Attached files
| file | filename |
|---|---|
| EX-99.1 - EXHIBIT 99.1 - ASSOCIATED BANC-CORP | asb20160630ex-991.htm |
| 8-K - FORM 8-K - ASSOCIATED BANC-CORP | asb-20160630form8kpr.htm |
SECOND QUARTER 2016
EARNINGS PRESENTATION
JULY 21, 2016
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 plans, objectives, or goals for future operations, products or services, and forecasts of its
revenues, earnings, or other measures of performance. Such forward-looking statements may be
identified by the use of words such as “believe,” “expect,” “anticipate,” “plan,” “estimate,” “should,” “will,”
“intend,” “outlook” or similar expressions. Forward-looking statements are based on current management
expectations and, by their nature, are subject to risks and uncertainties. Actual results may differ
materially from those contained in the forward-looking statements. Factors which may cause actual
results to differ materially from those contained in such forward-looking statements include those
identified in the Company’s most recent Form 10-K and subsequent SEC filings. Such factors are
incorporated herein by reference.
1
SECOND QUARTER UPDATE
Net income available to common equity of $47 million, or $0.31 per common share
2
Enhanced
Customer
Experience
50% increase in mobile deposits
from the year ago quarter
Record levels of ATM and mobile
deposits
New presence in downtown
Milwaukee and La Crosse
Organic
Balance Sheet
Growth
Average loans were
up $719 million, or 4% from the
first quarter
Total commercial lending
accounted for 75% of average
loan growth
Diverse
Business
Lines
Recognized record insurance
commissions of $22 million
in the second quarter
Card-based fees, brokerage and
annuity commissions, service
charges, and trust service fees all
increased from the first quarter
Disciplined
Credit
Approach
Balanced loan growth across
commercial, CRE, and consumer
businesses
Loan mix by asset class was
unchanged from the first quarter
Expense
Control
Noninterest expense was flat from
the first quarter and down $2 million
year over year
On target to hold expenses flat for
the fifth straight year, when adjusted
for acquisitions
Prudent
Capital
Management
Dividend payout ratio of 35%
Return on average common equity
Tier 1 (CET1) of 9.9%
($ in millions)
$1.5 $1.4 $1.4 $1.4 $1.4
$5.4 $5.7 $5.8 $5.9 $6.1
$4.1 $4.3
$4.4 $4.5
$4.7
$7.2 $7.1
$6.9 $7.1
$7.5
2Q 2015 3Q 2015 4Q 2015 1Q 2016 2Q 2016
Commercial & Business Commercial Real Estate
Residential Mortgage Home Equity & Other Consumer
($30)
($29)
$2
$73
$116
$185
$192
$210
CRE
Investor
18%
Construction
6%
Commercial
& Business
38%
Residential
Mortgage
31%
Home Equity
5%
Other
Consumer
2%
LOAN PORTFOLIO TRENDS
Average Net Loan Change (from 1Q 2016)
Loan Mix – 2Q 2016 (Average)
Average Quarterly Loans
$18.5 $18.2
Total
Commercial
& Business
+5%
$18.5
$18.9
$19.6
Home Equity &
Other Consumer
Commercial Real Estate
Residential Mortgage
Power & Utilities
Mortgage Warehouse
REIT
($ in billions)
General Commercial
3
Oil and Gas
CREDIT QUALITY TRENDS
($ IN MILLIONS)
$140 $180 $178
$251 $281
$60
$84 $124
$150
$176
2Q 2015 3Q 2015 4Q 2015 1Q 2016 2Q 2016
Oil and Gas
$149 $134 $158 $157 $154
$11 $13
$20
$129 $129
2Q 2015 3Q 2015 4Q 2015 1Q 2016 2Q 2016
Oil and Gas
Potential Problem Loans Nonaccrual Loans
$9 $8 $8
$4 $2
$13 $19
2Q 2015 3Q 2015 4Q 2015 1Q 2016 2Q 2016
Oil and Gas
Net Charge Offs Allowance to Total / Oil and Gas Loans
1.4% 1.4% 1.5% 1.4% 1.4%
3.4%
3.8%
5.6%
6.5%
5.6%
2Q 2015 3Q 2015 4Q 2015 1Q 2016 2Q 2016
ALLL / Total Loans
Oil and Gas ALLL / Oil and Gas Loans
4
$200
$264
$302
$401
$457
$160 $147
$178
$286
$21
$283
$17
Houston based
9 staff, including 2 in-house
engineers
90 years of combined
experience
$26, 3.4% $29, 3.8%
$42, 5.6% $49, 6.5% $42, 5.6%
OIL AND GAS LENDING UPDATE
Spring redeterminations: Complete except for 3 credits;
the reviews have largely resulted in borrowing base
decreases
New business: New loan fundings of $86 million; offset by
repayments and charge offs
Energy reserves: Declined due to charge offs; returned to
prior year end level
1 – Based on borrowers’ % revenue from oil/gas
5
~$1 billion in exposure
4% of total loans
57 credits
Exclusively focused on the
upstream sector
Exposure is approximately
60% oil and 40% gas1
100% of loans are
reserve secured
Management Second Quarter Update
Portfolio
Mix
Underwriting
$658 $587 $522
$402 $387
$88 $158
$210
$225 $240
$11 $13 $20
$129 $129
2Q 2015 3Q 2015 4Q 2015 1Q 2016 2Q 2016
Pass Criticized / Classified Nonaccrual
$757 $758 $752 $756 $756
Period End Loans by Credit Quality and Related Reserves
($ millions)
Net Interest Margin
3.15% 3.13% 3.14% 3.16% 3.12%
2Q 2015 3Q 2015 4Q 2015 1Q 2016 2Q 2016
3.38% 3.38% 3.37% 3.41% 3.35%
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
4.00%
4.50%
$140
$144
$148
$153
$157
$161
$165
$169
$174
$178
2.83% 2.82% 2.82% 2.81% 2.81%
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
3.00%
3.50%
4.00%
$-
$4
$8
$12
$16
$20
$24
$28
$32
$36
$40
$44
$48
$52
$56
$60
$64
$68
$72
$76
$80
$84
$88
$92
$96
$ 00
$104
$108
$112
$116
$120
$124
$128
$132
$136
$140
$144
$148
$152
$156
$160
$164
$168
$172
$176
$180
$165
$170 $169 $171
$176
$1
$1 $2 $1
$1
2Q 2015 3Q 2015 4Q 2015 1Q 2016 2Q 2016
Interest Recoveries, Prepayment Fees, & Deferred Fees
Net Interest Income Net of Interest Recoveries, Prepayment Fees, &
Deferred Fees
Yield on Interest-earning Assets Net Interest Income & Net Interest Margin
Total Interest-earning Yield
NET INTEREST INCOME AND MARGIN TRENDS
($ in millions)
0.21% 0.22% 0.22%
0.30% 0.31%
2Q 2015 3Q 2015 4Q 2015 1Q 2016 2Q 2016
Interest-bearing Deposit Costs Other Funding Costs
0.40% 0.40% 0.41% 0.39%
$171
Total Loan Yield
$172
0.45%
$171
$166
$177
Cost of Interest-bearing Liabilities
6
$10
$7 $8
$4 $4
2Q 2015 3Q 2015 4Q 2015 1Q 2016 2Q 2016
NONINTEREST INCOME TRENDS
($ IN MILLIONS)
Mortgage Banking (net) Income
$66 $64 $63 $65
$67
2Q 2015 3Q 2015 4Q 2015 1Q 2016 2Q 2016
Fee-based Revenue
1 – Fee-based Revenue = A non-GAAP financial measure, is the sum of trust service fees, service charges on deposit accounts, card-based and other nondeposit fees,
insurance commissions, and brokerage and annuity commissions.
Please refer to Noninterest Income as presented on Page 3 of the Financial Tables, Consolidated Statements of Income
$86
$80
$83 $83
1
Insurance Commissions
$20
$18 $18
$21 $22
2Q 2015 3Q 2015 4Q 2015 1Q 2016 2Q 2016
$82
7
$103 $101 $100 $101 $102
2Q 2015 3Q 2015 4Q 2015 1Q 2016 2Q 2016
Personnel
$22 $21 $20 $20 $20
2Q 2015 3Q 2015 4Q 2015 1Q 2016 2Q 2016
NONINTEREST EXPENSE TRENDS
($ IN MILLIONS)
Technology and Equipment
1 – FTE = Average full time equivalent employee
Please refer to Noninterest Expense as presented on Page 3 of the Financial Tables, Consolidated Statements of Income
FTE1 Trend
$177
$172
$176 $174 $174
4,465 4,421 4,378 4,374 4,415
2Q 2015 3Q 2015 4Q 2015 1Q 2016 2Q 2016
8
2016 OUTLOOK
9
High single digit annual average
loan growth
Maintain Loan to Deposit ratio
under 100%
In the absence of Federal
Reserve action to raise rates,
NIM expected to be
approximately flat
Approximately flat to prior year
NONINTEREST
EXPENSE
Approximately flat to prior year
Continue to follow stated
corporate priorities for capital
deployment
Dependent on loan growth and
changes in risk grade or other
indications of credit quality
BALANCE
SHEET
NET INTEREST
MARGIN
NONINTEREST
INCOME
CAPITAL
PROVISION
oninterest
Expense
Balance Sheet
et Interest
argin
oninterest
ncome
apital
rovision