Mike Firestinefamous Banker

November 28, 2007

Background of Mike Firestine

• Finance Company – Account Adjuster• Lebanon Valley National Bank

– Assistant Manager– Manager: Plaza Office– Manager: Schaefferstown Office– Manager: Ag Loan Officer

• Fulton Bank & LVFB – Senior Vice President, Senior Ag Loan Officer

Job Responsibilities

• Manage:– 2 Agriculture Loan Officers– 2 Administrative Assistants

• Manage Personal Loan Portfolio– $62 Million– 325 Customers

• Manage Ag Group Loan Portfolio– $170 Million

Fulton Bank Ag Group

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Agriculture Loan Officer

• Good work ethics

• Farm knowledge– It is easier to make a farmer a lender than a lender into

a farmer

• Accounting Courses– Accounting I; Accounting II; Intermediate

Accounting

• Marketing or Sales Courses

• Character Traits:– Friendly, Courteous, Patient, Aggressive

Ag Loan Officer’s Job Responsibilities• Gather financial information on farm

– Tax Returns, Balance Sheet

• Cross Sell other Bank products– e.g. savings accounts, estate planning, investments, credit cards

• Mentally evaluate farm equipment, livestock, and farm practices

• Review financial information with analyst• Prepare loan application for approval process• Present loan for approval• Review loan documentation• Close loan (sign loan papers) on farm• Manage Delinquency• Attend Agriculture Functions (4H & FFA Banquets, etc.)

Banking is a Personal LongTerm Commitment

• Customers are loyal to bank– Relationship business– Dealing with third generations

• Banks are loyal to customer• Banks are strong part of the community

– Support community events and clubs• 4-H, FFA, Young Farmers

– Provide special bank programs• Farm Start program

Banks Assist in Providing Infrastructure for Towns & Cities

• Finance Businesses– Employment

• Support Civic Organizations• Finance Hospitals and Clinics• Assist Customers in preparing Estate Planning

– Pass farm from generation to generation– Reduce Death Taxes– Trusts

• CRA (Community Reinvestment Act)

Cross Section of Typical Customer

• Plain Sect– Amish, Mennonite, Brethren

• Small Farms– Average Farm Size in PA is 133 Acres

• 7.7 Million Acres of Farm Land• Lancaster County: 71 Acres• Lebanon County: 103 Acres• Berks County: 115 Acres

FFC Banks are Located in the Heart of PA Agriculture

• Lancaster County, PA State Rankings:#1 – Corn for Silage; Hay; Barley; Tobacco; Milk

Cows & Production; Layers & Egg Production; Broilers Produced; All Chickens on Hand; Hogs & Pigs on Hand; Cattle & Calves on Hand;

#2 – Corn for Grain; Winter Wheat; Soybeans; Sheep &

Lambs on Hand• Lancaster County, PA Farms:

#1 – # of Farms; # of Cattle Farms; # of Commercial Dairy Farms; # of Hog Farms; # of Sheep

Farms; # of Chicken Farms• Average Farm Size: 71 acres

FFC Banks are Located in the Heart of PA Agriculture

• Lebanon County, PA State Rankings:

#2 – Broilers Produced; All Chickens on Hand; Hogs & Pigs on Hand; Meat, Poultry, & Misc. Products

#5 – Corn for Silage; Average Milk Cows & Production

• Lebanon County, PA Farms:

#5 – # of Hog Farms; # of Chicken Farms• Average Farm Size: 103 acres

FFC Banks are Located in the Heart of PA Agriculture

• Berks County, PA State Rankings:

#3 – Corn for Grain; Winter Wheat; Apples

#4 – Corn for Silage; Soybeans; Average Milk Cows & Production; Layers & Egg Production; Broilers

Produced; All Chickens on Hand; Hogs & Pigs on Hand; Cattle & Calves on Hand

• Berks County, PA Farms:

#2 – # of Chicken Farms

#3 – # of Farms • Average Farm Size: 115 acres

Why Does Fulton Bank Do Agriculture Lending

• 1 in 7 Jobs in Pennsylvania is Related to Agriculture

• #1 Industry in Pennsylvania– Gross Farm Sales in Pennsylvania is $4.3 Billion Annually, with $44

Billion in Total Economic Impact

– A Multiplier Effect of 10 on other Industries• Grocery Stores, Processing Plants, Milk Processing, Cheese Plants, Bakeries

– 18th Largest Agriculture State in the United States

• Contribution to Society– Rural Town Infrastructure

• Feed Mills, Fertilizer Plants

– Banks Contribute Growth to Agriculture

• Farmers are Close to Markets in the East– Transportation Cost Advantage

• Lenders have Knowledge of Agriculture

• Delinquency is Low on Agriculture Loans

• Good Source of CRA Loans

• Charge Off on Agriculture Loans is Low

Why Does Fulton Bank Want to Continue in Agriculture Lending?

• Posture of Bank to Lend to Agriculture Customers, and Prospective Customers with Strong Balance Sheets, and Strong Income Statements

• Good Managers Able to Withstand Extended Periods of Low Commodity Prices

• Farm Assets Appreciate in Value– i.e. Land (Continuing to Escalate), Farm Equipment (Used Equipment

Prices Increase, as New Equipment Prices Increase

• People Need to Eat– Commodity Prices Will Increase

• Agriculture Has Been a Source of Good, Sound Loans for the Bank

• Important for a Community Bank to Lend to the Industry in Pennsylvania

The Strength of Agriculture Lending at Fulton Bank

• Average Loan Relationship is Small

• Risk Spread over Various Agriculture Enterprises

• Real Estate is the Collateral of Choice– Historically Real Estate Values Have Appreciating Development Pressure

– Farmers are Competing for Real Estate

• The Typical Ag Customer has Relatives also Dealing with the Bank– Ag Customer Generally in Family Units

• i.e. Grandfather, Father, Son

• Opportunities for Cross Selling– Deposit Accounts, Credit Cards, Loans, etc.

• 80% of Ag Customers are of the Plain Sect– Frown on Bankruptcies

– Lower Cost of Living

• Farm Machinery, Livestock, Commodities– Strong Resale Value

• Ag Customers Good Referral Source

Fulton Financial Corporation• FFC operates 200 banking offices through the following affiliates:

– Fulton Bank, Lancaster, PA

– Swineford National Bank, Middleburg, PA

– Lafayette Ambassador Bank, Easton, PA

– FNB Bank, N.A., Danville, PA

– Hagerstown Trust, Hagerstown, MD

– Delaware National Bank, Georgetown, DE

– The Bank, Woodbury, NJ

– Peoples Bank of Elkton, Elkton, MD

– Skylands Community Bank, Hackettstown, NJ

– Premier Bank, Doylestown, PA

– Resource Bank, Virginia Beach, VA

– Columbia Bank, Maryland

Fulton Financial Corporation

• Financial Services Affiliates include:– Fulton Financial Advisors, N.A., Lancaster, PA– Fulton Insurance Services Group, Inc.,

Lancaster, PA– Dearden, Maguire, Weaver and Barrett, LLC,

West Conshohocken, PA

• Residential Mortgage Lending – Fulton Mortgage Company, offered by all

banks

FFC at Time of Wachovia Ag Loan Portfolio Purchase

• Staff– 6 Agricultural Lenders– 5 Administrative Support Staff

• LVFB Ag Loan Totals– $106.3 Million

• Fulton Bank Ag Loan Totals– $165.1 Million

• Fulton Financial Corporation 12/31/03– Assets of $9.8 Billion– Number of Shareholders: 34,328

Wachovia Ag Loan Purchase

• Wachovia Ag Loan Portfolio – Trading area offered for sale overlaps our trading area– $165 Million in Loans– 350 Customers

• Wachovia Loans– Larger Concentration in Feathers

• Layer Operations• Broiler Operations

– Dairy Operations– Did not sell Loans over $250,000– Deposit Accounts were not included in Sale– Problem Loans were sold

• If loan was 30 days late, it was sold

Wachovia Ag Loan Purchase• Four Banks as well as Farm Credit did Due

Diligence on the Wachovia Loans offered for sale

• Information in Loan Files– Minimal information provided

• Process to purchase loan portfolio– Bids had to be in by 12/4/03– Answer on 12/5/03– Successful bidder had the opportunity to “put” back a

loan they did not want

• Loan portfolio purchase to be settled by 12/19/03

Problems With Wachovia Ag Loan Portfolio Purchase

• Customer Concerns

– Commitment to Agriculture of Bank that purchased portfolio

– What if no bank purchases the portfolio?

– Who will their loan officer be?

– Banks Location (vis a vis Ohio)

• Bank Concerns

– How many premium loan customers will walk after purchase?

– Loan Officers and Administrative Staff to service loans

– Will customers move their deposit accounts?

– Vultures feeding on carcasses• Farm Credit

Positives with Wachovia Ag Loan Portfolio Purchase

• Growth Potential

• Publicity

• Public Relations

– Legislators

– PA Secretary of Agriculture

– National Farmer’s Union

• New Deposit Accounts

• Ag Business moved to Fulton Bank

– Feed Mills

– Fertilizer Companies

– Farm Equipment Dealers

• Farmers not involved in purchase

• Cross-sell other bank products

– Investment Management and Trust Services

– Cash Management

– Leasing

– Purchased accounts being referral source

More Positives with Wachovia Ag Loan Portfolio Purchase

• Public Image– Big Bad Wachovia

– Knight in shining armor

• Reduced Exposure in Dairy Industry– Spread risk

• Media Exposure– Newspapers

– Farm Publications

– Television

– Radio

• Agriculture has been a good source of loans for Fulton Bank

• Fulton Bank has a strong commitment to agriculture

• We are the dominate player in the market

• Our staff

Yes, It Does Rain in Southern California – Problems

• Cultural differences for lenders• Territories of current loan officers and new

loan officers overlap• Purchased customers want to switch loan

officers• New loan officers

– Not enough administrative staff

• Paid premium for loans– Some loans are exiting