Fulton Financial Corporation · NASDAQ:FULT
Fulton Financial — Investor Presentation (February 2014)
62 slides from Fulton Financial's investor presentation, Feb 10, 2014
Slide 1: Investor Presentation
Investor Presentation Data as of December 31, 2013 (unless otherwise noted) Ticker Symbol: FULT (NASDAQ)
Slide 2: 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 words such as “may,” “should
Slide 3: About Us
About Us Mid-Atlantic financial holding company 6 community banks / 5 states Fulton Financial Advisors Fulton Mortgage Company 267 community banking offices Asset size: $16.9 billion 3,800 team members (3,620 FTEs) Shares outstanding: 192.7 million Market capitalization: $ 2.5 bill
Slide 4: A Valuable Franchise
A Valuable Franchise @ The Columbia Bank @ FNB Bank,N.A. @ Fulton Bank,N.A. IB Fulton Bank of New Jersey GB Lafayette Ambassador Bank i Swineford National Bank FULTON FINANCIAL CORPORATION
Slide 5: Corporate Priorities
1. Earnings Per Share (EPS) Growth 2. Quality Loan Growth 3. Improve Asset Quality 4. Core Deposit / Household Growth 5. Spread Management / Net Interest Margin 6. Increase Return on Average Assets (ROA) 7. Increase Return on Average Equity (ROE) 8. Expense Management 9. Enhance Compliance & Risk Ma
Slide 6: Priorities: EPS Growth
Priorities: EPS 1. EPS Growth Q4 2013 Diluted EPS : 22 cents 4.8% increase from 3Q 2013 and 10.0% increase form 4Q 2012 6
Slide 7: Diluted Earnings Per Share (Quarterly)
$0.00 $0.05 $0.10 $0.15 $0.20 $0.25 Q4 2009 Q1 2010 Q2 2010 Q3 2010 Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q4 2011 Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 0.11 0.13 0.14 0.16 0.16 0.17 0.18 0.20 0.18 0.19 0.20 0.21 0.20 0.20 0.21 0.21 0.22 Diluted Earnings Per Share (Quarterly) 7
Slide 8: Income Statement Summary (Quarter)
Income Statement Summary (December 31st – Quarter) Q4 Highlights Net Interest Income Increases From 3Q13: 3 bps net interest margin (NIM) increase; $64.4 million, 0.5%, growth in average loans From 4Q12: $789.6 million, 7%, growth in average loans; partially offset by 17 bps decrease in NIM
Slide 9: Income Statement Summary (Year to Date)
Income Statement Summary (December 31st – Year to Date) 2013 Highlights 3% Decrease in Net Interest Income NIM decreased 26 bps; Asset yields dropped 42 bps; Funding costs decreased 20 bps Decrease in net interest income partially offset by impact of $610 million, or 5%, increase in average lo
Slide 10: Priorities: Quality Loan Growth
2. Quality Loan Growth 4Q13 Average loans up 0.5% compared to Q3 2013 and 6.6% compared to 4Q 2012 Fifth consecutive quarter of growth Priorities: Quality Loan Growth 10
Slide 11: Average Loans & Yields
Average Loans & Yields (December 31st – Quarter) Balance Yield (1) Balance Yield (1) Balance Yield (1) 3Q 13 4Q 12 Comm'l Mort 5,066$ 4.49% 4,962$ 4.57% 4,623$ 5.03% 104$ 443$ Commercial 3,640 4.03% 3,706 4.04% 3,559 4.34% (66) 81 Home Equity 1,775 4.18% 1,767 4.19% 1,612 4.39% 8 163 Resid Mort 1,33
Slide 12: Peer Group
International Bancshares Corp. People’s United Financial, Inc. Prosperity Bancshares, Inc. Susquehanna Bancshares, Inc. TCF Financial Corporation UMB Financial Corporation Umpqua Holdings Corporation Valley National Bancorp Webster Financial Corporation Wintrust Financial Corporation Associated Banc
Slide 13: Average Loan Growth
Average Loan Growth 13 Note: 2008 through 2013 represents December year-over-year change in average loans. * Comprised of the 50 largest publicly traded domestic banks/thrifts in assets size as of December 31,2012. Excludes credit card companies. Source: SNL Financial LC 5.1% 8.9% 4.8% -1.0% 2.0% 5.
Slide 14: Priorities: Improve Asset Quality
3. Improve Asset Quality Priorities: Improve Asset Quality 14
Slide 15: Non-accrual Loans to Loans
1.05% 0.78% 0.81% 0.00% 1.00% 2.00% 3.00% Dec 31, 2008 Dec 31, 2009 Dec 31, 2010 Dec 31, 2011 Dec 31, 2012 Dec 31, 2013 FULT Peer Top 50* Non-accrual Loans to Loans 15 * Comprised of the 50 largest publicly traded domestic banks/thrifts in assets size as of December 31,2012. Excludes credit card com
Slide 16: Allowance for Loan Losses to Loans
1.59% 1.20% 1.47% 0.80% 1.10% 1.40% 1.70% 2.00% 2.30% 2.60% Dec 31, 2008 Dec 31, 2009 Dec 31, 2010 Dec 31, 2011 Dec 31, 2012 Dec 31, 2013 FULT Peer Top 50* Allowance for Loan Losses to Loans 16 * Comprised of the 50 largest publicly traded domestic banks/thrifts in assets size as of December 31,2012
Slide 17: Non-performing Loans
Non-performing Loans* (12/31/13) Comm'l Comm'l Mortgage Constr. Res. Mtg. Other Total (in thousands) Pennsylvania 26,617$ 17,266$ 11,508$ 11,034$ 8,833$ 75,258$ Maryland 2,784 3,774 4,410 3,002 2,730 16,700 New Jersey 6,451 19,000 4,673 7,528 6,696 44,348 Virginia 2,050 2,583 676 7,563 419 13,291 De
Slide 18: Provision for Credit Losses (Quarterly)
$0 $10 $20 $30 $40 $50 4Q09 1Q10 2Q10 3Q10 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 45.0 40.0 40.0 40.0 40.0 38.0 36.0 31.0 30.0 28.0 25.5 23.0 17.5 15.0 13.5 9.5 2.5 Provision for Credit Losses (Quarterly, in millions of dollars) 18
Slide 19: Core Deposit / Household Growth
4. Core Deposit / Household Growth Priorities: Core Deposit/ Household Growth 19
Slide 20: Top County Market Share
Top County Market Share* (12/31/13) Ranked #1 in deposit market share Lebanon, PA (Fulton Bank, N.A. 31.3%) Salem, NJ (Fulton Bank of New Jersey 26.0%) Ranked #2 in deposit market share Snyder, PA (Swineford National Bank 27.0%) Montour, PA (FNB Bank, N.A. 26.4%) Lancaster, PA (Fulton Bank
Slide 21: Deposit Composition
22% 21% 18% 9% 30% December 31, 2012 Non-Int DDA Int DDA Money Mkt Savings Time Deposit Composition 21 25% 23% 17% 10% 25% December 31, 2013 Non-Int DDA Int DDA Money Mkt Savings Time Note: Deposit composition is based on annual average balances for the periods indicated.
Slide 22: Average Customer Funding
Average Customer Funding (December 31st – Quarter) 4Q 13 3Q 13 4Q 12 3Q 13 4Q 12 Nonint DDA 3,318$ 3,222$ 2,955$ 96$ 363$ Int DDA 2,967 2,895 2,684 72 283 Savings/MMDA 3,411 3,360 3,399 51 12 CD's 2,966 3,065 3,473 (99) (507) Cash Mgt 291 288 316 3 (25) Total 12,953$ 12,830$ 12,827$ 123$ 126$ Change
Slide 23: Priorities: Margin
Priorities: Margin 4Q 13 3Q 13 4Q 12 3Q 13 4Q 12 Net Interest Margin (1) 3.48% 3.45% 3.65% 0.03% -0.17% Yield on Earning Assets 3.98% 3.96% 4.28% 0.02% -0.30% Cost of Funds 0.53% 0.55% 0.67% -0.02% -0.14% Fed Funds 0.25% 0.25% 0.25% - - Change From 23 • Negative impact of premium amortization on net
Slide 24: Net Interest Margin (Quarterly)
3.48% 3.48% 3.26% 3.00% 3.25% 3.50% 3.75% 4.00% 4Q10 1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 FULT Peer Top 50* Net Interest Margin (Quarterly) 24 Note: Fully-taxable equivalent * Comprised of the 50 largest publicly traded domestic banks/thrifts in assets size as of December 31,2
Slide 25: Interest Rate Shocks
Interest Rate Shocks (12/31/13) 25 1) A variety of interest rate scenarios are used to measure the effects of sudden and gradual movements upward and downward in the yield curve. These results are compared to the results obtained in a flat or unchanged interest rate scenario. Simulation of earnings
Slide 26: Priorities: ROA and ROE
6. ROA 4Q13: 0.99% 3Q13: 0.93% 4Q12: 0.99% Priorities: ROA and ROE 26 7. ROE (Tangible) (1) 4Q13: 11.15% 3Q13: 10.69% 4Q12: 10.53% Note: ROA is return an average assets determined by dividing net income for the period indicated by average assets (1) Non-GAAP based financial measure. Please refer to
Slide 27: Return on Average Assets by Bank
Return on Average Assets and Average Assets, by Bank 27 Year Ended Dec 31, 2013 Return on Average Assets* Average Assets ($ Millions) 2013 2012 Lafayette Ambassador Bank 1,408$ 1.24% 1.48% Fulton Bank, NA 9,450 1.15% 1.30% FNB Ban , NA 354 0.91% 1.20% The Columbia Bank 1,983 0.84% 0.82% Fulton Bank
Slide 28: Total Risk-Based Capital Ratio
Total Risk-Based Capital Ratio 28 11.0% 12.0% 13.0% 14.0% 15.0% 16.0% Dec 31, 2003 Dec 31, 2004 Dec 31, 2005 Dec 31, 2006 Dec 31, 2007 Dec 31, 2008 Dec 31, 2009 Dec 31, 2010 Dec 31, 2011 Dec 31, 2012 Dec 31, 2013 12.7% 11.8% 12.1% 11.7% 11.9% 14.3% 14.7% 14.2% 15.2% 15.6% 15.0%
Slide 29: Capital Adequacy
Capital Adequacy (12/31/13) (1) Estimates – based on final rules. Application of the Basel III rules are also subject to further interpretation, which could result in changes to the estimates shown above. (2) Fully-phased in requirements, with 2.50% conservation buffer. Excess Above Well Capitalized
Slide 30: Tangible Book Value Per Share
$0.00 $2.00 $4.00 $6.00 $8.00 Dec 31, 2010 Mar 31, 2011 Jun 30, 2011 Sep 30, 2011 Dec 31, 2011 Mar 31, 2012 Jun 30, 2012 Sep 30, 2012 Dec 31, 2012 Mar 31, 2013 Jun 30, 2013 Sep 30, 2013 Dec 31, 2013 6.69 6.84 7.06 7.20 7.24 7.38 7.46 7.63 7.76 7.82 7.72 7.77 7.94 Tangible Book Value Per Share (1) 30
Slide 31: Price to Tangible Book Value
1.65 1.89 0.00 0.50 1.00 1.50 2.00 2.50 M u lt ip le o f T a n g ib le B o o k V al u e Price to Tangible Book Value (1) FULT Peer Group Median Price Multiple vs. Peer Group 31 Notes: Peer Tangible Book Value as of 12/31/2013. Source: SNL Financial LC FULT Tangible Book Value as of 12/31/2013. (1) N
Slide 32: Price-to-LTM EPS
15.77 17.37 0.00 4.00 8.00 12.00 16.00 20.00 M u lt ip le o f L ast 12 M o n th s o f EP S Price-to-LTM EPS (1) FULT Peer Group Median Price Multiple vs. Peer Group 32 Notes: Peer Price-to-last twelve months EPS as of 12/31/2013. Source: SNL Financial LC FULT Price-to-last twelve months EPS as of 12
Slide 33: Cash Dividend and Yield
0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 3.50% $0.00 $0.01 $0.02 $0.03 $0.04 $0.05 $0.06 $0.07 $0.08 $0.09 4Q 09 1Q 10 2Q 10 3Q 10 4Q 10 1Q 11 2Q 11 3Q 11 4Q 11 1Q 12 2Q 12 3Q 12 4Q 12 1Q 13 2Q 13 3Q 13 4Q 13 Cash Dividend Yield FULT – Cash Dividend and Yield (1) 33 (1) Annualized dividend rate per
Slide 34: Stock Repurchase Programs
Stock Repurchase Programs 34 January 2013 October 2013 Program Program Authorized Shares to Repurchase 8.0 million 4.0 million % of Outstanding Shares 4.0% 2.1% Shares Repurchased 8.0 million (1) 2.8 million (2) Remaining Shares available to repurchase as of December 31, 2013 - 1.2 million (2) Avera
Slide 35: Priorities: Expense Management
8. Expense Management Priorities: Expense Management 35
Slide 36: Other Expenses
Other Expenses (December 31st – Quarter & Year to Date) 4Q 13 3Q 13 2013 2012 3Q 13 2012 Salaries & Benefits 65,194$ 63,344$ 253,240$ 243,915$ 1,850$ 9,325$ Occupancy & Equipment 16,106 15,165 62,363 58,906 941 3,457 Data Proc. & Software 5,836 8,025 28,115 24,456 (2,189) 3,659 Outside Services 5,63
Slide 37: Efficiency Ratio
63.4% 64.3% 64.3% 50.0% 52.0% 54.0% 56.0% 58.0% 60.0% 62.0% 64.0% 66.0% 2008 2009 2010 2011 2012 2013 FULT Peer Top 50* Efficiency Ratio (1) 37 (1) Non-GAAP based financial measure. Please refer to the calculation and management’s reasons for using this measure on the slide titled “Non-GAAP Reconcil
Slide 38: Cost Savings Initiatives
In 2014, a number of cost savings initiatives will be implemented with estimated annual ongoing expense savings of $8 million, as follows: Branch consolidations – Total of 13 branches; total savings of $3 million in 2014 Divisional consolidations – Streamline management structure at affiliate
Slide 39: Enhance Compliance & Risk Management Infrastructure
9. Enhance Compliance & Risk Management Infrastructure Financial reform legislation and a measureable increase in the scope and intensity of examinations of financial institutions Considerable resources have been invested in building out our risk management, compliance and technology infrastruct
Slide 40: Supplemental Information
Supplemental Information FULTON FINANCIAL CORPORATION
Slide 41: Other Income
Other Income (in millions) 41 $- $40 $80 $120 $160 $200 $240 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 (2) 2013 CAGR (1) = 5.1% (1) Compounded annual growth rate from year-ended December 31, 2003 to year-ended December 31, 2013. (2) Excludes $6.2 million gain on sale of Global Exchange Group
Slide 42: Other Income (Quarter & Year to Date)
Other Income (December 31st – Quarter & Year to Date) 4Q 13 3Q 13 2013 2012 3Q 13 2012 Invt Mgt & Trust 10,589$ 10,420$ 41,706$ 38,239$ 169$ 3,467$ Overdraft & NSF Fees 5,946 7,191 28,222 33,329 (1,245) (5,107) Mortgage Banking Income 4,363 7,123 30,656 44,600 (2,760) (13,944) Service Charges 3,744
Slide 43: Average Interest-Bearing Liabilities and Yields
Average Interest-Bearing Liabilities and Yields Balance Yield Balance Yield Balance Yield Int-Bearing Demand Deposits 2,967$ 0.13% 2,895$ 0.13% 2,684$ 0.16% Savings 3,410 0.12% 3,360 0.12% 3,399 0.15% Time Deposits 2,966 0.82% 3,065 0.88% 3,473 1.12% Short-term Borrowings 1,100 0.19% 1,338 0.20% 488
Slide 44: Net Charge-offs (Recoveries)
Net Charge-offs (Recoveries) (2013) Comm'l Comm'l Mortgage Constr. Res. Mtg. Other Total (dollars in thousands) Pennsylvania 11,244$ 9,910$ 2,342$ 2,537$ 4,729$ 30,762$ Maryland 1,147 (452) 590 680 2,561 4,526 New Jersey 8,475 8,239 1,555 3,294 1,729 23,292 Virginia 268 (138) (585) 2,273 220 2,038 D
Slide 45: Net Charge-Offs To Average Loans
0.49% 0.24% 0.28% 0.00% 0.50% 1.00% 1.50% 2008 2009 2010 2011 2012 2013 FULT Peer Top 50* Net Charge-Offs To Average Loans 45 * Comprised of the 50 largest publicly traded domestic banks/thrifts in assets size as of December 31,2012. Excludes credit card companies. Source: SNL Financial LC
Slide 46: Ending Loan Distribution by State
Ending Loan Distribution by State (12/31/13) December 31, % of September 30, Variance to 9/30/13 2013 Total 2013 $ % Pennsylvania 7,592,911$ 59.4% 7,570,541$ 22,370$ 0% New Jersey 2,398,955 18.8% 2,418,987 (20,032) -1% Maryland 1,312,131 10.3% 1,328,401 (16,270) -1% Virginia 986,007 7.7% 991,847 (5,
Slide 47: Residential Mortgages
Residential Mortgages (12/31/13) Ending % of NPL Allowance Balance Total Balance (1) Allocations (2) (dollars in thousands) Pennsylvania 677,736$ 50.7% 11,034$ 9,863$ Virginia 250,693 18.7% 7,563 11,956 New Jersey 169,499 12.7% 7,528 5,778 Maryland 157,981 11.8% 3,002 3,444 Delaware 81,471 6.1% 2,22
Slide 48: Fulton Mortgage Company
Fulton Mortgage Company New applications received during 4Q13 were $304 million compared to $418 million during 3Q13 Pipeline* $126 million at December 31, 2013 vs. $201 million at September 30, 2013 The approved loan pipeline at the end of Q4 2013 was $65 million Percentage of the pipeline
Slide 49: Commercial Loans
Commercial Loans (12/31/13) Ending % of NPL Allowance Balance Total Balance (1) Allocations (2) (dollars in thousands) Pennsylvania 2,633,580$ 72.6% 26,617$ 26,029$ New Jersey 500,546 13.8% 6,451 15,094 Maryland 272,325 7.5% 2,784 5,226 Virginia 144,855 4.0% 2,050 3,033 Delaware 77,114 2.1% 119 948
Slide 50: Commercial Mortgages
Commercial Mortgages (12/31/13) Ending % of NPL Allowance Balance Total Balance (1) Allocations (2) (dollars in thousands) Pennsylvania 2,657,968$ 52.1% 17,266$ 20,540$ New Jersey 1,283,485 25.2% 19,000 25,467 Maryland 541,129 10.6% 3,774 3,533 Virginia 424,001 8.3% 2,583 2,935 Delaware 195,339 3.8%
Slide 51: Construction Loans
Construction Loans (12/31/13) Ending % of NPL Allowance Balance Total Balance (1) Allocations (2) (dollars in thousands) Pennsylvania 289,658$ 50.5% 11,508$ 4,375$ Virginia 94,153 16.4% 676 1,850 New Jersey 90,528 15.8% 4,673 2,893 Maryland 61,048 10.6% 4,410 2,488 Delaware 38,285 6.7% - 1,043 573,6
Slide 52: Accruing Troubled Debt Restructurings
Accruing Troubled Debt Restructurings December 31, September 30, 2013 2013 $ % Residential mortgage 28,815$ 27,820$ 995$ 4% Commercial mortgage 19,758 22,644 (2,886) -13% Construction 10,117 9,841 276 3% Commercial 8,045 8,184 (139) -2% Consumer and other 1,376 1,678 (302) -18% 68,111$ 70,167$ (2,05
Slide 53: Investment Portfolio
Investment Portfolio (12/31/13) Weighted Ave. Remaining Life Unrealized (in years) Cost Gain (Loss) Fair Value Agency collateralized mortgage obligations 4.3 1,069$ (37)$ 1,032$ Agency mortgage-backed securities 5.0 949 (4) 946 Municipal bonds 5.6 282 3 285 Auction rate securities 3.6 172 (13) 159 C
Slide 54: Projected Investment Security Cash Flows
Projected Investment Security Cash Flows 54 (1) Investment Cash Flows – the amount of principal payments & maturities from the entire investment portfolio. (2) Cash Flow Yields – internal rate of return on all cash flows, which includes mortgage backed securities’ prepayments. $105 $101 $89 $91 2.40
Slide 55: Investment MBS & CMO Cash Flows
Investment MBS & CMO Cash Flows 55 $198,017,854 $179,098,681 $156,740,334 $127,251,195 $82,380,022 $4,739,834 $4,133,244 $3,310,745 $2,953,068 $1,715,933 $0 $1,000,000 $2,000,000 $3,000,000 $4,000,000 $5,000,000 $6,000,000 $7,000,000 $8,000,000 $0 $20,000,000 $40,000,000 $60,000,000 $80,000,000 $100
Slide 56: Projected CD Maturities
Projected CD Maturities 56 $617 $653 $527 $514 $444 $372 0.61% 0.51% 0.55% 0.57% 0.59% 0.43% 0.00% 0.25% 0.50% 0.75% 1.00% 1.25% 1.50% $0 $100 $200 $300 $400 $500 $600 $700 4Q2013 1Q2014 2Q2014 3Q2014 4Q2014 W e ig ht e d A v e ra g e C D R a te s o n M a turit ie s a n d O rig in a ti o n s C D M a
Slide 57: Investment Portfolio – Transactions
Investment Portfolio – Transactions (4th Quarter 2013) Principal Value (in thousands) Yield to Maturity (1) Wtd Avg Life (in years) US Treasury 201$ 0.06% 0.21 MBS 79,239 2.26% 4.74 Municipal - Bond Anticipation Notes 3,308 1.62% 0.49 Municipal 9,224 5.78% 0.00 Other 100 1.00% 4.89 92,072$ 2.59% 4.1
Slide 58: Non-GAAP Reconciliation
Non-GAAP Reconciliation 58 2013 2012 2011 2010 2009 2008 2007 Eff iciency rat io Non-interest expense 461,433$ 449,294$ 416,243$ 408,254$ 415,522$ 408,787$ 407,125$ Less: Intangible amortization (2,438) (3,031) (4,257) (5,240) (5,747) (7,162) (8,334) Numerator 458,995$ 446,263$ 411,986$ 403,014$ 409
Slide 59: Non-GAAP Reconciliation (con't)
Non-GAAP Reconciliation (con’t) 59 Q3 Q3 Q4 D ec 31, Sep 30, D ec 31, 2013 2013 2012 R eturn o n average shareho lders' equity ( tangible) Net income 42,083$ 39,948$ 40,240$ P lus: Intangible amortization, net of tax 541 347 463 Numerator 42,624$ 40,295$ 40,703$ Average shareholders' equity 2,050,74
Slide 60: Non-GAAP Reconciliation (con't)
Non-GAAP Reconciliation (con’t) 60 Tang ib le B ook V alue Per Share D ec 3 1, Sept 3 0 , Jun 3 0 , D ec 3 1, Sep 3 0 , Jun 3 0 , 2 0 13 2 0 13 2 0 13 2 0 12 2 0 12 2 0 12 Common shareholders' equity 2,063,187$ 2,028,964$ 2,028,733$ 2,081,656$ 2,060,683$ 2,041,184$ Less: Goodwill and intangible asse
Slide 61: Non-GAAP Reconciliation (con't)
Non-GAAP Reconciliation (con’t) 61 Price-to-Tangible Book Value Per Share Dec 31, 2013 Closing Price of FULT on Dec 31, 2013 (numerator) 13.09$ Shareholders' equity (tangible), per share (denominator) 7.94$ Price-to-Tangible Book Value Per Share 1.65 Price-to-Last Twelve Months (LTM) EPS Dec 31, 201
Slide 62: Fulton Financial Corporation
Fulton Financial Corporation One Penn Square Lancaster, PA 17602 www.fult.com Version 2014-2-10
Fulton Financial — Investor Presentation (February 2014) on 6ix