Fulton Financial Corporation · NASDAQ:FULT
Fulton Financial — Investor Presentation (September 2018)
40 slides from Fulton Financial's investor presentation, Sep 4, 2018
Slide 1: Investor Presentation September 2018
INVESTOR PRESENTATION September 2018 z Data as of June 30, 2018 - 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 39 39 Various roles since joining in 1979 Curt Myers President/COO 28 28 Various roles since joining in 1990 PwC, Banking and Investment Banking; Joined Mark McCol
Slide 5: A Valuable Franchise
A Valuable Franchise . ~240 financial centers throughout the Mid-Atlantic . Asset size of $20.2 billion . 3,700+ team members (3,580 FTEs (1)) . Market capitalization of $3.2 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 250 104 o Replace lower performing commercial relationship 97 managers with
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 2017 Parent Company Name 2017 Market Share . Rank 2017 Industry 2017 Branches 2017 ($000) Philadelphia is a natural
Slide 9: Recent Strategic Initiatives Support Our Relationship Banking Strategy
Recent Strategic Initiatives Support Our Relationship Banking Strategy Growth: Growth:Investing Investingin talent, introducing in talent new, introducing digital new digital capabilities, implementingcapabilities, implementing technology technology enhancements , expanding the Fulton Forward TM enh
Slide 10: Fulton Has Made Significant Investments To Enhance Its 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 Tentatively 2019 fultonbank.com . . Personalizes experience . Best-in-class online platform for Streamlines comme
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 first six months of 2018 are up 4.8% compared to the first six months of 2017 . Yields continue to move higher after several years of declines $16.0 $15.7 4.50% $15.2 $0.6 $0.4 $14.1 $1.0 $0.9 $14.0 $13.3 $0.4 $12.9 $0.8 $0.4 $1.8 $2.
Slide 14: Attractive, Low-Cost Core Deposit Profile
Attractive, Low-Cost Core Deposit Profile . Steady growth in core deposits while maintaining a low deposit beta . Average Deposits for the first six months of 2018 are up 3.2% compared to the first six months of 2017 $15.5 $16.0 $15.5 0.50% $14.6 $ $0.1 0.47% $13.7 $- $1.4 $1.5 $14.0 $12.9 $1.4 $- $
Slide 15: Solid Asset Quality And Reserves
Solid Asset Quality And Reserves Commentary Non-Performing Loans (NPLs) & Allowance/Loans . Excluding a 2Q18 loss from a single, large commercial lending relationship due to internal fraud at the $144.8 1.75% $138.5 borrower, overall asset quality continues to improve $150.0 $131.6 $134.8 . $123.7 C
Slide 16: Positioned For Rising Interest Rate Environment
Positioned For Rising Interest Rate Environment Commentary Overall Loan Portfolio Rate Type . Variable and adjustable rate loans are ~78% of the portfolio, mostly in commercial Adjustable Fixed Variable . Commercial loans represent ~73% of our loan portfolio . 36% Variable and adjustable rate loans
Slide 17: 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 compliance, risk and technology infrastructures were the 69.00% primary drivers of the increase in the efficiency ratio in 67.00% 2015 65.00% . 63.00
Slide 18: Excess Capital To Deploy
Excess Capital To Deploy Commentary Fulton 2Q18 Capital Ratios . Capital ratios exceed our internal minimums and 14.00% 13.2% 12.00% regulatory requirements 10.6% 10.6% 10.00% 9.2% o Opportunity exists to optimize the capital stack 8.7% . 8.00% Quarterly cash dividend increased to $0.12 per share in
Slide 19: Recent Financial Performance
RECENT FINANCIAL PERFORMANCE
Slide 20: Second Quarter Results
Second Quarter Results Net Income per diluted share: $0.20 in 2Q18, 28.6% decrease from 1Q18 and 23.1% decrease from 2Q17. Pre-Provision Net Revenue(1): $73.4 million, 18.2% increase from 1Q18 and 16.7% increase from 2Q17 Linked Quarter Loan and Core Deposit Growth: 0.7% increase in average loans, w
Slide 21: Income Statement Summary
Income Statement Summary Net Income of $35.2 million, 28.9% decrease from 1Q18 and 22.6% decrease from 2Q17 Change From 2Q18 1Q18 2Q17 Net Interest Income (Dollars in thousands, except per-share data) • From 1Q18: Increase of 3.1%, driven by loan and deposit growth and the impact of a 4 basis point
Slide 22: Net Interest Income And Margin
Net Interest Income And Margin AVERAGE INTEREST-EARNING ASSETS & YIELDS $20.0 5.00% 4.75% NET INTEREST INCOME & NET INTEREST MARGIN $15.0 4.50% $15.8 $15.6 $15.7 $15.1 $15.4 $160.0 4.00% $10.0 4.04% 4.25% 3.93% 3.83% 4.00% 3.78% 3.80% $140.0 3.50% $5.0 ~ $730 3.75% million 3.35% 3.39% $3.2 3.27% 3.2
Slide 23: Asset Quality
Asset Quality PROVISION FOR CREDIT LOSSES NON-PERFORMING LOANS (NPLS) & NPLS TO LOANS $40.0 $160.0 2.00% $136.5 $33.1 $135.7 $134.8 $134.6 $123.7 $30.0 $120.0 1.50% $20.0 $80.0 1.00% 0.88% 0.88% 0.85% 0.86% $10.0 $6.7 $6.7 $40.0 0.78% 0.50% $5.1 $4.0 $- $0.0 0.00% 2Q17 3Q17 4Q17 1Q18 2Q18(1) 2Q17 3Q
Slide 24: Non-Interest Income
Non-Interest Income MORTGAGE BANKING INCOME & SPREADS $7.0 4.00% $6.1 $6.0 3.50% $5.2 NON-INTEREST INCOME, EXCLUDING SECURITIES GAINS $4.8 3.00% $5.0 $4.4 $4.2 2.50% $4.0 $60.0 2.00% $3.0 1.50% $2.0 1.62% 1.44% 1.36% 1.30% 1.00% $50.0 1.11% $1.0 0.50% ~ $730 $- million 0.00% 2Q17(2) 3Q17 4Q17 1Q18 2
Slide 25: Non-Interest Expenses
Non-Interest Expenses SALARIES AND EMPLOYEE BENEFITS & STAFFING (1) $80.0 $75.8 3,700 NON-INTEREST EXPENSE & EFFICIENCY RATIO $74.5 $72.9 $73.5 $74.9 $70.0 3,600 $60.0 3,580 3,500 $160.0 68.0% 3,550 $50.0 3,400 $40.0 $140.0 67.5% 67.0% 3,300 $30.0 3,200 $20.0 ~ $730 million $120.0 66.0% $10.0 3,100
Slide 26: Profitability & Capital
Profitability & Capital ROA(1) ROE AND ROE (TANGIBLE)(2) 1.20% 11.52% 11.85% 12.00% 11.06% 0.98% 1.01% 1.00% 0.94% 8.76% 9.02% 8.36% 7.91% 8.23% 0.80% 0.70% 8.00% 0.67% 6.03% 6.28% 0.60% 4.00% 0.40% 0.20% 0.00% 2Q17 3Q17 4Q17(3) 1Q18 2Q18 0.00% 2Q17 3Q17 4Q17(3) 1Q18 2Q18 ROE ROE (tangible) TANGIBLE
Slide 27: 2018 Outlook
2018 Outlook Changes from the outlook as of the end of the first quarter of 2018 have been highlighted. • Loans & Deposits: Average annual loan and core deposit growth rates in the low to mid single-digits • Asset Quality: Provision will reflect impacts of changes in asset quality measures, risk rat
Slide 28: Appendix
APPENDIX
Slide 29: Average Loan Portfolio And Yields
Average Loan Portfolio And Yields Change in 2Q 2018 Balance From Yield From Balance Yield 1Q 2018 2Q 2017 1Q 2018 2Q 2017 (dollars in millions) Comm'l Mort $ 6,299 4.34% $ (7) $ 135 0.18% 0.34% Commercial 4,335 4.27% 46 114 0.12% 0.27% Resid Mort 2,026 3.89% 68 318 0.04% 0.12% Home Equity 1,503 4.83
Slide 30: Average Customer Funding And Rates
Average Customer Funding And Rates Change In 2Q 2018 Balance From Rate From Balance Rate 1Q 2018 2Q 2017 1Q 2018 2Q 2017 (dollars in millions) Nonint DDA $ 4,282 - % $ 36 $ (106) - % - % Int DDA 3,952 0.50% (7) 262 0.09% 0.20% Savings/MMDA 4,538 0.49% 44 223 0.10% 0.24% Brokered Deposits 85 1.87% 11
Slide 31: Loan Distribution By State
Loan Distribution By State Comm'l Consumer Comm'l Mortgage Constr. Res. Mtg. & Other Total (in thousands) Pennsylvania $ 3,100,252 $ 3,256,610 $ 491,953 $ 753,587 1,286,311 $ 8,888,713 New Jersey 560,333 1,430,936 191,322 276,509 410,976 2,870,076 Maryland 367,143 734,460 137,884 462,973 276,027 1,9
Slide 32: 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 $ 28,612 $ 17,680 $ 3,027 $ 7,586 $ 5,000 $ 61,905 $ 8,888,713 0.70% New Jersey 6,382 13,502 1,738 3,978 4,640 30,240 2,870,076 1
Slide 33: Net Charge-offs (Recoveries)
Net Charge-offs (Recoveries) Annualized Comm'l Consumer Average Loans Charge-Offs to Comm'l Mortgage Constr. Res. Mtg. & Other Total by State Average Loans (dollars in thousands) Pennsylvania $ 37,694 $ (110) $ 214 $ 54 $ 701 $ 38,553 $ 8,949,325 1.72% New Jersey (68) (51) (9) (19) 497 350 2,849,114
Slide 34: 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 4.3 $ 1,036 $ (35) $ 1,001 Collateralized mortgage obligations 3.6 742 (18) 724 State and municipal securities 8.1 416
Slide 35: Non-Interest Income (Excluding Securities Gains)
Non-Interest Income (Excluding Securities Gains) Change From 2Q 2018 1Q 2018 2Q 2017 1Q 2018 2Q 2017 (in thousands) Other service charges and fees: Merchant fees $ 4,920 $ 4,115 $ 4,531 $ 805 $ 389 Debit card income 3,077 2,817 2,884 260 193 Commercial loan interest rate swap fees 2,393 1,291 3,768
Slide 36: Non-Interest Expense
Non-Interest Expense Change From 2Q 2018 1Q 2018 2Q 2017 1Q 2018 2Q 2017 (in thousands) Salaries and employee benefits $ 74,919 $ 75,768 $ 74,496 $ (849) $ 423 Net occupancy expense 12,760 13,632 12,316 (872) 444 Data processing and software 10,453 10,473 9,054 (20) 1,399 Other outside services 7,56
Slide 37: Non-GAAP Reconciliation
Non-GAAP Reconciliation Three Months Ended Note: The Corporation has presented the following non-GAAP Jun 30 Sep 30 Dec 31 Mar 31 Jun 30 (Generally Accepted Accounting Principles) financial measures 2017 2017 2017 2018 2018 because it believes that these measures provide useful and Efficiency ratio
Slide 38: Non-GAAP Reconciliation
Non-GAAP Reconciliation Jun 30 Sep 30 Dec 31 Mar 31 Jun 30 2017 2017 2017 2018 2018 Tangible Common Equity to Tangible Assets (TCE Ratio) (dollars in thousands) Shareholders' equity $ 2,191,770 $ 2,225,786 $ 2,229,857 $ 2,235,493 $ 2,245,785 Less: Intangible assets (531,556) (531,556) (531,556) (531
Slide 39: 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 40: Fulton Financial Corporation
FULTON FINANCIAL "CORPORATION www.fult.com CORPORATION
Fulton Financial — Investor Presentation (September 2018) on 6ix