Fulton Financial Corporation · NASDAQ:FULT
Fulton Financial — Shareholder Meeting (May 2014)
83 slides from Fulton Financial's shareholder meeting presentation, May 8, 2014
Slide 1: May 8, 2014 Annual Shareholders' Meeting
May 8, 2014 Annual Shareholders’ Meeting 1
Slide 2: Reminder to vote your shares
2 REMINDER: If you have not yet voted your shares, please do so now by visiting the Judge of Election table at the side of the room.
Slide 3: Forward-Looking Statement
• Please remember that during today’s program, representatives of Fulton may make forward-looking statements regarding Fulton’s financial condition, results of operations and business. • These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties
Slide 4: Rules of Conduct
4 • Cameras, recording devices and cell phones are not permitted to be used in the meeting. • The display of placards and/or signs is prohibited. • Questions from shareholders should be directed to the Chairperson of the meeting during the Question and Answer (Q&A) period. • During the Q&A period, p
Slide 5: Welcome and Opening Remarks
5 Welcome and Opening Remarks Phil Wenger Chairman, President and CEO
Slide 6: Today's Agenda
6 • Business Meeting • Proposals: • Election of Directors • Say on Pay • Approval of the amended and restated Employee Stock Purchase Plan • Ratification of appointment of independent auditor • Introductions • Results of Voting • Conclusion of Business Meeting • Management Presentation • Question an
Slide 7: Board of Directors
Board of Directors 7
Slide 8: Board of Directors: John M. Bond, Jr.
8 Board of Directors John M. Bond, Jr.
Slide 9: Board of Directors: Craig A. Dally
9 Board of Directors Craig A. Dally
Slide 10: Board of Directors: Denise L. Devine
10 Board of Directors Denise L. Devine
Slide 11: Board of Directors: Patrick J. Freer
11 Board of Directors Patrick J. Freer
Slide 12: Board of Directors: George W. Hodges
12 Board of Directors George W. Hodges
Slide 13: Board of Directors: Albert Morrison III
13 Board of Directors Albert Morrison III
Slide 14: Board of Directors: R. Scott Smith, Jr.
14 Board of Directors R. Scott Smith, Jr.
Slide 15: Board of Directors: Gary A. Stewart
15 Board of Directors Gary A. Stewart
Slide 16: Board of Directors: Ernest J. Waters
16 Board of Directors Ernest J. Waters
Slide 17: Recognition of Retiring Director
17 Recognition of Retiring Director
Slide 18: Retiring Director Joe N. Ballard
18 Retiring Director Joe N. Ballard
Slide 19: Senior Management
Z } | Senior Management
Slide 20: Senior Management: Pat Barrett
20 Senior Management Pat Barrett
Slide 21: Senior Management: Jim Shreiner
21 Senior Management Jim Shreiner
Slide 22: Senior Management: Craig Hill
22 Senior Management Craig Hill
Slide 23: Senior Management: Craig Roda
23 Senior Management Craig Roda
Slide 24: Senior Management: Phil Rohrbaugh
24 Senior Management Phil Rohrbaugh
Slide 25: Senior Management: Meg Mueller
25 Senior Management Meg Mueller
Slide 26: Senior Management: Curt Myers
26 Senior Management Curt Myers
Slide 27: Senior Management: Angie Sargent
27 Senior Management Angie Sargent
Slide 28: Community Banking Leadership
28 Community Banking Leadership
Slide 29: Community Banking Leadership: Gerry Nau
29 Community Banking Leadership Gerry Nau North central and Northeastern Pennsylvania
Slide 30: Community Banking Leadership: Jeff Rush
30 Community Banking Leadership Jeff Rush South central and Southeastern Pennsylvania
Slide 31: Community Banking Leadership: John Scaldara
31 Community Banking Leadership John Scaldara Maryland and Virginia
Slide 32: Community Banking Leadership: Angela Snyder
32 Community Banking Leadership Angela Snyder New Jersey and Delaware
Slide 33: Jill Carson, Fulton Mortgage Company
33 Jill Carson Fulton Mortgage Company
Slide 34: Dave Hanson, Fulton Financial Advisors
34 Dave Hanson Fulton Financial Advisors/ Clermont Wealth Strategies
Slide 35: Report of the Judge of Elections
35 Report of the Judge of Elections
Slide 36: May 8, 2014 Annual Shareholders' Meeting
May 8, 2014 Annual Shareholders’ Meeting 36
Slide 37: A Look Back and a Look Ahead
37 Phil Wenger Chairman, President and CEO A Look Back and a Look Ahead
Slide 38: A Valuable Franchise
A Valuable Franchise @ The Columbia Bank @ FNB Bank,N.A. @ Fulton Bank,N.A. I Fulton Bank of New Jersey i Lafayette Ambassador Bank B Swineford National Bank
Slide 39: Basic Facts (at 3/31/14)
39 • Banking offices: 253 • Asset size: $16.9 billion • Team members: 3,800 •Shares outstanding: 188.9 million •Market capitalization: $2.4 billion •Book value per share: $10.90 • Tangible book value per share*: $8.08 Basic Facts (at 3/31/14) *Non-GAAP based financial measure. For a reconciliation t
Slide 40: Our Foundation: Vision and Mission
40 Vision: • We will be a high-performing, Mid-Atlantic regional financial services company whose team members deliver compliant products and services through relationship-based banking more effectively than our competitors, enabling us to sustain a long-term competitive advantage. Mission: • By car
Slide 41: Financial Performance
Z } | Financial Performance 41
Slide 42: 2013 Highlights
42 • Improved financial performance • Strongest overall asset quality metrics since late 2007 • Added capabilities due to investments in technology •More regulatory, risk management and compliance expertise • Deeper expertise on FFC’s senior management team 2013 Highlights
Slide 43: Diluted Earnings Per Share
43 • 83 cents for the year ended December 31, 2013 • 3.8% increase from 2012 • 22 cents for the 4th quarter of 2013 • 4.8% increase from the 3rd quarter of 2013 • 10.0% increase from the 4th quarter of 2012 Diluted Earnings Per Share
Slide 44: Diluted Earnings Per Share (quarterly)
44 Diluted Earnings Per Share (quarterly) $0.00 $0.05 $0.10 $0.15 $0.20 $0.25 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 Q4 2013 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 0.22
Slide 45: Returns on Assets and Equity
45 Return on Equity (ROE) (Tangible)* • 4th quarter 2013: 11.15% • 3rd quarter 2013: 10.69% • 4th quarter 2012: 10.53% Return on Assets (ROA) • 4th quarter 2013: 0.99% • 3rd quarter 2013: 0.93% • 4th quarter 2012: 0.99% Returns on Assets and Equity Note: ROA is return an average assets determined by
Slide 46: Loan Growth
46 For the year ended December 31, 2013: • Average loans increased $610 million, or 5.1%, over 2012 For the 4th quarter 2013: • Average loans up 6.6% over 4th quarter 2012 Loan Growth
Slide 47: Average Loan Growth
47 Average Loan Growth 5.1% 8.9% 4.8% -1.0% 2.0% 5.0% 8.0% 2008 2009 2010 2011 2012 2013 FULT Peer (1) Top 50 (2) Note: 2008 through 2013 represents December year-over-year change in average loans. (1) “Peer” represents the median of a peer group selected by Fulton. Peer group members are listed at
Slide 48: Non-accrual Loans to Total Loans
48 Non-accrual Loans to Total Loans 1.05% 0.78% 0.81% 0.00% 1.00% 2.00% 3.00% Dec 31, 2008 Dec 31, 2009 Dec 31, 2010 Dec 31, 2011 Dec 31, 2012 Dec 31, 2013 FULT Peer(1) Top 50(2) (1) “Peer” represents the median of a peer group selected by Fulton. Peer group members are listed at the end of this pre
Slide 49: Provision for Credit Losses
49 Provision for Credit Losses $0 $10 $20 $30 $40 $50 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 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 2.5 Quarterly, in millions of dollars
Slide 50: Net Interest Margin (Quarterly)
3.48% 3.48% 3.26% 3.00% 3.25% 3.50% 3.75% 4.00% 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 FULT Peer (1) Top 50 (2) Net Interest Margin (Quarterly) 50 Note: Fully-taxable equivalent (1) “Peer” represents the median of a peer group selected by Fulton. Peer group members are list
Slide 51: Efficiency Ratio
51 Efficiency Ratio(1) 63.4% 64.3% 64.3% 50.0% 52.0% 54.0% 56.0% 58.0% 60.0% 62.0% 64.0% 66.0% 2008 2009 2010 2011 2012 2013 FULT Peer (2) Top 50 (3) (1) Non-GAAP based financial measure. Please refer to the slides titled “Non-GAAP Reconciliation” at the end of this presentation for a reconciliation
Slide 52: First Quarter 2014 Performance
52 • Net Income: $42 million or 22 cents per share • 10% increase over 1st quarter 2013 • Same as 4th quarter 2013 • Return on Average Assets: 1.01% • Return on Average Equity: 8.21% • Significant reduction in overall expenses from 4th quarter of 2013 • Prudent management of our net interest margin
Slide 53: Cost Savings Initiatives
53 • Consolidated 14 branches into nearby branches • Reduced the number of regional presidents/increased the scope of responsibility of the other regional presidents • Eliminated certain employee benefits, many of which affected only specific groups of employees • PROJECTED SAVINGS FROM ITEMS ABOVE:
Slide 54: Fulton Financial Stock Performance and Analysts' Recommendations
54 Fulton Financial Stock Performance and Analysts’ Recommendations
Slide 55: Stock Performance
55 Stock Performance Stock Price Change FULT Peer (1) Large Banks (2) December 31, 2012 – December 31, 2013 36.2% 34.5 32.8% (1) “Peer” represents the median of a peer group selected by Fulton. Peer group members are listed at the end of this presentation. (2) Large Banks include: Bank of America Co
Slide 56: Analysts' Earnings Estimates – 2014 Peer Group
56 Analysts’ Earnings Estimates – 2014 Peer Group Source: SNL Financial LC Average change: 11.4% Median change: 7.0% Rank Company Name HQ State 2014 Median EPS Estimate 2013 Actual Diluted EPS Percent Change 1 IberiaBank Corp. LA $3.65 $2.20 65.9% 2 BancorpSouth, Inc. MS $1.34 $0.99 35.4% 3 TCF Fina
Slide 57: Analysts' Recommendations
57 Analysts’ Recommendations (as of 4/25/14) • Barclays Capital Equal Weight • BB&T Hold • Boenning & Scattergood Neutral • FBR Capital Markets Market Perform • Guggenheim Partners Neutral • Jeffries & Company Hold • Keefe, Bruyette &Woods Market Perform • Merion Capital Group Neutral • Raymond Jame
Slide 58: Our Customers
Z } | Our Customers
Slide 59: 2013 Sales Results
59 Retail households*: Up 1.68% • Year-end 2012 households: 258,460 • Year-end 2013 households: 262,796 Commercial households*: Down 0.41% • Year-end 2012 households: 62,178 • Year-end 2013 households: 61,925 2013 Sales Results * A household is defined as a retail or business customer that has a che
Slide 60: Deposit Composition
60 Deposit Composition 22% 21%18% 9% 30% December 31, 2012 Non-Int DDA Int DDA Money Mkt Savings Time 25% 23% 17% 10% 25% December 31, 2013 Non-Int DDA Int DDA Money Mkt Savings Time Note: Deposit composition is based on annual average balances for the periods indicated.
Slide 61: FFC Customer Digital Behavior
61 FFC Customer Digital Behavior February 2013 February 2014 Year-over-Year Growth* Online Banking Customers 146,058 172,732 18% Bill Payment Customers 38,437 49,450 29% Total Apps Downloaded 22,769 60,856 167% eBill Users 6,702 8,679 30% Person-to-Person Payments 448 713 59% * Rounded to nearest wh
Slide 62: Customer and Branch Technology
62 • Electronic signature pads • Digital marketing • Teller Cash Recyclers •Remote Deposit Capture • iPads/WiFi networks • Envelope-less ATM Deposits • Self-service branch kiosks Customer and Branch Technology
Slide 63: Branches Remain Important
63 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% Mobile Banking Offering Local Ownership/Decisionmaking ATM Locations Products Offered Branch Locations Web Banking Offering Brand Reputation Attractive Rates and Fees Importance in Choosing a Financial Institution (Important or Very Impor
Slide 64: Branch Role is Evolving
Branch Role is Evolving 64 • Financial planning and advising • One-to-one marketing and sales • Customer service and issue resolution • Complex transaction handling • Local community branch presence Source: Diebold Innovation, Jan 2014
Slide 65: Our Shareholders
Z } | Our Shareholders
Slide 66: Capital Adequacy (12/31/13)
66 Capital Adequacy (12/31/13) Excess Above Well Capitalized Well Threshold Well FULT Capitalized (in millions) FULT (1) Capitalized (2) Total Risk-Based Capital Ratio 15.00% 10.00% $ 660 14.90% 10.50% Tier 1 Risk-Based Capital Ratio 13.20% 6.00% $ 940 11.80% 8.50% Tier 1 Leverage Ratio 10.60% 5.00%
Slide 67: Deploying Capital in 2013
67 •Reinvested into profitable business lines •Repurchased 8 million shares at an average cost of $11.37 per share •Paid quarterly cash dividends to shareholders • 8 cents per quarter/32 cents total in 2013 Deploying Capital in 2013
Slide 68: FULT – 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 4Q 09 1Q 10 2Q 10 3Q 10 4Q 10 1Q 11 2Q 11 3Q 11 4Q 11 1Q 12 2Q 12 3Q 12 4Q 12 1Q 13 2Q 13 3Q 13 4Q 13 Cash Dividend Yield FULT – Cash Dividend and Yield (1) 68 (1) Annualized dividend rate per
Slide 69: Our Environment
Z } | Our Environment
Slide 70: Current Challenges
70 • Overall low interest rate environment presents challenges to our margin • Non-interest income impacted by lower deposit account revenue due to customer behavior • Higher long-term interest rates = decrease in residential mortgage volume • Increased expenses to build regulatory and compliance in
Slide 71: Forces Impacting our Industry
71 Forces Impacting our Industry
Slide 72: New Regulatory Actions in 2013
72 • 16,000 pages of new regulations • 643 enforcement actions against financial institutions • Raising the bar on risk and compliance capabilities •Rating agencies showing more interest in topic •Cost of non-compliance is high New Regulatory Actions in 2013 Source: Continuity Control
Slide 73: Regulatory Reform Impacts on the Banking Industry
73 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% No significant impacts Maintaining higher liquidity Adjusting certain product lines/business activities Maintaining higher capital Noting an increased cost of compliance Which of the following impacts on your organization have resulted from regulator
Slide 74: How Have We Responded?
74 •Enhanced bank board governance •Continued focus on risk management •Accelerated risk management capabilities in regulatory compliance • Further enhanced our Bank Secrecy Act framework (people, processes and technology) • Strengthened technology-based compliance controls How Have We Responded?
Slide 75: Looking Ahead
Z } | Looking Ahead
Slide 76: Corporate Priorities
76 •Enhance Compliance/Risk Management infrastructure •Grow earnings per share (EPS) •Grow quality loans •Improve asset quality •Grow core deposits/households •Manage the Net Interest Margin • Increase the Return on Average Assets (ROA) • Increase the Return on Average Equity (ROE) •Manage expenses
Slide 77: What Are We Working To Do?
77 • Attract and retain an engaged workforce • Respond to industry challenges • Deliver services the way our customers want to receive them and exceed expectations • Manage our risk • Comply with regulations • Manage our expenses • Increase profitability • Grow the company and increase shareholder r
Slide 78: May 8, 2014 Annual Shareholders' Meeting
May 8, 2014 Annual Shareholders’ Meeting 78
Slide 79: Questions and Answers
Z| | Questions and Answers
Slide 80: May 8, 2014 Annual Shareholders' Meeting
May 8, 2014 Annual Shareholders’ Meeting 80
Slide 81: Non-GAAP Reconciliation
Non-GAAP Reconciliation 81 Note: The Corporation has presented the following non-GAAP (Generally Accepted Accounting Principals) financial measures because it believes that these measures provide useful and comparative information to assess trends in the Corporation's results of operations. Presenta
Slide 82: Non-GAAP Reconciliation (continued)
Non-GAAP Reconciliation (continued) 82 R eturn o n average shareho lders' equity ( tangible) Q4 Q3 Q4 D ec 31, Sep 30, D ec 31, 2013 2013 2012 Net income 42,083$ 39,948$ 40,240$ P lus: Intangible amortization, net of tax 541 347 463 Numerator 42,624$ 40,295$ 40,703$ Average shareholders' equity 2,05
Slide 83: 2013 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