Associated Banc-corp · NYSE:ASB
Associated Banc-corp — Q3 2021 Earnings Presentation
22 slides from Associated Banc-corp's earnings presentation, Oct 21, 2021
Slide 1: Third Quarter 2021 Earnings Presentation
Third Quarter 2021 Earnings Presentation OCTOBER 21, 2021
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: 2021 Third Quarter Update
2021 Third Quarter Update 3Q 2021 results reflect positive revenue growth trends Associated Banc-Corp Reports Third Quarter 2021 net income available to common equity of $85 million, or $0.56 per common share ▪ QoQ growth in: ▪ Negative provision of $24 million ▪ Loan and securities interest ▪ Net c
Slide 4: Third Quarter Loan Update
Third Quarter Loan Update 3Q 2021 results reflect positive trends across several core Commercial loan categories ▪ Commercial & Business Lending Average Loan Change (2Q 2021 to 3Q 2021) average loan growth (excl. PPP) of $271 million, or over 3% QoQ ($ in millions) ▪ Continued growth in specialized
Slide 5: Loan Trend Updates
Loan Trend Updates Commercial & Business Lending, along with CRE Construction, drove quarterly loan growth Average Quarterly Loans Commercial Banking Line Utilization1 ($ in billions) 41.7% 40.7% 40.9% 40.6% 40.0% 40.3% $25.0 $24.7 $24.5 $24.1 $23.9 31.4% 31.5% 31.4% 31.8% 29.2% 30.4% $8.8 $8.5 $8.5
Slide 6: 3Q 2021 Pre-Tax Pre-Provision Income Walk-Forward
3Q 2021 Pre-Tax Pre-Provision Income1 Walk-Forward 3Q PTPP expansion driven by higher net interest income, fees, asset gains and controlled expenses ($ in millions) $112 $88 $(24) $(1) 2Q Pre-Tax 2Q Provision 2Q PTPP Net Interest Noninterest Personnel Net Asset Initiative-related 3Q PTPP 3Q Provisio
Slide 7: Strategic Initiative Updates
Strategic Initiative Updates We announced a new growth focused and digital forward vision for Associated on September 9, 2021 ▪ Booked our first Auto Finance loans on September 30, 2021 Expanding our Lending ▪ New Head of Asset-Based Lending started in September Capabilities ▪ New President of Equip
Slide 8: Net Interest Income and Yield Trends
Net Interest Income and Yield Trends 3Q 2021 NII expanded by over 2%, but margins were pressured by increased liquidity NII and NIM Trends Average Yields ($ in millions) 3.06% 3.00% 2.91% 2.87% 2.89% 2.49% 2.93% 2.88% 2.82% 2.83% 2.79% 2.39% 2.38% 2.59% 2.69% 2.57% 2.37% 2.56% 2.47% 1.90% 1.94% 1.81
Slide 9: 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) $27.5 $28.1 $4.7 $26.8 $26.7 $26.8 $0.5 $3.4 $3.2 $1.4 $3.0 $0.5 $2.8 $8.1 $0.5 $0
Slide 10: Cash and Investment Securities Portfolio
Cash and Investment Securities Portfolio We are targeting rebuilding the investment portfolio to 20%+ of assets by year-end 2022 Average Investments and Yield Trends EOP Securities + Cash / Total Assets ($ in billions) 21% 22% 21% 1.90% 1.94% 19% 18% 5% 1.81% 3% 6% 5% 2% 1.66% 1.57% 16% 15% 16% 16%
Slide 11: Noninterest Income Trends
Noninterest Income Trends 3Q 2021 noninterest income grew by $9 million QoQ with gains in several core categories Noninterest Income Trend Net Mortgage Banking Income ($ in millions) ($ in millions) $24 $15 $15 $15 $15 $13 $95 $11 $9 $8 $8 $86 $12 $82 $76 $13 $8 $73 $10 $5 3Q 2020 4Q 2020 1Q 2021 2Q
Slide 12: Noninterest Expense Trends
Noninterest Expense Trends Noninterest expense up 2% QoQ including impact of new strategic growth initiatives Noninterest Expense Trend Adjusted Efficiency Ratio4 ($ in millions) 85% $228 64% 66% 67% 67% 65% 65% 63% 63% 60% $50 $173 $175 $174 $178 $2 3Q 2020 4Q 2020 1Q 2021 2Q 2021 3Q 2021 $69 $71 $
Slide 13: Strong Capital Position
Strong Capital Position Tangible Book Value has increased 7% from 3Q 2020 through 3Q 2021 Tangible Book Value / Share Capital Ratios 13.78% $17.58 13.50% $17.35 11.57% 11.30% 10.57% 10.22% $16.95 7.92% 7.50% $16.67 $16.37 1 TCE Ratio Common Equity Tier 1 Capital Total Capital 3Q 2020 4Q 2020 1Q 2021
Slide 14: Allowance Update
Allowance Update Net Reserve Release of $32 million, reflecting strong dynamics throughout the portfolio Third Quarter 2021 ACLL ACLL / Total Loans ▪ Allowance for credit losses on loans (ACLL) decreased $32 million at the end of 3Q 2021 1.73% 1.77% 1.76% 1.67% from 2Q 2021 1.62% 1.55% 1.52% ▪ Net c
Slide 15: Credit Quality Trends
Credit Quality Trends Credit metrics largely continued to improve during the third quarter Key COVID Commercial Loan Outstandings1 Nonaccrual Loans ($ in millions) ($ in millions) $2,099 $2,011 $232 $1,619 $211 $1,522 $1,482 $163 $1,204 $79 $77 $147 $135 $1,219 $1,131 $8 $59 $1,064 $990 $37 $63 $62
Slide 16: Updated 2021 Full-Year Outlook
Updated 2021 Full-Year Outlook Previous Guidance (9/9/2021) Updated Guidance ▪ Commercial loan growth, excl. PPP, of 2-4% ▪ Commercial loan growth, excl. PPP, of Balance Sheet approximately 2% ▪ Full-year net interest margin of 2.45% to Management 2.55% ▪ Full-year net interest margin of approximate
Slide 17: Appendix
Appendix
Slide 18: Total Loans Outstanding Balances as of September 30, 2021
Total Loans Outstanding Balances as of September 30, 2021 Well-diversified $24 billion loan portfolio ($ in millions) % of Total % of Total 1 1 9/30/2021 Loans 9/30/2021 Loans 2 C&BL (by NAICS ) CRE (by property type) Utilities $ 1,734 7.3% Multi-Family $ 1,955 8.3% Wholesale/Manufacturing 1,587 6.7
Slide 19: 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 $ 68.3 37% $ 584.8 89% $ 653.2 2.77% Retail REITs
Slide 20: Loan Stratification Outstandings as of September 30, 2021
Loan Stratification Outstandings as of September 30, 2021 C&BL by Geography CRE by Geography Total Loans1 $9.0 billion $6.1 billion Illinois Minnesota 14% Minnesota Illinois Illinois 9% 7% 23% 16% Texas 3 Minnesota 6% 10% Other Wisconsin Other 2 Midwest2 24% Midwest Wisconsin Wisconsin Other 22% 10%
Slide 21: Reconciliation and Definitions of Non-GAAP Items
Reconciliation and Definitions of Non-GAAP Items ($ in millions) Pre-tax Pre-Provision Income Reconciliation1 2Q 2021 3Q 2021 Pre-tax pre-provision income Income (loss) before income taxes $113 $112 Provision for credit losses (35) (24) Pre-tax pre-provision income $78 $88 Tangible Common Equity and
Slide 22: Reconciliation and Definitions of Non-GAAP Items
Reconciliation and Definitions of Non-GAAP Items Efficiency Ratio Reconciliation 3Q 2020 4Q 2020 1Q 2021 2Q 2021 3Q 2021 Federal Reserve efficiency ratio 85.41% 59.68% 65.74% 66.81% 65.43% Fully tax-equivalent adjustment (1.29)% (0.84)% (0.97)% (1.07)% (1.01)% Other intangible amortization (0.87)% (