Results driven by positive margin, expense
and credit trends.
GREEN
BAY, Wis., April 21, 2022 /PRNewswire/ -- Associated
Banc-Corp (NYSE: ASB) ("Associated" or "Company") today reported
net income available to common equity ("earnings") of $71 million, or $0.47 per common share, for the quarter ended
March 31, 2022. These amounts compare
to earnings of $89 million, or $0.58 per common share for the quarter ended
March 31, 2021 and earnings of
$74 million, or $0.49 per common
share for the quarter ended December 31,
2021.
"Our first quarter results were marked by strong positive
momentum in our strategic lending initiatives," said President and
CEO Andy Harmening. "Commercial line
utilization continues to climb, employment trends in our markets
continue to reflect robust productivity and credit remains
remarkably benign. Our core customers continue to borrow and grow,
and we remain committed to supporting them with their financial
needs. In this spirit, we also announced today that we plan to
implement several changes to our overdraft program in the third
quarter of this year. These changes are expected to reduce the
total burden of overdrafts to our customers by approximately
30%."
"As a bank, we're in a far different place than we were a year
ago," Harmening continued. "We're well-positioned to deliver
expanding margins, positive operating leverage and enhanced value
to all of our stakeholders as we move through 2022."
First Quarter 2022 Highlights (all
comparisons to the fourth quarter of 2021)
- Average loans were up $302
million to $24.1 billion
- Excluding PPP, average Commercial & Business Lending loans
were up $177 million to $9.0 billion
- Average deposits were up $245
million to $28.6 billion
- Quarterly net interest margin was up two basis points to
2.42%
- Net interest income was up $1
million to $188 million
- Noninterest income was down $7
million to $74 million
- Noninterest expense was down $9
million to $173 million
- Provision for credit losses was negative $4 million compared to negative $6 million
- Net income available to common equity was down $3 million to $71
million
Loans
First quarter 2022 average total loans of $24.1 billion were up 1%, or $302 million from the prior quarter and were down
1%, or $366 million from the same
period last year. Excluding PPP, average total loans of
$24.1 billion were up 2%, or
$374 million from the prior quarter
and were up 2%, or $397 million from
the same period last year. With respect to first quarter 2022
average balances by loan category:
- Commercial and business lending (excluding PPP) increased
$177 million from the prior quarter
and increased $481 million compared
to the same period last year to $9.0
billion.
- Commercial real estate lending increased $43 million from the prior quarter and increased
$6 million from the same period last
year to $6.2 billion.
- Consumer lending was $8.9
billion, up $154 million from
the prior quarter and down $90
million from the same period last year.
- PPP loans decreased $71 million
from the prior quarter and decreased $763
million from the same period last year to $44 million.
First quarter 2022 period-end total loans of $24.5 billion were up 1%, or $307 million from the prior quarter and were up
2%, or $370 million from the same
period last year. Excluding PPP, period-end total loans of
$24.5 billion were up 1%, or
$355 million from the prior quarter
and were up 5%, or $1.2 billion from
the same period last year. With respect to first quarter 2022
period-end balances by loan category:
- Commercial and business lending (excluding PPP) decreased
$51 million from the prior quarter
and increased $759 million from the
same period last year to $9.3
billion.
- Commercial real estate lending increased $36 million from the prior quarter and increased
$86 million from the same period last
year to $6.2 billion.
- Consumer lending was $9.0
billion, up $370 million from
the prior quarter and up $343 million
from the same period last year.
- PPP loans decreased $48 million
from the prior quarter and decreased $819
million from the same period last year to $18 million.
In 2022, we expect full-year auto finance loan growth of over
$1.2 billion and total commercial
loan growth of $750 million to
$1 billion.
Deposits
First quarter 2022 average deposits of $28.6 billion were up 1%, or $245 million compared to the prior quarter and
were up 7%, or $1.8 billion from the
same period last year. With respect to first quarter 2022 average
balances by deposit category:
- Noninterest-bearing demand deposits decreased $100 million from the prior quarter and increased
$650 million from the same period
last year to $8.3 billion.
- Savings increased $163 million
from the prior quarter and increased $720
million from the same period last year to $4.5 billion.
- Interest-bearing demand deposits increased $216 million from the prior quarter and increased
$1.0 billion from the same period
last year to $6.7 billion.
- Money market deposits increased $138
million from the prior quarter and increased $155 million from the same period last year to
$7.0 billion.
- Time deposits decreased $68
million from the prior quarter and decreased $345 million from the same period last year to
$1.3 billion.
- Network transaction deposits decreased $103 million from the prior quarter and decreased
$345 million from the same period
last year to $735 million.
First quarter 2022 period-end deposits of $28.4 billion were down $61 million compared to the prior quarter and
were up 3%, or $728 million from the
same period last year. Low-cost core deposits (interest-bearing
demand, noninterest-bearing demand and savings) made up 68% of
deposit balances as of March 31,
2022. With respect to first quarter 2022 period-end balances
by deposit category:
- Noninterest-bearing demand deposits decreased $188 million from the prior quarter and decreased
$180 million from the same period
last year to $8.3 billion.
- Savings increased $251 million
from the prior quarter and increased $628
million from the same period last year to $4.7 billion.
- Interest-bearing demand deposits decreased $403 million from the prior quarter and increased
$868 million from the same period
last year to $6.6 billion.
- Money market deposits increased $338
million from the prior quarter and decreased $316 million from the same period last year to
$7.5 billion.
- Time deposits decreased $58
million from the prior quarter and decreased $272 million from the same period last year to
$1.3 billion.
- Network transaction deposits (included in money market and
interest-bearing deposits) decreased $4
million from the prior quarter and decreased $292 million from the same period last year to
$763 million.
Net Interest Income and Net
Interest Margin
First quarter 2022 net interest income of $188 million was up 1%, or $1 million from the prior quarter and the net
interest margin increased 2 basis points from the prior quarter to
2.42%. Compared to the same period last year, net
interest income increased 7%, or $12
million, and the net interest margin increased 3 basis
points.
- The average yield on total loans for the first quarter of 2022
decreased 5 basis points from the prior quarter and decreased 7
basis points from the same period last year to 2.81%.
- The average cost of total interest-bearing liabilities for the
first quarter of 2022 decreased 1 basis point from the prior
quarter and decreased 14 basis points from the same period last
year to 0.26%.
- The net free funds benefit for the first quarter of 2022
remained flat to the prior quarter and decreased 4 basis points
compared to the same period last year to 0.08%.
We now expect short-term interest rates to rise following each
of this year's Federal Open Market Committee meetings. Assuming
rate increases of 25 basis points or more following each meeting,
we now expect our 2022 net interest income to exceed $840 million.
Noninterest Income
First quarter 2022 total noninterest income of $74 million decreased $7
million from the prior quarter and decreased $21 million from the same period last year. With
respect to first quarter 2022 noninterest income line items:
- Mortgage Banking, net was $8
million for the first quarter, up slightly from the prior
quarter. Relative to the prior-year period, Mortgage Banking was
down $16 million, driven by slowing
refinance activity and higher retention of mortgages on our balance
sheet.
- Service charges and deposit account fees decreased slightly
from the prior quarter and increased $2
million from the same period last year.
- Card-based fees decreased $1
million from the prior quarter and increased slightly from
the same period last year.
- Capital markets fees decreased $1
million from the prior quarter and increased $1 million from the same period last year.
Guided by customer feedback, we announced today that we are
making several customer-friendly changes to our overdraft program
in the third quarter of 2022. The planned changes are expected to
reduce service charges and deposit account fees by approximately
$3 million in 2022. Additional
details can be found in the press release available at
investor.associatedbank.com.
Given our revised outlook for higher rates in 2022, we are also
modifying our noninterest income guidance. We are now expecting
less mortgage banking income and lower service charge revenues for
both commercial and consumer customers over the back half of the
year. We now expect total noninterest income for the year of
between $290 million and $300 million.
Noninterest Expense
First quarter 2022 total noninterest expense of $173 million decreased $9
million from the prior quarter and decreased $2 million compared to the same period last year.
With respect to first quarter 2022 noninterest expense line
items:
- Personnel expense decreased $3
million from the prior quarter and increased $1 million from the same period last
year.
- Other expense decreased $7
million from the prior quarter and decreased $2 million from the same period last year,
primarily driven by a reduction in pension, donation and other
expenses.
We expect total noninterest expense of approximately
$725 million to $740 million for 2022.
Taxes
The first quarter 2022 tax expense was $19 million compared to $15 million of tax expense in the prior quarter
and $25 million of tax expense
in the same period last year. The effective tax rate for first
quarter of 2022 was 20.1% compared to an effective tax rate of
16.5% in the prior quarter.
We expect the annual 2022 tax rate to be between 19% and 21%,
assuming no change in the statutory corporate tax rate.
Credit
The first quarter 2022 provision for credit losses was negative
$4 million, compared to a negative
provision of $6 million in the prior
quarter and a negative provision of $23
million in the same period last year. With respect to first
quarter 2022 credit quality:
- Total accruing loans 30-89 days past due of $13 million were down $3
million from the prior quarter and down $2 million from the same period last year.
- Nonaccrual loans of $143 million
were up $13 million from the prior
quarter and down $20 million from the
same period last year. The nonaccrual loans to total loans ratio
was 0.58% in the first quarter, up from 0.54% in the prior quarter
and down from 0.68% in the same period last year.
- First quarter net recoveries of $2
million compared to net charge offs of $6 million in the prior quarter and net charge
offs of $5 million in the same period
last year.
- The allowance for credit losses on loans (ACLL) of $318 million was down $2
million from the prior quarter and down $86 million compared to the same period last
year. The ACLL to total loans ratio was 1.30% in the first quarter,
down from 1.32% in the prior quarter and down from 1.67% in the
same period last year.
Throughout the remainder of 2022, we expect to adjust provision
to reflect changes to risk grades, economic conditions, other
indications of credit quality, and loan volume.
Capital
The Company's capital position remains strong, with a CET1
capital ratio of 10.2% at March 31,
2022. 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 2022 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 21, 2022.
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 2022 earnings call.
The first quarter 2022 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
$35 billion and is Wisconsin's largest bank holding
company. 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