Fulton Financial Corporation · NASDAQ:FULT
Fulton Financial — Q2 2018 Earnings Presentation
30 slides from Fulton Financial's earnings presentation, Jul 30, 2018
Slide 1: Investor Presentation
INVESTOR PRESENTATION D A T A A S O F J U N E 3 0 , 2 0 1 8 U N L E S S O T H E R W I S E N O T E D
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? • Risk Management Foundation • Management Depth and Experience • Stability of Geographic Markets / Franchise Value • Strong Capital & Reserves • Commitment to Enhancing Shareholder Value • Relationship Banking Strategy / Customer Experience • Quality Loan Growth / Solid Asset Quality • A
Slide 4: A Valuable Franchise
A VALUABLE FRANCHISE • 243 community banking offices across the Mid-Atlantic • Asset size: $20.2 billion • 3,700+ team members (3,580 FTEs (1)) • Market capitalization: $2.9 billion (2) (1) Average full-time equivalent employees. (2) Based on shares outstanding and the closing price as of June 30, 2
Slide 5: Strong Position in Attractive Markets
STRONG POSITION IN ATTRACTIVE MARKETS Median Deposits Market Market Household (HH) 2018-2023 Projected Change Metropolitan Statistical Area (MSA) (in millions) Rank Share Income Population HH Income Lancaster, PA 3 ,131 1 28.28% 6 4,827 2.16% 9.70% Philadelphia-Camden-Wilmington, PA-NJ-DE-MD 2 ,966
Slide 6: Deep Executive Bench with Continuity
DEEP EXECUTIVE BENCH WITH CONTINUITY Years in Years at Prior Financial Name Position Fulton Services Experience E. Philip Wenger Chairman and CEO 38 38 Various roles since joining in 1979 President/COO of Fulton Financial Corporation and Curtis Myers 27 27 Various roles since joining in 1990 Preside
Slide 7: Second Quarter Results
SECOND QUARTER RESULTS Net income per diluted share: $0.20 in 2Q18, 28.6% decrease from 1Q18 and 23.1% decrease from 2Q17. Pre-Provision Net Revenue(1): $73.4 million, 18.2% increase from 1Q18 and 16.7% increase from 2Q17 Linked Quarter Loan and Core Deposit Growth: 0.7% increase in average loans, w
Slide 8: Income Statement Summary
Change from 2Q18 1Q18 2Q17 INCOME STATEMENT SUMMARY (dollars in thousands, except per-share data) Net Interest Income 156,067 $ 4,749 $ 1 4,504 Provision for Credit Losses 3 3,117 N e t In c2om9e,o1f 4$375.2 mil lio n , 2 8 .9 % d e2cr6ea,s4e f1ro7m 1Q18 and 22.6% Non-Interest Income 4 9,090 de c
Slide 9: Net Interest Income and Margin
NET INTEREST INCOME AND MARGIN Net Interest Income & Net Interest Margin Average Interest-Earning Assets & Yields ($ IN MILLIONS) ($ IN BILLIONS) $20.0 6.00% 3.93% 4.04% $15.0 3.78% 3.80% 3.83% 4.00% $15.8 $15.6 $15.7 $10.0 $15.1 $15.4 2.00% $5.0 ~ $730 million $2.8 $3.1 $3.2 $2.9 $3.0 $- 0.00% 2Q17
Slide 10: Loan Portfolio Composition & Yield
LOAN PORTFOLIO COMPOSITION & YIELD Average loans for the first six months of 2018 are up 4.8% compared to the first six months of 2017. $18.0 12.00% $15.7 $16.0 $15.2 $0.6 $14.1 $0.4 10.00% $1.0 $0.9 ( $14.0 $12.9 $13.3 $0.4 J Q $0.8 $2.0 1 C C $1.8 1 $0.4 $0.7 G $0.6 $1.5 J $12.0 8.00% 1 $1.5 5 $
Slide 11: Deposit Composition & Cost
DEPOSIT COMPOSITION & COST Average deposits for the first six months of 2018 are up 3.2% compared to the first six months of 2017. $18.0 0.50% 0.47% $16.0 $15.5 $15.5 $14.6 $13.7 $1.4 $1.5 0.40% ( $14.0 $1.4 J $12.9 Q 0.37% 1 C $1.3 C 1 G $3.0 $2.0 $1.2 J $12.0 1 $2.7 5 Q ( $2.4 V 0.31% 0.30% : H
Slide 12: Positioned for Rising Interest Rate Environment
POSITIONED FOR RISING INTEREST RATE ENVIRONMENT JUNE 30, 2018 Rate Annual Change in % Change in Change (1) Net Interest Income (2) Net Interest Income (2) +300 bps $ 81.0 million 12.4% +200 bps $ 55.3 million 8.5% +100 bps $ 28.2 million 4.3% - 100 bps $ (45.3) million -6.9% 1) A variety of interest
Slide 13: Asset Quality
ASSET QUALITY ($ IN MILLIONS) Provision for Credit Losses Non-Performing Loans (NPLs) & NPLs to Loans $160.0 2.00% $40.0 $135.7 $136.5 $134.8 $134.6 $33.1 $123.7 $120.0 1.50% $30.0 $20.0 $80.0 1.00% 0.88% 0.88% 0.85% 0.86% $40.0 0.78% 0.50% $10.0 $6.7 $6.7 $5.1 $4.0 $- $0.0 0.00% 2Q17 3Q17 4Q17 1Q18
Slide 14: Non-Interest Income
NON-INTEREST INCOME ($ IN MILLIONS) Non-Interest Income, Excluding Securities Gains Mortgage Banking Income & Spreads $7.0 4.00% $6.1 $6.0 3.50% $5.2 $4.8 3.00% $5.0 $4.4 $4.2 2.50% $4.0 2.00% $3.0 1.50% $2.0 1.62% 1.44% 1.36% 1.30% 1.00% 1.11% $1.0 0.50% $60.0 $- 0.00% 2Q17(2) ~ $373Q01 7 4Q17 1Q18
Slide 15: Non-Interest Expenses
NON-INTEREST EXPENSES ($ IN MILLIONS) Non-Interest Expense & Efficiency Ratio (1) Salaries and Employee Benefits & Staffing $80.0 $75.8 3,700 $74.5 $72.9 $73.5 $74.9 $160.0 80.0% $70.0 3,600 $60.0 3,580 3,550 3,500 $140.0 70.0% $50.0 3,400 $40.0 67.5% 65.3% ~ $730 3,300 $120.0 64.2% 63.3% 60.0% $30.
Slide 16: Profitability & Capital
PROFITABILITY & CAPITAL ROA(1) ROE and ROE (tangible)(2) 1.20% 0.98% 1.01% 1.00% 0.94% 11.52% 11.85% 12.00% 11.06% 0.80% 0.67% 0.70% 0.60% 8.76% 9.02% 8.36% 7.91% 8.23% 0.40% 8.00% 6.03% 6.28% 0.20% 0.00% 4.00% 2Q17 3Q17 4Q17(3) 1Q18 2Q18 Tangible Common Equity Ratio(2) 0.00% Net Income Per Diluted
Slide 17: 2018 Outlook
2018 OUTLOOK Changes from the outlook as of the end of the first 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 18: Appendix
APPENDIX
Slide 19: Average Loan Portfolio and Yields
AVERAGE LOAN PORTFOLIO AND YIELDS Change in 2Q 2018 Balance From Yield From Balance Yield 1Q 2018 2Q 2017 1Q 2018 2Q 2017 (dollars in millions) Comm'l Mort $ 6,299 4.34% $ (7) $ 135 0.18% 0.34% Commercial 4,335 4.27% 46 114 0.12% 0.27% Resid Mort 2,026 3.89% 68 318 0.04% 0.12% Home Equity 1,503 4.83
Slide 20: Average Customer Funding and Rates
AVERAGE CUSTOMER FUNDING AND RATES Change In 2Q 2018 Balance From Rate From Balance Rate 1Q 2018 2Q 2017 1Q 2018 2Q 2017 (dollars in millions) Nonint DDA $ 4,282 - % $ 36 $ (106) - % - % Int DDA 3,952 0.50% (7) 262 0.09% 0.20% Savings/MMDA 4,538 0.49% 44 223 0.10% 0.24% Brokered Deposits 85 1.87% 11
Slide 21: Loan Distribution by State
LOAN DISTRIBUTION BY STATE AS OF JUNE 30, 2018 Comm'l Consumer Comm'l Mortgage Constr. Res. Mtg. & Other Total (in thousands) Pennsylvania $ 3,100,252 $ 3,256,610 $ 4 91,953 $ 753,587 1,286,311 $ 8 ,888,713 New Jersey 560,333 1,430,936 1 91,322 276,509 410,976 2 ,870,076 Maryland 367,143 734,460 1 3
Slide 22: Non-Performing Loans
NON-PERFORMING LOANS(1) AS OF JUNE 30, 2018 Comm'l Consumer Ending Loans NPLs/Loans Comm'l Mortgage Constr. Res. Mtg. & Other Total NPLs by State by State (dollars in thousands) Pennsylvania $ 28,612 $ 17,680 $ 3,027 $ 7 ,586 $ 5 ,000 $ 6 1,905 $ 8,888,713 0.70% New Jersey 6,382 13,502 1,738 3,978 4
Slide 23: Net Charge-Offs (Recoveries)
NET CHARGE-OFFS (RECOVERIES) THREE MONTHS ENDED JUNE 30, 2018 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 $ 37,694 $ (110) $ 214 $ 54 $ 701 $ 3 8,553 $ 8,949,325 1.72% New Jersey (6
Slide 24: Investment Portfolio
INVESTMENT PORTFOLIO JUNE 30, 2018 Weighted Avg. Remaining Life Amortized Unrealized Estimated (in years) Cost Gain (Loss) Fair Value (dollars in millions) Residential mortgage-backed securities 4.3 $ 1 ,036 $ (35) $ 1 ,001 Collateralized mortgage obligations 3.6 742 (18) 724 State and municipal sec
Slide 25: Non-Interest Income (Excluding Securities Gains)
NON-INTEREST INCOME (EXCLUDING SECURITIES GAINS) Change From 2Q 2018 1Q 2018 2Q 2017 1Q 2018 2Q 2017 (in thousands) Other service charges and fees: Merchant fees $ 4,920 $ 4,115 $ 4,531 $ 805 $ 389 Debit card income 3 ,077 2,817 2,884 260 193 Commercial loan interest rate swap fees 2 ,393 1,291 3,76
Slide 26: Non-Interest Expense
NON-INTEREST EXPENSE Change From 2Q 2018 1Q 2018 2Q 2017 1Q 2018 2Q 2017 (in thousands) Salaries and employee benefits $ 74,919 $ 75,768 $ 74,496 $ (849) $ 4 23 Net occupancy expense 12,760 13,632 12,316 (872) 4 44 Data processing and software 10,453 10,473 9,054 (20) 1 ,399 Other outside services 7
Slide 27: A Sustainable Payout
A SUSTAINABLE PAYOUT Cash Dividend Per Common Share & Yield $0.52 4.5% $0.47 $0.48 (2) CAGR = 8.4% 4.0% $0.44 $0.41 $0.40 $0.38 3.5% V ` : $0.34 . $0.36 1 2.91% 0 3.0% 1 $0.32 R J 2.63% V Q $0.32 J I 2.92% R I 2.5% 2.75% 1 Q $0.28 V C $0.24 R ` V 2.44% ^ $0.24 2.0% _ R J 2.18% V $0.20 R
Slide 28: 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 financia
Slide 29: Non-GAAP Reconciliation (Continued)
NON-GAAP RECONCILIATION (CONTINUED) Jun 30 Sep 30 Dec 31 Mar 31 Jun 30 2017 2017 2017 2018 2018 Tangible Common Equity to Tangible Assets (TCE Ratio) (dollars in thousands) Shareholders' equity $ 2,191,770 $ 2,225,786 $ 2 ,229,857 $ 2,235,493 $ 2,245,785 Less: Intangible assets (531,556) ( 531,556)
Slide 30: Fulton Financial Corporation
FULTON FINANCIAL CORPORATION www.fult.com