Fulton Financial Corporation · NASDAQ:FULT
Fulton Financial — Shareholder Meeting (May 2015)
72 slides from Fulton Financial's shareholder meeting presentation, May 5, 2015
Slide 1: Annual Shareholders' Meeting May 5, 2015
ANNUAL SHAREHOLDERS’ MEETING May 5, 2015 1
Slide 2: Reminder: vote your shares
REMINDER: If you have not yet voted your shares, please do so now by visiting the Judge of Election table at the side of the room. 2
Slide 3: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS This presentation may contain forward-looking statements with respect to Fulton Financial 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 wor
Slide 4: Rules of Conduct
RULES OF CONDUCT • Cameras, recording devices and cell phones are not permitted to be used in the meeting. • The display of placards and/or signs is prohibited. • Questions from shareholders should be directed to the Chairperson of the meeting during the Question and Answer (Q&A) period. • During th
Slide 5: Welcome and Opening Remarks
WELCOME AND OPENING REMARKS Phil Wenger, Chairman, President and CEO 5
Slide 6: Today's Agenda
TODAY’S AGENDA • Business Meeting • Proposals: • Election of Directors • Say on Pay • Ratification of appointment of independent auditor • Introductions • Results of Voting • Conclusion of Business Meeting • Management Presentation • Questions and Answers 6
Slide 7: Board of Directors
BOARD OF DIRECTORS 7
Slide 8: Board of Directors: John M. Bond, Jr.
BOARD OF DIRECTORS 8 John M. Bond, Jr.
Slide 9: Board of Directors: Lisa Crutchfield
BOARD OF DIRECTORS 9 Lisa Crutchfield
Slide 10: Board of Directors: Denise L. Devine
BOARD OF DIRECTORS 10 Denise L. Devine
Slide 11: Board of Directors: Patrick J. Freer
BOARD OF DIRECTORS 11 Patrick J. Freer
Slide 12: Board of Directors: George W. Hodges
BOARD OF DIRECTORS 12 George W. Hodges
Slide 13: Board of Directors: Albert Morrison III
BOARD OF DIRECTORS 13 Albert Morrison III
Slide 14: Board of Directors: Rob Moxley
BOARD OF DIRECTORS 14 Rob Moxley
Slide 15: Board of Directors: R. Scott Smith, Jr.
BOARD OF DIRECTORS 15 R. Scott Smith, Jr.
Slide 16: Board of Directors: Gary A. Stewart
BOARD OF DIRECTORS 16 Gary A. Stewart
Slide 17: Board of Directors: Ernest J. Waters
BOARD OF DIRECTORS 17 Ernest J. Waters
Slide 18: Recognition of Retiring Director
18 RECOGNITION OF RETIRING DIRECTOR
Slide 19: Retiring Director: Craig A. Dally
RETIRING DIRECTOR 19 Craig A. Dally
Slide 20: Senior Management
20 SENIOR MANAGEMENT
Slide 21: Senior Management: Pat Barrett
SENIOR MANAGEMENT 21 Pat Barrett
Slide 22: Senior Management: Phil Rohrbaugh
SENIOR MANAGEMENT 22 Phil Rohrbaugh
Slide 23: Senior Management: Craig Roda
SENIOR MANAGEMENT 23 Craig Roda
Slide 24: Senior Management: Meg Mueller
SENIOR MANAGEMENT 24 Meg Mueller
Slide 25: Senior Management: Curt Myers
SENIOR MANAGEMENT 25 Curt Myers
Slide 26: Senior Management: Angie Sargent
SENIOR MANAGEMENT 26 Angie Sargent
Slide 27: Retiring Management: Craig Hill, Jim Shreiner
RETIRING MANAGEMENT 27 Craig Hill Jim Shreiner
Slide 28: Community Banking Leadership
28 COMMUNITY BANKING LEADERSHIP
Slide 29: Community Banking Leadership: Gerry Nau
COMMUNITY BANKING LEADERSHIP 29 Gerry Nau North central and Northeastern Pennsylvania
Slide 30: Community Banking Leadership: Jeff Rush
COMMUNITY BANKING LEADERSHIP 30 Jeff Rush Southcentral/Southeastern Pennsylvania and Delaware
Slide 31: Community Banking Leadership: John Scaldara
COMMUNITY BANKING LEADERSHIP 31 John Scaldara Maryland and Virginia
Slide 32: Community Banking Leadership: Angela Snyder
COMMUNITY BANKING LEADERSHIP 32 Angela Snyder New Jersey
Slide 33: Jill Carson, Fulton Mortgage Company
33 Jill Carson Fulton Mortgage Company
Slide 34: Dave Hanson, Fulton Financial Advisors
34 Dave Hanson Fulton Financial Advisors/ Clermont Wealth Strategies
Slide 35: Report of the Judge of Election
35 REPORT OF THE JUDGE OF ELECTION
Slide 36: Annual Shareholders' Meeting May 5, 2015
ANNUAL SHAREHOLDERS’ MEETING May 5, 2015 36
Slide 37: A Look Back and a Look Ahead
37 Phil Wenger, Chairman, President and CEO A LOOK BACK AND A LOOK AHEAD
Slide 38: A Valuable Franchise
A VALUABLE FRANCHISE i The Columbia Bank Gi FNB Bank,N.A. @ Fulton Bank,N.A. I Fulton Bank of New Jersey G Lafayette Ambassador Bank GB Swineford National Bank | Pennsylvania New Jersey | Maryland (CIAL ‘CORPORATION
Slide 39: Basic Facts (at 3/31/15)
39 Banking offices: 254 Asset size: $17.4 billion Team members: 3,700 Shares outstanding: 179.1 million Market capitalization: $2.2 billion Book value per share: $11.34 Tangible book value per share*: $8.37 BASIC FACTS (AT 3/31/15) *Non-GAAP based financial measure. For a reconciliation to the most
Slide 40: Major Forces Continuing to Impact Our Industry
MAJOR FORCES CONTINUING TO IMPACT OUR INDUSTRY 40 High Regulatory Burden—BSA Enforcement Actions Increasing Number of Cyber Breaches Impact of Changing Customer Behaviors Disintermediation Risk and Impact on Future Liquidity Margin Pressure from Low Interest Rate Environment
Slide 41: Financial Performance
41 FINANCIAL PERFORMANCE
Slide 42: 2014 Highlights
2014 HIGHLIGHTS • Diluted Earnings Per Share Growth • Average Loan Growth • Core Deposit Growth • Revenue challenges due to a persistent low interest rate environment • Asset Quality improvement • Decrease in Non-Interest Expenses • Strong capital levels 42
Slide 43: Other 2014 Events
OTHER 2014 EVENTS • Received enforcement actions from our regulators; devoted considerable resources to strengthen and improve our BSA/AML program • Implemented cost-savings initiatives • Initiated capital actions which resulted in the issuance of $100 million of subordinated debt, the proceeds of w
Slide 44: Diluted Earnings Per Share
DILUTED EARNINGS PER SHARE 44 $ 0.59 $ 0.73 $ 0.80 $0.83 0.84 $- $0.25 $0.50 $0.75 $1.00 2010 2011 2012 2013 2014
Slide 45: Return on Average Assets & Tangible Equity
RETURN ON AVERAGE ASSETS & TANGIBLE EQUITY 45 0.93% 0.96% 0.96% 0.50% 0.60% 0.70% 0.80% 0.90% 1.00% 2010 2011 2012 2013 2014 FULT Peer^ Top 50* Note: Return an average assets determined by dividing net income for the period indicated by average assets. Return an tangible equity is a non-GAAP based f
Slide 46: Average Loan and Average Deposit Growth
AVERAGE LOAN AND AVERAGE DEPOSIT GROWTH 46 2.4% 9.0% 8.2% -1.0% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% 10.0% 2010 2011 2012 2013 2014 FULT Peer^ Top 50* Note: 2010 through 2014 represents December year-over-year change in average loans and average deposits ˄ See “Appendix” for listing of
Slide 47: Non-Performing Loans & NPLs to Loans
NON-PERFORMING LOANS (NPLS) & NPLS TO LOANS ($ IN MILLIONS) 47 $328.8 $286.5 $211.1 $154.3 $138.5 2.75% 2.39% 1.74% 1.21% 1.06% 0.00% 1.00% 2.00% 3.00% $- $50.0 $100.0 $150.0 $200.0 $250.0 $300.0 $350.0 2010 2011 2012 2013 2014 NPLs NPLs/Loans Note: NPLs consist of nonaccrual loans and accruing loan
Slide 48: Provision for Credit Losses
PROVISION FOR CREDIT LOSSES ($ IN MILLIONS) $160.0 $135.0 $94.0 $40.5 $12.5 $- $25.0 $50.0 $75.0 $100.0 $125.0 $150.0 $175.0 2010 2011 2012 2013 2014 48
Slide 49: Net Interest Margin
NET INTEREST MARGIN 49 3.39% 3.53% 3.21% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 2010 2011 2012 2013 2014 FULT Peer^ Top 50* Note: Fully-taxable equivalent. ˄ See “Appendix” for listing of Peer Group banks. * Comprised of the 50 largest publicly traded domestic banks/thrifts in assets size as of December 31,2
Slide 50: Efficiency Ratio
EFFICIENCY RATIO 65.7% 61.7% 63.6% 50.0% 52.0% 54.0% 56.0% 58.0% 60.0% 62.0% 64.0% 66.0% 2010 2011 2012 2013 2014 FULT Peer^ Top 50* Note: The efficiency ratio is a non-GAAP based financial measure. Please refer to the calculation and management’s reasons for using this measure on the slides titled
Slide 51: Capital Strength (12/31/14)
CAPITAL STRENGTH (12/31/14) 51 Excess Above Well Capitalized Well Threshold Well FULT Capitalized (in millions) FULT (1) Capitalized (2) Total Risk-Based Capital Ratio 14.70% 10.00% $ 625 14.70% 10.50% Tier 1 Risk-Based Capital Ratio 12.30% 6.00% $ 850 11.00% 8.50% Tier 1 Leverage Ratio 10.00% 5.00%
Slide 52: Deploying Capital: Completed Stock Repurchase Programs
DEPLOYING CAPITAL: COMPLETED STOCK REPURCHASE PROGRAMS June 2012 to April 2015 Repurchase Programs Shares Repurchased 26.4 million % of Outstanding Shares 14.9% (1) Amount Repurchased $307 million Average Purchase Price $11.61 52 (1) Total shares repurchased as a percentage of outstanding common sto
Slide 53: A Sustainable Payout
A SUSTAINABLE PAYOUT 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% $0.00 $0.04 $0.08 $0.12 $0.16 $0.20 $0.24 $0.28 $0.32 $0.36 2010 2011 2012 2013 2014 Cash Dividend Yield 53 (1) Annualized dividend rate per share divided by period-end stock price. (2) Compounded annual growth rate from December 31, 2010
Slide 54: First Quarter 2015 Performance
54 FIRST QUARTER 2015 PERFORMANCE • Diluted Earnings Per Share growth • Increase in Average Loans & Average Deposits • Decrease in Net Interest Income & Net Interest Margin • Asset Quality • Strong Capital Levels Note: In comparison to the fourth quarter of 2014
Slide 55: Fulton Financial Stock Performance and Analysts' Recommendations
55 FULTON FINANCIAL STOCK PERFORMANCE AND ANALYSTS’ RECOMMENDATIONS
Slide 56: Stock Performance
56 STOCK PERFORMANCE Stock Price Change FULT Peer (1) Large Banks (2) December 31, 2012 – December 31, 2013 36.2% 34.1% 32.8% December 31, 2013 – December 31, 2014 -5.5% -4.6% 7.9% December 31, 2012 – December 31, 2014 28.6% 30.5% 42.3% (1) Median price change of Peer Group banks; See “Appendix” for
Slide 57: Analysts' Earnings Estimates – 2014 Peer Group
ANALYSTS’ EARNINGS ESTIMATES – 2014 PEER GROUP(1) 57 Average change (3): 10.8% Median change (3): 8.8% Rank Company Name HQ State 2015 Median EPS Estimate (2) 2014 Actual Diluted EPS Percent Change 1 Umpqua Holdings Corp. MO $1.23 $0.78 57.5% 2 IberiaBank Corp. LA $4.39 $3.30 32.9% 3 BancorpSouth, I
Slide 58: Analysts' Recommendations (as of 4/30/15)
ANALYSTS’ RECOMMENDATIONS (AS OF 4/30/15) 58 • Barclays Capital Equal Weight • BB&T Hold • Boenning & Scattergood Neutral • Drexel Hamilton Hold • FBR Capital Markets Market Perform • Guggenheim Partners Neutral • Jefferies & Company Hold • Keefe, Bruyette &Woods Market Perform • Sandler O’Neill Hol
Slide 59: Looking Ahead
59 LOOKING AHEAD
Slide 60: 2015 Outlook
2015 OUTLOOK • Manage our Net Interest Margin • Grow Loans and Deposits • Grow Non-Interest Income • Control Expenses • Return Capital to Shareholders 60
Slide 61: Branch Strategy
BRANCH STRATEGY • 13 branches consolidated into nearby branches • Customer retention remained the same as at other unaffected branches: We retained: • 96% of retail customers • 92% of commercial customers • Minimal impact on employee population • 70 positions eliminated • 56 employees found other po
Slide 62: Loan/Deposit Growth
LOAN/DEPOSIT GROWTH • Quality earning asset growth remains a top priority • Increase loan growth to help offset the impact of the current low interest rate environment • Continue to grow deposits to support loan growth 62
Slide 63: Risk Management and Compliance
• 2014 accomplishments paved the way for our 2015 priorities: • Effective use of technology to strengthen our compliance program • Robust regulatory compliance training • Addition of key staff in regulatory compliance areas • Completing enhancement of our BSA/AML processes and controls • Preparing f
Slide 64: One Bank: Simplifying Company Structure
ONE BANK: SIMPLIFYING COMPANY STRUCTURE PAST FUTURE • Up to 15 separate subsidiary banks • Conduct our core banking business through a single subsidiary bank • Organizational structure based mainly on geography • Our company will be organized based on business lines – aligning our resources to bette
Slide 65: IT Transformation
IT TRANSFORMATION What is it? • Aggressive, multi-year project to realign and strengthen IT support throughout the company • Prioritized approach to strengthening our technology systems throughout the company We’re doing this to: • Be better able to meet the growing technological needs of our compan
Slide 66: Investing in Our Team
INVESTING IN OUR TEAM We’re doing this to: • Attract and retain qualified and motivated employees who continue to grow and develop • Better serve our customers • Increase our company’s capacity and earning power 66
Slide 67: Annual Shareholders' Meeting May 5, 2015
ANNUAL SHAREHOLDERS’ MEETING May 5, 2015 67
Slide 68: Questions & Answers
QUESTIONS & ANSWERS May 5, 2015 68
Slide 69: Annual Shareholders' Meeting May 5, 2015
ANNUAL SHAREHOLDERS’ MEETING May 5, 2015 69
Slide 70: Appendix
APPENDIX 70
Slide 71: Non-GAAP Reconciliation
NON-GAAP RECONCILIATION 2014 2013 2012 2011 2010 Eff iciency rat io Non-interest expense 459,246$ 461,433$ 449,294$ 416,242$ 408,254$ Less: Intangible amortization (1,259) (2,438) (3,031) (4,257) (5,240) Numerator 457,987$ 458,995$ 446,263$ 411,985$ 403,014$ Net interest income (fully taxable equiva
Slide 72: Peer Group
PEER GROUP* Associated Banc-Corp BancorpSouth, Inc. BOK Financial Corporation Commerce Bancshares, Inc. Cullen/Frost Bankers, Inc. FNB Corporation FirstMerit Corporation Hancock Holding Company IBERIABANK Corporation International Bancshares Corp. National Penn Bancshares, Inc. Private Bancorp, Inc.