GREEN BAY, Wis. -- April 25, 2024 -- Associated Banc-Corp (NYSE: ASB) ("Associated" or "Company") today reported net income available to common equity ("earnings") of $78 million, or $0.52 per common share, for the quarter ended March 31, 2024. These amounts compare to a loss of $94 million, or $(0.62) per common share, for the quarter ended December 31, 2023 and earnings of $100 million, or $0.66 per common share, for the quarter ended March 31, 2023.
"During the first quarter, we continued to make strong progress against our strategic plan," said President and CEO Andy Harmening. "We added talent in key areas, enhanced operational efficiency, and improved the customer experience through product and service enhancements. Here in April, our collective efforts were recognized when we were named #1 for Retail Banking Customer Satisfaction in the Upper Midwest Region by J.D. Power.1 Importantly, these efforts also contributed to the bottom line through balanced loan and deposit growth, net household growth, and expanding margins."
"As we look forward, macroeconomic question marks remain, but we feel well-positioned thanks to the stability of our markets, the resilience of our customer base, and the quarterly momentum from our initiatives. We're excited to share our progress over the remainder of the year."
First Quarter 2024 Highlights (all comparisons to Fourth Quarter 2023)
- Total period end commercial & business lending loans increased $161 million to $11.0 billion
- Total period end commercial real estate loans decreased $73 million to $7.3 billion
- Total period end consumer loans increased $190 million to $11.2 billion
- Total period end deposits increased $267 million to $33.7 billion
- Total period end core customer deposits2 increased $557 million to $28.0 billion
- Net interest income increased $4 million to $258 million
- Quarterly net interest margin increased 10 basis points to 2.79%
- Noninterest income increased $196 million to $65 million (increase primarily driven by one time items impacting 4Q 2023 results)
- Noninterest expense decreased $42 million to $198 million (decrease primarily driven by one time items impacting 4Q 2023 results)
- Provision for credit losses on loans increased $3 million to $24 million
- Net income available to common equity increased $172 million to $78 million (increase primarily driven by one time items impacting 4Q 2023 results)
Loans
First quarter 2024 average total loans of $29.4 billion decreased 2%, or $583 million, from the prior quarter and increased 2%, or $523 million, from the same period last year. With respect to first quarter 2024 average balances by loan category:
- Commercial and business lending decreased $4 million from the prior quarter and increased $200 million from the same period last year to $10.8 billion.
- Commercial real estate lending decreased $8 million from the prior quarter and increased $139 million from the same period last year to $7.4 billion.
- Consumer lending decreased $572 million from the prior quarter and increased $184 million from the same period last year to $11.2 billion.
First quarter 2024 period end total loans of $29.5 billion increased 1%, or $278 million, from the prior quarter and increased 1%, or $287 million, from the same period last year. With respect to first quarter 2024 period end balances by loan category:
- Commercial and business lending increased $161 million from the prior quarter and increased $34 million from the same period last year to $11.0 billion.
- Commercial real estate lending decreased $73 million from the prior quarter and increased $81 million from the same period last year to $7.3 billion.
- Consumer lending increased $190 million from the prior quarter and increased $172 million from the same period last year to $11.2 billion.
In 2024, we continue to expect total loan growth of 4% to 6% on an end of period basis as compared to the year ended December 31, 2023.
Deposits
First quarter 2024 average deposits of $33.3 billion increased 3%, or $1.1 billion, from the prior quarter and increased 11%, or $3.4 billion, from the same period last year. With respect to first quarter 2024 average balances by deposit category:
- Noninterest-bearing demand deposits decreased $289 million from the prior quarter and decreased $1.5 billion from the same period last year to $5.9 billion.
- Savings increased $66 million from the prior quarter and increased $263 million from the same period last year to $4.9 billion.
- Interest-bearing demand deposits increased $334 million from the prior quarter and increased $676 million from the same period last year to $7.5 billion.
- Money market deposits decreased $5 million from the prior quarter and decreased $1.4 billion from the same period last year to $6.1 billion.
- Total time deposits increased $934 million from the prior quarter and increased $4.8 billion from the same period last year to $7.2 billion.
- Network transaction deposits increased $35 million from the prior quarter and increased $505 million from the same period last year to $1.7 billion.
First quarter 2024 period end deposits of $33.7 billion increased 1%, or $267 million, from the prior quarter and increased 11%, or $3.4 billion, from the same period last year. With respect to first quarter 2024 period end balances by deposit category:
- Noninterest-bearing demand deposits increased $134 million from the prior quarter and decreased $1.1 billion from the same period last year to $6.3 billion.
- Savings increased $289 million from the prior quarter and increased $394 million from the same period last year to $5.1 billion.
- Interest-bearing demand deposits decreased $97 million from the prior quarter and increased $1.8 billion from the same period last year to $8.7 billion.
- Money market deposits increased $391 million from the prior quarter and decreased $1.6 billion from the same period last year to $6.7 billion.
- Total time deposits decreased $450 million from the prior quarter and increased $3.9 billion from the same period last year to $6.9 billion.
- Network transaction deposits (included in money market and interest-bearing demand deposits) increased $227 million from the prior quarter and increased $519 million from the same period last year to $1.8 billion.
In 2024, we continue to expect core customer deposit growth of 3% to 5% on an end of period basis as compared to the year ended December 31, 2023.
Net Interest Income and Net Interest Margin
First quarter 2024 net interest income of $258 million increased $4 million, or 2%, from the prior quarter and decreased $16 million, or 6%, from the same period last year. The net interest margin increased to 2.79%, reflecting a 10 basis point increase from the prior quarter and a 28 basis point decrease from the same period last year.
- The average yield on total loans for the first quarter of 2024 increased 14 basis points from the prior quarter and increased 73 basis points from the same period last year to 6.22%.
- The average cost of total interest-bearing liabilities for the first quarter of 2024 remained flat compared to the prior quarter and increased 107 basis points from the same period last year to 3.55%.
- The net free funds benefit for the first quarter of 2024 decreased 3 basis points from the prior quarter and increased 9 basis points from the same period last year to 0.70%.
We continue to expect total net interest income growth of 2% to 4% in 2024.
Noninterest Income
First quarter 2024 total noninterest income of $65 million increased $196 million from the prior quarter (with the increase driven primarily by one time items impacting prior quarter results) and increased $3 million, or 5%, from the same period last year. With respect to first quarter 2024 noninterest income line items:
- Wealth management fees increased $1 million from the prior quarter and increased $2 million from the same period last year.
- Service charges and deposit account fees increased $2 million from the prior quarter and decreased $1 million from the same period last year.
- Capital markets, net decreased $5 million from the prior quarter and decreased $1 million from the same period last year.
- Investment securities gains (losses), net increased $63 million from the prior quarter and increased $4 million from the same period last year, driven primarily by a $65 million net loss on a sale of investments associated with a balance sheet repositioning recognized in the fourth quarter of 2023 and a $4 million gain on sale of Visa B shares recognized in the first quarter of 2024. As of March 31, 2024, we had no Visa B shares remaining.
After adjusting to exclude the impact of the mortgage and investment securities sales announced during the fourth quarter of 2023, we continue to expect total noninterest income to decrease by 0% to 2% in 2024.
Noninterest Expense
First quarter 2024 total noninterest expense of $198 million decreased $42 million, or 17%, from the prior quarter (with the decrease driven primarily by one time items impacting prior quarter results) and increased $10 million, or 5%, from the same period last year as we continued to invest in our strategic initiatives. With respect to first quarter 2024 noninterest expense line items:
- Personnel expense decreased $1 million from the prior quarter and increased $3 million from the same period last year.
- Technology expense decreased $2 million from the prior quarter and increased $3 million from the same period last year.
- FDIC assessment expense decreased $28 million from the prior quarter and increased $7 million from the same period last year. These results were driven primarily by a $31 million special assessment recognized in the fourth quarter of 2023 and an $8 million special assessment recognized in the first quarter of 2024.
After adjusting to exclude the impact of the $31 million FDIC special assessment finalized during the fourth quarter of 2023 and the $8 million FDIC special assessment finalized during the first quarter of 2024, we expect total noninterest expense to grow by 2% to 3% in 2024.
Taxes
The first quarter 2024 tax expense was $20 million compared to $47 million of tax benefit in the prior quarter and $27 million of tax expense in the same period last year. The effective tax rate for the first quarter of 2024 was 19.8% compared to an effective tax rate of 20.9% in the same period last year.
In 2024, we continue to expect the annual effective tax rate to be between 19% and 21%, assuming no change in the corporate tax rate.
Credit
The first quarter 2024 provision for credit losses on loans was $24 million, compared to a provision of $21 million in the prior quarter and a provision of $18 million in the same period last year. With respect to first quarter 2024 credit quality:
- Nonaccrual loans of $178 million increased $29 million from the prior quarter and increased $61 million from the same period last year. The nonaccrual loans to total loans ratio was 0.60% in the first quarter, up from 0.51% in the prior quarter and up from 0.40% in the same period last year.
- First quarter 2024 net charge offs of $22 million increased compared to net charge offs of $16 million in the prior quarter and increased compared to net charge offs of $3 million in the same period last year.
- The allowance for credit losses on loans (ACLL) of $388 million increased $2 million compared to the prior quarter and increased $22 million compared to the same period last year. The ACLL to total loans ratio was 1.31% in the first quarter, down from 1.32% in the prior quarter and up from 1.25% in the same period last year.
In 2024, we continue to expect to adjust provision to reflect changes to risk grades, economic conditions, loan volumes, and other indications of credit quality.
Capital
The Company’s capital position remains strong, with a CET1 capital ratio of 9.43% at March 31, 2024. The Company’s capital ratios continue to be in excess of the Basel III “well-capitalized” regulatory benchmarks on a fully phased in basis.
FIRST QUARTER 2024 EARNINGS RELEASE CONFERENCE CALL
The Company will host a conference call for investors and analysts at 4:00 p.m. Central Time (CT) today, April 25, 2024. Interested parties can access the live webcast of the call through the Investor Relations section of the Company's website, http://investor.associatedbank.com. Parties may also dial into the call at 877-407-8037 (domestic) or 201-689-8037 (international) and request the Associated Banc-Corp first quarter 2024 earnings call. The first quarter 2024 financial tables with an accompanying slide presentation will be available on the Company's website just prior to the call. An audio archive of the webcast will be available on the Company's website approximately fifteen minutes after the call is over.
ABOUT ASSOCIATED BANC-CORP
Associated Banc-Corp (NYSE: ASB) has total assets of $41 billion and is the largest bank holding company based in Wisconsin. Headquartered in Green Bay, Wisconsin, Associated is a leading Midwest banking franchise, offering a full range of financial products and services from nearly 200 banking locations serving more than 100 communities throughout Wisconsin, Illinois and Minnesota. The Company also operates loan production offices in Indiana, Michigan, Missouri, New York, Ohio and Texas. Associated Bank, N.A. is an Equal Housing Lender, Equal Opportunity Lender and Member FDIC. More information about Associated Banc-Corp is available at www.associatedbank.com.
FORWARD-LOOKING STATEMENTS
Statements made in this document 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,” "project," "guidance," 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.
NON-GAAP FINANCIAL MEASURES
This press release and related materials may contain references to measures which are not defined in generally accepted accounting principles (“GAAP”). Information concerning these non-GAAP financial measures can be found in the financial tables. 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 a greater understanding of ongoing operations and enhance comparability of results with prior periods.
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