Associated Banc-corp · NYSE:ASB
Associated Banc-corp — Q3 2024 Earnings Presentation
31 slides from Associated Banc-corp's earnings presentation, Oct 24, 2024
Slide 1: Third Quarter 2024 Earnings Presentation
Third Quarter 2024 Earnings Presentation OCTOBER 24, 2024
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: Third Quarter 2024 Results
Third Quarter 2024 Results1 3Q 2024 Operating Results ▪ GAAP diluted EPS of $0.56 $0.56 Diluted EPS ▪ Total core customer deposit2 growth of $618 million ▪ Total deposit growth of $863 million +2.3% +2.6% ▪ Total loan growth of $373 million Core Customer Total Deposit Growth Deposit Growth2 ▪ Loans
Slide 4: Phase 2: Advancing our Growth Strategy
Phase 2: Advancing our Growth Strategy Phase 2 is designed to accelerate our momentum through an infusion of talent in key areas & targeted initiatives Diligent Expense Expected Outcomes Progress Updates1 by YE 2025 Control ▪ Consumer & Small Business Repositioned initiatives largely completed; on B
Slide 5: Tailwinds into 2025
Tailwinds into 20251 Progress against several key performance indicators has positioned us for growth in 2025 ▪ Highest annual net promoter score since Net Promoter Score internal tracking began in 20172 Improving ▪ Highest mobile banking satisfaction score Customer since internal tracking began in
Slide 6: Quarterly Loan Trends
Quarterly Loan Trends Total period end loan growth of $373 million was led by emerging C&I growth & steady growth in Auto Average Quarterly Loans Period End Loan Change (6/30/2024 to 9/30/2024) ($ in billions) ($ in millions) $29.9 $30.0 $29.4 $29.6 $29.6 Commercial & Industrial $288 Auto Finance $1
Slide 7: Quarterly Deposit & Funding Trends
Quarterly Deposit & Funding Trends Core customer deposits1 grew 2% during 3Q, enabling us to decrease wholesale funding Average Quarterly Deposits Period End Funding Change (6/30/2024 to 9/30/2024) ($ in billions) ($ in millions) $33.3 $32.6 $33.3 $32.0 $32.2 Total Deposits +$863 (+3%) $5.9 $5.7 $5.
Slide 8: Average Yield Trends
Average Yield Trends Earning asset yields were up 3 bps during 3Q, while the cost of interest-bearing liabilities decreased by 1 bp Quarterly Average Yields (%) Asset & Liability Yield / Rate Trends (%) 7.56 7.45 7.52 7.29 7.42 7.22 7.24 7.27 7.04 7.11 5.64 5.65 5.68 5.36 5.51 5.72 5.52 5.58 5.42 5.
Slide 9: Net Interest Income & Net Interest Margin Trends
Net Interest Income & Net Interest Margin Trends Net interest income increased by $6 million vs. the prior quarter, while our margin expanded by 3 bps ($ in millions) $263 $258 $257 $254 $253 2.79% 2.78% 2.75% 2.71% 2.69% 3Q 2023 4Q 2023 1Q 2024 2Q 2024 3Q 2024 Quarterly Net Interest Income Quarterl
Slide 10: 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 $2.7 billion of fixed-rate prime/super prime Auto Fi
Slide 11: Cash & Investment Securities Portfolio
Cash & Investment Securities Portfolio We continue to target investments to total assets of 18% to 20% in 2024 Period End Securities Book Composition CET1 Including AOCI1 (%) ($ in billions) 9.55 9.68 9.72 $8.1 9.39 9.43 9.38 $7.9 9.01 $7.7 $7.7 $7.8 $0.2 8.87 8.79 $0.2 8.53 $0.3 $0.3 $0.2 $3.8 3Q 2
Slide 12: Noninterest Income Trends
Noninterest Income Trends 3Q noninterest income increased $2 million vs. the prior quarter, led by growth in wealth management fees Quarterly Noninterest Income Trends ($ in millions) $70 $67 $67 $65 $65 $5 $12 $6 $6 $5 $8 $4 $4 $5 $2 $7 $9 $3 $3 $2 $50 $50 $52 $55 $47 1 3Q 2023 4Q 2023 Adjusted 1Q
Slide 13: Noninterest Expense Trends
Noninterest Expense Trends We now expect total noninterest expense to increase by 1% to 2% in 2024, excluding FDIC Special Assessment Noninterest Expense Trends Efficiency Ratio (%) ($ in millions) 132.0 $239 $31 64.1 60.1 58.5 61.0 61.5 60.9 61.5 60.4 $196 $198 $196 $201 57.2 $8 $60 $52 $53 $44 $47
Slide 14: Capital Profile
Capital Profile Our capital ratios increased across the board in the third quarter Capital Ratios (%) 2024 Capital Target Ranges (%) 10.00 7.75 9.72 7.50 12.34 12.36 6.75 9.00 10.27 10.30 9.68 9.72 3Q 2024 2024 3Q 2024 2024 TCE Ratio1 Target CET1 Ratio Target Range Range Tangible Book Value / Share
Slide 15: Allowance for Credit Losses on Loans (ACLL) Update
Allowance for Credit Losses on Loans (ACLL) Update Our ACLL percentage increased by 1 basis point vs. the prior quarter to 1.33% ACLL1 Update ACLL / Total Loans (%) ▪ ACLL increased $8 million from the prior quarter to $398 million, driven primarily by nominal credit movement coupled with 1.32 1.31
Slide 16: Credit Quality Trends
Credit Quality Trends 3Q 2024 credit quality remained solid with NALs & NCOs down meaningfully vs. prior quarter Total Delinquent Loans Nonaccrual Loans ($ in millions) ($ in millions) $169 $178 $149 $154 $23 $128 $79 $74 $84 $63 $48 $24 $11 $0 $19 $19 $50 $51 $56 $62 $37 $49 $7 $79 $86 $85 $83 $86
Slide 17: 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 3Q 23 4Q 23 1Q 24 2Q 24 3Q 24 Portfolio LTV 59% 58% 59% 59% 58% Consumer Com'l & Delinquencies/Loans3 0.14% 0.52% 0.28% 0.01%
Slide 18: FY 2024 Outlook
FY 2024 Outlook GAAP Adjusted Previous FY 2024 Updated FY 2024 FY 2023 Result FY 2023 Result1 Guidance2 Guidance2 $29.2B $29.2B Lower end of original EoP Total Loans (+1.4% vs. 2022) (+1.4% vs. 2022) 4% to 6% growth range No Change Core Customer Deposits3 Lower end of original EoP Total Deposits $33
Slide 19: Appendix
Appendix
Slide 20: Phases 1 + 2: Consumer & Small Business Banking
Phases 1 + 2: Consumer & Small Business Banking Our efforts to upgrade the customer experience are largely completed, with expected results on track 2022 2023 2024 Impact1 Platinum Choice Launched New Brand Early Pay ▪ Named #1 for Retail Checking and Mass Campaign Banking Customer Affluent Banker P
Slide 21: Phases 1 + 2: Commercial Banking
Phases 1 + 2: Commercial Banking We’ve bolstered our commercial leadership team & continue to invest by adding talented RMs in key markets 2021-2022 2023 2024 Impact1 ▪ Launched Asset-Based ▪ Hired Phillip Trier as ▪ Hired Michael Lebens as ▪ Expanded commercial Lending & Equipment EVP, Commercial S
Slide 22: Improving our Return Profile Over Time
Improving our Return Profile Over Time1 Our efforts to remix the balance sheet & drive toward improved profitability are on track Assets Liabilities Growing diversified asset classes to Attracting and deepening customer decrease reliance on legacy low-yielding, relationships to decrease reliance on
Slide 23: Stable, Granular Deposit Portfolio
Stable, Granular Deposit Portfolio1 Uninsured, uncollateralized deposits were only 22% of total deposits as of 9/30/2024 Period End Total Deposit Trends (Associated Bank, N.A.) ($ in billions) $32.1 $33.5 $33.7 $32.8 $33.8 22% Percentage of total deposits that are uninsured & uncollateralized 77% 77
Slide 24: Liquidity Sources
Liquidity Sources As of 9/30/2024, ASB’s total liquidity sources covered 166% of uninsured, uncollateralized deposits ($ in millions) Liquidity Sources 6/30/2024 9/30/2024 Federal Reserve Balance $482.4 $405.8 Available FHLB Chicago Capacity $5,184.3 $6,164.5 Available Fed Discount Window Capacity $
Slide 25: Additional Loan Trends
Additional Loan Trends Period End Quarterly Loan Trends Average Loan Change (2Q 2024 to 3Q 2024) ($ in billions) ($ in millions) $30.2 $29.5 $29.6 $30.0 $29.2 CRE-Investor $121 $11.2 $11.1 $11.4 Auto Finance $112 $10.8 $11.0 Home Equity & Other Consumer $14 $7.3 $7.4 $7.3 $7.3 $7.2 $(8) CRE-Owner Oc
Slide 26: Additional Deposit & Funding Trends
Additional Deposit & Funding Trends Period End Quarterly Deposits Average Funding Change (2Q 2024 to 3Q 2024) ($ in billions) ($ in millions) $33.4 $33.7 $33.6 Total Deposits +$691 (+2%) $32.1 $32.7 $6.1 $6.3 $5.8 $5.9 Core Customer Deposits1 +$322 (+1%) $6.4 Customer CDs $315 $7.6 $7.5 $7.2 $7.3 $7
Slide 27: Total Loans Outstanding Balances as of September 30, 2024
Total Loans Outstanding Balances as of September 30, 2024 ($ in millions) % of Total % of Total 9/30/20241 Loans 9/30/20241 Loans C&BL (by NAICS 2) CRE (by property type) Utilities $ 2,493 8.3% Multi-Family $ 2,914 9.7% Manufacturing & Wholesale Trade 2,404 8.0% Industrial 1,685 5.6% Real Estate (in
Slide 28: Loan Stratification Outstanding Balances as of September 30, 2024
Loan Stratification Outstanding Balances as of September 30, 2024 Illinois Illinois Minnesota 15% Minnesota 21% 9% 6% Minnesota Illinois Other Texas 9% 15% Midwest2 7% 21% Wisconsin C&BL by Other CRE by 23% Geography Midwest 2 Wisconsin Total Other Midwest 2 Geography 10% $11.4 billion 27% Loans1 12
Slide 29: Reconciliation & Definitions of Non-GAAP Items
Reconciliation & Definitions of Non-GAAP Items Period End Core Customer Deposits Reconciliation ($ in millions) 3Q 2023 4Q 2023 1Q 2024 2Q 2024 3Q 2024 Total deposits $32,123 $33,446 $33,713 $32,691 $33,554 Brokered CDs (3,351) (4,447) (3,931) (4,062) (4,243) Network transaction deposits (1,649) (1,
Slide 30: Reconciliation & Definitions of Non-GAAP Items
Reconciliation & Definitions of Non-GAAP Items Selected Trend Information1 ($ in millions) 3Q 2023 4Q 2023 1Q 2024 2Q 2024 3Q 2024 Wealth management fees $21 $21 $22 $23 $24 Service charges and deposit account fees 13 11 12 12 14 Card-based fees 12 12 11 12 12 Other fee-based revenue 5 4 4 5 5 Fee-b
Slide 31: Reconciliation & Definitions of Non-GAAP Items
Reconciliation & Definitions of Non-GAAP Items One Time Item Noninterest Income Reconciliation YTD ($ in millions) Dec 2023 4Q 2023 GAAP noninterest income $63 $(131) Loss on mortgage portfolio sale1 136 136 Net loss on sale of investments1 65 65 Noninterest income, excluding one time items $264 $70