Fulton Financial Corporation · NASDAQ:FULT
Fulton Financial — Q3 2020 Earnings Presentation
40 slides from Fulton Financial's earnings presentation, Nov 9, 2020
Slide 1: Investor Presentation
INVESTOR PRESENTATION z Data as of September 30, 2020 - 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 Relationship Banking Strategy Focused on the Customer Experience Granular, Well-Diversified Loan Portfolio Attractive Core Deposit Profile Solid Asset Quality and Reserves Prudent Expense Manageme
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 41 41 Various roles since joining in 1979 Curt Myers President/COO 30 30 Various roles since joining in 1990 PwC, Banking and Investment Banking; Joined Mark McCol
Slide 5: A Valuable Franchise
A Valuable Franchise ~220 financial centers throughout the Mid-Atlantic Asset size of $25.5 billion 3,400+ team members (1) Market capitalization of ~ $1.5 billion (2) Opportunity to meaningfully grow our market share (3) o ~16.4% deposit market share across the 15 counties where we have a
Slide 6: Strong Position In Attractive & Stable Markets
Strong Position In Attractive & Stable Markets Fulton Financial Fulton Financial Market Median Projected Fulton Financial Fulton Financial Market Total Projected Corporation Corporation Total Market Total Household Market Metropolitan Statistical Area (MSA) Corporation Corporation Total Active Branc
Slide 7: 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 2020 Parent Company Name Market Share Philadelphia is a natural extension of our current Rank 2020 Industry Branch
Slide 8: Strategic Initiatives Support Our Relationship Banking Strategy
Strategic Initiatives Support Our Relationship Banking Strategy Purpose We Change Lives for the Better OPERATIONAL EXCELLENCE GROWTH STRATEGIES Strategic Filter • Advancing business line structure Outcomes • Investing in talent for growth and charter consolidation. in targeted markets and • Focus on
Slide 9: Fulton Has Made Significant Investments To Enhance Its Digital Capabilities
Fulton Has Made Significant Investments To Enhance Its Digital Capabilities Commercial Online Commercial Loan Mortgage Loan NewPurchaseBanking Website Platform Origination System Origination System 2017 2019 2020 Best-in-class online platform for Streamlines commercial Cloud-based loan origina
Slide 10: Optimizing Our Financial Center Network
Optimizing Our Financial Center Network Optimizing our financial center network has: Moved us towards multiple financial center types vs. a one-size-fits-all model Given us greater ability to re-invest in people & digital transactions Oriented the financial center as a primary touchpoint enabl
Slide 11: Granular, Well-Diversified Loan Portfolio
Granular, Well-Diversified Loan Portfolio Average Loans YTD 9/2020 are up 10.5% compared to YTD 9/2019 Excluding PPP loans, average loans YTD 9/2020 are up 3.9% compared to YTD 9/2019 Yields have declined in 2020, partially offset by declines in deposit costs $18.0 $18.0 5.00% $0.7 $16.4 $0.9
Slide 12: Attractive Core Deposit Profile
Attractive Core Deposit Profile Steady growth in core deposits Average Deposits for YTD /2020 are up 14.5% compared to YTD 9/2019 Deposit costs actively managed lower 0.79% $20.0 0.80% $18.9 $18.0 $1.6 $16.8 0.70% $15.8 $ $16.0 $14.6 $15.5 $0.1 $1.5 $- 0.60% $1.4 $- $1.5 $3.8 $14.0 $1.4 0.55%
Slide 13: Solid Asset Quality And Reserves
Solid Asset Quality And Reserves Commentary Non-Performing Loans (NPLs) & Allowance/Loans Growth in allowance for credit losses in 2020 1.75% reflects impact of COVID-19 and adoption of $142.1 $150.0 $139.7 $141.2 (1) $131.6 $134.8 CECL 1.50% $125.0 Selected Industries With Heightened Risk Due t
Slide 14: Prudent Expense Management With Opportunities To Realize Efficiencies
Prudent Expense Management With Opportunities To Realize Efficiencies Commentary Efficiency Ratio (FTE) Low rate environment and continued buildout of our 70.0% compliance, risk and technology infrastructures were 68.0% the primary drivers of the increase in the efficiency 66.0% ratio in 2015 64.0
Slide 15: Strong Capital Position
Strong Capital Position COMMENTARY CAPITAL RATIOS (1) Capital position remains strong Suspended share repurchases in Mid- 16.00% 13.8% March 14.00% Dividend elected to remain at $0.13 12.00% $648 quarterly 10.00% 9.6% 9.6% $196 Raised $375 million of subordinated debt $485 8.00% 7.5% in Q1 2
Slide 16: Credit Disclosures – Additional Detail On Deferrals And Select Industries
CREDIT DISCLOSURES – ADDITIONAL DETAIL ON DEFERRALS AND SELECT INDUSTRIES (DATA AS OF SEPTEMBER 30, 2020; ALL INDUSTRY CLASSIFICATIONS BASED ON NAICS CODES)
Slide 17: P&I Deferrals and Loans In Forbearance Have Declined
P&I Deferrals and Loans In Forbearance Have Declined As of September 30, 2020 (1) Based on regulatory classifications. (2) Represents the portion of the portfolio balance as of September 30, 2020 that consists of loans that had entered into COVID-19 pandemic-related payment deferral arrangements at
Slide 18: Selected Industries With Heightened Risk Due to COVID-19
Selected Industries With Heightened Risk Due to COVID-19 Commercial Portfolio – Selected Industries (1) (1) Commercial Portfolio consists of Commercial and Industrial, Commercial Mortgage, and Construction loans to commercial borrowers. Note: "Pass," "Special Mention" and 18 "Substandard or Lower" a
Slide 19: Complete Hotel Portfolio Reviewed With Updated Risk Ratings
Complete Hotel Portfolio Reviewed With Updated Risk Ratings As of September 30, 2020 • 60 hotel loans totaling $366 million or 2.6% of the portfolio. • Average loan size of $3.0 million. • Approximately 51% of the hotel loans are in a COVID-19 deferral. • Concentration in hotels that primarily rely
Slide 20: Food Services/Restaurant Portfolio Reflects Diversity In Size, Type And Geography
Food Services/Restaurant Portfolio Reflects Diversity In Size, Type And Geography As of September 30, 2020 Food Services/Restaurants portfolio reflects diversity in size, type and geography • Portfolio size of $106 million. • Diversified and granular portfolio with average loan size of $250 thousand
Slide 21: Arts and Entertainment: Portfolio Risk Assessment
Arts and Entertainment: Portfolio Risk Assessment Shows Reasonable Ability To Perform Given Current Environment As of September 30, 2020 The Arts/Entertainment portfolio risk assessment shows reasonable ability to perform given current environment • Portfolio of $290 million. • Diverse portfolio wit
Slide 22: Healthcare: CCRC's Show Solid Occupancy, Performance
Healthcare: CCRC’s Show Solid Occupancy, Performance And Continue To Have Waiting Lists As of September 30, 2020 CCRC's show solid occupancy, performance and continue to have waiting lists • Portfolio of $967 million. • Healthcare portfolio granular and diverse. • Largest exposure is Nursing and Con
Slide 23: Retail Exposure Includes Significant Auto Dealership Portfolio
Retail Exposure Includes Significant Auto Dealership Portfolio That Has Rebounded Nicely As of September 30, 2020 Retail exposure includes significant auto dealership portfolio that has rebounded nicely 5% • Portfolio of $680 million. • Approximately $457 million in Auto and Equipment Dealership exp
Slide 24: Energy Portfolio Detail
Energy Portfolio Detail: No Direct Exposure To Upstream Or Midstream; Downstream Comprised Of Oil And Gasoline Retail Distribution As of September 30, 2020 • Upstream - Exploration and production sector. Includes searching for crude oil and natural gas fields, drilling of exploratory wells, and dril
Slide 25: Recent Financial Performance & Highlights
RECENT FINANCIAL PERFORMANCE & HIGHLIGHTS
Slide 26: Income Statement Summary
Income Statement Summary Change From 3Q20 2Q20 3Q19 (dollars in thousands, except per-share data) Net Interest Income $ 154,116 $ 1,362 $ (7,144) Provision for Credit Losses 7,080 (12,490) 4,910 Non-Interest Income 63,246 10,329 7,925 Securities Gains 2 (3,003) (4,490) Non-Interest Expense 139,147 (
Slide 27: Net Interest Income And Margin
Net Interest Income And Margin AVERAGE INTEREST-EARNING ASSETS & YIELDS ($ IN BILLIONS) NET INTEREST INCOME & NET INTEREST MARGIN (1) ($ IN MILLIONS) ~ $730 million ~ $610 million AVERAGE LIABILITIES & RATES ($ IN BILLIONS) 27 (1) Using a 21% federal tax rate and statutory interest expense disallowa
Slide 28: Asset Quality
Asset Quality ($ IN MILLIONS) PROVISION FOR CREDIT LOSSES NON-PERFORMING LOANS (NPLS) & NPLS TO LOANS NET CHARGE-OFFS (NCOS) AND NCOS TO AVERAGE LOANS ALLOWANCE FOR CREDIT LOSSES (ALLOWANCE) (1) TO NPLS & LOANS (1) The allowance for credit losses (“ACL”) relates specifically to "Loans, net of unearn
Slide 29: Non-Interest Income
Non-Interest Income (1) Three months ended September 30, 2020 (percent of total non-interest income) 3Q20 2Q20 Change (dollars in thousands) Wealth Management $ 14,943 $ 13,407 $ 1,536 Mortgage Banking 16,801 9,964 6,837 Consumer Banking 10,423 9,138 1,285 Commercial Banking 18,311 16,748 1,
Slide 30: Non-interest Expense
Non-interest Expense Three months ended September 30, 2020 3Q20 2Q20 Change (percent of total non-interest expense) (dollars in thousands) Salaries and Benefits $ 79,227 $ 81,012 $ (1,785) Occupancy 13,221 13,144 77 Data Processing and Software 12,285 12,193 92 Other Outside Services 7,617 7
Slide 31: Cost Savings Initiatives
Cost Savings Initiatives Comprehensive review of expenses undertaken over the past 4 months resulting in the following cost savings initiatives: Projected • Previously disclosed 21 financial centers expected to be $16-$17 closed and consolidated in January 2021 • Further cost savings initiatives pla
Slide 32: Q4 2020 Outlook
Q4 2020 Outlook All previous guidance for 2020 has been withdrawn due to the impact from COVID-19. At this time, select guidance for the fourth quarter of 2020 will be provided on the following areas in comparison to third quarter of 2020 actual results, except effective tax rate is the expected ran
Slide 33: Appendix
APPENDIX
Slide 34: Average Loan Portfolio And Yields
Average Loan Portfolio And Yields Change in 3Q 2020 Balance From Yield From Balance Yield 2Q 2020 3Q 2019 2Q 2020 3Q 2019 (dollars in millions) Real estate - commercial mortgage$ 6,987 3.27% $ 111 $ 498 (0.20%) (1.30%) Commercial & industrial 5,984 2.53% 274 1,569 (0.82%) (2.03%) Real estate - resid
Slide 35: Average Customer Funding And Rates
Average Customer Funding And Rates Change In 3Q 2020 Balance From Rate From Balance Rate 2Q 2020 3Q 2019 2Q 2020 3Q 2019 (dollars in millions) Noninterest bearing demand$ 6,271 - % $ 481 $ 2,023 - % - % Interest-bearing demand 5,591 0.14% 487 1,143 (0.03%) (0.68%) Savings 5,716 0.16% 270 690 (0.09%)
Slide 36: Non-Interest Income
Non-Interest Income (1) $ Change from Q3 2020 Q2 2020 Q3 2019 Q2 2020 Q3 2019 (in thousands) Wealth management $ 14,943 $ 13,407 $ 13,867 1,536 1,076 Mortgage banking 16,801 9,964 6,658 6,837 10,143 Consumer banking: Card 5,002 4,966 5,791 36 (789) Overdraft 3,015 2,107 4,682 908 (1,667) Other consu
Slide 37: Non-Interest Expense
Non-Interest Expense $ Change from Q3 2020 Q2 2020 Q3 2019 Q2 2020 Q3 2019 (in thousands) Salaries and employee benefits $ 79,227 $ 81,012 $ 78,211 $ (1,785) $ 1,016 Net occupancy 13,221 13,144 12,368 77 853 Data processing and software 12,285 12,193 11,590 92 695 Other outside services 7,617 7,600
Slide 38: Non-GAAP Reconciliation
Non-GAAP Reconciliation Note : The Corporation has presented the following non-GAAP (Generally Accepted Accounting Principles) financial measures because it believes that these measures provide useful and comparative information to assess trends in the Corporation's results of operations and financi
Slide 39: Non-GAAP Reconciliation
Non-GAAP Reconciliation Years Ended Nine Months Ended Three Months Ended Sep 30 Sep 30 Sep 30 Jun 30 Sep 30 2014 2015 2016 2017 2018 2019 2019 2020 2019 2020 2020 Efficiency ratio Non-interest expense $ 459,246 $ 480,160 $ 489,519 $ 525,579 $ 546,104 $ 567,736 $ 428,762 $ 424,705 $ 146,770 $ 143,006
Slide 40: Fulton Financial Corporation
eee FULTON FINANCIAL CORPORATION FULTON FINANCIAL www.fult.com ‘CORPORATION