Associated Banc-corp · NYSE:ASB
Associated Banc-corp — Investor Presentation (February 2015)
35 slides from Associated Banc-corp's investor presentation, Feb 12, 2015
Slide 1: Associated Banc-Corp Investor Presentation First Quarter 2015
Exhibit 99.1 ASSOCIATED BANC-CORP INVESTOR PRESENTATION FIRST QUARTER 2015 ASB LISTED NYSE
Slide 2: Forward-Looking Statements and Trademarks
FORWARD-LOOKING STATEMENTS AND TRADEMARKS 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 regardi
Slide 3: Our Footprint and Franchise
OUR FOOTPRINT AND FRANCHISE Largest bank headquartered in Wisconsin >$1bn deposits1 $27 billion in assets (Top 50 bank holding company in the U.S.) >$500mm deposits1 226 banking offices serving approximately one million customers 1999 Deposits 2 ($ in billions) Branches2 1861 WI $12.7 161 IL $4.6 43
Slide 4: Strategic Fundamentals
STRATEGIC FUNDAMENTALS Meeting customer needs to build Evolving our overall delivery model deep and lasting customer relationships to meet changing preferences of our customers FOCUS ON EVOLUTION OF CUSTOMER CUSTOMER NEEDS EXPERIENCE AND CHANNELS GEOGRAPHIC DIVERSIFIED ANCHOR IN THE PORTFOLIO OF UPP
Slide 5: Attractive Midwest Markets
ATTRACTIVE MIDWEST MARKETS Serve a Large Market Place: (Footprint is ~ 20% of USA) 1 Dec 13 to Dec 14 3 Manufacturing Concentrated 2: Total Top 3 states (Indiana, Wisconsin, Employment and Iowa) for concentration of up 363k manufacturing jobs and two other states in the top 10 Manufacturing Favorabl
Slide 6: Diversified Loan Portfolio
DIVERSIFIED LOAN PORTFOLIO We are building a diversified loan portfolio that we believe will perform well through the next downturn in the credit cycle. Internal Portfolio Management Goals Goal Range Current (Q4-2014) Retail – 30-40% Retail – 37% Asset Mix C&I – 30-40% C&I – 40% CRE – 25-35% CRE – 2
Slide 7: Reshaping & Rebuilding the Loan Portfolio
RESHAPING & REBUILDING THE LOAN PORTFOLIO 1 Cumulative $16.8 2010-2014 $15.7 Change $14.7 $13.2 $13.3 +$0.5 bn +$2.1 bn +$2.2 bn 1 Based on Average Balances, $ in Billions 6
Slide 8: Loan Portfolio Growth
LOAN PORTFOLIO GROWTH 2014 AVERAGE LOAN GROWTH OF $1.2 BILLION OR 8% FROM 2013 $ IN MILLIONS % Change Residential Mortgage +13% Commercial Real Estate +8% Oil & Gas +71% Total General Commercial Loans Commercial +5% & Business Lending Power & Utilities +12% +34% ($686 mln) Mortgage Warehouse +2% Hom
Slide 9: Stable Deposit and Liquidity Profile
STABLE DEPOSIT AND LIQUIDITY PROFILE Strong Holding Company Liquidity Loans / Deposits – Year End Bank holding company cash and liquid investments of $599 mm (12/31/2014) Deposits and Customer Funding Mix $19.1 billion at 12/31/2014 ~987k deposit accounts with over $10.9 billion of granular deposits
Slide 10: Growing Net Interest Income
GROWING NET INTEREST INCOME ($ IN MILLIONS) Interest Income -9% Net Interest Income +7% Interest Expense -67% 9
Slide 11: Diversified Portfolio of Value-Added Businesses
DIVERSIFIED PORTFOLIO OF VALUE-ADDED BUSINESSES Community, Consumer, and Business Corporate and Commercial Specialty Private Consumer Community Client and and Corporate and Commercial Real Markets Institutional Business Specialized Lending Estate Lending Services Banking Rochester, MN Private Branch
Slide 12: Commercial & Business Lending
COMMERCIAL & BUSINESS LENDING C&BL Loans by Industry $7 billion portfolio; 40% of total loans ($7.0 billion – Dec 2014 – Period End) – Predominantly LIBOR-based commercial lines of credit – 86% reset, re-price, or mature within a year More than 280 colleagues serving businesses, municipal government
Slide 13: Oil and Gas Lending
OIL AND GAS LENDING ~ $750 million portfolio; ~4% of total loans and ~11% of overall CB&L activity – Outstanding balance is driven by respective borrowing bases. Oil and Gas book 2014 Fourth 48 clients Quarter Loan Composition All other loans Over $1 billion in aggregate commitments Average commitme
Slide 14: Commercial Real Estate Lending
COMMERCIAL REAL ESTATE LENDING $4.1 billion portfolio; ~23% of total loans CRE Loans by Industry ($4.1 billion – Dec 2014 – Period End) More than 90 CRE colleagues: – Offices in Chicago, Cincinnati, Columbus, Detroit, Green Bay, Madison, Milwaukee, Minneapolis, and St. Louis Recognized as: – #4 in U
Slide 15: Private Client & Institutional Services
PRIVATE CLIENT & INSTITUTIONAL SERVICES Assets Under Management ($ in billions) Over 170 colleagues serving our Private Client & Institutional Customers: CAGR = 10% $8.0 – Private banking, personal trust, and portfolio $7.4 $6.5 management services for individuals ($500k to $10 million in investible
Slide 16: Consumer and Business Banking
CONSUMER AND BUSINESS BANKING Over 1,700 colleagues servicing individuals and Residential Mortgage Loans by State small business owners through five business units: ($4.5 billion – Dec 2014) In- Other – Consumer Banking, Business Banking, Footprint 1 1% 7% Residential Lending, Retail Payments, and R
Slide 17: Evolving Model with Customer Trends
EVOLVING MODEL WITH CUSTOMER TRENDS Associated Bank Customer Trends Since 2011: Branch transactions -15% Mobile banking adoption +250% Since 2013: Digital Deposits +78% Rationalize Branch Network Enhance Digital Banking: Evolve Selling Tools: Since 2007: Current Offerings: Coming Soon: 28% branches
Slide 18: Pursuing Efficiency Gains
PURSUING EFFICIENCY GAINS ($ IN MILLIONS) 1 Areas of Focus Efficiency Ratio Goal = at 2014 = Peer Average 69% or Better Back Office Initiatives: Implementing technology solutions in labor intensive processes 70.4% 69.5% 69.3% 69.0% 4,968 4,809 4,985 Real Estate Initiatives: 4,728 4,406 Actions to op
Slide 19: Capital Management Priorities
CAPITAL MANAGEMENT PRIORITIES 2013 2014 2015 Funding Fund Loan Growth and other Capital Investments Organic Growth Increased Increased Declared quarterly Paying a quarterly dividend quarterly dividend common dividend Competitive in Q4 2013 in Q4 2014 of $0.10/ share in Dividend Q1 2015 Paid $0.33/ P
Slide 20: Why Associated
WHY ASSOCIATED EPS and Dividends Paid & ROT1CE ¹ Return on Tier 1 Common Equity Reasons to Invest 10.4% 9.8% 9.6% 9.0% $0.31 • Leading Midwest Bank Operating in $0.28 Attractive Markets $0.26 • Well Diversified Lending Portfolio • Stable Deposits and Liquidity Diluted Earnings • Committed to Expense
Slide 21: Appendix
APPENDIX • MISCELLANEOUS EXHIBITS • ASSOCIATED OIL AND GAS LENDING DETAIL
Slide 22: Segment Profitability
SEGMENT PROFITABILITY FULL YEAR 2014 ASB – Consolidated Total Earning Assets* = $22.8 bn Total Revenue = $971.3 mm Net Income = $190.5 mm ROT1CE: 9.9% Earning Assets* Total Revenue Net Income 16% 38% 36% 34% 56% 51% 33% 26% 10% ROT1CE Community, Consumer, & Business Banking 5.3% Risk Management & Sh
Slide 23: Credit Quality Indicators
CREDIT QUALITY INDICATORS ($ IN MILLIONS) Potential Problems Loans & PPLs to Total Loans Nonaccruals & NA / Total Loans $288 $235 $220 $220 $190 $185 $178 $179 $184 $177 1.69% 1.48% 1.34% 1.28% 1.08% 1.17% 1.08% 1.05% 1.07% 1.01% 4Q 2013 1Q 2014 2Q 2014 3Q 2014 4Q 2014 4Q 2013 1Q 2014 2Q 2014 3Q 201
Slide 24: Noninterest Income Trend
NONINTEREST INCOME TREND ($ IN MILLIONS) Total Noninterest Income 2014 Noninterest Income Composition $335 Asset gains + $33 $313 $313 Investment Other securities gains 3% $290 4% $273 $64 $49 $21 Brokerage & $13 Annuity 5% Mortgage BOLI Banking 5% 7% Capital Market Fees 3% Svc Chg on Deposits 24% I
Slide 25: Noninterest Expense Annual Trends
NONINTEREST EXPENSE ANNUAL TRENDS ($ IN MILLIONS) 1 FTE Trend 4,985 4,968 Total Noninterest Expense 4,809 4,728 4,406 $675 $681 $679 $617 $653 2010 2011 2012 2013 2014 Avg FTE $360 $381 $397 $390 $325 Technology 2 Spend $75 $80 $67 $52 $48 2010 2011 2012 2013 2014 Other Non-Personnel Spend 3 $244 $2
Slide 26: Investment Securities Portfolio
INVESTMENT SECURITIES PORTFOLIO Investment Portfolio – December 31, 2014 Amortized Cost Composition – December 31, 2014 Type Amortized Fair Value TEY Duration Cost (000’s) (%) (Yrs) (000’s) Govt & Agencies $999 $998 0.67 2.11 Municipals Agency MBS 17% 2,762,222 2,792,479 2.57 2.83 Agency MBS CMOs Hy
Slide 27: Reconciliation and Definitions of Non-GAAP Items
RECONCILIATION AND DEFINITIONS OF NON-GAAP ITEMS 4Q 2013 1Q 2014 2Q 2014 3Q 2014 4Q 2014 Efficiency Ratio Reconciliation: Efficiency ratio (1) 73.70% 70.41% 69.70% 69.44% 70.33% Taxable equivalent adjustment (1.49) (1.35) (1.32) (1.36) (1.40) Asset gains, net 0.80 0.22 0.26 1.36 1.05 Other intangibl
Slide 28: Our Vision
OUR VISION ASSOCIATED will be the most admired Midwestern financial services company, distinguished by sound, value-added financial solutions with personal service for our customers, built upon a strong commitment to our colleagues and the communities we serve, resulting in exceptional value for our
Slide 29: Appendix
APPENDIX • MISCELLANEOUS EXHIBITS • ASSOCIATED OIL AND GAS LENDING DETAIL
Slide 30: Oil & Gas Value Chain
OIL & GAS VALUE CHAIN From beneath the earth’s surface to the end-user: Field Services Field Downstream Upstream E&P Midstream Services R&M Supports Involved in drilling for Processes, Oil refineries and drilling for oil oil and natural gas stores, petrochemical plants, and gas and operating the mar
Slide 31: Players in the Upstream Sector
PLAYERS IN THE UPSTREAM SECTOR Integrated oil and gas companies Derive revenue from all phases of the energy value chain (e.g., ExxonMobil, BP, Shell) Independent oil and gas companies (Associated Bank’s Oil & Gas segment’s focus) Receive substantiallyall revenue from the production of oil and natur
Slide 32: Reserve-Based Lending
RESERVE-BASED LENDING Reserve-based lending is a form of Asset-based lending business This is a standard lending model for borrowers engaged in the Upstream sector of the oil and gas industry Associated Bank’s emphasis is on the small to mid-size independent segment, both public and private, collate
Slide 33: Typical Loan Structure
TYPICAL LOAN STRUCTURE Secured by first priority lien on oil and gas reserves These are syndicated deals with several banks participating in the credit 3 to 5 year working capital revolver with availability governed by a borrowing base subject to semi-annual determinations Proceeds used for acquisit
Slide 34: Associated's Oil & Gas Portfolio
ASSOCIATED’S OIL & GAS PORTFOLIO Established in January 2011 as a de novo lending vertical with zero loans outstanding and zero clients, the Oil & Gas group has grown steadily to its current book of forty-eight clients with aggregate commitments of more than $1 billion ($687MM funded; ~66% utilizati
Slide 35: Risks
RISKS Commodity price risk. Partially mitigated by: Borrowers usually mitigate prices risk by entering into multi-year commodity hedges with financial counterparties Risk adjustments are made to proven reserves that are not producing Commodity price environment is continuously monitored and changes
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