Associated Banc-corp · NYSE:ASB
Associated Banc-corp — Q4 2021 Earnings Presentation
26 slides from Associated Banc-corp's earnings presentation, Jan 20, 2022
Slide 1: Fourth Quarter 2021 Earnings Presentation
Fourth Quarter 2021 Earnings Presentation JANUARY 20, 2022
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 2021 Update
Fourth Quarter 2021 Update 4Q 2021 results reflect strong loan growth, deposit growth and expanding revenues Associated Banc-Corp Reports Fourth Quarter 2021 Net Income Available to Common Equity of $74 Million, or $0.49 per Common Share ▪ Annualized EoP QoQ growth of: ▪ Negative provision of $6 mil
Slide 4: Fourth Quarter Loan Update
Fourth Quarter Loan Update We saw a resurgence in general commercial lending in 4Q and our initiatives grew strongly as well ▪ Annualized Total Commercial1 loan EoP Loan Change (3Q 2021 to 4Q 2021) growth of 13% QoQ EoP ($ in millions) ▪ Asset-Based Lending (ABL) vertical expanded with new focus Gen
Slide 5: Annual Loan Trends
Annual Loan Trends General commercial growth even as we continued to reduce our PPP and Oil & Gas exposures EoP Annual Loan Trends EoP Loan Change (4Q 2020 to 4Q 2021) ($ in billions) ($ in millions) $24.5 $24.2 General Commercial $489 $22.9 $22.8 REIT $309 $20.8 $8.3 Power & Utilities $207 $7.6 $9.
Slide 6: Loan Trend Updates
Loan Trend Updates Line utilization rebounded and new construction commitments grew strongly Line Utilization1 (%) EoP CRE Construction Loan Exposures ($ in billions) 41.7 40.7 40.9 40.6 +5% 40.0 40.3 39.8% QoQ 38.2 37.4 34.7% 32.8 31.8 31.9 31.4 31.5 31.4 $4.0 $3.8 30.4 $3.6 $3.5 $3.5 29.2 Apr. May
Slide 7: Strategic Initiative Updates
Strategic Initiative Updates EoP Balance Trends ($ in millions) $17,000 Total Commercial (including legacy Asset- $16,000 Based Lending) $15,550 $15,120 3Q 2021 4Q 2021 YE2022 YE2023 Target Target $600 New Asset-Based Lending + Equipment $300 Finance $0 $67 3Q 2021 4Q 2021 YE2022 YE2023 Target Targe
Slide 8: Strategic Initiative Updates
Strategic Initiative Updates1 We announced a new growth focused and digital forward vision for Associated on September 9, 2021 ▪ Auto Finance: Starting strong with 665 active dealers across 13 states. Expanding our Average FICO score of 756 and 82% average LTV on initial loans. Lending ▪ Asset-Based
Slide 9: Net Interest Income and Yield Trends
Net Interest Income and Yield Trends 4Q 2021 NII and NIM both grew QoQ, driven by decreasing liability costs and expansion in securities NII and NIM Trends Average Yields (%) ($ in millions) 3.00 2.91 2.87 2.89 2.91 2.49% 2.88 2.84 2.79 2.82 2.83 2.39% 2.38% 2.40% 2.69 2.37% 2.57 2.56 2.47 2.44 1.94
Slide 10: Cash and Investment Securities Portfolio
Cash and Investment Securities Portfolio We are on track to rebuild the investment portfolio to 20% to 22% of total assets by year-end 2022 Average Investments and Yield Trends EoP Securities + Cash / Total Assets ($ in billions) 21% 22% 22% 21% 1.94% 5% 3% 18% 1.81% 6% 5% 1.76% 2% 1.66% 1.57% 17% 1
Slide 11: Quarterly Funding Trends
Quarterly Funding Trends We continue to improve the mix of low-cost, core customer funding and reduce our higher-cost liabilities Average Quarterly Deposits EoP Wholesale Funding Trends ($ in billions) ($ in billions) $28.1 $28.4 $27.5 $3.4 $26.7 $26.8 $3.2 $3.0 $0.5 $0.5 $2.8 $2.6 $0.5 $0.2 $0.2 $8
Slide 12: Annual Deposit Portfolio Trends
Annual Deposit Portfolio Trends Low-cost core deposits continued to trend up while we reduced reliance on high-cost fund sources Average Annual Deposits EoP Deposit Change (4Q 2020 to 4Q 2021) ($ in billions) ($ in millions) $27.7 $26.0 Interest-Bearing Demand $1,018 $24.1 $24.7 $8.1 $21.9 $6.9 $5.2
Slide 13: Noninterest Income Trends
Noninterest Income Trends Strong growth in capital markets activity offset moderation in net mortgage banking income Noninterest Income Trends Wealth Management & Capital Markets Fees ($ in millions) ($ in millions) $31 $32 $28 $28 $29 $8 $6 $7 $10 $95 $6 $86 $12 $82 $82 $23 $22 $22 $22 $23 $13 $8 $
Slide 14: Noninterest Expense Trends
Noninterest Expense Trends Noninterest expense up only 2% QoQ including impact of new initiatives and $17 minimum wage Noninterest Expense Trends Adjusted Efficiency Ratio2 (%) ($ in millions) 67.0 66.8 67.4 65.7 65.5 65.4 64.8 64.2 $182 62.8 $173 $175 $174 $178 $2 $1 59.7 $71 $67 $68 $73 $75 4Q 202
Slide 15: 4Q 2021 Pre-Tax Pre-Provision Income Walk-Forward
4Q 2021 Pre-Tax Pre-Provision Income1 Walk-Forward 4Q PTPP income remained relatively flat QoQ, with NII expansion offset by initiative-related charges ($ in millions) $92 $86 $(6) 3Q Pre-Tax 3Q Provision 3Q PTPP Net Interest Facilities & Technology 4Q PTPP 4Q Provision 4Q Pre-Tax Income Income Inco
Slide 16: Strong Capital Position
Strong Capital Position Tangible Book Value has increased 7% from 4Q 2020 through 4Q 2021 Tangible Book Value / Share Capital Ratios (%) $17.87 14.02 13.10 $17.58 11.81 11.02 10.45 10.31 $17.35 7.94 7.86 $16.95 $16.67 1 TCE Ratio Common Equity Tier 1 Capital Total Capital 4Q 2020 1Q 2021 2Q 2021 3Q
Slide 17: Allowance Update
Allowance Update Net reserve release of $12 million, reflecting strong dynamics throughout the portfolio 4Q 2021 ACLL ACLL / Total Loans (%) ▪ Allowance for credit losses on loans (ACLL) 1.73 1.77 1.76 1.67 decreased $12 million QoQ 1.55 1.62 1.52 1.41 1.32 ▪ Net charge offs of only $6 million; or 0
Slide 18: Credit Quality Trends
Credit Quality Trends Credit metrics largely continued to improve during 4Q 2021 Key COVID Commercial Loan Outstandings1 Nonaccrual Loans ($ in millions) ($ in millions) $2,011 $1,619 $211 $1,522 $1,482 $1,386 $163 $1,219 $77 $147 $135 $130 $1,131 $1,064 $990 $814 $37 $59 $63 $32 $62 $61 $18 $8 $6 $
Slide 19: 2022 Full-Year Outlook
2022 Full-Year Outlook FY 2022 Guidance ▪ Auto Finance loan growth of $1.2+ billion Balance Sheet ▪ Total Commercial loan growth of $750 million to $1 billion (including ABL and Equipment) Management* ▪ Target investments / total assets ratio of 20% to 22% ▪ Net interest income of $800+ million Net
Slide 20: Associated: Capitalizing on our Momentum
Associated: Capitalizing on our Momentum Growth Focused Digital Forward Higher Returns 19
Slide 21: Appendix
Appendix
Slide 22: Total Loans Outstanding Balances as of December 31, 2021
Total Loans Outstanding Balances as of December 31, 2021 Well-diversified $24 billion loan portfolio ($ in millions) % of Total % of Total 1 1 12/31/2021 Loans 12/31/2021 Loans C&BL (by NAICS 2) CRE (by property type) Utilities $ 1,808 7.5% Multi-Family $ 2,022 8.3% Wholesale/Manufacturing 1,737 7.2
Slide 23: Key COVID Commercial Loan Exposures
Key COVID Commercial Loan Exposures1 Key COVID commercial loan exposures are spread across multiple industries without large concentrations ($ in millions) % of total C&BL Utilization CRE Utilization Total loans 2 Retailers/Shopping Centers Retailers $ 85.1 49% $ 483.6 90% $ 568.7 2.35% Retail REITs
Slide 24: Loan Stratification Outstandings as of December 31, 2021
Loan Stratification Outstandings as of December 31, 2021 C&BL by Geography CRE by Geography Total Loans1 $9.4 billion $6.2 billion Illinois 3 Minnesota 15% Minnesota Texas Illinois Illinois 10% 7% 4% 23% 14% Minnesota 10% Other Wisconsin Other 2 Midwest2 24% Midwest Wisconsin Wisconsin Other 22% 12%
Slide 25: Reconciliation and Definitions of Non-GAAP Items
Reconciliation and Definitions of Non-GAAP Items ($ in millions) Selected Trend Information1 4Q 2020 1Q 2021 2Q 2021 3Q 2021 4Q 2021 Wealth management fees $22 $22 $23 $22 $23 Service charges and deposit account fees 15 15 16 17 17 Card-based fees 10 10 11 11 11 Other fee-based revenue 5 5 4 4 4 Fee
Slide 26: Reconciliation and Definitions of Non-GAAP Items
Reconciliation and Definitions of Non-GAAP Items ($ in millions) Pre-tax Pre-Provision Income Reconciliation1 3Q 2021 4Q 2021 Pre-tax pre-provision income Income (loss) before income taxes $112 $92 Provision for credit losses (24) (6) Pre-tax pre-provision income $88 $86 Tangible Common Equity and T