Attached files
| file | filename |
|---|---|
| EX-99.1 - EX-99.1 - ASSOCIATED BANC-CORP | asb09302020ex991.htm |
| 8-K - 8-K - ASSOCIATED BANC-CORP | asb-20201022.htm |
Exhibit 99.2 THIRD QUARTER 2020 EARNINGS PRESENTATION October 22, 2020
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,” "target," “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. These forward-looking statements include: management plans relating to the pending branch sales described herein (“pending sales”); the expected timing of the completion of the pending sales; the ability to complete the pending sales; the ability to obtain any required regulatory approvals; any statements of the plans and objectives of management for future operations, products or services; any statements of expectation or belief; projections related to certain financial results or other benefits of the pending sales; and any statements of assumptions underlying any of the foregoing. 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 Form 10-Qs and other SEC filings, and such factors are incorporated herein by reference. Additional factors which may cause actual results of the pending sales to differ materially from those contained in forward-looking statements are the possibility that expected benefits of the pending sales may not materialize in the timeframe expected or at all, or may be more costly to achieve; the pending sales may not be timely completed, if at all; that required regulatory 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 shareholders, customers, employees or other constituents to the pending sales; and diversion of management time on acquisition-related matters. Trademarks: All trademarks, service marks, and trade names referenced in this material are official trademarks and the property of their respective owners. Presentation: Within the charts and tables presented, certain segments, columns and rows may not sum to totals shown due to rounding. 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. 1
3Q 2020 ACTIONS We executed several initiatives to drive efficiency and improve earnings in 2021 FY 2021 Expected Pretax Run Rate Initiative Details Q3 Impact Impact Pending sales and/or $10 million of ~ $40 million consolidations of 22 severance expense expense branches (9% of and $6 million of real reduction network; ~100 FTEs) estate related expense Branch optimization & Corporate, (all pretax) Internal efficiency initiatives managerial, and back office streamlining expected to reduce FTEs by ~200 by year end Prepaid $950 million of $45 million loss on ~ $20 million net FHLB advances prepayment of FHLB interest income FHLB liability restructuring & advances (pretax) improvement Reorganization of our Reorganization of Net income tax benefit securities and real estate subsidiaries generated of $49 million (after lending subsidiaries a net income tax tax) benefit 2
3Q 2020 PTPP INCOME WALKFORWARD $60 million of pre-tax restructuring charges were incurred as part of our 3Q 20 efficiency initiatives Pre-tax pre-provision income of $901 million when adjusted for $60 million of restructuring costs. ($ in millions) $0 1 2 1 A non-GAAP measure. Please refer to the appendix for a reconciliation of pre-tax pre-provision income to loss before income taxes. 3 2 A non-GAAP measure. Please refer to the appendix for a reconciliation of pre-tax pre-provision income excluding Q3 initiatives to loss before income taxes.
3Q 2020 UPDATE Associated took actions in 3Q 2020 to improve efficiency and optimize our branch network Third Quarter 2020 Earnings of $0.26 Per Common Share Including Restructuring Charges and Tax Benefits 1 $60 million of restructuring charges ($45 million2 after taxes), were more than offset by a $49 million tax benefit from reorganizing our securities and real estate lending subsidiaries. 1 A non-GAAP measure. Please refer to the appendix for a reconciliation of earning per share excluding 3Q initiatives and tax benefits to earnings per share. 2 Assuming 25% marginal tax rate 4
LOAN TRENDS CRE loans continue to grow while general commercial lines of credit pay down Average Quarterly Loans Average Loan Growth (2Q20 to 3Q20) ($ in billions) ($ in millions) $25.2 $25.0 $23.3 $23.3 $0.8 $1.0 $22.8 Mortgage warehouse $173 PPP $171 $9.2 $8.5 $8.4 $8.8 $8.2 CRE construction $170 CRE investor $142 Power & utilities $79 $5.2 $5.2 $5.3 $5.7 $6.0 $(56) Home equity & other consumer $(61) Oil & gas $(140) REIT $8.3 $8.2 $8.4 $8.3 $8.1 $(213) Residential mortgage $1.3 $1.2 $1.2 $1.2 $1.1 $(493) General commercial 3Q 2019 4Q 2019 1Q 2020 2Q 2020 3Q 2020 Commercial & business Commercial real estate Residential mortgage Home equity & other consumer PPP lending 5
END OF PERIOD LOAN TRENDS Growth was led by higher specialty commercial and CRE balances, partially offset by general commercial EOP Loan Change1 2Q20 to 3Q20 ($ in millions) Total loans +$171 million (+1%) . Commercial and Business Lending -$35 million (0%) Mortgage warehouse $295 – General commercial balances declined as Power & utilities $204 customers used their excess liquidity to pay down lines CRE construction $151 ▪ Commercial Real Estate Lending +$298 million (+5%) CRE investor $147 – Construction funding along with lower payoffs drove the increase PPP $10 ▪ Total Consumer -$93 million (-1%) $(45) Home equity & other – The decline in consumer lending was driven by consumer continued refinancing and a $70 million portfolio $(48) Residential mortgage sale $(98) Oil & gas $(101) REIT $(343) General commercial 1 Excluding loans held for sale. 6
COMMERCIAL COVID-19 RELIEF UPDATE Commercial deferrals have declined by 73% since Q2 2020 Loan Deferrals & Modifications1 Active Deferred and Modified Loans Trend ($ in millions) ▪ We generally granted 90 day deferrals for our commercial customers $839 ▪ Total commercial deferrals have declined approximately 73% since the end of 2Q 2020 ▪ The $839 million of deferrals at Q2 have largely rolled off their initial 90 day term; the remaining $410 deferrals are primarily related to COVID impacted portfolios $286 $227 ▪ Currently, commercial deferrals ($227 million) represent approximately 1.4% of our commercial loan balances2 $1 Q1 20 Q2 20 Aug 20 Sep 20 Oct 19th CRE C&BL 1 Includes completed modifications as of October 19, 2020. 2 Loan balances as of 9/30/2020. 7
CONSUMER COVID-19 RELIEF UPDATE Consumer deferrals have declined by 63% from Q2 and most borrowers have not asked for additional help Loan Deferrals & Modifications1 Active Deferred and Modified Loans Trend ($ in millions) ▪ We generally granted six month deferrals to consumers who requested assistance $725 ▪ Total consumer deferrals have declined by $660 approximately 63% since the end of Q2 2020 ▪ As of 10/19/20, 97% of consumer loans previously on deferral are current or less than 30 days past due $376 $269 ▪ $263 million of the active deferrals, as of 10/19/20, are still in their initial deferral period $263 Deferrals on initial term ▪ As of 10/19/20, active consumer deferrals represent approximately 3% of consumer loan $0 balances2 Q1 20 Q2 20 Aug 20 Sep 20 Oct 19th 1 Includes completed modifications as of October 19, 2020. 2 Loan balances as of 9/30/2020. 8
ALLOWANCE UPDATE ACLL2 increased $13 million and covered 1.77% of loan balances at the end of 3Q 2020 Third Quarter ACLL Loan Allowance Walkforward ($ in millions) ▪ Allowance for credit losses on loans (ACLL) increased $13 million, or 3%, at the end of 3Q 2020 from 2Q 2020 ▪ ACLL to loans was 1.77%, or 1.84% excluding PPP loans ▪ 3Q 2020 provision of $43 million, down $18 million from 2Q 2020 ▪ CECL forward looking assumptions based on Moody’s September 2020 Baseline forecast Day 1 Net 1Q Net 2Q Net 3Q 9/30/20 ACLL1 CECL Reserve ACLL2 Reserve ACLL2 Reserve ACLL2 ACLL2 / Loan Category 12/31/19 Adoption2 Build2 3/31/20 Build2 06/30/20 Build2 09/30/20 Loans C&BL - excl. Oil & Gas$ 100,594 $ (8,390) $ 29,571 $ 121,775 $ 326 $ 122,101 $ 27,699 $ 149,799 1.76% C&BL Oil & Gas 13,226 55,460 8,880 77,567 6,025 83,592 (32,654) 50,938 15.29% PPP Loans - - - - 808 808 160 968 0.09% CRE - Investor 41,044 2,287 (785) 42,546 16,524 59,070 31,850 90,921 2.10% CRE - Construction 32,447 25,814 7,428 65,688 10,585 76,273 (10,528) 65,745 3.54% Residential Mortgage 16,960 33,215 (6,227) 43,947 (121) 43,826 (183) 43,643 0.55% Other Consumer 19,008 22,760 777 42,546 363 42,909 (2,937) 39,972 3.71% Total$ 223,278 $ 131,147 $ 39,643 $ 394,069 $ 34,510 $ 428,579 $ 13,408 $ 441,988 1.77% Total (excl. PPP Loans)$ 223,278 $ 131,147 $ 39,643 $ 394,069 $ 33,702 $ 427,770 $ 13,248 $ 441,019 1.84% ($ in thousands) 1 Includes ALLL and the allowance for unfunded commitments. 9 2 Includes funded and unfunded reserve for loans, excludes reserve for HTM securities.
CREDIT QUALITY – QUARTERLY TRENDS Nonaccrual loans increased in 3Q 2020 driven by CRE retail loans Potential Problem Loans1 Nonaccrual Loans1 ($ in millions) ($ in millions) $307 $293 $232 $234 $58 $72 $161 $17 $63 $172 $79 $133 $67 $60 $129 $118 $137 $11 $43 $1 $8 $32 $36 $23 $29 $50 $150 $186 $162 $145 $101 $118 $93 $95 $107 $110 3Q 2019 4Q 2019 1Q 2020 2Q 2020 3Q 2020 3Q 2019 4Q 2019 1Q 2020 2Q 2020 3Q 2020 Oil and gas Other COVID4 All other loans Oil and gas Other COVID4 All other loans Net Charge Offs1 ACLL2 to Total Loans / Oil and Gas Loans1 ($ in millions) 19.36% $30 16.63% $26 15.29% $3 $20 $17 $14 $21 $9 $25 3.83% $21 $10 2.69% 1.62% 1.73% 1.77% $8 1.04% 0.98% $4 $2 $6 3Q 20193 4Q 2019 1Q 2020 2Q 2020 3Q 2020 3Q 2019 4Q 2019 1Q 2020 2Q 2020 3Q 2020 Oil and gas Other COVID4 All other loans Oil and gas ACLL / Oil and gas Loans ACLL / loans 1 At period end. 10 2 ACLL figure does not include ~$70,000 for HTM securities in 3Q20. 4 Please see slide 19 for more detail on our Key COVID Commercial 3 3Q 2019 included a net recovery of $1 million for all other loans. Loan Exposures.
DEPOSIT PORTFOLIO TRENDS We continue to improve the mix of low-cost, core customer deposit funding Average Quarterly Deposits EOP Funding Change 2Q20 to 3Q20 ($ in billions) ($ in millions) $26.8 $25.2 $26.1 Interest-bearing demand $384 $24.3 $24.1 Savings $134 $7.4 $5.3 $6.9 Money Market $56 $5.5 $5.5 $(85) Noninterest-bearing demand $5.5 $(106) Network transaction deposits $5.1 $5.3 $5.4 $5.8 $(222) Time deposits $2.6 $2.7 $2.9 $3.3 $3.5 EOP Low-cost Deposit Mix Trend $6.9 61.5% 62.7% 54.7% 55.8% 58.2% $6.6 $6.5 $6.5 $6.5 28.0% 22.5% 22.9% 23.8% 28.5% $3.1 $2.7 $2.6 $2.5 $2.1 21.3% 21.4% 22.6% 20.2% 21.5% $1.8 $1.4 $1.4 $1.5 $1.5 10.8% 11.5% 11.8% 12.8% 13.2% 3Q 2019 4Q 2019 1Q 2020 2Q 2020 3Q 2020 3Q 2019 4Q 2019 1Q 2020 2Q 2020 3Q 2020 Noninterest-bearing demand Savings Time deposits Interest-bearing demand Money market Network transaction deposits 11
NET INTEREST INCOME AND YIELD TRENDS Net interest margin bottomed out during Q3 and has started to move back up in September Net Interest Income and Net Interest Margin Average Yields ($ in millions) 2.85% 2.89% 3.65% 2.30% 2.35% 3.14% 3.07% 3.04% 3.05% 3.06% 3.08% 3.01% 2.99% 2.94% 2.96% 2.93% 2.89% 2.76% 2.52% 2.58% 1Q20 - $203 2.60% 2.59% 2Q20 - $190 3Q20 - $182 1.52% 1.43% 1.37% 1.30% 1.21% 1.12% 0.57% 0.61% 0.60% 0.55% 0.54% 0.47% 0.30% 0.22% 0.28% 0.25% 0.21% 0.19% Jan Feb Mar Apr May Jun July Aug Sep Apr 20 May 20 Jun 20 Jul 20 Aug 20 Sep 20 Time Deposits Net interest income Net interest margin Commercial real estate loans Commercial and business Total interest- lending loans1 bearing liabilities Total residential mortgage Total interest- 1 Excludes PPP loans. loans bearing deposits 12
NONINTEREST INCOME TRENDS Mortgage banking income remains strong and service charges have rebounded during Q3 Noninterest Income Trend Net Mortgage Banking Income ($ in millions) ($ in millions) $12 $13 $11 $254 $7 $6 $101 $98 $93 $76 $47 3Q 2019 4Q 2019 1Q 2020 2Q 2020 3Q 2020 $40 $48 $51 $25 Service Charges & Deposit Account Fees ($ in millions) $17 $17 $16 $15 $14 $16 $11 $15 $14 $11 $21 $22 $21 $21 $21 $16 $15 $14 $14 $15 3Q 2019 4Q 2019 1Q 2020 2Q 2020 3Q 2020 3Q 2019 4Q 2019 1Q 2020 2Q 2020 3Q 2020 Card-based and other Wealth management fee based Asset gains (losses), net Service charges and deposit 13 account fees Insurance & Other
EXPENSE TRENDS 3Q 2020 included $60 million of restructuring costs3 which will improve the expense run rate going into 2021 Noninterest Expense Business Development and Advertising ($ in millions) ($ in millions) $228 $8 $8 $201 $204 $192 $50 $6 $2 $1 $183 $4 $4 $2 $1 $76 $82 $76 3Q 2019 4Q 2019 1Q 2020 2Q 2020 3Q 2020 $72 $69 Noninterest Expense1 / Average Assets 2.51% 2.55% 2.40% 2.37% $123 $121 $114 $111 $109 2.12% 2.39% 2.45% 2.35% 2.09% 1.87% 3Q 2019 4Q 2019 1Q 2020 2Q 2020 3Q 2020 3 3Q 2019 4Q 2019 1Q 2020 2Q 2020 3Q 2020 Personnel expense Other Adjusted noninterest Noninterest expense / Restructuring costs (FHLB & Acquisition expenses expense2 / average assets average assets Real estate expenses) 1 Annualized 2 A non-GAAP financial measure, adjusted noninterest expense excludes acquisition and restructuring related costs. Please refer to the appendix for a reconciliation of adjusted noninterest expense to noninterest expense. 3 Personnel expense includes $10 million of severance which is included in the $60 million of total restructuring expenses. 14
STRONG CAPITAL POSITION Tangible Common Equity ratio increased 25 bps to 7.50% during 3Q 2020 Regulatory Capital Ratios Capital Ratio Walkdowns 13.8% 13.8% 12.6% 11.6% 11.6% Common Equity Tier 1 Ratio1 10.3% 10.2% 10.4% 9.4% Tangible Common Equity Ratio2 Common Equity Tier 1 Tier 1 Capital Total Capital 2Q 2020 Restructuring & Earnings Dividends Other 3Q 2020 tax benefits excluding Capital restructuring 1Q 2020 2Q 2020 3Q 2020 and tax benefits 1 CET1 CECL adoption impact includes modified transition amount. 2 Tangible common equity / tangible assets. This is a non-GAAP financial measure. See Appendix for a reconciliation of non-GAAP financial measures to 15 GAAP financial measures.
2020 UPDATED OUTLOOK We are updating guidance for select items in Q4 and reiterating our expense guidance for Q4 and 2021 Fee Revenue: Net Interest Margin: Continue positive trend 4Q 2020 ~ 2.50% through end of 2020 2020 / 2021 Guidance Expenses: Effective Tax Rate: 4Q 2020 - $175 million1 FY 2020 - low to mid FY 2021 - $685 million single digit 1 Includes $3 million of restructuring costs. 16
APPENDIX
TOTAL LOANS OUTSTANDING BALANCES AS OF SEPTEMBER 30, 2020 Well diversified $25 billion loan portfolio ($ in millions) % of Total % of Total 09/30/20201 Loans 09/30/20201 Loans C&BL (by NAICS2) CRE (by property type) Utilities$ 1,802 7.2% Multi-Family$ 1,997 8.0% Wholesale/Manufacturing 1,717 6.9% Office/Mixed 1,268 5.1% Finance and Insurance 1,688 6.7% Industrial 1,049 4.2% Real Estate (includes REITs) 1,173 4.7% Retail 990 4.0% Construction 418 1.7% Single Family Construction 384 1.5% Mining3 390 1.6% Hotel/Motel 247 1.0% Health Care and Social Assistance 387 1.5% Parking Lots and Garages 102 0.4% Retail Trade 361 1.4% Land 99 0.4% Professional, Scientific, and Tech. Serv. 323 1.3% Mobile Home Parks 16 0.1% Rental and Leasing Services 272 1.1% Other 29 0.1% Transportation and Warehousing 196 0.8% Total CRE$ 6,181 24.7% Waste Management 188 0.8% Accommodation and Food Services 172 0.7% Consumer Information 125 0.5% Residential Mortgage$ 7,886 31.5% Arts, Entertainment, and Recreation 104 0.4% Home Equity 762 3.0% Management of Companies & Enterprises 86 0.3% Student Loans 121 0.5% Financial Investments & Related Activities 79 0.3% Credit Cards 105 0.4% Educational Services 60 0.2% Other Consumer 90 0.4% Public Administration 28 0.1% Total Consumer$ 8,963 35.8% Agriculture, Forestry, Fishing and Hunting 9 0.0% Other 282 1.1% Total C&BL$ 9,861 39.4% Total Loans$ 25,004 100.0% 1 All values as of period end. 2 North American Industry Classification System. 3 Includes $333 million of oil and gas loans and one $21 million fracking sand mining company loan. 18
KEY COVID COMMERCIAL LOAN EXPOSURES1 Key COVID commercial loan exposures are spread across multiple industries without large concentrations ($ in millions) % of total C&BL Utilization CRE Utilization Total loans Retailers/Shopping Centers2 Retailers$ 88.5 43%$ 681.0 90%$ 769.4 3.08% Retail REITs 224.5 51% 142.4 100% 366.9 1.86% Subtotal 313.0 48% 823.3 92% 1,136.3 4.64% Oil & Gas Oil & Gas 333.2 67% - 0% 333.2 1.33% Subtotal 333.2 67% - 0% 333.2 1.33% Hotels, Amusement & Related Hotels 0.1 21% 247.3 85% 247.4 0.99% Parking Lots and Garages 22.3 61% 101.8 90% 124.0 0.50% Casinos 28.0 100% - 0% 28.0 0.11% Recreation & Entertainment 25.1 41% 6.9 99% 32.1 0.13% Movie Theaters 10.3 31% - 0% 10.3 0.04% Subtotal 85.8 54% 356.0 86% 441.8 1.77% Restaurants Full-Service 69.8 80% 13.2 99% 82.9 0.33% Limited-Service & Other 21.7 93% 11.4 100% 33.0 0.13% Subtotal 91.5 83% 24.5 99% 116.0 0.46% Transportation & Other Transportation Services 50.9 80% - 0% 50.9 0.20% Fracking Sand Mining 20.6 72% - 0% 20.6 0.08% Subtotal 71.5 77% - 0% 71.5 0.29% Total$ 895.0 59%$ 1,203.8 90%$ 2,098.8 8.39% 1 As of 9/30/2020. 2 C&BL excludes grocers, convenience stores, vehicle dealers, auto parts and tire dealers, direct and mail order retailers, and building material dealers; CRE excludes properties primarily anchored by grocers, self-storage facilities, and vehicle dealers. 19
LOAN STRATIFICATION OUTSTANDINGS AS OF SEPTEMBER 30, 2020 C&BL by Geography Total Loans1 CRE by Geography $9.9 billion $6.2 billion Illinois Illinois Minnesota Illinois 17% 9% 15% Minnesota 24% 8% Other Texas Minnesota 3 Midwest2 Wisconsin 7% 10% 25% 22% Other Wisconsin Wisconsin 29% Other 26% Midwest2 Midwest2 10% 13% Other Texas 35% Other Other 9% 19% 17% Texas 5% C&BL by Industry Oil and Gas Lending4 CRE by Property Type $9.9 billion $333 million $6.2 billion South Texas & Eagle Retail Power & Utilities Ford 16% 18% 10% East Texas Real Estate North Office / Mixed Manufacturing & 12% Louisiana Use Arkansas Wholesale Trade Oil & Gas Permian 20% 15% Multi-Family 17% 3% 33% 32% Rockies Finance & 9% Insurance Industrial 17% Marcellus 17% Utica Appalachia 13% Bakken 2% Other 1-4 Family Other Mid- 5% Construction 5% 1Excludes $315 million Other consumer portfolio. (Onshore Continent Hotel / Motel 2 Lower 48) (primarily 4% Other Midwest includes Missouri, Indiana, Ohio, Michigan and Iowa. 20 3Principally reflects the oil and gas portfolio. 10% OK & KS) 4Chart based on commitments of $498 million. 7%
RECONCILIATION AND DEFINITIONS OF NON-GAAP ITEMS ($ IN MILLIONS) Adjusted Noninterest Expense Reconcilation1 3Q19 4Q19 1Q20 2Q20 3Q20 Noninterest expense $201 $204 $192 $183 $228 Restructuring costs 0 0 0 0 50 Acquisition related costs 2 1 2 1 0 Severance / frontline pay 0 4 0 2 10 Adjusted noninterest expense $199 $199 $190 $181 $167 Tangible Common Equity and Tangible Assets Reconciliation2 2Q20 3Q20 Common equity $3,671 $3,692 Goodwill and other intangible assets, net (1,181) (1,178) Tangible common equity $2,490 $2,513 Total assets $35,501 $34,699 Goodwill and other intangible assets, net (1,181) (1,178) Tangible assets $34,321 $33,520 3Q20 Pre-Tax Pre-Provision Income, Excluding 3Q20 Initiatives Reconciliation1 3Q20 Pre-tax pre-provision income Loss before income taxes $(13) Provision before income taxes 43 Pre-tax pre-provision income $30 3Q20 announced initiatives Loss on prepayments of FHLB Advances $45 Severance 10 Branch sales & consolidations 6 3Q20 announced initiatives $60 Pre-tax pre-provision income, excluding 3Q20 initiatives $90 1 This is a non-GAAP financial measure. Management believes these measures are meaningful because they reflect adjustments commonly made by management, investors, regulators, and analysts to evaluate the adequacy of earnings per common share, provide greater understanding of ongoing operations and enhance comparability of results with prior periods. 21 2 The ratio tangible common equity to tangible assets excludes goodwill and other intangible assets, net. This financial measure has been included as it is considered to be a critical metric with which to analyze and evaluate financial condition and capital strength.
RECONCILIATION AND DEFINITIONS OF NON-GAAP ITEMS ($ IN MILLIONS, EXCEPT PER SHARE DATA) YTD 2020 3Q20 per per share share Acquisition Related Costs, Gain on Sale of ABRC, & 3Q20 Initiatives Reconciliation1 YTD 2020 data 3Q 2020 data GAAP earnings $227 $1.46 $40 $0.26 Net of Tax Acquisition related costs (noninterest expense) 2 0.01 0 0.00 Gain on sale of ABRC (asset gains, net) (104) (0.68) 0 0.00 Q3 Initiatives Severance related to optimization plans (personnel) 7 0.05 7 0.05 Branch consolidations costs (occupancy and other) 4 0.03 4 0.03 Loss on prepayment of FHLB advances (expense) 33 0.22 33 0.22 Re-organization (income tax benefit) (63) (0.41) (49) (0.32) Earnings, excluding items above $106 $0.68 $35 $0.24 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 analysts to evaluate the adequacy of earnings per common share, provide greater understanding of ongoing operations and enhance comparability of results with prior periods. 22