Fulton Financial Corporation · NASDAQ:FULT
Fulton Financial — KBW Community Bank Investor Conference 2007
49 slides from Fulton Financial's conference presentation, Jul 30, 2007
Slide 1: KBW Community Bank Investor Conference July 31, 2007
KBW Community Bank Investor Conference July 31, 2007 Fulton Financial Corporation
Slide 2: Forward-Looking Statement
The following presentation may contain forward-looking statements about Fulton Financial Corporation’s growth and acquisition strategies, new products and services, and future financial performance, including earnings and dividends per share, return on average assets, return on average equity, effic
Slide 3: Presentation Outline
Overview Strategic Issues and Responses Challenges Recent trends Financial Performance Summary Questions Presentation Outline
Slide 4: Key Organic Growth Markets
Key Organic Growth Markets
Slide 5: FFC Affiliates in Affluent Markets
*Source: SNL, Median HH Income, 2006 data County National Ranking Ranking in State Median HH Ranking FFC Affiliate Fairfax, VA #3 #2 $101,762 Resource Bank Hunterdon, NJ #4 #1 $100,485 Skylands Bank Morris, NJ #7 #2 $96,965 Skylands Bank Somerset, NJ #8 #3 $96,350 Skylands Bank Howard, MD #9 #1 $92,
Slide 6: Serving PA's Strongest Markets
*Source: SNL, Median HH Income, 2006 data County Rank Projected Change 2006 - 2011 Median HH Income 2006 Projected HH Income Change 2006 - 2011 Chester, PA 1 9.63% $83,001 25.46% Montgomery, PA 2 3.05 77,383 23.86 Bucks, PA 3 4.06 76,234 23.89 Delaware, PA 4 0.17 63,220 20.68 Cumberland, PA 5 4.37 5
Slide 7: Fulton Financial Profile
Regional financial holding company (formed in 1982) 11 community banks and 3 financial services affiliates in 5 states 260 community banking offices Asset size: $15.1 billion Market capitalization: $2.4 billion Fulton Financial Profile
Slide 8: What have we accomplished?
25 consecutive years of record earnings 33 consecutive years of dividend increases 10.1% compounded annual growth rate in dividends per share 8.5% compounded annual growth rate in earnings per share (last 5 years = 7.0%) 25 bank acquisitions What have we accomplished?
Slide 9: 0.5810 0.5400 0.4932 0.4524 0.4050 0.3662 02672 oze42 95280 2202 92428 1996 1997 1998
0.5810 0.5400 0.4932 0.4524 0.4050 0.3662 02672 oze42 95280 2202 92428 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 =f 8 8 8 8 & & FultonFinancial Coportion | © 2 2 2 mo
Slide 10: Quarterly Cash Dividend
15 cents Dividend yield: approximately 4.40% Quarterly Cash Dividend
Slide 11: Stock Repurchase
April 2007: 1 million share buyback in progress through 12/31/07. Long history of repurchasing our shares Stock Repurchase
Slide 12: Financial Performance
Financial Performance
Slide 13: Q2/07
Tough quarter Reported EPS of .23/share Significant, aggressive steps to improve earnings Optimistic about developing trends Additional Alt-A repayment requests Costs of workforce initiatives Good loan and deposit growth Q2/07
Slide 14: Challenges
Improving our earnings Loan loss provision returning to more normal levels Reduced level of bank stock gains Consumer loan growth Resource Mortgage repurchase requests Challenges
Slide 15: Recent Positive Trends
Strong commercial loan growth and pipeline Linked quarter core deposit growth Increased margin normalization Declining CD re-pricing differential Improved loan yields Slightly steeper yield curve Reduced Alt-A exposure Recent Positive Trends
Slide 16: RMC: Future Exposure
*All 1 st Lien **$1 million 1 st Lien .6 2 nd $1.3 million Estimated EPD exposure $15.3 million Total $1.6 ** million = Pre 3/31/07 – Monitoring Loans $13.7* million = New Fundings - 2 nd Quarter RMC: Future Exposure
Slide 17: Increasing Non-interest Income
Company-wide promotions to increase referrals for fee-generating products and services: Investment management and trust services Cash Management Credit and debit cards Leasing International services Increasing Non-interest Income
Slide 18: Fulton Financial Advisors
New senior leadership Reduction of overhead Recurring fee new business pipeline Fulton Financial Advisors
Slide 19: Operating Efficiency
Operating Efficiency
Slide 20: Consolidation, Standardization and Centralization
Consolidation, Standardization and Centralization
Slide 21: Benefits of Consolidation
15 banking affiliates reduced to 11 in seven months Market and geographic efficiencies Leverage brand over wider market Larger affiliate provides strong leadership and management expertise Business model intact Fewer affiliates, faster standardization Benefits of Consolidation
Slide 22: Reducing Expenses
Product standardization that simplifies customer choices Departmental centralization Workforce management – job elimination and attrition Employee benefit plan consistency Reducing Expenses
Slide 23: Anticipated Impact
$1.5 million per month beginning 2008 Anticipated Impact
Slide 24: Customer Experience
Customer Experience
Slide 25: Customer Satisfaction
* Retail: 90% extremely/very satisfied Commercial: 90% extremely/very satisfied Fulton Financial Advisors: 80+% very satisfied/satisfied Fulton Mortgage Company: 99% of expectations met/exceeded 98% would recommend FMC to others * Compared to national average of 62% Source: American Banker/Gallup Co
Slide 26: Customer Experience
Customer experience champion in every affiliate and department Simplified product choices Standardization of process and procedures across all affiliates Customer Experience
Slide 27: Market Opportunities
In market M&A = opportunity to grow households Leverage our high customer satisfaction Increased targeted advertising and promotion “Local” = perceived value Customer retention is a key strength Market Opportunities
Slide 28: Summary of Larger Loans
43 relationships with commitments to lend of $20 million or more Maximum individual commitment of $33 million Average commercial lending relationship size is $394,444 Loans and corresponding relationships are within Fulton’s geographic market area Summary of Larger Loans
Slide 29: Loan Diversification (6/30/07)
Loan Diversification (6/30/07)
Slide 30: Quarter Ended June 30, 2007
$39.8 million Net income (14.7% decrease from 2006) $ 0.23 Net income per share (14.8% decrease from 2006) $ 0.150 Cash dividends per share (1.7% increase over 2006) 1.08% Return on assets 10.52% Return on equity 19.30% Return on tangible equity Quarter Ended June 30, 2007
Slide 31: Year Ended December 31, 2006
$185.5 million Net income (11.7% increase over 2005) $ 1.06 Net income per share (6.0 increase over 2005) $ 0.581 Cash dividends per share (7.6% increase over 2005) 1.30% Return on assets 12.84% Return on equity 23.87% Return on tangible equity Year Ended December 31, 2006
Slide 32: Peer Group
Greater Bay Bancorp * International Bancshares Corporation Old National Bancorp South Financial Group, Inc. Susquehanna Bancshares, Inc. TCF Financial Corporation Trustmark Corporation UMB Financial Corporation United Bankshares, Inc. Valley National Bancorp Whitney Holding Corporation Wilmington Tr
Slide 33: Income Statement Summary (6/30/07)
2007 2006 $ % Net Interest Income 242,680 $ 237,890 $ 4,790 $ 2% Loan Loss Provision (3,660) (1,880) (1,780) 95% Other Income 73,660 68,540 5,120 7% Securities Gains 2,410 4,070 (1,660) -41% Other Expenses (199,010) (178,800) (20,210) 11% Income Taxes (35,110) (39,240) 4,130 -11% Net Income 80,970 $
Slide 34: Income Statement Summary (linked quarter)
2nd Qtr 1st Qtr $ % Net Interest Income 120,910 $ 121,780 $ (870) $ -1% Loan Loss Provision (2,700) (960) (1,740) 181% Other Income 36,380 37,290 (910) -2% Securities Gains 630 1,780 (1,150) -65% Other Expenses (98,110) (100,910) 2,800 -3% Income Taxes (17,260) (17,850) 590 -3% Net Income 39,850 $ 4
Slide 35: Loan Growth (6/30/07)
2007 2006 $ % (dollars in millions) Commercial 3,100 $ 2,750 $ 350 $ 13% Comm'l Mort 3,260 3,020 240 8% Resid Mort/HE 2,140 2,020 120 6% Construction 1,390 1,340 50 4% Cons./Other 610 590 20 3% Total Loans 10,500 $ 9,720 $ 780 8% Loan Growth (6/30/07)
Slide 36: Average Loan Growth, Linked Quarter
2nd Q 07 1st Q 07 $ % (dollars in millions) Commercial 3,170 $ 3,030 $ 140 $ 5% Comm'l Mort 3,290 3,240 50 2% Resid Mort/HE 2,150 2,140 10 0% Construction 1,380 1,400 (20) -1% Cons./Other 590 600 (10) -2% Total Loans 10,580 $ 10,410 $ 170 2% Average Loan Growth Linked Quarter
Slide 37: Net Interest Margin (6/30/07)
Net Interest Margin (6/30/07)
Slide 38: 4.00 3.90 3.80 3.70 3.60 3.50 Q106 Q2 Q3 Q4 Q107 —*Reported -*- Core
4.00 3.90 5 3.80 3.70 3.60 3.50 Q106 Q2 06 Q3 06 Q4 06 Q107 —*Reported -*- Core Q207
Slide 39: Investment Portfolio (06/30/2007)
ENDING MODIFIED BALANCE DURATION CREDIT RATING (000's) Mortgage-backed securities 1,279.0 $ 2.92 AAA Municipal bonds 503.6 4.21 AAA Collateralized mortgage obligations 467.0 3.05 AAA U.S. Treasuries and agencies 282.1 2.23 AAA Corporate & trust preferred securities 75.0 6.55 Various Bank stocks 91.5
Slide 40: Deposit Growth (6/30/07)
2007 2006 $ % (dollars in millions) Nonint DDA 1,740 $ 1,860 $ (120) $ -6% Int DDA 1,670 1,680 (10) -1% Savings/MMDA 2,300 2,360 (60) -3% CD's 4,490 3,990 500 13% Cash Mgt 600 490 110 22% Total Deposits 10,800 $ 10,380 $ 420 $ 4% Deposit Growth (6/30/07)
Slide 41: Average Deposit Growth, Linked Quarter
2nd Q 07 1st Q 07 $ % (dollars in millions) Nonint DDA 1,760 $ 1,720 $ 40 $ 2% Int DDA 1,680 1,660 20 1% Savings/MMDA 2,300 2,300 - 0% CD's 4,530 4,460 70 2% Cash Mgt 630 570 60 11% Total Deposits 10,900 $ 10,710 $ 190 $ 2% Average Deposit Growth Linked Quarter
Slide 42: Net Charge-Offs To Loans (6/30/07)
Net Charge-Offs To Loans (6/30/07)
Slide 43: Other Income (6/30/07)
2007 2006 $ % (dollars in thousands) Invt Mgt & Trust 20,080 $ 19,130 $ 950 $ 5% Mort. Sales Gains 9,580 10,060 (480) -5% Overdraft & NSF Fees 9,980 9,790 190 2% Service Charges 6,310 6,660 (350) -5% Cash Mgt Fees 5,560 4,870 690 14% Success Card Fees 4,140 3,620 520 14% Other 18,010 14,850 3,160 21
Slide 44: Other Income Detail, Linked Quarter
2nd Q 07 1st Q 07 $ % (dollars in thousands) Invt Mgt & Trust 10,270 $ 9,810 $ 460 $ 5% Mort. Sales Gains 4,190 5,390 (1,200) -22% Overdraft & NSF Fees 5,210 4,770 440 9% Service Charges 3,150 3,150 - 0% Cash Mgt Fees 2,860 2,700 160 6% Success Card Fees 2,220 1,920 300 16% Other 8,480 9,540 (1,060)
Slide 45: —*FFC ~=- Peer —*- Top 50
52.0 50.0 93 94 95 96 97 98 99 00 01 02 O03 04 05 06 3107607 —*FFC ~=- Peer —*- Top 50
Slide 46: Other Expense (6/30/07)
2007 2006 $ % (dollars in thousands) Salaries & Benefits 111,850 $ 105,230 $ 6,620 $ 6% Occupancy & Equip. 27,300 25,120 2,180 9% DP/Software/Telecom 12,960 12,590 370 3% Amortization 4,180 3,860 320 8% Other Expenses 42,720 35,120 7,600 22% Total 199,010 $ 181,920 $ 17,090 $ 9% Other Expense (6/30/
Slide 47: Other Expense Detail, Linked Quarter
2nd Q 07 1st Q 07 $ % (dollars in thousands) Salaries & Benefits 55,550 $ 56,290 $ (740) $ -1% Occupancy & Equip. 13,390 13,910 (520) -4% DP/Software/Telecom 6,630 6,320 310 5% Amortization 2,200 1,980 220 11% Other Expenses 20,340 22,400 (2,060) -9% Total 98,110 $ 100,900 $ (2,790) $ -3% Other Expe
Slide 48: Positive Trends – Core Banking
Strong core deposit growth – DDA Strong commercial loan growth and pipeline Loan yields improving Improving normalized NIM Positive Trends – Core Banking
Slide 49: Fulton Financial Corporation
One Penn Square Lancaster, PA 17602 www.fult.com Fulton Financial Corporation
Fulton Financial — KBW Community Bank Investor Conference 2007 on 6ix