Associated Banc-corp · NYSE:ASB
Associated Banc-corp — Investor Presentation (September 2019)
24 slides from Associated Banc-corp's investor presentation, Sep 6, 2019
Slide 1: Associated Banc-Corp Investor Presentation 2019 Third Quarter
Exhibit 99.1 Associated Banc-Corp Investor Presentation 2019 Brookfield Office (Milwaukee MSA) – Opened October 2017 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 20191 Highlights and Accomplishments $33 billion of assets $23 billion of loans . Largest bank headquartered in Wisconsin2 $4 billion of equity $25 billion of deposits . Approximately 4,700 employees, servicing 1.3 million customer accounts in 8 states and 2Q 2019 Averag
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 Manufacturing Focus Well-Suited for Our Midwest Location nearly 30% of all U.S. manufacturing jobs2 ASB C&BL Loans by Industry Total ASB Loans by G
Slide 5: Actively Positioning for Lower Rates
ACTIVELY POSITIONING FOR LOWER RATES With expectations of lower interest rates, we are reducing wholesale funding and liquidity positions to defend net interest margin Second Quarter Actions1 Third Quarter Actions . Reduced network . Reducing network ~$400 million transaction deposits transaction de
Slide 6: Loan Trends
LOAN TRENDS Approximately $240 million of portfolio mortgages sold in 3Q 2019 for CECL and interest rate risk mitigation Average Quarterly Loans Average Loan Growth (1Q19 to 2Q19) ($ in billions) 2Q15 – 2Q19 ($ in millions) CAGR $23.0 $23.4 Mortgage warehouse $165 $20.5 $19.6 General commercial $70
Slide 7: Commercial Loan Management
COMMERCIAL LOAN MANAGEMENT1 Stable commercial and business lending with ongoing de-risking of the oil & gas portfolio; CRE remains steady Commercial and Business Oil & Gas Loans Commercial Real Estate Lending2 ($ in billions) ($ in millions) ($ in billions) 33% 34% 34% 32% 32% 24% 23% 22% 22% 22% 3.
Slide 8: Investment Securities Portfolio Trends
INVESTMENT SECURITIES PORTFOLIO TRENDS Taxable securities portfolio is a source of funds and is expected to continue to shrink in 3Q and 4Q 2019 Portfolio1 and Yield Trends (Quarterly) Investments / Average Earning Assets ($ in billions) 3.63% 3.68% 3.73% 3.74% 3.77% 24% 23% 23% 22% 21% 2.22% 2.26%
Slide 9: Deposit Portfolio Trends
DEPOSIT PORTFOLIO TRENDS Community, Consumer, and Business segment deposits now represent 56% of total average deposits1 Average Quarterly Deposits Period-end Funding Change2 ($ in billions) ($ in millions) $25.1 $24.7 $24.2 $24.6 $23.6 Savings $375 Lower- $5.3 $5.0 $5.1 cost $5.1 $5.4 Interest-bear
Slide 10: Repositioning Funding
REPOSITIONING FUNDING1 Reduction of network deposits continues; $250 million of 2.750% Senior Notes expected to be called in Oct. 2019 FHLB Advances and Network Quarter-end Loan to Deposit Ratio Transaction Deposits ($ in billions) 98% 96% 94% 94% $4.8 92% $4.3 91% 90% 89% $3.5 1Q 2Q 3Q 4Q $3.1 $3.2
Slide 11: Net Interest Income and Yields — Quarterly Trends
NET INTEREST INCOME AND YIELDS — QUARTERLY TRENDS Deposit costs have likely peaked, but we expect near-term margins will continue to compress Net Interest Income and Net Interest Margin Average Yields ($ in millions) 3.02% 3.02% 5.51% 2.92% 2.90% 5.19% 5.19% 2.87% 5.06% 4.98% 4.86% $226 $224 4.78% 4
Slide 12: Growing and Diversified Business Model
GROWING AND DIVERSIFIED BUSINESS MODEL Mortgage banking and wealth management benefitting from current environment Noninterest Income Mortgage Banking, Net2 ($ in millions) ($ in millions) $17 $14 $96 $13 $93 $8 $10 $86 $82 $82 YTD 15 YTD 16 YTD 17 YTD 18 YTD 19 Wealth Management Fees2,3 ($ in milli
Slide 13: 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 Ratio2 Branches and FTEs ($ in millions) $211 70% 4,792 69% 4,707 $7 $204 4,666 67% 4,
Slide 14: Investing in Customer Technology
INVESTING IN CUSTOMER TECHNOLOGY Digital first strategies remain our highest priority investments Retail Customer Focused Enhancements Commercial Client Focused Upgrades . New mobile app received 4.7-star rating with ~10,000 . Cash management (ACI) upgrade completed reviews1 with full customer base
Slide 15: Capital Priorities
CAPITAL PRIORITIES Committed to a consistent capital management philosophy2 with rigorous capital discipline Quarterly $23.0 $23.4 Average Loans $20.5 Funding $19.6 ($ in billions) 1. Organic Highest Priority $18.2 Growth 2Q15 2Q16 2Q17 2Q18 2Q19 Quarterly $0.17 $0.15 Commitment Dividends $0.12 Payi
Slide 16: Capital Levels and Share Repurchases
CAPITAL LEVELS AND SHARE REPURCHASES Repurchased $60 million of shares in 3Q 2019 while maintaining2 cushion to absorb CECL in 1Q 2020 TCE Ratio1 2014-2019 Cumulative Shares Repurchased2 (millions) 37.4 31.5 7.8% 7.3% 7.4% 6.9% 6.9% 7.1% 22.0 20.4 19.3 14.3 2 2Q14 2Q15 2Q16 2Q17 2Q18 2Q19 2014 2015
Slide 17: Current Expected Credit Losses (CECL)
CURRENT EXPECTED CREDIT LOSSES (CECL) Our current capital levels and expected earnings should allow us to readily absorb the anticipated CECL impact CECL Adoption in 1Q 2020 Expected Impact to ACL1 in 1Q 2020 . Life-of-loan CECL reserves will be driven by our . 30%-40% increase to ACL from year-end
Slide 18: Credit Quality – Quarterly Trends
CREDIT QUALITY – QUARTERLY TRENDS Continued benign credit environment with stable provision outlook in 3Q 2019 Potential Problem Loans1 Nonaccrual Loans1 ($ in millions) ($ in millions) $242 $250 $241 $236 $204 $166 $154 $156 $167 $128 2Q 2018 3Q 2018 4Q 2018 1Q 2019 2Q 2019 2Q 2018 3Q 2018 4Q 2018
Slide 19: 2019 Revised Outlook
2019 REVISED OUTLOOK This outlook reflects a stable domestic economy and two additional 25 bps Fed Funds rate decreases in 2019. We may adjust our outlook if, and when, we have more clarity on these factors. ▪ ~3% annual average loan ▪ Noninterest expense of growth for 20191 $785 million - $790 mill
Slide 20: Appendix
APPENDIX
Slide 21: FNB Staunton Transaction Summary
FNB STAUNTON TRANSACTION SUMMARY Seller: First Staunton Bancshares Transaction Value: . ~$76 million for franchise . ~1.30x 1Q 2019 reported tangible Staunton book value . ~4% deposit premium Alton Bethalto Consideration: 100% cash Assets Purchased: . Nine branches Edwardsville . ~$350 million of lo
Slide 22: Acquisitions
ACQUISITIONS Huntington completed… …and Staunton up next Was an in-market, cost takeout Is an in-market, cost takeout driven driven depository acquisition depository acquisition Delivering on Filled in network gaps and boosted Fills in network gaps and boosts our Our Strategy our network in key loca
Slide 23: Loans Stratification Outstandings as of June 30, 2019
LOANS STRATIFICATION OUTSTANDINGS AS OF JUNE 30, 2019 C&BL by Geography Total Loans1 CRE by Geography $8.5 billion $5.2 billion Minnesota 7% Illinois Illinois Minnesota Texas3 15% 11% 14% 10% Illinois 24% Other Minnesota 2 Other Midwest 10% 11% Wisconsin Midwest2 31% Wisconsin 24% Wisconsin 28% 26%
Slide 24: Reconciliation and Definitions of Non-GAAP Items
RECONCILIATION AND DEFINITIONS OF NON-GAAP ITEMS ($ IN MILLIONS) Efficiency Ratio 2Q15 2Q16 2Q17 2Q18 2Q19 Federal Reserve efficiency ratio 70.23% 69.34% 66.69% 65.77% 62.71% Fully tax-equivalent adjustment (1.35)% (1.36)% (1.30)% (0.65)% (0.84)% Other intangible amortization (0.35)% (0.21)% (0.18)%
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