Associated Banc-corp · NYSE:ASB
Associated Banc-corp — Barclays Global Financial Conference 2020
34 slides from Associated Banc-corp's conference presentation, Sep 14, 2020
Slide 1: Barclays Global Financial Conference Investor Presentation
Exhibit 99.1 Associated Banc-Corp Barclays Global Financial Conference Investor Presentation SEPTEMBER 14 2020 DePere Office (Green Bay MSA) – Opened February 2019
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 Second Quarter 20201 Highlights and Accomplishments $36 billion of assets $25 billion of loans . Largest bank headquartered in Wisconsin4 $4 billion of equity $27 billion of deposits . Approximately 4,3005 employees, servicing 1.3 million customer accounts in 8 states and over 120 comm
Slide 4: Market Perspective
MARKET PERSPECTIVE Our core markets are benefiting from less volatile and more resilient employment trends Total Loans1 July August National Average 10.2% 8.4% Associated Footprint 8.3% Other 18% Wisconsin Texas 29% 5% 2 Other Midwest 13% Minnesota Illinois 10% 25% . In July, 7 of our 8 footprint st
Slide 5: Customer Perspective
CUSTOMER PERSPECTIVE Customer activity is continuing to show positive trends Noninterest Bearing Debit and Credit Card Consumer Loan Portfolio Demand Deposits1 Purchases2 Deferrals3 Customer liquidity levels are Customer card activity Consumers in deferral are at record highs. continues to improve t
Slide 6: Customer Branch Activity
CUSTOMER BRANCH ACTIVITY 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 over 20% . Our largest branch teller transaction declines are found YoY in August 2020 (
Slide 7: Q3 2020 Optimization Initiatives
Q3 2020 OPITMIZATION INITIATIVES We have several initiatives in motion which are expected to drive efficiency and lift earnings in 2021 FY 2021 Expected Initiative Details Run Rate Impact Pending sales and/or ~ $10 million expense Branch optimization consolidations of 21 reduction branches (8% of ne
Slide 8: Branch Optimization Actions
BRANCH OPTIMIZATION ACTIONS Consolidations and sales driving $10MM in annual savings and generating a net $5-7MM gain at close1 We are driving change as customer behaviors evolve Peoria . WI Branch Consolidations: Announced September 4th (14 branches, $381 million in total deposits) – Most consolida
Slide 9: Branch Optimization Trend
BRANCH OPTIMIZATION TREND With these actions, we will have reduced our total branch count by 40% over the last decade 1 . Continued migration to mobile and online channels Pro forma Branch Count Trend has reduced the centricity of branches to our 279 distribution strategy 270 . Declining foot traffi
Slide 10: Reorganization & B/S Restructuring
REORGANIZATION & B/S RESTRUCTURING Associated has several other initiatives underway Reorganization / Restructuring Initiatives Executed Initiatives . The sale of ABRC and the pending branch transactions have facilitated corporate, managerial, Internal efficiency initiatives and back office streamli
Slide 11: A More Efficient Associated
A MORE EFFICIENT ASSOCIATED The sale of ABRC, pending branch sales, and internal restructuring will drive a more efficient ASB Expense Savings FTE Walkforward . The sale of ABRC will result in annual run rate expense savings of over $60 million and has reduced FTEs by ~ ~ ~ approximately 400 ~ ~ . T
Slide 12: Asset and Expense Trends 2012-2021
ASSET AND EXPENSE TRENDS 2012-2021 ASB continues to grow the franchise, while controlling costs and improving overall efficiency Average Assets1 $36+ ($ 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
Slide 13: Loan Portfolio Update
LOAN PORTFOLIO UPDATE $1 billion of PPP loans offset by repayment of commercial lines EOP Loan Change1 June 30, 2020 to August 31, 2020 ($ in millions) Total loans +$130 million . Commercial and Business Lending +$48 million Mortgage warehouse $162 – Power and utilities continues to grow Power & uti
Slide 14: Commercial COVID-19 Relief Update
COMMERCIAL COVID-19 RELIEF UPDATE Overall commercial deferrals are down by half since June 30, 2020 Loan Deferrals & Modifications1 Deferred and Modified Loans Trend ($ in millions) ▪ 39% of commercial and business loan deferrals (by loan balance) have ended $822 ▪ 53% of CRE loan deferrals (by loan
Slide 15: Consumer COVID-19 Relief Update
CONSUMER COVID-19 RELIEF UPDATE Consumer deferrals are starting to mature and early signs have been very positive Loan Deferrals & Modifications1 Deferred and Modified Loans Trend ($ in millions) ▪ We generally granted six month deferrals to consumers who requested assistance $725 $660 ▪ Approximate
Slide 16: Q2 Allowance Summary
Q2 ALLOWANCE SUMMARY Second quarter ACLL2 covered 1.73% of total loans, an increase of 11 bps from the first quarter Second Quarter ACLL Loan Allowance Walkforward ($ in millions) ▪ Allowance for credit losses on loans (ACLL) increased $35 million, or 9%, at the end of 2Q 2020 from 1Q 2020 ▪ Assumpt
Slide 17: Credit Quality – Quarterly Trends
CREDIT QUALITY – QUARTERLY TRENDS Reserve builds on key commercial exposures and oil and gas while credit metrics remain fairly stable Potential Problem Loans1 Nonaccrual Loans1 ($ in millions) ($ in millions) $307 $167 $172 $234 $63 $137 $129 $118 $50 $166 $161 $67 $63 $29 $4 $133 $36 $23 $32 $43 $
Slide 18: Deposit Portfolio Update
DEPOSIT PORTFOLIO UPDATE Low cost deposits continue to grow while time deposits run off Average Quarterly Deposits EOP Funding Change (6/30/20 to 8/31/20) ($ in billions) 2016 – 2020 ($ in millions) $26.1 CAGR Interest-bearing demand $550 $25.1 $23.6 Noninterest-bearing $140 $21.5 $5.1 $6.9 demand $
Slide 19: Net Interest Income Update
NET INTEREST INCOME UPDATE Net interest margin has stabilized in Q3 and is expected to trend up in Q4 Net Interest Income and Net Interest Margin Average Yields ($ in millions) 4.20% FY 20 Estimated NIM: approximately 2.55% (+/- based 3.65% 3.65% on timing of PPP forgiveness) 3.24% 3.14% 3.07% 3.04%
Slide 20: Noninterest Income Trends
NONINTEREST INCOME TRENDS Mortgage banking was strong during the quarter partially offset by MSR impairment Noninterest Income Gross Mortgage Banking Income ($ in millions) ($ in millions) $20 $254 $8 $9 $6 $96 $5 $5 $93 $1 $9 $12 $4 $5 $6 $82 $82 2Q 2016 2Q 2017 2Q 2018 2Q 2019 2Q 2020 Mortgage ban
Slide 21: Expense Trends
EXPENSE TRENDS Expense discipline remains a focus as the second quarter continued downward trend Noninterest Expense Business Development and Advertising ($ in millions) ($ in millions) $201 $204 $198 $8 $2 $192 $8 $4 $1 $183 $7 $2 $6 $1 $4 $71 $76 $82 $76 $72 2Q 2019 3Q 2019 4Q 2019 1Q 2020 2Q 2020
Slide 22: Capital Priorities
CAPITAL PRIORITIES Committed to a consistent capital management philosophy 2with rigorous capital discipline Quarterly $25.2 Funding Average Loans $23.0 $23.4 ($ in billions) $19.6 $20.5 1. Organic Highest Priority Growth 2Q16 2Q17 2Q18 2Q19 2Q20 Quarterly $0.17 $0.18 Commitment $0.15 Paying a Divid
Slide 23: Strong Capital Position
STRONG CAPITAL POSITION Capital ratios improved during the second quarter bolstered by the sale of ABRC Highlights Capital Ratio Walkdowns ▪ Expect CET1 ratio to grow over balance of 2020 ▪ Regulatory capital ratios not expected to be impacted by PPP ▪ ABRC sale improved the TCE ratio2 by 27 bps Com
Slide 24: 2020 Updated Outlook
2020 UPDATED OUTLOOK We are refining our guidance for the remainder of 2020 and providing expense guidance for 2021 ▪ Expect loan to deposit ratio to be ▪ We are affirming our quarterly approximately 90%, excluding expense run rate of approximately PPP $175 million for Q3 and Q4 2020 (excluding FHLB
Slide 25: Appendix
APPENDIX
Slide 26: 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 $3.6 million1 in grants to support commitments to support wind, CRA programing at various nonprofit hydroelectric and solar
Slide 27: Loan Trends
LOAN TRENDS PPP loans, funding of CRE commitments and unusually high line draws on commercial lines drove increases Average Quarterly Loans Average Loan Growth (1Q20 to 2Q20) ($ in billions) 2016 – 2020 ($ in millions) CAGR PPP $849 $25.2 $23.0 $23.4 Mortgage warehouse $364 $20.5 General commercial
Slide 28: Total Loans Outstanding
TOTAL LOANS OUTSTANDING BALANCES AS OF JUNE 30, 2020 Well diversified $24.8 billion loan portfolio ($ in millions) % of Total % of Total 06/30/20201 Loans 06/30/20201 Loans C&BL (by NAICS2) CRE (by property type code) Wholesale/Manufacturing$ 1,907 7.7% Multi-Family$ 1,841 7.4% Utilities 1,603 6.5%
Slide 29: Q2 Loan Portfolio Overview
Q2 LOAN PORTFOLIO OVERVIEW We continue to monitor our COVID affected loan portfolios ($ in millions as of 6/30/2020) Key COVID June 30, Coml. Loan % of Total Deferred % of Total Nonaccrual % of Total 2020 Exposures Loans Loans Loans Loans Loans PPP Loans$ 1,012 $ - - $ - - $ - - Commercial and indus
Slide 30: Q2 COVID Commercial Loan Exposures
Q2 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$ 97.9 45%$ 664.1 89%$ 762.0 3.07% Retail REITs 251.
Slide 31: Loan Stratification
LOAN STRATIFICATION OUTSTANDINGS AS OF JUNE 30, 2020 C&BL by Geography Total Loans1 CRE by Geography $9.9 billion $5.9 billion Minnesota 8% Illinois Illinois Minnesota Illinois 17% 10% 16% 25% 3 Minnesota Wisconsin Texas Other 10% 2 25% 8% Midwest Wisconsin Wisconsin 23% Other 29% Other 2 25% Midwes
Slide 32: Commercial Loan Management
COMMERCIAL LOAN MANAGEMENT1 We continue to de-risk our oil & gas portfolio while growing power & utilities and commercial real estate Oil & Gas Loans Power & Utilities Loans Commercial Real Estate ($ in billions) ($ in billions) ($ in billions) $1.6 $1.6 $1.5 $8.0 $0.8 $1.4 $1.4 $7.6 $1.3 $7.0 $7.1
Slide 33: Investment Securities Portfolio Trends
INVESTMENT SECURITIES PORTFOLIO TRENDS Investment portfolio balances targeted at ~15% of assets1 through 2020 Portfolio2 and Yield Trends (Quarterly) Investments3 / Total Assets1,4 ($ in billions) 3.77% 3.78% 3.79% 3.77% 3.80% 21% 21% 19% 2.36% 2.33% 2.32% 2.34% 2.06% 16% $6.5 $6.0 $5.6 $5.4 2Q 2017
Slide 34: Reconciliation and Definitions of Non-GAAP Items
RECONCILIATION AND DEFINITIONS OF NON-GAAP ITEMS ($ IN MILLIONS) Adjusted Noninterest Expense Reconcilation1 2Q19 3Q19 4Q19 1Q20 2Q20 Noninterest expense $198 $201 $204 $192 $183 Acquisition related costs 4 2 1 2 1 Severance / Frontline pay 1 0 4 0 2 Adjusted noninterest expense $193 $199 $199 $190
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