Attached files
| file | filename |
|---|---|
| 8-K - FORM 8-K - ASSOCIATED BANC-CORP | asb03312017form8-kpr.htm |
| EX-99.1 - EXHIBIT 99.1 - ASSOCIATED BANC-CORP | asb03312017ex-991.htm |
FIRST QUARTER 2017
EARNINGS PRESENTATION
APRIL 20, 2017
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
FIRST QUARTER UPDATE
Balance
Sheet
Management
Margin increased 4 basis points
Loan to Deposit ratio of 92%
Increased residential mortgage
and commercial real estate loan
growth
Fee
Businesses
Seasonal increase in insurance
commissions to $22 million
Brokerage and annuity
commissions increased 3%
Expense
Management
Noninterest expense declined 3%
Expenses in-line with guidance
Reduced Personnel and FDIC
expense
Capital
& Credit
Management
Return on average common equity
Tier 1 (CET1) of 10.6%
CET1 ratio of 9.9% at quarter end
Improving credit metrics
Provision decreased $6 million
2
Growing
Fee-based revenue1
Improving
Margin
Lower
Expenses
Expanding
Bottom Line
1Q 2017: Net income available to common equity of $54 million, or $0.35 per common share
All comparative statements are made with reference to fourth quarter 2016 results.
1 – Fee-based revenue = A non-GAAP financial measure, is the sum of trust service fees, service charges on deposit accounts, card-based and other nondeposit fees,
insurance commissions, and brokerage and annuity commissions. Please refer to the appendix for a reconciliation of fee-based revenue to total noninterest income.
CRE Investor
17%
Construction
7%
Commercial &
business
36%
Residential
mortgage
33%
Home equity
5%
Other
consumer
2%
($ in millions)
$1.4 $1.4 $1.4 $1.3 $1.3
$5.9 $6.1 $6.3 $6.3 $6.6
$4.5 $4.7
$4.9 $4.9 $5.0
$7.1
$7.5 $7.6 $7.4
$7.2
1Q 2016 2Q 2016 3Q 2016 4Q 2016 1Q 2017
Home equity & Other consumer Residential mortgage
Commercial real estate Commercial & business
($200)
($58)
($29)
($22)
$29
$44
$85
$247
LOAN PORTFOLIO – QUARTERLY TRENDS
Average Net Loan Change (from 4Q 2016)
Loan Mix – 1Q 2017 (Average)
Average Quarterly Loans
$18.9
$19.6 $20.1 $20.0
Home equity & Other consumer
Commercial real estate
Residential mortgage
Power & Utilities
Mortgage warehouse
REIT
($ in billions)
General commercial
Oil and Gas
$20.1
3
Money
market
43%
Savings
7%
Time
deposits
7%
Interest-
bearing
demand
20%
Noninterest-
bearing
demand
23%
$1.6 $1.5 $1.6 $1.6 $1.6
$1.4 $1.4 $1.4 $1.5 $1.5
$9.4 $8.7 $9.1 $9.3 $9.2
$3.2
$3.6
$4.2 $4.1 $4.3
$5.0 $5.0
$5.2 $5.3 $5.0
1Q 2016 2Q 2016 3Q 2016 4Q 2016 1Q 2017
Time deposits Savings
Money market Interest-bearing demand
Noninterest-bearing demand
DEPOSIT PORTFOLIO – QUARTERLY TRENDS
Loan to Deposit Ratio
Deposit Mix – 1Q 2017 (Average)
Average Quarterly Deposits
$20.6 $20.3
$21.4 $21.7
($ in billions)
$21.5 93%
98%
91% 92% 92%
1Q 2016 2Q 2016 3Q 2016 4Q 2016 1Q 2017
4
$171 $176
$178 $178 $179
$1
$1 $1 $2
$1
1Q 2016 2Q 2016 3Q 2016 4Q 2016 1Q 2017
Interest recoveries, prepayment fees, & deferred fees
Net interest income net of interest recoveries, prepayment fees, &
deferred fees
2.81% 2.81% 2.77% 2.80%
2.84%
2.00%
2.50%
3.00%
3.50%
3.41% 3.35% 3.35% 3.40%
3.51%
0.30% 0.31% 0.32% 0.33%
0.42%
2.43% 2.38% 2.29% 2.25% 2.39%
1Q 2016 2Q 2016 3Q 2016 4Q 2016 1Q 2017
Total loans
Total interest-bearing deposit costs
Investments and other Net interest margin
NET INTEREST INCOME AND MARGIN
QUARTERLY TRENDS
($ in millions)
$177
$180 $179
$172
$180
5
Average Yields Net Interest Income & Net Interest Margin
$4 $4
$9 $12 $5
$9
$4 $4
$7
$8
$4
1Q 2016 2Q 2016 3Q 2016 4Q 2016 1Q 2017
Capital market fees, net
Portfolio loan sales
Mortgage banking, net
NONINTEREST INCOME – QUARTERLY TRENDS
($ IN MILLIONS)
$65 $67 $66 $63 $67
1Q 2016 2Q 2016 3Q 2016 4Q 2016 1Q 2017
Fee-based revenue
$80
$83 $82
$95
Insurance Commissions
$21 $22
$19 $18
$22
1Q 2016 2Q 2016 3Q 2016 4Q 2016 1Q 2017
6
$92
$8 $8
$25
$20
$9
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 the appendix for a reconciliation of fee-based revenue to total noninterest income.
1
$12 $14 $13 $13 $12
$8 $7 $5 $6 $6
$14 $13 $15 $14 $15
1Q 2016 2Q 2016 3Q 2016 4Q 2016 1Q 2017
Occupancy
Business development and advertising
Other
$101 $102 $104 $107 $104
1Q 2016 2Q 2016 3Q 2016 4Q 2016 1Q 2017
Personnel
NONINTEREST EXPENSE – QUARTERLY TRENDS
($ IN MILLIONS)
1 – The efficiency ratio as defined by the Federal Reserve guidance is noninterest expense (which includes the provision for unfunded commitments) divided by the
sum of net interest income plus noninterest income, excluding investment securities gains / losses, net. The fully tax-equivalent efficiency ratio, which is a non-GAAP
financial measure, is noninterest expense (which includes the provision for unfunded commitments), excluding other intangible amortization, divided by the sum of
fully tax-equivalent net interest income plus noninterest income, excluding investment securities gains / losses, net. Please refer to the appendix for a reconciliation of
the Federal Reserve efficiency ratio to the fully tax-equivalent efficiency ratio.
Efficiency Ratio1
$174 $174 $175 $179 $174
7
$34 $33 $33 $33 $33
69% 69%
64% 65%
66%
67% 68%
63% 64%
65%
1Q 2016 2Q 2016 3Q 2016 4Q 2016 1Q 2017
Federal Reserve Fully tax-equivalent
1Q 2016 2Q 2016 3Q 2016 4Q 2016 1Q 2017
Oil and Gas
$4 $2
$(4)
$3
$13 $19 $22
$6
$6
1.4% 1.4% 1.4% 1.4% 1.4%
6.5%
5.6% 5.5% 5.7%
6.7%
1Q 2016 2Q 2016 3Q 2016 4Q 2016 1Q 2017
ALLL / Total Loans
Oil and Gas ALLL / Oil and Gas Loans
CREDIT QUALITY – QUARTERLY TRENDS
($ IN MILLIONS)
$251 $281 $270 $276 $262
$150
$176 $171
$75 $78
1Q 2016 2Q 2016 3Q 2016 4Q 2016 1Q 2017
Oil and Gas
$157 $154 $163 $128 $126
$129 $129 $127 $147 $134
1Q 2016 2Q 2016 3Q 2016 4Q 2016 1Q 2017
Oil and Gas
Potential Problem Loans Nonaccrual Loans
Net Charge Offs (Recoveries) Allowance to Total Loans / Oil and Gas Loans
$401
$457 $441
$351 $340
$286 $283 $290 $275
$260
$21 $18
$9
$17
8
OIL AND GAS UPDATE
$477 $451 $398 $446 $413
$150 $176
$171 $75
$78
$129 $129
$127
$147
$134
1Q 2016 2Q 2016 3Q 2016 4Q 2016 1Q 2017
Pass Potential Problem Loans Nonaccrual
$756 $756
$696 $668
$625
Period End Loans by Credit Quality Oil and Gas Allowance
$49
$42 $38 $38 $42
6.5%
5.6% 5.5% 5.7%
6.7%
1Q 2016 2Q 2016 3Q 2016 4Q 2016 1Q 2017
Oil and Gas Allowance
Oil and Gas Allowance / Oil and Gas Loans
($ in millions) ($ in millions)
9
Total O&G Portfolio
Quarter end March 31, 2017
59 credits ~$1 billion commitments
$625 million
outstandings
3%
of total loans
New business since
January 1, 2016
15 credits $335 million commitments
$207 million
outstandings
1%
of total loans
2017 OUTLOOK
Balance
Sheet
Management
Mid-to-high single digit annual
average loan growth
Maintain Loan to Deposit ratio
under 100%
Improving NIM trend
Fee
Businesses
Improving fee-based revenues
Declining mortgage banking
revenue
Increasing tax credit
investment activity
Expense
Management
Approximately 1% higher than
the prior year
Continued improvement to our
efficiency ratio
Capital
&
Credit
Management
Continue to follow stated
corporate priorities for capital
deployment
Provision expected to adjust with
changes to risk grade, other
indications of credit quality, and
loan volume
10
This outlook reflects a stable to improving economy and includes our expectation of one mid-year
interest rate increase in 2017. It does not reflect any changes to the regulatory environment or to
corporate tax rates. We may adjust our outlook if, and when, we have more clarity on any one, or
more, of these factors.
RECONCILIATION AND DEFINITIONS OF
NON-GAAP ITEMS
11
Efficiency Ratio 1Q 2016 2Q 2016 3Q 2016 4Q 2016 1Q 2017
Federal Reserve efficiency ratio 69.01% 69.34% 64.40% 65.35% 66.39%
Fully tax-equivalent adjustment (1.37) (1.36) (1.21) (1.25) (1.30)
Other intangible amortization (0.20) (0.21) (0.19) (0.20) (0.20)
Fully tax-equivalent efficiency ratio 67.44% 67.77% 63.00% 63.90% 64.89%
The efficiency ratio as defined by the Federal Reserve guidance is noninterest expense (which includes the provision for unfunded commitments)
divided by the sum of net interest income plus noninterest income, excluding investment securities gains / losses, net. The fully tax-equivalent
efficiency ratio, which is a non-GAAP financial measure, is noninterest expense (which includes the provision for unfunded commitments),
excluding other intangible amortization, divided by the sum of fully tax-equivalent net interest income plus noninterest income, excluding
investment securities gains / losses, net. Management believes the fully tax-equivalent efficiency ratio, which adjusts net interest income for the
tax-favored status of certain loans and investment securities, to be the preferred industry measurement as it enhances the comparability of net
interest income arising from taxable and tax-exempt sources.
Fee-based Revenue ($ millions) 1Q 2016 2Q 2016 3Q 2016 4Q 2016 1Q 2017
Trust service fees $12 $12 $12 $12 $12
Service charges on deposit accounts 16 16 18 16 16
Card-based and other nondeposit fees 12 13 13 13 13
Insurance commissions 21 22 19 18 22
Brokerage and annuity commissions 4 4 4 4 4
Fee-based revenue $65 $67 $66 $63 $67
Other 18 15 29 29 13
Total noninterest income $83 $82 $95 $92 $80