Attached files
| file | filename |
|---|---|
| 8-K - 8-K - FULTON FINANCIAL CORP | a8-k7x30x18.htm |
INVESTOR PRESENTATION D A T A A S O F J U N E 3 0 , 2 0 1 8 U N L E S S O T H E R W I S E N O T E D
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, Quarterly Report on Form 10-Q for the quarter ended March 31, 2018 and other periodic reports, which the Corporation files 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
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 • Attractive Core Deposit Profile • Prudent Expense Management • Balance Sheet Is Positioned for Rising Interest Rates 3
A VALUABLE FRANCHISE • 243 community banking offices across the Mid-Atlantic • Asset size: $20.2 billion • 3,700+ team members (3,580 FTEs (1)) • Market capitalization: $2.9 billion (2) (1) Average full-time equivalent employees. (2) Based on shares outstanding and the closing price as of June 30, 2018. 4
STRONG POSITION IN ATTRACTIVE MARKETS Median Deposits Market Market Household (HH) 2018-2023 Projected Change Metropolitan Statistical Area (MSA) (in millions) Rank Share Income Population HH Income Lancaster, PA 3 ,131 1 28.28% 6 4,827 2.16% 9.70% Philadelphia-Camden-Wilmington, PA-NJ-DE-MD 2 ,966 14 0.81% 7 0,516 1.31% 9.81% Allentown-Bethlehem-Easton, PA-NJ 1 ,471 4 8.87% 6 6,384 1.33% 8.45% New York-Newark-Jersey City, NY-NJ-PA 1 ,342 60 0.08% 7 4,466 1.90% 9.82% Baltimore-Columbia-Towson, MD 997 9 1.38% 7 7,704 2.51% 7.89% York-Hanover, PA 861 3 12.17% 6 3,858 1.50% 6.30% Harrisburg-Carlisle, PA 791 5 5.74% 6 3,998 2.20% 7.57% Lebanon, PA 758 1 34.47% 5 8,732 2.61% 7.10% Reading, PA 638 7 3.89% 6 2,208 0.67% 8.75% Hagerstown-Martinsburg, MD-WV 511 2 14.38% 5 9,641 3.33% 4.82% Top 10 Fulton Financial Corporation MSAs (1) $ 13,466 $ 67,389 1.84% 8.75% Total Franchise (1) $ 15,493 $ 6 7,068 1.89% 8.57% Nationwide $ 6 1,045 3.50% 8.86% Note: Data as of June 30, 2017 per Federal Deposit Insurance Corporation (FDIC) Summary of Deposits. Household Income Data as of June 30, 2017 per SNL Financial LC. (1) Median HH Income, 2018 – 2023 Projected Population Change and 2018 – 2023 Projected HH Income Change are weighted by deposits in each MSA. 5
DEEP EXECUTIVE BENCH WITH CONTINUITY Years in Years at Prior Financial Name Position Fulton Services Experience E. Philip Wenger Chairman and CEO 38 38 Various roles since joining in 1979 President/COO of Fulton Financial Corporation and Curtis Myers 27 27 Various roles since joining in 1990 President/CEO of Fulton Bank PwC, Banking and Investment Banking. Mark McCollom (1) Senior EVP/CFO 1 31 Joined Fulton in November 2017. Senior EVP/ Head – Meg Mueller 21 31 Various roles since joining in 1996 Commercial Banking Senior EVP/Head – Angela Snyder 15 31 Various roles since joining in 2002 Consumer Banking Angela Sargent Senior EVP/ CIO 25 25 Various roles since joining in 1992 Betsy Chivinski (1) Senior EVP/ CRO 23 35 Various roles since joining in 1994 (1) Includes years of service in public accounting as a financial services industry specialist 6
SECOND QUARTER RESULTS Net income per diluted share: $0.20 in 2Q18, 28.6% decrease from 1Q18 and 23.1% decrease from 2Q17. Pre-Provision Net Revenue(1): $73.4 million, 18.2% increase from 1Q18 and 16.7% increase from 2Q17 Linked Quarter Loan and Core Deposit Growth: 0.7% increase in average loans, while average demand and savings deposits increased 0.6% Net Interest Income & Margin: Net interest income increased 3.1%, reflecting the impact of a 4 basis point increase in net interest margin and balance sheet growth Non-Interest Income(2) & Non-Interest Expense: 7.1% increase in non-interest income and 2.4% decrease in non- interest expense Asset Quality: $29.1 million increase in provision for credit losses, driven by a $36.8 million addition to provision for credit losses related to one commercial relationship. Year-over-Year Loan and Core Deposit Growth: 4.2% increase in average loans and 3.1% increase in average demand and savings deposits Net Interest Income & Margin: 10.2% increase in net interest income, reflecting the impact of a 10 basis point increase in net interest margin and balance sheet growth Non-Interest Income(2) & Non-Interest Expense: 3.6% decrease in non-interest income and 0.5% increase in non- interest expense Asset Quality: $26.4 million increase in provision for credit losses, for reasons noted above (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) Excludinginvestment securities gains. 7
Change from 2Q18 1Q18 2Q17 INCOME STATEMENT SUMMARY (dollars in thousands, except per-share data) Net Interest Income 156,067 $ 4,749 $ 1 4,504 Provision for Credit Losses 3 3,117 N e t In c2om9e,o1f 4$375.2 mil lio n , 2 8 .9 % d e2cr6ea,s4e f1ro7m 1Q18 and 22.6% Non-Interest Income 4 9,090 de c r e as e 3 fr,o2m 32Q417. ( 1,845) Securities Gains 4 (15) ( 1,432) Non-Interest Expense 133,345 N e t I n te( r3es,t 3Inc1om6e) 650 (17,863) (15,840) Income before Income Taxes 3 8,699 From 1Q18: Increase of 3.1%, driven by loan and deposit growth and the ( 3,580) ( 5,570) Income Taxes 3,502 impact of a 4 basis point increase in NIM Net Income $ 35,197 $ (14,283) $ (10,270) From 2Q17: Increase of 10.2%, driven by loan growth and the impact of a ten basis point increase in NIM Net income per share (diluted) $ 0.20 $ ( 0.08) $ ( 0.06) Provision for Credit Losses (1) ROA 0.70% 2Q 18 (in0clu.d3ed1 a% $36).8 m il li on p ro v is io( n0 fo.r2 cr4ed%it lo)sses related to one commercial relationship and a $3.7 million negative provision for credit (2) ROE 6.28% lo s se s( , m2a.in7ly4 d%ue t)o pay o f fs o f c e rt ai( n2 lo.a0ns8 th%at h)ad allowance for credit loss allocations in prior periods and improving overall credit (3) metrics ROE (tangible) 8.23% ( 3.62%) ( 2.83%) (3) Non-Interest Income Efficiency ratio 63.3% (4.2%) (2.0%) From 1Q18: 7.1% increase driven by commercial loan interest rate swap fees ($1.1 million), mortgage banking revenues ($1.0 million), seasonal increases in merchant fees ($0.8 million) and gains on sales of Small Business Administration (SBA) loans ($0.8 million). From 2Q17: 3.6% decrease driven by decreases in commercial loan swap fee income ($1.4 million), overdraft fees ($0.5 million) and mortgage banking income ($1.0 million) largely due to reversal of MSR valuation allowance in 2Q17. Non-Interest Expenses From 1Q18: 2.4% decrease driven by decreases in professional fees, occupancy costs and salaries and benefits expense. From 2Q17: Relatively flat with the most notable increase in data processing and software, offset by a decrease in professional fees. Income Taxes 9.0% effective tax rate (ETR) in 2Q18 vs. 12.5% in 1Q18 and 16.6% in 2Q17. (1) ROA is return an average assets determined by dividing net income for the period indicated by average assets, annualized. (2) ROE is return on average shareholders’ equity determined by dividing net income for the period indicated by average shareholders’ equity, annualized. (3) Non-GAAP based financial measure. Please refer to the calculation and management’s reasons for using this measure on the slide titled “Non-GAAP Reconciliation” at the end of this presentation. 8
NET INTEREST INCOME AND MARGIN Net Interest Income & Net Interest Margin Average Interest-Earning Assets & Yields ($ IN MILLIONS) ($ IN BILLIONS) $20.0 6.00% 3.93% 4.04% $15.0 3.78% 3.80% 3.83% 4.00% $15.8 $15.6 $15.7 $10.0 $15.1 $15.4 2.00% $5.0 ~ $730 million $2.8 $3.1 $3.2 $2.9 $3.0 $- 0.00% 2Q17 3Q17 4Q17 1Q18 ~2 $Q6108 million Securities & Other Loans Earni ng Asset Yield (FT E) Average Liabilities & Rates ($ IN BILLIONS) $20.0 0.91% 1.00% $1.9 $1.4 $1.4 $1.7 $2.0 0.80% $15.0 0.82% 0.77% 0.78% 0.72% 0.60% $10.0 0.40% $15.9 $16.1 $5.0 $15.4 $15.5 $15.1 0.20% 9 $- 0.00% 2Q17 3Q17 4Q17 1Q18 2Q18 Deposits Borrow ings Cost of Intere st-bearing Liabilities
LOAN PORTFOLIO COMPOSITION & YIELD Average loans for the first six months of 2018 are up 4.8% compared to the first six months of 2017. $18.0 12.00% $15.7 $16.0 $15.2 $0.6 $14.1 $0.4 10.00% $1.0 $0.9 ( $14.0 $12.9 $13.3 $0.4 J Q $0.8 $2.0 1 C C $1.8 1 $0.4 $0.7 G $0.6 $1.5 J $12.0 8.00% 1 $1.5 5 $1.4 Q ( $1.4 $1.6 V : H $1.7 C J : $10.0 Q C $1.7 : : $1.7 J 6.00% Q 1 Q C $4.2 $4.3 ` Q $8.0 ` $4.1 ` $3.9 Q ` $3.7 C Q 4.26% 1 4.21% 4.07% Q 4.04% 3.95% J 1 : $6.0 4.00% V C Q R ^ V $ _ : ` $4.0 V 0 $6.2 $6.3 $5.6 2.00% $5.1 $5.2 $2.0 $- 0.00% 2014 2015 2016 2017 Jun 2018 Comm'l Mtg Comm'l Home Equity Res Mtg Construction Consumer/Other FTE loan yield (1) Note: Loan portfolio composition is based on average balances for the years ended December 31, 2014 to 2017, and six months ended June 30, 2018. (1) Presented on a fully-taxable equivalent basis. FTE loan yield for the six months ended June 30, 2018 are annualized. 10
DEPOSIT COMPOSITION & COST Average deposits for the first six months of 2018 are up 3.2% compared to the first six months of 2017. $18.0 0.50% 0.47% $16.0 $15.5 $15.5 $14.6 $13.7 $1.4 $1.5 0.40% ( $14.0 $1.4 J $12.9 Q 0.37% 1 C $1.3 C 1 G $3.0 $2.0 $1.2 J $12.0 1 $2.7 5 Q ( $2.4 V 0.31% 0.30% : H $2.2 C J : $10.0 Q C 0.29% : : 0.27% J $3.8 $1.5 Q $3.6 1 Q C $3.3 ` Q $8.0 ` $3.0 ` Q ` 0.20% C Q 1 Q J 1 : $6.0 V C Q R $3.4 $3.8 ^ V $4.2 $4.4 $ $4.3 _ : ` $4.0 V 0.10% 0 $2.0 $3.0 $3.0 $2.8 $2.7 $6.3 $- 0.00% 2014 2015 2016 2017 Jun 2018 Time Deposits Non-Int DDA Int DDA Money Mkt Savings Brokered Deposits cost (1) Note: Deposit composition is based on average balances for the years ended December 31, 2014 to 2017, and six months ended June 30, 2018. Average brokered deposits were $79.7 million and $0 as of the six months ended June 30, 2018 and 2017, respectively. (1) Deposit costs calculated by dividing interest expense on interest-bearing deposits by total average deposits. Deposit costs for the six months ended June 30, 2018 are annualized. 11
POSITIONED FOR RISING INTEREST RATE ENVIRONMENT JUNE 30, 2018 Rate Annual Change in % Change in Change (1) Net Interest Income (2) Net Interest Income (2) +300 bps $ 81.0 million 12.4% +200 bps $ 55.3 million 8.5% +100 bps $ 28.2 million 4.3% - 100 bps $ (45.3) million -6.9% 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 measure the Corporation’s short- term earnings exposure to rate movements. The Corporation’s policy limits the potential exposure of net interest income, in a non-parallel instantaneous shock, to 10% of the base case net interest income for a 100 basis point shock in interest rates, 15% for a 200 basis point shock and 20% for a 300 basis point shock. A "shock" is an immediate upward or downward movement of interest rates. The shocks do not take into account changes in customer behavior that could result in changes to mix and/or volumes in the balance sheet, nor do they account for competitive pricing over the forward 12-month period. These results include the effect of implicit and explicit floors that limit further reduction in interest rates. 2) The actual impact of changes in interest rates on the Corporation’s net interest income may differ materially from the anticipated amounts presented above. 12
ASSET QUALITY ($ IN MILLIONS) Provision for Credit Losses Non-Performing Loans (NPLs) & NPLs to Loans $160.0 2.00% $40.0 $135.7 $136.5 $134.8 $134.6 $33.1 $123.7 $120.0 1.50% $30.0 $20.0 $80.0 1.00% 0.88% 0.88% 0.85% 0.86% $40.0 0.78% 0.50% $10.0 $6.7 $6.7 $5.1 $4.0 $- $0.0 0.00% 2Q17 3Q17 4Q17 1Q18 2Q18(1) 2Q17 3Q17 4Q17 1Q18 2Q18 NPL NPLs/Loans Net Charge-offs (NCOs) and NCOs to Average Loans Allowance for Credit Losses (Allowance) to NPLs & Loans 150.0% 137% 3.00% $60.0 1.25% 129% 128% 131% 131% 1.01% 1.05% 125.0% $39.9 0.85% 100.0% 2.00% $40.0 0.65% 75.0% 0.45% 0.14% $20.0 0.14% 50.0% 1.00% 0.11% 0.10% 0.25% 1.14% 1.13% 1.12% 1.12% 1.07% 0.05% 25.0% $4.3 $5.3 $5.4 $4.0 $- -0.15% 0.0% 0.00% 2Q17 3Q17 4Q17 1Q18 2Q18(2) 2Q17 3Q17 4Q17 1Q18 2Q18 NCOs NCOs/Average Loans (annualized) Allowance/NPLs Allowance/Loans (1) Includes a $36.8 million provision for credit loss related to one commercial relationship recorded in 2Q18. (2) Includes a $33.9 million charge-off related to one commercial relationship incurred in 2Q18. 13
NON-INTEREST INCOME ($ IN MILLIONS) Non-Interest Income, Excluding Securities Gains Mortgage Banking Income & Spreads $7.0 4.00% $6.1 $6.0 3.50% $5.2 $4.8 3.00% $5.0 $4.4 $4.2 2.50% $4.0 2.00% $3.0 1.50% $2.0 1.62% 1.44% 1.36% 1.30% 1.00% 1.11% $1.0 0.50% $60.0 $- 0.00% 2Q17(2) ~ $373Q01 7 4Q17 1Q18 2Q18 million Gains on Sales Servicing Income Spread on Sales (1) $50.0 ~ $610 million $40.0 Other Non-Interest Income $30.0 $55.0 $50.9 $50.6 $49.1 $50.0 $47.4 $44.8 $43.9 $41.7 $45.9 $42.6 $40.0 $20.0 $30.0 $10.0 $20.0 $10.0 (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. $- 2Q17 3Q17 4Q17 1Q18 2Q18 2Q17 3Q17 4Q17 1Q18 2Q18 Invt Mgmt & Trust Srvs Deposit Srv Chgs Oth Srv Chgs Other 14
NON-INTEREST EXPENSES ($ IN MILLIONS) Non-Interest Expense & Efficiency Ratio (1) Salaries and Employee Benefits & Staffing $80.0 $75.8 3,700 $74.5 $72.9 $73.5 $74.9 $160.0 80.0% $70.0 3,600 $60.0 3,580 3,550 3,500 $140.0 70.0% $50.0 3,400 $40.0 67.5% 65.3% ~ $730 3,300 $120.0 64.2% 63.3% 60.0% $30.0 64.3% million 3,200 $20.0 3,100 $100.0 50.0% $10.0 ~ $610 $138.5 $136.7 million $- 3,000 $132.7 $132.2 $133.3 2Q17 3Q17 4Q17 1Q18 2Q18 $80.0 40.0% Total Salarie s Employee BeOneftiths er Non-InAtverarge Fsullt-t imEex Eqpuievalne nst Eemsployees $60.0 30.0% $40.0 20.0% $70.0 $65.0 $60.9 $60.0 $58.2 $59.3 $58.4 $20.0 10.0% $50.0 $- 0.0% $40.0 2Q17 3Q17 4Q17 1Q18 2Q18 $30.0 $20.0 $10.0 (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. 2Q17 3Q17 4Q17 1Q18 2Q18 Occp & Equip Data Processing & Software Outside Srvs Other 15
PROFITABILITY & CAPITAL ROA(1) ROE and ROE (tangible)(2) 1.20% 0.98% 1.01% 1.00% 0.94% 11.52% 11.85% 12.00% 11.06% 0.80% 0.67% 0.70% 0.60% 8.76% 9.02% 8.36% 7.91% 8.23% 0.40% 8.00% 6.03% 6.28% 0.20% 0.00% 4.00% 2Q17 3Q17 4Q17(3) 1Q18 2Q18 Tangible Common Equity Ratio(2) 0.00% Net Income Per Diluted Share 2Q17 3Q17 4Q17(3) 1Q18 2Q18 12.0% $0.30 ROE ROE (ta$n0g.i2bl8e ) $0.28 $0.26 8.7% 8.7% 8.7% 8.8% 8.7% $0.25 $0.20 8.0% $0.19 $0.20 $0.15 4.0% $0.10 $0.05 0.0% $- 2Q17 3Q17 4Q17 1Q18 2Q18 2Q17 3Q17 4Q17(3) 1Q18 2Q18 (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 charge to income taxes related to the re-measurement of net deferred tax assets. 16
2018 OUTLOOK Changes from the outlook as of the end of the first quarter of 2018 have been underlined. • Loans & Deposits: Average annual loan and core deposit growth rates in the low to mid single- digits • Asset Quality: Provision will reflect impacts of changes in asset quality measures, risk rating migration, and the results of our allowance allocation methodology, as well as loan growth • Non-Interest Income(1): Flat to 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 7 to 12 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 (1) Excluding securities gains and the litigation settlement of $5.1 million recognized in the fourth quarter of 2017 17
APPENDIX
AVERAGE LOAN PORTFOLIO AND YIELDS Change in 2Q 2018 Balance From Yield From Balance Yield 1Q 2018 2Q 2017 1Q 2018 2Q 2017 (dollars in millions) Comm'l Mort $ 6,299 4.34% $ (7) $ 135 0.18% 0.34% Commercial 4,335 4.27% 46 114 0.12% 0.27% Resid Mort 2,026 3.89% 68 318 0.04% 0.12% Home Equity 1,503 4.83% (36) ( 85) 0.18% 0.50% Construction 978 4.40% ( 6) 81 0.18% 0.42% Consumer 346 4.43% 30 45 (0.24%) (0.60%) Leasing 272 4.59% 11 27 0.06% 0.17% 1 6 - % - % Other 9 - - Total Loans $ 15,768 4.32% $ 107 $ 641 0.13% 0.27% Note: Presented on an FTE basis, using a 21% and 35% federal tax rate and statutory interest expense disallowances in 2018 and 2017, respectively. Average loan portfolio and yield are for the three months ended June 30, 2018, March 31, 2018 and June 30, 2017. 19
AVERAGE CUSTOMER FUNDING AND RATES Change In 2Q 2018 Balance From Rate From Balance Rate 1Q 2018 2Q 2017 1Q 2018 2Q 2017 (dollars in millions) Nonint DDA $ 4,282 - % $ 36 $ (106) - % - % Int DDA 3,952 0.50% (7) 262 0.09% 0.20% Savings/MMDA 4,538 0.49% 44 223 0.10% 0.24% Brokered Deposits 85 1.87% 11 85 0.36% 1.87% Time deposits 2,660 1.26% 13 ( 36) 0.06% 0.16% Total Deposits 15,517 0.50% 97 428 0.07% 0.16% Cash Mgt 478 0.41% (6) 201 0.00% 0.32% Total Customer Funding $ 15,995 0.50% $ 91 $ 629 0.07% 0.16% Note: Average customer funding and the rate are for the three months ended June 30, 2018, March 31, 2018, and June 30, 2017. 20
LOAN DISTRIBUTION BY STATE AS OF JUNE 30, 2018 Comm'l Consumer Comm'l Mortgage Constr. Res. Mtg. & Other Total (in thousands) Pennsylvania $ 3,100,252 $ 3,256,610 $ 4 91,953 $ 753,587 1,286,311 $ 8 ,888,713 New Jersey 560,333 1,430,936 1 91,322 276,509 410,976 2 ,870,076 Maryland 367,143 734,460 1 37,884 462,973 276,027 1 ,978,487 Virginia 99,959 522,905 8 5,619 513,274 62,367 1 ,284,124 Delaware 136,915 359,564 8 3,927 88,187 102,976 7 71,569 $ 4,264,602 $ 6,304,475 $ 9 90,705 $ 2,094,530 $ 2,138,657 $ 1 5,792,969 21
NON-PERFORMING LOANS(1) AS OF JUNE 30, 2018 Comm'l Consumer Ending Loans NPLs/Loans Comm'l Mortgage Constr. Res. Mtg. & Other Total NPLs by State by State (dollars in thousands) Pennsylvania $ 28,612 $ 17,680 $ 3,027 $ 7 ,586 $ 5 ,000 $ 6 1,905 $ 8,888,713 0.70% New Jersey 6,382 13,502 1,738 3,978 4,640 30,240 2,870,076 1.05% Maryland 4,351 2,498 3 3 650 1,152 8,684 1,978,487 0.44% Virginia 1,345 5 82 1,282 5,997 726 9,932 1,284,124 0.77% Delaware 3,354 5,015 3,240 678 696 12,983 7 71,569 1.68% $ 44,044 $ 39,277 $ 9,320 $ 18,889 $ 12,214 $ 123,744 $ 15,792,969 0.78% Ending Loans $ 4,264,602 $ 6,304,475 $ 990,705 $ 2,094,530 $ 2,138,657 $ 15,792,969 Non-performing Loan % (6/30/18) 1.03% 0.62% 0.94% 0.90% 0.57% 0.78% (1) Includes loans ≥ 90 days past due and accruing, and non-accrual loans. 22
NET CHARGE-OFFS (RECOVERIES) THREE MONTHS ENDED JUNE 30, 2018 Annualized Comm'l Consumer Average Loans Charge-Offs to Comm'l Mortgage Constr. Res. Mtg. & Other Total by State Average Loans (dollars in thousands) Pennsylvania $ 37,694 $ (110) $ 214 $ 54 $ 701 $ 3 8,553 $ 8,949,325 1.72% New Jersey (68) (51) (9) (19) 497 3 50 2,849,114 0.05% Maryland 465 224 (43) (6) (15) 6 25 1,954,797 0.13% Virginia - - - 364 12 3 76 1,253,967 0.12% Delaware - (18) - (6) 9 (15) 761,174 -0.01% $ 38,091 $ 45 $ 162 $ 387 $ 1,204 $ 3 9,889 $ 15,768,377 1.01% Average Loans $ 4,335,097 $ 6,298,534 $ 978,327 $ 2,026,161 $ 2,130,258 $ 1 5,768,377 Annualized Net Charge-offs (Recoveries) to Average Loans 3.51% 0.00% 0.07% 0.08% 0.23% 1.01% 23
INVESTMENT PORTFOLIO JUNE 30, 2018 Weighted Avg. Remaining Life Amortized Unrealized Estimated (in years) Cost Gain (Loss) Fair Value (dollars in millions) Residential mortgage-backed securities 4.3 $ 1 ,036 $ (35) $ 1 ,001 Collateralized mortgage obligations 3.6 742 (18) 724 State and municipal securities 8.1 416 (8) 408 Commercial mortgage-backed securities 3.6 244 (5) 239 Auction rate securities 5.0 107 (4) 103 Corporate debt securities 8.6 92 (1) 91 U.S. Government sponsored agency securities 5.1 27 - 27 Total Investments 5.6 $ 2 ,664 $ (71) $ 2 ,593 24
NON-INTEREST INCOME (EXCLUDING SECURITIES GAINS) Change From 2Q 2018 1Q 2018 2Q 2017 1Q 2018 2Q 2017 (in thousands) Other service charges and fees: Merchant fees $ 4,920 $ 4,115 $ 4,531 $ 805 $ 389 Debit card income 3 ,077 2,817 2,884 260 193 Commercial loan interest rate swap fees 2 ,393 1,291 3,768 1,102 (1,375) Letter of credit fees 956 992 1,109 (36) (153) Foreign exchange incomce 591 533 446 58 145 Other 1 ,728 1,671 1,604 57 124 Total 13,665 11,419 14,342 2,246 (677) Service charges on deposit accounts: Overdraft fees 5 ,092 5,145 5,648 (53) (556) Cash management fees 4 ,452 4,317 3,614 135 838 Other 2 ,726 2,500 3,652 226 (926) Total 12,270 11,962 12,914 308 (644) Investment management and trust services 12,803 12,871 12,132 (68) 671 Mortgage banking income 5 ,163 4,193 6,141 970 (978) Other: Credit card income 2 ,866 2,816 2,666 50 200 Small business administration lending income 846 357 1,163 489 (317) Other income 1 ,477 2,238 1,577 (761) (100) Total 5 ,189 5,411 5,406 (222) (217) Total Non-Interest Income, 25 excluding securities gains $ 49,090 $ 45,856 $ 50,935 $ 3 ,234 $ (1,845)
NON-INTEREST EXPENSE Change From 2Q 2018 1Q 2018 2Q 2017 1Q 2018 2Q 2017 (in thousands) Salaries and employee benefits $ 74,919 $ 75,768 $ 74,496 $ (849) $ 4 23 Net occupancy expense 12,760 13,632 12,316 (872) 4 44 Data processing and software 10,453 10,473 9,054 (20) 1 ,399 Other outside services 7 ,568 8,124 7,708 (556) (140) Professional fees 2 ,372 4,816 2,931 (2,444) (559) Equipment expense 3 ,434 3,534 3,034 (100) 4 00 FDIC insurance expense 2 ,663 2,953 2,366 (290) 2 97 Marketing 2 ,335 2,250 2,234 8 5 1 01 Amortization of tax credit investments 1 ,637 1,637 3,151 - (1,514) Other expenses 15,204 13,474 15,405 1 ,730 (201) Total Non-Interest Expenses $ 133,345 $ 136,661 $ 132,695 $ (3,316) $ 650 26
A SUSTAINABLE PAYOUT Cash Dividend Per Common Share & Yield $0.52 4.5% $0.47 $0.48 (2) CAGR = 8.4% 4.0% $0.44 $0.41 $0.40 $0.38 3.5% V ` : $0.34 . $0.36 1 2.91% 0 3.0% 1 $0.32 R J 2.63% V Q $0.32 J I 2.92% R I 2.5% 2.75% 1 Q $0.28 V C $0.24 R ` V 2.44% ^ $0.24 2.0% _ R J 2.18% V $0.20 R 1 0 1 1.5% $0.16 . ( : $0.12 1.0% $0.08 0.5% $0.04 $0.00 0.0% 2013 2014 2015 2016 2017 YTD 6/2018 Cash Dividend Yield(1) (1) Annual dividend per share (YTD 6/2018 annualized) divided by period-end stock price. (2) Compounded annual growth rate from December 31, 2013 to annualized June 30, 2018. 27
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. Three Months Ended Jun 30 Sep 30 Dec 31 Mar 31 Jun 30 2017 2017 2017 2018 2018 Efficiency ratio Non-interest expense $ 1 32,695 $ 1 32,157 $ 1 38,452 $ 1 36,661 $ 1 33,345 Less: Amortization of tax credit investments (3,151) (3,503) (3,376) (1,637) (1,637) Non-interest expense (numerator) $ 1 29,544 $ 1 28,654 $ 1 35,076 $ 1 35,024 $ 1 31,708 Net interest income (fully taxable-equivalent) $ 1 47,349 $ 1 52,721 $ 1 55,253 $ 1 54,232 $ 1 59,027 Plus: Total Non-interest income 52,371 51,974 56,956 45,875 49,094 Less: Investment securities gains (1,436) (4,597) (1,932) (19) (4) Net interest income (denominator) $ 1 98,284 $ 2 00,098 $ 2 10,277 $ 2 00,088 $ 2 08,117 Efficiency ratio 65.3% 64.3% 64.2% 67.5% 63.3% Three Months Ended Jun 30 Sep 30 Dec 31 Mar 31 Jun 30 2017 2017 2017 2018 2018 Return on Average Shareholders' Equity (ROE) (Tangible) Net income (numerator) $ 45,467 $ 48,905 $ 34,001 $ 49,480 $ 35,197 Average shareholders' equity $ 2,181,189 $ 2,215,389 $ 2,237,031 $ 2,224,615 $ 2,246,904 Less: Average goodwill and intangible assets (531,556) (531,556) (531,556) (531,556) (531,556) Average tangible shareholders' equity (denominator) $ 1,649,633 $ 1,683,833 $ 1,705,475 $ 1,693,059 $ 1,715,348 Return on average shareholders' equity (tangible), annualized 11.06% 11.52% 7.91% 11.85% 8.23% 28
NON-GAAP RECONCILIATION (CONTINUED) Jun 30 Sep 30 Dec 31 Mar 31 Jun 30 2017 2017 2017 2018 2018 Tangible Common Equity to Tangible Assets (TCE Ratio) (dollars in thousands) Shareholders' equity $ 2,191,770 $ 2,225,786 $ 2 ,229,857 $ 2,235,493 $ 2,245,785 Less: Intangible assets (531,556) ( 531,556) (531,556) ( 531,556) ( 531,556) Tangible shareholders' equity (numerator) $ 1,660,214 $ 1,694,230 $ 1 ,698,301 $ 1,703,937 $ 1,714,229 Total assets $ 1 9,647,435 $ 20,062,860 $ 20,036,905 $ 19,948,941 $ 20,172,539 Less: Intangible assets (531,556) ( 531,556) (531,556) ( 531,556) ( 531,556) Total tangible assets (denominator) $ 1 9,115,879 $ 19,531,304 $ 19,505,349 $ 19,417,385 $ 19,640,983 Tangible Common Equity to Tangible Assets 8.7% 8.7% 8.7% 8.8% 8.7% Three Months Ended Jun 30 SEP 30 Dec 31 Mar 31 Jun 30 2017 2017 2017 2018 2018 Pre-Provision Net Revenue (in thousands) Net interest income $ 1 41,563 $ 146,809 $ 149,413 $ 151,318 $ 156,067 Non-interest income 52,371 5 1,974 56,956 4 5,875 4 9,094 Less: Investment securities gains (1,436) (4,597) ( 1,932) (19) ( 4) Total Revenue $ 1 92,498 $ 194,186 $ 204,437 $ 197,174 $ 205,157 Non-interest expense $ 1 32,695 $ 132,157 $ 138,452 $ 136,661 $ 133,345 Less: Amortization of tax credit investments (3,151) (3,503) ( 3,376) (1,637) (1,637) Total Non-interest expense $ 1 29,544 $ 128,654 $ 135,076 $ 135,024 $ 131,708 Pre-Provision Net Revenue $ 62,954 $ 65,532 $ 6 9,361 $ 62,150 $ 73,449 29
www.fult.com