Associated Banc-corp · NYSE:ASB
Associated Banc-corp — Barclays Investor Conference 2017
30 slides from Associated Banc-corp's conference presentation, Sep 8, 2017
Slide 1: Associated Banc-Corp Barclays Investor Conference Third Quarter 2017
Associated Banc-Corp Barclays Investor Conference THIRD QUARTER 2017 Exhibit 99.1
Slide 2: Disclaimer: Forward-Looking Statements
DISCLAIMER Important note regarding forward-looking statements: This presentation contains “forward-looking statements” within the meaning of the federal securities laws, including Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amend
Slide 3: Disclaimer: Important Additional Information and Where to Find It
DISCLAIMER Important Additional Information and Where to Find It In connection with the proposed merger, Associated has filed with the SEC a Registration Statement on Form S-4 that includes a preliminary Proxy Statement of Bank Mutual and a preliminary Prospectus of Associated, as well as other rele
Slide 4: Our Franchise
Community, Consumer, and Business 33% Corporate and Commercial Specialty 61% Other3 6% YTD 2Q 2017 Net Income by Business Segment WI 69% 152 MN 7% 20 IL 24% 42 Deposits (%) And Branches OUR FRANCHISE 3 Nearly $30 billion of assets $21 billion of loans Over $1 billion of revenue2 $22 billion of depos
Slide 5: Attractive Midwest Markets
Manufacturing & Wholesale Trade 26% ATTRACTIVE MIDWEST MARKETS 3.0% 3.1% 3.2% 3.7% 3.8% 3.8% 4.4% 4.7% 5.0% IN WI IA MN MO MI U.S. IL OH Midwest ~30% All other regions ~70% U.S. Manufacturing Jobs 1 – U.S. Census Bureau, Annual Estimates of the Resident Population, 2016 2 – U.S. Bureau of Labor Stat
Slide 6: 2017 Strategic Priorities
2017 STRATEGIC PRIORITIES 5 Our Vision and Values: Associated Bank will be the Midwest’s premier financial services company, distinguished by consistent, quality customer experiences, built upon a strong commitment to our colleagues and the communities we serve, resulting in exceptional value to our
Slide 7: Positioned for Loan Growth
Net Growth: +$449 million $1.6 $1.5 $1.5 $1.4 $1.3 $4.6 $4.8 $5.4 $6.1 $7.0 2 $3.7 $4.0 $4.1 $4.7 $5.0 $5.9 $6.5 $7.2 $7.5 $7.3 2Q 2013 2Q 2014 2Q 2015 2Q 2016 2Q 2017 Commercial & business Commercial real estate Residential mortgage Home equity & Other consumer POSITIONED FOR LOAN GROWTH 6 $20.5 $1
Slide 8: Positioned for Deposit Growth
$1.9 $1.6 $1.6 $1.5 $1.8 $1.2 $1.3 $1.4 $1.4 $1.5 $6.9 $7.3 $9.1 $8.7 $9.1 $2.9 $2.9 $3.3 $3.6 $4.3 $4.2 $4.1 $4.3 $5.0 $4.9 2Q 2013 2Q 2014 2Q 2015 2Q 2016 2Q 2017 Time deposits Savings Money market Interest-bearing demand Noninterest-bearing demand 92% 98% 95% 98% 96% Loan to Deposit Ratio POSITIO
Slide 9: Second Quarter Update
SECOND QUARTER UPDATE 8 Strengthening Customer Relationships Delivering on our Strategy Expanding our Community Presence Providing Long- Term Value to Shareholders 2017 Strategic Priorities Balance Sheet Management Mid-to-high single digit annual average loan growth Maintain Loan to Deposit rati
Slide 10: Acquisition of Bank Mutual
ACQUISITION OF BANK MUTUAL 9 Associated Banc-Corp Acquisition of July 20, 2017 Bank Mutual Profile Second Quarter 2017 Branches1 58 Loans $2.0bn Deposits $1.9bn Revenue2 $100 mm Expenses2 $70mm Transaction Pricing 100% stock transaction - 0.422 exchange ratio 1.6x price / tangible book value per
Slide 11: Associated's Pro Forma Footprint
ASSOCIATED’S PRO FORMA FOOTPRINT Pro Forma Branch Footprint Strengthens our position as largest bank headquartered in the state of Wisconsin - > $32bn combined total assets - Adds > 120,000 customer accounts to the Associated franchise Significant efficiency opportunities - 50% of Bank Mutual br
Slide 12: Pro Forma Loans & Deposits
PRO FORMA LOANS & DEPOSITS Note: Figures as of June 30, 2017 Lo an s D ep os its Associated Bank Mutual Pro Forma Associated Bank Mutual Pro Forma Total Deposits = $1.9bn Cost of Deposits = 0.40% Non- interest- bearing Demand 17% Interest- bearing Demand 13% Savings 13% Time Deposits 29% Money
Slide 13: Estimated Pro Forma Financial Metrics
ESTIMATED PRO FORMA FINANCIAL METRICS 1 – Based on ASB and BKMU IBES median EPS estimates in 2017, 2018, and grown at 7% IBES median long-term growth rate thereafter. EPS accretion is excluding one-time charges. 2 – Estimated pro forma capitalization as of 30-Jun-17, net of merger and integration co
Slide 14: Post Announcement Update & Timeline
POST ANNOUNCEMENT UPDATE & TIMELINE Post Announcement Activities and Integration Planning ASB management team has developed a detailed integration plan spanning from transaction announcement through closing, conversion, and post-conversion time periods ASB/BKMU integration team has significant l
Slide 15: Accelerates 2017 Strategic Priorities
ACCELERATES 2017 STRATEGIC PRIORITIES Strengthening Customer Relationships Delivering on our Strategy Expanding our Community Presence Providing Long-term Value to Shareholders A low-risk transaction with significant opportunities for cost savings Expected to produce modest initial dilution to t
Slide 16: Asset Management Expansion
$46 $48 $49 $47 $48 $15 $16 $15 $16 $17 2013 2014 2015 2016 LTM June 2017 2 • On September 8, 2017, we announced an agreement to acquire a wealth management organization, Whitnell & Co., an Oak Brook, Illinois based, $1 billion AUM registered investment advisor, to further complement Associated’s in
Slide 17: Overall Expense Efficiency
Enhanced Automation Operational Efficiencies Branch Consolidations Branch Staffing Initiatives OVERALL EXPENSE EFFICIENCY Efficiency Drivers 1 – The efficiency ratio as defined by the Federal Reserve guidance is noninterest expense (which includes the provision for unfunded commitments) divided by t
Slide 18: Improving Capital Efficiency
IMPROVING CAPITAL EFFICIENCY 17 167 154 2Q 2013 2Q 2017 Average Common Shares Outstanding Diluted (in millions) 11.49% 10.72% 9.31% 9.17% 9.87% 2Q 2013 2Q 2014 2Q 2015 2Q 2016 2Q 2017 Common Equity Tier 1 Ratio 4 Funding Organic Growth Paying a Competitive Dividend Non-Organic Growth Opportunities S
Slide 19: Expanding Bottom Line
$0.11 $0.12 2Q 2016 2Q 2017 $0.31 $0.36 2Q 2016 2Q 2017 Earnings Per Share Dividends Shareholder Gain Return on Average Common Equity 16% annualized TSR EXPANDING BOTTOM LINE 18 As of June 30, 2017 Exceptional Value 1 – Refer to the appendix for a reconciliation of average common equity Tier 1 to av
Slide 20: 2017 Outlook
2017 OUTLOOK Balance Sheet Management Mid-to-high single digit annual average loan growth Maintain Loan to Deposit ratio under 100% Improving NIM trend Improving year over year fee- based revenues Declining year over year mortgage banking revenue Expense Management Approximately 1% highe
Slide 21: Appendix
APPENDIX
Slide 22: Transaction Summary
TRANSACTION SUMMARY 1 – Based on ASB closing share price of $24.60 on 19-Jul-17 and an assumed BKMU fully diluted share count of 46.5MM. Buyer Associated Banc-Corp (NYSE: ASB) Seller Bank Mutual Corporation (Nasdaq: BKMU) Consideration 100% stock Fixed Exchange Ratio 0.422 shares of ASB comm
Slide 23: Transaction Multiples & Assumptions
TRANSACTION MULTIPLES & ASSUMPTIONS 1 – Based on ASB closing share price of $24.60 on 19-Jul-17. 2 – Based on BKMU IBES median 2017E EPS of $0.38 plus 45% fully phased-in after-tax cost savings. Transaction Pricing1 12.2% premium to BKMU’s closing price of $9.25 on 19-Jul-17 1.6x price / tangibl
Slide 24: Credit Quality
$154 $163 $128 $126 $118 $129 $127 $147 $134 $114 2Q 2016 3Q 2016 4Q 2016 1Q 2017 2Q 2017 $232 $283 $290 $275 $260 1.4% 1.4% 1.4% 1.4% 1.4% 5.6% 5.5% 5.7% 6.7% 5.4% 2Q 2016 3Q 2016 4Q 2016 1Q 2017 2Q 2017 ALLL / Total Loans Oil and Gas ALLL / Oil and Gas Loans CREDIT QUALITY ($ IN MILLIONS) Potentia
Slide 25: Loan Portfolio by Industry and Geography
Manufacturing and Wholesale Trade 26% Power & Utilities 14% Real Estate 12% Oil & Gas 8% Finance & Insurance 12% 1 – Excludes $0.4 billion Other consumer portfolio 2 – Other Midwest includes Missouri, Indiana, Ohio, Michigan and Iowa 3 – Principally reflects the oil and gas portfolio 4 – Based on ou
Slide 26: Oil and Gas Update
OIL AND GAS UPDATE $451 $398 $446 $413 $450 $176 $171 $75 $78 $37 $129 $127 $147 $134 $114 2Q 2016 3Q 2016 4Q 2016 1Q 2017 2Q 2017 Pass Potential Problem Loans Nonaccrual $756 $696 $668 $625 Period End Loans by Credit Quality Oil and Gas Allowance $42 $38 $38 $42 $33 5.6% 5.5% 5.7% 6.7% 5.4% 2Q 2016
Slide 27: Positioned for Higher Interest Rates
0.41% 0.29% 0.40% 0.39% 0.65% $8 $6 $8 $12 $21 $8 $7 $11 $8 $13 2Q 2013 2Q 2014 2Q 2015 2Q 2016 2Q 2017 Short and long-term funding costs Interest-bearing deposits Corporate and Commercial Specialty Community, Consumer and Business Network Transaction Deposits2 Other2 POSITIONED FOR HIGHER INTEREST
Slide 28: Network Transaction Deposits
27 NETWORK TRANSACTION DEPOSITS Deposits and Customer Funding Average Rates Wealth Managers Quarter end June 30, 2017 Relationships established before June 30, 2012 21 relationships ~$3.2 billion ~15% of total deposits 11 relationships ~$2.1 billion ~65% of network transaction deposits Savings Money
Slide 29: High Quality Securities
34% 28% 66% 72% <1% <1% June 2016 June 2017 HIGH QUALITY SECURITIES ($ IN BILLIONS) $4.93 $5.76 $5.94 $6.08 $5.93 2.63% 2.63% 2.49% 2.41% 2.44% 1.00% 2.00% 3.00% 4.00% 5.00% $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 $0.00 2Q 2013 2Q 2014 2Q 2015 2Q 2016 2Q 2017 Average Balance Average Yield Investment Typ
Slide 30: Efficiency Ratio Reconciliation
Efficiency Ratio YTD 2Q13 YTD 2Q14 YTD 2Q15 YTD 2Q16 YTD 2Q17 Federal Reserve efficiency ratio 69.74% 69.75% 70.24% 69.18% 66.54% Fully tax-equivalent adjustment (1.41)% (1.32)% (1.37)% (1.36)% (1.30)% Other intangible amortization (0.42)% (0.41)% (0.34)% (0.21)% (0.19)% Fully tax-equivalent efficie
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