Associated Banc-corp · NYSE:ASB
Associated Banc-corp — Q4 2022 Earnings Presentation
26 slides from Associated Banc-corp's earnings presentation, Jan 26, 2023
Slide 1: Fourth Quarter 2022 Earnings Presentation
Fourth Quarter 2022 Earnings Presentation JANUARY 26, 2023
Slide 2: Forward-Looking Statements
Forward-Looking Statements Important note regarding forward-looking statements: Statements made in this presentation which are not purely historical are forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995. This includes any statements regarding management’s
Slide 3: Fourth Quarter and Full Year 2022 Results
Fourth Quarter and Full Year 2022 Results 4Q 2022 Highlights1 2022: Associated Banc-Corp Reports Fourth Quarter 2022 The Most Profitable Year in Net Income Available to Common Equity of $106 ASB History3 Million, or $0.70 per Common Share $355 million ▪ Total average loan growth of $1.1 billion (+4%
Slide 4: Quarterly Loan Trends
Quarterly Loan Trends Total loans continued to grow in most key categories, but at a slower pace than the prior quarter Average Quarterly Loans EoP Loan Change (9/30/2022 to 12/31/2022) ($ in billions) ($ in millions) $28.2 $27.1 CRE Construction $320 $25.4 $23.8 $24.1 Auto Finance $265 $10.5 Reside
Slide 5: Annual Loan Trends
Annual Loan Trends Successful deployment of our consumer and commercial lending initiatives drove broad growth in 2022 Average Annual Loans EoP Loan Change (12/31/2021 to 12/31/2022) ($ in billions) ($ in millions) $26.2 $24.5 Auto Finance $1,239 $24.1 $22.7 $23.1 Residential Mortgage $944 $9.9 Gene
Slide 6: Growing and Expanding our Lending Capabilities
Growing and Expanding our Lending Capabilities Our strategic lending initiatives have provided additional versatility to drive balanced growth Progress Update Balance Trends ($ in millions) ▪ Increasing our total commercial $17,639 $17,000 + Core Commercial1 and business relationship $15,550 manager
Slide 7: Quarterly Deposit Trends
Quarterly Deposit Trends Average deposits grew by 2% vs. the prior quarter, led by growth in core customer deposits Average Quarterly Deposits Average Deposit Change (4Q 2022 vs. 3Q 2022) ($ in billions) ($ in millions) $28.6 $28.9 $29.3 $28.4 $28.2 Core Customer Deposits1 +0.8% $235 $8.1 $8.1 $8.4
Slide 8: Annual Deposit Trends
Annual Deposit Trends In 2022, average annual deposits grew for the 11th consecutive year Average Annual Deposits Average Deposit Change (4Q 2022 vs. 4Q 2021) ($ in billions) ($ in millions) +4% $28.8 $27.7 +2.4% $672 Core Customer Deposits1 $26.0 $24.1 $24.7 $8.2 $8.1 $5.2 $6.9 $5.2 $4.8 $5.1 $6.1
Slide 9: Growing and Expanding our Deposit Capabilities
Growing and Expanding our Deposit Capabilities Several initiatives are underway to build on our deposit growth momentum into 2023 and beyond 2022 2023 21% increase in commercial RMs vs. 2021, with a Full-year impact expected in 2023 57% increase in new customer names Sharpened focus on TM, HSA and o
Slide 10: Pre-Tax Pre-Provision Income Trends
Pre-Tax Pre-Provision Income1 Trends Strong revenue growth and disciplined expense management are driving positive operating leverage 4Q 2022 vs. 4Q 2021 FY 2022 vs. FY 2021 ($ in millions) ($ in millions) +41% +79% 4Q21 Pre- 4Q21 4Q21 4Q22 Pre- 4Q22 4Q22 FY21 Pre- FY21 FY21 FY22 Pre- FY22 FY22 Tax
Slide 11: Average Yield Trends
Average Yield Trends ASB’s balance sheet continues to benefit from loan growth and the rising rate environment Average Yields (%) Asset & Liability Yield / Rate Trends (%) 5.93 4.46 5.55 4.62 3.72 4.29 4.12 2.97 3.50 3.52 3.75 2.59 2.60 3.36 3.22 2.89 2.88 2.98 2.97 3.12 2.57 2.48 1.58 2.29 2.42 1.9
Slide 12: Net Interest Income & Net Interest Margin Trends
Net Interest Income & Net Interest Margin Trends NII and NIM continued to grow in 4Q, driven by rising loan yields and controlled deposit costs ($ in millions) $289 $264 $216 3.31% $187 $188 3.13% 2.71% 2.42% 2.40% 4Q 2021 1Q 2022 2Q 2022 3Q 2022 4Q 2022 Quarterly Net Interest Income Quarterly Net I
Slide 13: Interest Rate Risk Management
Interest Rate Risk Management While ASB remains well-positioned to benefit from higher rates, we continue to manage the downside risk ▪ We’ve decreased our reliance on higher-beta network and wholesale Increased received fixed swaps funding since the last rate cycle (19% from $850 million in 3Q 2022
Slide 14: Noninterest Income Trends
Noninterest Income Trends Noninterest income remains pressured by market dynamics and customer-friendly fee adjustments Noninterest Income Trends Service Charges & Deposit Account Fees ($ in millions) ($ in millions) $17 $17 $17 $15 $14 $82 $74 $75 $9 $71 $4 $8 $10 $10 $62 $9 $8 4Q 2021 1Q 2022 2Q 2
Slide 15: Noninterest Expense Trends
Noninterest Expense Trends We continue to invest in people and technology while keeping expense growth below total revenue growth Noninterest Expense Trends Fully Tax-Equivalent Efficiency Ratio2 (%) ($ in millions) 67.4 65.5 65.7 63.8 $197 61.5 $196 59.8 60.3 58.8 $182 $181 $6 $173 55.5 $3 54.1 $49
Slide 16: Capital Profile
Capital Profile We are managing capital levels toward our target ranges, while holding TBVPS steady 4Q 2022 Regulatory Capital Ratios (%) Year-End 2023 Capital Targets (%) 9.50 11.33 9.35 7.25 6.97 9.00 9.95 9.35 6.75 4Q 2022 YE2023 4Q 2022 YE2023 1 TCE Ratio Target CET1 Ratio Target Range Range Tan
Slide 17: Allowance for Credit Losses on Loans (ACLL) Update
Allowance for Credit Losses on Loans (ACLL) Update Our ACLL increased slightly to 1.22%, with an allowance build largely driven by loan growth 4Q 2022 ACLL1 Update ACLL / Total Loans (%) ▪ ACLL ($) increased $19 million from the prior quarter to $351 million, largely driven by loan growth and stable
Slide 18: Credit Quality Trends
Credit Quality Trends Credit remains benign with NPAs, NALs and NCOs all declining vs. the prior quarter Total Nonperforming Assets Nonaccrual Loans ($ in millions) ($ in millions) $160 $161 $143 $18 $126 $133 $126 $130 $30 $0 $108 $116 $111 $16 $6 $18 $15 $81 $1 $16 $14 $61 $47 $38 $29 $130 $143 $1
Slide 19: 2023 Full-Year Outlook
2023 Full-Year Outlook1 ▪ Total loan growth of 7% to 9% Balance Sheet ▪ Target investments/total assets ratio of 18% to 20% Management ▪ Total net interest income & noninterest income growth of 10% to 12% Net Interest Income & ▪ Net interest income (GAAP) growth of 15% to 17% Noninterest Income ▪ No
Slide 20: Associated Bank
“ Associated Bank Your money works here: Growth S Higher Focused Returns
Slide 21: Appendix
Appendix
Slide 22: Additional Loan Trends
Additional Loan Trends EoP Quarterly Loan Trends Average Loan Change (3Q 2022 to 4Q 2022) ($ in billions) ($ in millions) Auto Finance $275 $28.8 $27.8 $26.5 Residential Mortgage $220 $24.2 $24.5 CRE Investor $157 $10.8 $10.6 General Commercial $156 $10.2 $9.4 $9.3 CRE Construction $137 REIT $121 $6
Slide 23: Total Loans Outstanding Balances as of December 31, 2022
Total Loans Outstanding Balances as of December 31, 2022 Well-diversified $29 billion loan portfolio ($ in millions) % of Total % of Total 1 1 12/31/2022 Loans 12/31/2022 Loans 2 C&BL (by NAICS ) CRE (by property type) Manufacturing & Wholesale Trade $ 2,182 7.6% Multi-Family $ 2,487 8.6% Utilities
Slide 24: Loan Stratification Outstanding Balances as of December 31, 2022
Loan Stratification Outstanding Balances as of December 31, 2022 Illinois Illinois Minnesota 14% Minnesota 23% Illinois 9% 7% 15% Texas Minnesota 5% 10% Other Midwest2 Wisconsin C&BL by Other CRE by 23% 24% Geography Midwest 2 Total 11% Wisconsin Other Geography $10.8 billion 28% Loans1 Midwest 2 14
Slide 25: Reconciliation and Definitions of Non-GAAP Items
Reconciliation and Definitions of Non-GAAP Items ($ in millions) YTD Dec YTD Dec Pre-Tax Pre-Provision Income Reconciliation1 4Q 2021 4Q 2022 2021 2022 Income before income taxes $92 $134 $436 $460 Provision for credit losses (6) 20 (88) 33 Pre-tax pre-provision income $86 $154 $348 $493 Average Tan
Slide 26: Reconciliation and Definitions of Non-GAAP Items
Reconciliation and Definitions of Non-GAAP Items ($ in millions) Efficiency Ratio Reconciliation 4Q 2021 1Q 2022 2Q 2022 3Q 2022 4Q 2022 Federal Reserve efficiency ratio 67.36% 65.71% 61.53% 60.32% 55.47% Fully tax-equivalent adjustment (1.10)% (1.13)% (0.98)% (0.87)% (0.77)% Other intangible amorti