Associated Banc-corp · NYSE:ASB
Associated Banc-corp — Q3 2021 Earnings Presentation
34 slides from Associated Banc-corp's earnings presentation, Nov 8, 2021
Slide 1: Associated Banc-Corp Fourth Quarter Investor Presentation
November 8, 2021 Associated Banc-Corp Fourth Quarter Investor Presentation Exhibit 99.1
Slide 2: Forward-Looking Statements
1 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
Slide 3: Strategic Vision
2 Strategic Vision We’ve set our direction for driving Associated’s shareholder returns higher over the next several years Digital ForwardGrowth Focused ▪ Serving our customers where and when they need us via online, mobile, and other channels ▪ Proactively listening to our customers to deliver diff
Slide 4: Our Strategic Initiatives
3 Our Strategic Initiatives We are focused on driving Positive Operating Leverage and improved ROATCE Expanding our Lending Capabilities Growing our Core Businesses Investing in our Digital Transformation ▪ Diversifying our consumer portfolio by growing Auto Finance ▪ Broadening our current Asset-Ba
Slide 5: Expanding our Lending Capabilities Update
4 Expanding Asset- Based Lending Expanding our Lending Capabilities Update ▪ Equipment Finance leader started in Oct. 2021 ▪ Policy, procedure, and systems review is underway ▪ Looking to hire direct sales and support staff in 4Q ▪ ABL leader started in Sept. 2021 ▪ Existing staff of three relations
Slide 6: Expanding our Lending Capabilities
5 Expanding our Lending Capabilities FY 2022 FY 2023 Targeted Total Balances Auto $1,350 $2,500 Asset-Based & Equipment $300 $600 Total for New Asset Classes $1,650 $3,100 Expected Yields ~3% ~3% Incremental Revenue ~$25MM ~$67MM 2022-2023 Projected Loan Outstandings1 ▪ In addition to expected core
Slide 7: Growing our Core Businesses Update
6 Enhancing Small Business and Consumer Direct Lending Retooling Mass Affluent Strategy Accelerating Core Middle Market Growth Growing our Core Businesses Update ▪ Hired an incremental relationship manager and three SBA specialists during 3Q ▪ Actively recruiting for several expected additions to ou
Slide 8: Investing in Digital Transformation Update
7 Digital Banking Transformation Branch & Facilities Consolidation Transforming Legacy IT Infrastructure Investing in Digital Transformation Update YTD Progress1 2022-23 Outlook ▪ Expect net savings of ~$9 million per year ▪ Exiting additional office space to align with an increasingly remote workfo
Slide 9: Redirecting Brick and Mortar Expenses
8 Redirecting Brick and Mortar Expenses We have consistently optimized our branches and staffing over the last decade Pro Forma Branch Count Trends1 202 177 26 19 20 14 6 270 237 215 213 248 216 2011 2013 2015 2017 2019 2021 ASB BKMU (58) HBAN (32) FNB (9) 2 1 Branch count at year end. Parenthetical
Slide 10: Generating Positive & Increasing Operating Leverage
9 +6%-8% +7%-10% 2021 2022 2023 +3%-4% +3%-4% 2021 2022 2023 Generating Positive & Increasing Operating Leverage Our revenue strategies are expected to leverage our people and technology while driving efficiency ~8% ~3.5% CAGR CAGR Estimated Net Interest Income + Noninterest Income1 Estimated Nonint
Slide 11: Positioning for Improved Financial Performance
10 7.50% TCE Ratio1 Positioning for Improved Financial Performance Our growth focused and digital forward vision is expected to drive higher shareholder returns Expanding our Lending Capabilities Growing our Core Businesses Investing in our Digital Transformation 2.75% Net Interest Margin 55%-60% Ef
Slide 12: 3Q 2021 Financial Trends
3Q 2021 Financial Trends
Slide 13: Expanding Revenue Trends
12 Expanding Revenue Trends ▪ QoQ growth in: ▪ Loan and securities interest income ▪ Fee-based revenues ▪ Mortgage banking and capital markets revenues ▪ QoQ reductions in both deposits and funding interest expense Contributing to Improving Profitability and Capital Trends ▪ ROATCE of 12.72% ▪ ROATA
Slide 14: Commercial Loan Update
13 Commercial Loan Update ▪ Commercial & Business Lending average loan growth (excl. PPP) of $271 million, or over 3% QoQ ▪ Continued growth in specialized lending categories including Power & Utilities, REIT and Mortgage Warehouse ▪ CRE Construction average loan growth of 1% QoQ ▪ PPP portfolio con
Slide 15: Loan Trend Updates
14 $1.8 $1.9 3Q 2020 3Q 2021 29.2% 31.4% 31.5% 31.4% 30.4% 31.8% 41.7% 40.7% 40.9% 40.6% 40.0% 40.3% April May June July August Sept. 2021 Historical Avg. $1.1 $1.1 $1.0 $0.9 $0.9 $8.1 $8.0 $8.0 $7.9 $7.8 $6.0 $6.2 $6.2 $6.2 $6.2 $1.0 $0.9 $0.8 $0.7 $0.3 $8.8 $8.5 $8.5 $8.4 $8.7 $25.0 $24.7 $24.5 $2
Slide 16: Pre-Tax Pre-Provision Income Walk-Forward
15 Noninterest Income (excl. Asset Gains) 3Q 2021 Pre-Tax Pre-Provision Income1 Walk-Forward 3Q PTPP expansion driven by higher net interest income, fees, asset gains and controlled expenses 2Q PTPP Income Net Interest Income Personnel Expense Initiative-related Facilities Exit Costs 3Q Pre-Tax Inco
Slide 17: Net Interest Income and Yield Trends
16 Net Interest Income and Yield Trends NII and NIM Trends 2.93% 2.88% 2.91% 2.87% 2.89% 2.59% 2.69% 2.57% 2.56% 2.47% 3.06% 3.00% 2.79% 2.82% 2.83% 1.90% 1.94% 1.81% 1.66% 1.57% 0.52% 0.43% 0.40% 0.36% 0.30% 0.08% 0.07% 0.07% 0.06% 0.07% 1.21% 0.97% 0.74% 0.51% 0.38% 3Q 2020 4Q 2020 1Q 2021 2Q 2021
Slide 18: Quarterly Funding Trends
17 $1.5 $1.3 $1.1 $0.9 $0.9 $2.1 $1.9 $1.7 $1.5 $1.4 $6.5 $6.5 $6.9 $7.0 $7.0 $3.5 $3.6 $3.8 $4.1 $4.2 $5.8 $5.7 $5.7 $5.9 $6.3 $7.4 $7.7 $7.7 $8.1 $8.1 $26.8 $26.7 $26.8 $27.5 $28.1 3Q 2020 4Q 2020 1Q 2021 2Q 2021 3Q 2021 Quarterly Funding Trends ($ in billions) Average Quarterly Deposits Time Depo
Slide 19: Investments and Yield Trends
18 $3.4 $3.2 $3.0 $3.2 $3.3 $1.9 $1.9 $1.9 $2.0 $2.0 $1.8 $1.0 $1.0 $1.8 $2.2 $7.1 $6.1 $5.9 $6.9 $7.5 1.90% 1.94% 1.81% 1.66% 1.57% 3Q 2020 4Q 2020 1Q 2021 2Q 2021 3Q 2021 16% 15% 16% 16% 17% 3% 2% 6% 5% 5% 19% 18% 21% 21% 22% 3Q 2020 4Q 2020 1Q 2021 2Q 2021 3Q 2021 Securities Cash Cash and Investm
Slide 20: Noninterest Income Trends
19 $15 $15 $15 $9 $8 $13 $15 $24 $8 $11 3Q 2020 4Q 2020 1Q 2021 2Q 2021 3Q 2021 $51 $52 $52 $53 $54 $13 $15 $24 $8 $11 $7 $6 $8 $6 $7 $5 $13 $12 $6 $10 $76 $86 $95 $73 $82 3Q 2020 4Q 2020 1Q 2021 2Q 2021 3Q 2021 Noninterest Income Trends Net Mortgage Banking IncomeNoninterest Income Trends ($ in mil
Slide 21: Noninterest Expense Trends
20 $109 $98 $104 $107 $108 $69 $75 $71 $67 $68 $2 $50 $228 $173 $175 $174 $178 3Q 2020 4Q 2020 1Q 2021 2Q 2021 3Q 2021 Noninterest Expense Trends Adjusted Efficiency Ratio4Noninterest Expense Trends 1 Personnel expense includes $10 million of severance. 2 Other expenses are primarily comprised of Te
Slide 22: Strong Capital Position
21 7.50% 10.22% 11.57% 13.78% 7.92% 10.57% 11.30% 13.50% TCE Ratio Common Equity Tier 1 Capital Tier 1 Capital Total Capital 1 Tangible common equity / tangible assets. This is a non-GAAP financial measure. See Appendix for a reconciliation of non-GAAP financial measures to GAAP financial measures.
Slide 23: Third Quarter 2021 ACLL
22 Third Quarter 2021 ACLL ▪ Allowance for credit losses on loans (ACLL) decreased $32 million at the end of 3Q 2021 from 2Q 2021 ▪ Net charge offs of only $8 million; or 0.13% of average loans ▪ 3Q 2021 provision of negative $24 million, compared to negative $35 million in 2Q 2021 and provision of
Slide 24: Credit Quality Trends
23 Credit Quality Trends $145 $97 $72 $66 $65 $8 $37 $32 $18 $8 $79 $77 $59 $63 $62 $232 $211 $163 $147 $135 3Q 2020 4Q 2020 1Q 2021 2Q 2021 3Q 2021 $162 $141 $114 $84 $64 $60 $41 $46 $24 $23 $72 $100 $104 $88 $164 $293 $282 $264 $196 $251 3Q 2020 4Q 2020 1Q 2021 2Q 2021 3Q 2021 Credit metrics large
Slide 25: 2021 Full-Year Guidance
24 Balance Sheet Management ▪ Commercial loan growth, excl. PPP, of approximately 2% ▪ Full-year net interest margin of approximately 2.40% ▪ Target investments / total assets ratio of 17% to 19% Total Revenue ▪ Total revenue of $1.045 billion to $1.060 billion ▪ Noninterest income of $315 million t
Slide 26: Appendix
Appendix
Slide 27: Third Quarter Digital Engagement Update
26 377 395 391 387 398 394 394 1Q 2020 2Q 2020 3Q 2020 4Q 2020 1Q 2021 2Q 2021 3Q 2021 Customer-Originated Digital Mortgage Applications 26% 33% 31% 33% 31% 33% 33% 1Q 2020 2Q 2020 3Q 2020 4Q 2020 1Q 2021 2Q 2021 3Q 2021 Third Quarter Digital Engagement Update Digital Engagement Customers have conti
Slide 28: Total Loans Outstanding
27 Total Loans Outstanding Balances as of September 30, 2021 Well-diversified $24 billion loan portfolio ($ in millions) 1 All values as of period end. 2 North American Industry Classification System. 3 Includes oil & gas loans. 9/30/2021 1 % of Total Loans 9/30/2021 1 % of Total Loans C&BL (by NAIC
Slide 29: Key COVID Commercial Loan Exposures
28 1 As of 9/30/2021. Excludes $174 million Oil & Gas portfolio. 2 C&BL excludes grocers, convenience stores, vehicle dealers, auto parts and tire dealers, direct and mail order retailers, and building material dealers; CRE excludes properties primarily anchored by grocers, self-storage facilities,
Slide 30: Loan Stratification
29 Manufacturing & Wholesale Trade 18% Real Estate 15% Power & Utilities 19% Mortgage Warehouse 14% 1 Excludes Other Consumer portfolio. 2 Other Midwest includes Missouri, Indiana, Ohio, Michigan and Iowa. 3 Principally reflects the oil and gas portfolio. C&BL by Geography $9.0 billion CRE by Geogra
Slide 31: 2021-2023 Community Commitment Plan
30 2021-2023 Community Commitment Plan Associated is working to address economic development and equity issues in each of our markets
Slide 32: Community, Diversity & Sustainability
31 Community, Diversity & Sustainability We remain committed to initiatives that improve our communities, promote diversity and enhance sustainability Over $1.7 billion1 in credit commitments to support wind, hydroelectric and solar projects since 2012 Annual Diversity & Inclusion training for all c
Slide 33: Reconciliation and Definitions of Non-GAAP Items
32 Reconciliation and Definitions of Non-GAAP Items ($ in millions) 1 This is a non-GAAP financial measure. Management believes these measures are meaningful because they reflect adjustments commonly made by management, investors, regulators, and analysts to evaluate the adequacy of earnings per com
Slide 34: Reconciliation and Definitions of Non-GAAP Items
33 Reconciliation and Definitions of Non-GAAP Items 1 This is a non-GAAP financial measure. Management believes these measures are meaningful because they reflect adjustments commonly made by management, investors, regulators, and analysts to evaluate the adequacy of earnings per common share, provi