Slide 1: Second Quarter 2022 Earnings Presentation
Second Quarter 2022 Earnings Presentation JULY 21, 2022
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: Second Quarter 2022 Update
Second Quarter 2022 Update1 2Q 2022 results reflect robust loan growth, expanding margins, stable deposits and resilient credit trends Associated Banc-Corp Reports Second Quarter 2022 Net Income Available to Common Equity of $84 Million, or $0.56 per Common Share ▪ $1.2 billion of Commercial loan ▪
Slide 4: Normalizing Commercial Growth Dynamics
Normalizing Commercial Growth Dynamics Core commercial line utilization and new originations have more than offset PPP runoff Average Total Commercial Loan Trends Regional Commercial Line Utilization3 (%) ($ in billions) $16.0 $15.5 $15.3 $15.2 $15.1 $15.1 43.5 43.7 % 42.9 43.3 % 40.2 $8.5 $8.4 $9.4
Slide 5: Diversified Loan Growth
Diversified Loan Growth Loan growth rebounded across the board in 2Q, led by general commercial and consumer borrowing Average Quarterly Loans EoP Loan Change (1Q 2022 to 2Q 2022) ($ in billions) ($ in millions) $25.4 General Commercial $559 $24.1 $23.9 $23.8 $24.1 $0.0 $0.0 Residential Mortgage $39
Slide 6: Our Strategic Initiatives Remain on Track
Our Strategic Initiatives Remain on Track EoP Balance Trends ($ in millions) $18,000 + $16,599 $17,000 + Core Commercial1 $15,120 $15,550 $15,434 3Q 2021 4Q 2021 1Q 2022 2Q 2022 YE2022 YE2023 Target Target $600 + New Asset-Based Lending + Equipment $300 + Finance2 $152 $67 $120 $0 3Q 2021 4Q 2021 1Q
Slide 7: Pre-Tax Pre-Provision Income Trends
Pre-Tax Pre-Provision Income1 Trends Strong revenue growth and disciplined expense management are driving positive operating leverage ($ in millions) $(0) 2Q21 Pre- 2Q21 2Q21 3Q21 Pre- 3Q21 3Q21 4Q21 Pre- 4Q21 4Q21 1Q22 Pre- 1Q22 1Q22 2Q22 Pre- 2Q22 2Q22 Tax Income Provision PTPP Tax Income Provisio
Slide 8: Core Funding Evolution
Core Funding Evolution We have consistently grown low-cost balances over time, and our deposits have proven resilient EoP Funding Trends EoP Deposit Resilience & Stability ($ in billions) ($ in billions) $32.8 $30.9 $29.4 $28.6 $28.5 $28.4 $8.1 $25.7 $5.3 $7.6 32% 32% 32% $5.0 $1.9 $3.4 $4.7 $1.5 $4
Slide 9: Poised for Further Margin Expansion
Poised for Further Margin Expansion ASB is structurally asset-sensitive, with strong asset betas and controlled deposit betas Average Yields (%) Average Yield Trends (%) 3.36 2.89 2.91 2.97 2.88 2.97 2.83 2.97 2.84 2.89 2.59 2.47 2.44 2.44 1.76 2.29 1.57 1.96 0.36 0.38 0.32 0.29 0.36 0.27 0.30 0.26
Slide 10: Net Interest Income and Net Interest Margin Trends
Net Interest Income and Net Interest Margin Trends 2Q 2022 NII and NIM continued to grow, driven by rising loan yields and controlled deposit costs ($ in millions) 2.78% 2.71% 2.50% 2.45% 2.37% 2.40% 2.42% $216 2.40% 2.38% 2.37% $187 $188 $184 2Q 2022 $180 4Q 2021 1Q 2022 3Q 2021 2Q 2021 Apr May Jun
Slide 11: Well-Positioned for the Current Rate Cycle
Well-Positioned for the Current Rate Cycle Relative to the prior rate cycle, ASB is more asset-sensitive and more customer-funded 1-Yr. Cumulative Repricing Gap1 / Total Earning Assets ▪ Our asset sensitivity has increased from the prior rate cycle, driven by commercial 44% 40% loan growth and a lar
Slide 12: Noninterest Income Trends
Noninterest Income Trends 2Q noninterest income increased vs. the prior quarter and same period last year despite macro pressures Noninterest Income Trends Service Charges & Deposit Account Fees ($ in millions) ($ in millions) $17 $17 $17 $17 $16 $82 $82 $9 $74 $75 $73 $10 $6 $4 $8 $7 $10 2Q 2021 3Q
Slide 13: Noninterest Expense Trends
Noninterest Expense Trends We continue to invest in people and technology while keeping expense growth below total revenue growth Noninterest Expense Trends Adjusted Efficiency Ratio2 (%) ($ in millions) 66.8 67.0 67.4 65.4 65.5 64.8 65.7 64.2 $178 $182 $181 61.5 60.8 $174 $2 $1 $173 $73 $69 2Q 2021
Slide 14: Optimized Capital Profile
Optimized Capital Profile We are managing capital levels toward our target ranges, while holding TBVPS steady over the past year 2Q 2022 Regulatory Capital Ratios (%) Year-End 2022 Capital Targets (%) 9.70 9.75 11.7 7.50 7.23 9.25 7.25 10.3 9.7 2Q 2022 YE2022 2Q 2022 YE2022 1 TCE Ratio Target CET1 R
Slide 15: Allowance for Credit Losses on Loans (ACLL) Update
Allowance for Credit Losses on Loans (ACLL) Update Negligible net charge offs and declining nonaccruals drove a zero provision for the quarter 2Q 2022 ACLL1 Update ACLL Walk-Forward (1Q 2022 to 2Q 2022) ▪ Negligible net charge offs (YTD net recovery) ($ in millions) ▪ 22% decrease in total nonperfor
Slide 16: Credit Quality Trends
Credit Quality Trends Declining nonperforming asset trends indicate a strong credit outlook Total Nonperforming Assets Nonaccrual Loans ($ in millions) ($ in millions) $171 $169 $160 $161 $147 $135 $143 $24 $34 $18 $126 $130 $30 $18 $9 $0 $108 $18 $6 $63 $62 $61 $81 $1 $47 $147 $135 $130 $143 $108 $
Slide 17: Strong Credit Fundamentals
Strong Credit Fundamentals1 ASB has built a well-diversified portfolio of high-quality credits over the past decade Portfolio Summary Core Credit Discipline ▪ Focused on diversified strategies that target Segment LTV WAvg. FICO2 high-quality customers, markets and risk Residential Mortgage 77% 781 m
Slide 18: 2022 Full-Year Outlook Updates
2022 Full-Year Outlook Updates Previous Guidance (5/23/2022) Updated Guidance ▪ Total commercial2 loan growth of $850M to $1.1B ▪ Total commercial2 loan growth of ~$1.7B Balance Sheet ▪ Target investments/total assets ratio of ~20% ▪ Target investments/total assets ratio of ~18% Management1 ▪ We exp
Slide 19: Associated Bank
“ Associated Bank Your money works here: Growth S Higher Focused Returns
Slide 20: Appendix
Appendix
Slide 21: Additional Second Quarter 2022 Loan Trends
Additional Second Quarter 2022 Loan Trends EoP Quarterly Loan Trends Average Loan Change (1Q 2022 to 2Q 2022) ($ in billions) ($ in millions) Auto Finance $384 $26.5 $0.0 $24.2 $24.5 General Commercial $297 $23.9 $23.6 $0.0 $0.4 $0.1 $0.2 Residential Mortgage $189 $10.2 CRE Investor $131 $9.4 $9.3 $
Slide 22: Total Loans Outstanding Balances as of June 30, 2022
Total Loans Outstanding Balances as of June 30, 2022 Well-diversified $26 billion loan portfolio ($ in millions) % of Total % of Total 1 1 6/30/2022 Loans 6/30/2022 Loans 2 C&BL (by NAICS ) CRE (by property type) Utilities $ 2,101 7.9% Multi-Family $ 2,165 8.2% Manufacturing & Wholesale Trade 2,036
Slide 23: Loan Stratification Outstanding Balances as of June 30, 2022
Loan Stratification Outstanding Balances as of June 30, 2022 Illinois Illinois Minnesota 23% Illinois 15% Minnesota 10% Texas 15% 8% 5% Minnesota 10% Other Wisconsin C&BL by CRE by Midwest2 24% Geography Other Midwest 2 Wisconsin Total 22% 11% 28% Wisconsin Geography $10.2 billion Loans1 Other Midwe
Slide 24: Reconciliation and Definitions of Non-GAAP Items
Reconciliation and Definitions of Non-GAAP Items ($ in millions) Pre-tax Pre-Provision Income Reconciliation1 2Q 2021 3Q 2021 4Q 2021 1Q 2022 2Q 2022 Income (loss) before income taxes $113 $112 $92 $93 $110 Provision for credit losses (35) (24) (6) (4) - Pre-tax pre-provision income $78 $88 $86 $89
Slide 25: Reconciliation and Definitions of Non-GAAP Items
Reconciliation and Definitions of Non-GAAP Items ($ in millions) Efficiency Ratio Reconciliation 2Q 2021 3Q 2021 4Q 2021 1Q 2022 2Q 2022 Federal Reserve efficiency ratio 66.81% 65.43% 67.36% 65.71% 61.53% Fully tax-equivalent adjustment (1.07)% (1.01)% (1.10)% (1.13)% (0.98)% Other intangible amorti