Fulton Financial Corporation · NASDAQ:FULT
Fulton Financial — RBC Capital Markets presentation (September 2003)
62 slides from Fulton Financial's conference presentation, Sep 19, 2003
Slide 1: Presentation to RBC Capital Markets
Presentation to: RBC Capital Markets September 19, 2003
Slide 2: Forward-looking statement
Forward-looking statement ¨ The following presentation may contain forward-looking statements about Fulton Financial Corporation’s growth and acquisition strategies, new products and services, and future financial performance, including earnings and dividends per share, return on average assets, ret
Slide 3: Presentation outline
Presentation outline R. Scott Smith, Jr. President and COO ¨ Corporate profile ¨ Strategic initiatives ¨ Asset quality ¨ Future direction Charles J. Nugent Senior Exec. VP/CFO ¨ Financial performance
Slide 4: Fulton Financial profile
Fulton Financial profile ¨ Regional financial holding company (formed in 1982) ¨ 11 bank subsidiaries; 3 financial services subsidiaries ¨ Asset size: $9.2 billion ¨ Second largest commercial bank headquartered in Third Federal Reserve District ¨ Fulton Bank founded in 1882
Slide 5: Where are we located?
Where are we located? ¨ The Bank [GRAPHIC] ¨ Delaware National Bank ¨ FNB Bank ¨ Fulton Bank ¨ Hagerstown Trust ¨ Lafayette Ambassador Bank ¨ Lebanon Valley Farmers Bank ¨ The Peoples Bank of Elkton ¨ Premier Bank ¨ Resource Bankshares Corp. (Pending) ¨ Skylands Community Bank ¨ Swineford National B
Slide 6: Assets by affiliate
Assets by affiliate (as of 6/30/03, in thousands) ¨ Fulton Bank $ 3,800,000 ¨ Lafayette Ambassador Bank 1,087,000 ¨ The Bank 1,050,000 ¨ Lebanon Valley Farmers Bank 779,000 ¨ Premier Bank 607,000 ¨ Hagerstown Trust Company 451,000 ¨ Skylands Community Bank 375,000 ¨ Delaware National Bank 338,000 ¨
Slide 7: Fulton Financial Advisors, N.A.
Fulton Financial Advisors, N.A. Includes Dearden Maguire Weaver and Barrett, LLC and Fulton Insurance Services Group As of: (June 30, 2003) $4.6 billion; $3.3 billion in assets under management Products and Services ¨ Personal trust ¨ Insurance ¨ Asset management ¨ Corporate trust ¨ Retirement servi
Slide 8: Fulton Mortgage Company
Fulton Mortgage Company ¨ Established April 2001 ¨ New entity to coordinate residential mortgage lending throughout FFC n Expanded, competitive product line to customers of all affiliates n In partnership with each affiliate, focused management team on residential mortgages n Entry into new markets
Slide 9: Mission statement
Mission statement ¨ We will increase shareholder value and enrich the communities we serve by creating financial success together with our customers and career success together with our employees . We will conduct all of our business with honesty and integrity.
Slide 10: Corporate ethics
Corporate ethics ¨ Longstanding written code of conduct ¨ No “gray” areas ¨ Expectations clearly outlined
Slide 11: What have we accomplished?
What have we accomplished? ¨ 9.3% compounded annual growth rate in earnings per share ¨ 21 consecutive years of record earnings ¨ 29 consecutive years of dividend increases ¨ 10.3% compounded annual growth rate in dividends per share ¨ Proven business model ¨ Consistently high performance
Slide 12: Five-year performance
Five-year performance Net income per share $ .88 $ 1.23 Cash dividends per share $ .37 $ .56 Return on assets 1.60 % 1.68 % Return on equity 15.06 % 15.86 % Efficiency ratio 55.3 % 52.4 % Dividend payout 41.6 % 45.4 % All information is as originally reported
Slide 13: Stock highlights (as of 8/31/03)
Stock highlights (as of 8/31/03) Average daily trading volume 187,053 Number of Market Makers Number of Analysts Number of shares outstanding 109.4 million Market Capitalization $2.2 billion
Slide 14: Employee stock ownership
Employee stock ownership ¨ 70% of our employees collectively own more than 2 million shares of Fulton Financial Corporation stock. ¨ Stock options help us to retain long-term loyal employees
Slide 15: Stock performance (1982-6/30/03)
Stock performance (1982-6/30/03) ¨ WITHOUT dividend reinvestment: 1 5 % compounded annual rate of return ¨ WITH dividend reinvestment: 19 % compounded annual rate of return
Slide 16: Employee retention
Employee retention [GRAPHIC] ¨ Exempt ¨ Non-exempt ¨ Overall
Slide 17: Employee opinion survey
Employee opinion survey ¨ Customer service ¨ Training and development ¨ Management team performance ¨ Sales orientation ¨ Company image and mission ¨ Work effectiveness ¨ Team orientation ¨ Pay and benefits ¨ Technology and systems ¨ Employee satisfaction
Slide 18: Retail customer satisfaction
Retail customer satisfaction ¨ 96% of customers are Extremely or Very Satisfied with their Fulton Financial affiliate bank
Slide 19: Deposit composition trends
Deposit composition trends June ‘03 June ‘02 Non Interest-Bearing Demand 19% 17% Interest-Bearing Demand 16% 14% Money Market 13% 13% Savings 11% 11% Time Deposits 36% 40% Customer Repos 5% 5% Total Deposits 100% 100%
Slide 20: Funding sources
Funding sources as of 6/30/03 [GRAPHIC] Deposits and Customer Repurchase Agreements 79% Capital 10% Other Borrowings 9% Other Liabilities 2%
Slide 21: Commercial customer satisfaction
Commercial customer satisfaction ¨ 86% of commercial customers are satisfied or very satisfied – results compare favorably to industry benchmarks ¨ Top three rated attributes: n Services offered n Convenient bank locations n Accurate communications ¨ Corporate customers state that what makes Fulton
Slide 22: Community involvement
Community involvement ¨ Employees are actively involved in their own communities ¨ The community benefits from this support ¨ The banks receive additional business as a result of the relationships and goodwill that are developed
Slide 23: Corporate strategic initiatives
Corporate strategic initiatives ¨ Achieving consistent earnings growth ¨ Maintaining high asset quality ¨ Expanding the franchise through our well-developed acquisition strategy ¨ Diversifying revenue stream by increasing the contribution of non-interest income ¨ Managing capital
Slide 24: Capital (At June 30, 2003)
Capital (At June 30, 2003) ¨ Total Capital (GAAP): $ 874 million ¨ Total Risk-based Capital: $ 857 million ¨ Ratios: ¨ Total RB Capital 13.9 % ¨ Tier 1 RB Capital 12.7 % ¨ Leverage Capital 9.4 %
Slide 25: Proforma Capital (At June 30, 2003)
Proforma Capital (At June 30, 2003) ¨ Total Risk-based Capital: $ 960 million ¨ Ratios: ¨ Total RB Capital 12.3 % ¨ Tier 1 RB Capital 10.9 % ¨ Leverage Capital 8.0 %
Slide 26: Acquisitions
Acquisitions n Resource Bankshares (pending) n Bank of Gloucester County n Premier Bank n Delaware National Bank n Drovers & Mechanics Bank n Central Pennsylvania Savings Association n 18 Sovereign Bank Branches n Hagerstown Trust Company n Dearden, Maguire, Weaver and Barrett, Inc. n Denver Nationa
Slide 27: Premier Bank
Premier Bank ¨ A $600 million state chartered bank headquartered in Doylestown, PA ¨ Eight full-service offices serving Montgomery, Bucks and Northampton counties ¨ Historical double-digit growth in deposits, loans, fee income and net income ¨ Strong asset quality ¨ Premier branches are contiguous t
Slide 28: Resource Bankshares, Inc.
Resource Bankshares, Inc. ¨ Assets of $860 million; headquartered in Virginia Beach, Virginia ¨ The only Virginia-based bank with offices in Virginia’s three major markets ¨ Market area accounts for over 73% of all deposits in state of Virginia ¨ Allows for expansion of Fulton Financial Advisors, re
Slide 29: What do we look for?
What do we look for? ¨ High growth areas ¨ Dynamic market demographics ¨ Strong performance ¨ Asset quality ¨ Talented and dedicated staff ¨ Compatible corporate culture
Slide 30: Acquisitions in new markets: what changes?
Acquisitions in new markets What changes? ¨ Replicate strong credit culture ¨ Loan review ¨ Investments ¨ Asset/liability management ¨ Compliance ¨ Common operating platform ¨ Audit
Slide 31: Acquisitions in new markets: what stays the same?
Acquisitions in new markets What stays the same? ¨ Bank name ¨ Board of Directors ¨ Management team ¨ Employees
Slide 32: Benefits to new affiliates
Benefits to new affiliates ¨ Additional capital ¨ Increased lending capacity ¨ Reduced expenses ¨ Management focus on growth, customer service and sales ¨ Proven merger/conversion expertise ¨ Increased non-interest income due to introduction of new products and services
Slide 33: Product availability
Product availability ¨ Residential Mortgages ¨ On-line banking ¨ Investment Management ¨ Debit/Credit cards ¨ Brokerage Services ¨ Cash management ¨ Insurance (whole life, term life, long-term care through Advisors) ¨ Specialized lending (leasing and indirect) ¨ International Services ¨ Corresponden
Slide 34: Composition of total revenues
Composition of total revenues 16.0% 16.2% 16.9% 17.9% 19.4% 22.9% 25.0% 28.0% ¨ Other Income ¨ Net Interest Income
Slide 35: Other income (YTD June)
Other income (YTD June) $ % (dollars in thousands) Invt Mgt & Trust $ 17,152 $ 14,743 $ 2,409 % Mort. Sales & Serv. 11,792 6,064 5,728 % Service Charges 7,766 7,472 % Deposit-related fees 7,323 6,995 % Cash Mgt Fees 3,628 3,619 % Success Card Fees 2,641 2,326 % Merchant Fees 2,056 1,893 % Other 6,84
Slide 36: Investment management and trust services revenue
Investment management and trust services revenue 13.2% 22.1% 26.8% 18.0% 31.6% 7.4% 11.0%
Slide 37: Growth in other income
Growth in other income 10.6% 13.3 % 10.4 % 10.6 % 13.4 % 14.3 % 35.8 % 18.4 % 18.3 % Note: In 2001, we acquired Dearden, Maguire, Weaver & Barrett, LLC
Slide 38: Moody’s Investor Service and Fitch Ratings
Moody’s Investor Service ¨ Short-term rating P-1 ¨ Long-term rating A-1 Fitch Ratings ¨ Short-term rating F-1 ¨ Long-term rating A
Slide 39: Loan diversification
Loan diversification [CHART] Consumer and Other % Residential Mortgage % Commercial Loans % Home Equity % Commercial Mortgage %
Slide 40: Summary of larger loans
Summary of larger loans ¨ 21 relationships with commitments to lend of $20 million or more ¨ Maximum individual commitment of $30 million ¨ Average commercial loan commitment is $536,000 ¨ Loans and corresponding relationships are within Fulton’s geographical market area
Slide 41: Commercial loan concentration
Commercial loan concentration by industry (as of 6/30/03) Industry % Construction 17.2 R/E—Rental 16.6 Services 11.9 Manufacturing 10.4 Retail 8.2 Health Care 7.7 Other 7.5 Agriculture 6.4 Wholesale 5.9 Arts and Entertainment 4.1 Financial Services 2.2
Slide 42: Experience of our lenders
Experience of our lenders ¨ The officers who oversee all lending have each worked in this capacity at Fulton for more than 20 years. ¨ This consistency should enable Fulton Financial to maintain its high asset quality in the future.
Slide 43: Possible Future Expansion
Possible Future Expansion [GRAPHIC] ¨ Current Markets ¨ Future Expansion
Slide 44: Looking ahead
Looking ahead ¨ Continue to build on our strengths ¨ Continue to rely on the expertise and skill of our employees ¨ Stick to banking basics while preparing for the future ¨ Enhance customer relationship management efforts
Slide 45: Board of Directors
Board of Directors ¨ Focused on maximizing shareholder value with an annual increase in earnings per share in the range of 10%
Slide 46: Financial Highlights
Financial Highlights Performance Overview
Slide 47: Six months ended June 30, 2003
Six months ended June 30, 2003 ¨ $0.64 Net income per share (6.7% increase over 2002) ¨ $0.303 Cash dividends per share (11.4% increase over 2002) ¨ 1.64% Return on Assets ¨ 15.88% Return on Equity ¨ 52.90% Efficiency Ratio
Slide 48: Average Balances (YTD June)
Average Balances (YTD June) $ % (dollars in millions) Investments $ 2,427 $ 1,817 $ % Loans 5,366 5,421 (55 ) -1 % Deposits 6,553 6,195 % Borrowings %
Slide 49: Average Loan Growth (YTD June)
Average Loan Growth (YTD June) $ % (dollars in millions) Commercial $ 1,706 $ 1,537 $ % Comm’l Mort 1,774 1,673 % Resid Mort (263 ) -32 % Cons./Other 1,328 1,390 (62 ) -4 % Total Loans $ 5,366 $ 5,421 (55 ) -1 %
Slide 50: Peer group
Peer group n Commerce Bancorp n Provident Financial Group n First Commonwealth Financial n Riggs National Corp. n First Financial Bancorp. n Sky Financial Group Inc. n FirstMerit Corp. n Susquehanna Bancshares n Fulton Financial Corp n Trust Co. of New Jersey n Hudson United Bancorp. n TrustCo Bank
Slide 51: Net charge-offs to average loans
Net charge-offs to average loans [GRAPH] Top 50 Peer FFC Source: SNL Financial Datasource
Slide 52: Non-performing assets to total assets
Non-performing assets to total assets [GRAPHIC] Top 50 Peer FFC Source: SNL Financial Datasource
Slide 53: Net interest margin
Net interest margin [GRAPHIC] Top 50 Peer FFC Source: SNL Financial Datasource
Slide 54: Asset/Liability management
Asset/Liability management Interest rate “shocks” (as of 6/30/03) ¨ Impact on Net Interest Income: Rate Change NII Change (Annual) % Change +300 bp + $ 34.6 million +12.2% +200 bp + $ 26.5 million + 9.4% +100 bp + $ 16.7 million + 5.9% - 100 bp - $ 17.5 million - 6.2% Source: FFC Asset/Liability Mod
Slide 55: Investment portfolio
Investment portfolio Portfolio Components ( in millions) Ending Bal. 6/30/03 Average Life (yrs.) Credit Rating Mortgage-backed securities $ 1,951.4 2.3 AAA—agency issued Treasuries and agencies $ 105.5 0.3 AAA Municipals $ 269.2 3.5 AAA—insured Bank-issued Trust preferred stock $ 20.6 various/callab
Slide 56: Bank stock gains
Bank stock gains (percent contribution to EPS) [GRAPHIC]
Slide 57: Efficiency ratio
Efficiency ratio [GRAPHIC] Top 50 Peer FFC Source: SNL Financial Datasource
Slide 58: Other Expenses (YTD June)
Other Expenses (YTD June) $ % (dollars in thousands) Salaries & Benefits $ 67,814 $ 63,665 $ 4,149 % Occupancy & Equip. 15,155 14,070 1,085 % Data Processing 5,640 6,163 (523 ) -8 % Advertising 3,019 3,653 (634 ) -17 % Telecommun. 2,481 2,661 (180 ) -7 % State Tax 2,204 2,728 (524 ) -19 % Stat. & Su
Slide 59: Accounting/Auditing
Accounting/Auditing ¨ Compliance with accounting standards ¨ Designated a financial expert ¨ Disclosure committee ¨ Enhanced Audit Committee role ¨ CFO certifications ¨ Audit Committee approvals of financial filings
Slide 60: Looking ahead
Looking ahead Continued focus on: ¨ Strong asset quality ¨ Growth in non-interest income, particularly from Advisors ¨ Expansion of franchise geographically ¨ Increased loan activity ¨ Core deposit growth
Slide 61: Overview
Overview ¨ Long-term, consistent performance ¨ Talented and dedicated employees ¨ Attractive returns for shareholders ¨ Career success for employees ¨ Financial success for customers ¨ Prosperity for communities
Slide 62: One Penn Square
One Penn Square Lancaster, PA 17602 www.fult.com
Fulton Financial — RBC Capital Markets presentation (September 2003) on 6ix