Fulton Financial Corporation · NASDAQ:FULT
Fulton Financial — Q4 2017 Earnings Presentation
34 slides from Fulton Financial's earnings presentation, Feb 6, 2018
Slide 1: Investor Presentation
D A T A A S O F D E C E M B E R 3 1 , 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: $20.0 billion • 3,700+ team members (3,570 FTEs (1)) • Market capitalization: $3.1 billion (2) 4 (1) Average full-time equivalent employees. (2) Based on shares outstanding and the closing price as of December
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, 2018 – 2023 Projected Population Change and 2018 – 2023 Projected HH Inco
Slide 6: Management team
Name Position(1) Years at Fulton Years in Financial Services Prior Experience E. Philip Wenger Chairman and CEO 38 38 Various roles since joining in 1979 Curtis Myers President/COO of Fulton Financial Corporation and Fulton Bank 27 27 Various roles since joining in 1990 Mark McCollom (2) Senior EVP/
Slide 7: 2017 Highlights
2017 HIGHLIGHTS 2017 net income of $171.8 million, or $0.98 per share. Excluding tax charge(1)(2), 2017 net income was $187.4 million, or $1.07 per share. 2017 Key Accomplishments Record year of revenues and net income, excluding tax charge(1) Average loan growth of 7.8% and average demand and s
Slide 8: The Impact of Tax Reform
THE IMPACT OF TAX REFORM During the fourth quarter of 2017, the Corporation recorded a $15.6 million charge(1) to income taxes related to the re-measurement of net deferred tax assets as a result of a new federal tax legislation enacted in December 2017. In the following table, the “As Adjusted” col
Slide 9: Income Statement Summary – Year to Date
INCOME STATEMENT SUMMARY – YEAR TO DATE Net Income of $171.8 million; 6.3% increase from 2016. Earnings per share increased 5.4% to $0.98. Net Interest Income 10.5% increase, reflecting the impact of loan growth and a 10 basis point higher net interest margin (NIM) Loan Loss Provision $23.3 mi
Slide 10: Income Statement Summary – Quarterly Comparison
INCOME STATEMENT SUMMARY – QUARTERLY COMPARISON 10 (1) ROA is return an average assets determined by dividing net income for the period indicated by average assets, annualized. (2) ROE is return on average shareholders’ equity determined by dividing net income for the period indicated by average sha
Slide 11: Net Interest Income and Margin – Quarterly Comparison
NET INTEREST INCOME AND MARGIN – QUARTERLY COMPARISON Net Interest Income & Net Interest Margin ~ $730 million ~ $610 million $132.2 $137.6 $141.6 $146.8 $149.4 3.15% 3.26% 3.29% 3.27% 3.29% 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
Slide 12: Loan Portfolio Composition & Yield
LOAN PORTFOLIO COMPOSITION & YIELD 12 Note: Loan portfolio composition is based on average balances for the years ended December 31, 2013 to 2017. (1) Presented on a fully-taxable equivalent basis. $4.9 $5.1 $5.2 $5.6 $6.2 $3.7 $3.7 $3.9 $4.1 $4.2 $1.7 $1.7 $1.7 $1.7 $1.6 $1.3 $1.4 $1.4 $1.5 $1.8 $0
Slide 13: Deposit Portfolio Composition
DEPOSIT PORTFOLIO COMPOSITION 13 Note: Deposit composition is based on average balances for the periods indicated. Average brokered deposits were $49.1 million and $0 as of the years ended December 31, 2017 and 2016, respectively; the percentage balance in both comparative periods was 0%. Average de
Slide 14: Interest rate sensitivity simulation
1) A variety of interest rate scenarios are used to measure the effects of sudden and gradual movements upward and downward in the yield curve. These results are compared to the results obtained in a flat or unchanged interest rate scenario. Simulation of net interest income is used primarily to mea
Slide 15: Asset Quality – Annual Comparison
ASSET QUALITY – ANNUAL COMPARISON ($ IN MILLIONS) 15 Provision for Credit Losses Non-Performing Loans (NPLs) & NPLs to Loans 134.26% 118.37% 130.15% 130.67% 1.42% 1.24% 1.17% 1.12% 0.00% 1.00% 2.00% 3.00% 0.0% 40.0% 80.0% 120.0% 160.0% 2014 2015 2016 2017 Allowance/NPLs Allowance/Loans Net Charge-of
Slide 16: Non-Interest Income – Quarter Comparison
NON-INTEREST INCOME – QUARTER COMPARISON ($ IN MILLIONS) Non-Interest Income, Excluding Securities Gains ~ $730 million ~ $610 million $51.2 $45.6 $50.9 $47.4 $55.0 $- $10.0 $20.0 $30.0 $40.0 $50.0 $60.0 4Q16 1Q17 2Q17 3Q17 4Q17 Mortgage Banking Income & Spreads Other Non-Interest Income 1.94% 1.62%
Slide 17: Non-Interest Expenses – Quarterly Comparison
NON-INTEREST EXPENSES – QUARTERLY COMPARISON ($ IN MILLIONS) Non-Interest Expense & Efficiency Ratio (1) ~ $730 million ~ $610 million $127.6 $122.3 $132.7 $132.2 $138.5 67.6% 64.2% 65.3% 64.3% 64.2% 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
Slide 18: Profitability & Capital – Annual Comparison
PROFITABILITY & CAPITAL – ANNUAL COMPARISON 18 ROA(1) ROE and ROE (tangible)(2) Tangible Common Equity Ratio(2) Diluted Earnings Per Common Share 7.62% 7.38% 7.69% 7.83% 10.31% 10.01% 10.30% 10.33% 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% 2014 2015 2016 2017 ROE ROE (tangible) 0.93% 0.86%
Slide 19: Stock Repurchase Programs
STOCK REPURCHASE PROGRAMS June 2012 to January 2018 Repurchase Programs (1) Shares Repurchased 31.88 million % of Outstanding Shares 15.9% (2) Amount Repurchased $375.1 million Average Purchase Price $11.77 demand and savings (1) Share repurchases completed from June 2012 through January 2018. (2) T
Slide 20: 2018 Outlook
2018 OUTLOOK • Loans & Deposits: Average annual loan and core deposit growth rates in the mid single digits • Asset Quality: Provision driven primarily by loan growth • Non-Interest Income(1): Low single-digit growth • Non-Interest Expense: Including amortization of tax free investments, low single-
Slide 21: Appendix
APPENDIX
Slide 22: Average Loan Portfolio and Yields
AVERAGE LOAN PORTFOLIO AND YIELDS 22 Note: Yields presented on a fully taxable-equivalent basis, using a 35% federal tax rate and statutory interest expense disallowances. Average loan portfolio and yield are for the three months ended December 31, 2017. Balance Yield 3Q 2017 4Q 2016 3Q 2017 4Q 2016
Slide 23: Average Customer Funding and Rates
AVERAGE CUSTOMER FUNDING AND RATES 23 Balance Rate 3Q 2017 4Q 2016 3Q 2017 4Q 2016 Nonint DDA 4,454$ - % (41)$ 122$ - % - % Int DDA 4,038 0.40% 95 324 0.01% 0.19% Savings/MMDA 4,752 0.38% 149 536 0.04% 0.17% Brokered Deposits 105 1.27% 15 105 0.04% 1.27% Time deposits 2,707 1.18% (38) (70) 0.03% 0.0
Slide 24: Loan Distribution by State
LOAN DISTRIBUTION BY STATE AS OF DECEMBER 31, 2017 24 Comm'l Consumer Comm'l Mortgage Constr. Res. Mtg. & Other Total (in thousands) Pennsylvania 3,168,035$ 3,329,112$ 519,334$ 740,563$ 1,290,799$ 9,047,843$ New Jersey 559,965 1,436,793 189,785 268,963 403,395 2,858,901 Maryland 323,064 702,596 146,
Slide 25: Non-Performing Loans
NON-PERFORMING LOANS(1) AS OF DECEMBER 31, 2017 25 Comm'l Consumer Ending Loans NPLs/Loans Comm'l Mortgage Constr. Res. Mtg. & Other Total NPLs by State by State Pennsylvania 36,231$ 13,374$ 4,830$ 8,874$ 5,308$ 68,617$ 9,047,843$ 0.76% New Jersey 6,145 13,138 2,373 4,732 4,014 30,402 2,858,901 1.06
Slide 26: Net Charge-Offs (Recoveries)
NET CHARGE-OFFS (RECOVERIES) THREE MONTHS ENDED DECEMBER 31, 2017 26 Annualized Comm'l Consumer Average Loans Charge-Offs to Comm'l Mortgage Constr. Res. Mtg. & Other Total by State Average Loans Pennsylvania 4,469$ (23)$ -$ (68)$ 672$ 5,050$ 8,933,378$ 0.23% New Jersey 134 72 (16) (18) 155 327 2,84
Slide 27: Investment Portfolio
INVESTMENT PORTFOLIO DECEMBER 31, 2017 27 Weighted Avg. Remaining Life Amortized Unrealized Estimated (in years) Cost Gain (Loss) Fair Value (dollars in millions) Residential mortgage-backed securities 4.8 1,132$ (11)$ 1,121$ Collateralized mortgage obligations 3.5 612 (9) 603 State and municipal se
Slide 28: Non-Interest Income (Excluding Securities Gains)
NON-INTEREST INCOME (EXCLUDING SECURITIES GAINS) 28 4Q 2017 3Q 2017 4Q 2016 3Q 2017 4Q 2016 Investment management and trust services 13,152$ 12,157$ 11,610$ 995$ 1,542$ Overdraft fees 5,609 5,844 5,749 (235) (140) Mortgage banking income 4,386 4,805 6,959 (419) (2,573) Merchant fees 4,308 4,398 3,98
Slide 29: Non-Interest Expense
NON-INTEREST EXPENSE 29 4Q 2017 3Q 2017 4Q 2016 3Q 2017 4Q 2016 Salaries and employee benefits 73,504$ 72,894$ 73,256$ 610$ 248$ Net occupancy expense 12,549 12,180 11,798 369 751 Data processing and software 10,401 10,301 9,442 100 959 Other outside services 7,665 6,582 6,536 1,083 1,129 Profession
Slide 30: A Sustainable Payout
A SUSTAINABLE PAYOUT $0.32 $0.34 $0.38 $0.41 $0.47 2.44% 2.75% 2.92% 2.18% 2.63% 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 $0.48 $0.52 2013 2014 2015 2016 2017 Cash Dividend Yield(1) 30 (1) Annual dividend per share divi
Slide 31: Non-GAAP Reconciliation
NON-GAAP RECONCILIATION D ec 31, Sep 30, Jun 30, M ar 31, D ec 31, 2017 2017 2017 2017 2016 2017 2016 Eff iciency rat io Non-interest expense 138,452$ 132,157$ 132,695$ 122,275$ 127,621$ 525,579$ 489,519$ Less: Amortization of tax credit investments (3,376) (3,503) (3,151) (998) - (11,028) - Numerat
Slide 32: Non-GAAP Reconciliation (Continued)
NON-GAAP RECONCILIATION (CONTINUED) D ec 3 1, D ec 3 1, D ec 3 1, D ec 3 1, 2 0 17 2 0 16 2 0 15 2 0 14 Tang ib le C ommon Equit y t o Tang ib le A sset s ( TC E R at io ) Shareholders' equity 2,229,857$ 2,121,115$ 2,041,894$ 1,996,665$ Less: Intangible assets (531,556) (531,556) (531,556) (531,803)
Slide 33: Non-GAAP Reconciliation (Continued)
33 NON-GAAP RECONCILIATION (CONTINUED) T hree M o nths Ended Year Ended D ec 31, D ec 31, 2017 2017 Diluted earnings per share Net income 34,001$ 171,753$ Plus: Re-measurement of net deferred tax assets 15,634 15,634 Net Income, adjusted (numerator) 49,635$ 187,387$ Weighted average shares (diluted)
Slide 34: Fulton Financial Corporation
FULTON FINANCIAL CORPORATION www.fult.com