Fulton Financial Corporation · NASDAQ:FULT
Fulton Financial — Shareholder Meeting (May 2017)
70 slides from Fulton Financial's shareholder meeting presentation, May 15, 2017
Slide 1: Annual Shareholders' Meeting
ANNUAL SHAREHOLDERS’ MEETING 1 May 15, 2017
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 • Say When 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: Lisa Crutchfield
BOARD OF DIRECTORS 8 Lisa Crutchfield
Slide 9: Board of Directors: Denise Devine
BOARD OF DIRECTORS 9 Denise Devine
Slide 10: Board of Directors: Pat Freer
BOARD OF DIRECTORS 10 Pat Freer
Slide 11: Board of Directors: George Hodges
BOARD OF DIRECTORS 11 George Hodges
Slide 12: Board of Directors: Al Morrison
BOARD OF DIRECTORS 12 Al Morrison
Slide 13: Board of Directors: Rob Moxley
BOARD OF DIRECTORS 13 Rob Moxley
Slide 14: Board of Directors: Scott Smith
BOARD OF DIRECTORS 14 Scott Smith
Slide 15: Board of Directors: Scott Snyder
BOARD OF DIRECTORS 15 Scott Snyder
Slide 16: Board of Directors: Ron Spair
BOARD OF DIRECTORS 16 Ron Spair
Slide 17: Board of Directors: Mark Strauss
BOARD OF DIRECTORS 17 Mark Strauss
Slide 18: Board of Directors: Ernie Waters
BOARD OF DIRECTORS 18 Ernie Waters
Slide 19: Senior Management
SENIOR MANAGEMENT 19
Slide 20: Senior Management: Phil Rohrbaugh
SENIOR MANAGEMENT 20 Phil Rohrbaugh
Slide 21: Senior Management: Craig Roda
SENIOR MANAGEMENT 21 Craig Roda
Slide 22: Senior Management: Meg Mueller
SENIOR MANAGEMENT 22 Meg Mueller
Slide 23: Senior Management: Curt Myers
SENIOR MANAGEMENT 23 Curt Myers
Slide 24: Senior Management: Angie Sargent
SENIOR MANAGEMENT 24 Angie Sargent
Slide 25: Senior Management: Betsy Chivinski
SENIOR MANAGEMENT 25 Betsy Chivinski
Slide 26: Report of the Judge of Election
REPORT OF THE JUDGE OF ELECTION 26
Slide 27: Annual Shareholders' Meeting
ANNUAL SHAREHOLDERS’ MEETING 27 May 15, 2017
Slide 28: A Look Back and a Look Ahead
A LOOK BACK AND A LOOK AHEAD Phil Wenger, Chairman, President and CEO 28
Slide 29: A Valuable Franchise
29 Pennsylvania Virginia Maryland Delaware New Jersey A VALUABLE FRANCHISE
Slide 30: Basic Facts (at 3/31/17)
BASIC FACTS (AT 3/31/17) Banking offices: 243 Asset size: $19.2 billion Team members: 3,700 Shares outstanding: 174.3 million Market capitalization: $3.1 billion Book value per share: $12.36 Tangible book value per share*: $9.31 30 *Non-GAAP based financial measure. For a reconciliation to the most
Slide 31: Financial Performance
FINANCIAL PERFORMANCE 31
Slide 32: 2016 Highlights
2016 HIGHLIGHTS (COMPARISONS ARE TO 2015) 32 Net Interest Income • Increased 4.2% Net Interest Margin • Decreased 3 basis points to 3.18% Non-Interest Income (Excluding Securities Gains) • Increased 8.6% Non-Interest Expense (Excluding Loss on Redemption of TruPS) • Increased 3.2%
Slide 33: Diluted Earnings Per Share
DILUTED EARNINGS PER SHARE 33 $ 0.80 $ 0.83 $ 0.84 $0.85 0.93 $- $0.25 $0.50 $0.75 $1.00 2012 2013 2014 2015 2016
Slide 34: Return on Average Assets, Tangible Equity & Average Equity
RETURN ON AVERAGE ASSETS, TANGIBLE EQUITY & AVERAGE EQUITY 34 0.88% 0.93% 0.89% 0.70% 0.80% 0.90% 1.00% 2012 2013 2014 2015 2016 FULT Note: Return an average assets determined by dividing net income for the period indicated by average assets. Return on average equity determined by dividing net incom
Slide 35: Average Loan and Average Deposit Growth
AVERAGE LOAN AND AVERAGE DEPOSIT GROWTH 35 6.0% 10.9% 8.6% -1.0% 1.0% 3.0% 5.0% 7.0% 9.0% 11.0% 13.0% 2012 2013 2014 2015 2016 FULT Peer^ Top 50* Note: 2012 through 2016 represents December year-over-year change in average loans and average deposits ˄ See “Appendix” for listing of Peer Group banks.
Slide 36: Deposit Portfolio Composition
DEPOSIT PORTFOLIO COMPOSITION 36 36 Note: Deposit composition is based on average balances for the periods indicated. Average demand and savings were up 9.3% compared to 2015; while total average deposits were up 6.1%. 19% 29% 24% 18% 10% Year Ended December 31, 2016 22% 28% 24% 17% 9% Year Ended De
Slide 37: Non-Performing Loans & NPLs to Loans
NON-PERFORMING LOANS (NPLS) & NPLS TO LOANS ($ IN MILLIONS) 37 Note: NPLs consist of nonaccrual loans and accruing loans 90 days or more past due. $154.3 $138.5 $144.8 $131.6 1.21% 1.06% 1.05% 0.90% 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% $- $25.0 $50.0 $75.0 $100.0 $125.0 $150.0 $175.0 2013 2014
Slide 38: Provision for Credit Losses
PROVISION FOR CREDIT LOSSES ($ IN MILLIONS) $40.5 $12.5 $2.3 $13.2 $- $10.0 $20.0 $30.0 $40.0 $50.0 2013 2014 2015 2016 38
Slide 39: Net Interest Margin
NET INTEREST MARGIN 39 3.18% 3.53% 3.03% 2.6% 2.8% 3.0% 3.2% 3.4% 3.6% 3.8% 4.0% 2012 2013 2014 2015 2016 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 Dec
Slide 40: Efficiency Ratio
EFFICIENCY RATIO 40 67.2% 62.7% 61.7% 54.0% 56.0% 58.0% 60.0% 62.0% 64.0% 66.0% 68.0% 70.0% 2012 2013 2014 2015 2016 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 titl
Slide 41: Capital Strength
CAPITAL STRENGTH 41 (1)Non-GAAP based financial measure. Please refer to the calculation and management’s reasons for using this measure on the slides titled “Non-GAAP Reconciliation” at the end of this presentation. Regulatory Capital Ratios & TCE Ratio 15.6% 15.0% 14.7% 13.2% 13.2% 13.4% 13.1% 12.
Slide 42: 2016 Capital Deployment
2016 CAPITAL DEPLOYMENT • Increased quarterly cash dividend by $0.01 to $0.10 • Paid a $0.02 special dividend in 4th quarter • Repurchased $18.6 million of common stock • Remaining authorization to repurchase up to $31.4 million in shares through December 2017 42
Slide 43: A Sustainable Payout
A SUSTAINABLE PAYOUT 43 (1) Dividends declared per share divided by period-end stock price. (2) Compounded annual growth rate from December 31, 2011 to December 31, 2016. Cash Dividend Per Common Share & Yield $0.20 $0.30 $0.32 $0.34 $0.38 2.04% 3.12% 2.44% 2.75% 2.92% 2.18% 0.0% 0.5% 1.0% 1.5% 2.0%
Slide 44: First Quarter 2017 Performance
FIRST QUARTER 2017 PERFORMANCE • Diluted earnings per share: $0.25 • Pre-provision net revenue*: increased $10.0 million (19.8%) year-over-year • Return on assets: 0.92% • Return on equity: 8.22% • Return on tangible equity*: 10.93% • Average loans: increased 7.2% from 1st quarter 2016 • Average cor
Slide 45: Fulton Financial Stock Performance and Analysts' Recommendations
FULTON FINANCIAL STOCK PERFORMANCE AND ANALYSTS’ RECOMMENDATIONS 45
Slide 46: Stock Performance
STOCK PERFORMANCE Stock Price Change FULT Peer (1) Large Banks (2) December 31, 2013 – December 31, 2016 43.68% 32.38% 32.42% December 31, 2015 – December 31, 2016 44.50% 39.63% 19.73% 46 (1) See “Appendix” for listing of Peer Group banks (2) Price change of Large Banks, which consist of: Bank of Am
Slide 47: Analysts' Earnings Estimates – 2017 Peer Group
ANALYSTS’ EARNINGS ESTIMATES – 2017 PEER GROUP 47 Average change(2): 17.1% Median change(2): 13.2% Notes: 1) 2017 median analyst estimates as of 4/30/2017 2) Average and median change above represents peer percent changes, excluding Fulton Source: SNL Financial LC Rank Company HQ State 2017 Median E
Slide 48: Analysts' Recommendations
ANALYSTS’ RECOMMENDATIONS (AS OF 5/08/17) 48 • Barclays Capital, Inc. Underweight • Boenning & Scattergood, Inc. Neutral • FBR & Co. Market Perform • Hovde Group, LLC Market Perform • Jefferies LLC Hold • Keefe, Bruyette & Woods, Inc. Market Perform • Merion Capital Group Outperform • Piper Jaffray
Slide 49: Annual Shareholders' Meeting
ANNUAL SHAREHOLDERS’ MEETING 49 May 15, 2017
Slide 50: Regulatory Update
REGULATORY UPDATE 50
Slide 51: Our Future Goal: One Bank
BANE F OUR FUTURE GOAL: ONE BANK v Te i“ Fo
Slide 52: How We Will Operate
HOW WE WILL OPERATE? Centralized • Strategic Planning • Product development • Operations/shared services Market-based • Sales • Service • One-to-one problem resolution 52 52
Slide 53: Our Future State: Four Geographic Regions
Central Pennsylvania Southeastern Pennsylvania New Jersey DelMarVa New Castle Sussex Cecil Frederick Howard Montgomery Prince George's Washington Baltimore Anne Arundel Baltimore Atlantic Burlington Camden Cumberland Gloucester Hunterdon Mercer Middlesex Monmouth Morris Ocean Salem Somerset Warren B
Slide 54: 18 Markets
New Castle Sussex Cecil Frederick Montgomery Prince George's Washington Baltimore Anne Arundel Baltimore Atlantic Burlington Camden Cumberland Hunterdon Mercer Middlesex Monmouth Morris Ocean Salem Somerset Warren Berks Centre Chester Columbia Cumberland Dauphin Delaware Lebanon Lancaster Lehigh Lyc
Slide 55: Segmentation Influences Our Operating Model
Segmentation influences our operating model 55 Branch/ Relat. Mgr. Social Call Center Customers Channels Products ATM Online Mobile Checking Savings Borrowing Investing Cash Flow Management Employee Banking Retirement Services Commercial Annual Revenue Loan Amounts $5mm - $50mm >$50mm $2.5mm - $10mm
Slide 56: Three Main Business Areas
THREE MAIN BUSINESS AREAS Focused on the needs of specific customer segments 56 Consumer Commercial Shared Services
Slide 57: Focus on the Customer!
Focus on the CUSTOMER!
Slide 58: The Balance of Power Has Changed
THE BALANCE OF POWER HAS CHANGED 58 BEFORE: Banks had the power NOW: Customers have the power 58
Slide 59: Why Segmentation?
WHY SEGMENTATION? 59 IMPROVE CUSTOMER EXPERIENCE OPTIMIZE RESULTS BECOME MORE EFFECTIVE AND EFFICIENT FOCUS EFFORTS 59
Slide 60: FFC's New Approach: Supporting Our Communities
FFC’s New Approach: 60 SUPPORTING OUR COMMUNITIES 60
Slide 61: Mission Statement: Fulton Forward
MISSION STATEMENT: Fulton Forward™ helps build vibrant communities through gifts of time and dollars and through programs, products and services designed to: • foster affordable housing, • drive economic development, and • promote education and financial literacy in the neighborhoods we serve. Econo
Slide 62: Partnership with Operation HOPE, Inc.
62 PARTNERSHIP WITH OPERATION HOPE, INC. 62
Slide 63: Investment in United Bancshares, Inc.
63 INVESTMENT IN UNITED BANCSHARES, INC. Phil Wenger Chairman, President and CEO, Fulton Financial Corporation Evelyn Smalls President and CEO United Bank of Philadelphia 63
Slide 64: Annual Shareholders' Meeting
ANNUAL SHAREHOLDERS’ MEETING 64 May 15, 2017
Slide 65: Questions & Answers
QUESTIONS & ANSWERS May 15, 2017 65
Slide 66: Annual Shareholders' Meeting
ANNUAL SHAREHOLDERS’ MEETING 66 May 15, 2017
Slide 67: Appendix
APPENDIX 67
Slide 68: Non-GAAP Reconciliation
NON-GAAP RECONCILIATION 68 2016 2015 2014 2013 2012 Eff iciency rat io Non-interest expense 489,519$ 480,160$ 459,246$ 461,433$ 449,294$ Less: Intangible amortization - (247) (1,259) (2,438) (3,031) Less: Loss on redemption of trust preferred securities - (5,626) - - - Numerator 489,519$ 474,287$ 45
Slide 69: Non-GAAP Reconciliation (Continued)
NON-GAAP RECONCILIATION (CONTINUED) 69 D ec 3 1, D ec 3 1, D ec 3 1, D ec 3 1, D ec 3 1, 2 0 16 2 0 15 2 0 14 2 0 13 2 0 12 Tang ib le C ommon Equit y t o Tang ib le A sset s ( TC E R at io ) Shareholders' equity 2,121,115$ 2,041,894$ 1,996,665$ 2,063,187$ 2,081,656$ Less: Intangible assets (531,556
Slide 70: 2016 Peer Group
2016 PEER GROUP(1) BancorpSouth, Inc. Commerce Bancshares, Inc. F.N.B. Corporation Hancock Holding Company IBERIABANK Corporation MB Financial, Inc. Northwest Bancshares, Inc. Old National Bancorp PrivateBancorp, Inc.(2) Prosperity Bancshares, Inc. 70 (1) Fulton’s Peer group as of December 31, 2016.