Fulton Financial Corporation · NASDAQ:FULT
Fulton Financial — Investor Presentation (September 2019)
39 slides from Fulton Financial's investor presentation, Sep 3, 2019
Slide 1: Investor Presentation
INVESTOR PRESENTATION z Data as of June 30, 2019 - Unless otherwise noted
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation may contain forward-looking statements with respect to the 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 "m
Slide 3: Why Fulton?
Why Fulton? . Deep Executive Bench with Continuity . Valuable Franchise in Attractive Markets . Investing in People to Drive Growth . Relationship Banking Strategy Focused on the Customer Experience . Granular, Well-Diversified Loan Portfolio . Attractive, Low-Cost Core Deposit Profile . Solid Asset
Slide 4: Deep Executive Bench With Continuity
Deep Executive Bench With Continuity Years in Financial Prior Name Position Years at Fulton Services Experience Phil Wenger Chairman/CEO 40 40 Various roles since joining in 1979 Curt Myers President/COO 29 29 Various roles since joining in 1990 PwC, Banking and Investment Banking; Joined Mark McCol
Slide 5: A Valuable Franchise
A Valuable Franchise . ~230 financial centers throughout the Mid-Atlantic . Asset size of $21.3 billion . 3,600+ team members (3,500 FTEs (1)) . Market capitalization of $2.7 billion (2) . Opportunity to meaningfully grow our market share(3) o ~16% deposit market share across the 15 counties where w
Slide 6: Strong Position In Attractive & Stable Markets
Strong Position In Attractive & Stable Markets Fulton Fulton Financial Fulton Financial Market Median Projected Fulton Financial Market Total Projected Financial Corporation Corporation Total Market Total Household Market Metropolitan Statistical Area (MSA) Corporation Total Active Branches Househol
Slide 7: Investing In People To Drive Growth
Investing In People To Drive Growth Commentary Revenue Producers . Renewed focus on front line hiring after years of building out the compliance and risk management areas 300 . Market disruption creates hiring opportunities 250 97 100 o Replace lower performing commercial relationship 97 managers wi
Slide 8: Extending Footprint Into Fast Growing Urban Markets
Extending Footprint Into Fast Growing Urban Markets Philadelphia, PA County Deposit Market Share – Top 20 Commentary Total Deposit Total Deposit Regulatory Total Active Total Deposits 2018 Parent Company Name Market Share Rank 2018 Industry Branches 2018 ($000) . Philadelphia is a natural extension
Slide 9: Strategic Initiatives Support Our Relationship Banking Strategy
Strategic Initiatives Support Our Relationship Banking Strategy Purpose We Change Lives for the Better OPERATIONAL EXCELLENCE GROWTH STRATEGIES Strategic Filter • Advancing business line structure Outcomes • Investing in talent for growth and charter consolidation. in targeted markets and • Focus on
Slide 10: Significant Investments To Enhance Digital Capabilities
Fulton Has Made Significant Investments To Enhance Its Digital Capabilities Commercial Online Commercial Loan NewNew Website Website PurchaseBanking Platform Origination System 2017 2017 2019 fultonbank.com . Personalizes experience . Best-in-class online platform for . Streamlines commercial . Prov
Slide 11: Website Recently Recognized As An Innovation Leader
Website Recently Recognized As An Innovation Leader Our redesigned customer website allows users to have a cohesive and personalized experience as they explore all of our products, services and capabilities in one place . Leverages data and customer insights to deliver personalized content to custom
Slide 12: Optimizing Our Branch Network
Optimizing Our Branch Network Optimizing our financial center network will: . Move us towards multiple financial center types vs. a one-size-fits-all model . Give us greater ability to re-invest in people & digital transactions . Orient the financial center as a primary touchpoint enabling higher- v
Slide 13: Granular, Well-Diversified Loan Portfolio
Granular, Well-Diversified Loan Portfolio . Average Loans for the six months ended June 30, 2019 are up 3.8% compared to 2018 . Yields continue to move higher after several years of declines $16.3 $16.0 $15.8 4.70% $15.2 $0.8 4.67% $0.6 $0.5 $0.9 $14.1 $1.0 $14.0 $0.9 4.50% $13.3 $0.4 $0.8 $2.0 $2.3
Slide 14: Attractive, Low-Cost Core Deposit Profile
Attractive, Low-Cost Core Deposit Profile . Steady growth in core deposits . Average Deposits for the six months ended June 30, 2019 are up 3.8% compared to 2018 $18.0 0.80% 0.77% $15.8 $16.3 $16.0 $15.5 $1.5 0.70% $14.6 $- $ $13.7 $1.4 $1.5 $14.0 $- $1.4 $- 0.60% $1.3 $3.0 $3.4 $3.0 $12.0 $2.7 0.55
Slide 15: Solid Asset Quality And Reserves
Solid Asset Quality And Reserves Commentary Non-Performing Loans (NPLs) & Allowance/Loans . Overall asset quality continues to be stable, despite a loss from a single, large commercial lending relationship due $144.8 $147.7 1.75% to internal fraud at the borrower in 2Q18 and a single, $150.0 $139.7
Slide 16: Prudent Expense Management With Opportunities To Improve
Prudent Expense Management With Opportunities To Improve Commentary Efficiency Ratio (FTE) 71.00% . Low rate environment and continued buildout of our 69.00% compliance, risk and technology infrastructures were the 67.00% 65.00% primary drivers of the increase in the efficiency ratio in 63.00% 2015
Slide 17: Excess Capital To Deploy
Excess Capital To Deploy Commentary Fulton 2Q19 Capital Ratios . Capital ratios exceed our internal minimums and regulatory 14.00% 12.4% 12.00% requirements 10.0% 10.0% 10.00% 8.7% o Opportunity exists to optimize the capital stack 8.5% 8.00% . Quarterly cash dividend increased to $0.13 per share in
Slide 18: Recent Financial Performance
RECENT FINANCIAL PERFORMANCE
Slide 19: Second Quarter Results
Second Quarter Results Net Income per diluted share: $0.35 in 2Q19, 6.1% increase from 1Q19 and 75.0% increase from 2Q18 Pre-Provision Net Revenue(1): $76.1 million, 3.2% increase from 1Q19 and 3.6% increase from 2Q18 Linked Quarter Loan and Core Deposit Growth: 0.8% increase in average loans, while
Slide 20: Income Statement Summary
Income Statement Summary Net Income of $59.8 million, 5.5% increase from 1Q19 and 69.8% increase from 2Q18. Increase from 2Q18 largely due to $36.8 million Change from provision for credit loss that was recorded in 2Q18. 2Q19 1Q19 2Q18 (dollars in thousands, except per-share data) Net Interest Inc
Slide 21: Net Interest Income And Margin
Net Interest Income And Margin AVERAGE INTEREST-EARNING ASSETS & YIELDS ($ IN BILLIONS) NET INTEREST INCOME & NET INTEREST MARGIN $20.0 $16.0 $16.2 $16.3 5.00% ($ IN MILLIONS) $15.8 $15.9 4.75% $15.0 4.37% $180.0 4.00% 4.35% 4.50% 4.22% 4.13% $165.0 $10.0 4.04% 4.25% 3.75% $150.0 4.00% $5.0 ~ $730 $
Slide 22: Asset Quality
Asset Quality PROVISION FOR CREDIT LOSSES NON-PERFORMING LOANS (NPLS) & NPLS TO LOANS ($ IN MILLIONS) $160.0 $147.7 2.00% $40.0 $139.7 $138.7 $33.1 $123.7 $120.1 $120.0 1.50% $30.0 $80.0 1.00% $20.0 0.86% 0.85% 0.90% $40.0 0.78% 0.75% 0.50% $10.0 $8.2 $5.1 $5.0 $1.6 $0.0 0.00% $- 2Q18 3Q18 4Q18 1Q19
Slide 23: Non-Interest Income
Non-Interest Income ($ IN MILLIONS) MORTGAGE BANKING INCOME & SPREADS NON-INTEREST INCOME, EXCLUDING SECURITIES GAINS $7.0 $6.6 4.00% $6.0 3.50% $60.0 $5.2 $5.0 $4.9 $4.8 $4.8 3.00% 2.50% $54.1 $4.0 2.00% $51.0 $3.0 $49.1 $49.5 1.50% $50.0 $2.0 1.56% 1.48% $46.7 1.30% 1.38% 1.34% 1.00% $1.0 0.50% ~
Slide 24: Non-Interest Expense
Non-Interest Expense ($ IN MILLIONS) SALARIES AND EMPLOYEE BENEFITS & STAFFING (1) NON-INTEREST EXPENSE & EFFICIENCY RATIO $90.0 3,700 $80.0 $74.9 $76.8 $75.7 $77.8 $79.0 3,600 $160.0 68.0% $70.0 3,580 3,500 $60.0 $144.2 3,500 $140.7 $50.0 3,400 $137.8 $140.0 $133.3 $135.4 67.0% $40.0 3,300 $30.0 3,
Slide 25: Profitability & Capital
Profitability & Capital ROA(1) ROE AND ROE (TANGIBLE)(2) 1.40% 1.28% 16.00% 14.99% 1.12% 13.28% 13.60% 1.20% 1.11% 1.14% 13.17% 11.48% 1.00% 12.00% 10.10% 10.15% 10.42% 8.23% 0.80% 0.70% 8.00% 6.28% 0.60% 4.00% 0.40% 0.20% 0.00% 2Q18 3Q18 4Q18 1Q19 2Q19 0.00% 2Q18 3Q18 4Q18 1Q19 2Q19 ROE ROE (tangib
Slide 26: 2019 Outlook
2019 Outlook • Changes from the outlook as of the end of the first quarter of 2019 have been underlined. • Loans & Deposits: Average annual loan and deposit growth rates in the low to mid single-digits • Net Interest Income: Mid single-digit growth rate • Net Interest Margin: An increase of 2 to 5 b
Slide 27: Appendix
APPENDIX
Slide 28: Average Loan Portfolio And Yields
Average Loan Portfolio And Yields Change in 2Q 2019 Balance From Yield From Balance Yield 1Q 2019 2Q 2018 1Q 2019 2Q 2018 (dollars in millions) Comm'l Mort $ 6,424 4.67% $ 46 $ 125 (0.02%) 0.33% Commercial 4,441 4.73% (22) 106 0.07% 0.46% Resid Mort 2,367 4.09% 90 341 0.03% 0.20% Home Equity 1,404 5
Slide 29: Average Customer Funding And Rates
Average Customer Funding And Rates Change In 2Q 2019 Balance From Rate From Balance Rate 1Q 2019 2Q 2018 1Q 2019 2Q 2018 (dollars in millions) Nonint DDA $ 4,201 - % $ (22) $ (81) - % - % Int DDA 4,186 0.78% 32 234 0.05% 0.28% Savings/MMDA 4,926 0.86% 13 388 0.04% 0.37% Brokered Deposits 246 2.58% 2
Slide 30: Loan Distribution By State
Loan Distribution By State Comm'l Consumer Comm'l Mortgage Constr. Res. Mtg. & Other Total (in thousands) Pennsylvania $ 3,142,225 $ 3,354,562 $ 480,488 $ 832,262 1,312,054 $ 9,121,591 New Jersey 561,614 1,290,725 132,409 350,952 389,347 2,725,047 Maryland 372,608 837,974 114,435 492,586 267,496 2,0
Slide 31: Non-performing Loans
Non-performing Loans(1) Comm'l Consumer Ending Loans NPLs/Loans Comm'l Mortgage Constr. Res. Mtg. & Other Total NPLs by State by State (dollars in thousands) Pennsylvania $ 29,479 $ 36,465 $ 2,849 $ 13,334 $ 19,096 $ 101,223 $ 11,846,638 0.85% Maryland 15,032 1,460 - 986 10,111 27,589 2,085,099 1.32
Slide 32: Net Charge-offs (Recoveries)
Net Charge-offs (Recoveries) Annualized Net Charge-Offs Comm'l Consumer Average Loans (Receoveries) to Comm'l Mortgage Constr. Res. Mtg. & Other Total by State Average Loans (dollars in thousands) Pennsylvania $ (858) $ 106 $ (1,199) $ 3 $ 356 $ (1,592) $ 9,110,764 (0.07%) New Jersey - - - - - - 2,7
Slide 33: Investment Portfolio
Investment Portfolio Weighted Avg. Remaining Life Amortized Unrealized Estimated (in years) Cost Gain (Loss) Fair Value (dollars in millions) Residential mortgage-backed securities 5.1 $ 332 $ (3) $ 329 Collateralized mortgage obligations 3.2 889 10 899 State and municipal securities 8.1 308 8 316 C
Slide 34: Non-Interest Income
Non-Interest Income(1) Change From 2Q 2019 1Q 2019 2Q 2018 1Q 2019 2Q 2018 (in thousands) Wealth management income $ 14,153 $ 13,239 $ 12,803 $ 914 $ 1,350 Commercial banking income: Merchant and card income 6,512 5,558 6,155 $ 954 $ 357 Cash management fees 4,638 4,361 4,452 277 186 Commercial loan
Slide 35: Non-Interest Expense
Non-Interest Expense Change From 2Q 2019 1Q 2019 2Q 2018 1Q 2019 2Q 2018 (in thousands) Salaries and employee benefits $ 78,991 $ 77,757 $ 74,919 $ 1,234 $ 4,072 Net occupancy expense 14,469 12,909 12,760 1,560 1,709 Data processing and software 11,268 10,353 10,453 915 815 Other outside services 11
Slide 36: Non-GAAP Reconciliation
Non-GAAP Reconciliation Three Months Ended Jun 30 Sep 30 Dec 31 Mar 31 Jun 30 2018 2018 2018 2019 2019 Note: The Corporation has presented the Efficiency ratio following non-GAAP (Generally Accepted Non-interest expense $ 133,345 $ 135,413 $ 140,685 $ 137,824 $ 144,168 Accounting Principles) financi
Slide 37: Non-GAAP Reconciliation
Non-GAAP Reconciliation Jun 30 Sep 30 Dec 31 Mar 31 Jun 30 2018 2018 2018 2019 2019 Tangible Common Equity to Tangible Assets (TCE Ratio) (dollars in thousands) Shareholders' equity $ 2,245,785 $ 2,283,014 $ 2,247,573 $ 2,301,019 $ 2,308,798 Less: Intangible assets (531,556) (531,556) (531,556) (535
Slide 38: Peer Group
Peer Group . BancorpSouth Bank . TCF Financial Corporation . Commerce Bancshares, Inc. . Trustmark Corporation . First Midwest Bancorp, Inc. . UMB Financial Corporation . F.N.B. Corporation . Umpqua Holdings Corporation . Hancock Whitney Corporation . Union Bankshares Corporation . IBERIABANK Corpor
Slide 39: Fulton Financial Corporation
FULTON FINANCIAL CORPORATION www.fult.com CORPORATION:
Fulton Financial — Investor Presentation (September 2019) on 6ix