Associated Banc-corp · NYSE:ASB
Associated Banc-corp — Investor Presentation (February 2018)
32 slides from Associated Banc-corp's investor presentation, Feb 7, 2018
Slide 1: Associated Banc-Corp Investor Presentation First Quarter 2018
Associated Banc-Corp Investor Presentation FIRST QUARTER 2018 Exhibit 99.1
Slide 2: Disclaimer
DISCLAIMER 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 plans, objectiv
Slide 3: Our Franchise
Community, Consumer, and Business 33% Corporate and Commercial Specialty 60% RMSS2 7% 2017 Net Income by Business Segment WI 63% 151 MN 7% 20 IL 30% 42 2017 Deposits (%) And Branches OUR FRANCHISE 2 $33 billion of assets1 $23 billion of loans1 Over $1 billion of revenue1 $25 billion of deposits1 Feb
Slide 4: Attractive Midwest Markets
Manufacturing & Wholesale Trade 25% ATTRACTIVE MIDWEST MARKETS 2.8% 3.0% 3.1% 3.4% 3.5% 4.1% 4.7% 4.7% 4.8% IA WI MN IN MO U.S. MI OH IL Midwest ~35% All other regions ~65% U.S. Manufacturing Jobs 1 – U.S. Census Bureau, Annual Estimates of the Resident Population, June 30, 2016 - July 31, 2017 2 –
Slide 5: 2018 Outlook
2018 OUTLOOK Balance Sheet Management ▪ Pro forma mid-single digit annual average loan growth on the combined Associated and Bank Mutual portfolio ▪ Maintain Loan to Deposit ratio under 100% ▪ Stable to modestly improving year over year NIM trend Fee Businesses ▪ Improving year over year fee- based
Slide 6: Loan Growth Trends
Wisconsin 31% Illinois 26% Minnesota 10% Other Midwest 13% Texas 4% Other 16% $1.6 $1.5 $1.5 $1.4 $1.3 $4.6 $4.9 $5.5 $6.2 $7.1 1 $3.7 $4.0 $4.2 $4.7 $5.0 $5.8 $6.5 $7.0 $7.4 $7.3 $15.7 $16.8 $18.3 $19.7 $20.6 2013 2014 2015 2016 2017 Commercial & Business Commercial Real Estate Residential Mortgage
Slide 7: Deposit Growth Trends
Checking and Savings Deposits Represented nearly 50% of our year-end deposit base 2017 Annual Average Deposits by Segment Loan to Deposit Ratio DEPOSIT GROWTH TRENDS ($ in billions) Growing Low Cost Deposits Average Annual Deposits 6% 6% $1.8 $1.6 $1.6 $1.6 $2.0 $1.2 $1.2 $1.3 $1.4 $1.5 $7.3 $7.6
Slide 8: Shift to Digital Channels
Customers continue to seek more efficient ways to bank. Digital capabilities are key to meeting their rising expectations. Associated is actively enhancing its multichannel approach and expects to deploy new and enhanced consumer mobile solutions in early 2018. SHIFT TO DIGITAL CHANNELS 7 We Have an
Slide 9: Increasing Distribution Efficiency
8 INCREASING DISTRIBUTION EFFICIENCY LESS BRANCH CENTRIC; MORE MOBILE AND ENHANCED 24/7 ACCESS Deposits ~63% from 2007 Branches ~30% from 2007 Average Deposits per Branch ~130% from 2007 ATM transactions represent nearly 30% of all deposit and withdrawal1 activity ATM deposit transactions ~4.5x from
Slide 10: Focused on Customer Experience
650 700 750 800 850 2011 2012 2013 2014 2015 2016 2017 FOCUSED ON CUSTOMER EXPERIENCE 9 ROBUST AFFINITY PROGRAMS OUTSTANDING CUSTOMER SERVICE CHALLENGER PHILOSOPHY MULTI-CHANNEL INITIATIVES Customer Approach J.D. Power U.S. Retail Banking Satisfaction Study2 1 – J.D. Power 2017 Certified Contact Cen
Slide 11: Overall Expense Efficiency
71.1% 70.3% 70.0% 67.0% 66.0% 69.3% 68.5% 68.2% 65.5% 64.5% 2013 2014 2015 2016 2017 Federal Reserve Fully tax-equivalent Efficiency Ratio1 Enhanced Automation Operational Efficiencies Branch Consolidations Branch Staffing Initiatives OVERALL EXPENSE EFFICIENCY Efficiency Drivers 1 – The efficiency
Slide 12: Bank Mutual Update
BANK MUTUAL UPDATE Closing Date 11 Expected System Conversion Branch and Systems Decommissioning Expected Total Restructuring Costs (Q1 - Q3) ▪ February 1, 2018 ▪ Late June / July 2018 ▪ Q3 ▪ ~$40 million – Change of control and severance: ~$10 million (Q1) – Merger advisors and consultants: ~$10 mi
Slide 13: Noninterest Expense Outlook
NONINTEREST EXPENSE OUTLOOK ($ in millions) 12 2017 Associated noninterest expense $709M 2017 Bank Mutual noninterest expense + 70 Whitnell incremental noninterest expense + ~5 One-time Tax Act compensation actions - ~$2 2018 noninterest expense baseline = ~$782M + ~1.0% baseline expense growth + ~8
Slide 14: Pro Forma Loans & Deposits
Commercial & Business Lending 35% CRE Investor 16% Construction 7% Residential Mortgage 36% Home Equity & Other Consumer 6% Commercial & Business Lending 33% CRE Investor 18% Construction 7% Residential Mortgage 35% Home Equity & Other Consumer 7% Money Market 38% Noninterest- bearing demand 23% Int
Slide 15: Net Interest Margin Outlook
NET INTEREST MARGIN OUTLOOK 14 4Q 2017 Run-Rate 2.79% + Expected benefit of 3 Fed rate increases + 3-6 bps + Expected benefit of Bank Mutual's higher loan yields + 3 bps Pro forma run-rate before tax adjustments 2.85%-2.88% – Fully tax-equivalent adjustments on municipal securities and loans - 3-4 b
Slide 16: Repricing Dynamics of Earning Assets
$138 $154 $155 $149 $155 $234 $236 $250 $261 $294 $358 $366 $370 $402 $459 $729 $756 $774 $812 $908 2013 2014 2015 2016 2017 Investment and Other Retail Commercial REPRICING DYNAMICS OF EARNING ASSETS ($ in millions) 15 Interest Income Commercial Residential Mortgage Investments and Other 2.59% 2.59
Slide 17: Capital Priorities
Funding Organic Growth Paying a Competitive Dividend Non-Organic Growth Opportunities Share Repurchases $15.7 $16.8 $18.3 $19.7 $20.6 2013 2014 2015 2016 2017 CAPITAL PRIORITIES 16 $0.33 $0.37 $0.41 $0.45 $0.50 2013 2014 2015 2016 2017 11% CAGR 7% CAGR Annual Average Loans; ($ in billions) Full Year
Slide 18: Expanding Bottom Line
$1.42 $1.26 $0.10 2016 2017 Per Share Data Dividends Shareholder Gain Return on Average Common Equity Return on average tangible equity2 $0.12 $0.15 Q1 2017 Q1 2018 EXPANDING BOTTOM LINE 17 As of December 31, 2017 Growing Shareholder Wealth +25% YoY 10.1% 10.9% Return on average common equity $100.0
Slide 19: Line of Business Profiles
LINE OF BUSINESS PROFILES
Slide 20: Balanced Business Segments
12.4% 12.9% Corporate and Commercial Specialty Community, Consumer, and Business Return on Average Allocated Capital BALANCED BUSINESS SEGMENTS 19 Community, Consumer, and Business Corporate and Commercial Specialty $409 $628 Corporate and Commercial Specialty Community, Consumer, and Business Net I
Slide 21: Corporate Banking
Corporate Lending Specialized Lending Verticals Commercial Deposits and Treasury Management Capital Markets CORPORATE BANKING CORPORATE AND COMMERCIAL SPECIALTY SEGMENT 20 Creative, relationship-oriented teams build loyal, long-lasting client relationships Corporate Lending serves large and comple
Slide 22: Commercial Real Estate
$5.7 billion in average loans and deposits 11 offices across 8 states ~110 colleagues COMMERCIAL REAL ESTATE CORPORATE AND COMMERCIAL SPECIALTY SEGMENT 21 Local experienced teams create custom real estate financing solutions Term, acquisition, construction and interim-bridge financing Depo
Slide 23: Consumer and Business Banking
6% 13% 16% 19% Q414 Q415 Q416 Q417 $14.9 billion in average loans and deposits 154 branches ~1,750 colleagues Full range services for individuals and small businesses Retail Banking provides best-in-class customer experience across branches and digital channels Residential Lending offers r
Slide 24: Community Markets
COMMUNITY MARKETS COMMUNITY, CONSUMER, AND BUSINESS SEGMENT 23 Localized approach ensures the customer experience is at the forefront of decisions and actions Virtual community banks with our full suite of financial and risk management solutions in midsize markets Community market presidents are
Slide 25: Private Client and Institutional Services
Brokerage and Annuity $20 Insurance $81 Other1 $2 Trust and Asset Management $50 $7.4 $8.0 $7.7 $8.3 $10.6 2013 2014 2015 2016 2017 Assets Under Management “AUM”2 PRIVATE CLIENT AND INSTITUTIONAL SERVICES COMMUNITY, CONSUMER, AND BUSINESS SEGMENT 24 Market-based teams are comprised of specialists
Slide 26: Appendix
APPENDIX
Slide 27: Credit Quality
$185 $177 $158 $128 $132 $20 $147 $77 $178 $275 $209 2013 2014 2015 2016 2017 1.7% 1.5% 1.5% 1.4% 1.3% 5.6% 5.7% 4.5% 2013 2014 2015 2016 2017 ALLL / Total Loans Oil and Gas ALLL / Oil and Gas Loans CREDIT QUALITY ($ IN MILLIONS; AT OR FOR THE YEAR ENDED) Potential Problem Loans Nonaccrual Loans 26
Slide 28: Loan Portfolio Composition by Geography and Industry
C&BL by Geography $7.2 billion CRE by Geography $4.8 billion Multi-Family 30% Retail5 22% Office / Mixed Use 20% Industrial 10% 1-4 Family Construction 9% Hotel / Motel 5% Other 4% Wisconsin 29% Illinois 19% Minnesota 9% Other Midwest2 24% Texas 5% Other 14% C&BL by Industry $7.2 billion Oil and Gas
Slide 29: Oil and Gas Update
OIL AND GAS UPDATE $446 $413 $450 $446 $483 $75 $78 $37 $39 $40 $147 $134 $114 $92 $77 $668 $625 $601 $577 $600 4Q 2016 1Q 2017 2Q 2017 3Q 2017 4Q 2017 Pass Potential Problem Loans Nonaccrual Period End Loans by Credit Quality Oil and Gas Allowance $38 $42 $33 $30 $27 5.7% 6.7% 5.4% 5.2% 4.5% 4Q 201
Slide 30: High Quality Securities
Fair Value Composition Risk Weighting Profile $5.00 $5.59 $5.91 $6.05 $6.03 2.66% 2.63% 2.50% 2.38% 2.44% 1.00% 2.00% 3.00% 4.00% 5.00% 2013 2014 2015 2016 2017 Average Balance Average Yield 29% 30% 70% 71% 1% -1% December 2016 December 2017 HIGH QUALITY SECURITIES ($ IN BILLIONS) Investment Type Am
Slide 31: Tax Act Impacts
TAX ACT IMPACTS 2017 Tax Act expenses 30 ~$0.10 per share Corporate Effective Tax Rate Outlook Expected 20-22% Effective Rate 1. Required partial write-off of deferred tax assets ~$12 million 2. Required acceleration of low income housing tax credit amortization ~$1 million 3. Previously disclosed c
Slide 32: Efficiency Ratio Reconciliation
Efficiency Ratio 2013 2014 2015 2016 2017 Federal Reserve efficiency ratio 71.14% 70.28% 69.96% 66.95% 65.97% Fully tax-equivalent adjustment (1.45)% (1.36)% (1.41)% (1.29)% (1.28)% Other intangible amortization (0.42)% (0.39)% (0.31)% (0.20)% (0.18)% Fully tax-equivalent efficiency ratio 69.27% 68.
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