Associated Banc-corp · NYSE:ASB
Associated Banc-corp — Q2 2018 Earnings Presentation
27 slides from Associated Banc-corp's earnings presentation, Jul 31, 2018
Slide 1: Associated Banc-Corp Investor Presentation
Exhibit 99.1 Associated Banc-Corp Investor Presentation 2018 THIRD 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 Second Quarter 2018 $34 billion of assets1 $23 billion of loans1 Over $3 billion of equity2 $24 billion of deposits1 YTD 2Q 2018 Average Loans by Business Segment 3 Corporate and − Largest bank headquartered in Wisconsin 52% Commercial Specialty Community, Consumer, and − Approximately
Slide 4: Attractive Midwest Markets
ATTRACTIVE MIDWEST MARKETS Large Population Base With a Manufacturing and Wholesale Trade-Centric Economy Midwest holds ~20% of the U.S. population1 and Commercial and Business Lending nearly 30% of all U.S. manufacturing jobs2 ASB Loan Composition by Industry U.S. Manufacturing Jobs Manufacturing &
Slide 5: Loan Growth Trends
LOAN GROWTH TRENDS Average Quarterly Loans Average Loan Growth1 ($ in billions) 2Q14 – 2Q18 ($ in millions) $23.0 CAGR Net growth: $927 million $20.5 $19.6 Commercial $7.7 $306 $18.2 4% real estate $16.6 Residential $7.3 $227 $7.5 mortgage General $7.2 $149 $6.5 commercial $5.7 10% Oil and gas $89 $
Slide 6: Managing Our Loan Portfolio Exposure
MANAGING OUR LOAN PORTFOLIO EXPOSURE Bank Mutual Additions Period End CRE Multifamily Loans ($ in billions) The addition of Bank Mutual increased our We are moderating our Multifamily exposure... exposure to: Multifamily Loans Residential Mortgages Bank Mutual CRE Multifamily ASB CRE Multifamily Net
Slide 7: Deposit Growth Trends
DEPOSIT GROWTH TRENDS Average Quarterly Deposits Quarter-end Loan to Deposit Ratio ($ in billions) 2Q14 – 2Q18 98% CAGR 96% $23.6 96% $21.5 94% 94% 6% 95% $19.6 $20.3 $5.1 $4.9 $17.2 $4.3 $5.0 91% 90% $4.7 13% 89% $4.1 $3.8 $3.3 $3.6 1Q 2Q 3Q 4Q $2.1 Historical Quarter-end Range 2014-2018 2018 $2.9
Slide 8: Net Interest Income and Margin - Quarterly Trends
NET INTEREST INCOME AND MARGIN - QUARTERLY TRENDS Average Yields Net Interest Income & Net Interest Margin ($ in millions) 4.75% 3.69% $226 3.45% 3.26% 3.29% $2 3.29% 3.29% 3.35% 3.16% 3.23% $1 2.63% 2.56% 2.45% 2.38% 2.42% 1.08% 0.65% <$1 0.29% 0.40% 0.39% 0.83% 0.51% 0.19% 0.21% 0.31% 2Q 2014 2Q 2
Slide 9: Net Interest Margin Walkforward and Outlook
NET INTEREST MARGIN WALKFORWARD AND OUTLOOK Q1 to Q2 Net Interest Margin Walkforward Net Interest Margin Detail 1Q 2018 Reported Net Interest Margin 2.92% + Net loan growth and funding composition (including Bank Mutual) ~0.06% 3.02% + Bank Mutual purchase loan related items 2.92% 9 bps Purchased lo
Slide 10: Growing and Diversified Business Model
GROWING AND DIVERSIFIED BUSINESS MODEL Robust Capital Markets, Trust and ($Noninterest IN MILLIONS Income) Investments Solutions2 ($ in millions) $25 $93 $21 $19 $19 $86 $19 $82 $82 $72 2Q 2014 2Q 2015 2Q 2016 2Q 2017 2Q 2018 Strong Insurance Commissions Growth Driven by Acquisitions $75 $24 $67 $22
Slide 11: Overall Expense Efficiency
OVERALL EXPENSE EFFICIENCY AUTOMATION AND CONSOLIDATIONS ARE DRIVING BETTER EFFICIENCY OVER TIME Efficiency Enhanced Automation Branch Consolidations Operational Efficiencies Drivers Noninterest Expense Efficiency Ratio1 Branches and FTEs ($ in millions) $213 $211 71% $21 $7 4,865 $182 67% 4,693 70%
Slide 12: Bank Mutual Expense Detail
BANK MUTUAL EXPENSE DETAIL Bank Mutual account and system conversion and branch Conversion Completed consolidation completed June 24, 2018. Expected Total Acquisition Related Costs Announced Recorded Expected Costs ($ in millions) 1Q 2018 2Q 2018 3Q 2018 Total Change of control and severance $10 $7
Slide 13: Evolving Delivery Model
EVOLVING DELIVERY MODEL Deposits by Digital & Remote Channels Increasing ATM, ACH and Wire Activity Increasing ATM Deposits ACH and Wire Activity 57% 35% June 2014 June 2018 Remote Deposit June 2014 June 2018 June 2014 June 2018 ATM Lockbox SnapDeposit Capture Non-branch Deposits / Total Deposits In
Slide 14: Capital Structure and Ratings
CAPITAL STRUCTURE AND RATINGS Holding Company Capital Structure Ratings and Capital Ratios ($ in millions) Associated Banc-Corp $250 $250 Moody’s long-term……………… Baa1 $250 $250 $250 S&P long-term……...…………… BBB $250 $250 $159 $160 Common equity Tier 1 $250 $250 $250 capital ratio………….…………… 10.5% $160
Slide 15: Capital Priorities
CAPITAL PRIORITIES 1 Funding Organic Growth 2 Paying a Competitive Dividend Quarterly Average Loans; ($ in billions) Quarterly Dividends $23.0 7% 14% $0.15 CAGR1 CAGR1 $20.5 $0.12 $19.6 $0.11 $0.10 $17.8 $18.2 $0.09 2Q 2014 2Q 2015 2Q 2016 2Q 2017 2Q 2018 2Q 2014 2Q 2015 2Q 2016 2Q 2017 2Q 2018 3 No
Slide 16: Expanding Bottom Line
EXPANDING BOTTOM LINE Per Share Data Dividends Total Shareholder Return 1 $0.53 +25%2 220 $0.03 $0.15 $0.12 $0.50 $0.36 180 2Q 2017 2Q 2018 2Q 2017 2Q 2018 Acquisition related costs GAAP earnings per share Total Shareholder Return on Average Return Common Equity 140 As of July 20, 2018 15.0% 87% 11.
Slide 17: 2018 Outlook
2018 OUTLOOK This outlook reflects a stable to improving economy and includes our expectation of additional 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 the remainde
Slide 18: Appendix
APPENDIX
Slide 19: Key Highlights
KEY HIGHLIGHTS . Largest bank headquartered in Wisconsin1 with $34 billion in assets2 Franchise . Efficiency-focused business model leading to improving ROATCE Overview . Midwest branch footprint in WI, IL and MN with more than 1 million customer accounts2 . Well diversified loan portfolio and low-c
Slide 20: Overall Funding Composition
OVERALL FUNDING COMPOSITION Quarterly Trends1 ($ in billions) $29.2 $29.4 . 2Q 2018 managed $26.5 $26.9 $26.3 run-off of acquired $4.5 $4.8 deposits and $3.2 $3.5 $3.2 network deposits . Cumulative deposit beta of 28% since rates started increasing2 $23.8 $23.8 $21.6 $22.3 $22.8 2Q 2017 3Q 2017 4Q 2
Slide 21: Strong Capital Base
STRONG CAPITAL BASE Regulatory Capital Levels CET1 Preferred & other Tier 1 ALLL & other Tier 2 13.4% 13.4% 13.0% 13.0% 13.2% 2.3% 2.2% 2.4% 2.4% 2.4% 0.7% 0.7% 0.7% 0.7% 0.7% 9.9% 9.9% 10.1% 10.5% 10.5% 2Q 2017 3Q 2017 4Q 2017 1Q 2018 2Q 2018 Bank Level Ratios CET1 Capital 10.0% 10.0% 10.1% 10.3% 1
Slide 22: Expanding Bottom Line
EXPANDING BOTTOM LINE Net Interest Margin Noninterest Income Efficiency Ratio2 ($ in millions) • Expanding margins • Growing fee-based revenue • Disciplined expense management 3.02% $92.8 65.2% 0.09%1 $82.4 62.3% 2.83% 2.93% 2Q 2017 2Q 2018 2Q 2017 2Q 2018 2Q 2017 2Q 2018 ROAA ROACE ROATCE3 15.0% 1.
Slide 23: Credit Quality – Quarterly Trends
CREDIT QUALITY – QUARTERLY TRENDS ($ IN MILLIONS) Potential Problem Loans Nonaccrual Loans $282 $263 $259 $232 $40 $242 $37 $39 $211 $209 $209 $204 $177 $34 $114 $69 $45 $40 $92 $77 $226 $220 $242 $208 $159 $137 $118 $119 $132 $140 2Q 2017 3Q 2017 4Q 2017 1Q 2018 2Q 2018 2Q 2017 3Q 2017 4Q 2017 1Q 2
Slide 24: Loans Stratification
LOANS STRATIFICATION OUTSTANDINGS AS OF JUNE 30, 2018 C&BL by Geography Total Loans1 CRE by Geography $8.0 billion $5.5 billion Minnesota 6% Illinois Illinois 16% 3 Illinois 24% 14% Texas Minnesota 10% 13% Other Minnesota Wisconsin Wisconsin Wisconsin Midwest2 11% 31% Other 29% 33% 11% Midwest2 Othe
Slide 25: High Quality Securities
HIGH QUALITY SECURITIES ($ IN BILLIONS) Portfolio Detail as of June 30, 2018 Portfolio Balance and Yield Trends Amortized Fair Duration $7.02 $7.4$7.5$7.6$7.7 5.00% Investment Type Cost Value (Yrs) $6.9$7.0$7.1$7.2$7.3$7.4 $6.5$6.6$6.7$6.8$6.9 $5.76 $5.94 $6.08 $5.93 GNMA CMBS $1.92 $1.86 2.93 $6.1$
Slide 26: Reconciliation and Definitions of Non-GAAP Items
RECONCILIATION AND DEFINITIONS OF NON-GAAP ITEMS Efficiency Ratio 2Q 2014 2Q 2015 2Q 2016 2Q 2017 2Q 2018 Federal Reserve efficiency ratio 69.70% 70.23% 69.34% 66.69% 65.77% Fully tax-equivalent adjustment (1.32) (1.35) (1.36) (1.30) (0.65) Other intangible amortization (0.41) (0.35) (0.21) (0.18) (
Slide 27: Reconciliation and Definitions of Non-GAAP Items
RECONCILIATION AND DEFINITIONS OF NON-GAAP ITEMS Average Tangible Common Equity Reconciliation ($ in millions) 2Q 2017 2Q 2018 Average common equity $3,005 $3,561 Average goodwill and other intangible assets, net (987) (1,236) Average tangible common equity 2,018 2,325 YTD 2018 2Q 2018 1Q 2018 Acqui