Associated Banc-corp · NYSE:ASB
Associated Banc-corp — Investor Presentation (November 2023)
30 slides from Associated Banc-corp's investor presentation, Nov 9, 2023
Slide 1: Strategic Update Presentation
Strategic Update Presentation November 9, 2023 Associated Banc-Corp
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 Foundation
Our Foundation
Slide 4: Associated Banc-Corp (NYSE: ASB)
Associated Banc-Corp (NYSE: ASB)1 Established in 1861, Associated Banc-Corp is the largest bank holding company based in Wisconsin2 $42B $30B Assets Loans $4B $32B Equity Deposits Risk Mgmt & Shared Services 15% Corporate & 196 9.55% Commercial Commercial Branches3 CET1 Ratio Consumer Specialty 39%
Slide 5: Our Strong Foundation
Our Strong Foundation We’ve strengthened our company over time by mitigating risk and prioritizing the customer experience Strengthened Credit Risk Enhanced Liquidity & Interest Sharpened Customer Profile Rate Risk Management Experience Focus ▪ Replaced high-risk ▪ Achieved 100% secured ▪ 90% top-bo
Slide 6: Proactive Expense Management
Proactive Expense Management ASB’s year-over-year expense growth has finished below the peer median in nine of the past ten years YoY Noninterest Expense Growth Trends1 Includes acquisition-related 16.0% costs from Bank Mutual acquisition 6.9% 7.4% 6.9% 6.1% 6.0% 5.1% 5.4% 5.3% 4.9% 2.9% 2.2% 1.8% 0
Slide 7: Strategic Plan Phase 1
Strategic Plan Phase 1 Launched September 2021
Slide 8: Our People-Led, Digitally Enabled Strategic Plan
Our People-Led, Digitally Enabled Strategic Plan Launched in Sept. 2021, our strategic plan was designed to attract & deepen relationships, enhance profitability Enhanced our Expanded our Invested in Digital Lending Capabilities Deposit Capabilities Transformation ▪ RM Growth ▪ Full Relationship Com
Slide 9: Broad-Based Loan Growth
Broad-Based Loan Growth Successful execution of our lending initiatives has provided additional versatility to drive balanced growth EoP Loan Change (3Q 2021 to 3Q 2023) +34% Commercial RMs ($ in billions) March 2021 – September 2023 +28% Asset-Based Lending $30.2 Vertical Launched $23.6 $11.2 Equip
Slide 10: Relationship-Focused Deposit Growth
Relationship-Focused Deposit Growth Our strong customer deposit growth in 3Q was driven by our efforts to attract & deepen customer relationships EoP Deposit Change (2Q 2023 to 3Q 2023) Expanded Commercial ($ in millions) Capabilities Total Deposits +$109mm Modernized Digital Core Customer Deposits1
Slide 11: Invested in Digital Transformation
Invested in Digital Transformation We’re leveraging agile frameworks & customer feedback to more quickly deliver custom digital solutions Launch of Associated Bank Digital ▪ Cloud-based platform with 99.9% uptime ▪ Open architecture ▪ Improved security and self-service controls Digital Account Openi
Slide 12: Our Next Chapter
Our Next Chapter
Slide 13: 2024-2025 Strategic Themes
2024-2025 Strategic Themes The second phase of our strategic plan pairs organic initiatives with a targeted balance sheet repositioning Continuation of People-Led, Digitally Enabled Strategy Inorganic Transaction 1 2 3 Diligent Expense Reinvestments in People, Balance Sheet Control Products & Techno
Slide 14: The Enabler: Diligent Expense Control
1 The Enabler: Diligent Expense Control We’ve identified and executed expense cuts with a $25 million to $30 million impact in 2024 Estimated Noninterest Expense ($ in millions) NIE is expected to grow by One-Time Expense 3%-4% YoY in 2023 and 2024, from New Initiatives excluding one-time expenses E
Slide 15: Bolstering Talent in Key Areas
2 Bolstering Talent in Key Areas Attracting and retaining high-quality talent continues to be a key driver of our strategic plan Moves Already Made in 4Q 2023 ▪ Neil Riegelman joined the bank as our commercial banking segment leader in Milwaukee and Madison ▪ With over 20 years of experience, Riegel
Slide 16: Deepening Relationships in our Core Footprint
2 Deepening Relationships in our Core Footprint New commercial banking group leader expected to be announced by December 1, 2023 Milwaukee / Madison Twin Cities ▪ Hired Neil Riegelman as commercial banking segment ▪ Actively recruiting for 5 additional leader RMs in 2024 ▪ Planning to hire 3 additio
Slide 17: Evolving our Consumer Lending Strategy
2 Evolving our Consumer Lending Strategy We are intentionally moderating growth in our low-yielding residential mortgage business ▪ After exiting third-party originated (TPO) 3Q 2023 Average Loan Portfolio mortgage lending in 1Q 2023, we are making several other changes to our mortgage strategy: ▪ L
Slide 18: Enhancing the Customer Experience with Digital
2 Enhancing the Customer Experience with Digital We are continuing to make digital-forward investments to deliver a better experience for our customers Digital Roadmap Updates ▪ With 11 major customer-facing upgrades since launching our platform in Fall 2022, our quarterly cadence of enhancements pl
Slide 19: Accelerating Core Customer Deposit Growth
2 Accelerating Core Customer Deposit Growth We plan to generate incremental deposits through relationship-focused strategies that grow our customer base Our relationship-focused initiatives… Expanding Upstreaming Quarterly digital 8 new product commercial RM base customers into mass upgrades that im
Slide 20: Expected Benefits of Organic Plan
Expected Benefits of Organic Plan Our organic plan builds on our momentum while adhering to the foundational strengths that got us here Funds our Balance Sheet ▪ Cumulative incremental deposit balance growth1 of $2.5 billion by year-end 2025 Transitions our Balance Sheet into Higher Return Businesse
Slide 21: Balance Sheet Repositioning Transaction
Balance Sheet Repositioning Transaction
Slide 22: Repositioning our Balance Sheet
3 Repositioning our Balance Sheet A balance sheet repositioning enhances our ability to drive improved liquidity & profitability Assets Liabilities ▪ We are currently overweight in low-margin ▪ Long standing reliance on wholesale and low-risk assets deposit funding has been exacerbated by recent mar
Slide 23: Transaction Summary
3 Transaction Summary1 We’ve sold ~$0.8 billion in securities and have agreed to sell ~$1 billion in loans Total Assets $1.8B $1.0B in ARMs Total Loan Sales Agreement2 Wtd. Avg. Yield 3.72% $0.8B in AFS securities Total Securities Sold Wtd. Avg. Yield 2.60% Estimated One-Time Loss3 $157M (4Q 2023) R
Slide 24: Use of Proceeds
3 Use of Proceeds We plan to pay down $0.9 billion of FHLB advances & reinvest $0.7 billion in securities at current rates Pay Down FHLB Advances Securities & Cash Reinvestment ($ in billions) Total Reinvestment $732M ( $0.9 ) FHLB Advance Reduction Cash 14% $3.7 $2.8 GNMA 86% 3Q 2023 Actual 3Q 2023
Slide 25: Key Benefits of Transaction
3 Key Benefits of Transaction This transaction enables us to reduce wholesale funding while enhancing liquidity & profitability Loan to Deposit (LTD) Ratio Wholesale Funding / Total Assets1 (3.2%) Loan Sales FHLB (1.7%) Advance Reduction 94.0% 90.8% 23.3% 21.7% 3Q 2023 Actual 3Q 2023 Pro Forma 3Q 20
Slide 26: Other Pro Forma Impacts
3 Other Pro Forma Impacts Repositioning enables us to accelerate our organic strategy by disposing of low-yielding, long-duration assets EoP Total Assets Impact Common Equity Tier 1 (CET1) Ratio Impact ($ in billions) $41.6 Our CET1 Ratio is expected $40.6 $38.0 $3.1 to remain well within our $3.1 9
Slide 27: Summary of Balance Sheet Repositioning Benefits
Summary of Balance Sheet Repositioning Benefits Reduces reliance on wholesale funding, improving overall liquidity position Enhanced capital generation driven by improved earnings profile Efficient use of capital to reduce exposure to low- yielding, longer-duration assets Improves overall yield of e
Slide 28: Medium-Term Operating Targets
Medium-Term Operating Targets We are refreshing our operating targets to account for our organic initiatives and balance sheet repositioning 3.00%+ Mid-Teens Net Interest Margin ROATCE 55%-60% <0.35% Efficiency Ratio NCOs / Avg. Loans Positive Operating Leverage 27
Slide 29: Appendix
Appendix
Slide 30: Reconciliation and Definitions of Non-GAAP Items
Reconciliation and Definitions of Non-GAAP Items Average Tangible Common Equity Reconciliation1 ($ in millions) 3Q 2023 Common equity $3,938 Goodwill and other intangible assets, net (1,149) Tangible common equity $2,789 End of Period Core Customer Deposits Reconciliation ($ in millions) 6/30/2023 9
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