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Associated Banc-Corp
Investor Presentation
THIRD QUARTER
2017
DISCLAIMER
Important note regarding forward-looking statements:
This presentation contains “forward-looking statements” within the meaning of the federal securities laws, including Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements may include: management plans relating to the proposed merger between
Associated Banc-Corp (“Associated”) and Bank Mutual Corporation (“Bank Mutual”); the expected timing of the completion of the proposed transaction; the ability to complete the
proposed transaction; the ability to obtain and required regulatory, shareholder or other approvals; any statements of the plans and objectives of management for future
operations, products or services, including the execution of integration plans relating to the proposed transaction; any statements of expectation or belief; projections related to
certain financial metrics or other benefits of the transaction; and any statements of assumptions underlying any of the foregoing. Forward-looking statements are typically
identified by words such as “believe,” “expect,” “anticipate,” “intend,” “seek,” “plan,” “will,” “would,” “target,” “outlook,” “estimate,” “forecast,” “project” and other similar words and
expressions or negatives of these words. Forward-looking statements are subject to numerous assumptions, risks and uncertainties, which change over time and are beyond our
control. Forward-looking statements speak only as of the date they are made. Neither Associated nor Bank Mutual assumes any duty and does not undertake to update any
forward-looking statements. Because forward-looking statements are by their nature, to different degrees, uncertain and subject to assumptions, actual results or future events
could differ, possibly materially, from those that Associated or Bank Mutual anticipated in its forward-looking statements, and future results could differ materially from historical
performance. Factors that could cause or contribute to such differences include, but are not limited to, those included under Item 1A “Risk Factors” in Associated’s Annual Report
on Form 10-K for the year ended December 31, 2016, those included under Item1A “Risk Factors” in Bank Mutual’s Annual Report on Form 10-K for the year ended December
31, 2016, those disclosed in Associated’s and Bank Mutual’s respective other periodic reports filed with the Securities and Exchange Commission (the “SEC”), as well as the
possibility that expected benefits of the proposed transaction may not materialize in the timeframe expected or at all, or may be more costly to achieve; the proposed transaction
may not be timely completed, if at all; that prior to the completion of the proposed transaction or thereafter, Associated’s and Bank Mutual’s respective businesses may not
perform as expected due to transaction-related uncertainty or other factors; that the parties are unable to successfully implement integration strategies related to the proposed
transaction; that required regulatory, shareholder or other approvals are not obtained or other customary closing conditions are not satisfied in a timely manner or at all;
reputational risks and the reaction of the companies’ shareholders, customers, employees or other constituents to the proposed transaction; and diversion of management time
on merger-related matters. These risks, as well as other risks associated with the proposed transaction, will be more fully discussed in the proxy statement/prospectus that will be
included in the registration statement on Form S-4 that will be filed with the SEC in connection with the proposed transaction. While the list of factors presented here is, and the
list of factors presented in the registration statement on Form S-4 will be, considered representative, no such lists should be considered to be a complete statement of all potential
risks and uncertainties. Unlisted factors may present significant additional obstacles to the realization of forward-looking statements. For any forward-looking statements made in
this presentation or in any documents, Associated and Bank Mutual claim the protection of the safe harbor for forward-looking statements contained in the Private Securities
Litigation Reform Act of 1995. Associated and Bank Mutual annualized, pro forma, projected and estimated numbers are used for illustrative purposes only, are not forecasts and
may not reflect actual results.
Trademarks:
All trademarks, service marks, and trade names referenced in this material are official trademarks and the property of their respective owners.
1
DISCLAIMER
Important Additional Information and Where to Find It
In connection with the proposed merger, Associated will file with the SEC a Registration Statement on Form S-4 that will include a Proxy Statement of Bank Mutual and a
Prospectus of Associated, as well as other relevant documents concerning the proposed transaction. This communication does not constitute an offer to sell or the solicitation of
an offer to buy any securities or a solicitation of any vote or approval. SHAREHOLDERS OF BANK MUTUAL CORPORATION ARE URGED TO READ THE REGISTRATION
STATEMENT AND THE PROXY STATEMENT/PROSPECTUS REGARDING THE MERGER WHEN IT BECOMES AVAILABLE AND ANY OTHER RELEVANT DOCUMENTS
FILED WITH THE SEC, AS WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THOSE DOCUMENTS, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION.
A free copy of the Proxy Statement/Prospectus, as well as other filings containing information about Associated and Bank Mutual, may be obtained at the SEC's Internet site
(http://www.sec.gov). You will also be able to obtain these documents, free of charge, from Associated Banc-Corp at http://www.associatedbank.com under the heading “About”
and then under the heading “Investor Relations” and then under “SEC Filings” or from Bank Mutual Corporation at http://www.bankmutual.com/bank-mutual-corporation/ under
the heading “Financial & SEC Reports.” Copies of the Proxy Statement/Prospectus can also be obtained, free of charge, by directing a request to Associated Banc-Corp, 433
Main Street, Green Bay, Wisconsin 54301, Attention: Investor Relations, Telephone: (920) 491-7059 or to Bank Mutual Corporation, 4949 West Brown Deer Road, Milwaukee,
Wisconsin 53223, Attention: Michael W. Dosland, Telephone: (414) 354-1500.
Participants in the Solicitation
Associated, Bank Mutual, and certain of their respective directors, executive officers and employees may be deemed to be participants in the solicitation of proxies in respect of
the proposed transaction. Information regarding Associated’s directors and executive officers is available in its definitive proxy statement, which was filed with the SEC on March
14, 2017, and certain of its Current Reports on Form 8-K.
Information regarding Bank Mutual’s directors and executive officers is available in its definitive proxy statement, which was filed with SEC on March 8, 2017, and certain of its
Current Reports on Form 8-K. Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or
otherwise, will be contained in the joint proxy statement/prospectus and other relevant materials filed with the SEC. Free copies of this document may be obtained as described in
the preceding paragraph.
Non-GAAP Measures
This presentation includes certain non-GAAP financial measures. These non-GAAP measures are provided in addition to, and not as substitutes for, measures of our financial
performance determined in accordance with GAAP. Our calculation of these non-GAAP measures may not be comparable to similarly titled measures of other companies due to
potential differences between companies in the method of calculation. As a result, the use of these non-GAAP measures has limitations and should not be considered superior
to, in isolation from, or as a substitute for, related GAAP measures. Reconciliations of these non- GAAP financial measures to the most directly comparable GAAP financial
measures can be found at the end of this presentation.
2
Community,
Consumer, and
Business
33%
Corporate and
Commercial
Specialty
61%
Other3
6%
YTD 2Q 2017 Net Income
by Business Segment
WI
69%
152
MN
7%
20
IL
24%
42
Deposits (%)
And Branches
OUR FRANCHISE
3
Nearly $30 billion of assets $21 billion of loans
Over $1 billion of revenue2 $22 billion of deposits
Second Quarter 20171
Largest bank headquartered in Wisconsin
1 – As of June 30, 2017, unless otherwise noted
2 – Twelve months ended June 30, 2017
3 – Risk Management and Shared Services
Approximately 4,350 employees, serving over 1 million
customers in over 100 communities across 8 states
Affinity Programs
Manufacturing
& Wholesale
Trade
26%
ATTRACTIVE MIDWEST MARKETS
3.0% 3.1% 3.2%
3.7% 3.8% 3.8%
4.4% 4.7%
5.0%
IN WI IA MN MO MI U.S. IL OH
Midwest
~30%
All other
regions
~70%
U.S.
Manufacturing
Jobs
1 – U.S. Census Bureau, Annual Estimates of the Resident Population, 2016
2 – U.S. Bureau of Labor Statistics, Manufacturing Industry Employees, seasonally adjusted, June 2017 (preliminary)
3 – U.S. Bureau of Labor Statistics, Unemployment Rates by State, seasonally adjusted, June 2017 (preliminary)
4 – Experian, 2016 Annual State of Credit report, VantageScore is a registered trademark
Midwest holds ~20% of the U.S. population1 and
~30% of all U.S. manufacturing jobs2
4
Large Population Base With a Manufacturing and Wholesale Trade-Centric Economy
Several Midwestern states have unemployment rates3 below
the national average
Dark green bars denote ASB branch states
Commercial and Business Lending
Loan Composition by Industry
Rochester, MN………..
Mankato, MN………….
Minneapolis, MN……..
Green Bay, WI………..
Wausau, WI…………...
708
708
707
704
704
Top U.S. Cities by Credit Score4
Green font denotes ASB branch markets
Supporting Strong Employment Base and Healthy Consumer Credit
2017 STRATEGIC PRIORITIES
5
Our Vision and Values: Associated Bank will be the Midwest’s premier financial services company,
distinguished by consistent, quality customer experiences, built upon a strong commitment to our
colleagues and the communities we serve, resulting in exceptional value to our shareholders through
economic cycles.
Strengthening
Customer
Relationships
Delivering on
our Strategy
Expanding our
Community
Presence
Providing
Long-Term
Value to
Shareholders
Strengthening our branch
network in WI while investing in
online and mobile channels
Managing diverse revenue
streams
Limiting risk-taking outside of
our core competencies,
markets, and industry segments
Diligently managing our costs
Prudently managing capital
Disciplined focus on improving
the fundamentals of our
business
Delivering value to shareholders
through economic cycles
Deepening our roots in existing
communities
Leveraging our expertise to
promote affordable housing,
small-business lending and
neighborhood development
Partnering with community
economic development groups
Providing outstanding customer
experiences
J.D. Power 2016 Certified Contact Center ProgramSM recognition is based on successful completion of an audit and exceeding a customer satisfaction benchmark
through a survey of recent servicing interactions. For more information, visit www.jdpower.com/ccc.
Net Growth: +$449 million
$1.6 $1.5 $1.5 $1.4 $1.3
$4.6 $4.8 $5.4
$6.1 $7.0
2
$3.7 $4.0
$4.1
$4.7
$5.0
$5.9
$6.5
$7.2
$7.5
$7.3
2Q 2013 2Q 2014 2Q 2015 2Q 2016 2Q 2017
Commercial & business Commercial real estate
Residential mortgage Home equity & Other consumer
POSITIONED FOR LOAN GROWTH
6
$20.5
$18.2
$19.6
$16.6
$15.7
($ in billions)
5%
Average Quarterly Loans
2Q13 – 2Q17
CAGR
6%
7%
11%
$(45)
$(36)
$(30)
$10
$39
$58
$60
$3931
Home equity & Other consumer
Commercial real estate
Residential mortgage
Power & Utilities
Mortgage warehouse
REIT
Oil and Gas
General commercial
Linked Quarter Average Loan Growth
1 – Approximately 60% of 2Q residential mortgage loan growth was in longer-dated production. Percentage based on change in period end composition.
2 – $4.8 billion of the total residential mortgage portfolio was comprised of adjustable-rate loans. Amount based on period end composition.
($ in millions)
$1.9 $1.6 $1.6 $1.5 $1.8
$1.2 $1.3 $1.4 $1.4 $1.5
$6.9 $7.3
$9.1 $8.7 $9.1
$2.9 $2.9
$3.3 $3.6
$4.3 $4.2 $4.1
$4.3 $5.0
$4.9
2Q 2013 2Q 2014 2Q 2015 2Q 2016 2Q 2017
Time deposits Savings
Money market Interest-bearing demand
Noninterest-bearing demand
92%
98%
95%
98%
96%
Loan to Deposit Ratio
POSITIONED FOR DEPOSIT GROWTH
($ in billions)
$21.5
7
$20.3 $19.6
$17.2 $17.1
Focused on Granular Low Cost Deposits
Average Quarterly Deposits
1 – Percentages based on second quarter 2017 average balances
2 – Risk Management and Shared Services segment balances
3 – Affinity debit cards as a percentage of active personal checking accounts, as of June 30, 2017
Corporate
and
Commercial
Specialty
30%
Community,
Consumer
and Business
54%
Network
Transaction
Deposits2
~15%
Other2
1%
Deposits by Segment1
Packers
23%
Badgers
8%
Brewers
7%
Wild
2%
Affinity Debit Cards3
2Q13 – 2Q17
CAGR
4%
10%
7%
SECOND QUARTER UPDATE
8
Strengthening
Customer
Relationships
Delivering
on our
Strategy
Expanding our
Community
Presence
Providing Long-
Term Value to
Shareholders
2017 Strategic Priorities
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 year over
year fee-based
revenues
Declining year over
year mortgage banking
revenue
Expense
Management
Capital
& Credit
Management
Approximately 1%
higher than the prior
year
Continued
improvement to our
efficiency ratio
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
YoY
Progress
YoY
Progress
ACQUISITION OF BANK MUTUAL
9
Associated Banc-Corp
Acquisition of
July 20, 2017
Bank Mutual Profile
Second Quarter 2017
Branches1 58
Loans $2.0bn
Deposits $1.9bn
Revenue2 $100 mm
Expenses2 $70mm
Transaction Pricing
100% stock transaction
- 0.422 exchange ratio
1.6x price / tangible book value per share
of $6.33 as of 30-Jun-17
12.5x price / 2017E EPS with fully phased-
in 45% after-tax cost savings3
Founded 1892
Milwaukee, WI
1 – Excludes previously announced pending sale of five branches. 57 branches in WI and one branch in MN
2 – Twelve months ended June 30, 2017
3 – Based on BKMU IBES median 2017E EPS of $0.38
ASSOCIATED’S PRO FORMA FOOTPRINT
Pro Forma Branch Footprint
Strengthens our position as largest bank
headquartered in the state of Wisconsin
- > $32bn combined total assets
- Adds > 120,000 customer accounts to
the Associated franchise
Significant efficiency opportunities
- 50% of Bank Mutual branches are within
1 mile of an Associated branch
- Several shared key technology vendors
- Positioned to further invest in and better
support the customer experience
Continued commitment to supporting the
socioeconomic health of our combined
communities and markets
- Expanding services into nearly a dozen
new markets
- Offers new customers access to
Associated's broader network and
solutions
Improved Scale and Customer Reach
10
PRO FORMA LOANS & DEPOSITS
Note: Figures as of June 30, 2017
Lo
an
s
D
ep
os
its
Associated
Bank Mutual
Pro Forma
Associated
Bank Mutual
Pro Forma
Total Deposits = $1.9bn
Cost of Deposits = 0.40%
Non-
interest-
bearing
Demand
17%
Interest-
bearing
Demand
13%
Savings
13%
Time
Deposits
29%
Money
Market
29%
Total Deposits = $23.5bn
Cost of Deposits = 0.50%
Non-
interest-
bearing
Demand
23%
Interest-bearing
Demand
17%
Savings
8%
Time
Deposits
11%
Money
Market
42%
Total Deposits = $21.6bn
Cost of Deposits = 0.51%
Non-
interest-
bearing
Demand
23%
Interest-bearing
Demand
18%
Savings
7%
Time
Deposits
9%
Money
Market
43%
Total Loans = $20.8bn
Yield on Loans = 3.62%
Commercial &
Business
36%
CRE Investor
16%
Construction
8%
Residential
Mortgage
34%
Home Equity
4%
Other Consumer
2%
Total Loans = $22.8bn
Yield on Loans = 3.65%
Commercial &
Business
34%
CRE Investor
18%
Residential
Mortgage
33%
Construction
8%
Home Equity
5%
Other Consumer
2%
Total Loans = $2.0bn
Yield on Loans = 3.92%
CRE Investor
41%
Commercial &
Business
18%
Construction
10%
Residential
Mortgage
23%
Home Equity
8%
Other Consumer
1%
11
ESTIMATED PRO FORMA FINANCIAL METRICS
1 – Based on ASB and BKMU IBES median EPS estimates in 2017, 2018, and grown at 7% IBES median long-term growth rate thereafter. EPS accretion is excluding one-time
charges.
2 – Estimated pro forma capitalization as of 30-Jun-17, net of merger and integration costs and purchase accounting adjustments.
GAAP EPS Accretion1
Pre-tax cost savings of 45% of BKMU
non-interest expense
Expected to improve efficiency ratio by
> 100bps with fully phased-in cost
savings
Internal rate of return in the high teens
Transaction does not alter dividend
policy or capital priorities
Additional Comments
Capital Metrics
Tangible Book Value Per Share Impact1
< 1% tangible book value per share
dilution at close (fully accounts for
merger and integration costs)
— ~$0.07 dilution at close
on a per share basis
< 3.5 years earnback using the
crossover method
Per Share ~$(0.03) ~$0.03
ASB Pro Forma
< 3.5 years
ASB Current
(30-Jun-17)² Pro Forma³
Common Equity Tier 1 Ratio 9.9 % 10.1 %
Tier 1 Capital Ratio 10.6 10.8
Total Capital Ratio 13.0 12.9
Tier 1 Leverage Ratio 8.1 8.2
~2%
~(2)%
2018E 2019E
12
2
POST ANNOUNCEMENT UPDATE & TIMELINE
Post
Announcement
Activities and
Integration
Planning
ASB management team has developed a detailed integration plan spanning from transaction
announcement through closing, conversion, and post-conversion time periods
ASB/BKMU integration team has significant local market knowledge and deep operational
expertise from prior consolidations to execute a seamless transition for customers, employees,
and stakeholders
Projected Post-Announcement Timeline
Integration
Planning &
Analysis
Q3 ’17
Q1 ‘18
Post-Closing
Q1 ’18
Q2 ‘18
Conversion
Q2 ’18
Q3 ‘18
Post-
Conversion
Q4 2018
Announcement
Q3 2017 –
–
–
13
ACCELERATES 2017 STRATEGIC PRIORITIES
Strengthening
Customer
Relationships
Delivering
on our
Strategy
Expanding our
Community
Presence
Providing
Long-term Value
to Shareholders
A low-risk transaction with significant opportunities for cost savings
Expected to produce modest initial dilution to tangible book value per share
with positive EPS accretion in 2019
Expected to improve efficiency ratio by > 100bps with fully phased-in cost
savings
Strengthens core deposit franchise
Enhances branch network and density
Increases current market share and expands services to new communities
Delivers smaller sized, in-market, depository institution acquisition
Drives efficiency through improved scale and distribution
Disciplined transaction terms with attractive economics
Adds over 120,000 customer accounts and nearly 1,000 commercial
relationships
Extends Associated’s specialized products to Bank Mutual’s customer base
Positions Associated to gain efficiencies and further invest in customer
experience
14
Enhanced
Automation
Operational
Efficiencies
Branch
Consolidations
Branch Staffing
Initiatives
OVERALL EXPENSE EFFICIENCY
Efficiency Drivers
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. Refer to the appendix for a reconciliation of the Federal
Reserve efficiency ratio to the fully tax-equivalent efficiency ratio.
15
~240
214
2.92%
2.43%
1.00%
1.50%
2.00%
2.50%
3.00%
180
190
200
210
220
230
240
250
260
2013 2014 2015 2016 Jun 2017
Branches (period end)
Annualized
Noninterest Expense /
YTD Average Assets
70% 70% 70% 69%
67%
68% 68% 69% 68%
65%
YTD 2Q13 YTD 2Q14 YTD 2Q15 YTD 2Q16 YTD 2Q17
Federal Reserve Fully tax-equivalent
Efficiency Ratio1
IMPROVING CAPITAL EFFICIENCY
16
167
154
2Q 2013 2Q 2017
Average Common Shares
Outstanding Diluted
(in millions)
11.49% 10.72%
9.31% 9.17% 9.87%
2Q 2013 2Q 2014 2Q 2015 2Q 2016 2Q 2017
Common Equity Tier 1 Ratio
$11.28
$13.29
2Q 2013 2Q 2017
Tangible Book Value
per Common Share
4
Funding
Organic
Growth
Paying a
Competitive
Dividend
Non-Organic
Growth
Opportunities
Share Buybacks
and Redemptions
Capital Priorities
$0.08
$0.12
2Q 2013 2Q 2017
Dividends
per Common Share
From July 21, 2017 (after public announcement of the Bank Mutual acquisition) through August 7,
2017, the Corporation repurchased approximately 1.6 million shares of common stock at an average price
of $23.59 per share.
Earnings Per Share Dividends
Shareholder Gain Return on Average Common Equity
6.6% 7.4%
0.0%
5.0%
10.0%
2Q 2016 2Q 2017
16%
annualized
TSR
EXPANDING BOTTOM LINE
17
As of June 30, 2017
Exceptional Value
1 – Refer to the appendix for a reconciliation of average common equity Tier 1 to average common equity
“We’ve shaped our success
around a shared vision to
become the Midwest’s
premier financial services
company, distinguished by
consistent, quality customer
experiences, built upon a
strong commitment to our
colleagues and the
communities we serve,
resulting in exceptional
value to our shareholders
through economic cycles.”
+16%
YoY
+9%
YoY
$0.31
$0.36
2Q 2016 2Q 2017
$0.11
$0.12
2Q 2016 2Q 2017
9.9% 10.6%
Return on average CET11
Return on average common equity
50%
110%
One Year Five Years
2017 OUTLOOK
Balance
Sheet
Management
Mid-to-high single digit annual
average loan growth
Maintain Loan to Deposit ratio
under 100%
Improving NIM trend
Improving year over year fee-
based revenues
Declining year over year
mortgage banking revenue
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
18
This outlook reflects a stable to improving economy. 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.
Fee
Businesses
APPENDIX
TRANSACTION SUMMARY
1 – Based on ASB closing share price of $24.60 on 19-Jul-17 and an assumed BKMU fully diluted share count of 46.5MM.
Buyer Associated Banc-Corp (NYSE: ASB)
Seller Bank Mutual Corporation (Nasdaq: BKMU)
Consideration 100% stock
Fixed Exchange Ratio 0.422 shares of ASB common stock for each share of BKMU common stock
Price per Share1 $10.38
Transaction Value1 $482 million
Pro Forma Ownership 89% ASB shareholders / 11% BKMU shareholders
Board Representation Chairman of BKMU, Michael T. Crowley, will be appointed to ASB’s Board of Directors
Required Approvals Shareholder approval from BKMU and customary regulatory approvals
Expected Closing 1st Quarter 2018
20
TRANSACTION MULTIPLES & ASSUMPTIONS
1 – Based on ASB closing share price of $24.60 on 19-Jul-17.
2 – Based on BKMU IBES median 2017E EPS of $0.38 plus 45% fully phased-in after-tax cost savings.
Transaction
Pricing1
12.2% premium to BKMU’s closing price of $9.25 on 19-Jul-17
1.6x price / tangible book value per share of $6.33 as of 30-Jun-17
12.5x price / 2017E EPS with fully phased-in after-tax cost savings2
Synergies
Pre-tax cost savings of 45% of BKMU non-interest expense
— Cost savings phased-in 25% in 2018 and 100% in 2019
Durbin ~$2mm annual pre-tax lost interchange revenue under the Durbin Amendment
Fair Value Marks
$(32)mm gross credit mark / 1.6% of 2Q17 total gross loans
$2mm of other pre-tax purchase accounting fair value adjustments
Core Deposit Intangible 1.5% core deposit intangible on non-time deposits amortized straight-line over ten years
Tax Rate 33% effective tax rate applied to BKMU pre-tax earnings and transaction adjustments
Merger and
Integration Costs
$40mm of total pre-tax merger and integration costs
Fully accounted for in transaction and tangible book value impact at close
21
1.4% 1.4% 1.4% 1.4% 1.4%
5.6% 5.5% 5.7%
6.7%
5.4%
2Q 2016 3Q 2016 4Q 2016 1Q 2017 2Q 2017
ALLL / Total Loans
Oil and Gas ALLL / Oil and Gas Loans
CREDIT QUALITY
($ IN MILLIONS)
Potential Problem Loans Nonaccrual Loans
$154 $163 $128 $126 $118
$129 $127 $147 $134 $114
$0
$200
$400
2Q 2016 3Q 2016 4Q 2016 1Q 2017 2Q 2017
$232
$283 $290 $275 $260
22
$2
($4)
$3
$19
$6 $12
5)
$5
5
25
2Q 2016 3Q 2016 4Q 2016 1Q 2017 2Q 2017
$22
$21
$18
$9
$13
$6
$281 $270 $276 $262 $226
$176 $171
$75 $78
$37
$0
00
00
2Q 2016 3Q 2016 4Q 2016 1Q 2017 2Q 2017
$263
$457 $441
$351 $340
Net Charge Offs (Recoveries) Allowance to Total Loans / Oil and Gas Loans
Oil and Gas Oil and Gas
Oil and Gas
$1
Manufacturing
and Wholesale
Trade
26%
Power &
Utilities
14%
Real Estate
12%
Oil & Gas
8%
Finance &
Insurance
12%
1 – Excludes $0.4 billion Other consumer portfolio
2 – Other Midwest includes Missouri, Indiana, Ohio, Michigan and Iowa
3 – Principally reflects the oil and gas portfolio
4 – Based on outstanding commitments of $940 million
5 – Our largest tenant exposure is less than 5%, spread over five loans, to a national investment grade grocer
C&BL by Geography
$7.4 billion
CRE by Geography
$5.0 billion
Multi-Family
30%
Retail5
23%
Office / Mixed
Use 19%
Industrial
10%
1-4 Family
Construction
9%
Hotel / Motel
4%
Other
5%
East Texas
North
Louisiana
Arkansas
19%
South Texas
& Eagle Ford
17%
Rockies
15%
Permian
14%
Marcellus
Utica
Appalachia
11%
Mid-
Continent
(primarily OK
& KS)
8%
Gulf Shallow
5%
Gulf Coast
5%
Bakken
1%
Other
(Onshore
Lower 48)
5%
Wisconsin
28%
Illinois
16%
Minnesota
7%
Texas3
10%
Other
Midwest2
9%
Other
30%
Wisconsin
28%
Illinois
23%
Minnesota
10%
Other
Midwest2
24%
Texas
4%
Other
11%
LOANS STRATIFICATION OUTSTANDINGS AS OF JUNE 30, 2017
23
Total Loans1
Wisconsin
31%
Illinois
27%
Other
Midwest2
13%
Minnesota
10%
Texas
5%
Other
14%
C&BL by Industry
$7.4 billion
Oil and Gas Lending4
$601 million
CRE by Property Type
$5.0 billion
OIL AND GAS UPDATE
$451 $398 $446 $413 $450
$176
$171 $75
$78 $37
$129
$127
$147
$134 $114
2Q 2016 3Q 2016 4Q 2016 1Q 2017 2Q 2017
Pass Potential Problem Loans Nonaccrual
$756
$696 $668
$625
Period End Loans by Credit Quality Oil and Gas Allowance
$42 $38 $38 $42 $33
5.6% 5.5% 5.7%
6.7%
5.4%
2Q 2016 3Q 2016 4Q 2016 1Q 2017 2Q 2017
Oil and Gas Allowance
Oil and Gas Allowance / Oil and Gas Loans
($ in millions) ($ in millions)
24
Total O&G Portfolio
Quarter end June 30, 2017
# of Credits $ of commitments $ of outstandings % of total loans
60 $940 million $601 million 3%
17
28%
$353 million
38%
$173 million
29%
1%
New business since
January 1, 2016
$601
0.41%
0.29%
0.40% 0.39%
0.65%
$8 $6 $8 $12
$21 $8 $7 $11 $8
$13
2Q 2013 2Q 2014 2Q 2015 2Q 2016 2Q 2017
Short and long-term funding costs
Interest-bearing deposits
Corporate
and
Commercial
Specialty
Community,
Consumer
and Business
Network
Transaction
Deposits2
Other2
POSITIONED FOR HIGHER INTEREST RATES
ASSET SENSITIVE PROFILE
($ in millions)
25
Interest Income & Net Interest Margin Interest Expense
2Q13 vs 2Q17
Interest
Income
Change
+$42 million
2Q13 vs 2Q17
NII Change
+$24 million
2Q13 vs 2Q17
Interest
Expense
Change
-$18 million
Cost of interest-bearing liabilities
Deposit Mix and Beta Overview1
3.16% 3.08% 2.83% 2.81% 2.83%
Deposit Betas:
Less than .2
>.2 <.5
~ 1
$89 $90 $92 $99
$113
$58 $58 $61
$65
$72
$34 $39
$37
$38
$38
$0
50
00
50
00
50
2Q 2013 2Q 2014 2Q 2015 2Q 2016 2Q 2017
Commercial Retail Investment and other
Net interest margin
$181 $186
$191
$202
$223
3
$16
$34
$13 $19
1 – Deposit mix based on second quarter 2017 average balances. Deposit beta overview from 4Q15 to 2Q17.
2 – Risk Management and Shared Services segment balances
3 – Our LIBOR-based loans typically reprice the first of the month in arrears. Since the Fed tends to raise rates mid-month, we tend to see a 6+ week lag in repricing.
($ in millions)
$20
26
0.06% 0.05% 0.05% 0.05% 0.05%
0.29% 0.30% 0.31%
0.42%
0.52%
0.78% 0.78% 0.78% 0.79%
0.85%
0.00%
0.20%
0.40%
0.60%
0.80%
1.00%
2Q 2016 3Q 2016 4Q 2016 1Q 2017 2Q 2017
NETWORK TRANSACTION DEPOSITS
Deposits and Customer Funding Average Rates
Wealth Managers
Quarter end June 30, 2017
Relationships established before
June 30, 2012
21
relationships ~$3.2 billion
~15%
of total deposits
11
relationships ~$2.1 billion
~65%
of network transaction deposits
Savings
Money Market without NTD Time Deposits
Network Transaction Deposits
Money Market with NTD (As Reported)
illio
1 – Total deposits excluding network transaction deposits
Network Transaction Deposits (NTD)
($ in billions)
Customer Funding
Customer Deposits1
Network Transaction Deposits as % of Total Deposits
$17.6
$19.7
$17.8
$20.8
$21.9
$2.1 $2.2 $2.9 $3.1 $3.2 0
0
0
0
0
0
2Q 2013 2Q 2014 2Q 2015 2Q 2016 2Q 2017
12.5% 12.9%
15.2% 15.5% 14.9%
34% 28%
66% 72%
<1% <1%
June 2016 June 2017
HIGH QUALITY SECURITIES
($ IN BILLIONS)
$4.93
$5.76 $5.94 $6.08 $5.93
2.63% 2.63% 2.49% 2.41% 2.44%
1.00%
2.00%
3.00%
4.00%
5.00%
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
2Q 2013 2Q 2014 2Q 2015 2Q 2016 2Q 2017
Average Balance Average Yield
Investment Type
Amortized
Cost
Fair
Value
Duration
(Yrs)
GNMA CMBS $2.02 $1.99 3.31
GNMA MBS & CMOs 2.20 2.19 4.55
Agency & Other MBS & CMOs 0.58 0.59 2.63
Municipals 1.16 1.17 5.60
Other1 0.01 0.01
Strategic Portfolio $5.97 $5.95 4.15
Membership Stock 0.18 0.18
Total Portfolio $6.15 $6.13
GNMA
CMBS
34%
GNMA
CMOs
30%
GNMA
MBS
6%
Municipals
20%
Other MBS
9%
Other CMOs
1%
Other
<1%
Fair Value Composition Risk Weighting Profile
Portfolio Detail as of June 30, 2017 Portfolio and Yield Trends
0%
Risk Weighted
Other
20%
Risk Weighted
1 – Includes Corporate, Treasury, and all other 27
Efficiency Ratio YTD 2Q13 YTD 2Q14 YTD 2Q15 YTD 2Q16 YTD 2Q17
Federal Reserve efficiency ratio 69.74% 69.75% 70.24% 69.18% 66.54%
Fully tax-equivalent adjustment (1.41)% (1.32)% (1.37)% (1.36)% (1.30)%
Other intangible amortization (0.42)% (0.41)% (0.34)% (0.21)% (0.19)%
Fully tax-equivalent efficiency ratio 67.91% 68.02% 68.53% 67.61% 65.05%
The efficiency ratio as defined by the Federal Reserve guidance is noninterest expense (which includes the provision for unfunded commitments) divided by
the sum of net interest income plus noninterest income, excluding investment securities gains / losses, net. The fully tax-equivalent efficiency ratio, which is a
non-GAAP financial measure, is noninterest expense (which includes the provision for unfunded commitments), excluding other intangible amortization,
divided by the sum of fully tax-equivalent net interest income plus noninterest income, excluding investment securities gains / losses, net. Management
believes the fully tax-equivalent efficiency ratio, which adjusts net interest income for the tax-favored status of certain loans and investment securities, to be
the preferred industry measurement as it enhances the comparability of net interest income arising from taxable and tax-exempt sources.
RECONCILIATION AND DEFINITIONS OF
NON-GAAP ITEMS
28
Average Tangible Common Equity and Average Common Equity Tier 1
($ in millions) 2Q 2016 2Q 2017
Average common equity $2,869 $3,005
Average goodwill and other intangible assets, net (989) (987)
Average tangible common equity 1,880 2,018
Less: Accumulated other comprehensive income / loss 1 50
Less: Deferred tax assets / deferred tax liabilities, net 32 32
Average common equity Tier 1 $1,913 $2,100