Associated Banc-corp · NYSE:ASB
Associated Banc-corp — Investor Presentation (November 2019)
23 slides from Associated Banc-corp's investor presentation, Nov 4, 2019
Slide 1: Associated Banc-Corp Investor Presentation Fourth Quarter 2019
Exhibit 99.1 Associated Banc-Corp Investor Presentation 2019 Brookfield Office (Milwaukee MSA) – Opened October 2017 FOURTH QUARTER
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 Franchise
OUR FRANCHISE Third Quarter 20191 Highlights and Accomplishments $33 billion of assets $23 billion of loans . Largest bank headquartered in Wisconsin2 $4 billion of equity $24 billion of deposits . Approximately 4,800 employees, servicing 1.3 million customer accounts in 8 states and 3Q 2019 Average
Slide 4: Attractive Midwest Markets
ATTRACTIVE MIDWEST MARKETS Large Population Base With a Manufacturing and Wholesale Trade-Centric Economy Midwest holds ~20% of the U.S. population1 and Manufacturing Focus Well-Suited for Our Midwest Location nearly 30% of all U.S. manufacturing jobs2 ASB C&BL Loans by Industry Total ASB Loans by G
Slide 5: Actively Positioning for Lower Rates
ACTIVELY POSITIONING FOR LOWER RATES With expectations of lower interest rates, we are reducing wholesale funding and liquidity positions to defend net interest margin Second Quarter Actions1 Third Quarter Actions1 Fourth Quarter Actions1 . Reduced network . Reduced network . Reducing network transa
Slide 6: Loan Trends
LOAN TRENDS Approximately $240 million of portfolio mortgages sold in 3Q 2019 for CECL and interest rate risk mitigation Average Quarterly Loans Average Loan Growth (2Q19 to 3Q19) ($ in billions) 3Q15 – 3Q19 ($ in millions) CAGR $23.0 $23.3 Real estate construction $65 $20.9 $20.1 Mortgage warehouse
Slide 7: Commercial Loan Management
COMMERCIAL LOAN MANAGEMENT1 De-risking of the oil & gas portfolio is nearly complete; CRE has rebounded Commercial Loans as a Oil & Gas Loans Commercial Real Estate Percentage of Total Loans ($ in millions) ($ in billions) 60% 58% 58% 59% 59% $6.9 $7.0 $7.1 23% 22% 22% 22% 23% $6.7 $6.7 3.3% 2.8% 2.
Slide 8: Deposit Portfolio Trends
DEPOSIT PORTFOLIO TRENDS Loan to deposit ratio is 93%, within its historical range, giving deposit pricing flexibility Average Quarterly Deposits Average Funding Change (from 2Q 2019) ($ in billions) ($ in millions) $25.2 $24.7 $24.6 $25.1 $24.2 Interest-bearing demand $468 Lower- $5.3 $5.0 $5.1 $5.
Slide 9: Repositioning Funding
REPOSITIONING FUNDING1 Reduction of network deposits continues; $250 million of 2.750% Senior Notes called in October 2019 FHLB Advances and Network Quarter-end Low-cost Deposit Mix Transaction Deposits ($ in billions) Checking and Savings represent 55% 27% 23% 21% 11% 6% 12% $3.7 $3.3 Money market
Slide 10: Investment Securities Portfolio Trends
INVESTMENT SECURITIES PORTFOLIO TRENDS Taxable securities portfolio is a source of funds and is expected to continue to shrink through 1Q 2020 Portfolio1 and Yield Trends (Quarterly) Investments / Average Earning Assets ($ in billions) 3.73% 3.74% 3.77% 3.78% 24% 3.68% 23% 23% 22% 20% 2.26% 2.29% 2.
Slide 11: Net Interest Income and Yields — Quarterly Trends
NET INTEREST INCOME AND YIELDS — QUARTERLY TRENDS Deposit costs have peaked, but we expect near-term margins will continue to compress Net Interest Income and Net Interest Margin Average Yields ($ in millions) 5.51% 3.02% 5.19% 5.19% 2.92% 2.90% 2.87% 4.98% 4.92% 2.81% 4.78% 4.86% 4.79% $224 4.56% 4
Slide 12: Growing and Diversified Business Model
GROWING AND DIVERSIFIED BUSINESS MODEL Mortgage banking and wealth management benefitting from current environment Noninterest Income Mortgage Banking, Net2 ($ in millions) ($ in millions) $27 $24 $25 $101 $16 $17 $95 $86 $88 $80 YTD 15 YTD 16 YTD 17 YTD 18 YTD 19 Wealth Management Fees2,3 ($ in mil
Slide 13: Overall Expense Efficiency
OVERALL EXPENSE EFFICIENCY Automation and consolidations are driving better efficiency over time Efficiency Enhanced Automation Branch Consolidations Operational Efficiencies Drivers Noninterest Expense Efficiency Ratio2,3 Restructuring Plan ($ in millions) . Expect 4Q 2019 70% restructuring charges
Slide 14: Investing in Customer Technology
INVESTING IN CUSTOMER TECHNOLOGY Digital first strategies remain our highest priority investments Retail Customer Focused Enhancements Commercial Client Focused Upgrades . New mobile app received 4.7-star rating with ~10,000 . Cash management (ACI) upgrade completed reviews1 with full customer base
Slide 15: Capital Priorities
CAPITAL PRIORITIES Committed to a consistent capital management philosophy 2with rigorous capital discipline Quarterly $23.0 $23.3 $20.9 Funding Average Loans $20.1 ($ in billions) 1. Organic Highest Priority $18.5 Growth 3Q15 3Q16 3Q17 3Q18 3Q19 Quarterly $0.17 $0.15 Paying a Commitment Dividends $
Slide 16: Current Expected Credit Losses (CECL)
CURRENT EXPECTED CREDIT LOSSES (CECL) Our current capital levels and expected earnings should allow us to readily absorb the anticipated CECL impact CECL Adoption in 1Q 2020 Expected Impact to ACL1 in 1Q 2020 . Life-of-loan CECL reserves will be driven by our . 30%-40% increase to ACL from year-end
Slide 17: Credit Quality – Quarterly Trends
CREDIT QUALITY – QUARTERLY TRENDS Continued benign credit environment with stable provision outlook in 4Q 2019 Potential Problem Loans1 Nonaccrual Loans1 ($ in millions) ($ in millions) $236 $250 $241 $166 $154 $156 $167 $133 $128 $129 3Q 2018 4Q 2018 1Q 2019 2Q 2019 3Q 2019 3Q 2018 4Q 2018 1Q 2019
Slide 18: Appendix
APPENDIX
Slide 19: FNB Staunton Transaction Summary
FNB STAUNTON TRANSACTION SUMMARY Seller: First Staunton Bancshares Transaction Value: . ~$76 million for franchise Staunton . ~1.30x 1Q 2019 reported tangible book value Alton . ~4% deposit premium Bethalto Consideration: 100% cash Assets Purchased: Edwardsville . Nine branches . ~$350 million of lo
Slide 20: Acquisitions
ACQUISITIONS Huntington completed… …and Staunton up next Was an in-market, cost takeout Is an in-market, cost takeout driven driven depository acquisition depository acquisition Delivering on Filled in network gaps and boosted Fills in network gaps and boosts our Our Strategy our network in key loca
Slide 21: Community, Diversity & Sustainability
COMMUNITY, DIVERSITY & SUSTAINABILITY1 We remain committed to initiatives to improve our communities, promote diversity and enhance sustainability Over $900 million in credit $3.6 million in grants to support commitments to support wind, CRA programing at various nonprofit hydroelectric and solar pr
Slide 22: Loan Stratification
LOAN STRATIFICATION OUTSTANDINGS AS OF SEPTEMBER 30, 2019 C&BL by Geography Total Loans1 CRE by Geography $8.4 billion $5.2 billion Minnesota 7% Illinois Illinois Illinois 3 Minnesota Texas 25% 16% 10% 14% 9% Other 2 Minnesota Midwest 10% Other 11% 2 Wisconsin Wisconsin Midwest Wisconsin 31% 29% 22%
Slide 23: Reconciliation and Definitions of Non-GAAP Items
RECONCILIATION AND DEFINITIONS OF NON-GAAP ITEMS ($ IN MILLIONS) YTD YTD YTD YTD YTD Efficiency Ratio SEP 15 SEP 16 SEP 17 SEP 18 SEP 19 Federal Reserve efficiency ratio 69.78% 67.51% 65.64% 67.50% 64.18% Fully tax-equivalent adjustment (1.38)% (1.32)% (1.27)% (0.69)% (0.83)% Other intangible amorti
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