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Section 1: 8-K (FORM 8-K)

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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)
May 7, 2018

                                                                            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))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company [ ]
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]







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








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: May 7, 2018
By: /s/ Christopher J. Del Moral-Niles
 
Christopher J. Del Moral-Niles
 
Chief Financial Officer
  
 
 






 
Exhibit Index
 
Exhibit
Number
99.1




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Section 2: EX-99.1 (EXHIBIT 99.1)

asb2q18investordeckfinal
Exhibit 99.1 Associated Banc-Corp Investor Presentation 2018 SECOND QUARTER


 
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. Trademarks: All trademarks, service marks, and trade names referenced in this material are official trademarks and the property of their respective owners. 1


 
OUR FRANCHISE First Quarter 2018 $33 billion of assets1 $23 billion of loans1 Over $1 billion of revenue2 $24 billion of deposits1 3 − Largest bank headquartered in Wisconsin − Approximately 5,000 employees, servicing over 1 million customer accounts in 8 states and over 110 communities1 Affinity Programs4 − 40%+ of active personal checking accounts are affinity related4 Contact Center Recognition5 24% 7% 9% 2% 1 – As of March 31, 2018, unless otherwise noted 2 – Twelve months ended March 31, 2018 3 – Based on assets 4 – Affinity debit cards as a percentage of active personal checking accounts, as of March 31, 2018 2 5 – J.D. Power 2017 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


 
ATTRACTIVE MIDWEST MARKETS Large Population Base With a Manufacturing and Wholesale Trade-Centric Economy Midwest holds ~20% of the U.S. population1 and Commercial and Business Lending nearly 30% of all U.S. manufacturing jobs2 ASB Loan Composition by Industry U.S. Manufacturing Jobs Manufacturing & Wholesale Midwest Trade ~30% 25% All other regions ~70% Supporting Strong Employment Base and Healthy Consumer Credit Several Midwestern states have unemployment rates3 well below the national average: Select ASB Metro Market 4 4.6% 4.7% Unemployment Rates 4.1% 4.4% 3.6% 3.2% 3.2% 2.8% 2.9% Madison, WI…………………… 2.2% Wausau, WI….………………… 2.3% Green Bay, WI………………… 2.3% Rochester, MN……………..…... 2.7% Minneapolis – St. Paul, MN….… 2.9% IA WI MN IN MO U.S. OH IL MI Dark green bars denote ASB branch states 1 – U.S. Census Bureau, Annual Estimates of the Resident Population for the United States, Regions, States, and Puerto Rico: April 1, 2010 to July 1, 2017 2 – U.S. Bureau of Labor Statistics, Manufacturing Industry Employees, seasonally adjusted, March 2018 (preliminary) 3 – U.S. Bureau of Labor Statistics, State Employment and Unemployment, seasonally adjusted, March 2018 (preliminary) 4 – U.S. Bureau of Labor Statistics, Civilian labor force and unemployment by metropolitan area, seasonally adjusted, March 2018 (preliminary) 3


 
2018 OUTLOOK This outlook reflects a stable to improving economy and includes our expectation of two additional interest rate increases in 2018. We may adjust our outlook if, and when, we have more clarity on any one, or more, of these factors. ▪ 1%-2% quarterly loan growth for ▪ Approximately $825M the remainder of 2018 noninterest expense (including Diversified Insurance ▪ Maintain Loan to Deposit ratio expenses)1 Balance Sheet under 100% Expense Management Management ▪ Lower effective tax rate ▪ Improving year over year NIM (20%-22%) trend ▪ Improving year over year fee- ▪ Continue to follow stated based revenues corporate priorities for capital deployment ▪ Approximately $365M - $375M Capital & Fee full year noninterest income ▪ Provision expected to adjust with Credit Businesses changes to risk grade, other Management indications of credit quality, and loan volume 1 – Includes $40 million of expected acquisition related costs. 4


 
LOAN GROWTH TRENDS1 Average Quarterly Loans QoQ Average Loan Growth, $ in millions ($ in billions) 1Q14 – 1Q18 Net QoQ Growth: +$1.2 billion $22.1 CAGR $20.1 Commercial $18.9 real estate $526 $17.8 $7.3 5% Residential $464 $16.2 mortgage $7.2 General $7.1 $184 $7.0 commercial $6.1 Home equity & $90 $5.4 8% other consumer $5.0 $42 $4.5 REIT $4.1 $3.9 Oil and Gas $37 $8.0 14% $(25) Power & Utilities $5.9 $6.6 $4.7 $5.2 5% $(103) Mortgage warehouse $1.5 $1.5 $1.4 $1.3 $1.4 1Q 2014 1Q 2015 1Q 2016 1Q 2017 1Q 2018 Commercial & business Commercial real estate Residential mortgage Home equity & other consumer 1First quarter 2018 includes Bank Mutual loans for two months, from 2/1/2018 through 3/31/2018. 5


 
DEPOSIT GROWTH TRENDS1 Average Quarterly Deposits Strong Deposit Growth ($ in billions) Loan to Deposit Ratio 2 2012 – 2017 CAGR 96% 94% 93% 91% 92% 1Q14 – 1Q18 7% CAGR $23.7 4% $21.5 3% 3% $20.6 $5.1 5% $19.1 $5.0 $17.0 $5.0 $4.3 $4.7 14% IL WI MN $4.2 $3.2 $4.3 $3.2 $2.8 Low Cost Deposit Mix3 $9.4 7% – Checking and Savings represent nearly 50% – $8.7 $9.4 $9.2 $7.2 $1.7 22% $1.2 $1.3 $1.4 $1.5 $1.7 $1.6 $1.6 $1.6 $2.7 40% 1Q 2014 1Q 2015 1Q 2016 1Q 2017 1Q 2018 20% Time deposits Money market Noninterest-bearing demand 11% 7% Savings Interest-bearing demand 1 – First quarter 2018 includes Bank Mutual deposits for two months, from 2/1/2018 through 3/31/2018 6 2 – SNL U.S. Deposit Market Share Report. State figures portray deposit growth for all bank branches in that state 3 – Percentages based on first quarter 2018 average balances


 
EXPANDING MARGINS Interest Income & Average Yield Repricing1 in next 12 Interest Expense and NIM ($ in millions) 4.34% months 3.93% 3.89% 3.69% 90% 2.92% 3.52% 2.84% 2.83% 2.84% 2.79% 2.39% 2.42% 2.40% 2.47% 2.44% $264 $237 $236 $223 $44 $212 $39 $41 $38 $37 0.73% $84 0.63% 0.65% $76 $72 $77 $69 0.51% 0.42% $52 $136 $42 $43 $106 $113 $122 $118 $34 $27 $15 $18 $13 $14 $10 $33 $17 $21 $28 $28 1Q 2017 2Q 2017 3Q 2017 4Q 2017 1Q 2018 1Q 2017 2Q 2017 3Q 2017 4Q 2017 1Q 2018 Short and long-term funding costs Commercial Residential mortgage Interest-bearing deposits Investment and other and retail Net Interest Margin 7 1 – Repricing, resetting, or maturing balances as a percentage of March 31, 2018 balances Cost of interest-bearing deposits


 
NET INTEREST INCOME WALKFORWARD AND MARGIN OUTLOOK Net Interest Income Walkforward 4Q 2017 Reported Net Interest Income and Margin $187 million 2.79% + Net loan and deposit growth (including Bank Mutual) + $10 million + Bank Mutual purchase loan related items + $6 million Purchased loan accretion $4 million Prepayments and other adjustments $2 million + Net changes in securities portfolio + $3 million + LIBOR - Fed Funds spread widening + $2 million + Other prepayments and net changes to other earning assets and liabilities + $2 million 1Q 2018 Net Interest Income and Margin $210 million 2.92% Net Interest Margin Outlook 1Q 2018 Reported Net Interest Margin 2.92% Expected future margin impacts for 2018: Full quarter effect of Bank Mutual purchase accretion 0 to +1 bp Prepayments, interest recoveries and other adjustments (including Bank Mutual) (-1) to +1 bp LIBOR - Fed Funds spread normalization (-1) to 0 bps Expected benefit of two additional Fed rate increases +2 to +4 bps Net 2018 projected net interest margin range 2.92%-2.98% 8


 
GROWING AND DIVERSIFIED BUSINESS MODEL ($ IN MILLIONS) Robust Capital Markets, Trust and Noninterest Income 2 Investments Solutions ($ in millions) $26 $90 $19 $19 $19 $20 $83 $80 $80 $74 1Q 2014 1Q 2015 1Q 2016 1Q 2017 1Q 2018 Strong Insurance Commissions Growth Driven by Acquisitions $73 $23 $65 $67 $22 $63 $20 $21 $56 $12 1Q 2014 1Q 2015 1Q 2016 1Q 2017 1Q 2018 1Q 2014 1Q 2015 1Q 2016 1Q 2017 1Q 2018 Fee-based revenue1 1 – A non-GAAP financial measure, fee-based revenue is the sum of insurance commissions and fees, service charges and deposit account fees, card-based and loan fees, trust and asset management fees, and brokerage commissions and fees. Please refer to the appendix for a reconciliation of fee-based revenue to total noninterest income. 9 2 – Capital markets, trust and asset management fees, and brokerage commissions and fees


 
OVERALL EXPENSE EFFICIENCY AUTOMATION AND INVESTMENTS ARE DRIVING BETTER EFFICIENCY OVER TIME Efficiency Drivers Enhanced Operational Branch Branch Staffing Automation Efficiencies Consolidations Initiatives 2.81% Noninterest Expense / 1 Efficiency Ratio 2.65% Average Assets2 2.53% 2.45% 2.43% 71% 70% 70% 69% 66% 70% 69% 69% 58 67% 65% 63% 227 227 215 215 213 1Q 2014 1Q 2015 1Q 2016 1Q 2017 1Q 2018 Federal Reserve Fully tax-equivalent 1Q 2014 1Q 2015 1Q 2016 1Q 2017 1Q 2018 Excluding acquistion related costs Associated Branches Bank Mutual Branches 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 and to the efficiency ratio excluding acquisition related costs. 2 – Annualized data. Noninterest expense for 1Q 2018 excludes $21M of acquisition related costs. 10


 
MULTI-CHANNEL STRATEGY Transactions are moving out of branches1… Solution is Multi-channel Strategy2 Since 2015… Branch-centric 25% Other Branch Snap deposits transactions up 75% 14% down 15% 41% 20% Multi-channel Digital …but branches remain important for certain Community, Consumer and Business segments deposit growth2 Physical Presence2… Last 12 Months Deposit Growth3 • 66% of households are multi-channel or 54% branch-centric • Over 30,000 customers per day in our 38% branches …and Digital Engagement2 5% 3% • 61% of households are digitally engaged Multi-channel Branch-centric Digital Other 1 __ 2015 compared to twelve months ended March 31, 2018, excluding Bank Mutual transactions 11 2 __ See Appendix for definition of Multi-channel, Branch-centric, Digital and Other categories. Figures exclude Bank Mutual transactions 3 __ February 2017 to February 2018, excluding Bank Mutual


 
BRANCH NETWORK OPTIMIZATION UPGRADING AND REDUCING PHYSICAL FOOTPRINT1 Upgrading Reducing Physical Footprint • Associated has invested over $150MM in its physical branch network • Eliminated ~60 branches Since Since • 100% of branches have been upgraded 2012… 2012… • ~10% reduction in average branch size • 75% of branches have received a major (as measured in square feet) remodel SizeInnovation Transformation Consolidating Deposits Branches By Consumer Deposits2 Modern 242 Branches 36% 1Q 2012 Decr 1Q 2018 156 78% Incr 57 32 Digital Ambassadors <$50MM $50MM+ 12 1 – Excludes Bank Mutual branches Branches Branches 2 – Excludes commercial, corporate, trust, and network transaction deposits


 
CAPITAL PRIORITIES 1 Funding Organic Growth 2 Paying a Competitive Dividend Quarterly Average Loans; ($ in billions) Quarterly Dividends 8% 14% $0.15 CAGR $22.1 CAGR $20.1 $0.12 $0.11 $18.9 $0.10 $17.8 $0.09 $16.2 1Q 2014 1Q 2015 1Q 2016 1Q 2017 1Q 2018 1Q 2014 1Q 2015 1Q 2016 1Q 2017 1Q 2018 3 Non-Organic Growth Opportunities 4 Share Repurchases Cumulative Common Share Repurchases1 ($ in millions) $615 $552 $552 $469 Expected June 2018 Completed Feb. 2018 $219 Completed March 2018 Completed Oct. 2017 1Q 2014 1Q 2015 1Q 2016 1Q 2017 1Q 2018 1 __ Since March 31, 2012 13


 
BANK MUTUAL UPDATE ▪ Closed February 1, 2018; issued approximately 19.5 million common Legal Closing and Expected shares at 0.422 fixed exchange ratio Conversion Date ▪ Expected system conversion and branch consolidation: June 23, 2018 Expected Total Acquisition Announced Recorded Expected Related Costs Costs ($ in millions) 1Q 2018 2Q 2018 3Q 2018 Total Change of control and severance $10 $7 Merger advisors and consultants $10 $4 $10 - $15 $1 - $5 $35 - $40 Facilities and other $10 $5 Contract terminations $10 $5 Total $40 $21 Associated Bank (including Bank Mutual) $190 million - $195 million 4Q 2018 Expected Diversified Insurance Solutions $1 million - $2 million Combined Expenses Run-Rate Pro forma $191 million - $197 million 14


 
EXPANDING BOTTOM LINE Per Share Data Dividends Total Shareholder Return +25% 220 1 $0.50 YoY $0.15 $0.10 $0.12 $0.35 $0.40 180 1Q 2017 1Q 2018 1Q 2017 1Q 2018 Acquisition related costs GAAP earnings per share Total Shareholder Return on Average Return Common Equity 140 As of April 20, 2018 12.0% 112% 11.1% 100 52% 7.3% 8.0% Associated Banc-Corp S&P 500 Index S&P 400 Regional Banks Sub-Industry Index Three Years Five Years 1Q 2017 1Q 2018 Return on average tangible equity2 Return on average common equity 1 – Earnings per share, excluding acquisition related costs is a non-GAAP financial measure. Refer to the appendix for a reconciliation of non-GAAP measures 15 2 – Return on average tangible equity is a non-GAAP financial measure. Refer to the appendix for a reconciliation of non-GAAP measures


 
APPENDIX


 
CREDIT QUALITY – QUARTERLY TRENDS ($ IN MILLIONS) Potential Problem Loans Nonaccrual Loans $340 $260 $232 $263 $259 $282 $211 $209 $209 $42 $134 $15 $262 $177 $114 $92 $77 $69 $226 $220 $200 $137 $126 $118 $119 $132 $125 $78 $37 $39 $40 $40 1Q 2017 2Q 2017 3Q 2017 4Q 2017 1Q 2018 1Q 2017 2Q 2017 3Q 2017 4Q 2017 1Q 2018 Oil and Gas Bank Mutual related loans Oil and Gas Bank Mutual PCI1 related loans Net Charge Offs (Recoveries) Allowance to Total Loans / Oil and Gas Loans $13 6.7% $1 $11 $11 $9 5.4% 5.2% $3 4.5% $6 $12 $5 2.9% $8 1.4% 1.4% 1.3% 1.3% 0.1% 1.1% $4 1Q 2017 2Q 2017 3Q 2017 4Q 2017 1Q 2018 1Q 2017 2Q 2017 3Q 2017 4Q 2017 1Q 2018 Oil and Gas ALLL / Loans Purchase Discounts2 / Loans 1 __ Purchased credit-impaired loans 17 2 __ Reflects net unaccreted purchase discount to loans Oil and Gas ALLL / Oil and Gas Loans


 
LOANS STRATIFICATION OUTSTANDINGS AS OF MARCH 31, 2018 C&BL by Geography Total Loans1 CRE by Geography $7.7 billion $5.7 billion Minnesota Illinois 7% 14% Illinois Illinois 24% 16% Texas3 Minnesota 9% 14% Wisconsin 33% Other Wisconsin 2 Minnesota Wisconsin Midwest 34% 11% 29% 10% Other Other Midwest2 Midwest2 21% Other 30% 13% Other Other 14% 12% Texas3 4% Texas 4% C&BL by Industry Oil and Gas Lending4 CRE by Property Type $7.7 billion $657 million $5.7 billion Power & Utilities South Texas East Texas 14% North & Eagle Retail Real Estate Louisiana Ford 20% 12% 17% Arkansas Manufacturing 16% Multi-Family and Wholesale Office / Mixed Oil & Gas 36% Trade Rockies Use 9% Permian 25% 19% 19% 15% Finance & Other Insurance 10% 10% Industrial 9% Bakken Marcellus Utica 3% Appalachia Other Gulf Coast 1-4 Family Other Mid- 9% 6% 3% Construction 1 – Excludes $0.4 billion Other consumer portfolio (Onshore Continent Hotel / Motel 6% 2 – Other Midwest includes Missouri, Indiana, Ohio, Michigan and Iowa Gulf Shallow Lower 48) (primarily 4% 3 – Principally reflects the oil and gas portfolio 4% 6% OK & KS) 18 4 – Chart based on outstanding commitments of ~$1.0 billion 8%


 
OIL AND GAS UPDATE ~$1.0 billion $657 million 3% Total O&G Portfolio 56 credits Quarter end March 31, 2018 commitments outstandings of total loans $494 million $294 million 1% New business since 23 credits January 1, 2016 commitments outstandings of total loans Period End Loans by Credit Quality Oil and Gas Allowance ($ in millions) ($ in millions) 6.7% $657 $625 $601 $600 $577 $69 5.4% 5.2% $134 $77 $40 $114 $92 $40 4.5% $78 $37 $39 2.9% $548 $483 $42 $413 $450 $446 $33 $30 $27 $19 1Q 2017 2Q 2017 3Q 2017 4Q 2017 1Q 2018 1Q 2017 2Q 2017 3Q 2017 4Q 2017 1Q 2018 Oil and Gas Allowance Pass Potential Problem Loans Nonaccrual Oil and Gas Allowance / Oil and Gas Loans 19


 
HIGH QUALITY SECURITIES ($ IN BILLIONS) Portfolio Detail as of March 31, 2018 Strategic Portfolio and Yield Trends Amortized Fair Duration $6.89 $7.2$7.3$7.4$7.5 5.00% Investment Type Cost Value (Yrs) $6.8$6.9$7.0$7.1$7.2 $6.08 $5.97 $6.3$6.4$6.5$6.6$6.7 $5.75 GNMA CMBS $2.03 $1.97 3.04 $5.9$6.0$6.1$6.2$6.3 $5.45 $5.5$5.6$5.7$5.8$5.9 4.00% $5.1$5.2$5.3$5.4$5.5 GNMA MBS & CMOs 2.77 2.71 4.45 $4.6$4.7$4.8$4.9$5.0$5.1 $4.2$4.3$4.4$4.5$4.6 Agency & Other MBS & CMOs $3.8$3.9$4.0$4.1$4.2 2.71% 2.58% 0.50 0.51 2.83 $3.4$3.5$3.6$3.7$3.8 2.47% 3.00% $2.9$3.0$3.1$3.2$3.3$3.4 2.41% 2.42% Municipals 1.42 1.41 6.17 $2.5$2.6$2.7$2.8$2.9 $2.1$2.2$2.3$2.4$2.5 $1.7$1.8$1.9$2.0$2.1 2.00% FFELP ABS 0.29 0.29 0.18 $1.2$1.3$1.4$1.5$1.6$1.7 $0.8$0.9$1.0$1.1$1.2 1 $0.4$0.5$0.6$0.7$0.8 Other 0.01 0.01 1.88 $0.0$0.1$0.2$0.3$0.4 $- 1.00% Strategic Portfolio $7.03 $6.89 4.10 1Q 2014 1Q 2015 1Q 2016 1Q 2017 1Q 2018 Membership Stock 0.23 0.23 Average Balance Average Yield Total Portfolio $7.26 $7.12 Strategic Portfolio Fair Value Composition Strategic Portfolio Risk Weighting Profile <1% <1% Other Municipals GNMA MBS 20% 5% 0% 71% 70% Risk Weighted GNMA Other MBS CMOs 35% 7% Other CMOs 20% 1% 29% 31% Risk Weighted GNMA ABS 4% CMBS 29% March 2017 March 2018 Other <1% 1 – Includes Corporate, Treasury, and all other 20


 
RECONCILIATION AND DEFINITIONS OF NON-GAAP ITEMS Average Tangible Common Equity and Average Common Equity Tier 1 ($ in millions) 1Q 2014 1Q 2015 1Q 2016 1Q 2017 1Q 2018 Average common equity $2,827 $2,785 $2,849 $2,963 $3,377 Average goodwill and other intangible assets, net (940) (971) (989) (987) (1,108) Average tangible common equity 1,887 1,814 1,860 1,976 2,269 Less: Accumulated other comprehensive income / loss 13 (18) 3 54 89 Less: Deferred tax assets / deferred tax liabilities, net — 8 33 32 32 Average common equity Tier 1 $1,900 $1,804 $1,896 $2,062 $2,390 Tangible Common Equity and Common Equity Tier 1 ($ in millions) 1Q 2014 1Q 2015 1Q 2016 1Q 2017 1Q 2018 Common equity $2,840 $2,823 $2,862 $2,985 $3,553 Goodwill and other intangible assets, net (939) (987) (989) (987) (1,233) Tangible common equity 1,901 1,836 1,873 1,998 2,320 Less: Accumulated other comprehensive income / loss 11 (25) (2) 56 108 Less: Deferred tax assets / deferred tax liabilities, net — 27 32 31 46 Common equity Tier 1 $1,912 $1,838 $1,903 $2,085 $2,474 1Q 2018 Acquisition Related Costs per share ($ in millions, except per share data) 1Q 2018 data2 GAAP earnings $67 $0.40 Change of control and severance 7 Merger advisors and consultants 4 Facilities and other 5 Contract terminations 5 Total acquisition related costs $21 Less: Additional tax expense $5 Earnings, excluding acquisition related costs1 $83 $0.50 1 -- This is a non-GAAP financial measure. Management believes these measures are meaningful because they reflect adjustments commonly made by management, investors, regulators, and 21 analysts to evaluate the adequacy of earnings per common share, provide greater understanding of ongoing operations and enhance comparability of results with prior periods 2 -- Earnings and per share data presented after tax


 
RECONCILIATION AND DEFINITIONS OF NON-GAAP ITEMS Efficiency Ratio 1Q 2014 1Q 2015 1Q 2016 1Q 2017 1Q 2018 Federal Reserve efficiency ratio 70.46% 70.27% 69.01% 66.39% 70.76% Fully tax-equivalent adjustment (1.35) (1.42) (1.37) (1.30) (0.66) Other intangible amortization (0.42) (0.32) (0.20) (0.20) (0.51) Fully tax-equivalent efficiency ratio 68.69% 68.53% 67.44% 64.89% 69.60% Acquisition related costs adjustment (6.60)% Fully tax-equivalent efficiency ratio, excluding acquisition related costs 68.69% 68.53% 67.44% 64.89% 63.00% 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 2014 1Q 2015 1Q 2016 1Q 2017 1Q 2018 Insurance commissions and fees $12 $20 $21 $22 $23 Service charges and deposit account fees 16 16 16 16 16 Card-based and loan fees 12 11 12 13 13 Trust and asset management fees 12 12 12 12 13 Brokerage commissions and fees 4 4 4 4 7 Fee-based revenue $56 $63 $65 $67 $73 Other 18 17 18 13 17 Total noninterest income $74 $80 $83 $80 $90 22


 
DEFINITION OF CHANNEL CATEGORIES Includes households with checking accounts and at least one year of tenure. Branch-centric: • Used branch channel (via teller transactions) 6 or more months in the prior year • AND Used online channel (via login) fewer than 3 months in the prior year • AND Used mobile channel (via login) fewer than 3 months in the prior year Multi-channel: • Used branch channel (via teller transactions) 6 or more months in the prior year • AND (Used online channel (via login) 6 or more months in the prior year • OR Used mobile channel (via login) 6 or more months in the prior year) Digital-centric: • Used branch channel (via teller transactions) fewer than 6 months in the prior year • AND (Used online channel (via login) 6 or more months in the prior year • OR Used mobile channel (via login) 6 or more months in the prior year) Other (every other use combination): • Used branch channel (via teller transactions) fewer than 6 months in the prior year • AND Used online channel (via login) fewer than 6 months in the prior year • AND Used mobile channel (via login) fewer than 6 months in the prior year 23


 
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