Associated Banc-corp · NYSE:ASB
Associated Banc-corp — Q4 2023 Earnings Presentation
32 slides from Associated Banc-corp's earnings presentation, Jan 25, 2024
Slide 1: Fourth Quarter 2023 Earnings Presentation
Fourth Quarter 2023 Earnings Presentation JANUARY 25, 2024
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 & Full Year 2023 Results
Fourth Quarter & Full Year 2023 Results1 4Q 2023 Results FY 2023 Highlights ▪ GAAP diluted EPS of $(0.62) ▪ Adjusted diluted EPS of $0.532 4.5% 3.1% Total Deposit Growth Core Customer Deposit ▪ Total deposit growth of $1.3 billion (+4%) in 2H23 Growth in 2H233 ▪ Core customer deposit growth of $310
Slide 4: 4Q 2023 EPS Adjustments
4Q 2023 EPS Adjustments 4Q GAAP EPS was impacted by one time items from our balance sheet repositioning & FDIC’s special assessment Our balance sheet repositioning An FDIC special generated a $133M net pre-tax assessment added loss1 on a mortgage loan portfolio $31M to our noninterest sale and a $65
Slide 5: Advancing our Growth Strategy
Advancing our Growth Strategy Announced in 4Q, the next phase of our strategic plan builds on our foundation & positions us for future success 2 1 Reinvesting for 3 Organic Growth Diligent Expense Balance Sheet Reinvesting expense savings in Control people, products, process & Repositioning technolo
Slide 6: Key Leadership Hires in 2023-2024
Key Leadership Hires in 2023-2024 Our strategic plan has resonated in our Midwestern footprint, helping us attract top talent in key areas January August October 2023 2023 2023 Terry Williams Steven Moss Jayne Hladio EVP, Chief Information Officer SVP, Chief Data Officer EVP, President of Private We
Slide 7: Progress on Organic Initiatives
Progress on Organic Initiatives Our Phase 2 initiatives remain on track, positioning us to grow our customer base & enhance our profitability Updates through 1/24/2024 Expected Outcomes by Year-End 2025 ▪ Plan to add 26+ commercial & business RMs across all markets by 2025, with 10 already People hi
Slide 8: Quarterly Deposit & Funding Trends
Quarterly Deposit & Funding Trends We grew deposits in 4Q 2023 & flexed into brokered CDs to further pay down FHLB Average Quarterly Deposits EoP Funding Change (9/30/2023 to 12/31/2023) ($ in billions) ($ in millions) $32.0 $32.2 $31.3 $29.9 Total Deposits +$1,323mm (+4%) $29.3 $6.3 $6.2 $6.7 Core
Slide 9: Annual Deposit Trends
Annual Deposit Trends Deposits rebounded strongly in 2H 2023, with total deposits up 4% & core customer deposits 1 up 3% Average Annual Deposits 2023 Core Customer Deposit1 Growth Trends ($ in billions) ($ in millions) $31.3 $28.8 Total Core Customer $27.7 $6.6 $26.0 Deposits Deposits1 $24.7 $8.2 $8
Slide 10: Relationship-Focused Deposit Growth
Relationship-Focused Deposit Growth Our efforts to attract & deepen relationships have driven both consumer & commercial deposit growth 2H 2023 EoP Deposit Growth Trends Expanded Commercial ($ in millions) Capabilities Growth in Consumer Modernized Digital Growth in Commercial/Business Banking Exper
Slide 11: Quarterly Loan Trends
Quarterly Loan Trends Quarterly average loans grew by $68 million in 4Q; $969 million mortgage loan sale settled on 12/21/2023 Average Quarterly Loans EoP Loan Change (9/30/2023 to 12/31/2023) ($ in billions) ($ in millions) $29.4 $29.9 $30.0 $28.8 Auto Finance $249 $28.2 Power & Utilities $153 $10.
Slide 12: Annual Loan Trends
Annual Loan Trends Ongoing execution against our lending initiatives drove $3.3 billion average annual loan growth in 2023 Average Annual Loans EoP Loan Change (12/31/2022 to 12/31/2023) ($ in billions) ($ in millions) $29.5 Auto Finance $874 $26.2 Power & Utilities $290 $24.5 $24.1 $23.1 $10.8 CRE
Slide 13: Average Yield Trends
Average Yield Trends We continue to benefit from rising asset yields, while funding cost pressures have continued to stabilize Average Yields (%) Asset & Liability Yield / Rate Trends (%) 7.29 7.42 7.04 6.66 7.04 7.11 5.93 6.77 5.36 5.51 6.39 5.18 5.42 4.94 5.07 5.55 4.78 4.46 4.48 4.12 3.55 3.36 3.
Slide 14: Net Interest Income & Net Interest Margin Trends
Net Interest Income & Net Interest Margin Trends We saw further stabilization in both NII & NIM during the fourth quarter Net Interest Income & Net Interest Margin 4Q 2023 Pro Forma Net Interest Margin1 ($ in millions) Our balance sheet repositioning would have added ~11 bps to our 4Q NIM if the tra
Slide 15: Cash & Investment Securities Portfolio
Cash & Investment Securities Portfolio We continue to target investments to total assets of 18% to 20% in 2024 EoP Securities Book Composition CET1 Including AOCI1 (%) ($ in billions) $0.7B securities 9.55 9.35 9.45 9.48 9.39 reinvestment completed 8.74 8.87 during 4Q 2023 8.51 8.60 8.53 $7.7 $7.7 $
Slide 16: Noninterest Income Trends
Noninterest Income Trends Our 4Q GAAP noninterest income was impacted by one time items tied to our balance sheet repositioning Quarterly Noninterest Income Trends ($ in millions) $66 $67 $70 $62 $62 $5 $5 $4 $5 $5 $12 $6 $5 $7 $5 $9 $2 $4 $8 $2 $49 $48 $49 $50 $47 1 4Q 2022 1Q 2023 2Q 2023 3Q 2023
Slide 17: Noninterest Expense Trends
Noninterest Expense Trends Our 4Q noninterest expense was impacted by the FDIC special assessment & an acceleration of planned hiring Noninterest Expense Trends ($ in millions) $239 4Q noninterest expense impacted by $31 $31 million FDIC special assessment $197 $196 announced during the quarter $187
Slide 18: Capital Profile
Capital Profile Our capital ratios remained well within our target ranges following the balance sheet repositioning in 4Q 2023 4Q 2023 Capital Ratios (%) 2024 Capital Target Ranges (%) 12.21 10.00 7.75 9.39 7.11 9.00 9.99 9.39 6.75 7.11 4Q 2023 2024 4Q 2023 2024 TCE Ratio1 Target CET1 Ratio Target R
Slide 19: Allowance for Credit Losses on Loans (ACLL) Update
Allowance for Credit Losses on Loans (ACLL) Update Our ACLL percentage grew by 6 basis points vs. the prior quarter to 1.32% 4Q 2023 ACLL1 Update ACLL / Total Loans (%) ▪ ACLL increased $5 million from the prior quarter to $386 million, driven primarily by nominal credit movement coupled with genera
Slide 20: Credit Quality Trends
Credit Quality Trends Solid credit performance with continued signs of normalization Total Nonperforming Assets Nonaccrual Loans ($ in millions) ($ in millions) $178 $169 $140 $9 $160 $131 $149 $127 $133 $11 $118 $8 $111 $79 $15 $15 $14 $24 $36 $63 $169 $29 $25 $22 $11 $0 $131 $149 $111 $118 $86 $68
Slide 21: High-Quality Commercial Real Estate Portfolio
High-Quality Commercial Real Estate Portfolio1 ASB has built a diversified CRE portfolio by partnering with well-known developers in stable Midwest markets CRE Credit Quality Minnesota 9% Illinois 4Q 22 1Q 23 2Q 23 3Q 23 4Q 23 15% Other Midwest2 Portfolio LTV 60% 60% 60% 59% 58% 22% CRE by Delinquen
Slide 22: FY 2024 Outlook
FY 2024 Outlook GAAP Adjusted FY 2023 Result FY 2023 Result1 FY 2024 Guidance2 EoP Total Loans $29.2B $29.2B 4% to 6% Growth (+1.4% vs. 2022) (+1.4% vs. 2022) Core Customer Deposits3 $33.4B 3% to 5% Growth EoP Total Deposits (+12.9% vs. 2022) $27.4B (Core Customer Deposits) (-2.4% vs. 2022) Net Inte
Slide 23: Appendix
Appendix
Slide 24: Balance Sheet Repositioning Summary
Balance Sheet Repositioning Summary We are providing finalized transaction figures following the settlement of our 4Q 2023 sale of loans & securities Estimated 11/9/2023 Actual Total Assets Sold $1.8B $1.68B $1.0B in ARMs $969M in ARMs Total Loans Sold Wtd. Avg. Yield 3.72% Wtd. Avg. Yield 3.81% $0.
Slide 25: Stable, Granular Deposit Portfolio
Stable, Granular Deposit Portfolio Uninsured, uncollateralized deposits were only 23% of total deposits as of 12/31/2023 EoP Total Deposit Trends (Associated Bank, N.A.) ($ in billions) $32.1 $32.1 $33.5 23% $29.7 $30.4 Percentage of total deposits that were uninsured and uncollateralized as of 12/3
Slide 26: Liquidity Sources
Liquidity Sources As of 12/31/2023, ASB’s total liquidity sources covered 146% of uninsured, uncollateralized deposits ($ in millions) Liquidity Sources 9/30/2023 12/31/2023 Federal Reserve Balance $314.3 $421.8 Available FHLB Chicago Capacity $5,377.6 $5,985.4 Available Fed Discount Window Capacity
Slide 27: Additional Loan Trends
Additional Loan Trends EoP Quarterly Loan Trends Average Loan Change (3Q 2023 to 4Q 2023) ($ in billions) ($ in millions) $29.8 $30.2 $28.8 $29.2 $29.2 Auto Finance $254 CRE Construction $134 $11.1 $11.2 $10.8 $10.9 $10.8 Power & Utilities $48 Home Equity & Other Cons. $7 Credit Cards $3 $7.2 $7.3 $
Slide 28: Total Loans Outstanding Balances as of December 31, 2023
Total Loans Outstanding Balances as of December 31, 2023 ($ in millions) % of Total % of Total 12/31/20231 Loans 12/31/20231 Loans C&BL (by NAICS 2) CRE (by property type) Utilities $ 2,450 8.4% Multi-Family $ 2,711 9.3% Manufacturing & Wholesale Trade 2,145 7.3% Industrial 1,834 6.3% Real Estate (i
Slide 29: Loan Stratification Outstanding Balances as of December 31, 2023
Loan Stratification Outstanding Balances as of December 31, 2023 Illinois Illinois Minnesota 15% Minnesota 21% 9% 7% Illinois Texas Minnesota 15% Other 6% 9% Midwest2 22% Wisconsin C&BL by Other CRE by 23% Geography Midwest 10% 2 Wisconsin Total Other 2 Geography Midwest $10.8 billion 28% Loans1 13%
Slide 30: Reconciliation & Definitions of Non-GAAP Items
Reconciliation & Definitions of Non-GAAP Items One Time Item Reconciliation YTD Dec 2023 per 4Q 2023 per share ($ in millions, except per share data) YTD Dec 2023 share data (diluted) 4Q 2023 data (diluted) GAAP net income (loss) $183 $1.13 $(91) $(0.62) Loss on mortgage portfolio sale, net1,2 133 0
Slide 31: Reconciliation & Definitions of Non-GAAP Items
Reconciliation & Definitions of Non-GAAP Items One Time Item Noninterest Expense Reconciliation YTD ($ in millions, except per share data) Dec 2023 4Q 2023 GAAP noninterest expense $814 $239 FDIC special assessment (31) (31) Noninterest expense, excluding one time items $783 $209 End of Period Adjus
Slide 32: Reconciliation & Definitions of Non-GAAP Items
Reconciliation & Definitions of Non-GAAP Items Common Equity Tier 1 Capital Ratio Reconciliation 4Q 2022 1Q 2023 2Q 2023 3Q 2023 4Q 2023 Common equity Tier 1 capital ratio 9.35% 9.45% 9.48% 9.55% 9.39% Accumulated other comprehensive loss adjustment (0.84)% (0.72)% (0.88)% (1.01)% (0.52)% Common equ