UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 OR 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) August 5, 2014

 

 

Associated Banc-Corp

(Exact name of registrant as specified in its chapter)

 

 

 

Wisconsin   001-31343   39-1098068

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

 

433 Main Street, Green Bay, Wisconsin   54301
(Address of principal executive offices)   (Zip code)

Registrant’s telephone number, including area code 920-491-7500

(Former name or former address, if changed since last report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 


Item 7.01. Regulation FD Disclosure

Associated Banc-Corp is furnishing the investor presentation, included as Exhibit 99.1 to this Report on Form 8-K, which will be used, in whole or in part, from time to time by executives of the Registrant in one or more meetings with investors and analysts.

The information furnished pursuant to this Item 7.01, including Exhibit 99.1, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities under that Section and shall not be deemed to be incorporated by reference into any filing of the Registrant under the Securities Act of 1933 or the Exchange Act.

Item 9.01. Financial Statements and Exhibits.

The following exhibit is furnished as part of this Report on Form 8-K.

(d) Exhibits

 

99.1    Associated Banc-Corp Investor Presentation


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

    Associated Banc-Corp
    (Registrant)
Date: August 5, 2014     By:   /s/ Christopher J. Del Moral-Niles
      Christopher J. Del Moral-Niles
      Chief Financial Officer


Exhibit Index

 

Exhibit
Number

    
99.1    Associated Banc-Corp Investor Presentation.

EX-99.1
THIRD QUARTER 2014
ASSOCIATED BANC-CORP
INVESTOR
PRESENTATION
Exhibit 99.1


FORWARD-LOOKING STATEMENTS
1
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.


OUR FOOTPRINT AND FRANCHISE
Top 50, publicly traded,
U.S. bank holding
company
$26 billion in assets;
largest bank
headquartered in
Wisconsin
227 branches serving
approximately one
million customers
About Associated
ASBC
Deposits
2
($ in billions)
ASBC
Branches
2
WI
$12.1
161
IL
$3.8
43
MN
$1.4
23
Total
$17.3
227
1
FDIC market share data 6/30/14
2
As of 6/30/14 (Period End)
2


ATTRACTIVE MIDWEST MARKETS
3
Serve a Large Market Place: 
(Footprint
is
~
20%
of
USA)
1
Manufacturing
Concentrated:
Top
3
states
(Indiana, Wisconsin, and Iowa)
for concentration of
manufacturing jobs and two
other states in the top 10
Favorable Employment
Dynamics:
Wisconsin,
Minnesota, Indiana, Iowa, and
Ohio all have unemployment
rates
that
are
under
6%
3
Positive Economic Trends
Continuing job growth across
the footprint
1
US
Census
Bureau
2012
;
2
Area
Development
Online
Author:
Mark
Crawford
(Winter
2013);
3
June2014
US
Bureau
of
Labor
Statistics;
4
June2014 US Bureau of Labor Statistics  -
“Regional and State Employment and Unemployment (July 18,  2014 News Release)
Manufacturing
Share
of
Non-Farm
Employment²
4 of Top 5


ASSOCIATED AT ITS CORE
4
Community
bank values,
flexibility,
decision-
making,
attention to
relationships
and service
Big bank
products,
strength,
lending limits,
efficiency,
innovation,
depth of
expertise


1H 2014 HIGHLIGHTS AND OUTLOOK
5
Loan Growth of ~ $900 mm YoY
Total average loans of $16.6
bn, up 6% YoY
Purchased credit card
participation for $108 mm on
June 30, 2014
Net interest income up $9 mm or
5%  YoY
Disciplined Expense Management
Improving efficiency ratio
FTEs down 7% from 2Q13
Consistent Capital Deployment
Repurchased $69 mm of
common stock June YTD
1H 2014 Highlights:
Outlook –
Growing the
Franchise & Creating Long-
Term Shareholder Value
Continued focus on organic
growth
Defending NIM compression in
low-rate environment
Strong focus on efficiency &
expense management
Disciplined focus on deploying
capital to drive long-term
shareholder value
Repurchased $90 million
of common stock in July
2014


RESHAPING & REBUILDING THE LOAN
PORTFOLIO
1
6
1
Based on Average Annual Balances, $ in Billions
Installment
HELOCs &
2
nd
Liens
Residential
Mortgage
&
HE
1
st
Liens
Construction
CRE
Investor
Commercial
& Business
Lending
$16.1
$13.4
$13.0
$14.6
$15.7
5%
7%
5%
11%
12%
13%
13%
15%
21%
34%
9%
19%
20%
32%
4%
18%
29%
32%
$16.2
$16.6
4%
9%
4%
19%
30%
34%
3%
7%
5%
19%
29%
37%
2%
7%
6%
18%
29%
38%
2%
6%
6%
18%
29%
39%


LOAN PORTFOLIO GROWTH
AVERAGE
LOAN
GROWTH
OF
$898
MILLION
OR
6%
IN
1
ST
HALF
OF
2014
7
2Q
2014
vs.
4Q
2013
Change
in
Average
Net
Loan
Balances
by
Category
($ in millions)
Home Equity & Installment
Commercial Real Estate
Residential Mortgage
Power & Utilities
Oil & Gas
Mortgage Warehouse
General Commercial Loans
Total
Commercial &
Business
Lending =
+10%
(+$586)
+5%
% Change
+16%
+6%
+6%
+38% 
(6%)
+41%


COMMERCIAL LINE UTILIZATION TRENDS
8
Line utilization increased in Commercial & Business Lending
Change from 1Q 14
Commercial Real
Estate (including
construction)
-
260 bps
Commercial  &
Business Lending
+ 290 bps


160,000  “Associated Bank”
branded card accounts
CREDIT CARD PORTFOLIO PURCHASE
9
Summary Details:
ASBC acquired a 45% participation interest in a credit card portfolio of customers who currently hold
“Associated Bank”
branded credit card accounts for $108 million.
ASBC and US Bank will both participate on a pro-rata basis in all revenues, credit losses, and
growth going forward.
Elan will continue to administer, service, and manage the portfolio for a fixed, per account fee.
The purchase premium will be amortized over 5 years.
ASBC will forego referral fees it has been receiving from Elan/US Bank for new accounts but
expects that the net yield on the portfolio (net of losses and premium amortization) will offset this
foregone fee revenue.
Transaction is expected to result in less card based fee income but more net interest income. 
Bottom line impact should not be material in 2014, but will build value over time and
contribute to earnings growth as the portfolio grows.
55%
participation
45%
participation


GROWING NET INTEREST INCOME WHILE
MARGIN COMPRESSES
10


NONINTEREST INCOME TRENDS
11
1
Core
Fee-based
Revenue
=
Trust
service
fees
plus
Service
charges
on
deposit
accounts
plus
Card-based
and
other
nondeposit
fees
plus
Insurance
commissions
plus
Brokerage
and
annuity
commissions.
This
is
a
non-GAAP
measure.
Please
refer
to
the
press
release
tables
for
a
reconciliation
to
noninterest
income.
2
Other
Noninterest
Income
=
Total
Noninterest
Income
minus
Core
Fee-based
Revenue.
This
is
a
non-GAAP
measure.
Please
refer
to
the
press
release
tables
for
a
reconciliation
to
noninterest
income.


NONINTEREST EXPENSE TRENDS
($ IN MILLIONS)
12
1
Efficiency
ratio
=
Noninterest
expense,
excluding
other
intangible
amortization,
divided
by
sum
of
taxable
equivalent
net
interest
income
plus
noninterest
income,
excluding
investment
securities
gains/losses,
net,
and
asset
gains/losses,
net.
This
is
a
non-GAAP
financial
measure.
Please
refer
to
the
appendix
for
a
reconciliation
of
this
measure.
2
FTE
= Average Full Time Equivalent Employees
3
Technology
Spend
=
Data
Processing
and
Equipment
expenses
4
Other
Non-Personnel
Spend
=
Total
Noninterest
Expense
less
Personnel
and
Technology
spend


Areas of Focus
PURSUING EFFICIENCY GAINS
13
Back Office
Initiatives:
Implementing
technology solutions
in labor intensive
processes
Real Estate
Initiatives:
Actions to optimize
our real estate
holdings and
capacity
Distribution
Initiatives:
Optimize the ways
that we interact with
our customers
Efficiency
Ratio
1
at
2Q 2014 = 68%
Goal = Peer
Average or Better
1
Efficiency
ratio
=
Noninterest
expense,
excluding
other
intangible
amortization,
divided
by
sum
of
taxable equivalent net interest income plus noninterest income, excluding investment securities
gains/losses, net, and asset gains/losses, net.  This is a non-GAAP financial measure. Please refer to the
appendix
for
a
reconciliation
of
this
measure.
Efficiency
Ratio
2014
is
YTD
June
2014.


BRANCH EVOLUTION
14
Eagle River, Wisconsin
Milwaukee, Wisconsin
Branches coming in 2014: Lower construction costs, higher visibility profile
Madison, Wisconsin (UW Campus)
Express Branch:  Demonstration Kiosk –
“Hands On”
& Automated Teller Machine


RATIONALIZING THE FOOTPRINT
15
1
Branch counts are as of period end.


CAPITAL MANAGEMENT PRIORITIES
16
Funding
Organic Growth
Paying a
Competitive
Dividend
Non-organic
Growth
Opportunities
Share Buybacks
and
Redemptions
2012
2013
Fund Loan Growth and other Capital Investments
Repurchased $60
mm of Common
Stock
Redeemed $205
mm in Trust
Preferred
Repurchased
$120 mm of
Common Stock
Retired $26 mm
in Sub-Debt
Increased
quarterly dividend
in Q4 2012
Paid $0.23/
common share
Increased
quarterly dividend
in Q4 2013
Paid $0.33/
common share
Focused on Cost Take-out Driven Depository M&A
Maintaining Discipline in Pricing of any Transaction
2014
Repurchased $159
mm of Common Stock
through July 2014
Retired $155 mm in
Senior Notes in Q1
2014
Declared quarterly
common dividend
of $0.09/ share in
Q1 & Q2 2014


Recent
Transactions
DISCIPLINED CAPITAL DEPLOYMENT
17
$
Repurchased
Jan –Jun  2013
Jul –Dec  2013
Jan –Jun  2014
July 2014
$60 mm
$60 mm
$69 mm
$90 mm
Shares
Outstanding,
end of period
(in Millions)
11.49%
11.46%
10.72%
10.22%
1
1
Estimated pro forma calculation
2
Basel I ratio calculation
Tier 1
Common
Ratio
2
ASBC
Basel
III
Tier
1
Common
Ratio
Goal
=
8
9.5%
$279
mm
Repurchased
11.1
mm
Shares
Retired
2013-2014
YTD
Totals


2014 SECOND HALF OUTLOOK
18
Asset Growth
Deposits / Funding
Mix
Margin
Noninterest
Income
Noninterest
Expense
Capital
Provision
Full year 2014 annual
average loan growth of approximately 8%
Mid single digit average deposit and slightly higher other
funding growth
NIM compression of a few basis points per quarter
Net interest income growth
Second half 2014 noninterest income in line with first half 2014
Total 2014 expenses expected to be flat compared to
2013 with a continued focus on efficiency initiatives
Continue to follow stated corporate priorities for capital
deployment
Provision based on expected loan growth and other factors


WHY ASSOCIATED
19
Reasons to Invest
Management Team Focused on Creating
Long-Term Shareholder Value
1
Return
on
Tier
1
Common
Equity
(ROT1CE)
=
Management
uses
Tier
1
common
equity,
along
with
other
capital measures, to assess and monitor our capital position. This is a non-GAAP financial measure. Please refer
to the appendix for a definition of this and other non-GAAP items.
EPS
and
Dividends
Paid
&
ROT1CE
1
Leading Midwest Bank Operating in    
Attractive Markets
Core Organic Growth Opportunity
Disciplined Loan and Deposit Pricing
Committed to Efficiency Ratio Improvement
Strong Credit Quality and Capital Profile
Disciplined Capital Deployment
Improving Earnings Outlook


APPENDIX
20
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*


CREDIT QUALITY INDICATORS
($ IN MILLIONS)
21


SEGMENT PROFITABILITY
YTD JUNE 2014
22
* Average Earning Assets


COMMERCIAL LOAN DETAIL
23
C&BL Loans by Industry
($6.7 billion –
Jun 2014 –
Period End)
C&BL Loans by State
1
Includes Missouri, Indiana, Ohio, Michigan, & Iowa
($6.7 billion –
Jun 2014 –
Period End)
CRE Loans by Industry
($4.0 billion –
Jun 2014 –
Period End)
CRE Loans by State
($4.0 billion –
Jun 2014 –
Period End)


RETAIL LOANS BY STATE
24
Residential Mortgage Loans
($4.1 billion –
Jun 2014 –
Period End)
Home
Equity
Loans
2
($1.7 billion –
Jun 2014 –
Period End)
1
Includes Missouri, Indiana, Ohio, Michigan, & Iowa
2
Approximately 40% is in first lien position


NONINTEREST INCOME AND EXPENSE
COMPOSITION
SECOND QUARTER 2014
25
Noninterest Income by Category
Noninterest Expense by Category
($72 million)
($168 million)


Amortized Cost Composition –
June 30, 2014
Investment Portfolio –
June 30, 2014
Credit Rating
($ in thousands)
Fair Value
(000’s)
% of Total
Govt & Agency
$4,823,263
83.8%
AAA
108,481
1.9%
AA
676,732
11.8%
A
139,612
2.4%
BAA1, BAA2 & BAA3
-
0.0%
BA1 & Lower
1,917
0.0%
Non-rated
5,603
0.1%
TOTAL Market Value
$5,755,608
100.0%
Type
Amortized
Cost
(000’s)
Fair Value
(000’s)
TEY
(%)
Duration
(Yrs)
Govt & Agencies
$1,000
$1,000
0.31
0.13
Agency MBS
2,883,817
2,909,275
2.63
3.32
CMOs
971,054
975,260
2.42
3.01
GNMA CMBS
961,507
940,342
2.01
4.55
Municipals
872,848
903,269
5.20
4.84
ABS
19,396
19,395
0.54
0.29
Corporates
7,008
7,017
1.15
1.49
Other
18
50
TOTAL HTM &
AFS
$5,716,648
$5,755,608
2.86
3.69
INVESTMENT SECURITIES PORTFOLIO
26
Portfolio Ratings Composition –
June 30, 2014
Type
Fair Value
(000’s)
% of Total
0% RWA
$1,129,130
19.6%
20% RWA
4,557,383
79.2%
50% RWA
22,655
0.4%
=>100% RWA
7,494
0.1%
Not subject to RW
38,946
0.7%
TOTAL Market Value
$5,755,608
100.0%
Risk Weighting Profile –
June 30, 2014


RECONCILIATION AND DEFINITIONS OF
NON-GAAP ITEMS
27
2Q 2013
3Q 2013
4Q 2013
1Q 2014
2Q 2014
Efficiency Ratio Reconciliation:
Efficiency ratio (1)
69.01%
71.45%
73.70%
70.41%
69.70%
Taxable equivalent adjustment
(1.38)
(1.50)
(1.49)
(1.35)
(1.32)
Asset gains (losses), net
(0.01)
0.59
0.80         
0.22
0.26
Other intangible amortization
(0.41)
(0.44)
(0.42)
(0.42)
(0.41)
Efficiency ratio, fully taxable equivalent (1)
67.21%
70.10%
72.59%
68.86%
68.23%
(1)
Efficiency
ratio
is
defined
by
the
Federal
Reserve
guidance
as
noninterest
expense
divided
by
the
sum
of
net
interest
income
plus
noninterest
income, excluding investment securities gains / losses, net.  Efficiency ratio, fully taxable equivalent, is noninterest expense, excluding other
intangible amortization, divided by the sum of taxable equivalent net interest income plus noninterest income, excluding investment securities
gains / losses, net and asset gains / losses, net.  This efficiency ratio is presented on a taxable equivalent basis, which adjusts net interest
income for the tax-favored status of certain loans and investment securities.  Management believes this measure to be the preferred industry
measurement of net interest income as it enhances the comparability of net interest income arising from taxable and tax-exempt sources and it
excludes certain specific revenue items (such as investment securities gains / losses, net and asset gains / losses, net).
2009
2010
2011
2012
2013
1H 2014
Efficiency Ratio Reconciliation:
Efficiency ratio (1)
56.65%
65.68%
73.33%
72.92%
71.05%
70.05%
Taxable equivalent adjustment
(1.30)
(1.60)
(1.72)
(1.60)
(1.46)
(1.34)
Asset gains (losses), net
(0.93)
(0.79)
(0.95)
(0.90)
0.40
0.24
Other intangible amortization
(0.50)
(0.50)
(0.51)
(0.43)
(0.42)
(0.41)
Efficiency ratio, fully taxable equivalent (1)
53.92%
62.79%
70.15%
69.99%
69.57%
68.54%


OUR VISION
28
ASSOCIATED
will
be
the
most
admired Midwestern financial
services company, distinguished by
sound, value-added financial
solutions with personal service for
our customers, built upon a strong
commitment to our colleagues and
the communities we serve, resulting
in exceptional value for our
shareholders.