Associated Banc-corp · NYSE:ASB
Associated Banc-corp — Investor Presentation (November 2020)
31 slides from Associated Banc-corp's investor presentation, Nov 9, 2020
Slide 1: Associated Banc-Corp Investor Presentation Fourth Quarter 2020
Exhibit 99.1 Associated Banc-Corp Investor Presentation 2020 DePere Office (Green Bay MSA) – Opened February 2019 FOURTH 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 Third Quarter 20201 Highlights and Accomplishments $35 billion of assets $25 billion of loans . Largest bank headquartered in Wisconsin4 $4 billion of equity $27 billion of deposits . Approximately 4,2005 employees, servicing 1.3 million customer accounts in 8 states and over 120 commu
Slide 4: Market Perspective
MARKET PERSPECTIVE Our core markets are benefiting from less volatile and more resilient employment trends Total Loans1 Jul. Aug. Sep. Oct. National Average 10.2% 8.4% 7.9% 6.9% Illinois Associated Footprint 8.3% 7.9% 7.2% 24% Minnesota 10% Wisconsin 29% Other Midwest 2 13% Other Texas 19% 5% Associ
Slide 5: 3Q 2020 Actions
3Q 2020 ACTIONS We executed several initiatives to drive efficiency and improve earnings in 2021 FY 2021 Expected Pretax Run Rate Initiative Details Q3 Impact Impact Pending sales and/or $10 million of ~ $40 million consolidations of 22 severance expense expense branches (9% of and $6 million of rea
Slide 6: 3Q 2020 PTPP Income Walkforward
3Q 2020 PTPP INCOME WALKFORWARD $60 million of pre-tax restructuring charges were incurred as part of our 3Q 20 efficiency initiatives Pre-tax pre-provision income of $90 million1 when adjusted for $60 million of restructuring costs. ($ in millions) $0 1 2 1 A non-GAAP measure. Please refer to the a
Slide 7: Consumer Transaction Dynamics
CONSUMER TRANSACTION DYNAMICS Customers have shifted their transactions away from branch lobbies to drive ups and mobile channels Branch Transactions1 Active Mobile Users2 . Overall footprint teller transactions down approximately . Our largest branch teller transaction declines are found 16% in 3Q
Slide 8: Branch Optimization Trend
BRANCH OPTIMIZATION TREND With these actions, we will have reduced our total branch count by 40% over the last decade . Continued migration to mobile and online channels has 1 Pro forma Branch Count Trend reduced the centricity of branches to our distribution strategy 279 270 . Declining foot traffi
Slide 9: Asset and Expense Trends 2012-2021
ASSET AND EXPENSE TRENDS 2012-2021 1 $36+ Average Assets $34+ ($ billions) $33.0 $33.0 . We expect average asset $28.5 $29.5 $27.0 growth over the past $25.1 $23.3 decade will approach $22.0 60% by 2021 2012 2013 2014 2015 2016 2017 2018 2019 2020E 2021E Total Noninterest Expense ($ millions) $822 $
Slide 10: Loan Trends
LOAN TRENDS Growth was led by higher specialty commercial and CRE balances, partially offset by general commercial Average Quarterly Loans EOP Loan Change1 (2Q20 to 3Q20) ($ in billions) ($ in millions) 2016 – 2020 $25.0 CAGR Mortgage warehouse $295 $23.0 $23.3 $1.0 Power & utilities $204 $20.9 $20.
Slide 11: Commercial Loan Management
COMMERCIAL LOAN MANAGEMENT1 We continue to de-risk our oil & gas portfolio while growing power & utilities and commercial real estate Oil & Gas Loans Power & Utilities Loans Commercial Real Estate ($ in billions) ($ in billions) ($ in billions) $1.8 $1.6 $1.6 $1.5 $8.0 $8.1 $1.4 $7.6 $7.0 $7.1 $7.2
Slide 12: Commercial COVID-19 Relief Update
COMMERCIAL COVID-19 RELIEF UPDATE Commercial deferrals have declined by 83% since Q2 2020 Loan Deferrals & Modifications1 Active Deferred and Modified Loans Trend ($ in millions) ▪ We generally granted 90 day deferrals for our commercial customers $863 ▪ Total commercial deferrals have declined appr
Slide 13: Consumer COVID-19 Relief Update
CONSUMER COVID-19 RELIEF UPDATE Consumer deferrals have declined by 74% from Q2 and most borrowers have not asked for additional help Loan Deferrals & Modifications1 Active Deferred and Modified Loans Trend ($ in millions) ▪ We generally granted six month deferrals to consumers who requested assista
Slide 14: Allowance Update
ALLOWANCE UPDATE ACLL2 increased $13 million and covered 1.77% of loan balances at the end of 3Q 2020 Third Quarter ACLL Loan Allowance Walkforward ($ in millions) ▪ Allowance for credit losses on loans (ACLL) increased $13 million, or 3%, at the end of 3Q 2020 from 2Q 2020 ▪ ACLL to loans was 1.77%
Slide 15: Credit Quality – Quarterly Trends
CREDIT QUALITY – QUARTERLY TRENDS Nonaccrual loans increased in 3Q 2020 driven by CRE retail loans Potential Problem Loans1 Nonaccrual Loans1 ($ in millions) ($ in millions) $307 $293 $232 $234 $58 $72 $161 $17 $63 $172 $79 $133 $67 $60 $129 $118 $137 $11 $43 $1 $8 $32 $36 $23 $29 $50 $150 $186 $162
Slide 16: Deposit Portfolio Update
DEPOSIT PORTFOLIO UPDATE Low cost deposits continue to grow while time deposits run off Average Quarterly Deposits EOP Funding Change (Q2 2020 to Q3 2020) ($ in billions) 2016 – 2020 ($ in millions) $26.8 CAGR Interest-bearing demand $384 $24.7 $25.2 Savings $134 $22.4 $7.4 $21.4 $5.3 $5.3 9% $5.0 M
Slide 17: Net Interest Income and Yield Trends
NET INTEREST INCOME AND YIELD TRENDS Net interest margin bottomed out during Q3 and has started to move back up in September Net Interest Income and Net Interest Margin Average Yields ($ in millions) 2.85% 2.89% 3.65% 2.30% 2.35% 3.14% 3.07% 3.04% 3.05% 3.06% 3.08% 3.01% 2.99% 2.94% 2.96% 2.93% 2.89
Slide 18: Noninterest Income Trends
NONINTEREST INCOME TRENDS Mortgage banking income remains strong and service charges have rebounded during Q3 Noninterest Income Trend Net Mortgage Banking Income ($ in millions) ($ in millions) $12 $13 $11 $254 $7 $6 $101 $98 $93 $76 $47 3Q 2019 4Q 2019 1Q 2020 2Q 2020 3Q 2020 $40 $48 $51 $25 Servi
Slide 19: Expense Trends
EXPENSE TRENDS 3Q 2020 included $60 million of restructuring costs3 which will improve the expense run rate going into 2021 Noninterest Expense Business Development and Advertising ($ in millions) ($ in millions) $228 $8 $8 $201 $204 $192 $50 $6 $2 $1 $183 $4 $4 $2 $1 $76 $82 $76 3Q 2019 4Q 2019 1Q
Slide 20: Capital Priorities
CAPITAL PRIORITIES Committed to a consistent capital management philosophy 2with rigorous capital discipline Quarterly $25.0 Funding Average Loans $23.0 $23.3 $20.1 $20.9 1. Organic ($ in billions) Growth 3Q16 3Q17 3Q18 3Q19 3Q20 Quarterly $0.17 $0.18 $0.15 Paying a Dividends $0.11 $0.12 2. Competit
Slide 21: Strong Capital Position
STRONG CAPITAL POSITION Tangible Common Equity ratio increased 25 bps to 7.50% during 3Q 2020 Regulatory Capital Ratios Capital Ratio Walkdowns 13.8% 13.8% 12.6% 11.6% 11.6% Common Equity Tier 1 Ratio1 10.3% 10.2% 10.4% 9.4% Tangible Common Equity Ratio2 Common Equity Tier 1 Tier 1 Capital Total Cap
Slide 22: 2020 Updated Outlook
2020 UPDATED OUTLOOK We are updating guidance for select items in Q4 and reiterating our expense guidance for Q4 and 2021 Fee Revenue: Net Interest Margin: Continue positive trend 4Q 2020 ~ 2.50% through end of 2020 2020 / 2021 Guidance Expenses: Effective Tax Rate: 4Q 2020 - $175 million1 FY 2020 -
Slide 23: Appendix
APPENDIX
Slide 24: 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 25: 3Q 2020 Update
3Q 2020 UPDATE Associated took actions in 3Q 2020 to improve efficiency and optimize our branch network Third Quarter 2020 Earnings of $0.26 Per Common Share Including Restructuring Charges and Tax Benefits 1 $60 million of restructuring charges ($45 million2 after taxes) were more than offset by a
Slide 26: Total Loans Outstanding Balances as of September 30, 2020
TOTAL LOANS OUTSTANDING BALANCES AS OF SEPTEMBER 30, 2020 Well diversified $25 billion loan portfolio ($ in millions) % of Total % of Total 09/30/20201 Loans 09/30/20201 Loans C&BL (by NAICS2) CRE (by property type) Utilities$ 1,802 7.2% Multi-Family$ 1,997 8.0% Wholesale/Manufacturing 1,717 6.9% Of
Slide 27: Key COVID Commercial Loan Exposures
KEY COVID COMMERCIAL LOAN EXPOSURES1 Key COVID 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$ 88.5 43%$ 681.0 90%$ 769.4 3.08% Retail REITs 224
Slide 28: Loan Stratification Outstandings as of September 30, 2020
LOAN STRATIFICATION OUTSTANDINGS AS OF SEPTEMBER 30, 2020 C&BL by Geography Total Loans1 CRE by Geography $9.9 billion $6.2 billion Illinois Illinois Minnesota Illinois 17% 9% 15% Minnesota 24% 8% 3 Texas Minnesota Wisconsin 10% Other 25% 7% Midwest2 22% Other Wisconsin Wisconsin 2 Other 29% 2 26% M
Slide 29: Investment Securities Portfolio Trends
INVESTMENT SECURITIES PORTFOLIO TRENDS Investment portfolio balances targeted at ~15% of assets1 through 2020 Portfolio2 and Yield Trends (Quarterly) Investments3 / Total Assets1,4 ($ in billions) 3.78% 3.79% 3.77% 3.80% 3.78% 21% 21% 18% 2.33% 2.32% 2.34% 16% 2.06% 1.59% $6.0 $5.6 $5.4 $5.4 3Q 2017
Slide 30: Reconciliation and Definitions of Non-GAAP Items
RECONCILIATION AND DEFINITIONS OF NON-GAAP ITEMS ($ IN MILLIONS) Adjusted Noninterest Expense Reconcilation1 3Q19 4Q19 1Q20 2Q20 3Q20 Noninterest expense $201 $204 $192 $183 $228 Restructuring costs 0 0 0 0 50 Acquisition related costs 2 1 2 1 0 Severance / frontline pay 0 4 0 2 10 Adjusted noninter
Slide 31: Reconciliation and Definitions of Non-GAAP Items (Per Share Data)
RECONCILIATION AND DEFINITIONS OF NON-GAAP ITEMS ($ IN MILLIONS, EXCEPT PER SHARE DATA) YTD 2020 3Q20 per per share share Acquisition Related Costs, Gain on Sale of ABRC, & 3Q20 Initiatives Reconciliation1 YTD 2020 data 3Q 2020 data GAAP earnings $227 $1.46 $40 $0.26 Net of Tax Acquisition related c
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