Associated Banc-corp · NYSE:ASB
Associated Banc-corp — Q4 2019 Earnings Presentation
18 slides from Associated Banc-corp's earnings presentation, Jan 23, 2020
Slide 1: Fourth Quarter 2019 Earnings Presentation
Exhibit 99.2 FOURTH QUARTER 2019 EARNINGS PRESENTATION January 23, 2020
Slide 2: Disclaimer
DISCLAIMER 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 plans, objectiv
Slide 3: 2019: Managing a Challenging Rate Environment
2019: MANAGING A CHALLENGING RATE ENVIRONMENT We took several balance sheet actions... ▪ Reduced higher cost network transactions deposits Balance Sheet Period end low- 1 from $2.3 billion to $1.3 billion and increased our 56% ▪ cost deposit mix Management 50% 51% mix of low-cost deposits ▪ Sold $1
Slide 4: Loan Portfolio - Annual Trends
LOAN PORTFOLIO - ANNUAL TRENDS Average Annual Loans Average Net Loan Change (from 2018) ($ in billions) ($ in millions) $22.7 $23.1 General commercial $314 $314 $20.6 $19.7 Power & utilities $208 $18.3 $7.7 $8.4 $7.3 Mortgage warehouse $7.4 $91 Total Commercial $7.0 & business loans: +$682 million R
Slide 5: Loan Portfolio - Quarterly Trends
LOAN PORTFOLIO - QUARTERLY TRENDS Average Quarterly Loans Loan Mix – 4Q 2019 Period End ($ in billions) Commercial: 59% Consumer: 41% $23.1 $23.4 $23.3 Commercial & Residential $22.8 $22.8 business mortgage 36% 36% $8.0 $8.4 $8.6 $8.5 $8.2 CRE investor Home equity & Construction 17% other consumer 6
Slide 6: Commercial Loan Management
COMMERCIAL LOAN MANAGEMENT1 Oil & Gas Loans Power & Utilities Loans Commercial Real Estate ($ in billions) ($ in billions) ($ in billions) As we de-risked our Oil & ...we grew our Power & ...and Commercial Real Gas portfolio... Utilities vertical... Estate rebounded $0.8 $0.7 $0.7 $0.7 $1.5 $7.1 $7.
Slide 7: Deposit Portfolio - Annual Trends
DEPOSIT PORTFOLIO - ANNUAL TRENDS Average Annual Deposits Period End Low-cost Deposit Mix (%) ($ in billions) $24.7 56% $24.1 50% 51% 46% 49% 23% $21.9 23% $21.0 $5.2 25% 24% $19.9 $5.2 26% $5.0 21% 19% 20% $5.1 14% 17% $4.5 $4.8 $5.1 6% 7% 7% 8% 12% $4.0 2015 2016 2017 2018 2019 $3.0 $3.4 $1.9 $2.4
Slide 8: Deposit Portfolio - Quarterly Trends
DEPOSIT PORTFOLIO - QUARTERLY TRENDS Average Quarterly Deposits 4Q 2019 Period End Low-cost Deposit Mix ($ in billions) $25.1 $25.2 $24.2 $24.6 $24.1 $5.3 $5.0 $5.1 $5.4 $5.5 28% 23% 21% 12% 11% $4.7 $5.0 $5.5 $4.8 6% $5.1 $2.1 $2.3 $2.0 $2.6 $2.7 Period End Low-cost Deposit Mix Trend $7.4 $7.1 55%
Slide 9: Investment Securities Portfolio Trends
INVESTMENT SECURITIES PORTFOLIO TRENDS Portfolio and Yield Trends (Quarterly) Investments / Total Assets1 ($ in billions) 3.73% 3.74% 3.77% 3.78% 3.79% 22% 20% 21% 20% 17% 2.29% 2.34% 2.36% 2.33% 2.32% 4Q 2015 4Q 2016 4Q 2017 4Q 2018 4Q 2019 $6.8 $6.8 $6.5 $6.0 Portfolio Fair Value Composition1 $1.7
Slide 10: Net Interest Income and Margin - Annual Trends
NET INTEREST INCOME AND MARGIN - ANNUAL TRENDS Net Interest Income & Net Interest Margin Average Yields ($ in millions) 5.04% 4.96% 2.97% 2.86% 2.84% 4.57% 2.80% 2.82% $880 3.89% 4.51% 3.47% 3.46% $28 $836 3.66% $9 3.40% 3.39% 3.18% 3.17% 3.23% $741 2.82% 2.58% $707 2.45% 2.34% 2.42% $676 1.43% $851
Slide 11: Net Interest Income and Margin - Quarterly Trends
NET INTEREST INCOME AND MARGIN - QUARTERLY TRENDS Net Interest Income & Net Interest Margin Average Yields ($ in millions) 3.02% 5.51% 2.90% 2.88% 2.81% 2.83% 5.20% 5.19% 4.92% 4.55% 4.86% $224 4.78% 4.79% 4.49% $7 $216 $214 3.52% 3.54% 3.47% 4.13% $2 3.29% 3.27% $3 $206 $2 $200 2.78% 2.82% 2.83% 2.
Slide 12: Noninterest Income - Annual Trends
NONINTEREST INCOME - ANNUAL TRENDS ($ IN MILLIONS) $381 Mortgage Banking, Net $353 $356 $333 $329 $32 $19 $20 2017 2018 2019 Card-based Fees and Other Fee-based Revenue $296 $294 $269 $253 $261 $59 $57 $53 2015 2016 2017 2018 2019 2017 2018 2019 Fee-based revenue1 Other 1Fee-based revenue, a non-GAA
Slide 13: Noninterest Expense - Annual Trends
NONINTEREST EXPENSE - ANNUAL TRENDS ($ IN MILLIONS) Technology and Equipment Expense $106 $822 $96 $794 $29 $84 $7 $698 $703 $709 2017 2018 2019 $2 $5 $2 $5 $2 Noninterest Expense / Average Assets $481 $482 2.49% $414 $420 $427 2.41% 2.40% 2.40% 2.40% 2.37% 2015 2016 2017 2018 2019 2017 2018 2019 Ad
Slide 14: Credit Quality - Quarterly Trends
CREDIT QUALITY - QUARTERLY TRENDS ($ IN MILLIONS; AT OR FOR THE YEAR ENDED) Potential Problem Loans Nonaccrual Loans $351 $302 $275 $250 $209 $177 $157 $178 $128 $118 2015 2016 2017 2018 2019 2015 2016 2017 2018 2019 Provision for Credit Losses Allowance for Loan Losses to Loans $70 1.47% 1.39% 1.28
Slide 15: Strong Capital Position
STRONG CAPITAL POSITION Highlights CET1 and TCE Ratios ▪ Disciplined management of both regulatory and economic capital 10.1% 10.3% 10.2% ▪ Built up TCE ratio1 in 2019 in preparation for CECL implementation while continuing to deploy capital according to stated priorities 7.7% ▪ Repurchased $177 mil
Slide 16: 2020 Outlook
2020 OUTLOOK This outlook reflects our expectation for a stable economy. We may adjust our outlook if, and when, we have more clarity on economic factors. ▪ Annual average loan growth of ▪ Noninterest expense of 2% to 4% $790 million to $795 million ▪ Maintain loan to deposit ratio ▪ Effective tax r
Slide 17: Appendix
APPENDIX
Slide 18: Reconciliation and Definitions of Non-GAAP Items
RECONCILIATION AND DEFINITIONS OF NON-GAAP ITEMS ($ in millions) Adjusted Noninterest Expense Reconciliation1 2019 2018 2017 Noninterest expense $ 794 $ 822 $ 709 Acquisition related costs 7 29 - Severance 5 2 2 Adjusted noninterest expense $ 782 $ 791 $ 708 Tangible Common Equity and Tangible Commo