Fulton Financial Corporation · NASDAQ:FULT
Fulton Financial — Q3 2017 Earnings Presentation
32 slides from Fulton Financial's earnings presentation, Oct 31, 2017
Slide 1: Investor Presentation
D A T A A S O F S E P T E M B E R 3 0 , 2 0 1 7 U N L E S S O T H E R W I S E N O T E D INVESTOR PRESENTATION
Slide 2: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS This presentation may contain forward-looking statements with respect to Fulton Financial Corporation’s 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 wor
Slide 3: Why Fulton?
WHY FULTON? • Risk Management Foundation • Management Depth and Experience • Stability of Geographic Markets / Franchise Value • Strong Capital & Reserves • Commitment to Enhancing Shareholder Value • Relationship Banking Strategy / Customer Experience • Quality Loan Growth / Solid Asset Quality • A
Slide 4: A Valuable Franchise
A VALUABLE FRANCHISE • 243 community banking offices across the Mid-Atlantic • Asset size: $20.1 billion • 3,700+ team members (3,560 FTEs (1)) • Market capitalization: $3.3 billion (2) 4 (1) Average full-time equivalent employees. (2) Based on shares outstanding and the closing price as of Septembe
Slide 5: Strong Position in Attractive Markets
STRONG POSITION IN ATTRACTIVE MARKETS 5 Note: Data as of June 30, 2017 per Federal Deposit Insurance Corporation (FDIC) Summary of Deposits. Household Income Data as of June 30, 2017 per SNL Financial LC. (1) Median HH Income, 2017 – 2022 Projected Population Change and 2017 – 2022 Projected HH Inco
Slide 6: Deep Executive Management Team
Name Position Years at Fulton Years in Financial Services Prior Experience E. Philip Wenger Chairman, President and CEO 38 38 Various roles since joining in 1979 Craig Roda Senior EVP/ Community Banking 38 38 Various roles since joining in 1979 Philmer Rohrbaugh (1) Senior EVP/ COO and CFO 5 40 KPMG
Slide 7: Third Quarter Highlights
THIRD QUARTER HIGHLIGHTS Diluted Earnings Per Share: $0.28 in 3Q17, 7.7% increase from 2Q17 and 16.7% increase from 3Q16 Pre-Provision Net Revenue(1): $65.5 million, 4.1% increase from 2Q17 and 11.3% increase from 3Q16 Linked Quarter Loan and Core(2) Deposit Growth: 1.8% increase in average loans, a
Slide 8: Income Statement Summary – Quarterly
INCOME STATEMENT SUMMARY – QUARTERLY Net Income of $48.9 million; a 7.6% increase from 2Q17 and a 17.9% increase from 3Q16. Earnings per share increased 7.7% from 2Q17 and 16.7% from 3Q16. Net Interest Income From 2Q17: Increase of 3.7%, reflecting the impact of loan growth and an additional d
Slide 9: Net Interest Income and Margin
NET INTEREST INCOME AND MARGIN Net Interest Income & Net Interest Margin ~ $730 million ~ $610 million $130.6 $132.2 $137.6 $141.6 $146.8 3.14% 3.15% 3.26% 3.29% 3.27% 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 3.50% 4.00% $- $20.0 $40.0 $60.0 $80.0 $100.0 $120.0 $140.0 $160.0 3Q16 4Q16 1Q17 2Q17 3Q1
Slide 10: Loan Portfolio Composition & Yield
LOAN PORTFOLIO COMPOSITION & YIELD 10 Note: Loan portfolio composition is based on average balances for the years ended December 31, 2013 to 2016, and nine months ending September 30, 2017. (1) Presented on a fully-taxable equivalent basis. $4.9 $5.1 $5.2 $5.6 $6.1 $3.7 $3.7 $3.9 $4.1 $4.2 $1.7 $1.7
Slide 11: Deposit Portfolio Composition
DEPOSIT PORTFOLIO COMPOSITION 11 Note: Deposit composition is based on average balances for the periods indicated. Average brokered deposits were $30.3 million and $0 as of nine months ended September 30, 2017 and 2016, respectively; the percentage balance in both comparative periods was 0%. Average
Slide 12: Interest Rate Sensitivity
1) A variety of interest rate scenarios are used to measure the effects of sudden and gradual movements upward and downward in the yield curve. These results are compared to the results obtained in a flat or unchanged interest rate scenario. Simulation of net interest income is used primarily to mea
Slide 13: Asset Quality
ASSET QUALITY ($ IN MILLIONS) 13 Provision for Credit Losses Non-Performing Loans (NPLs) & NPLs to Loans 119.59% 130.15% 131.26% 128.92% 128.05% 1.15% 1.17% 1.15% 1.14% 1.13% 0.00% 1.00% 2.00% 3.00% 0.0% 25.0% 50.0% 75.0% 100.0% 125.0% 150.0% 3Q16 4Q16 1Q17 2Q17 3Q17 Allowance/NPLs Allowance/Loans N
Slide 14: Non-Interest Income – Quarter Comparison
NON-INTEREST INCOME – QUARTER COMPARISON ($ IN MILLIONS) Non-Interest Income, Excluding Securities Gains ~ $730 million ~ $610 million $48.1 $51.2 $45.6 $50.9 $47.4 $- $10.0 $20.0 $30.0 $40.0 $50.0 $60.0 3Q16 4Q16 1Q17 2Q17 3Q17 Mortgage Banking Income & Spreads Other Non-Interest Income 1.73% 1.94%
Slide 15: Non-Interest Expenses – Quarter Comparison
NON-INTEREST EXPENSES – QUARTER COMPARISON ($ IN MILLIONS) Non-Interest Expense & Efficiency Ratio (1) ~ $730 million ~ $610 million $119.8 $127.6 $122.3 $132.7 $132.2 65.2% 67.6% 64.2% 65.3% 64.3% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% $- $20.0 $40.0 $60.0 $80.0 $100.0 $120.0 $140.0 3
Slide 16: Profitability & Capital
PROFITABILITY & CAPITAL 16 ROA(1) ROE and ROE (tangible)(2) Tangible Common Equity Ratio(2) Diluted Earnings Per Common Share 7.78% 7.86% 8.22% 8.36% 8.76% 10.38% 10.47% 10.93% 11.06% 11.52% 0.00% 4.00% 8.00% 12.00% 3Q16 4Q16 1Q17 2Q17 3Q17 ROE ROE (tangible) 0.89% 0.89% 0.92% 0.94% 0.98% 0.00% 0.20
Slide 17: Stock Repurchase Programs
STOCK REPURCHASE PROGRAMS June 2012 to October 2017 Repurchase Programs (1) Shares Repurchased 31.88 million % of Outstanding Shares 15.9% (2) Amount Repurchased $375.1 million Average Purchase Price $11.77 demand and savings (1) Share repurchases completed from June 2012 through October 2017. (2) T
Slide 18: Average Assets and ROA, by Bank
AVERAGE ASSETS AND ROA, BY BANK Nine Months Ended September 30, 2017 Average Assets ($ Millions) 2017 2016 Fulton Bank, N.A. $11,003 1.08% 1.07% The Columbia Bank 2,369 0.93% 0.95% Lafayette Ambassador Bank 1,542 0.80% 0.93% Fulton Bank of New Jersey 3,907 0.71% 0.68% FNB Bank, N.A. 350 0.96% 0.59%
Slide 19: 2017 Outlook
2017 OUTLOOK The following outlook remains unchanged from prior quarter except in the case of Non-Interest Income and Net Interest Margin outlook: • Loans & Deposits: Annual average growth rate in the mid- to high-single digits • Asset Quality: Provision driven primarily by loan growth • Non-Interes
Slide 20: Appendix
APPENDIX
Slide 21: Average Loan Portfolio and Yields
AVERAGE LOAN PORTFOLIO AND YIELDS 21 Note: Yields presented on a fully taxable-equivalent basis, using a 35% federal tax rate and statutory interest expense disallowances. Average loan portfolio and yield are for the three months ended September 30, 2017. Balance Yield 2Q 2017 3Q 2016 2Q 2017 3Q 201
Slide 22: Average Customer Funding and Rates
AVERAGE CUSTOMER FUNDING AND RATES 22 Balance Rate 2Q 2017 3Q 2016 2Q 2017 3Q 2016 Nonint DDA 4,495$ - % 107$ 267$ - % - % Int DDA 3,943 0.39% 253 341 0.09% 0.20% Savings/MMDA 4,603 0.34% 288 524 0.09% 0.14% Brokered Deposits 90 1.23% 90 90 1.23% 1.23% CD's 2,745 1.15% 49 (69) 0.05% 0.08% Total Depo
Slide 23: Ending Loan Distribution by State
ENDING LOAN DISTRIBUTION BY STATE SEPTEMBER 30, 2017 23 Comm'l Consumer Comm'l Mortgage Constr. Res. Mtg. & Other Total (in thousands) Pennsylvania 3,129,220$ 3,274,457$ 516,258$ 730,036$ 1,285,685$ 8,935,656$ New Jersey 541,509 1,449,842 173,653 263,220 395,725 2,823,949 Maryland 333,622 688,343 14
Slide 24: Non-Performing Loans
NON-PERFORMING LOANS(1) SEPTEMBER 30, 2017 24 Comm'l Consumer Ending Loans NPLs/Loans Comm'l Mortgage Constr. Res. Mtg. & Other Total NPLs by State by State Pennsylvania 35,338$ 11,081$ 5,765$ 9,772$ 6,044$ 68,000$ 8,935,656$ 0.76% New Jersey 6,566 13,593 2,597 4,539 4,177 31,472 2,823,949 1.11% Mar
Slide 25: Net Charge-Offs (Recoveries)
NET CHARGE-OFFS (RECOVERIES) THREE MONTHS ENDED SEPTEMBER 30, 2017 25 Annualized Comm'l Consumer Average Loans Charge-Offs to Comm'l Mortgage Constr. Res. Mtg. & Other Total by State Average Loans Pennsylvania 1,409$ 240$ 2,204$ 156$ 391$ 4,400$ 8,951,377$ 0.20% New Jersey 287 144 (33) (47) 287 638
Slide 26: Investment Portfolio
INVESTMENT PORTFOLIO SEPTEMBER 30, 2017 26 Weighted Avg. Remaining Life Amortized Unrealized Estimated (in years) Cost Gain (Loss) Fair Value (dollars in millions) Residential mortgage-backed securities 4.4 1,185 (3) 1,182 Collateralized mortgage obligations 3.5 602$ (8)$ 594$ State and municipal se
Slide 27: Non-Interest Income (Excluding Securities Gains)
NON-INTEREST INCOME (EXCLUDING SECURITIES GAINS) 27 3Q 2017 2Q 2017 3Q 2016 2Q 2017 3Q 2016 Investment management and trust services 12,157$ 12,132$ 11,425$ 25$ 732$ Overdraft fees 5,844 5,648 5,770 196 74 Mortgage banking income 4,805 6,141 4,529 (1,336) 276 Merchant fees 4,398 4,531 4,220 (133) 17
Slide 28: Non-Interest Expense
NON-INTEREST EXPENSE 28 3Q 2017 2Q 2017 3Q 2016 2Q 2017 3Q 2016 Salaries and employee benefits 72,894$ 74,496$ 70,696$ (1,602)$ 2,198$ Net occupancy expense 12,180 12,316 11,782 (136) 398 Data processing and software 10,301 9,054 8,727 1,247 1,574 Other outside services 6,582 7,708 5,783 (1,126) 799
Slide 29: A Sustainable Payout
A SUSTAINABLE PAYOUT $0.30 $0.32 $0.34 $0.38 $0.41 $0.33 3.12% 2.44% 2.75% 2.92% 2.18% 2.35% 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% $0.00 $0.04 $0.08 $0.12 $0.16 $0.20 $0.24 $0.28 $0.32 $0.36 $0.40 $0.44 2012 2013 2014 2015 2016 YTD 9/2017 Cash Dividend Yield(1) 29 (1) Annual dividend per
Slide 30: Non-GAAP Reconciliation
NON-GAAP RECONCILIATION Note: The Corporation has presented the following non-GAAP (Generally Accepted Accounting Principles) financial measures because it believes that these measures provide useful and comparative information to assess trends in the Corporation's results of operations and financia
Slide 31: Non-GAAP Reconciliation (Con't)
NON-GAAP RECONCILIATION (CON’T) 31 Sep 30 Dec 31 Mar 31 Jun 30 Sep 30 2016 2016 2017 2017 2017 Tangible Common Equity to Tangible Assets (TCE Ratio) Shareholders' equity 2,129,436$ 2,121,115$ 2,154,683$ 2,191,770$ 2,225,786$ Less: Intangible assets (531,556) (531,556) (531,556) (531,556) (531,556) T
Slide 32: Fulton Financial Corporation
FULTON FINANCIAL CORPORATION www.fult.com