ASB Associated Banc Corp

GREEN BAY, Wis., Oct. 24, 2024 /PRNewswire/ --Associated Banc-Corp (NYSE: ASB) ("Associated" or "Company") today reported net income available to common equity ("earnings") of $85 million, or $0.56 per common share, for the quarter ended September 30, 2024. These amounts compare to earnings of $113 million, or $0.74 per common share, for the quarter ended June 30, 2024 and earnings of $80 million, or $0.53 per common share, for the quarter ended September 30, 2023.

"In the first nine months of 2024, we've remained squarely focused on executing Phase 2 of our strategic growth plan, and the financial tailwinds have started to emerge here in the third quarter," said President and CEO Andy Harmening. "During the quarter, we drove nearly $400 million in balanced loan growth and over $600 million in core customer deposit¹ growth, which enabled us to decrease our reliance on wholesale funding and expand our margin. We also saw strong credit performance again during the quarter, helping us to deliver solid bottom line results for our shareholders."

"We're growing our customer base, delivering industry-leading customer satisfaction, and adding top talent to our commercial banking team. We look forward to building on this momentum and providing additional updates along the way."

Third Quarter 2024 Highlights (all comparisons to Second Quarter 2024)

• Diluted earnings per common share of $0.56
• Total period end core customer deposit¹ growth of $618 million
• Total period end deposit growth of $863 million
• Total period end loan growth of $373 million
• Net interest income of $263 million
• Net interest margin of 2.78%
• Noninterest income of $67 million
• Noninterest expense of $201 million
• Provision for credit losses of $21 million
• Allowance for credit losses on loans / total loans of 1.33%
• Net charge offs / average loans (annualized) of 0.18%

Loans

Third quarter 2024 average total loans of $29.6 billion increased $55 million from the prior quarter and decreased 1%, or $251 million, from the same period last year. With respect to third quarter 2024 average balances by loan category:

• Commercial and business lending decreased $40 million from the prior quarter and decreased $14 million from the same period last year to $11.0 billion.
• Commercial real estate lending decreased $14 million from the prior quarter and decreased $77 million from the same period last year to $7.2 billion.
• Consumer lending increased $109 million from the prior quarter and decreased $159 million from the same period last year to $11.4 billion.

Third quarter 2024 period end total loans of $30.0 billion increased 1%, or $373 million, from the prior quarter and decreased 1%, or $202 million, from the same period last year. With respect to third quarter 2024 period end balances by loan category:

• Commercial and business lending increased $307 million from the prior quarter and increased $226 million from the same period last year to $11.4 billion.
• Commercial real estate lending decreased $72 million from the prior quarter and decreased $165 million the same period last year to $7.2 billion.
• Consumer lending increased $138 million from the prior quarter and decreased $263 million from the same period last year to $11.4 billion.

We continue to expect 2024 period end loan growth to finish at the lower end of our previous 4% to 6% range as compared to 2023.

Deposits

Third quarter 2024 average deposits of $33.3 billion increased 2%, or $691 million, from the prior quarter and increased 4%, or $1.3 billion, from the same period last year. With respect to third quarter 2024 average balances by deposit category:

• Noninterest-bearing demand deposits decreased $60 million from the prior quarter and decreased $667 million from the same period last year to $5.7 billion.
• Savings decreased $9 million from the prior quarter and increased $311 million from the same period last year to $5.1 billion.
• Interest-bearing demand deposits increased $129 million from the prior quarter and increased $415 million from the same period last year to $7.4 billion.
• Money market deposits decreased $53 million from the prior quarter and decreased $352 million from the same period last year to $5.9 billion.
• Total time deposits increased $635 million from the prior quarter and increased $1.6 billion from the same period last year to $7.6 billion.
• Network transaction deposits increased $49 million from the prior quarter and increased $5 million from the same period last year to $1.6 billion.

Third quarter 2024 period end deposits of $33.6 billion increased 3%, or $863 million, from the prior quarter and increased 4%, or $1.4 billion, from the same period last year. With respect to third quarter 2024 period end balances by deposit category:

• Noninterest-bearing demand deposits increased $42 million from the prior quarter and decreased $566 million from the same period last year to $5.9 billion.
• Savings decreased $85 million from the prior quarter and increased $236 million from the same period last year to $5.1 billion.
• Interest-bearing demand deposits increased $322 million from the prior quarter and increased $1.1 billion from the same period last year to $8.6 billion.
• Money market deposits decreased $200 million from the prior quarter and decreased $1.2 billion from the same period last year to $6.1 billion.
• Total time deposits increased $784 million from the prior quarter and increased $1.9 billion from the same period last year to $7.9 billion.
• Network transaction deposits (included in money market and interest-bearing demand deposits) increased $64 million from the prior quarter and decreased $82 million from the same period last year to $1.6 billion.

We continue to expect 2024 period end core customer deposit growth to finish at the lower end of our previous 3% to 5% range as compared to 2023.

Net Interest Income and Net Interest Margin

Third quarter 2024 net interest income of $263 million increased $6 million from the prior quarter and increased $8 million from the same period last year. The net interest margin increased to 2.78%, reflecting a 3 basis point increase from the prior quarter and a 7 basis point increase from the same period last year.

• The average yield on total loans for the third quarter of 2024 increased 6 basis points from the prior quarter and increased 31 basis points from the same period last year to 6.27%.
• The average cost of total interest-bearing liabilities for the third quarter of 2024 decreased 1 basis point from the prior quarter and increased 23 basis points from the same period last year to 3.59%.
• The net free funds benefit for the third quarter of 2024 decreased 1 basis point from the prior quarter and decreased 2 basis points from the same period last year to 0.69%.

Based on current market conditions, we now expect total net interest income growth of 0% to 1% in 2024.

Noninterest Income

Third quarter 2024 total noninterest income of $67 million increased $2 million, or 3%, from the prior quarter and increased $1 million, or 1%, from the same period last year. With respect to third quarter 2024 noninterest income line items:

• Wealth management fees increased $2 million from the prior quarter and increased $3 million from the same period last year.
• Service charges and deposit account fees increased $1 million from both the prior quarter and the same period last year.
• Mortgage banking, net decreased slightly from the prior quarter and decreased $4 million from the same period last year.

Excluding the impact of the mortgage and investment securities sales announced during the fourth quarter of 2023, we continue to expect total noninterest income to finish within a range of negative 1% to 1% growth in 2024.

Noninterest Expense

Third quarter 2024 total noninterest expense of $201 million increased $5 million, or 2%, from the prior quarter and increased $4 million, or 2%, from the same period last year as we continued to invest in our strategic initiatives. With respect to third quarter 2024 noninterest expense line items:

• Personnel expense decreased $1 million from the prior quarter and increased $4 million from the same period last year.
• Legal and professional expense increased $1 million from both the prior quarter and the same period last year.
• Technology expense increased slightly from the prior quarter and increased $1 million from the same period last year.
• FDIC assessment expense increased $1 million from the prior quarter and decreased $1 million from the same period last year.

After adjusting to exclude the impact of the $31 million FDIC special assessment booked during the fourth quarter of 2023 and $4 million of FDIC special assessment, net recognized over the first three quarters of 2024, we now expect total noninterest expense to grow by 1% to 2% in 2024.

Taxes

Third quarter 2024 tax expense was $20 million compared to a $13 million tax benefit in the prior quarter and $19 million of tax expense in the same period last year. The benefit recognized in the second quarter of 2024 was primarily driven by a strategic reallocation of our investment securities portfolio resulting in a deferred tax benefit of approximately $33 million during the quarter. The effective tax rate for the third quarter of 2024 was 18.6% compared to an effective tax rate of 18.9% in the same period last year.

After excluding the impact of the one time $33 million tax benefit recognized in the second quarter of 2024, we continue to expect the annual effective tax rate to be between 19% and 21% in 2024, assuming no change in the corporate tax rate.

Credit

The third quarter 2024 provision for credit losses on loans was $21 million, compared to a provision of $23 million in the prior quarter and a provision of $22 million in the same period last year. With respect to third quarter 2024 credit quality:

• Nonaccrual loans of $128 million decreased $26 million from the prior quarter and decreased $40 million from the same period last year. The nonaccrual loans to total loans ratio was 0.43% in the third quarter, down from 0.52% in the prior quarter and down from 0.56% in the same period last year.
• Third quarter 2024 net charge offs of $13 million decreased compared to net charge offs of $21 million in the prior quarter and decreased compared to net charge offs of $18 million in the same period last year.
• The allowance for credit losses on loans (ACLL) of $398 million increased $8 million compared to the prior quarter and increased $17 million compared to the same period last year. The ACLL to total loans ratio was 1.33% in the third quarter, up from 1.32% in the prior quarter and up from 1.26% 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 9.72% at September 30, 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.

THIRD 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, October 24, 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 third quarter 2024 earnings call. The third 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 $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 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 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," "intend," "target," "outlook," "project," "guidance," "forecast," 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 Form 10-Qs and other SEC filings, and 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:
Andrea Kozek, Senior Manager, Public Relations
920-491-7518

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SOURCE Associated Banc-Corp