Fulton Financial Corporation · NASDAQ:FULT
Fulton Financial — Q4 2016 Earnings Presentation
37 slides from Fulton Financial's earnings presentation, Feb 8, 2017
Slide 1: Investor Presentation
D A T A A S O F D E C E M B E R 3 1 , 2 0 1 6 U N L E S S O T H E R W I S E N O T E D INVESTOR PRESENTATION
Slide 2: Forward-Looking Statements
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 wor
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: $18.9 billion • 3,700+ team members (3,490 FTEs (1)) • Market capitalization: $3.3 billion (2) 4 (1) Full-time equivalent employees. (2) Based on shares outstanding and the closing price as of December 31, 201
Slide 5: Strong Position in Attractive Markets
STRONG POSITION IN ATTRACTIVE MARKETS 5 Note: Data as of June 30, 2016 per Federal Deposit Insurance Corporation (FDIC) Summary of Deposits. Household Income Data as of June 30, 2016 per SNL Financial LC. (1) Median HH Income, 2017 – 2022 Projected Population Change and 2017 – 2022 Projected HH Inco
Slide 6: Deep Executive Management Team
Name Position Years at Fulton Years in Financial Services Prior Experience E. Philip Wenger Chairman, President & CEO 37 37 Various roles since joining in 1979 Craig Roda Senior EVP/ Community Banking 38 38 Various roles since joining in 1979 Philmer Rohrbaugh (1) Senior EVP/ COO and Interim CFO 4 3
Slide 7: 2016 Highlights
2016 HIGHLIGHTS Diluted Earnings Per Share • $0.24 diluted earnings per share in 4Q16, $0.93 YTD Loan and Core Deposit Growth • 6.0% annual increase in average loans and 9.3% annual increase in average core deposits • Ending loans increased 6.2% in 2016 Net Interest Income & Margin • Net interest in
Slide 8: Income Statement Summary – Annual Comparison
INCOME STATEMENT SUMMARY – ANNUAL COMPARISON (1) ROA is return an average assets determined by dividing net income for the period indicated by average assets (2) Non-GAAP based financial measure. Please refer to the calculation and management’s reasons for using this measure on the slide titled “Non
Slide 9: Income Statement Summary – Quarterly Comparison
INCOME STATEMENT SUMMARY – QUARTERLY COMPARISON Net Income of $42.2 million; a 1.6% increase from 3Q16 and a 9.4% increase from 4Q15 Net Interest Income From 3Q16: Increase of 1.3% due to a 1.2% increase in average earning assets and a 1 bp improvement in net interest margin (NIM) From 4Q15: I
Slide 10: Net Interest Income and Margin
NET INTEREST INCOME AND MARGIN 10 Net Interest Income & Net Interest Margin (NIM (1)) ~ $730 million ~ $610 million $527.2 $514.9 $500.0 $521.0 3.50% 3.39% 3.21% 3.18% 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% $- $50.0 $100.0 $150.0 $200.0 $250.0 $300.0 $350.0 $400.0 $450.0 $500.0 $550.0 $600.0 2
Slide 11: Net Interest Income and Margin – Quarter Comparison
NET INTEREST INCOME AND MARGIN – QUARTER COMPARISON Net Interest Income & Net Interest Margin(1) ~ $730 million ~ $610 million $127.8 $129.1 $128.9 $130.6 $132.2 3.19% 3.23% 3.20% 3.14% 3.15% 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% $- $20.0 $40.0 $60.0 $80.0 $100.0 $120.0 $140.0 4Q15 1Q16 2Q16 3Q16
Slide 12: Loan Portfolio Composition & Yield
LOAN PORTFOLIO COMPOSITION & YIELD 12 Note: Loan portfolio composition is based on average balances for the years ended December 31, 2012 to 2016. (1) Presented on a fully-taxable equivalent basis. $4.6 $4.9 $5.1 $5.2 $5.6 $3.6 $3.7 $3.7 $3.9 $4.1 $1.6 $1.7 $1.7 $1.7 $1.7 $1.2 $1.3 $1.4 $1.4 $1.5 $0
Slide 13: Deposit Portfolio Composition
DEPOSIT PORTFOLIO COMPOSITION 13 Note: Deposit composition is based on average balances for the periods indicated. Average demand and savings are up 9.3% compared to 2015; while total average deposits are up 6.1%. 19% 29% 24% 18% 10% Time Deposits Non-Int DDA Int DDA Money Mkt Savings Year Ended Dec
Slide 14: Interest Rate Sensitivity
1) A variety of interest rate scenarios are used to measure the effects of sudden and gradual movements upward and downward in the yield curve. These results are compared to the results obtained in a flat or unchanged interest rate scenario. Simulation of net interest income is used primarily to mea
Slide 15: Asset Quality – Annual Comparison
ASSET QUALITY – ANNUAL COMPARISON ($ IN MILLIONS) $40.5 $12.5 $2.3 $13.2 $- $10.0 $20.0 $30.0 $40.0 $50.0 2013 2014 2015 2016 Provision for Credit Losses Non-Performing Loans (NPLs) & NPLs to Loans 132.82% 134.26% 118.37% 130.15% 1.60% 1.42% 1.24% 1.17% 0.00% 1.00% 2.00% 3.00% 4.00% 5.00% 0.0% 25.0%
Slide 16: Non-Interest Income – Annual Comparison
$30.6 $17.1 $18.2 $19.4 1.63% 1.19% 1.35% 1.67% 0.0% 0.5% 1.0% 1.5% 2.0% $(5.0) $5.0 $15.0 $25.0 $35.0 $45.0 2013 2014 2015 2016 Ga ins on Sale s Servicing Income Spre ad on Sale s (1 ) NON-INTEREST INCOME – ANNUAL COMPARISON ($ IN MILLIONS) 16 Non-interest Income (Excluding Securities Gains) $180.0
Slide 17: Non-Interest Income – Quarter Comparison
NON-INTEREST INCOME – QUARTER COMPARISON ($ IN MILLIONS) Non-Interest Income, Excluding Securities Gains ~ $730 million ~ $610 million $45.1 $42.2 $46.1 $48.1 $51.2 $- $10.0 $20.0 $30.0 $40.0 $50.0 $60.0 4Q15 1Q16 2Q16 3Q16 4Q16 Mortgage Banking Income & Spreads Other Non-Interest Income 1.60% 1.28%
Slide 18: Non-Interest Expense – Annual Comparison
$- $50.0 $100.0 $150.0 $200.0 $250.0 2013 2014 2015(3) 2016 Occp & Equip Data Processing & Software Outside Srvs Other $208.2 $208.2 $213.7 $206.2 3,610 3,560 3,460 3,490 3,400 3,500 3,600 3,700 3,800 $- $50.0 $100.0 $150.0 $200.0 $250.0 $300.0 2013 2014 2015 2016 Total Salaries Employee Benefits Av
Slide 19: Non-Interest Expenses – Quarter Comparison
NON-INTEREST EXPENSES – QUARTER COMPARISON ($ IN MILLIONS) Non-Interest Expense & Efficiency Ratio (1) ~ $730 million ~ $610 million $118.4 $120.4 $121.6 $119.8 $127.6 66.6% 68.3% 67.6% 65.2% 67.6% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% $- $20.0 $40.0 $60.0 $80.0 $100.0 $120.0 $140.0 4
Slide 20: Compliance & Risk Management
$1.8 $2.1 $3.2 $4.3 $4.9 $4.6 $1.4 $8.6 $5.9 $4.1 13 26 30 45 47 56 $- $3.0 $6.0 $9.0 $12.0 0 10 20 30 40 50 60 70 2011 2012 2013 2014 2015 2016 Salarie s & Be nefits Expense Outsi de Consul ti ng Services and Te mpora ry Staffing (1) Staffing $0.8 $0.1 COMPLIANCE & RISK MANAGEMENT (1) Represents th
Slide 21: Profitability & Capital
10.76% 10.31% 10.01% 10.30% 0.00% 4.00% 8.00% 12.00% 2013 2014 2015 2016 PROFITABILITY & CAPITAL ROA ROE (tangible) (1) Regulatory Capital Ratios & TCE Ratio (1) Diluted Earnings Per Common Share $ 0.83 $ 0.84 $ 0.85 $0.93 $- $0.25 $0.50 $0.75 $1.00 2013 2014 2015 2016 15.0% 14.5% 13.3% 13.3% 13.1%
Slide 22: Stock Repurchase Programs
STOCK REPURCHASE PROGRAMS June 2012 to December 2016 Repurchase Programs (1) Shares Repurchased 31.88 million % of Outstanding Shares 15.9% (2) Amount Repurchased $375.1 million Average Purchase Price $11.77 demand and savings (1) Share repurchases completed from June 2012 through December 2016. (2)
Slide 23: Average Assets and ROA, by Bank
AVERAGE ASSETS AND ROA, BY BANK Year Ended Dec 31, 2016 Average Assets ($ Millions) 2016 2015 Fulton Bank, N.A. $10,206 1.08% 1.03% The Columbia Bank 2,191 0.94% 0.88% Lafayette Ambassador Bank 1,534 0.92% 0.91% Fulton Bank of New Jersey 3,777 0.67% 0.76% FNB Bank, N.A. 354 0.62% 0.46% Swineford Nat
Slide 24: 2017 Outlook
2017 OUTLOOK • Loans & Deposits: Annual average growth rate in the mid- to high-single digits • Net Interest Margin: Modest improvement (flat to 5 basis points) on a quarterly basis in Q1 and Q2; Q3 and Q4 margin trends will be largely dependent upon changes in the federal funds rate and competitor
Slide 25: Appendix
APPENDIX
Slide 26: Average Loan Portfolio and Yields
AVERAGE LOAN PORTFOLIO AND YIELDS 26 Note: Yields presented on a fully taxable-equivalent basis, using a 35% federal tax rate and statutory interest expense disallowances. Average loan portfolio yield is for the three months ended December 31, 2016. Balance Yield 3Q 2016 4Q 2015 3Q 2016 4Q 2015 Comm
Slide 27: Average Customer Funding and Rates
AVERAGE CUSTOMER FUNDING AND RATES 27 Balance Rate 3Q 2016 4Q 2015 3Q 2016 4Q 2015 Nonint DDA 4,332$ - % 104$ 333$ - % - % Int DDA 3,714 0.21% 112 302 0.02% 0.08% Savings/MMDA 4,216 0.21% 137 312 0.01% 0.04% CD's 2,777 1.09% (37) (126) 0.02% 0.06% Total Deposits 15,039 0.31% 316 821 0.00% 0.02% Cash
Slide 28: Ending Loan Distribution by State
ENDING LOAN DISTRIBUTION BY STATE DECEMBER 31, 2016 28 Comm'l Consumer Comm'l Mortgage Constr. Res. Mtg. & Other Total (in thousands) Pennsylvania 2,988,557$ 3,152,231$ 492,694$ 677,642$ 1,314,226$ 8,625,350$ New Jersey 525,880 1,433,541 148,800 243,990 378,314 2,730,525 Maryland 334,839 622,567 93,
Slide 29: Non-Performing Loans
NON-PERFORMING LOANS(1) DECEMBER 31, 2016 29 Comm'l Consumer Ending Loans NPLs/Loans Comm'l Mortgage Constr. Res. Mtg. & Other Total NPLs by State by State Pennsylvania 25,039$ 12,884$ 4,460$ 8,727$ 7,831$ 58,941$ 8,625,350$ 0.68% New Jersey 5,964 14,698 384 6,647 4,890 32,583 2,730,525 1.19% Maryla
Slide 30: Net Charge-Offs (Recoveries)
NET CHARGE-OFFS (RECOVERIES) YEAR ENDED DECEMBER 31, 2016 30 Comm'l Consumer Average Loans Charge-Offs to Comm'l Mortgage Constr. Res. Mtg. & Other Total by State Average Loans Pennsylvania 3,630$ 1,243$ (654)$ 881$ 4,418$ 9,518$ 8,267,470$ 0.12% New Jersey 1,767 (1,006) (553) 481 3,297 3,986 2,751,
Slide 31: Investment Portfolio
INVESTMENT PORTFOLIO DECEMBER 31, 2016 31 Weighted Avg. Remaining Life Amortized Unrealized Estimated (in years) Cost Gain (Loss) Fair Value (dollars in millions) Collateralized mortgage obligations 3.0 604$ (10)$ 594$ Mortgage-backed securities 4.5 1,353 (10) 1,343 State and municipal securities 8.
Slide 32: A Sustainable Payout
A SUSTAINABLE PAYOUT $0.20 $0.30 $0.32 $0.34 $0.38 $0.41 2.04% 3.12% 2.44% 2.75% 2.92% 2.18% 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% $0.00 $0.04 $0.08 $0.12 $0.16 $0.20 $0.24 $0.28 $0.32 $0.36 $0.40 $0.44 2011 2012 2013 2014 2015 2016 Cash Dividend Yield 32 (1) Annual dividend per share di
Slide 33: Non-Interest Income (Excluding Securities Gains)
NON-INTEREST INCOME (EXCLUDING SECURITIES GAINS) 33 4Q 2016 3Q 2016 4Q 2015 3Q 2016 4Q 2015 Invt Mgt & Trust 11,610$ 11,425$ 10,919$ 185$ 691$ Mortgage Banking Income 6,959 4,529 4,318 2,430 2,641 Overdraft & NSF Fees 5,749 5,770 5,694 (21) 55 Merchant Fees 3,981 4,220 3,772 (239) 209 Service Charge
Slide 34: Non-Interest Expense
NON-INTEREST EXPENSE 34 4Q 2016 3Q 2016 4Q 2015 3Q 2016 4Q 2015 Salaries & Benefits 73,256$ 70,696$ 65,467$ 2,560$ 7,789$ Occupancy & Equipment 15,206 14,919 15,192 287 14 Data Proc. & Software 9,442 8,727 9,195 715 247 Outside Services 6,536 5,783 6,537 753 (1) Professional fees 2,783 2,535 2,814 2
Slide 35: 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 36: Non-GAAP Reconciliation (Con't)
NON-GAAP RECONCILIATION (CON’T) 36 2013 2014 2015 2016 Tangible Common Equity to Tangible Assets (TCE Ratio) Shareholders' equity 2,063,187$ 1,996,665$ 2,041,894$ 2,121,115$ Less: Intangible assets (533,076) (531,803) (531,556) (531,556) Tangible shareholders' equity (numerator) 1,530,111$ 1,464,862
Slide 37: Fulton Financial Corporation
FULTON FINANCIAL CORPORATION www.fult.com