Fulton Financial Corporation · NASDAQ:FULT
Fulton Financial — Investor Presentation (November 2018)
40 slides from Fulton Financial's investor presentation, Nov 1, 2018
Slide 1: Investor Presentation
INVESTOR PRESENTATION z Data as of September 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 $20.4 billion . 3,600+ team members (3,530 FTEs (1)) . Market capitalization of $2.9 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 96 o Replace lower performing commercial relationship 97 managers with h
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 2018 Parent Company Name Market Share . Rank 2018 Industry Branches 2018 ($000) Philadelphia is a natural extension
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: Significant Investments To Enhance 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 nine months of 2018 are up 4.2% compared to the first nine months of 2017 . Yields continue to move higher after several years of declines $16.0 $15.8 4.50% $15.2 $0.6 $0.4 $14.1 $1.0 $0.9 $14.0 $0.4 4.32% $13.3 4.30% $12.9 $0.8
Slide 14: Attractive, Low-Cost Core Deposit Profile
Attractive, Low-Cost Core Deposit Profile . Steady growth in core deposits while lagging deposit costs . Average Deposits for the first nine months of 2018 are up 2.3% compared to the first nine months of 2017 $15.6 $16.0 $15.5 0.60% $14.6 $ $13.7 $- $1.4 $1.5 $14.0 $12.9 $1.4 0.51% $- 0.50% $- $1.3
Slide 15: Solid Asset Quality And Reserves
Solid Asset Quality And Reserves Commentary Non-Performing Loans (NPLs) & Allowance/Loans . Excluding the 2Q18 loss from a single, large commercial lending relationship due to internal fraud $144.8 1.75% $138.5 at the borrower, overall asset quality continues to $150.0 $131.6 $134.8 improve $120.1 .
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) . Low rate environment and continued buildout of our 71.00% 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 3Q18 Capital Ratios . Capital ratios exceed our internal minimums and 14.00% 13.3% 12.00% regulatory requirements 10.7% 10.7% 10.00% 9.3% 8.8% o Opportunity exists to optimize the capital stack 8.00% . Quarterly cash dividend increased to $0.12 per share in
Slide 19: Recent Financial Performance
RECENT FINANCIAL PERFORMANCE
Slide 20: Third Quarter Results
Third Quarter Results Net Income per diluted share: $0.37 in 3Q18, 85.0% increase from 2Q18 and 32.1% increase from 3Q17. Pre-Provision Net Revenue(1): $77.4 million, 5.3% increase from 2Q18 and 18.1% increase from 3Q17 Linked Quarter Loan and Core Deposit Growth: 0.6% increase in average loans, whi
Slide 21: Income Statement Summary
Income Statement Summary Net Income of $65.6 million, 86.5% increase from 2Q18 and 34.2% increase from 3Q17 Change From 3Q18 2Q18 3Q17 Net Interest Income . (Dollars in thousands, except per-share data) From 2Q18: Increase of 2.6%, driven by loan and deposit growth and the impact of a 3 basis point
Slide 22: Net Interest Income And Margin
Net Interest Income And Margin AVERAGE INTEREST-EARNING ASSETS & YIELDS ($ IN BILLIONS) NET INTEREST INCOME & NET INTEREST MARGIN $20.0 $15.6 $15.9 5.00% ($ IN MILLIONS) $15.4 $15.7 $15.8 4.75% $180.0 4.00% $15.0 4.13% 4.50% $165.0 3.75% $10.0 4.25% 4.04% $150.0 3.93% 3.80% 3.83% 4.00% $135.0 3.50%
Slide 23: Asset Quality
Asset Quality PROVISION FOR CREDIT LOSSES NON-PERFORMING LOANS (NPLS) & NPLS TO LOANS ($ IN MILLIONS) $160.0 2.00% $40.0 $136.5 $134.8 $134.6 $33.1 $123.7 $120.1 $120.0 1.50% $30.0 $80.0 1.00% $20.0 0.88% 0.85% 0.86% $40.0 0.78% 0.75% 0.50% $10.0 $6.7 $5.1 $4.0 $1.6 $0.0 0.00% $- 3Q17 4Q17 1Q18 2Q18
Slide 24: Non-Interest Income
Non-Interest Income ($ IN MILLIONS) MORTGAGE BANKING INCOME & SPREADS NON-INTEREST INCOME, EXCLUDING SECURITIES GAINS $6.0 4.00% $5.2 3.50% $5.0 $4.8 $4.9 $4.4 $60.0 $4.2 3.00% $4.0 2.50% $3.0 2.00% 1.50% $50.0 $2.0 1.62% 1.38% 1.36% 1.30% 1.00% $1.0 1.11% 0.50% ~ $730 $- million 0.00% $40.0 3Q17 4Q
Slide 25: Non-Interest Expenses
Non-Interest Expenses ($ IN MILLIONS) SALARIES AND EMPLOYEE BENEFITS & STAFFING (1) NON-INTEREST EXPENSE & EFFICIENCY RATIO $90.0 3,700 $80.0 $72.9 $73.5 $75.8 $74.9 $76.8 3,600 $70.0 3,560 3,570 3,500 $60.0 $160.0 68.0% $50.0 3,400 $40.0 3,300 $140.0 67.5% 67.0% $30.0 3,200 $20.0 ~ $730 million 3,1
Slide 26: Profitability & Capital
Profitability & Capital ROA(1) ROE AND ROE (TANGIBLE)(2) 1.40% 1.28% 16.00% 14.99% 1.20% 0.98% 1.01% 11.52% 11.85% 11.48% 1.00% 12.00% 8.76% 9.02% 7.91% 8.23% 0.80% 0.67% 0.70% 8.00% 6.03% 6.28% 0.60% 4.00% 0.40% 0.20% 0.00% 3Q17 4Q17(3) 1Q18 2Q18 3Q18 0.00% 3Q17 4Q17(3) 1Q18 2Q18 3Q18 ROE ROE (tang
Slide 27: 2018 Outlook
2018 Outlook Changes from the outlook as of the end of the second quarter of 2018 have been underlined. • 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 FINANCIAL
Slide 29: Average Loan Portfolio And Yields
Average Loan Portfolio And Yields Change in 3Q 2018 Balance From Yield From Balance Yield 2Q 2018 3Q 2017 2Q 2018 3Q 2017 (dollars in millions) Comm'l Mort $ 6,310 4.46% $ 11 $ 101 0.12% 0.39% Commercial 4,304 4.36% (31) 47 0.09% 0.28% Resid Mort 2,143 3.96% 117 301 0.07% 0.13% Home Equity 1,474 4.9
Slide 30: Average Customer Funding And Rates
Average Customer Funding And Rates Change In 3Q 2018 Balance From Rate From Balance Rate 2Q 2018 3Q 2017 2Q 2018 3Q 2017 (dollars in millions) Nonint DDA $ 4,298 - % $ 16 $ (197) - % - % Int DDA 4,116 0.61% 164 173 0.11% 0.22% Savings/MMDA 4,718 0.64% 180 115 0.15% 0.30% Brokered Deposits 162 2.05%
Slide 31: Loan Distribution By State
Loan Distribution By State Comm'l Consumer Comm'l Mortgage Constr. Res. Mtg. & Other Total (in thousands) Pennsylvania $ 3,111,008 $ 3,213,510 $ 494,652 $ 753,563 1,289,002 $ 8,861,735 New Jersey 560,890 1,424,922 177,034 353,674 417,914 2,934,434 Maryland 377,370 760,541 140,747 415,128 273,139 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 $ 26,048 $ 14,900 $ 3,282 $ 7,646 $ 4,841 $ 56,717 $ 8,861,735 0.64% New Jersey 8,375 14,530 1,731 4,384 3,562 32,582 2,934,434 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 $ 2,420 $ 111 $ (250) $ 417 $ 618 $ 3,316 $ 8,871,970 0.15% New Jersey (96) (141) (8) (11) (148) (404) 2,870
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 4.9 $ 498 $ (20) $ 478 Collateralized mortgage obligations 3.4 820 (23) 797 State and municipal securities 7.7 270 (9)
Slide 35: Non-Interest Income (Excluding Securities Gains)
Non-Interest Income (Excluding Securities Gains) Change From 3Q 2018 2Q 2018 3Q 2017 2Q 2018 3Q 2017 (in thousands) Other service charges and fees: Merchant fees $ 5,006 $ 4,920 $ 4,398 $ 86 $ 608 Commercial loan interest rate swap fees 3,607 2,393 1,954 1,214 1,653 Debit card income 3,604 3,077 2,8
Slide 36: Non-Interest Expense
Non-Interest Expense Change From 3Q 2018 2Q 2018 3Q 2017 2Q 2018 3Q 2017 (in thousands) Salaries and employee benefits $ 76,770 $ 74,919 $ 72,894 $ 1,851 $ 3,876 Net occupancy expense 12,578 12,760 12,180 (182) 398 Data processing and software 10,157 10,453 10,301 (296) (144) Other outside services
Slide 37: Non-GAAP Reconciliation
Non-GAAP Reconciliation Three Months Ended Note: The Corporation has presented the following non-GAAP Sep 30 Dec 31 Mar 31 Jun 30 Sep 30 (Generally Accepted Accounting Principles) financial measures 2017 2017 2018 2018 2018 because it believes that these measures provide useful and Efficiency ratio
Slide 38: Non-GAAP Reconciliation
Non-GAAP Reconciliation Sep 30 Dec 31 Mar 31 Jun 30 Sep 30 2017 2017 2018 2018 2018 Tangible Common Equity to Tangible Assets (TCE Ratio) (dollars in thousands) Shareholders' equity $ 2,225,786 $ 2,229,857 $ 2,235,493 $ 2,245,785 $ 2,283,014 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 wwwafult.com FULTON FINANCIAL “CORPORATION
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