Associated Banc-corp · NYSE:ASB
Associated Banc-corp — Q1 2018 Earnings Presentation
24 slides from Associated Banc-corp's earnings presentation, May 7, 2018
Slide 1: Associated Banc-Corp Investor Presentation Second Quarter 2018
Exhibit 99.1 Associated Banc-Corp Investor Presentation 2018 SECOND 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 First Quarter 2018 $33 billion of assets1 $23 billion of loans1 Over $1 billion of revenue2 $24 billion of deposits1 3 − Largest bank headquartered in Wisconsin − Approximately 5,000 employees, servicing over 1 million customer accounts in 8 states and over 110 communities1 Affinity Pr
Slide 4: Attractive Midwest Markets
ATTRACTIVE MIDWEST MARKETS Large Population Base With a Manufacturing and Wholesale Trade-Centric Economy Midwest holds ~20% of the U.S. population1 and Commercial and Business Lending nearly 30% of all U.S. manufacturing jobs2 ASB Loan Composition by Industry U.S. Manufacturing Jobs Manufacturing &
Slide 5: 2018 Outlook
2018 OUTLOOK This outlook reflects a stable to improving economy and includes our expectation of two additional interest rate increases in 2018. We may adjust our outlook if, and when, we have more clarity on any one, or more, of these factors. ▪ 1%-2% quarterly loan growth for ▪ Approximately $825M
Slide 6: Loan Growth Trends
LOAN GROWTH TRENDS1 Average Quarterly Loans QoQ Average Loan Growth, $ in millions ($ in billions) 1Q14 – 1Q18 Net QoQ Growth: +$1.2 billion $22.1 CAGR $20.1 Commercial $18.9 real estate $526 $17.8 $7.3 5% Residential $464 $16.2 mortgage $7.2 General $7.1 $184 $7.0 commercial $6.1 Home equity & $90
Slide 7: Deposit Growth Trends
DEPOSIT GROWTH TRENDS1 Average Quarterly Deposits Strong Deposit Growth ($ in billions) Loan to Deposit Ratio 2 2012 – 2017 CAGR 96% 94% 93% 91% 92% 1Q14 – 1Q18 7% CAGR $23.7 4% $21.5 3% 3% $20.6 $5.1 5% $19.1 $5.0 $17.0 $5.0 $4.3 $4.7 14% IL WI MN $4.2 $3.2 $4.3 $3.2 $2.8 Low Cost Deposit Mix3 $9.4
Slide 8: Expanding Margins
EXPANDING MARGINS Interest Income & Average Yield Repricing1 in next 12 Interest Expense and NIM ($ in millions) 4.34% months 3.93% 3.89% 3.69% 90% 2.92% 3.52% 2.84% 2.83% 2.84% 2.79% 2.39% 2.42% 2.40% 2.47% 2.44% $264 $237 $236 $223 $44 $212 $39 $41 $38 $37 0.73% $84 0.63% 0.65% $76 $72 $77 $69 0.5
Slide 9: Net Interest Income Walkforward and Margin Outlook
NET INTEREST INCOME WALKFORWARD AND MARGIN OUTLOOK Net Interest Income Walkforward 4Q 2017 Reported Net Interest Income and Margin $187 million 2.79% + Net loan and deposit growth (including Bank Mutual) + $10 million + Bank Mutual purchase loan related items + $6 million Purchased loan accretion $4
Slide 10: Growing and Diversified Business Model
GROWING AND DIVERSIFIED BUSINESS MODEL ($ IN MILLIONS) Robust Capital Markets, Trust and Noninterest Income 2 Investments Solutions ($ in millions) $26 $90 $19 $19 $19 $20 $83 $80 $80 $74 1Q 2014 1Q 2015 1Q 2016 1Q 2017 1Q 2018 Strong Insurance Commissions Growth Driven by Acquisitions $73 $23 $65 $
Slide 11: Overall Expense Efficiency
OVERALL EXPENSE EFFICIENCY AUTOMATION AND INVESTMENTS ARE DRIVING BETTER EFFICIENCY OVER TIME Efficiency Drivers Enhanced Operational Branch Branch Staffing Automation Efficiencies Consolidations Initiatives 2.81% Noninterest Expense / 1 Efficiency Ratio 2.65% Average Assets2 2.53% 2.45% 2.43% 71% 7
Slide 12: Multi-Channel Strategy
MULTI-CHANNEL STRATEGY Transactions are moving out of branches1… Solution is Multi-channel Strategy2 Since 2015… Branch-centric 25% Other Branch Snap deposits transactions up 75% 14% down 15% 41% 20% Multi-channel Digital …but branches remain important for certain Community, Consumer and Business se
Slide 13: Branch Network Optimization
BRANCH NETWORK OPTIMIZATION UPGRADING AND REDUCING PHYSICAL FOOTPRINT1 Upgrading Reducing Physical Footprint • Associated has invested over $150MM in its physical branch network • Eliminated ~60 branches Since Since • 100% of branches have been upgraded 2012… 2012… • ~10% reduction in average branch
Slide 14: Capital Priorities
CAPITAL PRIORITIES 1 Funding Organic Growth 2 Paying a Competitive Dividend Quarterly Average Loans; ($ in billions) Quarterly Dividends 8% 14% $0.15 CAGR $22.1 CAGR $20.1 $0.12 $0.11 $18.9 $0.10 $17.8 $0.09 $16.2 1Q 2014 1Q 2015 1Q 2016 1Q 2017 1Q 2018 1Q 2014 1Q 2015 1Q 2016 1Q 2017 1Q 2018 3 Non-
Slide 15: Bank Mutual Update
BANK MUTUAL UPDATE ▪ Closed February 1, 2018; issued approximately 19.5 million common Legal Closing and Expected shares at 0.422 fixed exchange ratio Conversion Date ▪ Expected system conversion and branch consolidation: June 23, 2018 Expected Total Acquisition Announced Recorded Expected Related C
Slide 16: Expanding Bottom Line
EXPANDING BOTTOM LINE Per Share Data Dividends Total Shareholder Return +25% 220 1 $0.50 YoY $0.15 $0.10 $0.12 $0.35 $0.40 180 1Q 2017 1Q 2018 1Q 2017 1Q 2018 Acquisition related costs GAAP earnings per share Total Shareholder Return on Average Return Common Equity 140 As of April 20, 2018 12.0% 112
Slide 17: Appendix
APPENDIX
Slide 18: Credit Quality – Quarterly Trends
CREDIT QUALITY – QUARTERLY TRENDS ($ IN MILLIONS) Potential Problem Loans Nonaccrual Loans $340 $260 $232 $263 $259 $282 $211 $209 $209 $42 $134 $15 $262 $177 $114 $92 $77 $69 $226 $220 $200 $137 $126 $118 $119 $132 $125 $78 $37 $39 $40 $40 1Q 2017 2Q 2017 3Q 2017 4Q 2017 1Q 2018 1Q 2017 2Q 2017 3Q
Slide 19: Loans Stratification
LOANS STRATIFICATION OUTSTANDINGS AS OF MARCH 31, 2018 C&BL by Geography Total Loans1 CRE by Geography $7.7 billion $5.7 billion Minnesota Illinois 7% 14% Illinois Illinois 24% 16% Texas3 Minnesota 9% 14% Wisconsin 33% Other Wisconsin 2 Minnesota Wisconsin Midwest 34% 11% 29% 10% Other Other Midwest
Slide 20: Oil and Gas Update
OIL AND GAS UPDATE ~$1.0 billion $657 million 3% Total O&G Portfolio 56 credits Quarter end March 31, 2018 commitments outstandings of total loans $494 million $294 million 1% New business since 23 credits January 1, 2016 commitments outstandings of total loans Period End Loans by Credit Quality Oil
Slide 21: High Quality Securities
HIGH QUALITY SECURITIES ($ IN BILLIONS) Portfolio Detail as of March 31, 2018 Strategic Portfolio and Yield Trends Amortized Fair Duration $6.89 $7.2$7.3$7.4$7.5 5.00% Investment Type Cost Value (Yrs) $6.8$6.9$7.0$7.1$7.2 $6.08 $5.97 $6.3$6.4$6.5$6.6$6.7 $5.75 GNMA CMBS $2.03 $1.97 3.04 $5.9$6.0$6.1
Slide 22: Reconciliation and Definitions of Non-GAAP Items
RECONCILIATION AND DEFINITIONS OF NON-GAAP ITEMS Average Tangible Common Equity and Average Common Equity Tier 1 ($ in millions) 1Q 2014 1Q 2015 1Q 2016 1Q 2017 1Q 2018 Average common equity $2,827 $2,785 $2,849 $2,963 $3,377 Average goodwill and other intangible assets, net (940) (971) (989) (987)
Slide 23: Reconciliation and Definitions of Non-GAAP Items: Efficiency Ratio
RECONCILIATION AND DEFINITIONS OF NON-GAAP ITEMS Efficiency Ratio 1Q 2014 1Q 2015 1Q 2016 1Q 2017 1Q 2018 Federal Reserve efficiency ratio 70.46% 70.27% 69.01% 66.39% 70.76% Fully tax-equivalent adjustment (1.35) (1.42) (1.37) (1.30) (0.66) Other intangible amortization (0.42) (0.32) (0.20) (0.20) (
Slide 24: Definition of Channel Categories
DEFINITION OF CHANNEL CATEGORIES Includes households with checking accounts and at least one year of tenure. Branch-centric: • Used branch channel (via teller transactions) 6 or more months in the prior year • AND Used online channel (via login) fewer than 3 months in the prior year • AND Used mobil