Fulton Financial Corporation · NASDAQ:FULT
Fulton Financial — Investor Presentation (September 2020)
39 slides from Fulton Financial's investor presentation, Sep 21, 2020
Slide 1: Investor Presentation
INVESTOR PRESENTATION z Data as of June 30, 2020 - 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 Relationship Banking Strategy Focused on the Customer Experience Granular, Well-Diversified Loan Portfolio Attractive Core Deposit Profile Solid Asset Quality and Reserves Prudent Expense Manageme
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 ~220 financial centers throughout the Mid-Atlantic Asset size of $24.6 billion 3,500+ team members (3,460 FTEs (1) ) Market capitalization of ~ $1.7 billion (2) Opportunity to meaningfully grow our market share (3) o ~16.5% deposit market share across the 15 counties w
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: 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 8: 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 9: Significant Investments To Enhance 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 10: Optimizing Our Branch Network
Optimizing Our Branch Network Optimizing our financial center network has: Moved us towards multiple financial center types vs. a one-size-fits-all model Given us greater ability to re-invest in people & digital transactions Oriented the financial center as a primary touchpoint enabling higher
Slide 11: Granular, Well-Diversified Loan Portfolio
Granular, Well-Diversified Loan Portfolio Average Loans YTD 6/2020 are up 8.2% compared to YTD 6/2019 Excluding PPP loans, average loans YTD 6/2020 are up 4.2% compared to YTD 6/2019 Yields had risen for several years but declined in 2020. $18.0 $17.6 5.00% $16.4 $0.8 $15.8 $0.9 $16.0 $0.7 $15
Slide 12: Attractive Core Deposit Profile
Attractive Core Deposit Profile Steady growth in core deposits Average Deposits for YTD 6/2020 are up 11.5% compared to YTD 6/2019 0.79% $20.0 0.80% $18.2 $18.0 $16.8 $1.5 0.70% $ $15.8 $16.0 $14.6 $15.5 $0.1 $1.5 0.60% $- $1.4 $- $1.5 $14.0 $1.4 $3.8 0.55% $3.5 (1)Costs Deposit $3.0 $3.0 0.50%
Slide 13: Solid Asset Quality And Reserves
Solid Asset Quality And Reserves Commentary Non-Performing Loans (NPLs) & Allowance/Loans Growth in allowance for credit losses in 2020 1.75% reflects impact of COVID-19 and adoption of $139.7 $141.2 $139.8 (1) $150.0 $131.6 $134.8 CECL 1.50% $125.0 We are mindful of where we are in the economic
Slide 14: Prudent Expense Management With Opportunities To Improve
Prudent Expense Management With Opportunities To Improve Commentary Efficiency Ratio (FTE) 71.0% Low rate environment and continued buildout of our 69.0% 67.0% compliance, risk and technology infrastructures were 65.0% the primary drivers of the increase in the efficiency 63.0% 61.0% ratio in 2015
Slide 15: Strong Capital Position
Strong Capital Position COMMENTARY CAPITAL RATIOS (1) Capital position remains strong 16.00% 13.8% Suspended share repurchases in Mid- 14.00% March 12.00% $622 10.00% 9.5% 9.5% Dividend elected to remain at $0.13 $195 quarterly 8.00% 7.6% $479 6.00% $619 Raised $375 million of subordinated d
Slide 16: Credit Disclosures – Additional Detail On Deferrals And Select Industries
CREDIT DISCLOSURES – ADDITIONAL DETAIL ON DEFERRALS AND SELECT INDUSTRIES (DATA AS OF AUGUST 2020; ALL INDUSTRY CLASSIFICATIONS BASED ON NAICS CODES)
Slide 17: Commercial P&I Deferrals Have Declined by 88%
Commercial P&I Deferrals Have Declined by 88% to 2% of the Commercial Portfolio Commercial Portfolio ------------------- P&I Deferrals $ -------------------- As of 8/31/2020 Portfolio Balance Total (1) 2nd Round Active (2) ($'s in MMs) ($'s in MMs) (% of Bal) ($'s in MMs) (% of Bal) C&I Portfolio$ 6
Slide 18: Selected Industries With Heightened Risk Due to COVID-19
Selected Industries With Heightened Risk Due to COVID-19 Commercial Portfolio – Selected Industries (1) 8/31/20 Special Special Substandard Substandard Balance Avg Loan NPL $ NPL % Pass $ Pass % Mention $ Mention % or Lower $ or Lower % # Hotels $367,051 $3,059 $376 0.1% $287,778 78.4% $70,026 19.1%
Slide 19: Complete Hotel Portfolio Reviewed With Updated Risk Ratings
Complete Hotel Portfolio Reviewed With Updated Risk Ratings As of August 31, 2020 • As of August 31, 2020, 60 hotel loans totaling $367 Hotel Portfolio, By flag million or 2.6% of the portfolio. Other IHG 22% 21% • Average loan size of $3.0 million. • Approximately 65% of the hotel loans are in a CO
Slide 20: Food Services/Restaurant Portfolio Reflects Diversity
Food Services/Restaurant Portfolio Reflects Diversity In Size, Type And Geography As of August 31, 2020 14% • Food Services portfolio just $104 million. • Diversified and granular portfolio with average loan 40% size of $250 thousand. 17% • Geographically dispersed exposure, with most destinations n
Slide 21: Arts and Entertainment: Portfolio Risk Assessment
Arts and Entertainment: Portfolio Risk Assessment Shows Reasonable Ability To Perform Given Current Environment As of August 31, 2020 3% 3% • Portfolio of $286 million. 4% • Diverse portfolio with average loan size of $1.1 12% million. 37% • Largest sub-sector includes fitness centers. 80% of fitnes
Slide 22: Healthcare: CCRC's Show Solid Occupancy And Performance
Healthcare: CCRC’s Show Solid Occupancy, Performance And Continue To Have Waiting Lists As of August 31, 2020 • Portfolio of $974 million. 3% 11% • Healthcare portfolio granular and diverse. • Largest exposure is Nursing and Continuing Care facilities, which are primarily non-profit, religious-affil
Slide 23: Retail Exposure Includes Significant Auto Dealership Portfolio
Retail Exposure Includes Significant Auto Dealership Portfolio That Has Rebounded Nicely As of August 31, 2020 2% 1% 1% 2% 4% • Portfolio of $649 million. 5% 5% • Approximately $450 million in Auto and 13% Equipment Dealership exposure. Retail New and Used car sales are strong. 67% • Remaining portf
Slide 24: Energy Portfolio Detail: No Direct Upstream Or Midstream Exposure
Energy Portfolio Detail: No Direct Exposure To Upstream Or Midstream; Downstream Comprised Of Oil And Gasoline Retail Distribution As of August 31, 2020 • Upstream - Exploration and production sector. Includes searching for crude oil and natural gas fields, drilling of exploratory wells, and drillin
Slide 25: Recent Financial Performance & Highlights
RECENT FINANCIAL PERFORMANCE & HIGHLIGHTS
Slide 26: Income Statement Summary
Income Statement Summary Change From 2Q20 1Q20 2Q19 (dollars in thousands, except per-share data) Net Interest Income $ 152,754 $ (7,992) $ (11,790) Provision for Credit Losses 19,570 (24,460) 14,545 Non-Interest Income 52,917 (1,681) (1,223) Securities Gains 3,005 2,959 2,829 Non-Interest Expense 1
Slide 27: Net Interest Income And Margin
Net Interest Income And Margin AVERAGE INTEREST-EARNING ASSETS & YIELDS ($ IN BILLIONS) NET INTEREST INCOME & NET INTEREST MARGIN (1) ($ IN MILLIONS) ~ $730 million ~ $610 million AVERAGE LIABILITIES & RATES ($ IN BILLIONS) 27 (1) Using a 21% federal tax rate and statutory interest expense disallowa
Slide 28: Asset Quality
Asset Quality ($ IN MILLIONS) PROVISION FOR CREDIT LOSSES NON-PERFORMING LOANS (NPLS) & NPLS TO LOANS NET CHARGE-OFFS (NCOS) AND NCOS TO AVERAGE LOANS ALLOWANCE FOR CREDIT LOSSES (ALLOWANCE) (1) TO NPLS & LOANS (1) The allowance for credit losses (“ACL”) relates specifically to "Loans, net of unearn
Slide 29: Non-Interest Income
Non-Interest Income (1) Three months ended June 30, 2020 2Q20 1Q20 Change (percent of total non-interest income) (dollars in thousands) Wealth Management $ 13,407 $ 15,055 $ (1,648) Mortgage Banking 9,964 6,234 3,730 Consumer Banking 9,138 11,239 (2,101) Commercial Banking 16,748 18,419 (1,6
Slide 30: Non-Interest Expense
Non-Interest Expense Three months ended June 30, 2020 (percent of total non-interest expense) 2Q20 1Q20 Change (dollars in thousands) Salaries and Benefits $ 81,012 $ 80,228 $ 784 Occupancy 13,144 13,486 (342) Data Processing and Software 12,193 11,645 548 Other Outside Services 7,600 7,881
Slide 31: Q3 2020 Outlook
Q3 2020 Outlook All previous guidance for 2020 has been withdrawn due to the impact from COVID-19. At this time, select guidance for the third quarter of 2020 will be provided on the following areas in comparison to second quarter of 2020 actual results, except effective tax rate is the expected ran
Slide 32: Appendix
APPENDIX FULTON CORPO!
Slide 33: Average Loan Portfolio And Yields
Average Loan Portfolio And Yields Change in 2Q 2020 Balance From Yield From Balance Yield 1Q 2020 2Q 2019 1Q 2020 2Q 2019 (dollars in millions) Real estate - commercial mortgage$ 6,876 3.47% $ 129 $ 452 (0.73%) (1.20%) Commercial & industrial 5,710 3.35% 1,263 1,269 (0.86%) (1.38%) Real estate - res
Slide 34: Average Customer Funding And Rates
Average Customer Funding And Rates Change In 2Q 2020 Balance From Rate From Balance Rate 1Q 2020 2Q 2019 1Q 2020 2Q 2019 (dollars in millions) Noninterest bearing demand$ 5,790 - % $ 1,483 $ 1,589 - % - % Interest-bearing demand 5,104 0.17% 454 918 (0.32%) (0.61%) Savings 5,446 0.25% 318 520 (0.31%)
Slide 35: Non-Interest Income
Non-Interest Income (1) $ Change from Q2 2020 Q1 2020 Q2 2019 Q1 2020 Q2 2019 (in thousands) Wealth management $ 13,407 $ 15,055 $ 14,153 (1,648) (746) Mortgage banking 9,964 6,234 6,593 3,730 3,371 Consumer banking: Card 4,966 4,685 5,047 281 (81) Overdraft 2,107 4,058 4,413 (1,951) (2,306) Other c
Slide 36: Non-Interest Expense
Non-Interest Expense $ Change from Q2 2020 Q1 2020 Q2 2019 Q1 2020 Q2 2019 (in thousands) Salaries and employee benefits $ 81,012 $ 80,228 $ 78,991 $ 784 $ 2,021 Net occupancy 13,144 13,486 14,469 (342) (1,325) Data processing and software 12,193 11,645 11,268 548 925 Other outside services 7,600 7,
Slide 37: 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 financi
Slide 38: Non-GAAP Reconciliation
Non-GAAP Reconciliation Years Ended Six Months Ended Three Months Ended Jun 30 Jun 30 Jun 30 Mar 31 Jun 30 2014 2015 2016 2017 2018 2019 2019 2020 2019 2020 2020 Efficiency ratio Non-interest expense $ 459,246 $ 480,160 $ 489,519 $ 525,579 $ 546,104 $ 567,736 $ 281,992 $ 285,558 $ 144,168 $ 142,552
Slide 39: Fulton Financial Corporation
FULTON FINANCIAL CORPORATION FULTON FINANCIAL www.fult.com, CORPORATION
Fulton Financial — Investor Presentation (September 2020) on 6ix