Attached files
| file | filename |
|---|---|
| EX-99.2 - SUPPLEMENTAL FINANCIAL INFORMATION FOR THE QUARTER ENDED MAR 31, 2018 - FULTON FINANCIAL CORP | exhibit9923-31x18.htm |
| EX-99.1 - PRESS RELEASE DATED APRIL 17, 2018 - FULTON FINANCIAL CORP | exhibit9913-31x18.htm |
| 8-K - 8-K - FULTON FINANCIAL CORP | a8-k3x31x18.htm |
D A T A A S O F M A R C H 3 1 , 2 0 1 8
U N L E S S O T H E R W I S E N O T E D
2018 FIRST QUARTER RESULTS
NASDAQ: FULT
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 "may," "should," "will," "could," "estimates," "predicts," "potential," "continue,"
"anticipates," "believes," "plans," "expects," "future," "intends," “projects,” the negative of these terms and other
comparable terminology. These forward looking statements may include projections of, or guidance on, the
Corporation’s future financial performance, expected levels of future expenses, anticipated growth strategies,
descriptions of new business initiatives and anticipated trends in the Corporation’s business or financial results.
Forward-looking statements are neither historical facts, nor assurance of future performance. Instead, they are based
on current beliefs, expectations and assumptions regarding the future of the Corporation’s business, future plans and
strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-
looking statements related to the future, they are subject to inherent uncertainties, risks and changes in circumstances
that are difficult to predict and many of which are outside of the Corporation’s control, and actual results and financial
condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not
unduly rely on any of these forward-looking statements. Any forward-looking statement is based only on information
currently available and speaks only as of the date when made. 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, 2017 which has been
filed with the Securities and Exchange Commission and is 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
FIRST QUARTER RESULTS
Net income per diluted share: $0.28 in 1Q18, 47.4% increase from 4Q17 and 12.0% increase from 1Q17. 4Q17
included a $15.6 million, or $0.09 per share, charge related to the re-measurement of net deferred tax assets.
Pre-Provision Net Revenue(1): $62.2 million, 10.4% decrease from 4Q17 and 0.5% increase from 1Q17
Linked Quarter
Loan and Core Deposit Growth: 0.6% increase in average loans, while average demand and savings deposits
decreased 4.1%
Net Interest Income & Margin: Net interest income increased 1.3%, reflecting the impact of a 6 basis point increase
in net interest margin
Non-Interest Income(2) & Non-Interest Expense: 16.7% decrease in non-interest income and 1.3% decrease in non-
interest expense
Asset Quality: $2.8 million decrease in provision for credit losses. Overall credit metrics stable to improving.
Year-over-Year
Loan and Core Deposit Growth: 5.4% increase in average loans and 4.5% increase in average demand and savings
deposits
Net Interest Income & Margin: 10.0% increase in net interest income, reflecting the impact of loan growth and a 9
basis point increase in net interest margin
Non-Interest Income(2) & Non-Interest Expense: 0.6% increase in non-interest income and 11.8% increase in non-
interest expense
Asset Quality: $0.8 million decrease in provision for credit losses
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 investment securities gains.
INCOME STATEMENT SUMMARY
4
(1) Includes the impact of the $15.6 million charge for the re-measurement of net deferred tax assets (“Tax Charge”). Refer to slide 11 for additional information.
(2) ROA is return an average assets determined by dividing net income for the period indicated by average assets, annualized.
(3) ROE is return on average shareholders’ equity determined by dividing net income for the period indicated by average shareholders’ equity, annualized.
(4) Non-GAAP based financial measure. Please refer to the calculation and management’s reasons for using this measure on the slide titled “Non-GAAP Reconciliation” at the end of this presentation.
1Q18 4Q17(1) 1Q17
Net Interest Income 151,318 1,905$ 13,739$
Provision for Credit Losses 3,970 (2,760) (830)
Non-Interest Income 45,856 (9,168) 289
Securities Gains 19 (1,913) (1,087)
Non-Interest Expense 136,661 (1,791) 14,386
Income before Income Taxes 56,562 (4,625) (615)
Income Taxes 7,082 (20,104) (6,715)
Net Income 49,480$ 15,479$ 6,100$
Net income per share (diluted) 0.28$ 0.09$ 0.03$
ROA (2) 1.01% 0.34% 0.09%
ROE (3) 9.02% 2.99% 0.80%
ROE (tangible) (4) 11.85% 3.94% 0.92%
Efficiency ratio (4) 67.5% 3.3% 3.3%
(dollars in thousands, except per-share data)
Change from
Net Income of $49.5 million, 45.5% increase from 4Q17 and 14.1%
increase from 1Q17. 4Q17 included a $15.6 million, or $0.09 per share,
charge related to the re-measurement of net deferred tax assets
Net Interest Income
From 4Q17: Increase of 1.3%, reflecting the impact of a six basis point
increase in net interest margin (NIM)
From 1Q17: Increase of 10.0%, driven by loan growth and the impact of a
nine basis point increase in NIM
Provision for Credit Losses
$4.0 million provision in 1Q18. Overall credit metrics stable to improving.
Non-Interest Income
From 4Q17: 16.7% decrease driven by decreases in commercial loan
interest rate swap fees, debit card and Small Business Administration
income. 4Q17 included a $5.1 million litigation settlement.
From 1Q17: 0.6% increase driven by higher investment management and
trust services income, merchant and cash management fee income,
partially offset by decreases in commercial loan swap fee income.
Non-Interest Expenses
From 4Q17: 1.3% decrease driven by decreases in amortization of tax
credit investments and FDIC insurance expense. Partially offsetting these
decreases, were increases in salaries and benefits, professional fees and
occupancy costs.
From 1Q17: 11.8% increase driven by salaries and benefits, other outside
services, professional fees and FDIC insurance expense
Income Taxes
12.5% effective tax rate (ETR) in 1Q18 vs. 44.4% in 4Q17 and 24.1% in
1Q17. Excluding the Tax Charge, ETR for 4Q17 was 18.9%.
NET INTEREST INCOME AND MARGIN
Net Interest Income & Net Interest Margin
~ $730
million
~ $610
million
$137.6 $141.6
$146.8 $149.4 $151.3
3.26%
3.29% 3.27% 3.29%
3.35%
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
1Q17 2Q17 3Q17 4Q17 1Q18
Net Interest Income
Net Interest Margin (Fully-taxable equivalent basis, or FTE)
Average Interest-Earning Assets & Yields
Average Liabilities & Rates
$2.9 $2.9 $3.1 $3.2 $2.9
$14.9 $15.1 $15.4
$15.6 $15.7
3.74% 3.78% 3.80%
3.83% 3.93%
0.00%
2.00%
4.00%
$-
$5.0
$10.0
$15.0
$20.0
1Q17 2Q17 3Q17 4Q17 1Q18
Securities & Other Loans Earning Asset Yield (FTE)
$14.9 $15.1 $15.9
$16.1
$15.4
$1.7 $1.7
$1.4 $1.4
$1.9
0.69% 0.72%
0.77% 0.78% 0.82%
0.00%
0.20%
0.40%
0.60%
0.80%
1.00%
$-
$5.0
$10.0
$15.0
$20.0
1Q17 2Q17 3Q17 4Q17 1Q18
Deposits Borrow ings Cost of Intere st-bearing Liabilities
($ IN MILLIONS) ($ IN BILLIONS)
($ IN BILLIONS)
5
ASSET QUALITY
($ IN MILLIONS)
6
Provision for Credit Losses Non-Performing Loans (NPLs) & NPLs to Loans
131% 129% 128% 131% 131%
1.15% 1.14% 1.13% 1.12% 1.12%
0.00%
1.00%
2.00%
3.00%
0.0%
25.0%
50.0%
75.0%
100.0%
125.0%
150.0%
1Q17 2Q17 3Q17 4Q17 1Q18
Allowance/NPLs Allowance/Loans
Net Charge-offs (NCOs) and NCOs to Average Loans Allowance for Credit Losses (Allowance) to NPLs & Loans
$3.5
$4.3
$5.3 $5.4
$4.0
0.09%
0.11% 0.14% 0.14%
0.10%
0.00%
0.10%
0.20%
0.30%
0.40%
0.50%
$-
$2.0
$4.0
$6.0
1Q17 2Q17 3Q17 4Q17 1 8
NCOs NCOs/Average Loans (annualized)
$4.8
$6.7
$5.1
$6.7
$4.0
$-
$1.0
$2.0
$3.0
$4.0
$5.0
$6.0
$7.0
1Q17 2Q17 3Q17 4Q17 1Q18
$131.5 $135.7 $136.5 $134.8 $134.6
0.88% 0.88% 0.88% 0.85% 0.86%
0.00%
0.50%
1.00%
1.50%
2.00%
$0.0
$40.0
$80.0
$120.0
$160.0
1Q17 2Q17 3Q17 4Q17 1Q18
NPL NPLs/Loans
NON-INTEREST INCOME
($ IN MILLIONS)
Non-Interest Income, Excluding Securities Gains
~ $730
million
~ $610
million
$45.6
$50.9
$47.4
$55.0
$45.9
$-
$10.0
$20.0
$30.0
$40.0
$50.0
$60.0
1Q17 2Q17 3Q17 4Q17 1Q18
Mortgage Banking Income & Spreads
Other Non-Interest Income
1.62%
1.44%
1.62%
1.36%
1.11%
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
4.00%
$-
$1.0
$2.0
$3.0
$4.0
$5.0
$6.0
$7.0
1Q17 2Q17(2) 3Q17 4Q17 1Q18
Gains on Sales Servicing Income Spread on Sales (1)
$4.6
$6.1
$4.8
$4.4
$4.2
$-
$10.0
$20.0
$30.0
$40.0
50.0
1Q17 2Q17 3Q17 4Q17 1Q18
Invt Mgmt & Trust Srvs Deposit Srv Chgs Oth Srv Chgs Other
$41.0
$44.8 $42.6
$50.6
$41.7
(1) Represents Gains on Sales divided by total new commitments to originate residential mortgage
loans for customers.
(2) Servicing income includes $1.3 million mortgage servicing rights recovery in 2Q17.
7
NON-INTEREST EXPENSES
($ IN MILLIONS)
Non-Interest Expense & Efficiency Ratio (1)
~ $730
million
~ $610
million
$122.3
$132.7 $132.2
$138.5
$136.7
64.2%
65.3%
64.3% 64.2%
67.5%
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
$160.0
1Q17 2Q17 3Q17 4Q17 1Q18
Salaries and Employee Benefits & Staffing
Other Non-Interest Expenses
3,520
3,580
3,000
3,500
4,000
$-
$10.0
$20.0
$30.0
$40.0
$50.0
$60.0
$70.0
$80.0
1Q17 2Q17 3Q17 4Q17 1Q18
Total Salarie s Employee Be nefits Average Full-time Equivale nt Employe es
$69.2
$74.5 $72.9 $73.5
$75.8
$-
$10.0
$20.0
$30.0
$40.0
$5 .0
$6 .0
$70.0
1Q17 2Q17 3Q17 4Q17 1Q18
Occp & Equip Data Processing & Software Outside Srvs Other
$53.1
$58.2 $59.3
$65.0
$60.9
(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
PROFITABILITY & CAPITAL
9
ROA(1) ROE and ROE (tangible)(2)
Tangible Common Equity Ratio(2) Net Income Per Diluted Share
8.22% 8.36%
8.76%
6.03%
9.02%
10.93% 11.06%
11.52%
7.91%
11.85%
0.00%
4.00%
8.00%
12.00%
1Q17 2Q17 3Q17 4Q17(3) 1Q18
ROE ROE (tangible)
0.92% 0.94%
0.98%
0.67%
1.01%
0.00%
0.20%
0.40%
0.60%
0.80%
1.00%
1.20%
1Q17 2Q17 3Q17 4Q17(3) 1Q18
(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.
(3) 4Q17 reflects the impact of the $15.6 million Tax Charge.
8.7% 8.7% 8.7% 8.7% 8.8
0.0%
4.
8.
12.0
1Q17 2Q17 3Q17 4Q17 1Q18
$0.25
$0.26
$0.28
$0.19
$0.28
$-
$0.05
$0.10
$ .15
$0.20
$0.25
$0.30
1Q17 2Q17 3Q17 4Q17(3) 1Q18
2018 OUTLOOK
Changes from original outlook have been underlined.
• Loans & Deposits: Average annual loan and core deposit growth rates in the mid single digits
• Asset Quality: Provision driven primarily by loan growth
• Non-Interest Income(1): Low single-digit growth
• Non-Interest Expense: Including amortization of tax free investments, low single-digit growth
rate
• Capital: Focus on utilizing capital to support loan growth and provide appropriate returns to
shareholders
• Net Interest Margin: For the full year 2018, the outlook for NIM is an increase of 5 to 10 basis
points over 2017, including the impact of tax reform on tax equivalent net interest income.
• Effective Tax Rate: Anticipated to range between 11% to 14% depending on level of tax credits
realized
10
(1) Excluding securities gains and the litigation settlement of $5.1 million recognized in the fourth quarter of 2017
THE IMPACT OF TAX REFORM
During the fourth quarter of 2017, the Corporation recorded a $15.6 million tax charge to income taxes related to
the re-measurement of net deferred tax assets as a result of a new federal tax legislation enacted in December
2017. In the following table, the “As Adjusted” column presents Income Taxes, Net Income, Net Income Per Share
(Diluted) and selected financial ratios adjusted to exclude this charge:
11
(1) The information presented in the “As Adjusted” column and ROE (tangible) are non-GAAP based financial measures. Please refer to the calculation and management’s reasons for
using these measures on the slide titled “Non-GAAP Reconciliation” at the end of this presentation.
Fourth Quarter 2017
As Reported Adjustment As Adjusted(1)
Income before Income Taxes 61,187 - 61,187
Income Taxes 27,186 (15,634) 11,552
Net Income 34,001$ 15,634$ 49,635$
Net incom per share (diluted) $0.19 0.09$ 0.28$
ROA 0.67% 0.31% 0.98%
ROE 6.03% 2.77% 8.80%
ROE (tangible) (1) 7.91% 3.64% 11.55%
(dollars in thousands, except per-share data)
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
Mar 31 Jun 30 Sep 30 Dec 31 Mar 31
2017 2017 2017 2017 2018
Efficiency ratio
Non-interest expense 122,275$ 132,695$ 132,157$ 138,452$ 136,661$
Less: Amortization of tax credit investments (998) (3,151) (3,503) (3,376) (1,637)
Non-interest expense (numerator) 121,277$ 129,544$ 128,654$ 135,076$ 135,024$
Net interest income (fully taxable-equivalent) 143,243$ 147,349$ 152,721$ 155,253$ 154,232$
Plus: Total Non-interest income 46,673 52,371 51,974 56,956 45,875
Less: Investment securities gains (1,106) (1,436) (4,597) (1,932) (19)
Net interest income (denominator) 188,810$ 198,284$ 200,098$ 210,277$ 200,088$
Efficiency ratio 64.2% 65.3% 64.3% 64.2% 67.5%
Mar 31 Jun 30 Sep 30 Dec 31 Mar 31
2017 2017 2017 2017 2018
Return on Average Shareholders' Equity (ROE) (Tangible)
Net ncom ( umerator) 43,380$ 45,467$ 48,905$ 34,001$ 49,480$
Average shareholders' equity 2,140,547$ 2,181,189$ 2,215,389$ 2,237,031$ 2,224,615$
Less: Average goodwill and intangible assets (531,556) (531,556) (531,556) (531,556) (531,556)
Average tangible shareholders' equity (denominator) 1,608,991$ 1,649,633$ 1,683,833$ 1,705,475$ 1,693,059$
Return on average shareholders' equity (tangible), annualized 10.93% 11.06% 11.52% 7.91% 11.85%
Three Months Ended
Three Months Ended
NON-GAAP RECONCILIATION (CONTINUED)
13
Mar 31 Jun 30 Sep 30 Dec 31 Mar 31
2017 2017 2017 2017 2018
Tangible Common Equity to Tangible Assets (TCE Ratio)
Shareholders' equity 2,154,683$ 2,191,770$ 2,225,786$ 2,229,857$ 2,235,493$
Less: Intangible assets (531,556) (531,556) (531,556) (531,556) (531,556)
Tangible shareholders' equity (numerator) 1,623,127$ 1,660,214$ 1,694,230$ 1,698,301$ 1,703,937$
Total assets 19,178,576$ 19,647,435$ 20,062,860$ 20,036,905$ 19,948,941$
Less: Intangible assets (531,556) (531,556) (531,556) (531,556) (531,556)
Total tangible assets (denominator) 18,647,020$ 19,115,879$ 19,531,304$ 19,505,349$ 19,417,385$
Tangible Common Equity to Tangible Assets 8.7% 8.7% 8.7% 8.7% 8.8%
Mar 31 Jun 30 Sep 30 Dec 31 Mar 31
2017 2017 2017 2017 2018
Pre-Provision Net Revenue
Net interest income 137,579$ 141,563$ 146,809$ 149,413$ 151,318$
Non-interest income 46,673 52,371 51,974 56,956 45,875
Less: Investment securities gains (1,106) (1,436) (4,597) (1,932) (19)
Total Revenue 183,146$ 192,498$ 194,186$ 204,437$ 197,174$
on-interest expense 122,275$ 132,695$ 132,157$ 138,452$ 136,661$
Less: Amortization of tax credit investments (998) (3,151) (3,503) (3,376) (1,637)
Total Non-interest expense 121,277$ 129,544$ 128,654$ 135,076$ 135,024$
Pre-Provision Net Revenue 61,869$ 62,954$ 65,532$ 69,361$ 62,150$
Three Months Ended
(dollars in thousands)
(in thousands)
14
NON-GAAP RECONCILIATION (CONTINUED)
T hree M o nths Ended
D ec 31,
2017
Net income and Net income per share, diluted
Net income 34,001$
Plus: Re-measurement of net deferred tax assets 15,634
Net Income, adjusted (numerator) 49,635$
Weighted average shares (diluted) (denominator) 176,374
Net income per share, diluted 0.28$
Return on average assets
Net income 34,001$
Plus: Re-measurement of net deferred tax assets 15,634
Net Income, adjusted (numerator) 49,635$
Average assets (denominator) 20,072,579$
Return on average assets, annualized 0.98%
Return on average shareholders' equity
Net income 34,001$
Plus: Re-measurement of net deferred tax assets 15,634
Net Income, adjusted (numerator) 49,635$
Average shareholders' equity (denominator) 2,237,031$
Return on average shareholders' equity, annualized 8.80%
Return on average shareholders' equity (tangible)
Net Income, as reported 34,001$
Plus: Re-measurement of net deferred tax assets 15,634
Net Income, adjusted (numerator) 49,635$
Average shareholders' equity 2,237,031$
Less: Average goodw ill and intangible assets (531,556)
Average tangible shareholders' equity (denominator) 1,705,475$
Return on average shareholders' equity (tangible), annualized 11.55%
Reconciliation of Net Income; Net Income per share, diluted; and Selected Financial Ratios, adjusted to exclude the charge recognized in the fourth
quarter of 2017 related to the re-measurement of net deferred tax assets:
www.fult.com