Associated Banc-corp · NYSE:ASB
Associated Banc-corp — Q2 2023 Earnings Presentation
26 slides from Associated Banc-corp's earnings presentation, Jul 20, 2023
Slide 1: Second Quarter 2023 Earnings Presentation
Second Quarter 2023 Earnings Presentation JULY 20, 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: Second Quarter 2023 Results
Second Quarter 2023 Results ASB reports 2Q 2023 net income available to common equity of $84 million, or $0.56 per common share 2Q 2023 Highlights1 $84 million Net Income Available to Common Equity ▪ Total period end loan growth of $642 million (+2%) (up slightly vs. 6/30/2022) ▪ Total period end de
Slide 4: Strong Credit Risk Profile
Strong Credit Risk Profile We’ve Prime/super prime consumer Geographically anchored in stable significantly portfolios Midwest markets de-risked our portfolio Replaced high-risk Diversified CRE since 2009 portfolios with portfolio with lower-risk asset limited urban classes office exposure 3
Slide 5: Quarterly Loan Trends
Quarterly Loan Trends We continued to add high-quality loans in select segments during 2Q Average Quarterly Loans EoP Loan Change (3/31/2023 to 6/30/2023) ($ in billions) ($ in millions) $28.8 $29.4 General Commercial $272 $28.2 $27.1 $25.4 Auto Finance $226 $10.6 $10.9 CRE Investor $219 $10.5 $10.2
Slide 6: Quarterly Deposit & Funding Trends
Quarterly Deposit & Funding Trends We flexed into brokered & network deposits during 2Q to fund growth, build liquidity & pay down FHLB Average Quarterly Deposits EoP Funding Change (3/31/2023 to 6/30/2023) ($ in billions) ($ in millions) Customer CDs $541 $31.3 $29.3 $29.9 $28.2 $28.9 Savings $47 $
Slide 7: Expanded Deposit Capabilities
Expanded Deposit Capabilities Despite recent industry-wide volatility, our efforts to grow and deepen customer relationships remain on track Expanded Commercial 2Q 2023 Net Growth1 in both Consumer and Business Capabilities Checking Households Modernized Digital 11% Consumer Checking Household Banki
Slide 8: Pre-Tax Pre-Provision Income Trends
Pre-Tax Pre-Provision Income1 Trends PTPP income was up 21% vs. 2Q 2022, driven by revenue growth and disciplined expense management ($ in millions) $(0) 2Q22 Pre- 2Q22 2Q22 3Q22 Pre- 3Q22 3Q22 4Q22 Pre- 4Q22 4Q22 1Q23 Pre- 1Q23 1Q23 2Q23 Pre- 2Q23 2Q23 Tax Income Provision PTPP Tax Income Provision
Slide 9: Average Yield Trends
Average Yield Trends ASB continues to benefit from rising asset yields, while funding costs have risen throughout 1H 2023 Average Yields (%) Asset & Liability Yield / Rate Trends (%) 5.18 6.66 7.04 4.94 6.77 5.93 4.46 6.39 3.72 5.55 4.48 4.62 4.78 4.12 3.06 4.29 2.97 3.75 3.22 3.30 3.31 2.48 3.12 3.
Slide 10: Net Interest Income & Net Interest Margin Trends
Net Interest Income & Net Interest Margin Trends NII increased 19% year-over-year despite recent funding cost pressures facing the industry Net Interest Income & Net Interest Margin ($ in millions) Maintained receive fixed swaps of $289 $2.85 billion $274 $264 in 2Q 2023 $258 $216 3.31% 3.13% 3.07%
Slide 11: Cash & Investment Securities Portfolio
Cash & Investment Securities Portfolio We continue to target investments to total assets of 18% to 20% in 2023 EoP Securities Book Composition CET1 Including AOCI1 (%) ($ in billions) 9.35 9.45 9.48 8.51 8.74 8.60 $7.7 $7.7 $0.4 $0.3 $6.9 $7.0 $6.7 $0.3 $0.3 4Q 2022 1Q 2023 2Q 2023 $0.3 CET1 Ratio C
Slide 12: Noninterest Income Trends
Noninterest Income Trends Noninterest income increased slightly from 1Q 2023, with mortgage banking boosted by MSR valuations Noninterest Income Trends Service Charges & Deposit Account Fees ($ in millions) ($ in millions) $17 $15 $14 $13 $12 $75 $71 $8 $66 $10 $62 $62 2Q 2022 3Q 2022 4Q 2022 1Q 202
Slide 13: Noninterest Expense Trends
Noninterest Expense Trends Our noninterest expense to average assets ratio decreased for the third consecutive quarter to 1.89% Noninterest Expense Trends Fully Tax-Equivalent Efficiency Ratio2 (%) ($ in millions) 61.5 $196 $197 59.8 60.3 $191 58.8 58.5 $6 $187 57.0 $181 55.5 56.1 $1 54.1 54.6 $49 $
Slide 14: Capital Profile
Capital Profile We continued to manage capital within our target ranges during 2Q 2Q 2023 Capital Ratios (%) Year-End 2023 Capital Targets (%) 12.22 9.48 9.50 7.25 10.07 9.00 6.94 9.48 6.75 2Q 2023 YE2023 2Q 2023 YE2023 6.94 TCE Ratio 1 Target CET1 Ratio Target Range Range Tangible Book Value / Shar
Slide 15: Allowance for Credit Losses on Loans (ACLL) Update
Allowance for Credit Losses on Loans (ACLL) Update Our ACLL percentage increased slightly to 1.26% as of June 30 2Q 2023 ACLL1 Update ACLL / Total Loans (%) ▪ ACLL increased $11 million from the prior quarter to $377 million, driven by a mix of portfolio loan growth and nominal credit movement coupl
Slide 16: Credit Quality Trends
Credit Quality Trends Key credit metrics remain stable despite volatility in the macro outlook Total Nonperforming Assets Nonaccrual Loans ($ in millions) ($ in millions) $126 $133 $127 $133 $140 $131 $108 $116 $118 $111 $17 $15 $8 $18 $15 $1 $16 $14 $24 $36 $47 $38 $29 $25 $22 $108 $116 $111 $118 $
Slide 17: 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 2Q 22 3Q 22 4Q 22 1Q 23 2Q 23 15% Other Midwest2 Portfolio LTV 60% 60% 60% 60% 60% 22% CRE by Delinquen
Slide 18: 2023 Full-Year Outlook Updates
2023 Full-Year Outlook Updates1 Previous Guidance (5/11/2023) Updated Guidance2 ▪ Total loan growth of 6% to 8% ▪ Total loan growth of 6% to 8% ▪ Average core customer deposit3 ▪ End of period core customer deposit3 Balance Sheet growth of 1% to 3% compression of 3% (growth of 2% in Management ▪ Tar
Slide 19: Appendix
Appendix
Slide 20: Stable, Granular Deposit Portfolio
Stable, Granular Deposit Portfolio Uninsured, uncollateralized deposits were only 21% of total deposits as of 6/30/2023 EoP Total Deposit Trends (Associated Bank, N.A.) ($ in billions) $30.4 $32.1 21% $29.3 $29.7 Percentage of total deposits that were $28.6 uninsured and uncollateralized as of 6/30/
Slide 21: Liquidity Sources
Liquidity Sources As of 6/30/2023, ASB’s total liquidity sources covered 179% of uninsured, uncollateralized deposits ($ in millions) Liquidity Sources 3/31/2023 6/30/2023 Federal Reserve Balance $504.2 $179.0 Available FHLB Chicago Capacity $3,453.8 $5,148.4 Available Fed Discount Window Capacity $
Slide 22: Additional Loan Trends
Additional Loan Trends EoP Quarterly Loan Trends Average Loan Change (1Q 2023 to 2Q 2023) ($ in billions) ($ in millions) $29.2 $29.8 $28.8 Auto Finance $164 $27.8 $26.5 Residential Mortgage $117 $10.9 $11.1 Mortgage Warehouse $116 $10.8 $10.6 $10.2 CRE Investor $113 All Other Specialized $99 $7.2 $
Slide 23: Total Loans Outstanding Balances as of June 30, 2023
Total Loans Outstanding Balances as of June 30, 2023 ($ in millions) % of Total % of Total 1 1 6/30/2023 Loans 6/30/2023 Loans 2 C&BL (by NAICS ) CRE (by property type) Utilities $ 2,324 7.8% Multi-Family $ 2,554 8.6% Manufacturing & Wholesale Trade 2,286 7.7% Industrial 1,744 5.8% Real Estate (incl
Slide 24: Loan Stratification Outstanding Balances as of June 30, 2023
Loan Stratification Outstanding Balances as of June 30, 2023 Illinois Illinois Minnesota 15% Minnesota 23% 9% Illinois 7% 15% Texas Minnesota Other 6% 9% Midwest2 22% Wisconsin C&BL by CRE by 24% Geography Other 2 Midwest Wisconsin Total Other Geography 11% $11.1 billion 27% Loans1 Midwest 2 14% Wis
Slide 25: Reconciliation and Definitions of Non-GAAP Items
Reconciliation and Definitions of Non-GAAP Items Pre-Tax Pre-Provision Income Reconciliation1 ($ in millions) 2Q 2022 3Q 2022 4Q 2022 1Q 2023 2Q 2023 Income before income taxes $110 $122 $134 $131 $111 Provision for credit losses - $17 20 18 22 Pre-tax pre-provision income $110 $139 $154 $149 $133 A
Slide 26: Reconciliation and Definitions of Non-GAAP Items
Reconciliation and Definitions of Non-GAAP Items Efficiency Ratio Reconciliation 2Q 2022 3Q 2022 4Q 2022 1Q 2023 2Q 2023 Federal Reserve efficiency ratio 61.53% 60.32% 55.47% 56.07% 58.49% Fully tax-equivalent adjustment (0.98)% (0.87)% (0.77)% (0.79)% (0.85)% Other intangible amortization (0.76)% (