Fulton Financial Corporation · NASDAQ:FULT
Fulton Financial — Q4 2019 Earnings Presentation
38 slides from Fulton Financial's earnings presentation, Feb 12, 2020
Slide 1: Investor Presentation
INVESTOR PRESENTATION z Data as of December 31, 2019 - 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 Core Deposit Profile . Solid Asset Quality a
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 . ~230 financial centers throughout the Mid-Atlantic . Asset size of $21.9 billion . 3,600+ team members (3,510 FTEs (1)) . Market capitalization of $2.9 billion (2) . Opportunity to meaningfully grow our market share(3) o ~16.5% deposit market share across the 15 counties where
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 325 300 . Market disruption creates hiring opportunities 275 110 o Replace lower performing commercial relationship 250 97 97 man
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 2019 Parent Company Name Market Share . Philadelphia is a natural extension of our current Rank 2019 Industry Branch
Slide 9: 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 10: 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 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 2019 are up 3.9% compared to 2018 . Yields continue to move higher after several years of declines $18.0 4.70% $16.4 $16.0 $15.8 $0.7 4.55% $15.2 4.50% $0.6 $0.5 $0.9 $1.0 $14.1 $0.9 $14.0 $0.4 Portfolio Loan Total (1) Yield $13.3 $2.0 4.38%
Slide 14: Attractive Core Deposit Profile
Attractive Core Deposit Profile . Steady growth in core deposits . Average Deposits for 2019 are up 5.9% compared to 2018 $18.0 0.79% 0.80% $16.8 $15.8 $1.5 $16.0 $15.5 0.70% $14.6 $- $ $13.7 $1.4 $1.5 $14.0 $- $1.4 $- $3.5 0.60% $1.3 $3.0 $3.0 $12.0 $2.7 0.55% $2.4 0.50% DepositCosts $10.0 $3.8 $4.
Slide 15: Solid Asset Quality And Reserves
Solid Asset Quality And Reserves Commentary Non-Performing Loans (NPLs) & Allowance/Loans . Overall asset quality continues to be stable . We are mindful of where we are in the economic 1.75% cycle and are continuing to assess and analyze the $144.8 $139.7 $141.2 $150.0 $131.6 $134.8 loan portfolio
Slide 16: Prudent Expense Management With Opportunities To Improve
Prudent Expense Management With Opportunities To Improve Commentary Efficiency Ratio (FTE) 71.00% . Low rate environment and continued buildout of our 69.00% compliance, risk and technology infrastructures were the 67.00% 65.00% primary drivers of the increase in the efficiency ratio in 63.00% 2015
Slide 17: Strong Capital Position
Strong Capital Position Commentary Capital Ratios(1) . Capital ratios exceed our internal minimums and regulatory 14.00% requirements 12.00% 11.8% o Opportunity exists to optimize the capital stack . Quarterly cash dividend increased to $0.13 per share in 9.7% 9.7% 10.00% March of 2019 8.5% ~ $730 8
Slide 18: Recent Financial Performance
RECENT FINANCIAL PERFORMANCE
Slide 19: 2019 Highlights
2019 HIGHLIGHTS Net income of $226 million, or $1.35 per diluted share. Key Accomplishments Record year of revenues and net income Termination of remaining BSA/AML regulatory orders Average loan growth of 4% Successful consolidation of affiliate banks into Fulton Average deposit growth of
Slide 20: Quarter Highlights: 4Q19 vs 3Q19
Quarter Highlights: 4Q19 vs 3Q19 Net income per diluted share: $0.29 in 4Q19, 22% decrease from 3Q19 Loan Growth: 2% increase in average balances driven by C&I, commercial and residential mortgages and construction. Deposit Growth: 3% increase in average balances, largely driven by interest bearing
Slide 21: Quarter Highlights: 4Q19 vs 4Q18
Quarter Highlights: 4Q19 vs 4Q18 Net income per diluted share: $0.29 in 4Q19, 12% decrease from 4Q18 Loan Growth: 5% increase in average balances with growth in all categories, except for home equity. Deposit Growth: 6% increase in average balances with growth in all categories. Net Interest Income
Slide 22: Income Statement Summary
Income Statement Summary (1) ROA is return an average assets determined by dividing net income for the period indicated by average assets. (2) ROE is return on average shareholders’ equity determined by dividing net income for the period indicated by average shareholders’ equity, annualized (3) Non-
Slide 23: Income Statement Summary
Income Statement Summary Change from 4Q19 3Q19 4Q18 (dollars in thousands, except per-share data) Net Interest Income $ 159,270 $ (1,990) $ (3,674) Provision for Credit Losses 20,530 18,360 12,330 Non-Interest Income 55,281 (40) 5,758 Securities Gains - (4,492) - Non-Interest Expense 138,974 (7,796)
Slide 24: Net Interest Income And Margin
Net Interest Income And Margin AVERAGE INTEREST-EARNING ASSETS & YIELDS NET INTEREST INCOME & NET INTEREST MARGIN ($ IN BILLIONS) ($ IN MILLIONS) $20 5.00% 4.00% $180.0 4.00% $15 4.22% 4.35% 4.37% 4.25% 4.07% 3.00% $10 3.75% $16.0 $16.2 $16.3 $16.4 $16.8 2.00% $164.5 $162.9 $163.3 $5 $161.3 ~ $730 1
Slide 25: Asset Quality
Asset Quality PROVISION FOR CREDIT LOSSES NON-PERFORMING LOANS (NPLS) & NPLS TO LOANS ($ IN MILLIONS) 2.00% $30.0 $160.0 $147.7 $139.7 $138.7 $136.0 $141.2 1.50% $20.5 $120.0 $20.0 $80.0 1.00% 0.86% 0.90% $10.0 $8.2 0.85% 0.81% 0.84% $40.0 0.50% $5.1 $5.0 $2.2 $0.0 0.00% $- 4Q18 1Q19 2Q19 3Q19 4Q19
Slide 26: Non-Interest Income
Non-Interest Income(1) Three months ended December 31, 2019 (percent of total non-interest income) 4Q19 3Q19 Change (in thousands) n Wealth management $ 14,419 $ 13,867 $ 552 n Mortgage banking 5,076 6,658 (1,582) n Consumer banking 12,426 13,333 (907) n Commercial banking 19,628 18,284 1,344 n Othe
Slide 27: Non-Interest Expenses
Non-Interest Expenses 4Q19 3Q19 Change Three months ended December 31, 2019 (in thousands) (percent of total non-interest expense) n Salaries and benefits $ 76,975 $ 78,211 $ (1,236) n Occupancy 13,080 12,368 712 n Data Processing and software 11,468 11,590 (122) n Other outside services 8,215 12,16
Slide 28: Profitability & Capital
Profitability & Capital ROA(1) ROE AND ROE (TANGIBLE)(2) 1.40% 16.00% 14.03% 1.20% 1.12% 1.11% 1.14% 1.15% 13.17% 13.28% 13.60% 12.00% 10.42% 10.64% 10.52% 1.00% 0.87% 10.10% 10.15% 8.10% 0.80% 8.00% 0.60% 4.00% 0.40% 0.20% 0.00% 0.00% 4Q18 1Q19 2Q19 3Q19 4Q19 4Q18 1Q19 2Q19 3Q19 4Q19 ROE ROE (tangi
Slide 29: Revised 2020 Outlook
Revised 2020 Outlook • Loans & Deposits: Average annual loan and deposit growth rates in the low to mid single-digits • Net Interest Income: Low single digit growth rate • Net Interest Margin: 3.20% to 3.25% for the full year 2020; assumes a stable yield curve and one 25 bp rate cut in 2Q 2020 • Non
Slide 30: Appendix
APPENDIX
Slide 31: Average Loan Portfolio And Yields
Average Loan Portfolio And Yields Change in 4Q 2019 Balance From Yield From Balance Yield 3Q 2019 4Q 2018 3Q 2019 4Q 2018 (dollars in millions) Real estate - commercial mortgage $ 6,561 4.34% $ 72 $ 218 (0.23%) (0.23%) Commercial - industrial, financial and agricultural 4,575 4.24% 160 245 (0.32%) (
Slide 32: Average Customer Funding And Rates
Average Customer Funding And Rates Change In 4Q 2019 Balance From Rate From Balance Rate 3Q 2019 4Q 2018 3Q 2019 4Q 2018 (dollars in millions) Non-interest bearing demand $ 4,325 - % $ 77 $ 3 - % - % Interest-bearing demand 4,699 0.71% 251 474 (0.11%) 0.01% Savings and money market 5,205 0.78% 179 2
Slide 33: Non-Interest Income
Non-Interest Income(1) Change From 4Q 2019 3Q 2019 4Q 2018 3Q 2019 4Q 2018 (in thousands) Wealth management $ 14,419 $ 13,867 $ 13,408 $ 552 $ 1,011 Commercial banking: Merchant and card 5,841 6,166 5,656 (325) 185 Cash management 4,697 4,696 4,340 1 357 Commercial loan interest rate swap 5,426 3,94
Slide 34: Non-Interest Expense
Non-Interest Expense Change From 4Q 2019 3Q 2019 4Q 2018 3Q 2019 4Q 2018 (in thousands) Salaries and employee benefits $ 76,975 $ 78,211 $ 75,745 $ (1,236) $ 1,230 Net occupancy 13,080 12,368 12,708 712 372 Data processing and software 11,468 11,590 10,203 (122) 1,265 Other outside services 8,215 12
Slide 35: Non-GAAP Reconciliation
Non-GAAP Reconciliation Years Ended Note: The Corporation has presented the following non-GAAP (Generally Accepted Accounting 2018 2019 Principles) financial measures because it believes that these measures provide useful and Pre-Provision Net Revenue (in thousands) comparative information to assess
Slide 36: Non-GAAP Reconciliation
Non-GAAP Reconciliation Years Ended Three Months Ended Dec 31 Mar 31 Jun 30 Sep 30 Dec 31 2018 2019 2018 2019 2019 2019 2019 Efficiency ratio Non-interest expense $ 546,104 $ 567,736 $ 140,685 $ 137,824 $ 144,168 $ 146,770 $ 138,974 Less: Intangible Amortization - (1,427) - (107) (107) (1,071) (142)
Slide 37: Peer Group
Peer Group . Atlantic Union Bankshares Corporation . Provident Financial Services, Inc. . BancorpSouth Bank . Trustmark Corporation . Commerce Bancshares, Inc. . UMB Financial Corporation . First Midwest Bancorp, Inc. . Umpqua Holdings Corporation . F.N.B. Corporation . United Bankshares, Inc. . Han
Slide 38: Fulton Financial Corporation
FULTON FINANCIAL CORPORATION www.fult.com CORPORATION: