Fulton Financial Corporation · NASDAQ:FULT
Fulton Financial — Keefe, Bruyette & Woods (March 2006)
56 slides from Fulton Financial's conference presentation, Mar 1, 2006
Slide 1: Fulton Financial Corporation
Fulton Financial Corporation Keefe, Bruyette & Woods March 1, 2006
Slide 2: Forward-Looking Statement
rward-Looking Statement lI The following presentation may contain forward-looking statements about Fulton Financial Corporation’s growth and acquisition strategies, new products and services, and future financial performance, including earnings and dividends per share, return on average assets, retu
Slide 3: Agenda
™ Corporate profile ® Relationship banking strategy @ Strategic initiatives @™ Acquisition strategy ™ Capital ™ Loan summary ™ Customer and employee satisfaction @ Financial performance Se Futon Financial Comoran mmm
Slide 4: Regional financial holding company
®@ Regional financial holding company (formed in 1982) ™15 community banks and 3 financial services affiliates in 5 states ™ 254 community banking offices Asset size: $13.7 billion @ Market capitalization: $2.8 billion ton Finanei i 4
Slide 5: Where are we located?
Where are we located? he Bank 1B The Columbia Banc 1 Delaware Nations Bank -NB Bank 1 FrseWashington State Bank 1 Futon Bank Bi Hagerstown Tease i Latsyerce Ambassador Banke Lebanon Valley Farmers Bank 1 The Peoples Bank of ton 1 Premier Bank @ Resource Bank 1 Skyands Commoniy Bake SomerseValley Ban
Slide 6: Future expansion markets
Possible a a, = Future Expansion J Aetoer i Current Markets Gi Future Expansion
Slide 7: What have we accomplished?
What = we accomplished? sss ™ Proven business model = Consistent performance ™ 24 consecutive years of record earnings ™31 consecutive years of dividend increases ™ 10.2% compounded annual growth rate in dividends per share ™8.6% compounded annual growth rate in earnings per share (last 5 years = 5.
Slide 8: Stakeholders and marketing mix
For our : With Shareholders i People Employees Place Customers i Promotion Communities: Product : Price
Slide 9: Long-term successful employees, customers, shareholders
MLong-term MLong-term MLong-term successful___, successful _____,, successful employees customers shareholders
Slide 10: Returns with and without dividend reinvestment
@ WITHOUT dividend reinvestment: 14% compounded annual rate of return @ WITH dividend reinvestment: 18% compounded annual rate of return
Slide 11: Producing above average long term shareholder returns
™ Producing above average long term shareholder returns ®@ Driving EPS growth organically and acquisitively @ Creating financial success together with our customers ™ Creating career success together with our employees @ Enriching the communities we serve ™ Managing risk comprehensively ™ Deploying
Slide 12: Somerset Valley Bank and The Columbia Bank acquisitions
=Somerset Valley Bank -Acquired on 7/1/05 Assets of $540 million -Headquartered in Somerville, NJ °12 branches in Somerset, Hunterdon and Middlesex counties = The Columbia Bank Acquired on 2/1/06 Assets of $1.3 billion -Headquartered in Columbia, MD 25 offices in Howard, Montgomery, Prince George’s,
Slide 13: Columbia Bank
Columbia Bank ' Com ™ Consistently one of the fastest growing and most profitable de novo institutions since its founding in 1987 ™ Focused on building a premier community banking franchise in the Baltimore / Washington corridor ™ 4th largest independent commercial banking company in Central Marylan
Slide 14: Columbia Bank financial results
™ Assets: ™ Return on average = $1.32 billion assets: = Net income: * 1.28% ; + $46.1 million/up 21.7% " Net interest margin: ™ Earnings per share = 5.02% (diluted): = Efficiency ratio: = Up 24.4% = 50.76% ™ Return on equity: ™ Non-performing assets to total assets: = ,02% of total assets Se Futon F
Slide 15: Columbia Bank Footprint
Columbia Bank Footprint Batons City © Branch office Baltimare County /City, Howard County Montgorery County Prince George's County Total + Headquarters office FullService Retirement Branches Branches 3 3 a: 5 - 0 5 = 2 2 8 8 8 & & FoultonFinancial Coportion © 2 oo oo
Slide 16: Vibrant and diverse Baltimore / Washington corridor
| Vibrant and diverse Baltimore / Washington corridor economy providing excellent growth opportunities Affluent, well-educated retail customer base Concentration of small and mid-sized businesses Large, stable government employment base Attractive location for “new economy” firms Median household in
Slide 17: Strong performance
| Strong performance @ Asset quality ® High growth areas | Dynamic market demographics ™ Talented and dedicated staff = Compatible corporate culture Se Futon Financial Coporaion mm oy
Slide 18: Acquisitions in new markets: what changes, what stays
Acquisitions In New Markets What changes? What stays the same? @ Loan review | Bank name @ Investments ® Board of Directors @ Assetiliability ™ Management team management =m Employees = Compliance = Common operating platform @ Audit ™ Accounting = 2 2 8 8 8 & & FoultonFinancial Coportion © 2 oo oo 1
Slide 19: Our model
7 Ouran Mods © Affiliate knows local markets best © Maintains established local brand value Proprietary retail expertise and strategy Prestigious jobs in local markets Pricing autonomy ™ Performance goals MB Affiliate plan execution
Slide 20: Core strategies: commercial lending growth
Core Crentsil ™Organic and acquisitive ™ Resource Bank =development track lending |Skylands Community Bank = small business/ lines of credit | Premier Bank = commercial real estate lending Leverage affiliate strength to build retail base
Slide 21: Acquisition benefits
™ Increased income diversification due to introduction of new products and services | Continued local autonomy and decision-making | Increased lending capacity @ Additional capital | Proven merger/conversion expertise ™ Reduced expenses a Fatton Financial Comporas Pal
Slide 22: Products and services
® Debiticredit cards @ Investment @ Residential mortgages management ™ Specialized lending ™ Brokerage services (leasing and indirect) @ Insurance & International services (whole life, term life, long-term care . parking through advisors) § On-line banking ™ Cash management Se Futon Financial Copora
Slide 23: Other Income As a Percent of Total Income
Slide 24: Total capital and regulatory ratios
§ Total Capital (GAAP): $1.3 billion ®& Total Regulatory Capital: $1.1 billion @ Ratios: * Total Risk-Based Capital 12.06% * Tier 1 Risk-Based Capital 9.94% - Leverage Capital 7.66%
Slide 25: Completed accelerated repurchase of 4.3 million shares
=Completed accelerated repurchase of 4.3 million shares
Slide 26: Loan Diversification
Loan Diversification @21/05) 7% 10% = Commercial 28% Commercial Mortgage @ Res Mtg and Home Equity 21% = Construction m= Consumer and other 34% = 2 2 8 8 8 & & FoultonFinancial Coportion © 2 oo oo
Slide 27: Large relationships and lending limits
= 27 relationships with commitments to lend of $20 million or more | Maximum individual commitment of $30 million ™ Average commercial loan size is $597,000 ™ Loans and corresponding relationships are within Fulton’s geographical market area
Slide 28: Commercial loans by industry
Industry % Construction 22.8 RE - Investor - Owned 22.6 Services 11.9 Manufacturing 8.2 Retail 6.9 Health Care 6.7 Agriculture 5.7 Other 4.4 Wholesale 47 Arts and Entertainment 2.0 Financial Services 24 Transportation 1.7 100.0
Slide 29: Credit Ratings
Credit Ratings Moody’s Investor Services Standard & Poors | Short-term rating P-1 @ Credit rating BBB+ ™ Long-term rating ™@ Outlook Stable Issuer A-2 Lead Bank Deposits A-1 @ Outlook Stable Fitch Ratings Dominion Bond Rating Service ™ Short-term rating F-A ™ Credit rating A | Long-term rating A ™@
Slide 30: Employee Retention
Employee Retention 100 m Exempt Non-exem pt m Overall 2001 2002 2003 2004 2005 = 2 2 8 8 8 & & FoultonFinancial Coportion © 2 oo oo 30
Slide 31: Employee survey categories
™ Quality and | Training and Improvement Development = Commitment ®@ Organizational Leadership = Immediate . | Supervisor Work Process = Communication : . . ae Satisfaction ™ Pay and Benefits Service Climate = Teamwork and = Company Image Collaboration (Survey administered by BAI Survey Services) a
Slide 32: Employee Opinion Survey
Employee Opinion Survey ™Conducted every three years mOver 3,000 employees surveyed (85%) Completed in June 2005 MFFC responses exceed BAI national averages in 10 of the 12 categories = 2 2 8 8 8 & & FoultonFinancial Coportion © 2 oo oo 2
Slide 33: Customer satisfaction results
@ ‘Retail: ° 90% extremely/very satisfied = Commercial: ° 90% extremely/very satisfied @ Fulton Financial Advisors: * 80+% very satisfied/satisfied | Fulton Mortgage Company: ° 99% of expectations met/exceeded ° 98% would recommend FMC to others *compared to national average of 62% Source: 2005 Amer
Slide 34: 2005 results summary
™ $166.1 million Net income (11.0% increase over restated 2004) (8.6% over originally reported 2004) ™$ 1.05 Net income per share (6.1% increase over restated 2004) (4.0% over originally reported 2004) ™$ 0.567 Cash dividends per share (9.5% increase over 2004) = 1.41% Return on assets = 13.26% Retu
Slide 35: Peer group banks
First Republic Bank Bank of Hawaii Corporation International Bancshares Corporation TCF Financial Corporation BOK Financial Corporation Colonial BancGroup, Inc City National Corporation First Citizens BancShares, Inc Whitney Holding Corporation Cullen/Frost Bankers, Inc Associated Banc-Corp Commerce
Slide 36: Income statement comparison 2005 vs 2004
2005 2004 $ % (dollars in thousands) Net Interest Income $ 412,580 $ 357650 $ 54,930 15% Loan Loss Provision (3,120) (4.720) 1600 -34% Other income 136,420 124,160 14,260 12% Securities Gains 6,620 17,710 (11,090) 63% Branch Sale Gains 2,220 - 2,220 na Other Expenses (816,290) (277,520) (38,770) 14%
Slide 37: Loan growth, total
2005 2004 $ % (dollars in millions) Commercial $ 2,350 $ 2,100 $ 250 12% Comm'l Mort 2,620 2,210 410 19% Home Equity 1,150 990 160 16% Resid Mort 560 510 50 610% Construction 730 490 240 49% Cons./Other 570 560 10 2% Total Loans $ 7,980 $ 6,860 1,120 16% 7
Slide 38: Loan growth, internal
2005 2004 $ % (dollars in millions) Commercial $ 2,130 $ 2,020 $ 110 5% Comm'l Mort 2,240 2,070 170 8% Home Equity 1,080 980 100 10% Resid Mort 470 450 20 4% Construction 310 270 40 15% Cons./Other 560 570 (10) -2% Total Loans $ 6790 $ 6,360 430 7% 8
Slide 39: FFC versus peer and top 50
94 95 96 97 98 99 00 01 02 03 04 05 —o-FFC -=- Peer -* Top 50 Se Futon Financial Coporaion 2 mmm 39
Slide 40: Interest rate shocks
Interest rate “shocks” Rate Change NI Change (Annual) % Change +300 bp +$ 11.0 million + 2.6% +200 bp +$ 7.5 million + 1.8% +100 bp +$ 3.9 million + 0.9% - 100 bp - $10.6 million - 2.5% - 200 bp - $21.6 million - 5.2% Oe Futon tnancial Coporion ms oom
Slide 41: Treasury yields at different rate shocks
8.00 7.00 6.00 5.00 4.00 3.00 2.00 1.00 0.00 Percent Treasury Yields at Different Rate Shocks Quarter Ending 12/31/05 —--200 —= -100 ~~ Flat = 100 = 200 300
Slide 42: Loan Mix
Loan Mix a21/05) Adjustable 28% Fixed 33% Floating 39% = 2 2 8 8 8 & & FoultonFinancial Coportion © 2 oo oo
Slide 43: Investment portfolio
ENDING MODIFIED BALANCE DURATION CREDIT RATING (000's) Mortgage-backed securities $ 1,450.9 2.70 AAA - agency insured Municipal bonds 496.3 3.90 AAA - insured Collateralized mortgage obligations 265.0 2.09 ABA U.S. Treasuries and agencies 2488 © 2.57 ABA Trust preferred securities 622 10.03 various
Slide 44: OSFNWRUAN DO
OSFNWRUAN DO nllithll, HPPA PSP OCGA SHS Oe Futon Financial Coporaion mmm
Slide 45: Funding Sources
Funding Sources 231/05) 1% 10% = Deposits and Customer Repurchase Agreements 15% Borrowings = GAAP Capital u Other Liabilities 74% = 2 2 8 8 8 & & FoultonFinancial Coportion © 2 oo oo 45
Slide 46: Deposit growth, total
2005 2004 $ vi (dollars in millions) Nonint DDA $ 1,590 $ 1,380 $ 210 15% Int DDA 1,550 1,360 190 14% Savings/MMDA 2,060 1,850 210 11% CD's 3,170 2,690 480 18% Cash Mgt 390 410 (20) -5% Total Deposits $ 8760 $ 7,690 $1,070 14% Oe Futon Financial Coporaion mmm gs
Slide 47: Deposit growth, internal
2005 2004 $ % (dollars in millions) Nonint DDA $ 1440 $ 1,350 $ 90 7% Int DDA 1,400 1,320 80 6% Savings(MMDA 1,770 1,810 (40) -2% CD's 2,370 2,370 - 0% Cash Mgt 370 410 (40) -10% Total Deposits $ 7,350 $ 7,260 $ 90 1% a
Slide 48: FFC versus peer and top 50
0.80 0.70 0.60 0.50 0.40 0.30 0.20 0.10 0.00 SD MP PDP HS PP LDAP PS [-+-FFC -=- Peer -*-Top 50| Se Futon tinct Coporion oom mg
Slide 49: FFC versus peer and top 50
0.00 T 90 91 92 93 94 95 96 97 98 99 00 01 02 03 —*-FFC -*- Peer -*- Top 50 04 05 ae Futon Financial Coporaion ms 2 mmm
Slide 50: Other income, total
2005 2004 $ (dollars in thousands) Int Mgt & Trust $ 35,670 $ 34,820 $ 850 2% Mort. Sales Gains 25,460 19,260 6,200 32% Overdraft Fees 17,990 16,540 1,450 9% Service Charges 14,200 15,180 (980) 6% Cash MgtFees 8,010 7,730 280 4% Success Card Fees 6,490 5,660 830 15% Other 27,600 21,970 5,630 26% Tot
Slide 51: Other income, internal
2005 2004 $ (collars in thousands) Invt Mgt & Trust $ 25,510 $ 25,620 ¢ (110) 0% Mort. Sales Gains 6,360 5,640 720 13% Overdraft Fees 12,650 12,250 400 3% Service Charges 10,230 11,410 (1,180) -10% Cash Mgt Fees 5,880 5,830 50 1% Success Card Fees 4,640 4,090 550 13% Other 17,700 14,210 3,490 25% To
Slide 52: Efficiency ratio versus peer and top 50
62.00 60.00 58.00 56.00 MEE 54.00 52.00 50.00 93 94 95 96 97 "os "oo. 00 ‘ot ‘oo 03. od 05 —e-FFC -* Peer -*- Top 50
Slide 53: Other expenses, total
2005 2004 $ % (dottars in thousands) Salaries & Benefits $ 181,890 $ 166,030 $ 15860 10% Occupancy & Equip. 4,220 34,580 6,640 19% DPSSoftware/Telecom 23,080 20,340 2,740 13% Amortization 5,310 4,730 580 | 12% Other Expenses 64,790 51,840 12,950 25% Total $ 316,290 $ 277,520 $ 38,770 14%
Slide 54: Other expenses, internal
2005 2004 $ % (abtlars in thousands) Salaries & Benefits $ 153,670 $ 152,660 $ 1,010 1% Occupancy & Equip. 32,930 31,500 1,430 5% DPSoftware/Telecom 19,210 18,770 440 2% Amortization 3,560 4,350 (790) -18% Other Expenses 49,350 46,720 2,630 6% Total $ 258,720 $ 254,000 $ 4,720 2%
Slide 55: Looking Ahead
Looking Ahead Focus on: MEPS growth ™Non-interest income ™ Organic growth ™ Strong asset quality ™ Value-creating acquisitions ™ Net interest margin expansion | Improved efficiency = 2 2 8 8 8 & & FoultonFinancial Coportion © 2 oo oo
Slide 56: Fulton Financial Corporation
Fulton Financial Corporation One Penn Square Lancaster, PA 17602 www. fult.com Se Futon Financial Coporaion mmm 5
Fulton Financial — Keefe, Bruyette & Woods (March 2006) on 6ix