Fulton Financial Corporation · NASDAQ:FULT
Fulton Financial — Investor Presentation (November 2013)
61 slides from Fulton Financial's investor presentation, Nov 1, 2013
Slide 1: Investor Presentation
Investor Presentation Data as of September 30, 2013 (unless otherwise noted) Ticker Symbol: FULT (NASDAQ)
Slide 2: 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 words such as “may,” “should
Slide 3: About Us
About Us Mid-Atlantic financial holding company 6 community banks / 5 states Fulton Financial Advisors Fulton Mortgage Company 270 community banking offices Asset size: $17.1 billion 3,800 team members (3,640 FTEs) Shares outstanding: 192.3 million Market capitalization: $ 2.2 bill
Slide 4: A Valuable Franchise
A Valuable Franchise @ The Columbia Bank @ FNB Bank,N.A. @ Fulton Bank,N.A. IB Fulton Bank of New Jersey GB Lafayette Ambassador Bank i Swineford National Bank FULTON FINANCIAL CORPORATION
Slide 5: Corporate Priorities
1. Earnings Per Share (EPS) Growth 2. Quality Loan Growth 3. Improve Asset Quality 4. Core Deposit / Household Growth 5. Spread Management / Net Interest Margin 6. Increase Return on Average Assets (ROA) 7. Increase Return on Average Equity (ROE) 8. Expense Management 9. Enhance Compliance & Risk Ma
Slide 6: Priorities: EPS
Priorities: EPS 1. EPS Growth Q3 2013 Diluted EPS : 21 cents Unchanged from Q2 2013 and Q3 2012 6
Slide 7: Diluted Earnings Per Share (Quarterly)
$0.00 $0.05 $0.10 $0.15 $0.20 $0.25 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 0.11 0.11 0.13 0.14 0.16 0.16 0.17 0.18 0.20 0.18 0.19 0.20 0.21 0.20 0.20 0.21 0.21 Diluted Earnings Per Share (Quarterly) 7
Slide 8: Income Statement Summary
Income Statement Summary 8 Q3 2013 Q2 2013 $ % Net Interest Income 132,533$ 132,065$ 468$ 0% Loan Loss Provision (9,500) (13,500) 4,000 -30% Non-Interest Income 44,724 49,451 (4,727) -10% Securities Gains 2,633 2,865 (232) -8% Non-Interest Expenses (116,605) (117,130) 525 0% Income Taxes (13,837) (1
Slide 9: Priorities: Quality Loan Growth
2. Quality Loan Growth Average loans up 1.6% compared to Q2 2013 and up 6.8% compared to Q3 2012 Fourth consecutive quarter of solid growth Priorities: Quality Loan Growth 9
Slide 10: Average Loans
Average Loans 10 Q3 2013 Q2 2013 $ % Comm'l Mort 4,962$ 4,758$ 204$ 4% Commercial 3,706 3,715 (9) 0% Home Equity 1,767 1,733 34 2% Resid Mort 1,324 1,309 15 1% Construction 576 617 (41) -7% Consumer/Other 393 397 (4) -1% Total Loans 12,728$ 12,529$ 199$ 1.6% Change (dollars in millions)
Slide 11: Peer Group
International Bancshares Corp. People’s United Financial, Inc. Prosperity Bancshares, Inc. Susquehanna Bancshares, Inc. TCF Financial Corporation UMB Financial Corporation Umpqua Holdings Corporation Valley National Bancorp Webster Financial Corporation Wintrust Financial Corporation Associated Banc
Slide 12: Ending Loan Growth
Ending Loan Growth 12 Note: 2007 through 2012 represents December year-over-year change in ending loans. 06/30/13 represents June 30, 2013 over December 31, 2012 change in ending loans. 09/30/13 represents September 30, 2013 over December 31, 2012 change in ending loans. * Comprised of the 50 larges
Slide 13: Priorities: Improve Asset Quality
3. Improve Asset Quality Priorities: Improve Asset Quality 13
Slide 14: Non-accrual Loans to Loans
1.12% 1.01% 1.03% 0.00% 1.00% 2.00% 3.00% Dec 31, 2007 Dec 31, 2008 Dec 31, 2009 Dec 31, 2010 Dec 31, 2011 Dec 31, 2012 Jun 30, 2013 Sep 30, 2013 FULT Peer Top 50* Non-accrual Loans to Loans 14 * Comprised of the 50 largest publicly traded domestic banks/thrifts in assets size as of December 31,2012
Slide 15: Allowance for Loan Losses to Loans
1.65% 1.29% 1.61% 0.80% 1.10% 1.40% 1.70% 2.00% 2.30% 2.60% Dec 31, 2007 Dec 31, 2008 Dec 31, 2009 Dec 31, 2010 Dec 31, 2011 Dec 31, 2012 Jun 30, 2013 Sep 30, 2013 FULT Peer Top 50* Allowance for Loan Losses to Loans 15 * Comprised of the 50 largest publicly traded domestic banks/thrifts in assets s
Slide 16: Non-performing Loans
Non-performing Loans* (9/30/13) Comm'l Comm'l Mortgage Constr. Res. Mtg. Other Total (in thousands) Pennsylvania 30,646$ 16,613$ 13,246$ 11,027$ 9,083$ 80,615$ Maryland 3,297 1,162 5,781 2,556 3,098 15,894 New Jersey 8,831 19,927 4,749 10,423 8,169 52,099 Virginia 2,211 3,254 620 7,872 550 14,507 De
Slide 17: Provision for Credit Losses (Quarterly)
$0 $20 $40 $60 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 45.0 45.0 40.0 40.0 40.0 40.0 38.0 36.0 31.0 30.0 28.0 25.5 23.0 17.5 15.0 13.5 9.5 Provision for Credit Losses (Quarterly, in millions of dollars) 1
Slide 18: Priorities: Core Deposit/Household Growth
4. Core Deposit / Household Growth Priorities: Core Deposit/ Household Growth 18
Slide 19: Top County Market Share
Counties ranked #1 in deposit market share Lebanon, PA (Fulton Bank, N.A. 31.3%) Salem, NJ (Fulton Bank of New Jersey 26.0%) Counties ranked #2 in deposit market share Snyder, PA (Swineford National Bank 27.0%) Montour, PA (FNB Bank, N.A. 26.4%) Lancaster, PA (Fulton Bank, N.A. 23.7%)
Slide 20: Top County Market Share (con't)
Counties ranked #4 in deposit market share York, PA (Fulton Bank, N.A. 10.2%) Howard, MD (The Columbia Bank 9.4%) Union, PA (Fulton Bank, N.A. 7.2%) Counties ranked #5 in deposit market share Warren, NJ (Fulton Bank of New Jersey 9.4%) Columbia, PA (Fulton Bank, N.A. 4.2%) Sussex, DE
Slide 21: Deposit Composition
16% 15% 11% 8% 50% Q2 2009 Non-Int DDA Int DDA Money Mkt Savings Time Deposit Composition 21 26% 23% 17% 10% 24% Q3 2013 Non-Int DDA Int DDA Money Mkt Savings Time Note: Deposit composition is based on quarterly average balances for the periods indicated.
Slide 22: Average Deposits
Average Deposits Q3 2013 Q2 2013 $ % Non-Int DDA 3,221$ 3,117$ 104$ 3% Int DDA 2,895 2,719 176 6% Savings/MMDA 3,360 3,351 9 0% Total Core Deposits 9,477 9,187 290 3% CD's 3,065 3,169 (104) -3% Cash Management 288 287 1 0% Total Deposits 12,830$ 12,643$ 187$ 1% Change (dollars in millions) 22
Slide 23: Overall Customer Satisfaction Score
86.10% 83.80% 75.00% 80.00% 85.00% 90.00% 2013 (2) 2012 (3) Overall Customer Satisfaction Score (1) 23 (1) Annual retail customer satisfaction surveys conducted by Fulton’s internal Marketing Research Group. Areas covered: Overall Customer Satisfaction and likelihood to recommend the bank; Customer
Slide 24: Priorities: Margin
5. Spread Management / Net Interest Margin Q3 2013 Net Interest Margin (fully-taxable equivalent): 3.45% Yield on average interest-earning assets: 3.96% Cost of average interest-bearing liabilities: 0.70% Priorities: Margin 24
Slide 25: Net Interest Margin (Quarterly)
3.45% 3.41% 3.28% 3.00% 3.25% 3.50% 3.75% 4.00% Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 FULT Peer Top 50* Net Interest Margin (Quarterly) 25 Note: Fully-taxable equivalent * Comprised of the 50 largest publicly traded domestic banks/thr
Slide 26: Interest Rate Shocks
Interest Rate Shocks (9/30/13) 26 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 earnings i
Slide 27: Priorities: ROA and ROE
6. ROA Q3 2013: 0.93% Q2 2013: 0.97% Priorities: ROA and ROE 27 7. ROE (Tangible) (1) Q3 2013: 10.69% Q2 2013: 10.75% Note: ROA is return an average assets determined by dividing net income for the period indicated by average assets (1) Non-GAAP based financial measure. Please refer to the calculati
Slide 28: Return on Average Assets by Bank
Return on Average Assets and Average Assets, by Bank 28 Nine Mos Ended Sept 30, 3013 Return on Average Assets* Average Assets ($ Millions) Sept 30, 3013 Sept 30, 3012 Lafayette Ambassador Bank 1,410$ 1.27% 1.56% Fulton Bank, NA 9,393$ 1.13% 1.29% FNB Ban , NA 355$ 0.93% 1.24% The Columbia Bank 1,983
Slide 29: Total Risk-Based Capital Ratio
Total Risk-Based Capital Ratio 29 11.0% 12.0% 13.0% 14.0% 15.0% 16.0% Dec 31, 2003 Dec 31, 2004 Dec 31, 2005 Dec 31, 2006 Dec 31, 2007 Dec 31, 2008 Dec 31, 2009 Dec 31, 2010 Dec 31, 2011 Dec 31, 2012 Sep 30, 2013 12.7% 11.8% 12.1% 11.7% 11.9% 14.3% 14.7% 14.2% 15.2% 15.6% 14.7%
Slide 30: Capital Adequacy
Capital Adequacy (9/30/13) (1) Estimates – based on final rules. Application of the Basel III rules are also subject to further interpretation, which could result in changes to the estimates shown above. (2) Fully-phased in requirements, with 2.50% conservation buffer. Well- Well- FULT Capitalized F
Slide 31: Tangible Book Value Per Share
$0.00 $2.00 $4.00 $6.00 $8.00 Sep 30, 2010 Dec 31, 2010 Mar 31, 2011 Jun 30, 2011 Sep 30, 2011 Dec 31, 2011 Mar 31, 2012 Jun 30, 2012 Sep 30, 2012 Dec 31, 2012 Mar 31, 2013 Jun 30, 2013 Sep 30, 2013 6.67 6.69 6.84 7.06 7.20 7.24 7.38 7.46 7.63 7.76 7.82 7.72 7.77 Tangible Book Value Per Share (1) 31
Slide 32: Price to Tangible Book Value
1.50 1.76 0.00 0.50 1.00 1.50 2.00 M u lt ip le o f T a n g ib le B o o k V al u e Price to Tangible Book Value (1) FULT Peer Group Median Price Multiple vs. Peer Group 32 Notes: Peer Tangible Book Value as of 9/30/2013. Source: SNL Financial LC FULT Tangible Book Value as of 9/30/2013. (1) Non-GAAP
Slide 33: Price-to-LTM EPS
14.24 16.24 0.00 4.00 8.00 12.00 16.00 20.00 M u lt ip le o f L ast 12 M o n th s o f EP S Price-to-LTM EPS (1) FULT Peer Group Median Price Multiple vs. Peer Group 33 Notes: Peer Price-to-last twelve months EPS as of 9/30/2013. Source: SNL Financial LC FULT Price-to-last twelve months EPS as of 9/3
Slide 34: Cash Dividend and Yield
0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 3.50% $0.00 $0.01 $0.02 $0.03 $0.04 $0.05 $0.06 $0.07 $0.08 $0.09 Q3 2009 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Cash Dividend Yield FULT – Cash Dividend and Yield (1) 3
Slide 35: Stock Repurchase Programs
Stock Repurchase Programs 35 January 2013 October 2013 Program Program Authorized Shares to Repurchase 8.0 million 4.0 million % of Outstanding Shares 4.0% 2.1% Shares Repurchased* 8.0 million 0.0 million Remaining Shares available to repurchase as of September 30, 2013 - 4.0 million Average Purchas
Slide 36: Priorities: Expense Management
8. Expense Management Priorities: Expense Management 36
Slide 37: Non-Interest Expenses
Non-Interest Expenses Q3 2013 Q2 2013 $ % Salaries & Benefits 63,344$ 63,490$ (146)$ 0% Occupancy & Equip. 15,165 15,340 (175) -1% Data Proc. & Software 8,025 7,603 422 6% Outside Services 5,048 5,315 (267) -5% Professional Fees 3,329 3,395 (66) -2% Operating Risk Loss 3,297 1,860 1,437 77% FDIC Ins
Slide 38: Efficiency Ratio
62.8% 64.8% 64.0% 50.0% 52.0% 54.0% 56.0% 58.0% 60.0% 62.0% 64.0% 66.0% 2007 2008 2009 2010 2011 2012 YTD 6/30 YTD 9/30 FULT Peer Top 50* Efficiency Ratio (1) 38 (1) Non-GAAP based financial measure. Please refer to the calculation and management’s reasons for using this measure on the slide titled
Slide 39: Enhance Compliance & Risk Management Infrastructure
9. Enhance Compliance & Risk Management Infrastructure Financial reform legislation and a measureable increase in the scope and intensity of examinations of financial institutions. Considerable resources have been invested in building out our risk management, compliance and technology infrastruc
Slide 40: Supplemental Information
Supplemental Information FULTON FINANCIAL CORPORATION
Slide 41: Non-Interest Income
Non-Interest Income (in millions) 41 $- $40 $80 $120 $160 $200 $240 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 YTD Sep 30 YTD Dec 31 (2) CAGR (1) = 7.2% (1) Compounded annual growth rate from year-ended December 31, 2003 to year-ended December 31, 2012. (2) Excludes $6.2 million gain on
Slide 42: Non-Interest Income by Category
Non-Interest Income 42 Q3 2013 Q2 2013 $ % (dollars in thousands) Invt Mgt & Trust 10,420$ 10,601$ (181) -2% Overdraft & NSF Fees 7,191 7,624 (433) -6% Mort. Banking Income 7,123 10,997 (3,874) -35% Service Charges 3,746 4,057 (311) -8% Merchant Fees 3,397 3,600 (203) -6% Cash Mgt Fees 3,001 2,970 3
Slide 43: Interest Rates
Q3 2013 Q2 2013 Change % Net Interest Margin (1) 3.45% 3.52% -0.07% -2% Yield on Average Earning Assets 3.96% 4.07% -0.11% -3% Cost of Funds 0.55% 0.58% -0.03% -5% Fed Funds 0.25% 0.25% - - Interest Rates 43 (1) Fully-taxable equivalent
Slide 44: Net Charge-offs (Recoveries)
Net Charge-offs (Recoveries) (YTD September 2013) Comm'l Comm'l Mortgage Constr. Res. Mtg. Other Total (in thousands) Pennsylvania 13,863$ 4,127$ 1,532$ 2,220$ 3,882$ 25,624$ Maryland 1,034 (449) 333 568 1,925 3,411 New Jersey 6,261 6,973 1,488 2,405 1,399 18,526 Virginia 297 (138) 43 2,251 211 2,66
Slide 45: Net Charge-Offs To Average Loans
0.54% 0.27% 0.31% 0.00% 0.50% 1.00% 1.50% 2007 2008 2009 2010 2011 2012 YTD 06/30 (1) YTD 09/30 FULT Peer Top 50* (1) Net Charge-Offs To Average Loans 45 * Comprised of the 50 largest publicly traded domestic banks/thrifts in assets size as of December 31,2012. Excludes credit card companies. Source
Slide 46: Ending Loan Distribution by State
Ending Loan Distribution by State (9/30/13) September 30, % of June 30, Variance to 6/30/13 2013 Total 2013 $ % Pennsylvania 7,570,541$ 59.2% 7,579,143$ (8,602)$ 0% New Jersey 2,418,987 18.9% 2,350,924 68,063 3% Maryland 1,328,401 10.4% 1,250,429 77,972 6% Virginia 991,847 7.8% 1,021,673 (29,826) -3
Slide 47: Residential Mortgages
Residential Mortgages (9/30/13) Ending % of NPL Allowance Balance Total Balance (1) Allocations (2) (dollars in thousands) Pennsylvania 674,154$ 50.8% 11,027$ 9,502$ Virginia 246,036 18.5% 7,872 12,093 New Jersey 168,939 12.7% 10,423 6,602 Maryland 157,324 11.9% 2,556 3,321 Delaware 81,016 6.1% 2,43
Slide 48: Fulton Mortgage Company
Fulton Mortgage Company New applications received during Q3 2013 were $418 million compared to $678 million during Q2 2013 Pipeline* $201 million at September 30, 2013 vs. $368 million at June 30, 2013 The approved loan pipeline at the end of Q3 2013 was $89 million Percentage of the pipelin
Slide 49: Commercial Loans
Commercial Loans (9/30/13) Ending % of NPL Allowance Balance Total Balance (1) Allocations (2) (dollars in thousands) Pennsylvania 2,621,740$ 71.9% 30,646$ 25,349$ New Jersey 521,643 14.3% 8,831 18,689 Maryland 285,943 7.9% 3,297 4,446 Virginia 152,533 4.2% 2,211 2,353 Delaware 63,411 1.7% 199 1,058
Slide 50: Commercial Mortgages
Commercial Mortgages (9/30/13) Ending % of NPL Allowance Balance Total Balance (1) Allocations (2) (dollars in thousands) Pennsylvania 2,613,658$ 51.6% 16,613$ 21,562$ New Jersey 1,283,224 25.3% 19,927 26,659 Maryland 550,025 10.9% 1,162 3,960 Virginia 422,683 8.3% 3,254 3,169 Delaware 193,783 3.8%
Slide 51: Construction Loans
Construction Loans (9/30/13) Ending % of NPL Allowance Balance Total Balance (1) Allocations (2) (dollars in thousands) Pennsylvania 311,954$ 54.0% 13,246$ 4,767$ Virginia 97,426 16.9% 620 1,426 New Jersey 83,193 14.4% 4,749 3,210 Maryland 55,141 9.6% 5,781 2,687 Delaware 29,628 5.1% - 941 577,342$
Slide 52: Accruing Troubled Debt Restructurings
Accruing Troubled Debt Restructurings September 30, 2013 June 30, 2013 $ % Residential mortgage 27,820$ 28,948$ (1,128)$ -4% Commercial mortgage 22,644 24,828 (2,184) -9% Construction 9,841 10,599 (758) -7% Commercial 8,184 8,394 (210) -3% Consumer and other 1,678 1,562 116 7% 70,167$ 74,331$ (4,164
Slide 53: Investment Portfolio
Investment Portfolio (9/30/13) WEIGHTED AVG. ENDING REMAINING BALANCE LIFE (in millions) (in years) Agency collateralized mortgage obligations 1,113.8$ 3.75 Agency mortgage-backed securities 909.5 4.11 Municipal bonds 288.7 5.65 Auction rate securities 172.1 3.88 Corporate & trust preferred securiti
Slide 54: Projected Investment Security Cash Flows
Projected Investment Security Cash Flows 54 $112 $91 $99 $92 2.34% 2.63% 2.43% 2.55% 2.25% 2.45% 2.65% 2.85% 3.05% 3.25% $0 $50 $100 $150 $200 4Q2013 1Q2014 2Q2014 3Q2014 Cash Fl o w Y ields (2 ) In v est m e n t Cash Fl o w s (1 ) (in m il lion s ) Investment Cash Flows Cash Flow Yields (1) Investm
Slide 55: Investment MBS & CMO Cash Flows
Investment MBS & CMO Cash Flows (2012-2013) 55 $179,433,591 $198,017,854 $179,098,681 $156,740,334 $127,251,195 $4,591,601 $4,739,834 $4,133,244 $3,310,745 $2,953,068 $0 $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 $7,000,000 $8,000,000 $0 $20,000,000 $40,000,000 $60,000,000 $80
Slide 56: Investment Portfolio – Transactions
Investment Portfolio – Transactions (3rd Quarter 2013) Principal Value (in thousands) Yield to Maturity (1) Wtd Avg Life (in years) MBS 18,053$ 2.62% 4.94 Municipal - Bond Anticipation Notes 5,425 1.50% 0.59 Municipal 6,994 5.42% 4.36 30,472$ 3.06% 4.03 Principal Value (in thousands) Book Yield (2)
Slide 57: Non-GAAP Reconciliation
Non-GAAP Reconciliation 57 YT D Sept 30, 2013 2012 2011 2010 2009 2008 2007 Eff iciency rat io Non-interest expense 344,671$ 449,506$ 416,476$ 408,325$ 415,537$ 408,787$ 407,125$ Less: Intangible amortization (1,603) (3,031) (4,257) (5,240) (5,747) (7,162) (8,334) Numerator 343,068$ 446,475$ 412,219
Slide 58: Non-GAAP Reconciliation (con't)
Non-GAAP Reconciliation (con’t) 58 Q3 Q2 Sep 30, Jun 30, 2013 2013 R eturn o n average shareho lders' equity ( tangible) Net income 39,948$ 40,852$ P lus: Intangible amortization, net of tax 347 348 Net income, less intangible amortization, net of tax (numerator) 40,295$ 40,930$ Average shareholders
Slide 59: Non-GAAP Reconciliation (con't)
Non-GAAP Reconciliation (con’t) 59 Tang ib le B ook V alue Per Share Sept 3 0 , Jun 3 0 , D ec 3 1, Sep 3 0 , Jun 3 0 , M ar 3 1, 2 0 13 2 0 13 2 0 12 2 0 12 2 0 12 2 0 12 Common shareholders' equity 2,028,964$ 2,028,733$ 2,081,656$ 2,060,683$ 2,041,184$ 2,022,863$ Less: Goodwill and intangible asse
Slide 60: Non-GAAP Reconciliation (con't)
Non-GAAP Reconciliation (con’t) 60 Price-to-Tangible Book Value Per Share Sept 30, 2013 Closing Price of FULT on Sept 30, 2013 (numerator) 11.68$ Shareholders' equity (tangible), per share (denominator) 7.77$ Price-to-Tangible Book Value Per Share 1.50 % Price-to-Last Twelve Months (LTM) EPS Sept 30
Slide 61: Fulton Financial Corporation
Fulton Financial Corporation One Penn Square Lancaster, PA 17602 www.fult.com Version 2013-11-01
Fulton Financial — Investor Presentation (November 2013) on 6ix