Attached files
| file | filename |
|---|---|
| 8-K - 8-K - FULTON FINANCIAL CORP | a8-k6x30x16.htm |
| EX-99.1 - PRESS RELEASE DATED JULY 19, 2016 - FULTON FINANCIAL CORP | exhibit9916-30x16.htm |
| EX-99.2 - SUPPLEMENTAL FINANCIAL INFORMATION FOR THE QUARTER ENDED JUNE 30, 2016 - FULTON FINANCIAL CORP | exhibit9926-30x16.htm |
D A T A A S O F J U N E 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 SECOND 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
Report on Form 10-Q for the quarter ended March 31, 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
SECOND QUARTER HIGHLIGHTS
Diluted Earnings Per Share: $0.23 in 2Q16, 4.5% increase from 1Q16 and 9.5% increase from 2Q15
Pre-Provision Net Revenue: $53.3 million, 4.9% increase from 1Q16 and 9.7% increase from 2Q15
Linked Quarter
Loan and Core Deposit Growth: 0.8% increase in average loans, while average core deposits increased 1.6%
Net Interest Income & Margin: Net interest income was flat, reflecting a 3 basis point decrease in net
interest margin, offset by the impact of loan growth
Non-Interest Income(1) & Non-Interest Expense: 9.2% increase in non-interest income and a 1.0% increase in
non-interest expense
Asset Quality: $981,000 increase in provision for credit losses with improvement in all credit metrics.
Annualized net charge-off rate decreased from 20 basis points to 10 basis points.
Year-over-Year
Loan and Core Deposit Growth: 5.9% increase in average loans and 10.2% increase in average core deposits
Net Interest Income & Margin: 4.9% increase in net interest income and net interest margin unchanged
Non-Interest Income(1) & Non-Interest Expense: 4.5% increase in non-interest income and a 2.8% increase in
non-interest expense
Asset Quality: $311,000 increase in provision for credit losses. Improvement in all credit metrics.
3
(1) Excluding securities gains.
INCOME STATEMENT SUMMARY
Net Income of $39.8 million; a 3.9% increase from
1Q16 and an 8.4% increase from 2Q15. Earnings per
share increased 4.5% from 1Q16 and 9.5% from
2Q15.
Net Interest Income
From 1Q16: Flat, reflecting a 3 bp decrease in net interest
margin (NIM), offset by the impact of a 0.7% increase in
average earning assets
From 2Q15: Increase of 4.9% due to a 5.3% increase in average
earning assets
Loan Loss Provision
$2.5 million provision in 2Q16; Asset quality metrics continue
to improve
Non-Interest Income
From 1Q16 : Increase of 9.2% driven by increases in
commercial loan interest rate swap fees, merchant fees, life
insurance income, debit card fees, and gains on sales of SBA
loans
From 2Q15 : Increase of 4.5% due to increased commercial
loan interest rate swap fees, other service charges, and gains
on sales of SBA loans, partially offset by decrease in mortgage
banking income
Non-Interest Expenses
From 1Q16: Increase of 1.0% due to higher professional fees
and salaries and benefits, partially offset by net decreases in
outside services, equipment and occupancy expenses
From 2Q15: Increase of 2.8% due mainly to higher salaries and
benefits, professional fees, data processing and software,
partially offset by a decrease in expenses for outside services
4
(1) ROA is return an average assets determined by dividing net income for the period indicated by average assets.
(2) Non-GAAP based financial measure. Please refer to the calculation and management’s reasons for using this measure on the slide titled “Non-GAAP Reconciliation” at the end of this presentation.
2Q16 1Q16 2Q15
Net Interest Income 128,916$ (138)$ 5,996$
Provision for Credit Losses 2,511 981 311
Non-interest Income 46,061 3,871 1,987
Securities Gains 76 (871) (2,339)
Non-interest Expense 121,637 1,224 3,283
Income before Income Taxes 50,905 657 2,050
Income Taxes 11,155 (836) (1,020)
Net Income 39,750$ 1,493$ 3,070$
Earnings Per Share (Diluted) 0.23$ 0.01$ 0.02$
ROA (1) 0.88% 0.02% 0.02%
ROE (tangible) (2) 10.26% 0.19% 0.43%
Efficiency rati (2) 67.6% (0.7%) (1.4%)
(dollars in thousands, except per-share data)
Change from
NET INTEREST INCOME AND MARGIN
Net Interest Income & Net Interest Margin
~ $730
million
~ $610
million
$122.9 $125.7
$127.8 $129.1 $128.9
3.20%
3.18% 3.19%
3.23%
3.20%
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
Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016
Net Interest Income
Net Interest Margin (Fully-taxable equivalent basis, or FTE)
Average Interest-Earning Assets & Yields
Average Liabilities & Rates
$2.8 $2.9 $2.8 $2.8 $2.8
$13.2 $13.4 $13.7 $13.9 $14.0
3.74% 3.68% 3.67% 3.72% 3.69%
0.00%
2.00%
4.00%
$-
$3.0
$6.0
$9.0
$12.0
$15.0
$18.0
Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016
Securities & Other Loans Earni ng Asse t Y ield (FT E)
$13.5 $13.9 $14.2 $14.2 $14.4
$1.4 $1.3
$1.2 $1.4 $1.4
0.77%
0.72% 0.69% 0.70% 0.70%
0.00%
0.20%
0.40%
0.60%
0.80%
1.00%
$-
$3.0
$6.0
$9.0
$12.0
$15.
Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016
Deposits Borrow ings Cost of Intere st-bearing Liabilities
($ IN MILLIONS) ($ IN BILLIONS)
($ IN BILLIONS)
5
ASSET QUALITY
($ IN MILLIONS)
6
Provision for Credit Losses Non-Performing Loans (NPLs) & NPLs to Loans
113.34% 116.81%
118.37% 121.05%
129.26%
1.28% 1.25% 1.24% 1.20% 1.17%
0.00%
1.00%
2.00%
3.00%
0.00%
25.00%
50.00%
75.00%
100.00%
125.00%
150.00%
Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016
Allowance/NPLs Allowance/Loans
Net Charge-offs (NCOs) and NCOs to Average Loans Allowance for Credit Losses (Allowance) to NPLs & Loans
$12.4
$1.1 $0.7
$6.9
$3.5
0.38%
0.03%
0.02% 0.20%
0.10%
0.00%
0.10%
0.20%
0.30%
0.40%
0.50%
$-
$2.0
$4.0
$6.0
$8.0
$10.0
$12.0
$14.0
Q2 2015 Q3 2015 Q4 2015 1 6 2 2016
NCOs NCOs/Average Loans
$2.2
$1.0
$2.8
$1.5
$2.5
$-
$2.0
$4.0
Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016
$149.5 $145.0 $144.8
$137.2
$127.7
1.13% 1.07% 1.05% 0.99%
0.90%
0.00%
0.50%
1.00
1.50%
2.00%
$0.0
$20.0
$40.0
$60.0
$80.0
$100.0
$120.0
$140.0
$160.0
Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016
NPL NPLs/Loans
NON-INTEREST INCOME
($ IN MILLIONS)
Non-interest Income, Excluding Securities Gains
~ $730
million
~ $610
million
$44.1
$43.0
$45.1
$42.2
$46.1
$-
$5.0
$10.0
$15.0
$20.0
$25.0
$30.0
$35.0
$40.0
$45.0
$50.0
Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016
Mortgage Banking Income & Spreads
Other Non-interest Income
1.62%
1.17%
1.60%
1.28%
1.71%
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
Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016(2)
Gains on Sales Servicing Income Spread on Sales (1)
$5.3
$3.9
$4.3 $4.0
$3.9
$-
$5.0
$10.0
$15.0
$20.0
$25.
$30.0
$35.0
$40.0
$45.0
Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016
Invt Mgmt & Trust Srvs Deposit Srv Chgs Oth Srv Chgs Other
$38.7 $39.2
$40.7
$38.2
$42.2
(1) Represents Gains on Sales divided by total new commitments to originate residential
mortgage loans for customers.
(2) Servicing income includes $1.7 million Mortgage Servicing Right (MSR) impairment charge
in Q2 2016.
7
Includes $1.7 MSR
impairment charge
NON-INTEREST EXPENSES
($ IN MILLIONS)
Non-interest Expense & Efficiency Ratio (1)
~ $730
million
~ $610
million
$118.4 $119.3 $118.4 $120.4
$121.6
68.9% 68.8%
66.6%
68.3% 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
Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016
Salaries and Employee Benefits & Staffing
Other Non-interest Expenses
3,474 3,485
-
2,000
4,000
6,000
$-
$10.0
$20.0
$30.0
$40.0
$50.0
$60.0
$70.0
$80.0
Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016
Total Salaries Employee Benefits Average Full-time Equivalent Employees
$65.1 $65.3 $65.5
$69.4 $70.0
$-
$10.0
$20.0
$30.0
$40.0
$50.0
$60.0
$70.0
Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016
Occp & Equip Data Processing & Software Outside Srvs Other
$53.3
$54.0
$52.9
$51.0 $51.6
(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
$2.2
$4.6
$1.4
$8.2
$4.5
$2.1
$0.4
$1.4
$0.2
13
26
30
45
47
51
0
10
20
30
40
50
60
$-
$3.0
$6.0
$9.0
$12.0
2011 2012 2013 2014 2015 YTD 6/2016
Salaries & Benefits Expense Outside Consulting Services(1) Temporary Employee Expense Staffing
$0.8$0.1
COMPLIANCE & RISK MANAGEMENT
(1) Represents third-party consulting and legal services directly related to BSA/AML compliance program.
To
tal
E
xp
e
n
se
s,
in
m
ill
io
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
rio
d
En
d
9
PROFITABILITY & CAPITAL
10
ROA(1) ROE (tangible)(2)
Tangible Common Equity Ratio(2) Diluted Earnings Per Common Share
9.83%
9.11%
10.16% 10.07% 10.26%
0.00%
4.00%
8.00%
12.00%
Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016
0.86% 0.78%
0.86% 0.86% 0.88%
0.00%
0.20%
0.40%
0.60%
0.80%
1.00%
1.20%
Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 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.
8.9% 8.6% 8.7% 8.8% 8.8%
0.0%
4.
8.
12.0
Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016
$0.21
$0.20
$0.22 $0.22
$0.23
$-
$0.05
$0.10
$0.15
$0.20
$0.25
Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016
2016 OUTLOOK
The following outlook remains unchanged from prior quarter:
• Loans & Deposits: Annual average growth rate in the mid- to high-single digits
• Asset Quality: Provision driven primarily by loan growth
• Non-Interest Income (Excluding Securities Gains): Mid- to high-single digit growth rate
• Non-Interest Expense (Excluding Loss on Redemption of TruPS): Low- to mid-single digit growth rate
• Capital: Focus on utilizing capital to support growth and provide appropriate returns to our
shareholders
The following outlook has been updated:
• Net Interest Margin
Original: Stable on an annual basis, with modest volatility (+/- 0 to 3 basis points) on a
quarterly basis
Updated: Absent any further rate increases, expect low-single digit quarterly compression
11
NON-GAAP RECONCILIATION
Note: The Corporation has presented the following non-GAAP (Generally Accepted Accounting Principles) financial measures because it believes
that these measures provide useful and comparative information to assess trends in the Corporation's results of operations and financial condition.
Presentation of these non-GAAP financial measures is consistent with how the Corporation evaluates its performance internally and these non-
GAAP financial measures are frequently used by securities analysts, investors and other interested parties in the evaluation of companies in the
Corporation's industry. Investors should recognize that the Corporation's presentation of these non-GAAP financial measures might not be
comparable to similarly-titled measures of other companies. These non-GAAP financial measures should not be considered a substitute for GAAP
basis measures and the Corporation strongly encourages a review of its condensed consolidated financial statements in their entirety.
12
Jun 30 Sep 30 Dec 31 Mar 31 Jun 30
2015 2015 2015 2016 2016
Efficiency ratio
Non-interest expense 118,354$ 124,889$ 118,439$ 120,413$ 121,637$
Less: Intangible amortization (106) (5) (6) - -
Less: Loss on redemption of TruPS - (5,626) - - -
Numerator 118,248$ 119,258$ 118,433$ 120,413$ 121,637$
Net interest income (fully taxable equivalent) 127,445$ 130,250$ 132,683$ 134,026$ 133,890$
Plus: Total Non-interest income 46,489 44,774 45,839 43,137 46,137
Less: Investment securities gains (2,415) (1,730) (776) (947) (76)
Denominator 171,519$ 173,294$ 177,746$ 176,216$ 179,951$
Efficiency ratio 68.9% 68.8% 66.6% 68.3% 67.6%
Jun 30 Sep 30 Dec 31 Mar 31 Jun 30
2015 2015 2015 2016 2016
Return on Average Shareholders' Equity (ROE) (Tangible)
Net income 36,680$ 34,251$ 38,535$ 38,257$ 39,750$
Plus: Inta g bl amortization, net of tax 69 3 4 - -
N m rator 36,749$ 34,254$ 38,539$ 38,257$ 39,750$
Average shareholders' equity 2,031,788$ 2,022,829$ 2,036,769$ 2,058,799$ 2,089,915$
Less: Average goodwill and intangible assets (531,618) (531,564) (531,556) (531,556) (531,556)
Average tangible shareholders' equity (denominator) 1,500,170$ 1,491,265$ 1,505,213$ 1,527,243$ 1,558,359$
Return on average common shareholders' equity (tangible), annualized 9.83% 9.11% 10.16% 10.07% 10.26%
Three Months Ended
Three Months Ended
(dollars in thousands)
(dollars in thousands)
NON-GAAP RECONCILIATION (CON’T)
13
Jun 30 Sep 30 Dec 31 Mar 31 Jun 30
2015 2015 2015 2016 2016
Tangible Common Equity to Tangible Assets (TCE Ratio)
Shareholders' equity 2,024,817$ 2,025,904$ 2,041,894$ 2,073,309$ 2,106,997$
Less: Intangible assets (531,567) (531,562) (531,556) (531,556) (531,556)
Tangible shareholders' equity (numerator) 1,493,250$ 1,494,342$ 1,510,338$ 1,541,753$ 1,575,441$
Total assets 17,365,462$ 17,838,059$ 17,914,718$ 18,122,254$ 18,479,697$
Less: Intangible assets (531,567) (531,562) (531,556) (531,556) (531,556)
Total tangible assets (denominator) 16,833,895$ 17,306,497$ 17,383,162$ 17,590,698$ 17,948,141$
Tangible Common Equity to Tangible Assets 8.9% 8.6% 8.7% 8.8% 8.8%
Jun 30 Sep 30 Dec 31 Mar 31 Jun 30
2015 2015 2015 2016 2016
Pre-Provision Net Revenue
Net interest income 122,920$ 125,694$ 127,799$ 129,054$ 128,916$
Non-interest income 46,489 44,774 45,839 43,137 46,137
Less: Investment securities gains (2,415) (1,730) (776) (947) (76)
Total Revenue 166,994 168,738 172,862 171,244 174,977
on-interest expense 118,354 124,889 118,439 120,413 121,637
Less: Loss on redemption of TruPS - (5,626) - - -
Total Non-interest expense, as adjusted 118,354 119,263 118,439 120,413 121,637
Pre-Provision Net Revenue 48,640$ 49,475$ 54,423$ 50,831$ 53,340$
Three Months Ended
(dollars in thousands)
(in thousands)
www.fult.com