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) February 12, 2015

 

 

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: February 12, 2015   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.


FIRST QUARTER 2015
ASSOCIATED BANC-CORP
INVESTOR
PRESENTATION
LISTED
ASB
NYSE
Exhibit 99.1

FORWARD-LOOKING STATEMENTS AND
TRADEMARKS
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
the
property
of their
respective owners. Apple, the Apple logo, and iPhone are trademarks of Apple Inc., registered in
the U.S. and other countries. Apple Pay and Touch ID are trademarks of Apple Inc. : MasterPass,
MasterCard and the MasterCard Brand Mark are registered trademarks of MasterCard
International Incorporated.  Popmoney is a registered trademark of Fiserv, Inc. or its affiliates.
1

OUR FOOTPRINT AND FRANCHISE
Deposits
2
($ in billions)
Branches
WI
$12.7
161
IL
$4.6
43
MN
$1.5
22
Total
$18.8
226
1
FDIC market share data 6/30/14
2
As of 12/31/14 (Period End)
1861
1999
2006
1987
2011
2011
2012
>$1bn
deposits
1
>$500mm
deposits
1
2
Total Loan Distribution
($17.6 billion –
Dec 2014 –
Period End)
Wisconsin
Upper
Midwest
Other
Largest bank headquartered in
Wisconsin
$27 billion in assets (Top 50 bank
holding company in the U.S.)
226 banking offices serving
approximately one million customers
2

STRATEGIC FUNDAMENTALS
3
FOCUS ON
CUSTOMER
EXPERIENCE
GEOGRAPHIC
ANCHOR IN THE
UPPER MIDWEST
DIVERSIFIED
PORTFOLIO OF
BUSINESSES
EVOLUTION OF
CUSTOMER NEEDS
AND CHANNELS
Becoming a strong competitor or market
leader in attractive Midwest markets
Meeting customer needs to build
deep and lasting customer relationships
Evolving our overall delivery model
to meet changing preferences of
our customers
Delivering strong, well-balanced earnings
from all of our core businesses through a
diversified loan portfolio

ATTRACTIVE MIDWEST MARKETS
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, Iowa, Missouri and
Ohio all have unemployment rates
that
are
under
5.5%
3
Positive
Economic
Trends:
Continuing job growth
Best
Consumer
Credit:
Top
4
and 8 of top 10 cities within
footprint
1
Based on Population -
US Census Bureau 2012 ;
2
Area Development Online –
Author: Mark Crawford (Winter 2013);
3
December 2014
US Bureau of Labor Statistics;
4
Experian.com –
State of Credit 2014 –
VantageScore registered trademark.
4
Dec
13
to
Dec
14
3
Total
Employment
up 363k
Manufacturing
Employment
up 74k
Top
Ten
US
Cities
by
Credit
Score
4
1 –
Mankato, MN (706)
6 –
Wausau, WI (699)
2 –
Rochester, MN (703)
7 –
Green Bay, WI (698)
3 –
Minneapolis, MN (702)
8 –
Sioux Falls, SD (697)
4 –
Duluth, MN (699)
9 –
Cedar Rapids, IA (697)
5 –
Fargo, ND (699)
10 –
La Crosse, WI (696)
*National Average: 666
2

Strong lending base in high-quality, low-volatility
diversified assets to provide foundation for
selective and prudent risk taking in higher risk
asset classes. (Meaningful allocations to
Mortgage, Multi-family and Manufacturing)
Core lending markets in Midwest with primary
emphasis placed on Wisconsin, Minnesota,
Illinois, Missouri, Iowa, Indiana, Ohio and
Michigan.  (85% of Q4 2014 Loans)
Retail –
30-40%
C&I –
30-40%
CRE –
25-35%
DIVERSIFIED LOAN PORTFOLIO
5
Asset Mix
Geographic Mix
Industry Mix
Internal Portfolio Management Goals
We are building a diversified loan portfolio that we believe will perform well
through the next downturn in the credit cycle.
Current (Q4-2014)
Retail –
37%
C&I –
40%
CRE –
23%
Goal Range

RESHAPING & REBUILDING THE LOAN
PORTFOLIO
1
1
Based on Average Balances, $ in Billions
$13.2
$14.7
$15.7
$16.8
$13.3
6
Cumulative
2010-2014
Change
+$0.5 bn
+$2.1 bn
+$2.2 bn

LOAN PORTFOLIO GROWTH
2014 AVERAGE LOAN GROWTH OF $1.2 BILLION OR 8% FROM 2013
$ IN MILLIONS
7
Home Equity & Installment
Commercial Real Estate
Residential Mortgage
Power & Utilities
Oil & Gas
Mortgage Warehouse
General Commercial Loans
+13%
% Change
+8%
+71%
+5%
+34%
Total
Commercial
& Business
Lending
+12%
($686 mln)
+2%
(12%)

STABLE DEPOSIT AND LIQUIDITY PROFILE
Loans / Deposits  –
Year End
Bank holding company cash and liquid
investments of $599 mm (12/31/2014)
Deposits and Customer Funding Mix
$19.1 billion at 12/31/2014
~987k deposit accounts with over
$10.9 billion of granular deposits
(under $250k)
8
Strong Holding Company Liquidity
Deposit & Customer Funding Trend (Period End -
$ in Billions)
$15.8
$16.5
$17.6
$17.7
$19.1
Time Deposits
Savings
Other Funding
Money Market
Demand Deposits
Cumulative
2010-2014
Change
+ $2.9 bn
+ $2.0 bn

GROWING NET INTEREST INCOME
($ IN MILLIONS)
9
Interest Income
Interest Expense
Net Interest Income
-9%
-67%
+7%

DIVERSIFIED PORTFOLIO OF VALUE-ADDED
BUSINESSES
10
Corporate and
Specialized Lending
Consumer
and
Business
Banking
Private
Client and
Institutional
Services
Commercial Real
Estate Lending
Private
Banking
Personal
Trust
Asset
Management
Retirement
Plan Services
Associated
Financial
Group
Community
Markets
Branch
Banking
Commercial
Banking
Residential
Lending
Payments
and Direct
Channels
AIS
(Brokerage)
Corporate
Commercial and
Specialized Lending
Commercial
Deposits and
Treasury
Management
Global Markets        
(FX swaps)
Community,  Consumer, and Business
Corporate and Commercial Specialty
Rochester, MN
Eau Claire, WI
La Crosse, WI
Central
Wisconsin
Rockford, IL
Peoria, IL
Southern
Illinois
CRE lending
Real Estate
Investment Trusts
Developers

COMMERCIAL & BUSINESS LENDING
11
$7 billion portfolio; 40% of total loans
–
Predominantly LIBOR-based commercial lines
of credit
–
86% reset, re-price, or mature within a year
More than 280 colleagues serving businesses,
municipal governments, and entrepreneurs:
–
Includes Middle Market, Corporate, and
Commercial, and Specialized Lending efforts
–
Offers unsecured and customized commercial
finance lending solutions secured by accounts
receivable, inventory, machinery, and
equipment
–
Capital Markets revenue of $10 million in 2014
More than 40 Commercial Deposit and Treasury
Management colleagues
–
$4.9
billion
of
Commercial
average
deposits
–
Streamlined cash management solutions via
our Associated Connect platform for
businesses, municipalities, and correspondent
banks
1
Includes Missouri, Indiana, Ohio, Michigan, & Iowa
2
2014 Average Deposits for Corporate and Commercial Specialty (Segment Reporting)
C&BL Loans by Industry
($7.0 billion –
Dec 2014 –
Period End)
C&BL Loans by State
($7.0 billion –
Dec 2014 –
Period End)
2

OIL AND GAS LENDING
12
~
$750
million
portfolio;
~4%
of
total
loans
and
~11%
of
overall
CB&L
activity
–
Outstanding balance is driven by respective borrowing bases.
Exclusively
focused
on
the
upstream
sector
(‘Exploration
and
Production’
or
‘E&P’
sector).
–
Focused on the small to mid-size independent segment, both public and private companies.
–
Asset-based loans collateralized by a lien on oil and gas reserves.
–
Generally, we are a participant in a syndicated loan.
Price redeterminations are formally performed on a semi-annual basis.
–
Commodity prices are continuously monitored.
Recent
stress
test
indicates
adequate
specific
reserves
for
this
portfolio.
–
Reserves ascribed to Oil & Gas portfolio provide coverage of 135% versus identified potential
problem loans.
Please
Note:
For
more
information
on
Associated
Banc-Corp’s
oil
and
gas
lending,
please
refer
to
the
appendix
2014 Fourth
Quarter Loan
Composition
All other loans
Oil and Gas book
48 clients
Over $1 billion in aggregate commitments
Average commitment of $23 million

COMMERCIAL REAL ESTATE LENDING
13
$4.1 billion portfolio; ~23% of total loans
More than 90 CRE colleagues:
–
Offices in Chicago, Cincinnati, Columbus, Detroit,
Green Bay, Madison, Milwaukee, Minneapolis,
and St. Louis
Recognized as:
–
#4 in US Syndicated CRE facilities under $50MM
transaction
size
1
–
Top
20
US
Syndicated
CRE
facilities
Overall
1
1
Thomson Reuters LPC-
December, 2014 (based on # of transactions)
2
Includes Missouri, Indiana, Ohio, Michigan, & Iowa
Current  CRE offices
CRE Loans by Industry
($4.1 billion –
Dec 2014 –
Period End)
CRE Loans by State
($4.1 billion –
Dec 2014 –
Period End)

PRIVATE CLIENT & INSTITUTIONAL
SERVICES
14
Over 170 colleagues serving our Private Client &
Institutional Customers:
–
Private banking, personal trust, and portfolio
management services for individuals ($500k
to $10 million in investible assets)
–
Corporate trust, asset management and
retirement plan services
–
$8.0 billion of AUM
Associated
Financial
Group
:
370
1,2
colleagues
supporting our insurance brokerage
–
Leading benefits consultant in our markets
–
Providing Risk Management, HR, and
Benefits solutions for over 40 years
–
Acquisition of Ahmann & Martin Co. adds to
Commercial Property and Casualty
expertise.
2
–
Insurance Revenue of  over $44 million in
2014;  Expected to be over $70 million in
2015
1,2
Assets Under Management ($ in billions)
Insurance Commissions ($ in millions)
$6.5
$7.4
CAGR = 10%
$8.0
1
Includes Ahmann & Martin Co.
2
The acquisition of Ahmann & Martin Co. is expected to be completed in February 2015.

CONSUMER AND BUSINESS BANKING
15
Over 1,700 colleagues servicing individuals and
small business owners through five business units:
–
Consumer Banking, Business Banking,
Residential Lending, Retail Payments, and
Retail Brokerage
#1 mortgage originator in Wisconsin (in units)
A leading SBA lender in our markets
Official bank of the Green Bay Packers
Residential Mortgage Loans by State
($4.5
billion
–
Dec
2014)
1
Includes Missouri, Indiana, Ohio, Michigan, & Iowa
2
Approximately 40% is in first-lien position
Home
Equity
Loans
2
by
State
($1.6
billion
–
Dec
2014)
Note:  All trademarks, service marks and trade names referenced in this material are the property of their respective owners.
Wisconsin
41%
Illinois
37%
Minnesota
14%
In-
Footprint
1
7%
Other
1%
Wisconsin
71%
Illinois
16%
Minnesota
11%
Other
2%

EVOLVING MODEL WITH CUSTOMER TRENDS
16
Since 2011:
Branch transactions -15%
Mobile banking adoption +250%
Since 2013:
Rationalize Branch Network
Since 2007:
28%
branches closed or sold
36%
reduction in branch FTE
Focused on smaller, lower
construction cost, and more
visibility
Enhance Digital Banking:
Current Offerings:
Note:  All trademarks, service marks and trade names referenced in this material are the property of their respective owners.
Online Deposit and Lending
Sales Platforms
ATM Deposit Automation &
Remote Deposit
Technology Kiosks
Apple Pay & MasterPass
Evolve Selling Tools:
Coming Soon:
Redesigned website
that features:
–
Responsive design
across devices
–
Enhanced eCommerce
capabilities including
guided selling and
product comparison tools
Piloting video teller
Digital Deposits +78%
Associated
Bank
Customer
Trends

Areas of Focus
PURSUING EFFICIENCY GAINS
($ IN MILLIONS)
Efficiency Ratio
1
at 2014 =
69%
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.
2
–
FTE
= Average Full Time Equivalent Employees
3
–
Technology
Spend
=
Technology
and
Equipment
expenses
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
17
Efficiency
Ratio
1
2
3
$48
$52
$67
$75
$80
4,809
4,985
4,968
4,728
4,406
2010
2011
2012
2013
2014
Technology Spend
Avg FTE
62.5%
70.4%
69.3%
69.5%
69.0%

CAPITAL MANAGEMENT PRIORITIES
Funding
Organic Growth
Paying a
Competitive
Dividend
Non-organic
Growth
Opportunities
Share Buybacks
and
Redemptions
2013
2014
Fund Loan Growth and other Capital Investments
Repurchased
$120 mm of
Common Stock
Retired $26 mm
in Sub-Debt
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
2015
Repurchased $259
mm of Common
Stock
Retired $155 mm in
Senior Notes in Q1
2014
Increased
quarterly dividend
in Q4 2014
Paid $0.37/
common share
18
ASB
Basel
III
Tier
1
Common
Ratio
Goal
=
8
–
9.5%
Repurchased $30
mm of Common
Stock in Q1 2015
Declared quarterly
common dividend
of $0.10/ share in
Q1 2015

WHY ASSOCIATED
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
Return on Tier 1
Common Equity
$0.23
$0.26
$0.28
$0.31
Diluted
Earnings
per
Common
Share
Dividends per Common Share
19
•
Leading Midwest Bank Operating in    
Attractive Markets
•
Well Diversified Lending Portfolio
•
Stable Deposits and Liquidity
•
Committed to Expense Containment
•
Strong Credit Quality and Capital Profile
•
Disciplined Capital Deployment
•
Improving Earnings Outlook
Management Team Focused on Creating
Long-Term Value
Reasons to Invest
9.0%
9.6%
9.8%
10.4%
$0.01
$0.08
$0.09
$0.10
4Q 2011
4Q 2012
4Q 2013
4Q 2014

•
MISCELLANEOUS EXHIBITS
•
ASSOCIATED OIL AND GAS LENDING DETAIL
APPENDIX

SEGMENT PROFITABILITY
FULL YEAR 2014
ASB –
Consolidated Total
Earning Assets* = $22.8 bn
Total Revenue = $971.3 mm
Net Income = $190.5 mm
ROT1CE: 9.9%
* Average Earning Assets
21
Earning Assets*
Total Revenue
Net Income
Community, Consumer, & Business Banking
Risk Management & Shared Services
Corporate and Commercial Specialty Banking
ROT1CE
5.3%
10.4%
13.2%
36%
26%
38%
56%
10%
34%
16%
33%
51%

CREDIT QUALITY INDICATORS
($ IN MILLIONS)
22
Potential Problems Loans & PPLs to Total Loans
Nonaccruals & NA / Total Loans
ALL to Nonaccruals and Total Loans
Net Charge Offs & NCOs to Avg Loans
$185
$178
$179
$184
$177
1.17%
1.08%
1.05%
1.07%
1.01%
4Q 2013
1Q 2014
2Q 2014
3Q 2014
4Q 2014
Nonaccruals
Nonaccruals / Total Loans
$5
$5
$3
$3
$4
0.14%
0.14%
0.06%
0.06%
0.10%
4Q 2013
1Q 2014
2Q 2014
3Q 2014
4Q 2014
Net Charge Offs
NCOs / Avg Loans
145%
151%
152%
145%
150%
1.69%
1.63%
1.59%
1.55%
1.51%
4Q 2013
1Q 2014
2Q 2014
3Q 2014
4Q 2014
ALLL/ Nonaccruals
ALLL/ Total Loans
$235
$220
$288
$220
$190
1.48%
1.34%
1.69%
1.28%
1.08%
4Q 2013
1Q 2014
2Q 2014
3Q 2014
4Q 2014
Potential Problem Loans
PPLs / Total Loans

NONINTEREST INCOME TREND
($ IN MILLIONS)
Total Noninterest Income
23
2014 Noninterest Income Composition
Mortgage Banking (net) Income
$335
$273
$313
$313
$290
$33
$13
$64
$49
$21
2010
2011
2012
2013
2014
Mortgage
Banking
7%
Svc Chg on
Deposits
24%
Card & Other
Non Deposit
17%
Trust Service
Fees
17%
Insurance
15%
Capital Market
Fees
3%
Brokerage &
Annuity
5%
BOLI
5%
Asset gains +
Investment
securities gains
4%
Other
3%

Technology
2
Spend
NONINTEREST EXPENSE ANNUAL TRENDS
($ IN MILLIONS)
Total Noninterest Expense
Other Non-Personnel Spend
3
FTE
1
Trend
1
–
FTE
=
Average
Full
Time
Equivalent
Employees
2
–
Technology
Spend
=
Technology
and
Equipment
expenses
3
–
Other
Non-Personnel
Spend
=
Total
Noninterest
Expense
less
Personnel
and
Technology
spend
24
Personnel Expense
$617
$653
$675
$681
$679
$325
$360
$381
$397
$390
2010
2011
2012
2013
2014
$244
$241
$227
$209
$209
2010
2011
2012
2013
2014
$48
$52
$67
$75
$80
2010
2011
2012
2013
2014
4,809
4,985
4,968
4,728
4,406
2010
2011
2012
2013
2014
Avg FTE

Amortized
Cost
Composition
–
December
31,
2014
Investment Portfolio –
December 31, 2014
Credit Rating
($ in thousands)
Fair Value
(000’s)
% of Total
Govt & Agency
$4,805,680
82.8
AAA
99,531
1.7
AA
761,979
13.1
A
134,966
2.3
BAA1, BAA2 & BAA3
-
-
BA1 & Lower
1,772
0.0
Non-rated
5,951
0.1
TOTAL Market Value
$5,809,879
100.0%
Type
Amortized
Cost
(000’s)
Fair Value
(000’s)
TEY
(%)
Duration
(Yrs)
Govt & Agencies
$999
$998
0.67
2.11
Agency MBS
2,762,222
2,792,479
2.57
2.83
CMOs
940,178
940,604
2.28
2.85
GNMA CMBS
1,097,913
1,073,893
2.09
4.23
Municipals
965,294
995,746
4.99
5.30
Corporates
6,090
6,109
1.35
1.52
Other
18
50
TOTAL HTM &
AFS
$5,772,714
$5,809,879
2.84
3.51
INVESTMENT SECURITIES PORTFOLIO
25
Portfolio
Ratings
Composition
–
December
31,
2014
Fair Value
(000’s)
% of Total
0% RWA
$1,264,776
21.8
20% RWA
4,486,698
77.2
50% RWA
17,819
0.3
=>100% RWA
3,435
0.1
Not subject to RW
37,151
0.6
TOTAL Market Value
$5,809,879
100.0%
Risk Weighting Profile –
December 31, 2014
Agency MBS
Hybrid
32%
Agency
MBS
16%
CMOs
16%
GNMA
CMBS
19%
Municipals
17%
Type

RECONCILIATION AND DEFINITIONS OF
NON-GAAP ITEMS
4Q 2013
1Q 2014
2Q 2014
3Q 2014
4Q 2014
Efficiency Ratio Reconciliation:
Efficiency ratio (1)
73.70%
70.41%
69.70%
69.44%
70.33%
Taxable equivalent adjustment
(1.49)
(1.35)
(1.32)
(1.36)
(1.40)
Asset gains, net
0.80         
0.22
0.26
1.36
1.05
Other intangible amortization
(0.42)
(0.42)
(0.41)
(0.40)
(0.32)
Efficiency ratio, fully taxable equivalent (1)
72.59%
68.86%
68.23%
69.04%
69.66%
(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).
2010
2011
2012
2013
2014
Efficiency Ratio Reconciliation:
Efficiency ratio (1)
65.35%
73.64%
72.16%
71.04%
69.97%
Taxable equivalent adjustment
(1.60)
(1.74)
(1.59)
(1.45)
(1.36)
Asset gains (losses), net
(0.77)
(0.92)
(0.86)
0.39
0.73
Other intangible amortization
(0.52)
(0.54)
(0.45)
(0.42)
(0.39)
Efficiency ratio, fully taxable equivalent (1)
62.46%
70.44%
69.26%
69.56%
68.95%
Tier
1
common
equity,
a
non-GAAP
financial
measure,
is
used
by
banking
regulators,
investors
and
analysts
to
assess
and
compare
the
quality
and composition of our capital with the capital of other financial services companies. Management uses Tier 1 common equity, along with other
capital measures, to assess and monitor our capital position.  Tier 1 common equity (period end and average) is Tier 1 capital excluding
qualifying perpetual preferred stock and qualifying trust preferred securities.
26

OUR VISION
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.
27

•
MISCELLANEOUS EXHIBITS
•
ASSOCIATED OIL AND GAS LENDING DETAIL
APPENDIX

OIL & GAS VALUE CHAIN
29
Supports
drilling for oil
and gas
(offshore and
onshore)
Upstream E&P
Midstream
Downstream
R&M
Field
Services
Involved in drilling for
oil and natural gas
and operating the
wells that bring the oil
and natural gas to the
surface. Also referred
to as the ‘Exploration
and Production or
E&P sector’.
Processes,
stores,
markets, and
transports
crude oil,
natural gas and
the various
natural gas
liquids like
ethane, butane
and propane.
Oil refineries and
petrochemical plants,
and petroleum product
distribution via affiliated
retail outlets and
natural gas distribution
companies.
Responsible for
marketing refined
products such as
gasoline, diesel, and jet
fuel
Field Services
(Not active
in this
sector)
(Our Oil & Gas
segment’s focus)
(Not active
in this
sector)
(Not active in this
sector)
From beneath the earth’s surface to the end-user:

PLAYERS IN THE UPSTREAM SECTOR
Integrated oil and gas companies
Derive revenue from all phases of the energy value chain (e.g., ExxonMobil, BP, Shell)
Independent oil and gas companies (Associated Bank’s Oil & Gas segment’s focus)
Receive
substantially
all
revenue
from
the
production
of
oil
and
natural
gas.
They
are
public
and
private
companies
that
range
in
size
from
very
small
to
very
large
More than 6,000 independent oil & gas producers in the U.S.
Responsible for:
54% of domestic oil production
90% of domestic natural gas production
Drilling approximately 95% of wells in the U.S.
Direct and indirect impact of oil and natural gas industry to the U.S. economy:
$1.2 trillion contribution to U.S. GDP in 2011(8% of U.S. total)
9.8 million jobs in 2011 (5.6% of U.S. total)
>$30 billion in federal, state, and local taxes
(Sources:
Independent
Producers
Association
of
America,
American
Petroleum
Institute,
and
PWC’s
July
2013
article
“Economic
Impacts of the Oil and Natural Gas Industry on the U.S. Economy in 2011)
30

RESERVE-BASED LENDING
Reserve-based lending is a form of Asset-based lending business
This is a standard lending model for borrowers engaged in the Upstream sector of the oil and
gas industry
Associated Bank’s emphasis is on the small to mid-size independent segment, both public and
private,
collateralized
by
oil
and
gas
reserves
(larger
companies
typically
borrow
on
an
unsecured basis)
Typical Borrowing Base Valuation:
Based on independent review by Associated Bank petroleum engineers of proven reserves
Overall market assessment of commodity prices is made based on industry information
sources and is continuously monitored to estimate future cash flow from proven reserves
Cash flows from  proven reserves are discounted to derive a present value
Risk adjustments are made to present value of non producing proven reserves
A further significant advance rate haircut is applied to derive a conforming borrowing base
Semi-annual
redetermination
of
borrowing
base
and
more
frequent
field
visits
during
periods
of high volatility or risk in O&G markets.
If the borrowing base declines below the outstanding balance, there are restructuring
expectations.
Typically, this would mean reducing revolving lines to fully amortize inside a
conforming borrowing base within 3-6 months.
31

TYPICAL LOAN STRUCTURE
Secured by first priority lien on oil and gas reserves
These are syndicated deals with several banks participating in the credit
3 to 5 year working capital revolver with availability governed by a borrowing base subject to
semi-annual determinations
Proceeds used for acquisitions, development, working capital / letter of credit issuance, and
general corporate purposes
Financial covenants typically include cash flow leverage, interest coverage, and/or current ratio
measured quarterly
Sources of Repayment:
Primary Source of Repayment (“PSOR”) is cash flow.
Secondary Source of Repayment (“SSOR”) is sale of assets.
32

ASSOCIATED’S OIL & GAS PORTFOLIO
Established in January 2011 as a de novo lending vertical with zero loans outstanding and zero
clients, the Oil & Gas group has grown steadily to its current book of forty-eight clients with
aggregate commitments of more than $1 billion ($687MM funded; ~66% utilization).
–
Associated
has
Oil
and
Gas
average
loan
balances
of
$687
million
as
of
fourth
quarter
2014,
representing 4% of the total average loans outstanding ($17.4 Billion).
–
In addition, these balances are diversified between Oil and Gas operations.
January 2015 stress test indicates adequate specific reserves for this portfolio.
33
Oil and Gas Average Loan Balances by Quarter ($ in Millions)
$87
$134
$165
$213
$295
$270
$281
$341
$387
$445
$539
$613
$652
$687
Q3
2011
Q4
2011
Q1
2012
Q2
2012
Q3
2012
Q4
2012
Q1
2013
Q2
2013
Q3
2013
Q4
2013
Q1
2014
Q2
2014
Q3
2014
Q4
2014

RISKS
Commodity price risk. Partially mitigated by:
Borrowers usually mitigate prices risk by entering into multi-year commodity hedges with
financial counterparties
Risk adjustments are made to proven reserves that are not producing
Commodity price environment is continuously monitored and changes in commodity prices  are
considered in semi-annual redeterminations
Development risk. Partially mitigated by:
Borrowing Base is derived from existing Proven reserves (90% certainty of recovery)
Risk adjustments are made to non-proven, developed and producing reserves
At
least
70%
of
borrowing
base
is
required
to
be
attributable
to
proven,
developed
and
producing reserves
Reserve risk. Partially mitigated by:
Reserve report is required to be prepared by a qualified independent third party engineering firm
Associated Bank employs highly qualified staff petroleum engineers to evaluate the assumptions
utilized by the independent third party firms that prepare the reserve reports.  The engineering
report addresses four critical concerns:
1.
Pricing –
Future O&G prices must be realistic and fully supported
2.
Costs –
Exploration, development, and production costs
3.
Discount Rate –
Include the assumptions made
4.
Timing
–
Engineering
report
should
be
no
more
than
six
months
old,
never
over
a
year.
34
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