Associated Banc-corp · NYSE:ASB
Associated Banc-corp — Q3 2020 Earnings Presentation
23 slides from Associated Banc-corp's earnings presentation, Oct 22, 2020
Slide 1: Third Quarter 2020 Earnings Presentation
THIRD QUARTER 2020 EARNINGS PRESENTATION October 22, 2020
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: 3Q 2020 Actions
3Q 2020 ACTIONS We executed several initiatives to drive efficiency and improve earnings in 2021 FY 2021 Expected Pretax Run Rate Initiative Details Q3 Impact Impact Pending sales and/or $10 million of ~ $40 million consolidations of 22 severance expense expense branches (9% of and $6 million of rea
Slide 4: 3Q 2020 PTPP Income Walkforward
3Q 2020 PTPP INCOME WALKFORWARD $60 million of pre-tax restructuring charges were incurred as part of our 3Q 20 efficiency initiatives Pre-tax pre-provision income of $901 million when adjusted for $60 million of restructuring costs. ($ in millions) $0 1 2 1 A non-GAAP measure. Please refer to the a
Slide 5: 3Q 2020 Update
3Q 2020 UPDATE Associated took actions in 3Q 2020 to improve efficiency and optimize our branch network Third Quarter 2020 Earnings of $0.26 Per Common Share Including Restructuring Charges and Tax Benefits 1 $60 million of restructuring charges ($45 million2 after taxes), were more than offset by a
Slide 6: Loan Trends
LOAN TRENDS CRE loans continue to grow while general commercial lines of credit pay down Average Quarterly Loans Average Loan Growth (2Q20 to 3Q20) ($ in billions) ($ in millions) $25.2 $25.0 $23.3 $23.3 $0.8 $1.0 $22.8 Mortgage warehouse $173 PPP $171 $9.2 $8.8 $8.5 $8.2 $8.4 $170 CRE construction
Slide 7: End of Period Loan Trends
END OF PERIOD LOAN TRENDS Growth was led by higher specialty commercial and CRE balances, partially offset by general commercial EOP Loan Change1 2Q20 to 3Q20 ($ in millions) Total loans +$171 million (+1%) Commercial and Business Lending -$35 million (0%) Mortgage warehouse $295 – General commerc
Slide 8: Commercial COVID-19 Relief Update
COMMERCIAL COVID-19 RELIEF UPDATE Commercial deferrals have declined by 73% since Q2 2020 Loan Deferrals & Modifications1 Active Deferred and Modified Loans Trend ($ in millions) ▪ We generally granted 90 day deferrals for our commercial customers $839 ▪ Total commercial deferrals have declined appr
Slide 9: Consumer COVID-19 Relief Update
CONSUMER COVID-19 RELIEF UPDATE Consumer deferrals have declined by 63% from Q2 and most borrowers have not asked for additional help Loan Deferrals & Modifications1 Active Deferred and Modified Loans Trend ($ in millions) ▪ We generally granted six month deferrals to consumers who requested assista
Slide 10: Allowance Update
ALLOWANCE UPDATE ACLL2 increased $13 million and covered 1.77% of loan balances at the end of 3Q 2020 Third Quarter ACLL Loan Allowance Walkforward ($ in millions) ▪ Allowance for credit losses on loans (ACLL) increased $13 million, or 3%, at the end of 3Q 2020 from 2Q 2020 ▪ ACLL to loans was 1.77%
Slide 11: Credit Quality – Quarterly Trends
CREDIT QUALITY – QUARTERLY TRENDS Nonaccrual loans increased in 3Q 2020 driven by CRE retail loans Potential Problem Loans1 Nonaccrual Loans1 ($ in millions) ($ in millions) $307 $293 $234 $58 $232 $72 $161 $17 $63 $172 $79 $133 $67 $60 $129 $118 $137 $11 $8 $32 $43 $36 $23 $29 $1 $50 $150 $186 $162
Slide 12: Deposit Portfolio Trends
DEPOSIT PORTFOLIO TRENDS We continue to improve the mix of low-cost, core customer deposit funding Average Quarterly Deposits EOP Funding Change 2Q20 to 3Q20 ($ in billions) ($ in millions) $26.8 $25.2 $26.1 Interest-bearing demand $384 $24.1 $24.3 Savings $134 $5.3 $6.9 $7.4 Money Market $56 $5.5 $
Slide 13: Net Interest Income and Yield Trends
NET INTEREST INCOME AND YIELD TRENDS Net interest margin bottomed out during Q3 and has started to move back up in September Net Interest Income and Net Interest Margin Average Yields ($ in millions) 2.85% 2.89% 3.65% 2.30% 2.35% 3.14% 3.07% 3.05% 3.06% 3.08% 3.04% 3.01% 2.99% 2.94% 2.96% 2.93% 2.89
Slide 14: Noninterest Income Trends
NONINTEREST INCOME TRENDS Mortgage banking income remains strong and service charges have rebounded during Q3 Noninterest Income Trend Net Mortgage Banking Income ($ in millions) ($ in millions) $12 $13 $11 $254 $101 $7 $6 $98 $93 $76 $47 $48 3Q 2019 4Q 2019 1Q 2020 2Q 2020 3Q 2020 $40 $51 $25 Servi
Slide 15: Expense Trends
EXPENSE TRENDS 3Q 2020 included $60 million of restructuring costs3 which will improve the expense run rate going into 2021 Noninterest Expense Business Development and Advertising ($ in millions) ($ in millions) $228 $8 $8 $201 $204 $192 $50 $6 $2 $1 $183 $4 $4 $2 $1 $76 $82 $76 $72 3Q 2019 4Q 2019
Slide 16: Strong Capital Position
STRONG CAPITAL POSITION Tangible Common Equity ratio increased 25 bps to 7.50% during 3Q 2020 Regulatory Capital Ratios Capital Ratio Walkdowns 13.8% 13.8% 12.6% 11.6% 11.6% Common Equity Tier 1 Ratio1 10.3% 10.2% 10.4% 9.4% Tangible Common Equity Ratio2 Common Equity Tier 1 Tier 1 Capital Total Cap
Slide 17: 2020 Updated Outlook
2020 UPDATED OUTLOOK We are updating guidance for select items in Q4 and reiterating our expense guidance for Q4 and 2021 Fee Revenue: Net Interest Margin: Continue positive trend 4Q 2020 ~ 2.50% through end of 2020 2020 / 2021 Guidance Expenses: Effective Tax Rate: 4Q 2020 - $175 million1 FY 2020 -
Slide 18: Appendix
APPENDIX
Slide 19: Total Loans Outstanding Balances as of September 30, 2020
TOTAL LOANS OUTSTANDING BALANCES AS OF SEPTEMBER 30, 2020 Well diversified $25 billion loan portfolio ($ in millions) % of Total % of Total 1 1 09/30/2020 Loans 09/30/2020 Loans 2 C&BL (by NAICS ) CRE (by property type) Utilities $ 1,802 7.2% Multi-Family $ 1,997 8.0% Wholesale/Manufacturing 1,717 6
Slide 20: 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 $ 88.5 43% $ 681.0 90% $ 769.4 3.08% Retail REITs
Slide 21: Loan Stratification Outstandings as of September 30, 2020
LOAN STRATIFICATION OUTSTANDINGS AS OF SEPTEMBER 30, 2020 C&BL by Geography CRE by Geography Total Loans1 $9.9 billion $6.2 billion Illinois Minnesota Illinois Illinois Minnesota 17% 9% 15% 24% 8% Other Texas 3 Minnesota Wisconsin Midwest2 7% 10% 25% 22% Other Wisconsin Wisconsin 29% Other 26% Midwe
Slide 22: Reconciliation and Definitions of Non-GAAP Items
RECONCILIATION AND DEFINITIONS OF NON-GAAP ITEMS ($ IN MILLIONS) Adjusted Noninterest Expense Reconcilation1 3Q19 4Q19 1Q20 2Q20 3Q20 Noninterest expense $201 $204 $192 $183 $228 Restructuring costs 0 0 0 0 50 Acquisition related costs 2 1 2 1 0 Severance / frontline pay 0 4 0 2 10 Adjusted noninter
Slide 23: Reconciliation and Definitions of Non-GAAP Items
RECONCILIATION AND DEFINITIONS OF NON-GAAP ITEMS ($ IN MILLIONS, EXCEPT PER SHARE DATA) YTD 2020 3Q20 per per share share Acquisition Related Costs, Gain on Sale of ABRC, & 3Q20 Initiatives Reconciliation1 YTD 2020 data 3Q 2020 data GAAP earnings $227 $1.46 $40 $0.26 Net of Tax Acquisition related c