Fulton Financial Corporation · NASDAQ:FULT
Fulton Financial — Ferris Baker Watts Mid-Atlantic Bank Conference 2007
56 slides from Fulton Financial's conference presentation, Aug 7, 2007
Slide 1: Ferris Baker Watts Mid-Atlantic Bank Conference
Ferris Baker, Watts Inc. Mid-Atlantic Bank Conference August 8, 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: Organic Growth Initiatives
Additional cash management product options to keep funds on balance sheet Market segmentation / targeted direct mail Corporate-wide sales / incentive programs Remote deposit item capture / business clients Corporate credit card rewards program Small business segment Affiliate CEO scorecard Organic G
Slide 6: 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 7: 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 8: 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: $2.3 billion Fulton Financial Profile
Slide 9: 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 10: 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 11: Quarterly Cash Dividend
15 cents Dividend yield: approximately 4.40% Quarterly Cash Dividend
Slide 12: Capital (6/30/07 estimates)
Total Capital (GAAP): $1.5 billion Total Regulatory Capital: $1.4 billion Ratios (estimated): Total Risk-Based Capital 12.80% Tier 1 Risk-Based Capital 10.00% Leverage Capital 7.80% Capital (6/30/07 estimates)
Slide 13: Stock Repurchase
April 2007: 1 million share buyback in progress through 12/31/07. Long history of repurchasing our shares Stock Repurchase
Slide 14: Financial Performance
Financial Performance
Slide 15: 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 16: 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 17: 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 18: 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 19: 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 20: Fulton Financial Advisors
New senior leadership Reduction of overhead Recurring fee new business pipeline Fulton Financial Advisors
Slide 21: Operating Efficiency
Operating Efficiency
Slide 22: Consolidation, Standardization and Centralization
Consolidation, Standardization and Centralization
Slide 23: 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 24: Reducing Expenses
Product standardization that simplifies customer choices Departmental centralization Workforce management – job elimination and attrition Employee benefit plan consistency Reducing Expenses
Slide 25: Anticipated Impact
$1.5 million per month beginning 2008 Anticipated Impact
Slide 26: Customer Experience
Customer Experience
Slide 27: 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 28: Customer Experience
Customer experience champion in every affiliate and department Simplified product choices Standardization of process and procedures across all affiliates Customer Experience
Slide 29: 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 30: 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 31: Loan Diversification (6/30/07)
Loan Diversification (6/30/07)
Slide 32: Commercial Loan Concentration By Industry
Industry % Construction 28.0 RE - Investor - Owned 22.1 Services 13.5 Manufacturing 7.6 Retail 6.3 Health Care 5.8 Agriculture 4.9 Wholesale 4.2 Other 2.7 Financial Services 2.1 Arts and Entertainment 1.6 Transportation 1.2 100.0 Commercial Loan Concentration By Industry (as of 6/30/07)
Slide 33: Credit Ratings
Short-term rating P-1 Long-term rating Issuer A-2 Lead Bank Deposits A-1 Outlook Stable 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 Outlook Stable Credi
Slide 34: 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 35: 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 36: 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 37: Peer Group Diluted EPS
PEER GROUP Diluted EPS Ticker Company Name City State 20062005 % 1 TSFG — South Financial Group, Inc. Geenvile sc 1.49 0.94 58.5% 2 WINY Whitney Holding Corpor: New Orleans LA 2.20 1.63 35.0% 3 ONB Old National Bancorp Evansvile IN 1.20 0.93 29.0% 4 TRMK Trustmark Corporation Jackson MS 2.09 1.81 15
Slide 38: Peer Group Dividend Yield
PEER GROUP Diluted PS Ticker Company Name City State 2006 2005 % 15 CBSH Comrrerce Bancshares, Inc. Kansas City wo 309) 3.01 2.70% 16 SKYF Sky Financial Group, Inc. BowingGreen OH 172 169 1.80% 11 ~=NRBK Mercantile Bankshares Corporation Baltimore Ly 23° 226 1.80% 18 «Cw City National Corporation Be
Slide 39: 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 40: 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 41: 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 42: 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 43: Net Interest Margin (6/30/07)
Net Interest Margin (6/30/07)
Slide 44: 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 45: Interest Rate Shocks (6/30/07)
+300 bp + $ 11.5 million + 2.3% +200 bp + $ 7.7 million + 1.6% +100 bp + $ 3.9 million + .8% - 100 bp - $ 5.4 million - 1.1% - 200 bp - $ 13.1 million - 2.7% - 300 bp - $ 22.3 million - 4.5% Interest Rate Shocks (6/30/07) Rate Change NII Change (Annual) % Change 6 month cumulative gap – 0.90
Slide 46: 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 47: 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 48: 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 49: Net Charge-Offs To Loans (6/30/07)
Net Charge-Offs To Loans (6/30/07)
Slide 50: 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 51: 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 52: —*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 53: 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 54: 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 55: 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 56: Fulton Financial Corporation
One Penn Square Lancaster, PA 17602 www.fult.com Fulton Financial Corporation
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