in the first quarter of 2022, compared to the same period in 2021.

Average total long-term borrowings decreased $661.3 million, or 52.0%, in the
first quarter of 2022, compared to the same period in 2021, primarily as a
result of the balance sheet restructuring completed in 2021, which included the
prepayment of $536.0 million of long-term FHLB advances and the cash tender for
$75.0 million and $60.0 million of the Corporation's outstanding subordinated
and senior notes, respectively. This reduction in average long-term borrowings
resulted in a $6.2 million reduction of interest expense, partially offset by a
53 bps increase in the rate on average long-term borrowings during the first
quarter of 2022 compared to the same period in 2021.

Provision for credit losses

The provision for credit losses was a negative $7.0 million for the first
quarter of 2022, a decrease of $1.5 million from the same period in 2021. The
negative provision for credit losses for the first quarter of 2022 was recorded
to adjust the ACL as a result of improved economic conditions.

























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Non-interest income

The following table presents the components of non-interest income:

                                                          Three months ended March 31                      Increase (Decrease)
                                                            2022                 2021                     $                       %
                                                                                    (dollars in thousands)
Commercial banking:
  Merchant and card                                   $        6,097          $  5,768          $              329                 5.7  %
  Cash management                                              5,428             4,921                         507                10.3
  Capital markets                                              1,676             2,800                      (1,124)              (40.1)
  Other commercial banking                                     2,807             2,853                         (46)               (1.6)
Total commercial banking                                      16,008            16,342                        (334)               (2.0)
Consumer banking:
 Card                                                          5,796             5,878                         (82)               (1.4)
 Overdraft                                                     3,772             2,724                       1,048                38.5
 Other consumer banking                                        2,106             2,152                         (46)               (2.1)
Total consumer banking                                        11,674            10,754                         920                 8.6
Wealth management revenues                                    19,428            17,347                       2,081                12.0
Mortgage banking:
Gains on sales of mortgage loans                               3,026             8,656                      (5,630)              (65.0)
Mortgage servicing income                                      1,550             5,304                      (3,754)              (70.8)
Total mortgage banking                                         4,576            13,960                      (9,384)              (67.2)
Other                                                          3,551             3,519                          32                 0.9
Non-interest income before investment securities
gains                                                         55,237            61,922                      (6,685)              (10.8)
Investment securities gains, net                                  19            33,475                     (33,456)              (99.9)
Total Non-Interest Income                             $       55,256          $ 95,397          $          (40,141)              (42.1) %



Excluding net investment securities gains, non-interest income decreased $6.7
million, or 10.8%, in the first quarter of 2022 compared to the same period in
2021.

Compared to the first quarter of 2021, mortgage banking income in the first
quarter of 2022 decreased $9.4 million, or 67.2%, as a result of decreased gains
on sales of mortgage loans, driven by lower mortgage sales and lower
gain-on-sale spreads on loans sold, and a decrease in mortgage servicing income.
The decrease in mortgage servicing income was primarily due to a $0.6 million
reduction in the MSR valuation allowance in the first quarter of 2022, compared
to a $6.1 million reduction to the MSR valuation allowance in the same period in
2021.

In the first quarter of 2022, wealth management revenues increased $2.1 million,
or 12.0%, from the first quarter of 2021. The increase in wealth management
revenues primarily resulted from growth in brokerage income due to an increase
in the number of customer accounts.

Investment securities gains recognized in the first quarter of 2021 resulted from the sale of Visa shares as part of the balance sheet restructuring completed in the first quarter of 2021.










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Non-interest charges

The following table presents the components of non-interest expenses:

                                                            Three months ended March 31                       Increase (Decrease)
                                                              2022                  2021                     $                       %
                                                                                       (dollars in thousands)
Salaries and employee benefits                          $       84,464          $  82,586          $            1,878                  2.3  %
Net occupancy                                                   14,522             13,982                         540                  3.9
Data processing and software                                    14,315             13,561                         754                  5.6
Other outside services                                           8,167              8,490                        (323)                (3.8)
Equipment                                                        3,423              3,428                          (5)                (0.1)
FDIC insurance                                                   3,209              2,624                         585                 22.3
State taxes                                                      3,037              4,505                      (1,468)               (32.6)
Professional fees                                                1,792              2,779                        (987)               (35.5)
Marketing                                                        1,320              1,002                         318                 31.7
Intangible amortization                                            176                115                          61                 53.0
Debt extinguishment                                                  -             32,163                     (32,163)              (100.0)
Merger-related expenses                                            401                  -                         401                     N/M
Other                                                           11,152             13,149                      (1,997)               (15.2)
Total non-interest expense                              $      145,978          $ 178,384          $          (32,406)               (18.2) %



Compared to the first quarter of 2021, non-interest expense in the first quarter
of 2022 decreased $32.4 million, or 18.2%, primarily as a result of debt
extinguishment expenses related to the prepayment of FHLB advances, subordinated
debt and senior notes in 2021.

Non-interest expense for the first quarter of 2022 included $0.4 million
for merger-related expenses associated with the acquisition of Prudential.

Income taxes

Income tax expense for the three months ended March 31, 2022 was $13.3 million,
a $0.6 million decrease from $13.9 million for the same period in 2021. The
Corporation's ETR was 17.1% for the three months ended March 31, 2022, compared
to 16.0% for the same period in 2021.



















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FINANCIAL CONDITION

The table below presents the condensed consolidated closing balance sheets.

                                                                                                        Increase (Decrease)
                                               March 31, 2022           December 31, 2021               $                   %
Assets                                                                      (dollars in thousands)
Cash and cash equivalents                    $     1,157,965          $    
   1,638,614          $  (480,649)            (29.3) %
FRB and FHLB Stock                                    57,729                      57,635                   94               0.2
Loans held for sale                                   27,675                      35,768               (8,093)            (22.6)
Investment securities                              4,288,674                   4,167,774              120,900               2.9
Net loans, less ACL - loans                       18,232,414                  18,076,349              156,065               0.9
Net premises and equipment                           218,257                     220,357               (2,100)             (1.0)
Goodwill and intangibles                             537,877                     538,053                 (176)                -
Other assets                                       1,077,719                   1,061,848               15,871               1.5
Total Assets                                 $    25,598,310          $       25,796,398          $  (198,088)             (0.8) %
Liabilities and Shareholders' Equity
Deposits                                     $    21,541,174          $       21,573,499          $   (32,325)             (0.1) %
Short-term borrowings                                452,440                     416,764               35,676               8.6
Long-term borrowings                                 556,494                     621,345              (64,851)            (10.4)
Other liabilities                                    478,667                     472,110                6,557               1.4
Total Liabilities                                 23,028,775                  23,083,718              (54,943)             (0.2)
Total Shareholders' Equity                         2,569,535                   2,712,680             (143,145)             (5.3)

Total Liabilities and Equity $25,598,310 $

   25,796,398          $  (198,088)             (0.8) %



Cash and cash equivalents

Compared to December 31, 2021, cash and cash equivalents in the first quarter of
2022 decreased $480.6 million, or 29.3%, primarily due to a $156.1 million
increase in Net loans, a $120.9 million increase in investment securities and a
$97.2 million decrease in deposits and long-term borrowings.

Equity

Compared to December 31, 2021, shareholders' equity in the first quarter of 2022
decreased $143.1 million, primarily due to a $186.3 million loss in
comprehensive income for the quarter, attributable to unrealized losses on
investment securities and derivative instruments. See Note 8 "Accumulated Other
Comprehensive (Loss) Income" of the Notes to Consolidated Financial Statements
for additional details.
















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Investment security

The following table shows the book value of marketable securities:

                                                       March 31,           December 31,                 Increase (Decrease)
                                                          2022                 2021                   $                    %
Available for Sale                                                               (dollars in thousands)
U.S. Government securities                           $   373,717          $    127,618          $  246,099                       N/M

State and municipal securities                         1,144,646             1,188,670             (44,024)                  (3.7) %
Corporate debt securities                                395,597               386,133               9,464                    2.5
Collateralized mortgage obligations                      171,264               209,359             (38,095)                 (18.2)
Residential mortgage-backed securities                   275,602               229,795              45,807                   19.9
Commercial mortgage-backed securities                    963,507               971,148              (7,641)                  (0.8)
Auction rate securities                                        -                74,667             (74,667)                (100.0)

  Total available for sale securities                $ 3,324,333          $  3,187,390          $  136,943                    4.3  %

Held to maturity

Residential mortgage-backed securities               $   384,675          $    404,958          $  (20,283)                  (5.0) %
Commercial mortgage-backed securities                    579,666               575,426               4,240                    0.7
Total held to maturity securities                    $   964,341          $    980,384          $  (16,043)                  (1.6) %

Total Investment Securities                          $ 4,288,674          $  4,167,774          $  120,900                    2.9  %



Compared to December 31, 2021the total of AFS titles in the first quarter of 2022 increased $136.9 millionor 4.3%, mainly due to an increase in
$246.1 million in United States Government securities, partially offset by a $74.7 million reduction in the sale of ARCs.

In the first quarter of 2022, the total of HTM titles decreased $16.0 million
compared to December 31, 2021mainly due to a decrease in $20.3 million
in residential mortgage-backed securities.

Loans

The following table presents the outstandings by nature:

                                            March 31,                                      2022 vs. 2021 Increase (Decrease)
                                              2022               December 31, 2021                $                   %
                                                                       

(in thousands of dollars) Real estate – commercial mortgage $7,289,376 $7,279,080 $10,296

                0.1  %
Commercial and industrial (1)               4,156,981                   4,208,327               (51,346)              (1.2)
Real estate - residential mortgage          3,946,741                   3,846,750                99,991                2.6
Real estate - home equity                   1,098,171                   1,118,248               (20,077)              (1.8)
Real estate - construction                  1,210,340                   1,139,779                70,561                6.2
Consumer                                      481,551                     464,657                16,894                3.6
Equipment lease financing and other           310,884                     283,557                27,327                9.6
Overdrafts                                      1,928                       1,988                   (60)              (3.0)
Gross loans                                18,495,972                  18,342,386               153,586                0.8
Unearned income                               (19,853)                    (17,036)               (2,817)             (16.5) %
Net loans                                $ 18,476,119          $       18,325,350          $    150,769                0.8  %

(1) Includes PPP loans totaling $0.2 billion and $0.3 billion from March 31, 2022 and December 31, 2021respectively.

During the first three months of 2022, net loans increased $150.8 million, or
0.8%, compared to the level at December 31, 2021, primarily due to increases in
residential mortgage loans, commercial and industrial loans, excluding PPP
loans, and construction loans of $100.0 million, $85.5 million and $70.6
million, respectively, offset by a $137.0 million decrease in PPP loans
reflected in commercial and industrial loans.
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The increase in residential mortgages is due to continued growth in loan originations and the Company’s strategic decision to hold a larger proportion of loan originations on its balance sheet.

The increase in commercial and industrial loans, excluding PPP loans, was due to
solid loan origination volumes along with an increase in existing credit line
utilization.

Construction loans include loans to commercial borrowers secured by commercial
real estate, loans to commercial borrowers secured by residential real estate,
and other construction loans, which are loans to individuals secured by
residential real estate. Approximately $8.5 billion, or 46.0%, of the loan
portfolio was in commercial mortgage and construction loans as of March 31,
2022.

The Corporation does not have a significant concentration of credit risk with
any single borrower, industry or geographic location within its footprint. The
Corporation's policies limit the maximum total lending commitment to an
individual borrower to $70.0 million as of March 31, 2022. In addition, the
Corporation has established lower total lending limits for certain types of
lending commitments and lower total lending limits based on the Corporation's
internal risk rating of an individual borrower at the time the lending
commitment is approved, geographic location of customer or collateral and asset
class.

The following table summarized the industry concentrations within the commercial
mortgage and the commercial and industrial loan portfolios (excluding PPP
loans):

                                                    March 31, 2022      December 31, 2021
Real estate (1)                                             45.4  %                44.3  %
Health care                                                  6.5                    6.7
Agriculture                                                  6.1                    6.1
Manufacturing                                                5.5                    5.1
Other services (2)                                           4.9                    5.0
Construction (3)                                             4.3                    3.9
Hospitality and food services                                3.7                    3.7
Wholesale trade                                              3.3                    2.8
Retail                                                       2.9                    3.0
Educational services                                         2.6                    2.7
Arts, entertainment and recreation                           2.3            

2.3

Professional, scientific and technical services              1.8            

1.8

Public administration                                        1.3            

1.5

Transportation and warehousing                               1.2                    1.3
Finance and Insurance                                        1.1                    1.4
Other (4)                                                    7.1                    8.4
Total                                                      100.0  %               100.0  %



(1)   Includes commercial loans to borrowers engaged in the business of:
renting, leasing or managing real estate for others; selling and/or buying real
estate for others; and appraising real estate.
(2)   Excludes public administration.
(3)  Includes commercial loans to borrowers engaged in the construction
industry.
(4)  Includes the energy sector.











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The following table shows the changes in outstanding loans for the three months ended March 31, 2022:

                                                                                                                       Consumer and
                           Commercial            Real Estate -                                   Real Estate -         Real Estate -         Equipment
                               and                Commercial             Real Estate -            Residential              Home                Lease
                           Industrial              Mortgage              Construction              Mortgage               Equity             Financing             Total
                                                                                           (in thousands)
Three months ended March 31, 2022
Balance at December 31,
2021                     $     30,141          $       52,815          $          901          $       35,269          $    8,900          $    15,640          $ 143,666
Additions                       1,397                   2,398                       -                     319               1,658                    -              5,772
Payments                       (2,450)                 (1,793)                   (229)                 (1,668)             (1,028)                (174)            (7,342)
Charge-offs                      (227)                   (152)                      -                       -              (1,052)                (469)            (1,900)
Transfers to accrual
status                           (349)                 (2,238)                      -                       -                   -                    -             (2,587)
Transfers to OREO                 (22)                   (630)                      -                       -                (158)                   -               (810)
Balance at March 31,
2022                     $     28,490          $       50,400          $          672          $       33,920          $    8,320          $    14,997          $ 136,799


In the first three months of 2022, outstanding loans decreased by approximately
$6.9 millionor 4.8%, primarily due to payments and, to a lesser extent, transfers to regularization status and write-offs, partially offset by additions to unregulated loans during the period.



The following table summarizes non-performing assets as of the indicated dates:

                                                                 March 31, 2022          December 31, 2021
                                                                          (dollars in thousands)
Non-accrual loans                                              $       136,799          $        143,666
Loans 90 days or more past due and still accruing                       24,182                     8,453
Total non-performing loans                                             160,981                   152,119
OREO (1)                                                                 2,014                     1,817
Total non-performing assets                                    $       162,995          $        153,936
Non-accrual loans to total loans                                          0.74  %                   0.78  %
Non-performing loans to total loans                                       0.87  %                   0.83  %
Non-performing assets to total assets                                     0.64  %                   0.60  %

ACL - loans to non-performing loans                                        151  %                    164  %


(1) Excludes $4.7 million and $6.4 million of residential mortgage properties
for which formal foreclosure proceedings were in process as of March 31, 2022
and December 31, 2021, respectively

Non-performing loans increased $8.9 million, or 5.8%, compared to the level at
December 31, 2021. Non-performing loans as a percentage of total loans were
0.87% at March 31, 2022 and 0.83% at December 31, 2021. See Note 4, "Loans and
Allowance for Credit Losses," in the Notes to Consolidated Financial Statements
for further details on non-performing loans.

The following table presents the ToRs on the dates indicated:

                                      March 31, 2022       December 31, 

2021

                                                  (in thousands)
Real estate - commercial mortgage    $         3,563      $            

3,464

Commercial and industrial                      1,903                   

1,857

Real estate - residential mortgage            11,700                  11,948
Real estate - home equity                     12,028                  12,218

Consumer                                           2                       5

Total accruing TDRs                           29,196                  29,492
Non-accrual TDRs(1)                           52,125                  55,945
Total TDRs                           $        81,321      $           85,437

(1) Included with unaccrued loans in the previous table.

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The ability to identify potential problem loans in a timely manner is important
to maintaining an adequate ACL. For commercial loans, commercial mortgages and
construction loans to commercial borrowers, an internal risk rating process is
used to monitor credit quality. The evaluation of credit risk for residential
mortgages, home equity loans, construction loans to individuals, consumer loans
and equipment lease financing is based on payment history, through the
monitoring of delinquency levels and trends. For a description of the
Corporation's risk ratings, see Note 4, "Loans and Allowance for Credit Losses,"
in the Notes to Consolidated Financial Statements.

Total internally risk-rated loans were $12.5 billion, of which $1.1 billion were
criticized and classified, as of March 31, 2022, and $12.4 billion, of which
$1.1 billion were criticized and classified, as of December 31, 2021. The
following table presents criticized and classified loans, or those with internal
risk ratings of special mention or substandard or lower for commercial
mortgages, commercial and industrial loans and construction loans to commercial
borrowers, by class segment:

                                  Special Mention (1)                         Increase (Decrease)                       Substandard or Lower (2)                       Increase (Decrease)                 Total Criticized and Classified Loans
                       March 31, 2022         December 31, 2021              $                   %              March 31, 2022         December 31, 2021               $                   %             March 31, 2022        December 31, 2021
                                                                                                                         (dollars in thousands)
Real estate -
commercial mortgage    $       364,463       $           387,279       $   (22,816)               (5.9)%       $        321,298       $           331,096       $     (9,798)         (3.0)%             $      685,761       $            718,375
Commercial and
industrial                     149,008                   142,369             6,639                   4.7                176,970                   152,219             24,751               16.3                 325,978                    294,588
Real estate -
construction (3)                35,807                    58,841           (23,034)               (39.1)                  4,769                     6,324             (1,555)             (24.6)                 40,576                     65,165
Total                  $       549,278       $           588,489       $     (39,211)             (6.7)%       $        503,037       $           489,639       $        13,398               2.7%       $    1,052,315       $          1,078,128

% of total risk rated
loans                           4.4  %                    4.7  %                                                         4.0  %                    3.9  %                                                        8.4  %                     8.6  %


(1) Loans considered “criticized” by banking regulators (2) Loans considered “classified” by banking regulators (3) Excluding construction – other

The decrease in total loans challenged and classified that occurred during the three months ended March 31, 2022 was attributed to improving economic conditions.

Allowance and Provision for Credit Losses

The following table presents the components of the ACL:

                                 March 31, 2022       December 31, 2021
                                         (dollars in thousands)
ACL - loans                     $       243,705      $          249,001
ACL - OBS credit exposure (1)            13,933                  14,533
    Total ACL                   $       257,638      $          263,534


(1) Included in “other liabilities” in the consolidated balance sheet.











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The following table shows the activity in the ACL:

                                                    Three months ended March 31
                                                      2022               2021
                                                      (dollars in thousands)
Average balance of Net loans                    $  18,383,118       $ 

18,980,586

Balance of ACL at beginning of period           $     249,001       $    277,567

Loans charged off:
Commercial and industrial                                (227)            (4,319)
Real estate - commercial mortgage                        (152)            

(1,837)

Consumer and real estate - home equity                 (1,052)              

(847)

Equipment lease financing and other                      (469)              

(968)

Real estate - residential mortgage                          -               (192)
Real estate - construction                                  -                (39)
Total loans charged off                                (1,900)            (8,202)
Recoveries of loans previously charged off:
Commercial and industrial                               1,980               

769

Real estate - commercial mortgage                         112               

174

Consumer and real estate - home equity                    454               

440

Equipment lease financing and other                       154               

159

Real estate - residential mortgage                        222                 95
Real estate - construction                                 32                384
Total recoveries                                        2,954              2,021
Net loans charged off/(recoveries)                      1,054             

(6,181)

Provision for credit losses (1)                        (6,350)            

(5,400)

Balance of ACL at end of period                 $     243,705       $    

265,986

Net charge-offs to average loans (annualized)           (0.02) %            

0.13%

(1) The allowance for credit losses included in the table only includes the portion related to loans.

The provision for credit losses, specific to loans, for the three months ended
March 31, 2022 was negative $6.4 million, compared to a negative provision of
$5.4 million recorded for the same period in 2021. Several factors during the
first three months of 2022 in comparison to the same period in 2021, including
improved economic conditions, reduced the level of the ACL determined to be
necessary. The ACL includes qualitative adjustments, as appropriate, intended to
capture the impact of uncertainties not reflected in the quantitative models.
See Note 4, "Loans and Allowance for Credit Losses," in the Notes to
Consolidated Financial Statements for further details on the provision for
credit losses.

The following table summarizes the assignment of the ACL – ready:

                                                         March 31, 2022                               December 31, 2021
                                                                     % In Each Loan                              % In Each Loan
                                               ACL - loans            Category (1)           ACL - loans          Category (1)
                                                                           (dollars in thousands)
Real estate - commercial mortgage           $       79,853                    39.5  %       $   87,970                    39.7  %
Commercial and industrial                           66,511                    22.5              67,056                    22.9
Real estate - residential mortgage                  55,892                    21.3              54,236                    21.0
Consumer, home equity, equipment lease
financing                                           28,146                    10.2              26,798                    10.2
Real estate - construction                          13,303                     6.5              12,941                     6.2

Total ACL - loans                           $      243,705                   100.0  %       $  249,001                   100.0  %

(1) Ending loan balances as a % of total loans for the periods presented.

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Deposits and borrowings

The following table presents closing filings by type:

                                                                                                                 Increase (Decrease)
                                                        March 31, 2022           December 31, 2021               $                  %
                                                                                     (dollars in thousands)
Noninterest-bearing demand                            $     7,528,391          $        7,370,963          $  157,428               2.1  %
Interest-bearing demand                                     5,625,286                   5,819,539            (194,253)             (3.3)
Savings and money market deposits                           6,479,196                   6,403,995              75,201               1.2
Total demand and savings                                   19,632,873                  19,594,497              38,376               0.2
Brokered deposits                                             248,833                     251,526              (2,693)             (1.1)
Time deposits                                               1,659,468                   1,727,476             (68,008)             (3.9)
Total deposits                                        $    21,541,174          $       21,573,499          $  (32,325)             (0.1) %



During the first three months of 2022, total deposits decreased by $32.3
million, or 0.1%, primarily related to a $194.3 million decrease in
interest-bearing demand deposits and a $68.0 million decrease in time deposits,
partially offset by increases of $157.4 million in noninterest-bearing demand
deposits and $75.2 million in savings and money market deposits.

The following table presents term loans by type:

                                                                                                      Increase (Decrease)
                                             March 31, 2022           December 31, 2021               $                  %
                                                                          (dollars in thousands)
Short-term borrowings:
Customer funding (1)                       $       452,440          $          416,764          $   35,676                8.6  %

Long-term borrowings:

Other long-term borrowings                         556,494                     621,345             (64,851)             (10.4)

Total borrowings                           $     1,008,934          $        1,038,109          $  (29,175)              (2.8) %

(1) Includes repurchase agreements and short-term promissory notes.

In the first three months of 2022, customer financing increased $35.7 million, or 8.6%. Moreover, compared to December 31, 2021total long-term borrowings decreased $64.9 million due to the maturity of $65.0 million senior fixed rate bonds of 3.60%.

Equity

Total shareholders' equity decreased $143.1 million during the first three
months of 2022. The decrease was due primarily to a $186.3 million decrease in
AOCI, mainly due to unrealized losses in investment securities and derivatives.
The decrease in AOCI was partially offset by net income of $64.3 million
reflected in retained earnings.

On March 21, 2022, the Corporation announced that its board of directors
approved the repurchase of up to $75 million of shares of the Corporation's
common stock, or approximately 2.7% of the Corporation's outstanding shares,
based on the closing price of the Corporation's common stock and the number of
shares outstanding on March 17, 2022. Under the repurchase program, repurchased
shares are added to treasury stock at cost. As permitted by securities laws and
other legal requirements, and subject to market conditions and other factors,
purchases may be made from time to time in open market or privately negotiated
transactions, including, without limitation, through accelerated share
repurchase transactions. The repurchase program may be discontinued at any time
and will expire on December 31, 2022.

Regulatory capital

The Corporation and its subsidiary bank, Fulton Bank, are subject to regulatory
capital requirements ("Capital Rules") administered by banking regulators.
Failure to meet minimum capital requirements could result in certain actions by
regulators that could have a material effect on the Corporation's financial
statements.


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Capital rules require that the company and Fulton Bank for:

•Achieving a minimum Common Equity Tier 1 capital ratio of 4.50% of risk-weighted assets;

•Achieving a minimum Tier 1 Leverage capital ratio of 4.00% of average assets;

• Achieve a minimum total capital ratio of 8.00% of risk-weighted assets and a minimum Tier 1 capital ratio of 6.00% of risk-weighted assets;

•Maintain a "capital conservation buffer" of 2.50% above the minimum risk-based
capital requirements, which must be maintained to avoid restrictions on capital
distributions and certain discretionary bonus payments; and

•Comply with a revised definition of capital to improve the ability of
regulatory capital instruments to absorb losses. Certain non-qualifying capital
instruments, including cumulative preferred stock and TruPS, are excluded as a
component of Tier 1 capital for institutions of the Corporation's size.

The Capital Rules use a standardized approach for risk weightings that expands
the risk-weightings for assets and off-balance sheet exposures from the previous
0%, 20%, 50% and 100% categories to a much larger and more risk-sensitive number
of categories, depending on the nature of the assets and off-balance sheet
exposures and resulting in higher risk weightings for a variety of asset
categories.

As of March 31, 2022, the Corporation's capital levels met the fully phased-in
minimum capital requirements, including the capital conservation buffers, as
prescribed in the Capital Rules.

As of March 31, 2022, Fulton Bank met the well capitalized requirements under
the regulatory framework for prompt corrective action. To be categorized as well
capitalized, the Bank must maintain minimum Total risk-based, Tier I risk-based,
Common Equity Tier I risk-based and Tier I leverage ratios as set forth in the
regulation. There were no other conditions or events since March 31, 2022 that
management believes have changed the Corporation's capital categories.

The following table summarizes the Company’s capital ratios against regulatory requirements:

                                                                                                  Regulatory
                                                                                                    Minimum              Fully Phased-in, with
                                                                                                  for Capital            Capital Conservation
                                             March 31, 2022          December 31, 2021             Adequacy                     Buffers
Total Risk-Based Capital (to Risk-Weighted
Assets)                                               13.8  %                   14.1  %                    8.0  %                       10.5  %
Tier I Risk-Based Capital (to Risk-Weighted
Assets)                                               10.9  %                   10.9  %                    6.0  %                        8.5  %
Common Equity Tier I (to Risk-Weighted
Assets)                                               10.0  %                    9.9  %                    4.5  %                        7.0  %
Tier I Leverage Capital (to Average Assets)            8.9  %                    8.6  %                    4.0  %                        4.0  %

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Luisa D. Fuller