Associated Banc-corp · NYSE:ASB
Associated Banc-corp — Investor Presentation (May 2020)
33 slides from Associated Banc-corp's investor presentation, May 20, 2020
Slide 1: Associated Banc-Corp Investor Presentation Second Quarter 2020
Exhibit 99.1 Associated Banc-Corp Investor Presentation 2020 DePere Office (Green Bay MSA) – Opened February 2019 SECOND QUARTER
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: Our Franchise
OUR FRANCHISE First Quarter 20201 Highlights and Accomplishments $34 billion of assets $24 billion of loans . Largest bank headquartered in Wisconsin4 $4 billion of equity $26 billion of deposits . Over 4,6005 employees, servicing 1.3 million customer accounts in 8 states and over 120 communities1 A
Slide 4: COVID-19 Response
COVID-19 RESPONSE1 Associated continues to support its Customers, Colleagues and Communities during these challenging times ▪ Funded nearly 6,900 loans totaling over $1 billion as part of the Paycheck Protection Program ▪ Consumers: suspended certain transaction and late fees; initiated consumer and
Slide 5: Loan Trends
LOAN TRENDS Continued mid-single digit loan growth across the portfolio Average Quarterly Loans Average Loan Growth (4Q19 to 1Q20) ($ in billions) 2016 – 2020 ($ in millions) CAGR $23.1 $23.3 $22.1 Residential mortgage $237 $20.1 Power & utilities $133 $18.9 $8.4 $7.3 $8.4 4% General commercial $107
Slide 6: Loan Portfolio Trends
LOAN PORTFOLIO TRENDS Customer draws during March led to a significant uptick in balances at the end of the quarter EOP Loan Change1 4Q19 to 1Q20 Loan Change1 from 3/31/20 to 4/30/20 ($ in millions) ($ in millions) General commercial $627 PPP2 $962 Mortgage warehouse $325 CRE construction $76 Power
Slide 7: Commercial Loan Management
COMMERCIAL LOAN MANAGEMENT1 We continue to de-risk our oil & gas portfolio while growing power & utilities and commercial real estate Oil & Gas Loans Power & Utilities Loans Commercial Real Estate ($ in billions) ($ in billions) ($ in billions) $1.6 $1.5 $0.8 $1.4 $1.4 $7.6 $1.3 $1.3 $7.0 $7.1 $7.2
Slide 8: Total Loans Outstanding Balances as of March 31, 2020
TOTAL LOANS OUTSTANDING BALANCES AS OF MARCH 31, 2020 Well diversified $24.4 billion loan portfolio ($ in millions) % of Total % of Total 03/31/20201 Loans 03/31/20201 Loans C&BL (by NAICS2) CRE (by property type code) Wholesale/Manufacturing$ 1,820 7.5% Multi-Family$ 1,785 7.3% Power & Utilities 1,
Slide 9: Key Commercial Loan Exposures
KEY COMMERCIAL LOAN EXPOSURES1 Key commercial loan exposures are spread across multiple industries without large concentrations ($ in millions) % of total C&BL Utilization CRE Utilization Total loans Retailers/Shopping Centers2 Retailers$ 149.7 81%$ 527.5 91%$ 677.2 2.78% Retail REITs 303.9 67% 148.
Slide 10: Loan Vintage
LOAN VINTAGE1 Total portfolio is 98% pass rated as of the end of 1Q 2020 ($ in billions) 20202 2019 2018 2017 2016 Prior $2.9 $2.2 $2.0 Commercial & 97% of C&BL loans are $1.1 Business Lending $0.6 $0.8 Pass rated $2.0 Commercial Real $1.3 97% of CRE loans are Estate $0.9 Pass rated $0.5 $0.5 $0.4 $
Slide 11: COVID-19 Relief
COVID-19 RELIEF Our COVID-19 Relief Program is helping our customers overcome challenges related to the pandemic Loan Deferrals & Modifications1 Distribution of Deferred and Modified loans1 Loan Deferrals $1.6 billion (3,165 loans) including: . Commercial Real Estate – $561 million (66 loans) Corpor
Slide 12: CECL Update
CECL UPDATE We adopted CECL as of January 1, 2020 and finished the first quarter with ACLL2 covering 1.62% of loans CECL Adopted in 1Q 2020 Loan Allowance Walkforward ($ in millions) ▪ Allowance for credit losses on loans (ACLL) increased $171 million, or 76%, at the end of 1Q 2020 from 4Q 2019 ▪ As
Slide 13: Credit Quality – Quarterly Trends
CREDIT QUALITY – QUARTERLY TRENDS Reserve builds on key commercial exposures and oil and gas while credit metrics remain fairly stable Potential Problem Loans1 Nonaccrual Loans1 ($ in millions) ($ in millions) $156 $167 $241 $234 $137 $27 $129 $118 $166 $161 $67 $51 $63 $29 $4 $133 $36 $23 $43 $215
Slide 14: Deposit Portfolio Trends
DEPOSIT PORTFOLIO TRENDS Increased low cost deposits while reducing high cost non-core funding Average Quarterly Deposits EOP Funding Change (3/31/20 to 4/30/20) ($ in billions) 2016 – 2020 ($ in millions) CAGR PPP Funding $928 $23.7 $24.6 $24.3 Noninterest-bearing $861 demand $21.5 $20.6 $5.0 $5.1
Slide 15: Investment Securities Portfolio Trends
INVESTMENT SECURITIES PORTFOLIO TRENDS Investment portfolio balances targeted at ~15% of assets1 through 2020 Portfolio2 and Yield Trends (Quarterly) Investments3 / Total Assets4 ($ in billions) 3.74% 3.77% 3.78% 3.79% 3.77% 21% 21% 20% 2.34% 2.36% 2.33% 2.32% 2.34% 16% $6.8 $6.5 $6.0 $1.8 $5.6 $5.4
Slide 16: Net Interest Income and Yields — Quarterly Trends
NET INTEREST INCOME AND YIELDS — QUARTERLY TRENDS Lower deposit costs have helped stabilize net interest margin Net Interest Income and Net Interest Margin Average Yields ($ in millions) 5.19% 5.19% 2.90% 2.88% 4.92% 2.83% 2.84% 2.81% 4.55% 4.34% 4.85% 4.79% 4.13% 4.49% 3.85% 3.65% $216 $214 $206 $2
Slide 17: Growing and Diversified Business Model
GROWING AND DIVERSIFIED BUSINESS MODEL Mortgage banking was strong during the quarter partially offset by MSR impairment Noninterest Income Gross Mortgage Banking Income ($ in millions) ($ in millions) $15 $(9) $6 $98 $5 $5 $5 $(1) $90 $91 $6 $4 $5 $5 $6 $83 $80 1Q 2016 1Q 2017 1Q 2018 1Q 2019 1Q 20
Slide 18: Noninterest Expense Trends
NONINTEREST EXPENSE TRENDS We continue to stay disciplined with expenses and are seeing the benefits of the 4Q 2019 restructuring Noninterest Expense Business Development and Advertising ($ in millions) ($ in millions) $201 $204 $198 $8 $192 $2 $1 $192 $8 $4 $7 $1 $2 $7 $6 1Q 2019 2Q 2019 3Q 2019 4Q
Slide 19: Enhancing Our Digital Platforms
ENHANCING OUR DIGITAL PLATFORMS Delivered significant customer-facing enhancements in 2019; optimizing recent initiatives in 2020 Banking Services Are Current Focus ASB Fintech Initiatives in 2019 - 2020 Innovation has so far focused on Partner Application Status/Timing . Unbundling of banking Perso
Slide 20: Customer Activity Update
CUSTOMER ACTIVITY UPDATE Average Daily Branch Average Monthly Mobile Average Daily Customer Activity1 Banking Sessions Per User2 Care Calls3 April branch activity ...as our customers ramped ...and call volume grew 32% declined 15% from January... up mobile sessions by as we increasingly interacted 1
Slide 21: Capital Priorities
CAPITAL PRIORITIES Committed to a consistent capital management philosophy 2with rigorous capital discipline Quarterly $22.1 $23.1 $23.3 Funding Average Loans $20.1 ($ in billions) $18.9 1. Organic Highest Priority Growth 1Q16 1Q17 1Q18 1Q19 1Q20 Quarterly $0.17 $0.18 Commitment $0.15 Paying a Divid
Slide 22: Strong Capital Position
STRONG CAPITAL POSITION Highlights Capital Ratio Walkdowns1 ▪ Strong asset growth and the First Staunton acquisition moderated capital ratios during 1Q 2020 ▪ Election to utilize modified CECL transition mitigated CECL impact to regulatory capital; CECL negatively impacted TCE ratio ▪ Expect CET1 ra
Slide 23: On May 4, 2020 ASB Agreed to Sell Associated Benefits and Risk Consulting
ON MAY 4, 2020 ASB AGREED TO SELL ASSOCIATED BENEFITS AND RISK CONSULTING (“ABRC”) Overview of ABRC Strategic Rationale Top 40 insurance broker in the United States, providing Timely monetization of strategic investment employee benefits, retirement plans, compliance, business insurance, risk ma
Slide 24: Benefits for Our Stakeholders
BENEFITS FOR OUR STAKEHOLDERS ABRC Enhanced Resources: greater breadth of insurance expertise in many specialized areas Customer Benefits Continuity: current team of talented ABRC colleagues continuing to work on behalf of clients ABRC Colleagues: all will receive employment offers and will be
Slide 25: Economics of the Sale Are Very Attractive to ASB
ECONOMICS OF THE SALE ARE VERY ATTRACTIVE TO ASB, REFLECTING ABRC’S PREMIUM FRANCHISE VALUE Transaction Terms Financially Attractive Yields substantial proceeds and ROI Buyer — ~$222mm after-tax proceeds — ~$111mm after-tax gain — >20% IRR on investment in ABRC $266 million¹ Purchase — 3x multip
Slide 26: 2020 Outlook
2020 OUTLOOK We are withdrawing our prior guidance due to extraordinary economic uncertainty. We expect to update our guidance as conditions become more clear. ▪ Maintain loan to deposit ratio ▪ Anticipate noninterest expense under 100%, excluding PPP run rate to be flat from Q1 through the remainde
Slide 27: Well Prepared for Challenges Ahead
WELL PREPARED FOR CHALLENGES AHEAD We remain customer focused while maintaining discipline in our management approach ▪ We remain ready to help our ▪ Our underwriting has been and customers meet their capital and remains conservative liquidity needs ▪ Well reserved with ACLL to loan Commitment ▪ Ban
Slide 28: Appendix
APPENDIX
Slide 29: Community, Diversity & Sustainability
COMMUNITY, DIVERSITY & SUSTAINABILITY We remain committed to initiatives to improve our communities, promote diversity and enhance sustainability Nearly $1.2 billion1 in credit $3.6 million1 in grants to support commitments to support wind, CRA programing at various nonprofit hydroelectric and solar
Slide 30: Loan Stratification
LOAN STRATIFICATION OUTSTANDINGS AS OF MARCH 31, 2020 C&BL by Geography Total Loans1 CRE by Geography $9.5 billion $5.6 billion Minnesota 6% Illinois Illinois Minnesota 16% Illinois 17% 10% 26% Texas3 9% Minnesota Other Wisconsin 10% Midwest2 23% Other Wisconsin Wisconsin 27% 22% Midwest2 28% Other
Slide 31: Reconciliation and Definitions of Non-GAAP Items
RECONCILIATION AND DEFINITIONS OF NON-GAAP ITEMS ($ IN MILLIONS) Adjusted Noninterest Expense Reconcilation1 1Q19 2Q19 3Q19 4Q19 1Q20 Noninterest expense $192 $198 $201 $204 $192 Acquisition related costs 1 4 2 1 2 Severance 01040 Adjusted noninterest expense $191 $193 $199 $199 $191 Fee-based Reven
Slide 32: Reconciliation and Definitions of Non-GAAP Items
RECONCILIATION AND DEFINITIONS OF NON-GAAP ITEMS Tangible Common Equity Reconciliation1 ($ in millions) 2020 Q1 Common equity $3,534 Goodwill and other intangibleassets, net (1,284) Tangible common equity $2,250 Estimated after-tax gain on sale of ABRC 111 Pro forma ABRCgoodwill and intangibles rele
Slide 33: Reconciliation and Definitions of Non-GAAP Items
RECONCILIATION AND DEFINITIONS OF NON-GAAP ITEMS Tangible Book Value Per Share Reconciliation ($ in millions, except per share) 2020 Q1 Tangible common equity $2,250 Shares outstanding, end of period (000’s) 153,690 Tangible book value per share $14.64 Pro forma adjusted tangible common equity $2,46
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