Fulton Financial Corporation · NASDAQ:FULT
Fulton Financial — KBW 6th Annual Community Bank Conference 2005
57 slides from Fulton Financial's conference presentation, Jul 26, 2005
Slide 1: Fulton Financial Corporation KBW 6th Annual Community Bank Conference July 2005
Fulton Financial Corporation KBW 6th Annual Community Bank Conference July 2005
Slide 2: Presentation Outline
Presentation Outline Corporate profile Strategic initiatives Capital Acquisition strategy Loan summary Relationship banking strategy Financial performance
Slide 3: Fulton Financial Profile
Fulton Financial Profile Regional financial holding company (formed in 1982) 14 community banks and 3 financial services affiliates in 5 states 232 community banking offices Asset size: $12.1 billion Market capitalization: $2.9 billion Average daily trading volume: 191,000 shares (Q2/05)
Slide 4: What have we accomplished?
8.8% compounded annual growth rate in earnings per share 23 consecutive years of record earnings 31 consecutive years of dividend increases 10.3% compounded annual growth rate in dividends per share Proven business model Consistent performance What have we accomplished?
Slide 5: Where are we located?
Where are we located Pennsylvania Where are we located? 1 The Bank ane 1 SomerseValey Delaware Bane FULTON FINANCIAL ‘CORPORATION =m 8 & & FultonFinancial Corporation | 2 2 2 oo
Slide 6: Future Expansion
Future Expansi @ Current Markets Future Expansion
Slide 7: Mission Statement
Mission Statement We will increase shareholder value and enrich the communities we serve by creating financial success together with our customers and career success together with our employees. We will conduct all of our business with honesty and integrity.
Slide 8: Peer Group Five-Year Total Return
17 South Financial Group, Inc. (The) 18 First Midwest Bancorp, Inc. 19 Susquehanna Bancshares, Inc. 20 United Bankshares, Inc. 21 Sky Financial Group Inc. 22 Mercantile Bankshares Corporation 23 Citizens Banking Corporation 24 Valley National Bancorp 25 Wilmington Trust Corporation 26 BancorpSouth,
Slide 9: Stock Performance (1982 - 2004)
Stock Performance (1982 - 2004) WITHOUT dividend reinvestment: 15% compounded annual rate of return WITH dividend reinvestment: 19% compounded annual rate of return
Slide 10: Corporate Strategic Initiatives
Corporate Strategic Initiatives Expanding the franchise through our well-developed acquisition strategy Diversifying revenue stream by increasing the contribution of non-interest income Managing capital Maintaining high asset quality Achieving consistent earnings growth Sound risk management
Slide 11: Recent Acquisitions
Recent Acquisitions Resource Bank - Virginia Beach, Virginia Acquired on 4/1/04 Assets of $1.1 billion First Washington State Bank - Windsor, NJ Acquired on 12/31/04 Assets of $585 million Somerset Valley Bank Acquired on 7/1/05 Assets of $511 million Headquartered in Somerville, NJ 11 branches in S
Slide 12: Somerset Valley Bank - Branch Locations
Somerset Valley Bank - Branch Locations Fulton Financial branches SVB Financial branches
Slide 13: What do we look for?
Strong performance Asset quality High growth areas Dynamic market demographics Talented and dedicated staff Compatible corporate culture What do we look for?
Slide 14: Acquisitions In New Markets
Acquisitions In New Markets What changes? Loan review Investments Asset/liability management Compliance Common operating platform Audit Accounting What stays the same? Bank name Board of Directors Management team Employees
Slide 15: In-Market Consolidation
In-Market Consolidation 24 acquisitions since 1982 14 affiliate banks today Potential consolidation as market coverage increases Lehigh Valley - four prior acquisitions now comprise our second largest affiliate
Slide 16: Benefits To New Affiliates
Continued local autonomy and decision-making Increased lending capacity Additional capital Proven merger/conversion expertise Reduced expenses Increased income diversification due to introduction of new products and services Benefits To New Affiliates
Slide 17: Product Availability
Investment management Brokerage services Insurance (whole life, term life, long-term care through advisors) Cash management On-line banking Debit/credit cards Residential mortgages Specialized lending (leasing and indirect) International services Correspondent banking Product Availability
Slide 18: Other Income As a Percent of Total Income
Other Income As a Percent of Total Income (6/30/05)
Slide 19: Capital (6/30/05)
Capital (6/30/05) Total Capital (GAAP): $1.2 billion Total Regulatory Capital: $1.0 billion Ratios: Total Risk-Based Capital 12.70% Tier 1 Risk-Based Capital 10.40% Leverage Capital 7.70%
Slide 20: Stock Buyback
Stock Buyback Completed accelerated repurchase in May 2005 of 4.3 million share board-authorized program that expired 6/30/05
Slide 21: Loan Diversification
Loan Diversification (6/30/05) Commercial Commercial Mortgage Residential Mortgage Construction Home Equity Consumer and other East 2314.57 2556.9 558.8 743.77 1141.7 545.88 West 30.6 38.6 34.6 31.6 North 45.9 46.9 45 43.9
Slide 22: Summary of Larger Loans
27 relationships with commitments to lend of $20 million or more Maximum individual commitment of $30 million Average commercial loan size is $573,000 Loans and corresponding relationships are within Fulton's geographical market area Summary of Larger Loans
Slide 23: Commercial Loan Concentration By Industry
Commercial Loan Concentration By Industry (as of 6/30/05)
Slide 24: Credit Ratings
Short-term rating P-1 Long-term rating Issuer A-2 Lead Bank Deposits A-1 Outlook Stable Credit Ratings Moody's Investor Services Short-term rating F-1 Long-term rating A Outlook Stable Fitch Ratings Standard & Poors Credit rating BBB+ Outlook Stable Dominion Bond Rating Service Credit rating A Outlo
Slide 25: Our Relationship Strategy
Our Relationship Strategy Long-term successful employees Long-term successful customers Long-term successful shareholders
Slide 26: Employee Retention
Employee Retention 2000 2001 2002 2003 2004 Exempt 88 88.8 91.1 92.4 87.6 Non-exempt 75 77.3 78.8 78.4 73.5 Overall 78.7 79.7 81.2 82.6 78.2
Slide 27: Employee Stock Ownership
Employee Stock Ownership 80% of our employees collectively own approximately 4 million shares of Fulton Financial Corporation stock Stock options help us to retain key high-performing employees
Slide 28: Employee Opinion Survey
Employee Opinion Survey Quality and Improvement Commitment Immediate Supervisor Job Satisfaction Service Climate Company Image Training and Development Organizational Leadership Work Process Communication Pay and Benefits Teamwork and Collaboration (Survey administered by BAI Survey Services)
Slide 29: Employee Opinion Survey
Employee Opinion Survey Conducted every three years Over 3,000 employees surveyed (85%) Completed in June 2005 FFC responses exceed BAI national averages in 10 of the 12 categories
Slide 30: Customer Satisfaction
Customer Satisfaction Retail: 96% extremely or very satisfied Commercial: 86% very satisfied or satisfied Compared to national average of 58% of customers who are very satisfied with their financial institution* *Source: 2004 American Banker/Gallup consumer survey
Slide 31: Fulton Financial Advisors Client Satisfaction Survey Responses
80+% say they are very satisfied/satisfied with the level of service they receive 22% / 520 responses Most important drivers of satisfaction: Our people (personalized service, stability in contact person and integrity) Our ability to satisfy a range of financial needs Ease of access to decision make
Slide 32: Fulton Mortgage Company Customer Satisfaction Survey Responses
Fulton Mortgage Company Customer Satisfaction Survey Responses * 99% of customers' expectations were met/exceeded 98% would recommend FMC to others 22% response rate / all settlements *Source: 2004 Client Survey
Slide 33: Quarter ended June 30, 2005
Quarter ended June 30, 2005 $41.6 million Net income (9.8% increase over 2004) $ 0.27 Net income per share (8.0% increase over 2004) $ 0.145 Cash dividends per share (9.8% increase over 2004) 1.46% Return on assets 13.95% Return on equity 20.64% Return on tangible equity
Slide 34: Income Statement Summary
Income Statement Summary (6/30/05)
Slide 35: Average Loan Growth
Average Loan Growth 2005 2004 $ % (dollars in millions) Commercial $ 2,310 $ 2,030 $ 280 14% Comm'l Mort 2,860 2,400 460 19% Resid Mort 890 620 270 44% Home Equity 1,120 930 190 20% Cons./Other 1,690 1,520 170 11% Total Loans $ 7,750 6,570 1,180 18% (6/30/05)
Slide 36: Internal Loan Growth
2005 2004 $ % (dollars in millions) Commercial $ 2,120 $ 1,980 $ 140 7% Comm'l Mort 2,460 2,280 180 8% Resid Mort 530 490 40 8% Consumer/Other 1,540 1,420 120 8% Total Loans $ 6,650 $ 6,170 480 8% Internal Loan Growth (6/30/05)
Slide 37: Funding Sources
Funding Sources (6/30/05) Deposits and Customer Repurchase Agreements Borrowings GAAP Capital Other Liabilities East 74 15 10 1 West 30.6 38.6 34.6 31.6 North 45.9 46.9 45 43.9
Slide 38: Average Deposit Growth
Average Deposit Growth 2005 2004 $ % (dollars in millions) Nonint DDA $ 1,540 $ 1,320 $ 220 17% Int DDA 1,490 1,310 180 14% Savings/MMDA 1,950 1,810 140 8% CD's 3,010 2,640 370 14% Cash Mgt 390 390 - 0% Total Deposits $ 8,380 $ 7,470 $ 910 12% (6/30/05)
Slide 39: Internal Deposit Growth
Internal Deposit Growth 2005 2004 $ % (dollars in millions) Nonint DDA $ 1,420 $ 1,300 $ 120 9% Int DDA 1,390 1,290 100 8% Savings/MMDA 1,790 1,790 - 0% CD's 2,290 2,410 (120) -5% Cash Mgt 390 390 - 0% Total Deposits $ 7,280 $ 7,180 $ 100 1% (6/30/05)
Slide 40: Net Interest Margin (quarterly)
Net Interest Margin (quarterly) 3/02 6/02 9/02 12/02 3/03 6/03 9/03 12/03 3/04 6/04 9/04 12/04 3/05 6/05 FFC 4.44 4.48 4.33 4.17 4.06 3.91 3.62 3.73 3.79 3.73 3.88 3.92 3.95 3.92
Slide 41: Net Interest Margin
Net Interest Margin (6/30/05) 94 95 96 97 98 99 00 01 02 03 04 3/05 6/05 FFC 4.73 4.68 4.73 4.72 4.58 4.56 4.31 4.27 4.35 3.82 3.83 3.95 3.92 Peer 4.62 4.55 4.52 4.58 4.33 4.28 4.08 4.09 4.29 3.91 3.82 3.74 Top 50 4.54 4.46 4.36 4.36 4.11 4.02 3.86 4.03 4.23 3.8 3.68 3.66
Slide 42: Asset/Liability Management
Asset/Liability Management Rate Change NII Change (Annual) % Change +300 bp + $ 21.2 million + 5.5% +200 bp + $ 14.7 million + 3.8% +100 bp + $ 8.5 million + 2.2% - 100 bp - $ 11.7 million - 3.0% - 200 bp - $ 33.6 million - 8.7% Interest rate "shocks"
Slide 43: Percent
Percent 5.00 son —Flat 4.00 —in0 —200 3.00 300 2.00 1.00 : : : ; r r r
Slide 44: Loan Mix
Loan Mix (6/30/05) Fixed Floating Adjustable FFC 30 42 28 West 30.6 38.6 34.6 North 45.9 46.9 45
Slide 45: Investment Portfolio
ENDING MODIFIED BALANCE DURATION CREDIT RATING (000's) Mortgage-backed securities $ 1,751.3 2.57 AAA - agency insured Municipal bonds 374.6 4.04 AAA - insured U.S. Treasuries and agencies 105.1 1.13 AAA Trust preferred securities 59.7 11.0 various - 5 yr call FHLB stock 67.0 na na Bank stock 66.7 na
Slide 46: Bank Stock Gains
Bank Stock Gains (6/30/05 percent contribution to EPS) 94 95 96 97 98 99 00 01 02 03 04 YTD05 East 3.8 4.6 3.9 5.8 7.7 4.9 5.4 6 3.6 6.6 6.2 3.1
Slide 47: Net Charge-Offs To Loans
Net Charge-Offs To Loans (6/30/05) 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 3/05 6/05 FFC 0.15 0.17 0.16 0.18 0.08 0.11 0.06 0.17 0.14 0.19 0.19 0.2 0.22 0.17 0.06 0.02 0.02 Peer 0.49 0.51 0.57 0.24 0.16 0.18 0.2 0.22 0.23 0.24 0.27 0.34 0.32 0.26 0.2 0.17 Top 50 0.66 0.75 0.7 0.43 0.22 0.24 0.3
Slide 48: Nonperforming Assets To Assets
Nonperforming Assets To Assets (6/30/05) 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 3/05 6/05 FFC 0.62 0.55 0.65 0.65 0.73 0.62 0.57 0.58 0.54 0.46 0.42 0.44 0.47 0.33 0.3 0.25 0.27 Peer 1.14 1.39 1.07 0.95 0.64 0.56 0.53 0.47 0.44 0.42 0.45 0.53 0.54 0.46 0.39 0.35 Top 50 1.59 1.65 1.25 0.92 0.65
Slide 49: Other Income Detail
Other Income Detail 2005 2004 $ % (dollars in thousands) Invt Mgt & amp; Trust $ 8,970 $ 8,640 $ 330 4% Mort. Sales Gains 6,290 6,050 240 4% Overdraft Fees 4,450 4,180 270 6% Service Charges 3,590 3,840 (250) -7% Branch Sale Gains 2,200 - 2,200 na Cash Mgt Fees 1,920 1,910 10 1% Success Card Fees 1,
Slide 50: Internal Results
Internal Results 2005 2004 $ % (dollars in thousands) Invt Mgt & amp; Trust $ 8,680 $ 8,640 $ 40 0% Mort. Sales Gains 6,270 6,050 220 4% Service Charges 3,490 4,180 (690) -17% Overdraft Fees 4,300 3,840 460 12% Branch Sale Gains 2,200 - 2,200 na Cash Mgt Fees 1,910 1,910 - 0% Success Card Fees 1,600
Slide 51: Efficiency Ratio
Efficiency Ratio (6/30/05) 93 94 95 96 97 98 99 00 01 02 03 04 3/05 6/05 FFC 61.7 60.9 60.1 56.2 54 54.1 51.5 51.1 53.1 52.2 53.5 55.1 54.5 54.9 Peer 61.7 61.6 60.5 58.6 57.1 55.3 55.7 54.9 55.7 57.1 57.7 58.8 58 Top 50 60.7 61.2 59.8 58.1 57.9 57 56.2 56 55.2 54.7 57.9 58.6 57.6
Slide 52: Other Expense Detail
Other Expense Detail 2005 2004 $ % (dollars in thousands) Salaries & Benefits $ 45,150 $ 41,830 $ 3,320 8% Occupancy & Equip. 9,440 8,610 830 10% DP/Software/Telecom 5,860 5,160 700 14% Amortization 1,170 1,360 (190) -14% Other Expenses 16,490 13,580 2,910 21% Total $ 78,110 $ 70,540 $ 7,570 11% (6/
Slide 53: Internal Results
Internal Results 2005 2004 $ % (dollars in thousands) Salaries & Benefits $ 43,860 $ 41,830 $ 2,030 5% Occupancy & Equip. 8,920 8,610 310 4% DP/Software/Telecom 5,630 5,160 470 9% Amortization 1,020 1,360 (340) -25% Other Expenses 15,270 13,580 1,690 12% Total $ 74,700 $ 70,540 $ 4,160 6% (6/30/05)
Slide 54: Looking Ahead
Looking Ahead Continued focus on: Strong asset quality Continued strong loan growth Growth in net interest margin Growth in non-interest income Core deposit growth Expansion of franchise geographically Consistent EPS growth
Slide 55: Fulton Financial Corporation
Fulton Financial Corporation One Penn Square Lancaster, PA 17602 www.fult.com
Slide 56: Where are we located?
Where are we located Pennsylvania Where are we located? 1 The Bank ane 1 SomerseValey Delaware Bane FULTON FINANCIAL ‘CORPORATION =m 8 & & FultonFinancial Corporation | 2 2 2 oo
Slide 57: Future Expansion
Future Expansi @ Current Markets Future Expansion
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