Attached files
| file | filename |
|---|---|
| EX-99.2 - SUPPLEMENTAL FINANCIAL INFORMATION FOR THE QUARTER ENDED SEPTEMBER 30, 2016 - FULTON FINANCIAL CORP | exhibit9929-30x162.htm |
| EX-99.1 - PRESS RELEASE DATED OCTOBER 18, 2016 - FULTON FINANCIAL CORP | exhibit9919-30x161.htm |
| 8-K/A - 8-K/A - FULTON FINANCIAL CORP | a8-ka9x30x16.htm |
D A T A A S O F S E P T E M B E R 3 0 , 2 0 1 6
U N L E S S O T H E R W I S E N O T E D
2016 THIRD QUARTER RESULTS
NASDAQ: FULT
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,” “will,” “could,” “estimates,” “predicts,”
“potential,” “continue,” “anticipates,” “believes,” “plans,” “expects,” “future,” “intends” and similar expressions which
are intended to identify forward-looking statements. Management’s “2016 Outlook” contained herein is comprised of
forward-looking statements.
Forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties, some
of which are beyond the Corporation’s control and ability to predict, that could cause actual results to differ materially
from those expressed in the forward-looking statements. The Corporation undertakes no obligation, other than as
required by law, to update or revise any forward-looking statements, whether as a result of new information, future
events or otherwise.
A discussion of certain risks and uncertainties affecting the Corporation, and some of the factors that could cause the
Corporation’s actual results to differ materially from those described in the forward-looking statements, can be found
in the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of
Operations” in the Corporation’s Annual Report on Form 10-K for the year ended December 31, 2015 and Quarterly
Reports on Form 10-Q for the quarters ended March 31, 2016 and June 30, 2016, which have been filed with the
Securities and Exchange Commission and are available in the Investor Relations section of the Corporation’s website
(www.fult.com) and on the Securities and Exchange Commission’s website (www.sec.gov).
The Corporation uses certain non-GAAP financial measures in this presentation. These non-GAAP financial measures
are reconciled to the most comparable GAAP measures at the end of this presentation.
2
THIRD QUARTER HIGHLIGHTS
Diluted Earnings Per Share: $0.24 in 3Q16, 4.3% increase from 2Q16 and 20.0% increase from 3Q15
Pre-Provision Net Revenue(1): $58.9 million, 10.4% increase from 2Q16 and 19.0% increase from 3Q15
Linked Quarter
Loan and Core Deposit Growth: 1.8% increase in average loans, while average core deposits increased 3.4%
Net Interest Income & Margin: Net interest income increased 1.3%, reflecting the impact of loan growth and
an additional day in the quarter, partially offset by the impact of a 6 basis point decrease in net interest
margin
Non-Interest Income(2) & Non-Interest Expense: 4.5% increase in non-interest income and a 1.5% decrease in
non-interest expense
Asset Quality: $1.6 million increase in provision for credit losses attributed to continued loan growth
Year-over-Year
Loan and Core Deposit Growth: 6.3% increase in average loans and 8.9% increase in average core deposits
Net Interest Income & Margin: 3.9% increase in net interest income, reflecting the impact of loan growth,
partially offset by the impact of a 4 basis point decrease in net interest margin
Non-Interest Income(2) & Non-Interest Expense: 11.9% increase in non-interest income and, excluding the
loss on redemption of trust preferred securities in 3Q15, 0.5% increase in non-interest expense
Asset Quality: $3.1 million increase in provision for credit losses. Overall credit metrics stable to improving
3
(1) Non-GAAP based financial measure. Please refer to the calculation and management’s reason for using the measure on the slide titled “Non-GAAP Reconciliation” at
the end of this presentation.
(2) Excluding securities gains.
INCOME STATEMENT SUMMARY
Net Income of $41.5 million; a 4.3% increase from 2Q16 and
a 21.1% increase from 3Q15. Earnings per share increased
4.3% from 2Q16 and 20.0% from 3Q15.
Net Interest Income
From 2Q16: Increase of 1.3%, reflecting the impact of loan growth
and an additional day in the quarter, partially offset by the impact of
a 6 basis point decrease in net interest margin (NIM)
From 3Q15: Increase of 3.9% primarily driven by loan growth and
lower cost of funds
Loan Loss Provision
$4.1 million provision in 3Q16, primarily driven by loan growth
Non-Interest Income
From 2Q16: Increase of 4.5% driven primarily by increases in
commercial loan interest rate swap fees and mortgage banking
income
From 3Q15: Increase of 11.9% due to increased commercial loan
interest rate swap fees, mortgage banking income, and SBA loan sale
gains
Non-Interest Expenses
From 2Q16: Decrease of 1.5% due to decreases in FDIC insurance
expense, data processing, professional fees and operating risk loss,
partially offset by increases in salaries and employee benefits, other
real estate owned and repossession expense and other outside
services
From 3Q15: Relatively flat with increases in salaries and employee
benefits and occupancy expense, offset by decreases in other
outside services, FDIC insurance expense, and operating risk loss
4
(1) ROA is return an average assets determined by dividing net income for the period indicated by average assets.
(2) Non-GAAP based financial measure. Please refer to the calculation and management’s reasons for using this measure on the slide titled “Non-GAAP Reconciliation” at the end of this presentation.
3Q16 2Q16 3Q15
Net Interest Income 130,565$ 1,649$ 4,871$
Provision for Credit Losses 4,141 1,630 3,141
Non-Interest Income 48,147 2,086 5,103
Securities Gains 2 (74) (1,728)
Non-Interest Expense 119,848 (1,789) 585
Loss on redemption of TruPS - - (5,626)
Income before Income Taxes 54,725 3,820 10,146
Income Taxes 13,257 2,102 2,929
Net Income 41,468$ 1,718$ 7,217$
Earnings Per Share (Diluted) 0.24$ 0.01$ 0.04$
ROA (1) 0.89% 0.01% 0.11%
ROE (tangible) (2) 10.38% 0.12% 1.27%
Efficiency rati (2) 65.2% (2.4%) (3.7%)
(dollars in thousands, except per-share data)
Change from
NET INTEREST INCOME AND MARGIN
Net Interest Income & Net Interest Margin
~ $730
million
~ $610
million
$125.7 $127.8 $129.1 $128.9
$130.6
3.18% 3.19%
3.23%
3.20% 3.14%
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
$-
$20.0
$40.0
$60.0
$80.0
$100.0
$120.0
$140.0
Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016
Net Interest Income
Net Interest Margin (Fully-taxable equivalent basis, or FTE)
Average Interest-Earning Assets & Yields
Average Liabilities & Rates
$2.9 $2.9 $2.8 $2.8 $3.0
$13.4 $13.7 $13.9 $14.0 $14.2
3.68% 3.67% 3.72% 3.69% 3.63%
0.00%
2.00%
4.00%
$-
$3.0
$6.0
$9.0
$12.0
$15.0
$18.0
Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016
Securities & Other Loans Earning Asset Yield (FTE)
$13.9 $14.2 $14.2 $14.4 $14.7
$1.3 $1.2 $1.4 $1.4
$1.4
0.72%
.69% 0.70% 0.70% 0.70%
0.00%
0.20%
0.40%
0.60%
0.80%
1.00%
$-
$3.0
$6.0
$9.0
$12.0
$15.
Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016
Deposits Borrowings Cost of Interest-bearing Liabilities
($ IN MILLIONS) ($ IN BILLIONS)
($ IN BILLIONS)
5
ASSET QUALITY
($ IN MILLIONS)
6
Provision for Credit Losses Non-Performing Loans (NPLs) & NPLs to Loans
116.81% 118.37% 121.05%
129.26%
119.59%
1.25% 1.24% 1.20% 1.17% 1.15%
0.00%
1.00%
2.00%
3.00%
0.0%
25.0%
50.0%
75.0%
100.0%
125.0%
150.0%
Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016
Allowance/NPLs Allowance/Loans
Net Charge-offs (NCOs) and NCOs to Average Loans Allowance for Credit Losses (Allowance) to NPLs & Loans $1.1
$ .7
$6.9
$3.5
$4.1
0.03%
0.02%
0.20%
0.10 0.11%
0.00%
0.10%
0.20%
0.30%
0.40%
0.50%
$-
$2.0
$4.0
$6.0
$8.0
Q3 2015 Q4 2015 Q1 2016 Q2 2016 3
NCOs NCOs/Average Loans
$1.0
$2.8
$1.5
$2.5
$4.1
$-
$1.0
$2.0
$3.0
$4.0
$5.0
Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016
$145.0 $144.8
$137.2
$127.7
$138.1
1.07 .05% 0.99%
0.90% 0.96%
0.00%
0.50%
1.00%
1.50%
2.00%
$0.0
$40.0
$80.0
$120.0
$160.0
Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016
NPL NPLs/Loans
NON-INTEREST INCOME
($ IN MILLIONS)
Non-Interest Income, Excluding Securities Gains
~ $730
million
~ $610
million
$43.0
$45.1
$42.2
$46.1
$48.1
$-
$5.0
$10.0
$15.0
$20.0
$25.0
$30.0
$35.0
$40.0
$45.0
$50.0
Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016
Mortgage Banking Income & Spreads
Other Non-Interest Income
1.17%
1.60%
1.28%
1.71% 1.73%
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
4.00%
$(1.0)
$-
$1.0
$2.0
$3.0
$4.0
$5.0
$6.0
Q3 2015 Q4 2015 Q1 2016 Q2 2016(2) Q3 2016(2)
Gains on Sales Servicing Income Spread on Sales ( 1)
$3.9
$4.3 $4.0 $3.9
$4.5
$-
$5.0
$10.0
$15.0
$20.0
$25.
$30.0
$35.0
$40.0
$45.0
Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016
Invt Mgmt & Trust Srvs De posit Srv Chgs Oth Srv Chgs Other
$39.2
$40.7
$38.2
$42.2
$43.6
(1) Represents Gains on Sales divided by total new commitments to originate residential
mortgage loans for customers.
(2) Servicing income includes $1.7 and $1.3 million Mortgage Servicing Right (MSR)
impairment charges in Q2 2016 and Q3 2016, respectively.
7
Includes $1.7 MSR
impairment charge
Includes $1.3 MSR
impairment charge
NON-INTEREST EXPENSES
($ IN MILLIONS)
Non-Interest Expense & Efficiency Ratio (1)
~ $730
million
~ $610
million
$119.3 $118.4 $120.4
$121.6 $119.8
68.8%
66.6% 68.3% 67.6%
65.2%
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
Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016
Salaries and Employee Benefits & Staffing
Other Non-Interest Expenses
3,440 3,490
-
2,000
4,000
6,000
$-
$10.0
$20.0
$30.0
$40.0
$50.0
$60.0
$70.0
$80.0
Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016
Total Salaries Empl oyee Benefits Average Full-time Equivalent E mploye es
$65.3 $65.5
$69.4 $70.0 $70.7
$-
$10.0
$20.0
$30.0
$40.0
$5 .0
$60.0
$70.0
3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016
Occp & Equip Data Processing & Softwa re Outsi de Srvs Other
$54.0
$52.9
$51.0 $51.6 $49.1
(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 Reconciliation” at the end of this presentation.
8
$1.8 $2.1
$3.2 $4.3 $3.3
$1.0 $1.2 $1.1
$4.6
$1.4
$8.6 $5.9
$3.1
$1.1 $1.0 $1.0
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 YTD
9/2016
Q1 2016 Q2 2016 Q3 2016
Salaries & Benefits Expense Outside Consulting Services and Temporary Staffing (1) Staffing
$0.8
$0.1
COMPLIANCE & RISK MANAGEMENT
(1) Represents third-party consulting, legal and staffing services directly related to BSA/AML compliance program.
To
tal
Exp
e
n
se
s, in
m
illio
n
s
• Strengthening Risk Management and Compliance infrastructures
• Address deficiencies within BSA/AML compliance
• BSA/AML enforcement actions at the Corporation and banking subsidiaries
• Significant investments in personnel, outside services and systems
BSA/AML Compliance Program Expenses and Staffing
To
tal
N
u
m
b
e
r
o
f
Em
p
lo
ye
e
s
at
Pe
ri
o
d
E
n
d
9
PROFITABILITY & CAPITAL
10
ROA(1) ROE (tangible)(2)
Tangible Common Equity Ratio(2) Diluted Earnings Per Common Share
9.11%
10.16% 10.07% 10.26% 10.38%
0.00%
4.00%
8.00%
12.00%
Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016
0.78%
0.86% 0.86% 0.88% 0.89%
0.00%
0.20%
0.40%
0.60%
0.80%
1.00%
1.20%
Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016
(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-GAAP Reconciliation” at the end of this presentation.
8.6 8.7% 8.8% 8.8% 8.8%
0.0%
4.
8.
12.0
Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016
$0.20
$0.22 $0.22
$0.23
$0.24
$-
$0.05
$0.10
$0.15
$0.20
$0.25
Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016
2016 OUTLOOK
The following outlook remains unchanged from prior quarter:
• Loans & Deposits: Annual average growth rate in the mid- to high-single digits
• Asset Quality: Provision driven primarily by loan growth
• Non-Interest Income (Excluding Securities Gains): Mid- to high-single digit growth rate
• Non-Interest Expense (Excluding Loss on Redemption of TruPS): Low- to mid-single digit growth rate
• Capital: Focus on utilizing capital to support growth and provide appropriate returns to our
shareholders
• Net Interest Margin: Absent any further rate increases, expect low-single digit quarterly compression
11
NON-GAAP RECONCILIATION
Note: The Corporation has presented the following non-GAAP (Generally Accepted Accounting Principles) financial measures because it believes
that these measures provide useful and comparative information to assess trends in the Corporation's results of operations and financial condition.
Presentation of these non-GAAP financial measures is consistent with how the Corporation evaluates its performance internally and these non-
GAAP financial measures are frequently used by securities analysts, investors and other interested parties in the evaluation of companies in the
Corporation's industry. Investors should recognize that the Corporation's presentation of these non-GAAP financial measures might not be
comparable to similarly-titled measures of other companies. These non-GAAP financial measures should not be considered a substitute for GAAP
basis measures and the Corporation strongly encourages a review of its condensed consolidated financial statements in their entirety.
12
Sep 30 Dec 31 Mar 31 Jun 30 Sep 30
2015 2015 2016 2016 2016
Efficiency ratio
Non-interest expense 124,889$ 118,439$ 120,413$ 121,637$ 119,848$
Less: Intangible amortization (5) (6) - - -
Less: Loss on redemption of TruPS (5,626) - - - -
Numerator 119,258$ 118,433$ 120,413$ 121,637$ 119,848$
Net interest income (fully taxable equivalent) 130,250$ 132,683$ 134,026$ 133,890$ 135,784$
Plus: Total Non-interest income 44,774 45,839 43,137 46,137 48,149
Less: Investment securities gains (1,730) (776) (947) (76) (2)
Denominator 173,294$ 177,746$ 176,216$ 179,951$ 183,931$
Efficiency ratio 68.8% 66.6% 68.3% 67.6% 65.2%
Sep 30 Dec 31 Mar 31 Jun 30 Sep 30
2015 2015 2016 2016 2016
Return on Average Shareholders' Equity (ROE) (Tangible)
Net income 34,251$ 38,535$ 38,257$ 39,750$ 41,468$
Plus: Inta g bl amortization, net of tax 3 4 - - -
N m rator 34,254$ 38,539$ 38,257$ 39,750$ 41,468$
Average shareholders' equity 2,022,829$ 2,036,769$ 2,058,799$ 2,089,915$ 2,120,596$
Less: Average goodwill and intangible assets (531,564) (531,556) (531,556) (531,556) (531,556)
Average tangible shareholders' equity (denominator) 1,491,265$ 1,505,213$ 1,527,243$ 1,558,359$ 1,589,040$
Return on average common shareholders' equity (tangible), annualized 9.11% 10.16% 10.07% 10.26% 10.38%
Three Months Ended
Three Months Ended
(dollars in thousands)
(dollars in thousands)
NON-GAAP RECONCILIATION (CON’T)
13
Sep 30 Dec 31 Mar 31 Jun 30 Sep 30
2015 2015 2016 2016 2016
Tangible Common Equity to Tangible Assets (TCE Ratio)
Shareholders' equity 2,025,904$ 2,041,894$ 2,073,309$ 2,106,997$ 2,129,436$
Less: Intangible assets (531,562) (531,556) (531,556) (531,556) (531,556)
Tangible shareholders' equity (numerator) 1,494,342$ 1,510,338$ 1,541,753$ 1,575,441$ 1,597,880$
Total assets 17,838,059$ 17,914,718$ 18,122,254$ 18,480,035$ 18,701,062$
Less: Intangible assets (531,562) (531,556) (531,556) (531,556) (531,556)
Total tangible assets (denominator) 17,306,497$ 17,383,162$ 17,590,698$ 17,948,479$ 18,169,506$
Tangible Common Equity to Tangible Assets 8.6% 8.7% 8.8% 8.8% 8.8%
Sep 30 Dec 31 Mar 31 Jun 30 Sep 30
2015 2015 2016 2016 2016
Pre-Provision Net Revenue
Net interest income 125,694$ 127,799$ 129,054$ 128,916$ 130,565$
Non-interest income 44,774 45,839 43,137 46,137 48,149
Less: Investment securities gains (1,730) (776) (947) (76) (2)
Total Revenue 168,738 172,862 171,244 174,977 178,712
on-interest expense 124,889 118,439 120,413 121,637 119,848
Less: Loss on redemption of TruPS (5,626) - - - -
Total Non-interest expense, as adjusted 119,263 118,439 120,413 121,637 119,848
Pre-Provision Net Revenue 49,475$ 54,423$ 50,831$ 53,340$ 58,864$
Three Months Ended
(dollars in thousands)
(in thousands)
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