Associated Banc-corp · NYSE:ASB
Associated Banc-corp — Q3 2023 Earnings Presentation
25 slides from Associated Banc-corp's earnings presentation, Oct 19, 2023
Slide 1: Third Quarter 2023 Earnings Presentation
Third Quarter 2023 Earnings Presentation OCTOBER 19, 2023
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: Third Quarter 2023 Results
Third Quarter 2023 Results ASB reports 3Q 2023 net income available to common equity of $80 million, or $0.53 per common share 3Q 2023 Highlights1 $80 million Net Income Available to Common Equity ▪ Total core customer deposit2 growth of $527 million (-5% vs. 2Q 2023) (+2%); total deposit growth of
Slide 4: Quarterly Deposit Trends
Quarterly Deposit Trends Strong core customer deposit1 growth (+2%; +$527mm) enabled us to decrease reliance on non-customer deposits Average Quarterly Deposits EoP Deposit Change (2Q 2023 to 3Q 2023) ($ in billions) ($ in millions) $31.3 $32.0 $29.3 $29.9 Core Customer Deposits1 $28.9 $6.3 +$527mm
Slide 5: Relationship-Focused Deposit Growth
Relationship-Focused Deposit Growth1 Our strong customer deposit growth in 3Q was driven by our efforts to attract & deepen customer relationships Expanded Commercial Capabilities Modernized Digital Banking Experience +$527mm Core Customer Deposit2 Growth Growth in Consumer Upgraded Product & Growth
Slide 6: Quarterly Loan Trends
Quarterly Loan Trends Period end total loans grew by 1% during 3Q, led by steady growth in Auto Finance Average Quarterly Loans EoP Loan Change (2Q 2023 to 3Q 2023) ($ in billions) ($ in millions) $29.4 $29.9 $28.8 Auto Finance $229 $28.2 $27.1 Mortgage Warehouse $130 $10.9 $11.0 CRE Construction $1
Slide 7: Pre-Tax Pre-Provision Income Trends
Pre-Tax Pre-Provision Income1 Trends Despite recent margin pressures, YTD PTPP income is up 20% vs. the same period in 2022 ($ in millions) 3Q22 Pre- 3Q22 3Q22 4Q22 Pre- 4Q22 4Q22 1Q23 Pre- 1Q23 1Q23 2Q23 Pre- 2Q23 2Q23 3Q23 Pre- 3Q23 3Q23 Tax Income Provision PTPP Tax Income Provision PTPP Tax Inco
Slide 8: Average Yield Trends
Average Yield Trends We continue to benefit from rising asset yields, while the mix shift impacting funding costs has begun to stabilize Average Yields (%) Asset & Liability Yield / Rate Trends (%) 7.04 7.29 6.66 7.04 5.93 6.77 6.39 5.36 5.18 4.94 5.07 5.55 4.78 4.46 4.48 4.12 3.72 3.36 3.30 3.31 3.
Slide 9: Net Interest Income & Net Interest Margin Trends
Net Interest Income & Net Interest Margin Trends Our NII & NIM stabilized in 3Q as funding cost volatility impacting the industry began to abate Net Interest Income & Net Interest Margin Estimated NII Sensitivity Profile (%) ($ in millions) (12-Month Ramp) $289 $274 9.2 $264 $258 7.8 $254 6.8 4.6 4.
Slide 10: Cash & Investment Securities Portfolio
Cash & Investment Securities Portfolio We continue to target investments to total assets of 18% to 20% in 2023 EoP Securities Book Composition CET1 Including AOCI1 (%) ($ in billions) 9.35 9.45 9.48 9.55 8.51 8.74 8.60 8.53 $7.7 $7.7 $7.7 $0.4 $0.3 $0.3 $7.0 $6.7 $0.3 4Q 2022 1Q 2023 2Q 2023 3Q 2023
Slide 11: Noninterest Income Trends
Noninterest Income Trends Noninterest income increased slightly from 2Q 2023, with modest growth in several subcategories Noninterest Income Trends Service Charges & Deposit Account Fees ($ in millions) ($ in millions) $15 $14 $13 $12 $13 $71 $66 $67 $10 $62 $62 $5 $4 $5 $5 $5 $5 $8 $6 $5 $8 $7 $2 3
Slide 12: Noninterest Expense Trends
Noninterest Expense Trends Our noninterest expense to average assets ratio decreased by 18 basis points vs. 3Q 2022 Noninterest Expense Trends Fully Tax-Equivalent Efficiency Ratio2 (%) ($ in millions) $196 $197 $196 60.3 60.1 $191 58.8 58.5 58.5 $6 $187 57.0 55.5 56.1 $1 54.1 54.6 $49 $53 $53 $46 $
Slide 13: Capital Profile
Capital Profile We’ve increased the upper end of our CET1 target range to 9.75% 3Q 2023 Capital Ratios (%) Year-End 2023 Capital Targets (%) 12.25 9.75 9.55 7.25 10.12 9.00 6.88 9.55 6.75 3Q 2023 YE2023 3Q 2023 YE2023 6.88 TCE Ratio 1 Target CET1 Ratio Target Range Range Tangible Book Value / Share
Slide 14: Allowance for Credit Losses on Loans (ACLL) Update
Allowance for Credit Losses on Loans (ACLL) Update Our ACLL percentage remained flat vs. the prior quarter at 1.26% 3Q 2023 ACLL1 Update ACLL / Total Loans (%) ▪ ACLL increased $4 million from the prior quarter to $381 million, driven by a mix of portfolio loan growth and nominal credit movement cou
Slide 15: Credit Quality Trends
Credit Quality Trends Key credit metrics remain largely stable with limited migration in the portfolio Total Nonperforming Assets Nonaccrual Loans ($ in millions) ($ in millions) $178 $169 $133 $133 $140 $9 $131 $127 $116 $118 $111 $17 $15 $8 $79 $15 $16 $14 $24 $36 $169 $38 $29 $25 $22 $11 $116 $11
Slide 16: High-Quality Commercial Real Estate Portfolio
High-Quality Commercial Real Estate Portfolio1 ASB has built a diversified CRE portfolio by partnering with well-known developers in stable Midwest markets CRE Credit Quality Minnesota 9% Illinois 3Q 22 4Q 22 1Q 23 2Q 23 3Q 23 15% Other Midwest2 Portfolio LTV 60% 60% 60% 60% 59% 23% CRE by Delinquen
Slide 17: 2023 Full-Year Outlook Updates
2023 Full-Year Outlook Updates1 Previous Guidance (9/11/2023) Updated Guidance ▪ Total loan growth of 6% to 8% ▪ Total loan growth of 5% to 6% ▪ End of period core customer deposit2 ▪ No change to core customer deposit2 Balance Sheet compression of 3% (growth of 2% in guidance Management 2H 2023) ▪
Slide 18: Appendix
Appendix
Slide 19: Stable, Granular Deposit Portfolio
Stable, Granular Deposit Portfolio Uninsured, uncollateralized deposits were only 22% of total deposits as of 9/30/2023 EoP Total Deposit Trends (Associated Bank, N.A.) ($ in billions) $32.1 $32.1 22% Percentage of total deposits that were $29.7 $30.4 $29.3 uninsured and uncollateralized as of 9/30/
Slide 20: Liquidity Sources
Liquidity Sources As of 9/30/2023, ASB’s total liquidity sources covered 172% of uninsured, uncollateralized deposits ($ in millions) Liquidity Sources 6/30/2023 9/30/2023 Federal Reserve Balance $179.0 $314.3 Available FHLB Chicago Capacity $5,148.4 $5,377.6 Available Fed Discount Window Capacity $
Slide 21: Additional Loan Trends
Additional Loan Trends EoP Quarterly Loan Trends Average Loan Change (2Q 2023 to 3Q 2023) ($ in billions) ($ in millions) $29.8 $30.2 $28.8 $29.2 Auto Finance $230 $27.8 Residential Mortgage $106 $11.1 $11.2 $10.8 $10.9 Power & Utilities $84 $10.6 Mortgage Warehouse $48 CRE Construction $18 $7.2 $7.
Slide 22: Total Loans Outstanding Balances as of September 30, 2023
Total Loans Outstanding Balances as of September 30, 2023 ($ in millions) % of Total % of Total 1 1 9/30/2023 Loans 9/30/2023 Loans 2 C&BL (by NAICS ) CRE (by property type) Utilities $ 2,295 7.6% Multi-Family $ 2,645 8.8% Manufacturing & Wholesale Trade 2,270 7.5% Industrial 1,756 5.8% Real Estate
Slide 23: Loan Stratification Outstanding Balances as of September 30, 2023
Loan Stratification Outstanding Balances as of September 30, 2023 Illinois Illinois Minnesota 15% Minnesota 23% 9% 7% Illinois Texas Minnesota 15% Other 6% 9% Midwest2 23% Wisconsin C&BL by Other CRE by 23% Geography Midwest 2 11% Wisconsin Total Other Geography $11.2 billion 27% Loans1 Midwest 2 14
Slide 24: Reconciliation and Definitions of Non-GAAP Items
Reconciliation and Definitions of Non-GAAP Items End of Period Core Customer Deposits Reconciliation ($ in millions) 6/30/2023 9/30/2023 Total deposits $32,014 $32,123 Brokered CDs (3,818) (3,351) Network transaction deposits (1,601) (1,649) Core customer deposits $26,595 $27,123 Pre-Tax Pre-Provisi
Slide 25: Reconciliation and Definitions of Non-GAAP Items
Reconciliation and Definitions of Non-GAAP Items Selected Trend Information1 ($ in millions) 3Q 2022 4Q 2022 1Q 2023 2Q 2023 3Q 2023 Wealth management fees $20 $20 $20 $20 $21 Service charges and deposit account fees 15 14 13 12 13 Card-based fees 11 11 11 11 12 Other fee-based revenue 4 3 4 4 5 Fee