Associated Banc-corp · NYSE:ASB
Associated Banc-corp — Q1 2023 Earnings Presentation
26 slides from Associated Banc-corp's earnings presentation, Apr 20, 2023
Slide 1: First Quarter 2023 Earnings Presentation
First Quarter 2023 Earnings Presentation APRIL 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: First Quarter 2023 Results
First Quarter 2023 Results ASB reports 1Q 2023 net income available to common equity of $100 million, or $0.66 per common share 1Q 2023 Highlights1 $100 million Net Income Available to Common Equity ▪ Total period end loan growth of $408 million (+1%) (+41% vs. 3/31/2022) ▪ Total period end deposit
Slide 4: Quarterly Loan Trends
Quarterly Loan Trends Total loans continued to grow in 1Q, but growth decelerated vs. 2H 2022 as expected Average Quarterly Loans EoP Loan Change (12/31/2022 to 3/31/2023) ($ in billions) ($ in millions) $28.2 $28.8 Mortgage Warehouse $218 $27.1 $25.4 Auto Finance $169 $24.1 $10.5 $10.6 Residential
Slide 5: Quarterly Deposit Trends
Quarterly Deposit Trends EoP core customer deposits1 decreased by less than 1% vs. 12/31/2022, despite industry volatility Average Quarterly Deposits EoP Deposit Change (12/31/2022 to 3/31/2023) ($ in billions) ($ in millions) Customer CDs $364 $29.3 $29.9 $28.6 $28.2 $28.9 Savings $126 $7.3 Core $8
Slide 6: Pre-Tax Pre-Provision Income Trends
Pre-Tax Pre-Provision Income1 Trends PTPP income was up 67% vs. 1Q 2022, driven by strong revenue growth and disciplined expense management ($ in millions) $(0) 1Q22 Pre- 1Q22 1Q22 2Q22 Pre- 2Q22 2Q22 3Q22 Pre- 3Q22 3Q22 4Q22 Pre- 4Q22 4Q22 1Q23 Pre- 1Q23 1Q23 Tax Income Provision PTPP Tax Income Pr
Slide 7: Average Yield Trends
Average Yield Trends ASB continues to benefit from rising asset yields, while funding costs have begun to ramp up as expected Average Yields (%) Asset & Liability Yield / Rate Trends (%) 6.66 5.93 4.94 6.39 4.46 4.62 5.55 3.72 4.12 4.48 4.29 2.97 3.50 3.22 3.36 3.75 3.30 2.60 2.48 2.98 2.97 3.12 2.5
Slide 8: Net Interest Income & Net Interest Margin Trends
Net Interest Income & Net Interest Margin Trends NII decreased slightly in 1Q, driven by an increase in liability costs relative to loan yields ($ in millions) $289 $274 $264 $216 3.31% $188 3.13% 3.07% 2.71% 2.42% 1Q 2022 2Q 2022 3Q 2022 4Q 2022 1Q 2023 Quarterly Net Interest Income Quarterly Net I
Slide 9: Interest Rate Risk Management
Interest Rate Risk Management We have taken gradual steps to reduce asset sensitivity and interest rate risk over time ▪ Over the past three quarters, we’ve executed $2.85 billion of received Increased received fixed swaps fixed swaps from $2 billion in 4Q 2022 to $2.85 billion ▪ We’ve also added hi
Slide 10: Cash and Investment Securities Portfolio
Cash and Investment Securities Portfolio We continue to target investments to total assets of 18% to 20% in 2023 EoP Securities Book Composition CET1 Including AOCI1 (%) ($ in billions) The estimated portfolio 9.35 9.45 duration on our AFS 8.51 8.74 portfolio was 3.98 years as of 3/31/2023 $7.7 $7.0
Slide 11: Noninterest Income Trends
Noninterest Income Trends Noninterest income increased slightly from 4Q 2022, with modest growth in mortgage banking income Noninterest Income Trends Service Charges & Deposit Account Fees ($ in millions) ($ in millions) $17 $17 $15 $14 $13 $74 $75 $71 $4 $8 $9 $10 $62 $62 1Q 2022 2Q 2022 3Q 2022 4Q
Slide 12: Noninterest Expense Trends
Noninterest Expense Trends Noninterest expense decreased 5% vs. the prior quarter despite ongoing investments in people and tech Noninterest Expense Trends Fully Tax-Equivalent Efficiency Ratio2 (%) ($ in millions) 65.7 63.8 61.5 $196 $197 59.8 60.3 58.8 $6 $187 $181 55.5 56.1 $173 $1 54.1 54.6 $49
Slide 13: Capital Profile
Capital Profile We are continuing to manage capital toward target ranges, while improving tangible book value per share 1Q 2023 Capital Ratios (%) Year-End 2023 Capital Targets (%) 12.22 9.45 9.50 7.25 10.05 7.03 9.00 9.45 6.75 1Q 2023 YE2023 1Q 2023 YE2023 7.03 TCE Ratio Target CET1 Ratio Target Ra
Slide 14: Allowance for Credit Losses on Loans (ACLL) Update
Allowance for Credit Losses on Loans (ACLL) Update Our ACLL percentage increased slightly from 1.22% at year-end to 1.25% as of March 31, 2023 1Q 2023 ACLL1 Update ACLL / Total Loans (%) ▪ ACLL ($) increased $15 million from the prior quarter to $366 million, largely driven by a mix of portfolio loa
Slide 15: Credit Quality Trends
Credit Quality Trends Credit remains benign with delinquencies down vs. the prior quarter Total Nonperforming Assets Nonaccrual Loans ($ in millions) ($ in millions) $161 $143 $18 $126 $133 $126 $133 $0 $108 $116 $118 $111 $18 $16 $15 $15 $1 $16 $24 $81 $14 $47 $38 $29 $25 $143 $116 $118 $108 $111 $
Slide 16: Supplemental Information
Supplemental Information
Slide 17: Stable, Granular Deposit Portfolio
Stable, Granular Deposit Portfolio1 Uninsured, uncollateralized deposits are only 24% of total deposits; ASB has 103% liquidity coverage 2 EoP Total Deposit Trends (Associated Bank, N.A.) ▪ After removing deposits collateralized ($ in billions) by investments and FHLB letters of credit, uninsured an
Slide 18: Liquidity Sources
Liquidity Sources As of 4/19/2023, ASB’s total liquidity sources cover 177% of uninsured, uncollateralized deposits ($ in millions) Liquidity Sources 3/31/2023 4/19/2023 Federal Reserve Balance $504.2 $503.3 Available FHLB Chicago Capacity $3,453.8 $4,740.6 Available Fed Discount Window Capacity $1,
Slide 19: High-Quality Commercial Real Estate Portfolio
High-Quality Commercial Real Estate Portfolio1 ASB has built a diversified portfolio by partnering with well-known developers in stable Midwest markets CRE Credit Quality Minnesota Illinois 10% 15% Other 1Q 22 2Q 22 3Q 22 4Q 22 1Q 23 Midwest2 23% Period End Bal ($B) $6.2 $6.6 $6.9 $7.2 $7.2 CRE by P
Slide 20: 2023 Full-Year Outlook Updates
2023 Full-Year Outlook Updates1 Previous Guidance (2/13/2023) Updated Guidance2 ▪ Total loan growth of 7% to 9% ▪ Total loan growth of 6% to 8% ▪ Average core customer deposit3 ▪ Average core customer deposit3 Balance Sheet growth of 3% to 5% growth of 1% to 3% Management ▪ Target investments/total
Slide 21: Appendix
Appendix
Slide 22: Additional Loan Trends
Additional Loan Trends EoP Quarterly Loan Trends Average Loan Change (4Q 2022 to 1Q 2023) ($ in billions) ($ in millions) $28.8 $29.2 Auto Finance $246 $27.8 $26.5 CRE Construction $144 $24.5 $10.8 $10.9 General Commercial $144 $10.6 $10.2 Residential Mortgage $141 $9.3 Power & Utilities $57 $7.2 $7
Slide 23: Total Loans Outstanding Balances as of March 31, 2023
Total Loans Outstanding Balances as of March 31, 2023 Well-diversified $29.2 billion loan portfolio ($ in millions) % of Total % of Total 1 1 3/31/2023 Loans 3/31/2023 Loans 2 C&BL (by NAICS ) CRE (by property type) Utilities $ 2,201 7.5% Multi-Family $ 2,529 8.7% Manufacturing & Wholesale Trade 2,1
Slide 24: Loan Stratification Outstanding Balances as of March 31, 2023
Loan Stratification Outstanding Balances as of March 31, 2023 Illinois Illinois Minnesota 15% Minnesota 23% 10% Illinois 7% 15% Texas Minnesota 5% 10% Other Midwest2 Wisconsin C&BL by CRE by 23% 24% Geography Other Midwest 2 Wisconsin Total Geography 11% Other $10.9 billion 27% Loans1 Midwest 2 14%
Slide 25: Reconciliation and Definitions of Non-GAAP Items
Reconciliation and Definitions of Non-GAAP Items ($ in millions) Pre-Tax Pre-Provision Income Reconciliation1 1Q 2022 2Q 2022 3Q 2022 4Q 2022 1Q 2023 Income before income taxes $93 $110 $122 $134 $131 Provision for credit losses (4) - $17 20 18 Pre-tax pre-provision income $89 $110 $139 $154 $149 Av
Slide 26: Reconciliation and Definitions of Non-GAAP Items
Reconciliation and Definitions of Non-GAAP Items ($ in millions) Selected Trend Information1 1Q 2022 2Q 2022 3Q 2022 4Q 2022 1Q 2023 Wealth management fees $22 $21 $20 $20 $20 Service charges and deposit account fees 17 17 15 14 13 Card-based fees 10 11 11 11 11 Other fee-based revenue 4 4 4 3 4 Fee