Associated Banc-corp · NYSE:ASB
Associated Banc-corp — Q4 2024 Earnings Presentation
35 slides from Associated Banc-corp's earnings presentation, Jan 23, 2025
Slide 1: Fourth Quarter 2024 Earnings Presentation
Fourth Quarter 2024 Earnings Presentation January 23, 2025 Associated Banc-Corp
Slide 2: Important Disclosures
Important Disclosures 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 plan
Slide 3: Fourth Quarter & Full Year 2024 Results
Fourth Quarter & Full Year 2024 Results1 4Q 2024 Operating Results FY 2024 Highlights ▪ GAAP diluted EPS of $(1.03) 3.6% 4.3% ▪ Adjusted diluted EPS of $0.572 Core Customer Deposit Total Deposit Growth Growth3 ▪ Total deposit growth of $1.1 billion +$1.2 billion +$1.2 billion ▪ Total core customer d
Slide 4: 4Q 2024 EPS Adjustments
4Q 2024 EPS Adjustments 4Q GAAP EPS was impacted by several nonrecurring items A $130M loss on a mortgage loan portfolio sale and a $148M loss on a sale of investments (both pre-tax) reduced noninterest income by $279M A loss on prepayment of FHLB advances added $14M of noninterest expense $0.09 $0.
Slide 5: Advancing our Growth Strategy
Advancing our Growth Strategy1 Growth initiatives & an infusion of talent in key areas have provided tailwinds for our company into 2025 Net Promoter Score2 Filled Several Key Leadership Roles ▪ Onboarded four new executive leaders in 2024 ▪ Added three new directors in 2024 51 39 42 42 Upgraded Cus
Slide 6: Quarterly Loan Trends
Quarterly Loan Trends Total period end loans decreased $222M vs. 3Q24, but increased $501M after excluding the 4Q24 loan sale 1,2 Average Quarterly Loans Period End Loan Change (9/30/2024 to 12/31/2024) ($ in billions) ($ in millions) Commercial & Industrial $315 $30.0 $29.6 $29.6 $30.2 $29.4 CRE-In
Slide 7: Annual Loan Trends
Annual Loan Trends Total period end loans increased $552 million vs. year-end 2023, with C&I loans up $842 million Period End Annual Loans Emerging C&I Loan Growth ($ in billions) (Period end balances) $29.2 $29.8 $28.8 $24.5 $24.2 Commercial & Industrial Loans $10.8 $10.8 $11.7 $9.4 $9.4 1H 2024 2H
Slide 8: Quarterly Deposit & Funding Trends
Quarterly Deposit & Funding Trends Total period end deposits increased $1.1B vs. the prior quarter, while core customer deposits1 grew by $869M Average Quarterly Deposits Period End Funding Change (9/30/2024 to 12/31/2024) ($ in billions) ($ in millions) $34.3 Total Deposits +$1,094 (+3%) $33.3 $32.
Slide 9: Annual Deposit Trends
Annual Deposit Trends Total period end deposits & core customer deposits1 both grew by $1.2B in 2024 Average Annual Deposits Period End Deposit Growth ($ in billions) ($ in billions) $33.4 $31.3 $28.8 $5.7 $27.7 $6.6 $26.0 $34.6 $33.4 $8.2 $7.4 $8.1 $6.9 $28.6 $6.9 $27.4 $6.6 $5.1 $5.6 $6.1 $4.8 +4.
Slide 10: Average Yield Trends
Average Yield Trends Earning asset yields decreased 22 bps during 4Q, while interest-bearing liabilities costs decreased 30 bps Quarterly Average Yields (%) Asset & Liability Yield / Rate Trends (%) 7.42 7.56 7.45 7.52 7.09 7.22 7.24 7.27 7.11 5.64 5.65 5.68 5.51 5.46 6.74 5.72 5.65 5.52 5.58 5.42 3
Slide 11: Net Interest Income & Net Interest Margin Trends
Net Interest Income & Net Interest Margin Trends NII increased by $8 million and NIM expanded by 3 bps during 4Q Net Interest Income & Net Interest Margin 4Q 2024 Pro Forma Net Interest Margin1 ($ in millions) Our 4Q 2024 balance sheet repositioning & credit card balance acquisition would have added
Slide 12: Interest Rate Risk Management
Interest Rate Risk Management1 We’ve taken proactive steps to reduce our asset sensitivity & protect NII in a falling rate environment Balance Sheet Actions Since 2021 Estimated NII Sensitivity Profile (%) (12-Month Ramp, Dynamic Forecast) ▪ Added $2.8 billion of fixed-rate prime/super prime Auto Fi
Slide 13: Cash & Investment Securities Portfolio
Cash & Investment Securities Portfolio We are targeting securities + cash / total assets of 22% to 24% in 2025 Period End Securities Book Composition CET1 Including AOCI1 (%) ($ in billions) $8.5 10.00 9.68 9.72 9.78 $8.1 $0.2 9.39 9.43 9.38 $7.9 9.01 $7.7 $7.8 $0.2 8.87 8.79 $0.2 $0.3 $0.2 $3.7 $3.
Slide 14: Noninterest Income Trends
Noninterest Income Trends GAAP noninterest income was impacted by nonrecurring items in 4Q 2024 Quarterly Noninterest Income Trends ($ in millions) $70 $72 $65 $65 $67 $5 $12 $6 $6 $9 $8 $4 $4 $5 $2 $3 $9 $3 $3 $2 $50 $52 $55 $54 $47 4Q 2023 Adj.1 1Q 2024 2Q 2024 3Q 2024 4Q 2024 Adj.1 4Q 2023 GAAP n
Slide 15: Noninterest Expense Trends
Noninterest Expense Trends 4Q noninterest expense included a $14 million loss on prepayment of FHLB advances Noninterest Expense Trends Efficiency Ratio (%) ($ in millions) 132.0 107.4 $239 $224 64.1 $31 61.0 57.2 61.5 60.9 61.5 60.4 61.1 $201 $14 $198 $196 $8 $60 $57 $47 $52 4Q 2023 1Q 2024 2Q 2024
Slide 16: Capital Profile
Capital Profile Our CET1 capital ratio increased by 28 bps in 4Q following the transactions announced during the quarter Capital Ratios (%) 4Q 2024 Pro Forma CET1 Ratio2 12.61 The residential mortgage loan sale announced 12.36 during 4Q 2024 would have added an incremental ~7 bps to our 4Q CET1 rati
Slide 17: Allowance for Credit Losses on Loans (ACLL)
Allowance for Credit Losses on Loans (ACLL) Our ACLL percentage increased by 2 basis points vs. the prior quarter to 1.35% ACLL1 Update ACLL / Total Loans (%) ▪ ACLL increased $5 million from the prior quarter to $402 million, driven primarily by incremental credit movement coupled with 1.32 1.31 1.
Slide 18: Credit Quality Trends
Credit Quality Trends 4Q 2024 credit quality remained solid with NALs down $5 million & NCOs down $1 million vs. prior quarter Total Delinquent Loans Nonaccrual Loans ($ in millions) ($ in millions) $178 $149 $154 $84 $80 $128 $74 $23 $123 $51 $56 $63 $48 $24 $21 $62 $37 $0 $19 $19 $17 $77 $48 $49 $
Slide 19: FY 2025 Outlook
FY 2025 Outlook FY 2025 Guidance1 Total Loan Growth Up 5% to 6% Total Deposit Growth Up 1% to 2% Core Customer Deposit Growth2 Up 4% to 5% Net Interest Income Up 12% to 13% Effective Tax Rate 19% to 21% CET1 Capital Ratio 10% to 10.5% GAAP Adjusted FY 2024 Result FY 2024 Result3 FY 2025 Guidance4 No
Slide 20: Appendix
Appendix
Slide 21: Balance Sheet Repositioning Summary
Balance Sheet Repositioning Summary We are on track to finalize our balance sheet repositioning in 1Q 2025 Actions Taken as of Estimated 12/4/2024 Remaining in 1Q 2025 12/31/2024 $0.2B in ARMs & $723M in residential mortgage Loan sale on track to close in Total Loans Sold1 $0.5B in fixed-rate mortga
Slide 22: Improving our Return Profile Over Time
Improving our Return Profile Over Time1 Our efforts to remix the balance sheet & drive toward improved profitability are on track Assets Liabilities Growing diversified asset classes to Attracting & deepening customer decrease reliance on legacy low-yielding, relationships to decrease reliance on lo
Slide 23: Stable, Granular Deposit Portfolio
Stable, Granular Deposit Portfolio As of 12/31/2024, ASB’s total liquidity sources covered 162% of uninsured, uncollateralized deposits Period End Deposit Trends (Associated Bank, N.A.) Liquidity Sources ($ in billions) $34.9 9/30/2024 12/31/2024 $33.5 $33.7 $33.8 $32.8 Federal Reserve Balance $405.
Slide 24: Additional Quarterly Loan Trends
Additional Quarterly Loan Trends Period End Quarterly Loan Trends Quarterly Average Loan Change (3Q24 to 4Q24) ($ in billions) ($ in millions) $29.5 $29.6 $30.0 $29.8 $29.2 Commercial & Industrial $455 $11.1 $11.4 Auto Finance $136 $10.8 $11.0 $11.7 CRE-Owner Occupied $48 $7.4 $7.3 $7.3 $7.2 $7.2 CR
Slide 25: Additional Annual Loan Trends
Additional Annual Loan Trends Average Annual Loans Quarterly Average Loan Change (4Q23 to 4Q24) ($ in billions) ($ in millions) $29.5 $29.7 Auto Finance $633 $26.2 $24.5 $24.1 Commercial & Industrial $570 $10.8 $11.1 $9.9 CRE-Owner Occupied $84 $9.4 $9.1 Home Equity & Other Cons. $31 $7.3 $7.3 $6.6
Slide 26: Additional Quarterly Deposit & Funding Trends
Additional Quarterly Deposit & Funding Trends Period End Quarterly Deposits Average Funding Change (3Q 2024 to 4Q 2024) ($ in billions) ($ in millions) $34.6 $33.4 $33.7 $33.6 Total Deposits +$1,017 (+3%) $32.7 $5.8 $6.1 $6.3 $5.8 $5.9 Core Customer Deposits1 +$703 (+3%) $8.0 Customer CDs $399 $7.6
Slide 27: Additional Annual Deposit Trends
Additional Annual Deposit Trends Period End Annual Deposits Quarterly Average Deposit Growth ($ in billions) ($ in billions) $34.6 $33.4 $29.6 $5.8 $28.5 $6.1 $26.5 $34.3 $7.8 $32.2 $8.5 $8.0 $7.6 $7.7 $28.1 $27.1 $6.8 $5.1 $6.5 $4.8 $5.5 $4.6 $6.0 $6.0 +6.7% $3.7 $4.4 +3.8% $6.7 $7.5 $6.9 $7.3 $8.0
Slide 28: High-Quality Commercial Real Estate Portfolio
High-Quality Commercial Real Estate Portfolio1 ASB has built a diversified CRE portfolio by partnering with well-known developers in stable Midwest markets CRE Credit Quality 4Q 23 1Q 24 2Q 24 3Q 24 4Q 24 Portfolio LTV 58% 59% 59% 58% 57% Com'l & Delinquencies/Loans3 0.52% 0.28% 0.01% 0.22% 0.50% Co
Slide 29: Total Loans Outstanding Balances as of December 31, 2024
Total Loans Outstanding Balances as of December 31, 2024 ($ in millions) % of Total % of Total 12/31/20241 Loans 12/31/20241 Loans C&BL (by NAICS 2) CRE (by property type) Utilities $ 2,570 8.6% Multi-Family $ 3,077 10.3% Manufacturing & Wholesale Trade 2,452 8.2% Industrial 1,635 5.5% Real Estate (
Slide 30: Loan Stratification Outstanding Balances as of December 31, 2024
Loan Stratification Outstanding Balances as of December 31, 2024 Illinois Illinois Minnesota 15% Minnesota 20% 10% 7% Minnesota Other Texas Illinois 9% 15% Midwest2 6% 21% Wisconsin C&BL by Other Other CRE by 22% Geography Midwest 2 10% Wisconsin Total Midwest 2 Geography 12% $11.7 billion 28% Loans
Slide 31: Swaps Update
Swaps Update Contractual swap balances as of 12/31/2024 ($ in billions) $2.85 $2.70 $2.45 $2.45 $1.85 3.88% 3.89% 3.89% 3.82% 3.80% 4Q 2024 1Q 2025 2Q 2025 3Q 2025 4Q 2025 Notional Balances Weighted Average Yield 30
Slide 32: Reconciliation & Definitions of Non-GAAP Items
Reconciliation & Definitions of Non-GAAP Items Nonrecurring Item Reconciliation YTD Dec 2024 per 4Q 2024 per share ($ in millions, except per share data) YTD Dec 2024 share data (diluted) 4Q 2024 data (diluted) GAAP net income (loss) $123 $0.72 $(162) $(1.03) Loss on mortgage portfolio sale1 130 0.8
Slide 33: Reconciliation & Definitions of Non-GAAP Items
Reconciliation & Definitions of Non-GAAP Items Nonrecurring Item Noninterest Expense Reconciliation YTD YTD ($ in thousands) Dec 2024 Dec 2023 4Q 2024 4Q 2023 GAAP noninterest expense $818,397 $813,682 $224,282 $239,391 Loss on prepayments of FHLB advances 1 (14,243) - (14,243) - FDIC special assess
Slide 34: Reconciliation & Definitions of Non-GAAP Items
Reconciliation & Definitions of Non-GAAP Items Common Equity Tier 1 Capital Ratio Reconciliation 4Q 2024 3Q 2024 2Q 2024 1Q 2024 4Q 2023 Common equity Tier 1 capital ratio 10.00% 9.72% 9.68% 9.43% 9.39% Accumulated other comprehensive loss adjustment (0.22)% (0.34)% (0.67)% (0.64)% (0.52)% Common eq
Slide 35: Reconciliation & Definitions of Non-GAAP Items
Reconciliation & Definitions of Non-GAAP Items Tangible Common Equity and Tangible Assets Reconciliation 1 ($ in millions) 4Q 2024 3Q 2024 2Q 2024 1Q 2024 4Q 2023 Common equity $4,411 $4,219 $4,048 $3,975 $3,980 Goodwill and other intangible assets, net (1,137) (1,139) (1,141) (1,143) (1,145) Tangib