Associated Banc-corp · NYSE:ASB
Associated Banc-corp — Q4 2017 Earnings Presentation
20 slides from Associated Banc-corp's earnings presentation, Jan 25, 2018
Slide 1: Fourth Quarter 2017 Earnings Presentation
FOURTH QUARTER 2017 EARNINGS PRESENTATION January 25, 2018 Exhibit 99.2
Slide 2: Disclaimer
DISCLAIMER 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 plans, objectiv
Slide 3: 2017 Highlights
▪ Improving year over year fee-based revenues ▪ Declining year over year mortgage banking revenue 1 – Unless otherwise noted, all comparative statements are made with reference to full year 2016 results 2 – See slide 20 for detailed expenses related to the Tax Act 2017 HIGHLIGHTS1 3 Balance Sheet Ma
Slide 4: Tax Act Impacts
TAX ACT IMPACTS 2017 Tax Act Expenses 4 ~$0.10 per share Corporate Effective Tax Rate Outlook Expected 20-22% Effective Rate 1. Required partial write-off of deferred tax assets ~$12 million 2. Required acceleration of low income housing tax credit amortization ~$1 million 3. Previously disclosed co
Slide 5: Loan Portfolio - Annual Trends
Commercial & business 35% Residential mortgage 35% CRE investor 16%Construction 8% 2013 2014 2015 2016 2017 $1.6 $1.5 $1.5 $1.4 $1.3 $4.6 $4.9 $5.5 $6.2 $7.1 $3.7 $4.0 $4.2 $4.7 $5.0 $5.8 $6.5 $7.0 $7.4 $7.3$15.7 $16.8 $18.3 $19.7 $20.6 Home equity & other consumer 6% 5 Average Net Loan Change (from
Slide 6: Loan Portfolio - Quarterly Trends
($ in billions) LOAN PORTFOLIO - QUARTERLY TRENDS $206 $19 $9 $(2) $(12) $(36) $(100) $(120) 6 4Q 2016 1Q 2017 2Q 2017 3Q 2017 4Q 2017 $1.3 $1.3 $1.3 $1.3 $1.3 $6.3 $6.6 $7.0 $7.3 $7.5 $4.9 $5.0 $5.0 $5.0 $4.9 $7.4 $7.2 $7.3 $7.3 $7.2 $20.0 $20.1 $20.5 $20.9 $20.9 Average Net Loan Change (from 3Q 20
Slide 7: Deposit Portfolio - Annual Trends
2013 2014 2015 2016 2017 $1.9 $2.9 $3.2 $3.9 $2.5 $17.7 $19.2 $21.5 $22.3 $23.0 7 ($ in billions) DEPOSIT PORTFOLIO - ANNUAL TRENDS 2013 2014 2015 2016 2017 $1.8 $1.6 $1.6 $1.6 $2.0 $1.2 $1.2 $1.3 $1.4 $1.5 $7.3 $7.6 $9.2 $9.1 $9.1 $2.8 $3.0 $3.2 $3.8 $4.3$4.2 $4.2 $4.5 $5.1 $5.0 $17.4 $17.6 $19.9 $
Slide 8: Deposit Portfolio - Quarterly Trends
DEPOSIT PORTFOLIO - QUARTERLY TRENDS 4Q 2016 1Q 2017 2Q 2017 3Q 2017 4Q 2017 92% 92% 96% 94% 91% 8 ($ in billions) Money market 39% Time Deposits 11% Savings 7% Noninterest -bearing demand 23% Interest- bearing demand 20% 4Q 2016 1Q 2017 2Q 2017 3Q 2017 4Q 2017 $1.6 $1.6 $1.8 $2.2 $2.4 $1.5 $1.5 $1.
Slide 9: Net Interest Income and Margin - Annual Trends
9 NET INTEREST INCOME AND MARGIN - ANNUAL TRENDS 2013 2014 2015 2016 2017 $646 $681 $676 $707 $741 3.17% 3.08% 2.84% 2.80% 2.82% Average Yields Net Interest Income & Net Interest Margin ($ in millions) Net interest income Net interest marginTotal commercial loans Investments and other Total resident
Slide 10: Net Interest Income and Margin - Quarterly Trends
10 NET INTEREST INCOME AND MARGIN - QUARTERLY TRENDS 4Q 2016 1Q 2017 2Q 2017 3Q 2017 4Q 2017 $178 $179 $184 $184 $188 $186 $2 $180 $1 $180 $2 $190 $1 $187 2.80% 2.84% 2.83% 2.84% 2.79% Average Yields Net Interest Income & Net Interest Margin ($ in millions) Interest recoveries, prepayment fees, & de
Slide 11: Noninterest Income - Annual Trends
2013 2014 2015 2016 2017 $49 $21 $32 $38 $19 2013 2014 2015 2016 2017 $222 $225 $253 $261 $269 $94 $66 $76 $92 $64 $316 $291 $329 $353 $333 NONINTEREST INCOME - ANNUAL TRENDS ($ IN MILLIONS) 1 – Fee-based revenue = A non-GAAP financial measure, is the sum of insurance commissions and fees, service c
Slide 12: Noninterest Expense - Annual Trends
NONINTEREST EXPENSE - ANNUAL TRENDS ($ IN MILLIONS) 2013 2014 2015 2016 2017 71.1% 70.3% 70.0% 67.0% 66.0%69.3% 68.5% 68.2% 65.5% 64.5% 2013 2014 2015 2016 2017 $397 $390 $405 $415 $420 $59 $58 $61 $56 $54 $684 $680 $698 $703 $709 1 – The efficiency ratio as defined by the Federal Reserve guidance i
Slide 13: Credit Quality - Annual Trends
13 CREDIT QUALITY - ANNUAL TRENDS ($ IN MILLIONS; AT OR FOR THE YEAR ENDED) Potential Problem Loans Nonaccrual Loans Net Charge Offs (Recoveries) Allowance to Total Loans / Oil and Gas Loans 2013 2014 2015 2016 2017 $235 $190 $178 $276 $137 $124 $302 $75 $351 $40 $177 2013 2014 2015 2016 2017 $185 $
Slide 14: Bank Mutual Update
BANK MUTUAL UPDATE Expected Closing 14 Expected System Conversion Branch and Systems Decommissioning Expected Total Restructuring Costs (Q1 - Q3) ▪ February 1, 2018 ▪ Late June / July 2018 ▪ Q3 ▪ ~$40 million – Change of control and severance: ~$10 million (Q1) – Merger advisors and consultants: ~$1
Slide 15: Noninterest Expense Outlook
NONINTEREST EXPENSE OUTLOOK ($ in millions) 15 2017 Associated noninterest expense $709M 2017 Bank Mutual noninterest expense + 70 Whitnell incremental noninterest expense + ~5 One-time Tax Act compensation actions - ~$2 2018 noninterest expense baseline = ~$782M + ~1.0% baseline expense growth + ~8
Slide 16: Net Interest Margin Outlook
NET INTEREST MARGIN OUTLOOK 16 4Q 2017 Run-Rate 2.79% + Expected benefit of 3 Fed rate increases + 3-6 bps + Expected benefit of Bank Mutual's higher loan yields + 3 bps Pro forma run-rate before tax adjustments 2.85%-2.88% – Fully tax-equivalent adjustments on municipal securities and loans - 3-4 b
Slide 17: 2018 Outlook
2018 OUTLOOK Balance Sheet Management ▪ Pro forma mid-single digit annual average loan growth on the combined Associated and Bank Mutual portfolio ▪ Maintain Loan to Deposit ratio under 100% ▪ Stable to modestly improving year over year NIM trend Fee Businesses ▪ Improving year over year fee- based
Slide 18: Appendix
APPENDIX
Slide 19: Oil and Gas Update
19 OIL AND GAS UPDATE Period End Loans by Credit Quality Oil and Gas Allowance ($ in millions) ($ in millions) 4Q 2016 1Q 2017 2Q 2017 3Q 2017 4Q 2017 5.7% 6.7% 5.4% 5.2% 4.5% $38 $42 $33 $30 $27 Total O&G Portfolio As of December 31, 2017 # of credits $ of commitments $ of outstandings % of total l
Slide 20: Reconciliation and Definitions of Non-GAAP Items
20 RECONCILIATION AND DEFINITONS OF NON-GAAP ITEMS Efficiency Ratio 2013 2014 2015 2016 2017 Federal Reserve efficiency ratio 71.14 % 70.28 % 69.96 % 66.95 % 65.97 % Fully tax-equivalent adjustment (1.45)% (1.36)% (1.41)% (1.29)% (1.28)% Other intangible amortization (0.42)% (0.39)% (0.31)% (0.20)%