Attached files
| file | filename |
|---|---|
| EX-99.2 - SUPPLEMENTAL FINANCIAL INFORMATION FOR THE QUARTER ENDED JUN 30, 2017 - FULTON FINANCIAL CORP | exhibit9926-30x17.htm |
| EX-99.1 - PRESS RELEASE DATED JULY 18, 2017 - FULTON FINANCIAL CORP | exhibit9916-30x17.htm |
| 8-K - 8-K - FULTON FINANCIAL CORP | a8-k6x30x17.htm |
D A T A A S O F J U N E 3 0 , 2 0 1 7
U N L E S S O T H E R W I S E N O T E D
2017 SECOND QUARTER RESULTS
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 “2017 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, 2016 and Quarterly
Report on Form 10-Q for the quarter ended March 31, 2017, 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
SECOND QUARTER HIGHLIGHTS
Diluted Earnings Per Share: $0.26 in 2Q17, 4.0% increase from 1Q17 and 13.0% increase from 2Q16
Pre-Provision Net Revenue(1): $63.0 million, 1.8% increase from 1Q17 and 18.0% increase from 2Q16
Linked Quarter
Loan and Core(2) Deposit Growth: 1.8% increase in average loans, and 2.0% increase in average core deposits
Net Interest Income & Margin: Net interest income increased 2.9%, reflecting the impact of loan growth and
a 3 basis point increase in net interest margin
Non-Interest Income(3) & Non-Interest Expense: 11.8% increase in non-interest income and an 8.5% increase
in non-interest expense
Asset Quality: $1.9 million increase in provision for credit losses, reflective of loan growth.
Year-over-Year
Loan and Core(2) Deposit Growth: 8.3% increase in average loans and 7.6% increase in average core deposits
Net Interest Income & Margin: 9.8% increase in net interest income, reflecting the impact of loan growth
and a 9 basis point increase in net interest margin
Non-Interest Income(3) & Non-Interest Expense: 10.6% increase in non-interest income and 9.1% increase in
non-interest expense
Asset Quality: $4.2 million increase in provision for credit losses, reflective of loan growth with stable to
improving credit metrics.
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) Consists of non-interest bearing demand deposits, interest-bearing demand deposits, and savings and money market accounts.
(3) Excluding securities gains.
INCOME STATEMENT SUMMARY – QUARTERLY
Net Income of $45.5 million; a 4.8% increase from 1Q17 and a
14.4% increase from 2Q16. Earnings per share increased 4.0%
from 1Q17 and 13.0% from 2Q16.
Net Interest Income
From 1Q17: Increase of 2.9%, reflecting the impact of loan growth and a
3 basis point increase in net interest margin (NIM), stemming from two
Federal Funds rate increases
From 2Q16: Increase of 9.8%, driven by loan growth and the impact of a
9 basis point increase in NIM driven by three Federal Funds rate
increases and long-term debt re-financings at lower rates
Loan Loss Provision
$6.7 million provision in 2Q17; increase due largely to loan growth
Non-Interest Income
From 1Q17: Increase of 11.8% driven primarily by mortgage banking
income, merchant fee income, commercial loan interest rate swap fees
and Small Business Administration (SBA) loan sale gains. Mortgage
banking income was increased in 2Q17 by reversal of mortgage servicing
rights (MSR) valuation allowance. Excluding this, non-interest income
growth was 8.9%.
From 2Q16: Increase of 10.6% driven primarily by mortgage banking
income, commercial loan interest rate swap fees, investment
management and trust services income and SBA loan sale gains
Non-Interest Expenses
From 1Q17: Increase of 8.5% due to lower 1Q17 incentive compensation
expense, higher salaries due to April merit increases and headcount
growth, increased amortization of tax credit investments and higher
other outside services and other expenses
From 2Q16: Increase of 9.1% due to higher salaries expense,
amortization of tax credit investments and increased other outside
services, slightly offset by a decrease in data processing
Income Taxes
Lower effective tax rate mainly due to reclassification of tax credit
investments to non-interest expense and excess tax benefits on stock
awards in 2Q17
4
(1) ROA is return an average assets determined by dividing net income for the period indicated by average assets, annualized.
(2) ROE is return on average shareholders’ equity determined by dividing net income for the period indicated by average shareholders’ equity, annualized.
(3) Non-GAAP based financial measure. Please refer to the calculation and management’s reasons for using this measure on the slide titled “Non-GAAP Reconciliation” at the end of this presentation.
2Q17 1Q17 2Q16
Net Interest Income 141,563$ 3,984$ 12,647$
Provision for Credit Losses 6,700 1,900 4,189
Non-Interest Income 50,935 5,368 4,874
Securities Gains 1,436 330 1,360
Non-Interest Expense 132,695 10,420 11,058
Income before Income Taxes 54,539 (2,638) 3,634
Income Taxes 9,072 (4,725) (2,083)
Net Income 45,467$ 2,087$ 5,717$
Earnings Per Share (Diluted) 0.26$ 0.01$ 0.03$
ROA (1) 0.94% 0.02% 0.06%
ROE (2) 8.36% 0.14% 0.71%
ROE (tangible) (3) 11.06% 0.13% 0.80%
Efficiency ratio (3) 65.3% 1.1% (2.3%)
(dollars in thousands, except per-share data)
Change from
INCOME STATEMENT SUMMARY – YEAR TO DATE
Net Income of $88.8 million; 13.9%
increase from 2016. Earnings per share
increased 13.3% from the prior year.
Net Interest Income
8.2% increase, reflecting the impact of loan
growth and a 6 basis point higher NIM which
reflects the impact of 3 Federal Funds rate
increases, higher non-accrual interest income
in 2017 and lower long-term borrowing costs
Loan Loss Provision
$11.5 million provision in 2017, attributed to
loan growth and stable credit metrics
Non-Interest Income
Increase of 9.3% driven primarily by
commercial loan swap fees, mortgage banking
income, investment management and trust
fees and SBA loan sale gains.
Non-Interest Expenses
Increase of 5.3%, driven by amortization of tax
credit investments, higher salaries expense,
sales tax audit accruals and higher other
outside services, slightly offset by expenses
related to lower data processing, software and
FDIC insurance.
5
(1) ROA is return an average assets determined by dividing net income for the period indicated by average assets, annualized.
(2) ROE is return on average shareholders’ equity determined by dividing net income for the period indicated by average shareholders’ equity, annualized.
(3) Non-GAAP based financial measure. Please refer to the calculation and management’s reasons for using this measure on the slide titled “Non-GAAP Reconciliation” at the end of this presentation.
YTD June
2017 2016 Change
Net Interest Income 279,142$ 257,970$ 21,172$
Provision for Credit Losses 11,500 4,041 7,459
Non-Interest Income 96,502 88,251 8,251
Securities Gains 2,542 1,023 1,519
Non-Interest Expense 254,970 242,050 12,920
Income before Income Taxes 111,716 101,153$ 10,563
Income Taxes 22,869 23,146 (277)
Net Income 88,847$ 78,007$ 10,840$
Earnings Per Share (Diluted) 0.51$ 0.45$ 0.06$
ROA (1) 0.93% 0.87% 0.06%
ROE (2) 8.29% 7.56% 0.73%
ROE (tangible) (3) 11.00% 10.17% 0.83%
Efficiency ratio (3) 64.8% 68.0% (3.2%)
(dollars in thousands, except per-share data)
NET INTEREST INCOME AND MARGIN
Net Interest Income & Net Interest Margin
~ $730
million
~ $610
million
$128.9 $130.6 $132.2
$137.6 $141.6
3.20% 3.14% 3.15% 3.26% 3.29%
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
4.00%
$-
$20.0
$40.0
$60.0
$80.0
$100.0
$120.0
$140.0
$160.0
2Q16 3Q16 4Q16 1Q17 2Q17
Net Interest Income
Net Interest Margin (Fully-taxable equivalent basis, or FTE)
Average Interest-Earning Assets & Yields
Average Liabilities & Rates
$2.8 $3.0 $2.9 $2.9 $2.9
$14.0 $14.2 $14.5 $14.9 $15.1
3.69% 3.63% 3.62% 3.74%
3.78%
0.00%
2.00%
4.00%
$-
$5.0
$10.0
$15.0
$20.0
2Q16 3Q16 4Q16 1Q17 2Q17
Securities & Other Loans Earning Asset Yield (FTE)
$14.4 $14.7 $15.0 $14.9 $15.1
$1.4 $1.4 $1.3 $1.7
$1.7
0.70% 0.70% 0.70% 0.69% 0.72%
0.00%
0.20%
0.40%
0.60%
0.80%
1.00%
$-
$5.0
$10.0
$15.0
$20.0
2Q16 3Q16 4Q16 1Q17 2Q17
Deposits Borrowings Cost of Interest-bearing Liabilities
($ IN MILLIONS) ($ IN BILLIONS)
($ IN BILLIONS)
6
ASSET QUALITY
($ IN MILLIONS)
7
Provision for Credit Losses Non-Performing Loans (NPLs) & NPLs to Loans
129.26%
119.59%
130.15% 131.26% 128.92%
1.17% 1.15% 1.17% 1.15% 1.14%
0.00%
1.00%
2.00%
3.00%
0.0%
25.0%
50.0%
75.0%
100.0%
125.0%
150.0%
2Q16 3Q16 4Q16 1Q17 2Q17
Allowance/NPLs Allowance/Loans
Net Charge-offs (NCOs) and NCOs to Average Loans Allowance for Credit Losses (Allowance) to NPLs & Loans
$3.5
$4.1
$(1.2)
$3.5
$4.3
0.10%
0 11%
-0.03%
0.09% 0.11%
-0.10%
0.00%
0.10%
0.20%
0.30%
0.40%
0.50%
$(2.0)
$-
$2.0
$4.0
$6.0
2Q16 3Q16 4Q16 1Q17 2Q17
NCOs NCOs/Average Loans (annualized)
$2.5
$4.1
$5.0 $4.8
$6.7
$-
$1.0
$2.0
$3.0
$4.
$5.0
$6.0
$7.0
2Q16 3Q16 4Q16 1Q17 2Q17
$127.7
$138.1
$131.6 $131.5 $135.7
0.90% 0.96% 0.90% 0.88% 0.88%
0.00%
0.50%
1.00
1.50%
2.00%
$0.0
$40.0
$80.0
$120.0
$160.0
2Q16 3Q16 4Q16 1Q17 2Q17
NPL NPLs/Loans
NON-INTEREST INCOME – QUARTER COMPARISON
($ IN MILLIONS)
Non-Interest Income, Excluding Securities Gains
~ $730
million
~ $610
million
$46.1
$48.1
$51.2
$45.6
$50.9
$-
$10.0
$20.0
$30.0
$40.0
$50.0
$60.0
2Q16 3Q16 4Q16 1Q17 2Q17
Mortgage Banking Income & Spreads
Other Non-Interest Income
1.71% 1.73%
1.94%
1.62% 1.44%
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
$7.0
$8.0
2Q16(2) 3Q16(2) 4Q16(2) 1Q17 2Q17(2)
Gains on Sales Servicing Income Spread on Sales (1)
$3.9
$4.5
$7.0
$4.6
$6.1
$-
$10.0
$20.0
$30.0
$40.0
$50.0
2Q16 3Q16 4Q16 1Q17 2Q17
Invt Mgmt & Trust Srvs Deposit Srv Chgs Oth Srv Chgs Other
$42.2
$43.6 $44.2
$41.0
$44.8
(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 Rights (MSR) impairment
charges in 2Q16 and 3Q16, respectively, and $1.7 million and $1.3 million recoveries in 4Q16 and
2Q17, respectively.
8
NON-INTEREST EXPENSES – QUARTER COMPARISON
($ IN MILLIONS)
Non-Interest Expense & Efficiency Ratio (1)
~ $730
million
~ $610
million
$121.6 $119.8
$127.6
$122.3
$132.7
67.6%
65.2%
67.6%
64.2%
65.3%
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
2Q16 3Q16 4Q16 1Q17 2Q17
Salaries and Employee Benefits & Staffing
Other Non-Interest Expenses
3,480 3,550
-
2,000
4,000
6,000
$-
$10.0
$20.0
$30.0
$40.0
$50.0
$60.0
$70.0
$80.0
2Q16 3Q16 4Q16 1Q17 2Q17
Total Salaries Employee Benefits Average Full-time Equivalent Employees
$70.0 $70.7
$73.3
$69.2
$74.5
$-
$10.0
$20.0
$30.0
$40.0
$50.0
$60.0
$70.0
2Q16 3Q16 4Q16 1Q17 2Q17
Occp & Equip Data Processing & Software Outside Srvs Other
$51.6
$49.1
$54.4 $53.0
$58.2
(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.
9
PROFITABILITY & CAPITAL
10
ROA(1) ROE and ROE (tangible)(2)
Tangible Common Equity Ratio(2) Diluted Earnings Per Common Share
7.65% 7.78% 7.86%
8.22% 8.36%
10.26% 10.38% 10.47%
10.93% 11.06%
0.00%
4.00%
8.00%
12.00%
2Q16 3Q16 4Q16 1Q17 2Q17
ROE ROE (tangible)
0.88%
0.89% 0.89% 0.92% 0.94%
0.00%
0.20%
0.40%
0.60%
0.80%
1.00%
1.20%
2Q16 3Q16 4Q16 1Q17 2Q17
(1) ROA is return an average assets determined by dividing net income for the period indicated by average assets, annualized.
(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.
8.8% 8.8% 8.6% 8.7% 8.7%
0.0%
4.
8.
12.0
2Q16 3Q16 4Q16 1Q17 2Q17
$0.23
$0.24 $0.24
$0.25
$0.26
$-
$0.05
$0.10
$ .15
$0.20
$0.25
$0.30
2Q16 3Q16 4Q16 1Q17 2Q17
2017 OUTLOOK
The following outlook remains unchanged from prior quarter:
• Loans & Deposits: Annual average growth rate in the mid- to high-single digits
• Asset Quality: Provision driven primarily by loan growth
• Non-Interest Income (Excluding Securities Gains): Mid- to high-single digit
growth rate
• Non-Interest Expense: Low- to mid-single digit growth rate
• Capital: Focus on utilizing capital to support growth and provide appropriate
returns to our shareholders
• Net Interest Margin: Modest improvement in Q2 (2 to 7 basis points); quarterly
improvement of 3 to 9 basis points during Q3 and Q4, with variability within
that range based on further changes in the federal funds rate and competitive
pressure on deposit pricing.
11
NON-GAAP RECONCILIATION
Note: The Corporation has presented the following non-GAAP (Generally Accepted Accounting Principles) financial measures because it believes
that these measures provide useful and comparative information to assess trends in the Corporation's results of operations and financial condition.
Presentation of these non-GAAP financial measures is consistent with how the Corporation evaluates its performance internally and these non-
GAAP financial measures are frequently used by securities analysts, investors and other interested parties in the evaluation of companies in the
Corporation's industry. Investors should recognize that the Corporation's presentation of these non-GAAP financial measures might not be
comparable to similarly-titled measures of other companies. These non-GAAP financial measures should not be considered a substitute for GAAP
basis measures and the Corporation strongly encourages a review of its condensed consolidated financial statements in their entirety.
12
Jun 30 Jun 30 Jun 30 Sep 30 Dec 31 Mar 31 Jun 30
2016 2017 2016 2016 2016 2017 2017
Efficiency ratio
Non-interest expense - Numerator 242,050$ 254,970$ 121,637$ 119,848$ 127,621$ 122,275$ 132,695$
Less: Amortization of tax credit investments - (4,149) - - - (998) (3,151)
Numerator 242,050$ 250,821$ 121,637$ 119,848$ 127,621$ 121,277$ 129,544$
Net interest income (fully taxable-equivalent) 267,916$ 290,593$ 133,890$ 135,784$ 137,571$ 143,243$ 147,349$
Plus: Total Non-interest income 89,274 99,044 46,137 48,149 52,755 46,673 52,371
Less: Investment securities gains (1,023) (2,542) (76) (2) (1,525) (1,106) (1,436)
Denominator 356,167$ 387,095$ 179,951$ 183,931$ 188,801$ 188,810$ 198,284$
Efficiency ratio (1) 68.0% 64.8% 67.6% 65.2% 67.6% 64.2% 65.3%
Jun 30 Jun 30 Jun 30 Sep 30 Dec 31 Mar 31 Jun 30
2016 2017 2016 2016 2016 2017 2017
Return on Average Shareholders' Equity (ROE) (Tangible)
et i come - Numerator 78,007$ 88,847$ 39,750$ 41,468$ 42,150$ 43,380$ 45,467$
Av age sh r holders' equity 2,074,357$ 2,160,980$ 2,089,915$ 2,120,596$ 2,132,655$ 2,140,547$ 2,181,189$
Less: Average goodwill and intangible assets (531,556) (531,556) (531,556) (531,556) (531,556) (531,556) (531,556)
Average tangible shareholders' equity (denominator) 1,542,801$ 1,629,424$ 1,558,359$ 1,589,040$ 1,601,099$ 1,608,991$ 1,649,633$
Return on average shareholders' equity (tangible), annualized 10.17% 11.00% 10.26% 10.38% 10.47% 10.93% 11.06%
(dollars in thousands)
Three Months Ended
Three Months Ended
Six Months Ended
Six Months Ended
(dollars in thousands)
(1) Amortization expense for tax credit investments that are considered to be affordable housing projects under applicable accounting guidance is included in income taxes. Amortization expense for other tax
credit investments that are not considered to be affordable housing projects is included in non-interest expense. If amortization expense for all tax credit investments were recorded in income taxes, the effective
tax rate for the quarter ended June 30, 2017 would have been 21.2% vs 16.6%.
NON-GAAP RECONCILIATION (CON’T)
13
Jun 30 Sep 30 Dec 31 Mar 31 Jun 30
2016 2016 2016 2017 2017
Tangible Common Equity to Tangible Assets (TCE Ratio)
Shareholders' equity 2,106,997$ 2,129,436$ 2,121,115$ 2,154,683$ 2,191,770$
Less: Intangible assets (531,556) (531,556) (531,556) (531,556) (531,556)
Tangible shareholders' equity (numerator) 1,575,441$ 1,597,880$ 1,589,559$ 1,623,127$ 1,660,214$
Total assets 18,480,035$ 18,701,062$ 18,944,247$ 19,178,576$ 19,647,351$
Less: Intangible assets (531,556) (531,556) (531,556) (531,556) (531,556)
Total tangible assets (denominator) 17,948,479$ 18,169,506$ 18,412,691$ 18,647,020$ 19,115,795$
Tangible Common Equity to Tangible Assets 8.8% 8.8% 8.6% 8.7% 8.7%
Jun 30 Sep 30 Dec 31 Mar 31 Jun 30
2016 2016 2016 2017 2017
Pre-Provision Net Revenue
Net interest income 128,916$ 130,565$ 132,237$ 137,579$ 141,563$
Non-interest income 46,137 48,149 52,755 46,673 52,371
Less: Investment securities gains (76) (2) (1,525) (1,106) (1,436)
Total Revenue 174,977 178,712 183,467 183,146 192,498
Total Non-interest expense 121,637$ 119,848$ 127,621$ 122,275$ 132,695$
Less: Amortization of tax credit investments - - - (998) (3,151)
121,637 119,848 127,621 121,277 129,544
Pre-Provision Net Revenue 53,340$ 58,864$ 55,846$ 61,869$ 62,954$
Three Months Ended
(dollars in thousands)
(in thousands)
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