Associated Banc-corp · NYSE:ASB
Associated Banc-corp — Q4 2018 Earnings Presentation
20 slides from Associated Banc-corp's earnings presentation, Jan 24, 2019
Slide 1: Fourth Quarter 2018 Earnings Presentation
Exhibit 99.2 FOURTH QUARTER 2018 EARNINGS PRESENTATION January 24, 2019
Slide 2: Disclaimer
DISCLAIMER 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 plans, objectiv
Slide 3: 2018: Momentum Continues
2018: MOMENTUM CONTINUES ($ in millions) $356 Total $353 $333 noninterest Positive revenue growth trends... Accelerating $296 ▪ income $261 $269 ▪ Net interest income up 19% year over year Revenue Fee-based 1 1 ▪ Fee-based revenue up 10% year over year Growth $707 $741 $880 ▪ revenue Net interest 20
Slide 4: 2018 Summary of Results
2018 SUMMARY OF RESULTS1 Net income available to common equity of $323 million, or $1.89 per common share or $2.03 per common share, excluding acquisition related costs2 2018 Guidance 2018 Results ▪ Mid single digit loan growth Loan growth +10% Balance Sheet Loans/deposits 92% Management ▪ Maintain
Slide 5: Loan Portfolio - Annual Trends
LOAN PORTFOLIO - ANNUAL TRENDS Average Annual Loans Average Net Loan Change (from 2017) ($ in billions) ($ in millions) Residential mortgage $1,184 $22.7 Commercial real estate $481 $20.6 General commercial $191 $19.7 Oil and gas $145 $18.3 $7.7 REIT $107 $16.8 $7.3 Power & utilities $75 $7.4 $(29)
Slide 6: Loan Portfolio - Quarterly Trends
LOAN PORTFOLIO - QUARTERLY TRENDS1 Average Quarterly Loans Average Net Loan Change (from 3Q 2018) ($ in billions) ($ in millions) YoY Oil &Gas $47 Growth $23.0 $23.0 $22.8 Total $22.1 Commercial & REIT $43 $20.9 business loans: + $81 million $7.7 12% Power & utilities $23 $7.3 $7.9 $8.0 $7.2 General
Slide 7: Deposit Portfolio - Annual Trends
DEPOSIT PORTFOLIO - ANNUAL TRENDS Average Annual Deposits Period End Low-cost Deposit Mix (%) ($ in billions) 49% 50% 51% 47% 46% $24.1 24% 23% 24% 25% $21.9 26% $21.0 $5.2 $19.9 19% 20% 16% 14% 17% $5.0 $17.6 $5.1 7% 6% 7% 7% 8% $4.5 $4.8 2014 2015 2016 2017 2018 $4.2 $4.0 Savings Interest-bearing
Slide 8: Deposit Portfolio - Quarterly Trends
DEPOSIT PORTFOLIO - QUARTERLY TRENDS1 Average Quarterly Deposits Quarter-end Loan to Deposit Ratio ($ in billions) YoY 98% $24.7 $24.2 Growth $23.7 $23.7 96% $22.2 94% 94% 95% $5.3 $5.4 5% $5.1 $5.1 92% $5.1 91% 90% 89% $5.0 $4.5 $4.7 $4.8 16% 1Q 2Q 3Q 4Q $4.2 $1.9 Historical Quarter-end Range 2014
Slide 9: Net Interest Income and Margin - Annual Trends
NET INTEREST INCOME AND MARGIN - ANNUAL TRENDS Average Yields Net Interest Income & Net Interest Margin ($ in millions) 5.04% 3.08% 2.97% 3.89% 4.51% 3.68% $880 3.47% 3.46% 2.84% $14 2.80% 2.82% $15 3.66% $8 3.38% 3.40% 3.18% 3.23% 3.23% $741 2.59% 2.58% 2.45% 2.34% 2.42% $707 $681 $677 1.16% $844 0
Slide 10: Net Interest Income and Margin - Quarterly Trends
NET INTEREST INCOME AND MARGIN - QUARTERLY TRENDS Average Yields Net Interest Income & Net Interest Margin ($ in millions) 5.51% 2.92% 3.02% 2.92% 3.02% 2.79% 5.06% 4.98% 4.62% $227 $224 4.78% $5 4.05% 4.56% 4.52% $5 $219 $5 $1 $2 4.14% $2 $4 $3 3.79% $210 $1 3.52% $2 3.32% 3.36% 3.45% $4 3.18% $1 2
Slide 11: Noninterest Income - Annual Trends
NONINTEREST INCOME - ANNUAL TRENDS ($ IN MILLIONS) Banking Fees $353 $356 $329 $333 $66 $69 $65 $67 $64 $291 $20 $38 $20 $32 $47 $48 $50 $53 $57 $21 2014 2015 2016 2017 2018 Card-based fees Service charges Trust & Asset Management, Insurance, $296 and Brokerage & Advisory Income $269 $253 $261 $172
Slide 12: Noninterest Expense Trends
NONINTEREST EXPENSE TRENDS ($ IN MILLIONS) Annual Noninterest Expense Trend Quarterly Noninterest Expense Trend $822 $213 $211 $204 $193 $29 $181 $74 $80 $78 $77 $698 $703 $709 $75 $680 $310 $107 $118 $124 $124 $117 $278 $280 $279 $282 4Q 2017 1Q 2018 2Q 2018 3Q 2018 4Q 2018 Personnel Other Acquisit
Slide 13: Credit Quality - Annual Trends
CREDIT QUALITY - ANNUAL TRENDS ($ IN MILLIONS; AT OR FOR THE YEAR ENDED) Nonperforming Assets Nonaccrual Loans $293 $275 $229 $209 $194 $193 $177 $178 $140 $128 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 Net Charge Offs Allowance for Loan Losses to Loans $65 1.5% 1.5% 1.4% 1.3% 1.0% $39 $30 $
Slide 14: Strong Capital Position
STRONG CAPITAL POSITION Highlights CET1 and TCE Ratios ▪ Disciplined management of both regulatory and economic capital 10.3% 9.7% 9.5% 9.5% 10.1% ▪ Maintained TCE ratio1 ~7% while improving common equity Tier 1 ratio by reducing risk in the loan and investment books ▪ Increased common dividend 24%
Slide 15: Huntington Branch Transaction Summary
HUNTINGTON BRANCH TRANSACTION SUMMARY Seller: The Huntington National Bank Existing ASB Branches Acquired Branches Assets Purchased: ▪ 32 Branches and ~$134M of WI related loans Deposits Assumed: ~$850M Consideration: 100% cash Transaction Value: ▪ ~4% net blended premium on deposits acquired1 Requi
Slide 16: Acquisitions
ACQUISITIONS Bank Mutual completed... ...and Huntington up next Was an in-market, cost takeout Is an in-market, cost takeout driven acquisition depository acquisition Delivering on Filled in network gaps and boosts our Fills in network gaps and boosts our our Strategy network in key locations networ
Slide 17: 2019 Outlook
2019 OUTLOOK This outlook reflects a stable to improving economy and includes our expectation of two rate increases in 2019. We may adjust our outlook if, and when, we have more clarity on any one, or more, of these factors. ▪ 3% - 6% annual average loan ▪ Approximately $800M noninterest growth for
Slide 18: Appendix
APPENDIX
Slide 19: Reconciliation and Definitions of Non-GAAP Items
RECONCILIATION AND DEFINITIONS OF NON-GAAP ITEMS Efficiency Ratio 2014 2015 2016 2017 2018 Federal Reserve efficiency ratio 70.28 % 69.96 % 66.95 % 65.97 % 66.23 % Fully tax-equivalent adjustment (1.36)% (1.41)% (1.29)% (1.28)% (0.71)% Other intangible amortization (0.39)% (0.31)% (0.20)% (0.18)% (0
Slide 20: Reconciliation and Definitions of Non-GAAP Items
RECONCILIATION AND DEFINITIONS OF NON-GAAP ITEMS Tangible common equity reconciliation1 2014 2015 2016 2017 2018 Common equity $ 2,740 $ 2,816 $ 2,931 $ 3,078 $ 3,524 Goodwill and other intangible assets, net (937) (985) (987) (992) (1,245) Tangible common equity $ 1,803 $ 1,831 $ 1,944 $ 2,086 $ 2,