Associated Banc-corp · NYSE:ASB
Associated Banc-corp — Q4 2020 Earnings Presentation
24 slides from Associated Banc-corp's earnings presentation, Jan 21, 2021
Slide 1: Fourth Quarter 2020 Earnings Presentation
FOURTH QUARTER 2020 EARNINGS PRESENTATION JANUARY 21, 2021
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: 2020: Managing a Tumultuous Year
2020: Managing a Tumultuous Year ($ in millions except per share data) We managed our margin through the low rate 2.84% environment... Active NIM 2.49% 2.49% Management 2.31% FY 2020 ▪ Reduced the cost of funding across the bank NIM 2.53% ▪ Increased C&I loan spreads (Quarterly NIM) ▪ Minimized our
Slide 4: 2020 Fourth Quarter Update
2020 Fourth Quarter Update Fourth quarter 2020 results reflected positive trends across our core business and operations Associated Banc-Corp Reports Fourth Quarter 2020 Earnings of $0.40 Per Common Share and $1.86 Per Common Share for the Full Year 2020 ▪ 4Q 2020 NIM of 2.49%, up 18 ▪ Provision of
Slide 5: 2020 Pre-Tax Pre-Provision
2020 Pre-Tax Pre-Provision 2020 included multiple cost saving initiatives and asset sales which drove PTPP higher YoY ($ in millions) 2020 Initiatives PTPP Adjusted PTPP 2 1 1 A non-GAAP measure. Please refer to the appendix for a reconciliation of pre-tax pre-provision income to income before incom
Slide 6: 4Q 2020 PTPP Walkforward
4Q 2020 PTPP Walkforward 4Q 2020 PTPP income excluding gain on sale of branches of $94 million ($ in millions) PTPP 1 2 1 A non-GAAP measure. Please refer to the appendix for a reconciliation of pre-tax pre-provision income to income before income taxes. 2 A non-GAAP measure. Please refer to the app
Slide 7: Annual Loan Trends
Annual Loan Trends PPP, CRE, and Mortgage Warehouse lead growth as we continued to reduce our Oil & Gas exposures Average Annual Loans Average Loan Change (2019 to 2020) ($ in billions) ($ in millions) $24.5 PPP $701 $22.7 $23.1 $0.7 Mortgage warehouse $381 $20.6 $19.7 $8.7 CRE investor $337 $7.7 $8
Slide 8: Quarterly Loan Trends
Quarterly Loan Trends CRE continues to grow partially offset by general commercial loans Average Quarterly Loans Average Loan Change (4Q19 to 4Q20) ($ in billions) ($ in millions) $25.2 $25.0 $24.7 PPP $930 $23.3 $0.8 $1.0 $22.8 $0.9 Mortgage warehouse $597 $9.2 $8.8 $8.5 CRE investor $482 $8.2 $8.4
Slide 9: Loan Deferral Update
Loan Deferral Update Total deferrals have declined approximately 95% since 2Q 2020 Active Commercial Loan Deferrals Active Consumer Loan Deferrals ▪ We generally granted 90 day deferrals for our ▪ We generally granted six month deferrals to commercial customers consumers who requested assistance ▪ T
Slide 10: Allowance Update
Allowance Update ACLL2 decreased $11 million and covered 1.76% of loan balances at the end of 2020 Fourth Quarter ACLL Loan Allowance Walkforward ($ in millions) ▪ Allowance for credit losses on loans (ACLL) decreased $11 million at the end of 4Q 2020 from 3Q 2020 ▪ ACLL to loans was 1.76%, or 1.82%
Slide 11: Credit Quality – Quarterly Trends
Credit Quality – Quarterly Trends Credit metrics improved during 4Q 2020 Potential Problem Loans Nonaccrual Loans ($ in millions) ($ in millions) $307 $293 $282 $234 $58 $232 $211 $72 $17 $63 $100 $172 $161 $67 $60 $137 $79 $77 $41 $118 $11 $8 $43 $23 $29 $1 $50 $37 $150 $186 $162 $141 $145 $118 $95
Slide 12: Annual Deposit Portfolio Trends
Annual Deposit Portfolio Trends Low-cost core deposits have trended up while we reduced reliance on high-cost fund sources Average Annual Deposits EOP Deposit Change (2019 to 2020) ($ in billions) ($ in millions) $26.0 Noninterest-bearing $2,211 demand $24.1 $24.7 $21.9 $6.9 $21.0 $5.2 Savings $915
Slide 13: Quarterly Deposit Portfolio Trends
Quarterly Deposit Portfolio Trends We continue to improve the mix of low-cost, core customer funding Average Quarterly Deposits EOP Deposit Change 3Q20 to 4Q20 ($ in billions) ($ in millions) $26.1 $26.8 $26.7 Noninterest-bearing demand $173 $24.1 $24.3 Money Market $166 $6.9 $7.4 $7.7 Savings $121
Slide 14: Net Interest Income and Yield Trends
Net Interest Income and Yield Trends 4Q 2020 margin rebounded as C&I spreads widened and liability costs declined Net Interest Income and Net Interest Margin Average Yields ($ in millions) 4.34% 4.55% 2.85% 2.89% 4.13% 2.56% 3.85% 3.24% 2.35% 3.06% 3.00% 2.30% 3.27% 3.33% $203 3.04% 2.88% 2.93% 2.80
Slide 15: Noninterest Income Trends
Noninterest Income Trends The fourth quarter branch sales generated a gain of $7 million as mortgage banking and service charges grew Noninterest Income Trend Net Mortgage Banking Income ($ in millions) ($ in millions) $15 $254 $12 $13 $98 $93 $7 $6 $86 $76 $7 $40 $48 $51 4Q 2019 1Q 2020 2Q 2020 3Q
Slide 16: Expense Trends
Expense Trends 2020 cost saving initiatives reduced the expense run rate and improved the efficiency ratio Noninterest Expense Adjusted Efficiency Ratio2 85% ($ in millions) $228 67% 69% 70% 63% 63% 63% 63% $204 60% $1 $192 $50 $183 43% $2 $173 $1 $82 $76 $72 4Q 2019 1Q 2020 2Q 2020 3Q 2020 4Q 2020
Slide 17: Strong Capital Position
Strong Capital Position Tangible Common Equity ratio increased 44 bps to 7.94% during 4Q 2020 Regulatory Capital Ratios Capital Ratio Walkdowns 14.02% 12.56% 11.81% Common Equity Tier 1 Ratio 10.45% 10.35% 9.36% 7.94% 6.90% Tangible Common Equity Ratio1 3Q Gain on Earnings Dividends Other 4Q TCE Rat
Slide 18: 2021 Outlook
2021 Outlook We are sharing guidance for 2021 ▪ Commercial loan growth, ▪ We expect 2021 expenses of excluding PPP, of 2-4% approximately $675 million ▪ Full year margin of 2.55% to ▪ Full-year effective tax rate 2.65% expected to be between 18-21% Balance Sheet Expense Management ▪ Target investmen
Slide 19: Appendix
APPENDIX
Slide 20: Total Loans Outstanding Balances as of December 31, 2020
Total Loans Outstanding Balances as of December 31, 2020 Well diversified $24 billion loan portfolio ($ in millions) % of Total % of Total 12/31/20201 Loans 12/31/20201 Loans 2 C&BL (by NAICS ) CRE (by property type) 3 Finance and Insurance $ 1,739 7.1% Multi-Family $ 2,035 8.3% Utilities 1,609 6.6%
Slide 21: 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 2 Retailers/Shopping Centers Retailers $ 67.7 44% $ 676.5 90% $ 744.2 3.04% Retail REITs
Slide 22: Loan Stratification Outstandings as of 12/31/2020
Loan Stratification Outstandings as of 12/31/2020 C&BL by Geography CRE by Geography Total Loans1 $9.4 billion $6.2 billion Illinois 16% Illinois Illinois Minnesota Minnesota 16% 9% 24% 8% Texas 3 Minnesota Other Wisconsin 6% 10% Midwest2 26% Wisconsin Wisconsin 21% Other 30% Other 2 26% Midwest 2 M
Slide 23: Reconciliation and Definitions of Non-GAAP Items
Reconciliation and Definitions of Non-GAAP Items ($ in millions) Adjusted Noninterest Expense Reconcilation1 4Q19 1Q20 2Q20 3Q20 4Q20 Noninterest expense $204 $192 $183 $228 $173 Restructuring costs 0 0 0 50 0 Acquisition related costs 1 2 1 0 0 Severance / frontline pay 4 0 2 10 0 Adjusted noninter
Slide 24: Reconciliation and Definitions of Non-GAAP Items
Reconciliation and Definitions of Non-GAAP Items ($ in millions) YTD 2020 Adjusted Pre-tax Pre-Provision Income Reconciliation1 YTD 2020 4Q 2020 Pre-tax pre-provision income Income before income taxes $327 $84 Provision for credit losses 174 17 Pre-tax pre-provision income 501 101 2020 Acquisitions,