Associated Banc-corp · NYSE:ASB
Associated Banc-corp — Q2 2021 Earnings Presentation
22 slides from Associated Banc-corp's earnings presentation, Jul 22, 2021
Slide 1: Second Quarter 2021 Earnings Presentation
Second Quarter 2021 Earnings Presentation JULY 22, 2021
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: First 100 Days
First 100 Days New President & CEO Andrew J. Harmening joined Associated Banc-Corp on April 28, 2021 Actively Listening Realigning Leadership Formulating Next Steps ▪ Gaining perspectives of ▪ New leadership and ▪ Leveraging key learnings colleagues, customers, focus on digital to refine our priorit
Slide 4: 2021 Second Quarter Update
2021 Second Quarter Update 2Q 2021 results reflect positive loan growth trends, growing consumer fees and improving credit Associated Banc-Corp Reports Second Quarter 2021 net income available to common equity of $86 million, or $0.56 per common share ▪ EOP loan metrics: ▪ Nonaccrual loans down 10%
Slide 5: Quarterly Loan Trends
Quarterly Loan Trends EOP loans reflect positive Commercial and CRE trends (excl. PPP and Oil & Gas, which are both in runoff) Average Quarterly Loans EOP Loan Change (1Q 2021 to 2Q 2021) ($ in billions) ($ in millions) $25.2 $25.0 $24.7 REIT $118 $24.5 $24.1 $0.8 $1.0 $0.9 $0.8 $0.7 General Commerc
Slide 6: EOP Commercial Loan Growth Walk-Forward
EOP Commercial Loan Growth Walk-Forward Excluding PPP, 2Q total commercial loan growth of ~2% was in line with our expectations Commercial and Business Lending (excl. PPP) Commercial Real Estate ($ in millions) ($ in millions) +2.8% +0.6% 5
Slide 7: Quarterly Funding Trends
Quarterly Funding Trends We continue to improve the mix of low-cost, core customer funding and reduce our higher-cost liabilities Average Quarterly Deposits EOP Wholesale Funding Trends ($ in billions) ($ in billions) $27.5 $5.7 $26.8 $26.7 $26.8 $26.1 $0.5 $4.7 $1.5 $0.5 $8.1 $3.4 $3.2 $3.0 $6.9 $7
Slide 8: 2Q 2021 Pre-Tax Pre-Provision Income Walk-Forward
2Q 2021 Pre-Tax Pre-Provision Income1 Walk-Forward 2Q PTPP pressured by MSR impairment, lower asset sales despite increased NII, lower expenses ($ in millions) $1 $78 1Q 2021 PTPP 1Q MSR Asset Gains / Other Mortgage Other Noninterest Net Interest Lower Expenses 2Q 2021 PTPP Write-Up Branch Sales Ban
Slide 9: Net Interest Income and Yield Trends
Net Interest Income and Yield Trends 2Q NII grew as refinance activity slowed and liability costs continued to be managed downward NII and NIM Trends Average Yields ($ in millions) 2.56% 3.24% 3.06% 3.00% 2.91% 2.87% 2.45% 3.04% 2.35% 2.49% 2.36% 2.93% 2.88% 2.79% 2.82% 2.80% 2.69% 2.39% 2.59% 2.57%
Slide 10: Net Interest Income Walk-Forward
Net Interest Income Walk-Forward Declining mortgage refinance activity, accelerated PPP recognition and lower deposit costs boosted 2Q NII ($ in millions) Declining refinance Continued activity contributed downward to slower PPP income momentum in prepayment rates recognition overall deposit on mort
Slide 11: Noninterest Income Trends
Noninterest Income Trends 2Q income pressured by lower net mortgage banking income despite a $2M increase in deposit & card fees Noninterest Income Trend Net Mortgage Banking Income ($ in millions) ($ in millions) $24 $254 $21 $15 $15 $15 $15 $12 $13 $95 $9 $8 $186 $86 $12 $76 $13 $8 $73 $5 2Q 2020
Slide 12: Noninterest Expense Trends
Noninterest Expense Trends Noninterest expense down 5% YoY, 4% YoY improvement in noninterest expense to average assets ratio1 Noninterest Expense Trend Adjusted Efficiency Ratio3 ($ in millions) 85% $228 64% 66% 67% 67% 63% 63% 63% 60% $50 $183 43% $173 $175 $174 $72 2Q 2020 3Q 2020 4Q 2020 1Q 2021
Slide 13: Strong Capital Position
Strong Capital Position Tangible Book Value has increased 7% from 2Q 2020 through 2Q 2021 Tangible Book Value / Share Capital Ratios 13.83% 14.02% $17.35 11.62% 11.81% 10.70% 10.25% $16.95 $16.67 8.04% 7.25% $16.37 $16.21 1 TCE Ratio Common Equity Tier 1 Capital Total Capital 2Q 2020 3Q 2020 4Q 2020
Slide 14: Allowance Update
Allowance Update Net Reserve Release of $40 million, reflecting improving dynamics in every portfolio category Second Quarter 2021 ACLL ACLL / Total Loans ▪ Allowance for credit losses on loans (ACLL) decreased $40 million at the end of 2Q 2021 from 1Q 2021 1.73% 1.77% 1.76% 1.62% 1.67% ▪ Net Charge
Slide 15: Credit Quality Trends
Credit Quality Trends Credit metrics continued to improve during 2Q 2021 Potential Problem Loans Nonaccrual Loans ($ in millions) ($ in millions) $307 $293 $282 $264 $58 $232 $211 $72 $196 $63 $100 $104 $172 $163 $60 $79 $77 $147 $41 $11 $8 $46 $88 $50 $59 $37 $63 $186 $162 $24 $145 $32 $18 $141 $11
Slide 16: Updated 2021 Full-Year Outlook
Updated 2021 Full-Year Outlook We continue to expect loan growth in the second half of the year ▪ Commercial loan growth, ▪ We are withdrawing our prior 2021 excluding PPP, of 2-4% total expense guidance ▪ Full-year margin of 2.45% to ▪ Total expense for 2021 will reflect 2.55% growth and efficiency
Slide 17: Appendix
Appendix
Slide 18: Total Loans Outstanding Balances as of June 30, 2021
Total Loans Outstanding Balances as of June 30, 2021 Well-diversified $24 billion loan portfolio ($ in millions) % of Total % of Total 1 1 6/30/2021 Loans 6/30/2021 Loans 2 C&BL (by NAICS ) CRE (by property type) Utilities $ 1,695 7.1% Multi-Family $ 2,038 8.5% Wholesale/Manufacturing 1,575 6.6% Off
Slide 19: Key COVID Commercial Loan Exposures
Key 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 Centers 2 Retailers $ 75.3 39% $ 662.8 91% $ 738.1 3.08% Retail REITs
Slide 20: Loan Stratification Outstandings as of 6/30/2021
Loan Stratification Outstandings as of 6/30/2021 C&BL by Geography CRE by Geography Total Loans1 $9.2 billion $6.2 billion Illinois 15% Minnesota Illinois Illinois Minnesota 8% 24% 16% 9% 3 Texas Minnesota 6% Other 10% Wisconsin Other Midwest2 24% Midwest 2 22% Wisconsin Other Wisconsin 10% 29% Midw
Slide 21: Reconciliation and Definitions of Non-GAAP Items
Reconciliation and Definitions of Non-GAAP Items ($ in millions) Pre-tax Pre-Provision Income Reconciliation1 1Q 2021 2Q 2021 Pre-tax pre-provision income Income (loss) before income taxes $119 $113 Provision for credit losses (23) (35) Pre-tax pre-provision income $96 $78 Tangible Common Equity and
Slide 22: Reconciliation and Definitions of Non-GAAP Items
Reconciliation and Definitions of Non-GAAP Items Efficiency Ratio Reconciliation 2Q 2020 3Q 2020 4Q 2020 1Q 2021 2Q 2021 Federal Reserve efficiency ratio 43.49% 85.41% 59.68% 65.74% 66.81% Fully tax-equivalent adjustment (0.39)% (1.29)% (0.84)% (0.97)% (1.07)% Other intangible amortization (0.65)% (