Results driven by balance sheet growth and
continued progress against the Company's strategic
initiatives
GREEN
BAY, Wis., Oct. 19, 2023 /PRNewswire/ --
Associated Banc-Corp (NYSE: ASB) ("Associated" or "Company")
today reported net income available to common equity ("earnings")
of $80 million, or $0.53 per common share, for the quarter ended
September 30, 2023. These amounts
compare to earnings of $84 million, or $0.56 per common share, for the quarter ended
June 30, 2023 and earnings of
$93 million, or $0.62 per common
share, for the quarter ended September 30,
2022.
"We continued to see steady improvements in customer
acquisition, retention and satisfaction scores during the quarter,
enabling us to grow core customer deposits by over $500 million and decrease our reliance on
non-customer funding sources," said President and CEO Andy Harmening. "Our strategic initiatives have
also enabled us to deliver another quarter of balanced,
high-quality loan growth. While we feel well positioned today, we
recognize that the banking environment continues to evolve, and we
look forward to sharing more details about the second phase of our
strategic plan later this quarter."
Third Quarter 2023 Highlights (all comparisons to the second
quarter of 2023)
- Total period end commercial loans increased $68 million to $18.5
billion
- Total period end consumer loans increased $276 million to $11.7
billion
- Total period end deposits increased $109
million to $32.1 billion
- Quarterly net interest margin decreased 9 basis points to
2.71%
- Noninterest income increased $1
million to $67 million
- Noninterest expense increased $6
million to $196 million
- Provision for credit losses on loans remained flat at
$22 million
- Net income available to common equity decreased $4 million to $80
million
Loans
Third quarter 2023 average total loans of $29.9 billion were up 2%, or $446 million, from the prior quarter and were up
10%, or $2.8 billion, from the same
period last year. With respect to third quarter 2023 average
balances by loan category:
- Commercial and business lending increased $86 million from the prior quarter and increased
$793 million from the same period
last year to $11.0 billion.
- Commercial real estate lending increased $17 million from the prior quarter and increased
$545 million from the same period
last year to $7.3 billion.
- Consumer lending increased $343
million from the prior quarter and increased $1.5 billion from the same period last year to
$11.6 billion.
Third quarter 2023 period end total loans of $30.2 billion were up 1%, or $344 million, from the prior quarter and were up
9%, or $2.4 billion, from the same
period last year. With respect to third quarter 2023 period end
balances by loan category:
- Commercial and business lending increased $40 million from the prior quarter and increased
$582 million from the same period
last year to $11.2 billion.
- Commercial real estate lending increased $28 million from the prior quarter and increased
$450 million from the same period
last year to $7.3 billion.
- Consumer lending increased $276
million from the prior quarter and increased $1.3 billion from the same period last year to
$11.7 billion.
In 2023, we now expect full-year total loan growth of 5% to
6%.
Deposits
Third quarter 2023 average deposits of $32.0 billion were up 2%, or $721 million, from the prior quarter and were up
11%, or $3.1 billion, from the same
period last year. With respect to third quarter 2023 average
balances by deposit category:
- Noninterest-bearing demand deposits decreased $351 million from the prior quarter and decreased
$1.8 billion from the same period
last year to $6.3 billion.
- Savings increased $65 million
from the prior quarter and increased $79
million from the same period last year to $4.8 billion.
- Interest-bearing demand deposits increased $315 million from the prior quarter and increased
$392 million from the same period
last year to $7.0 billion.
- Money market deposits decreased $450
million from the prior quarter and decreased $1.0 billion from the same period last year to
$6.3 billion.
- Total time deposits increased $970
million from the prior quarter and increased $4.7 billion from the same period last year to
$6.0 billion.
- Network transaction deposits increased $172 million from the prior quarter and increased
$766 million from the same period
last year to $1.6 billion.
Third quarter 2023 period end deposits of $32.1 billion were up $109
million from the prior quarter and were up 10%, or
$2.9 billion, from the same period
last year. With respect to third quarter 2023 period end balances
by deposit category:
- Noninterest-bearing demand deposits decreased $143 million from the prior quarter and decreased
$1.8 billion from the same period
last year to $6.4 billion.
- Savings increased $59 million
from the prior quarter and increased $128
million from the same period last year to $4.8 billion.
- Interest-bearing demand deposits increased $490 million from the prior quarter and increased
$406 million from the same period
last year to $7.5 billion.
- Money market deposits decreased $253
million from the prior quarter and decreased $641 million from the same period last year to
$7.3 billion.
- Total time deposits decreased $45
million from the prior quarter and increased $4.8 billion from the same period last year to
$6.1 billion.
- Network transaction deposits (included in money market and
interest-bearing deposits) increased $49
million from the prior quarter and increased $785 million from the same period last year to
$1.6 billion.
We continue to 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
Third quarter 2023 net interest income of $254 million decreased $4
million, or 1%, from the prior quarter and decreased
$10 million, or 4%, from the same
period last year. The net interest margin decreased to 2.71%,
reflecting a 9 basis point decrease from the prior quarter
and a 42 basis point decrease from the same period last
year.
- The average yield on total loans for the third quarter of 2023
increased 19 basis points from the prior quarter and increased 190
basis points from the same period last year to 5.96%.
- The average cost of total interest-bearing liabilities for the
third quarter of 2023 increased 30 basis points from the prior
quarter and increased 255 basis points from the same period last
year to 3.36%.
- The net free funds benefit for the third quarter of 2023
increased three basis points from the prior quarter and increased
49 basis points compared to the same period last year to
0.71%.
We now expect total net interest income growth of 8% to 10% in
2023.
Noninterest Income
Third quarter 2023 total noninterest income of $67 million increased $1 million, or 2%,
from the prior quarter and decreased $4
million, or 6%, from the same period last year. With respect
to third quarter 2023 noninterest income line items:
- Mortgage banking, net was $7
million for the third quarter, down $1 million from the prior quarter and up
$4 million from the same period last
year.
- Service charges and deposit account fees increased slightly
from the prior quarter and decreased $2
million from the same period last year.
- Capital markets, net increased slightly from the prior quarter
and decreased $2 million from the
same period last year.
- Asset gains (losses) increased $1
million from the prior quarter and increased $1 million from the same period last year.
We continue to expect total noninterest income to compress by 8%
to 10% in 2023.
Noninterest Expense
Third quarter 2023 total noninterest expense of $196 million increased $6
million, or 3%, from the prior quarter and increased
slightly from the same period last year as we continued to invest
in our strategic initiatives. With respect to third quarter 2023
noninterest expense line items:
- Personnel expense increased $3
million from the prior quarter and decreased $1 million from the same period last year.
- Technology expense increased $2
million from the prior quarter and increased $3 million from the same period last year.
- Occupancy expense increased $1
million from the prior quarter and increased slightly from
the same period last year.
We continue to expect total noninterest expense growth of 3% to
4% in 2023, excluding any nonrecurring items incurred in the fourth
quarter.
Taxes
The third quarter 2023 tax expense was $19 million compared to $24 million of tax expense in the prior quarter
and $26 million of tax expense in the
same period last year. The effective tax rate for the third quarter
of 2023 was 18.9% compared to an effective tax rate of 21.3% in the
prior quarter and an effective tax rate of 21.4% 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 third quarter 2023 provision for credit losses on loans was
$22 million, compared to a provision of $22 million in
the prior quarter and a provision of $17 million in the same
period last year. With respect to third quarter 2023 credit
quality:
- Nonaccrual loans of $169 million
were up $37 million from the prior
quarter and up $52 million from the
same period last year. The nonaccrual loans to total loans ratio
was 0.56% in the third quarter, up from 0.44% in the prior quarter
and up from 0.42% in the same period last year.
- Third quarter 2023 net charge offs of $18 million were up compared to net charge offs
of $11 million in the prior quarter
and were up compared to net charge offs of $2 million in the same period last year.
- The allowance for credit losses on loans (ACLL) of $381 million was up $4
million compared to the prior quarter and up $48 million compared to the same period last
year. The ACLL to total loans ratio was 1.26% in the third quarter,
flat with 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 9.55% at September 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.
THIRD 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, October 19, 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 third quarter 2023 earnings call.
The third 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
$42 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