Results driven by balance sheet expansion,
stable credit trends, and progress against the Company's strategic
initiatives
GREEN
BAY, Wis., July 20, 2023 /PRNewswire/ --
Associated Banc-Corp (NYSE: ASB) ("Associated" or "Company")
today reported net income available to common equity ("earnings")
of $84 million, or $0.56 per common share, for the quarter ended
June 30, 2023. These amounts compare
to earnings of $100 million, or $0.66 per common share, for the quarter ended
March 31, 2023 and earnings of
$84 million, or $0.56 per common
share, for the quarter ended June 30,
2022.
"Our second quarter results were marked by the resilience and
stability of our Midwestern markets and continued execution against
our strategic plan," said President and CEO Andy Harmening. "Unemployment remains well below
the national average in most of our footprint and economic activity
has continued at a healthy pace. With these trends as a backdrop,
our diversified company loan portfolio, with a prime/super prime
concentration of consumer loans, has delivered strong credit
performance again this quarter. This stability enabled us to add
another $642 million in high-quality
loans and build momentum with our customer acquisition strategies
during the quarter. As a result of these efforts, we're already
seeing customer checking acquisition rates 11% higher than a year
ago, our attrition is down, and our digital customer satisfaction
scores are at a multi-year high."
"While we're pleased with the initial results of these efforts,
we've yet to realize the full impact of our customer acquisition
strategies," Harmening continued. "We look forward to building on
this momentum and delivering enhanced capabilities for our
customers in the coming quarters. Along the way, our disciplined
approach to credit, expenses and risk management will be our
foundation."
Second Quarter 2023 Highlights (all comparisons to the first
quarter of 2023)
- Total period end commercial loans increased $274 million to $18.4
billion
- Total period end consumer loans increased $367 million to $11.4
billion
- Total period end deposits increased $1.7
billion to $32.0 billion
- Quarterly net interest margin decreased 27 basis points to
2.80%
- Noninterest income increased $3
million to $66 million
- Noninterest expense increased $3
million to $191 million
- Provision for credit losses on loans increased $4 million to $22
million
- Net income available to common equity decreased $16 million to $84
million
Loans
Second quarter 2023 average total loans of $29.4 billion were up 2%, or $592 million, from the prior quarter and were up
16%, or $4.0 billion, from the same
period last year. With respect to second quarter 2023 average
balances by loan category:
- Commercial and business lending increased $283 million from the prior quarter and increased
$1.3 billion from the same period
last year to $10.9 billion.
- Commercial real estate lending increased $44 million from the prior quarter and increased
$932 million from the same period
last year to $7.3 billion.
- Consumer lending increased $265
million from the prior quarter and increased $1.8 billion from the same period last year to
$11.2 billion.
Second quarter 2023 period end total loans of $29.8 billion were up 2%, or $642 million, from the prior quarter and were up
13%, or $3.4 billion, from the same
period last year. With respect to second quarter 2023 period end
balances by loan category:
- Commercial and business lending increased $194 million from the prior quarter and increased
$929 million from the same period
last year to $11.1 billion.
- Commercial real estate lending increased $81 million from the prior quarter and increased
$756 million from the same period
last year to $7.3 billion.
- Consumer lending increased $367
million from the prior quarter and increased $1.7 billion from the same period last year to
$11.4 billion.
In 2023, we continue to expect full-year total loan growth of 6%
to 8%.
Deposits
Second quarter 2023 average deposits of $31.3 billion were up 5%, or $1.4 billion, from the prior quarter and were up
11%, or $3.1 billion, from the same
period last year. With respect to second quarter 2023 average
balances by deposit category:
- Noninterest-bearing demand deposits decreased $670 million from the prior quarter and decreased
$1.5 billion from the same period
last year to $6.7 billion.
- Savings increased $85 million
from the prior quarter and increased $67
million from the same period last year to $4.7 billion.
- Interest-bearing demand deposits decreased $151 million from the prior quarter and increased
$251 million from the same period
last year to $6.7 billion.
- Money market deposits decreased $793
million from the prior quarter and decreased $167 million from the same period last year to
$6.7 billion.
- Total time deposits increased $2.6
billion from the prior quarter and increased $3.7 billion from the same period last year to
$5.0 billion.
- Network transaction deposits increased $321 million from the prior quarter and increased
$692 million from the same period
last year to $1.5 billion.
Second quarter 2023 period end deposits of $32.0 billion were up 6%, or $1.7 billion, from the prior quarter and were up
12%, or $3.4 billion, from the same
period last year. With respect to second quarter 2023 period end
balances by deposit category:
- Noninterest-bearing demand deposits decreased $763 million from the prior quarter and decreased
$1.5 billion from the same period
last year to $6.6 billion.
- Savings increased $47 million
from the prior quarter and increased $69
million from the same period last year to $4.8 billion.
- Interest-bearing demand deposits increased $61 million from the prior quarter and increased
$248 million from the same period
last year to $7.0 billion.
- Money market deposits decreased $836
million from the prior quarter and decreased $247 million from the same period last year to
$7.5 billion.
- Total time deposits increased $3.2
billion from the prior quarter and increased $4.9 billion from the same period last year to
$6.1 billion.
- Network transaction deposits (included in money market and
interest-bearing deposits) increased $327
million from the prior quarter and increased $709 million from the same period last year to
$1.6 billion.
We now expect total core customer deposits (which excludes
network transaction deposits and brokered CDs) to decrease by 3% in
2023 on a period end basis, with 2% growth in the second half of
the year.
Net Interest Income and Net Interest Margin
Second quarter 2023 net interest income of $258 million decreased $16
million, or 6%, from the prior quarter and increased
$42 million, or 19%, from the same
period last year. The net interest margin decreased to 2.80%,
reflecting a 27 basis point decrease from the prior quarter
and a nine basis point increase from the same period last
year.
- The average yield on total loans for the second quarter of 2023
increased 28 basis points from the prior quarter and increased 261
basis points from the same period last year to 5.77%.
- The average cost of total interest-bearing liabilities for the
second quarter of 2023 increased 58 basis points from the prior
quarter and increased 270 basis points from the same period last
year to 3.06%.
- The net free funds benefit for the second quarter of 2023
increased seven basis points from the prior quarter and increased
58 basis points compared to the same period last year to
0.68%.
We now expect total net interest income growth of 10% to 12% in
2023.
Noninterest Income
Second quarter 2023 total noninterest income of $66 million increased $3 million, or 6% from
the prior quarter and decreased $10
million, or 13%, from the same period last year. With
respect to second quarter 2023 noninterest income line items:
- Mortgage banking, net was $8
million for the second quarter, up $4
million from the prior quarter and up $2 million from the same period last year.
- Service charges and deposit account fees decreased $1 million from the prior quarter and decreased
$4 million from the same period last
year.
- Card-based fees increased $1
million from the prior quarter and were flat from the same
period last year.
We continue to expect total noninterest income to compress by 8%
to 10% in 2023.
Noninterest Expense
Second quarter 2023 total noninterest expense of $191 million increased $3
million, or 2%, from the prior quarter and increased
$9 million, or 5%, from the same
period last year as we continued to invest in our strategic
initiatives. With respect to second quarter 2023 noninterest
expense line items:
- Personnel expense decreased $2
million from the prior quarter and increased $1 million from the same period last year.
- FDIC assessment expense increased $3
million from the prior quarter and increased $4 million from the same period last year.
- Occupancy expense decreased $1
million from the prior quarter and decreased $1 million from the same period last year.
- Business development and advertising expense increased
$1 million from the prior quarter and
increased $1 million from the same
period last year.
We now expect total noninterest expense growth of 3% to 4% in
2023.
Taxes
The second quarter 2023 tax expense was $24 million compared to $27 million of tax expense in the prior quarter
and $23 million of tax expense in the
same period last year. The effective tax rate for the second
quarter of 2023 was 21.3% compared to an effective tax rate of
20.9% in the prior quarter and an effective tax rate of 21.2% in
the same period last year.
We continue to expect the 2023 effective tax rate to be between
20% and 21%, assuming no change in the statutory corporate tax
rate.
Credit
The second quarter 2023 provision for credit losses on loans was
$22 million, compared to a provision of $18 million in
the prior quarter and a provision of zero in the same period last
year. Provision build in the second quarter was largely a function
of loan growth, limited credit movement and macro trends. With
respect to second quarter 2023 credit quality:
- Nonaccrual loans of $131 million
were up $14 million from the prior
quarter and up $23 million from the
same period last year. The nonaccrual loans to total loans ratio
was 0.44% in the second quarter, up from 0.40% in the prior quarter
and up from 0.41% in the same period last year.
- Second quarter 2023 net charge offs of $11 million were up compared to net charge offs
of $3 million in the prior quarter
and were up compared to net charge offs of less than $1 million in the same period last year.
- The allowance for credit losses on loans (ACLL) of $377 million was up $11
million compared to the prior quarter and up $59 million compared to the same period last
year. The ACLL to total loans ratio was 1.26% in the second
quarter, up from 1.25% in the prior quarter and up from 1.20% in
the same period last year.
In 2023, we 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 9.48% at June 30,
2023. The Company's capital ratios continue to be in excess
of the Basel III "well-capitalized" regulatory benchmarks on a
fully phased in basis.
SECOND QUARTER 2023 EARNINGS RELEASE CONFERENCE CALL
The Company will host a conference call for investors and
analysts at 4:00 p.m. Central Time
(CT) today, July 20, 2023. 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 second quarter 2023 earnings call.
The second quarter 2023 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 more than 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.
Investor Contact:
Ben
McCarville, Vice President, Director of Investor
Relations
920-491-7059
Media Contact:
Jennifer
Kaminski, Vice President, Public Relations Senior
Manager
920-491-7576
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SOURCE Associated Banc-Corp