Results driven by strong loan and deposit
growth, expanding margins and stable credit
GREEN
BAY, Wis., Oct. 20, 2022 /PRNewswire/ -- Associated
Banc-Corp (NYSE: ASB) ("Associated" or "Company") today reported
net income available to common equity ("earnings") of $93 million, or $0.62 per common share, for the quarter ended
September 30, 2022. These amounts
compare to earnings of $84 million, or $0.56 per common share, for the quarter ended
June 30, 2022 and earnings of
$85 million, or $0.56 per common
share, for the quarter ended September 30,
2021.
"Our third quarter results were a reflection of both the
strength and resilience we continue to see in our markets and our
ongoing efforts to deepen relationships and deliver capabilities
through our strategic initiatives," said President and CEO
Andy Harmening. "Within our
footprint, unemployment remains low, the consumer remains healthy,
and our commercial customers continue to seek opportunities amid an
uncertain macro environment. With these trends as a backdrop, our
initiatives helped bring in more than $1
billion in high-quality loans and $600 million in deposits during the quarter. This
growth was supported by substantial margin expansion and stable
credit trends. All of which combined to drive enhanced
profitability and a return on average tangible common
equity1 north of 14%."
"While we continue to keep a close eye on the current economic
environment, we've been working to de-risk our balance sheet for
over a decade," Harmening continued. "Our relentless focus on
credit quality and the diversifying benefits of our strategic plan
put us in a position to deliver enhanced value to our stakeholders
over the remainder of 2022 and beyond."
Third Quarter 2022 Highlights (all
comparisons to the second quarter of 2022)
- End of period total commercial loans were up $720 million to $17.5
billion
- End of period total consumer loans were up $602 million to $10.3
billion
- End of period total deposits were up $622 million to $29.2
billion
- Quarterly net interest margin was up 42 basis points to
3.13%
- Noninterest income was down $5
million to $71 million
- Noninterest expense was up $14
million to $196 million,
including an incremental $6 million
contribution to our charitable foundation vs. the prior
quarter
- Provision for credit losses on loans was $17 million, compared to a provision of zero in
the prior quarter
- Net income available to common equity was up $9 million to $93
million
Loans
Third quarter 2022 average total loans of $27.1 billion were up 7%, or $1.7 billion, from the prior quarter and were up
13%, or $3.2 billion, from the same
period last year. With respect to third quarter 2022 average
balances by loan category:
- Commercial and business lending (excluding PPP) increased
$597 million from the prior quarter
and increased $1.5 billion compared
to the same period last year to $10.2
billion.
- Commercial real estate lending increased $405 million from the prior quarter and increased
$608 million from the same period
last year to $6.8 billion.
- Consumer lending was $10.1
billion, up $665 million from
the prior quarter and up $1.4 billion
from the same period last year.
- PPP loans decreased $9 million
from the prior quarter and decreased $271
million from the same period last year to $5 million.
Third quarter 2022 period-end total loans of $27.8 billion were up 5%, or $1.3 billion, from the prior quarter and were up
18%, or $4.2 billion, from the same
period last year. With respect to third quarter 2022 period-end
balances by loan category:
- Commercial and business lending (excluding PPP) increased
$395 million from the prior quarter
and increased $1.8 billion from the
same period last year to $10.6
billion.
- Commercial real estate lending increased $334 million from the prior quarter and increased
$768 million from the same period
last year to $6.9 billion.
- Consumer lending was $10.3
billion, up $602 million from
the prior quarter and up $1.8 billion
from the same period last year.
- PPP loans decreased $8 million
from the prior quarter and decreased $181
million from the same period last year to $1 million.
Deposits
Third quarter 2022 average deposits of $28.9 billion were up 2%, or $704 million, compared to the prior quarter and
were up 3%, or $800 million, from the
same period last year. With respect to third quarter 2022 average
balances by deposit category:
- Noninterest-bearing demand deposits decreased $14 million from the prior quarter and decreased
$22 million from the same period last
year to $8.1 billion.
- Savings increased $53 million
from the prior quarter and increased $487
million from the same period last year to $4.7 billion.
- Interest-bearing demand deposits increased $174 million from the prior quarter and increased
$243 million from the same period
last year to $6.6 billion.
- Money market deposits increased $418
million from the prior quarter and increased $317 million from the same period last year to
$7.3 billion.
- Time deposits decreased $24
million from the prior quarter and decreased $204 million from the same period last year to
$1.2 billion.
- Network transaction deposits increased $98 million from the prior quarter and decreased
$21 million from the same period last
year to $873 million.
Third quarter 2022 period-end deposits of $29.2 billion were up 2%, or $622 million, compared to the prior quarter and
were up 5%, or $1.3 billion, from the
same period last year. With respect to third quarter 2022
period-end balances by deposit category:
- Noninterest-bearing demand deposits increased $139 million from the prior quarter and increased
$54 million from the same period last
year to $8.2 billion.
- Savings increased $1 million from
the prior quarter and increased $430
million from the same period last year to $4.7 billion.
- Interest-bearing demand deposits increased $332 million from the prior quarter and increased
$714 million from the same period
last year to $7.1 billion.
- Money market deposits increased $140
million from the prior quarter and increased $325 million from the same period last year to
$7.9 billion.
- Time deposits increased $10
million from the prior quarter and decreased $177 million from the same period last year to
$1.2 billion.
- Network transaction deposits (included in money market and
interest-bearing deposits) decreased $28
million from the prior quarter and decreased $65 million from the same period last year to
$864 million.
Net Interest Income and Net
Interest Margin
Third quarter 2022 net interest income of $264 million increased $48
million, or 22%, from the prior quarter and increased
$81 million, or 44%, from the same
period last year. The net interest margin increased to 3.13%,
reflecting a 42 basis point improvement from the prior quarter
and a 75 basis point increase from the same period last
year.
- The average yield on total loans for the third quarter of 2022
increased 90 basis points from the prior quarter and increased 114
basis points from the same period last year to 4.06%.
- The average cost of total interest-bearing liabilities for the
third quarter of 2022 increased 45 basis points from the prior
quarter and increased 51 basis points from the same period last
year to 0.81%.
- The net free funds benefit for the third quarter of 2022
increased 12 basis points from the prior quarter and increased 13
basis points compared to the same period last year to 0.22%.
We now expect short-term interest rates to rise by 75 basis
points following the Federal Open Market Committee (FOMC) meeting
in November and expect a 50 basis point increase following the
FOMC's December meeting. Based on these assumptions, we now expect
our 2022 net interest income to exceed $935
million.
Noninterest Income
Third quarter 2022 total noninterest income of $71 million decreased $5
million, or 6%, from the prior quarter and decreased
$11 million, or 14%, from the same
period last year. With respect to third quarter 2022 noninterest
income line items:
- Mortgage Banking, net was $2
million for the third quarter, down $4 million from the prior quarter and down
$9 million from the same period last
year, driven by slowing refinance activity and higher retention of
mortgages on our balance sheet.
- Service charges and deposit account fees decreased $1 million from the prior quarter and decreased
$2 million from the same period last
year.
- Wealth management fees decreased $1
million from the prior quarter and decreased $2 million from the same period last year.
- Investment securities gains (losses) increased $6 million from the prior quarter and increased
$6 million from the same period last
year.
Noninterest Expense
Third quarter 2022 total noninterest expense of $196 million increased $14
million, or 8%, from the prior quarter and increased
$18 million, or 10%, from the same
period last year as we continued to invest in people and
technology. Our third quarter noninterest expense also included an
incremental $6 million expense for a
contribution to our charitable foundation. With respect to other
third quarter 2022 noninterest expense line items:
- Personnel expense increased $6
million from the prior quarter and increased $10 million from the same period last year.
- Technology expense increased $1
million from the prior quarter and increased $3 million from the same period last year.
- Occupancy expense decreased slightly from the prior quarter and
decreased $2 million from the same
period last year.
We now expect total noninterest expense of approximately
$740 million to $750 million for 2022.
Taxes
The third quarter 2022 tax expense was $26 million compared to $23 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 third quarter
2022 was 21.4% compared to an effective tax rate of 21.2% in the
prior quarter and an effective tax rate of 20.6% in the same period
last year.
We continue to expect the 2022 effective tax rate to be
approximately 21%, assuming no change in the statutory corporate
tax rate.
Credit
The third quarter 2022 provision for credit losses on loans was
$17 million, compared to a provision of zero in the prior
quarter and a negative provision of $24
million in the same period last year. Provision build in the
third quarter was largely a function of increased loan volume. With
respect to third quarter 2022 credit quality:
- Nonaccrual loans of $116 million
were up $8 million from the prior
quarter and down $19 million from the
same period last year. The nonaccrual loans to total loans ratio
was 0.42% in the third quarter, up from 0.41% in the prior quarter
and down from 0.57% in the same period last year.
- Third quarter net charge offs of $2
million were up compared to negligible net charge offs in
the prior quarter and were down compared to net charge offs of
$8 million in the same period last
year.
- The allowance for credit losses on loans (ACLL) of $333 million was up $15
million compared to the prior quarter and flat compared to
the same period last year. The ACLL to total loans ratio was 1.20%
in the third quarter, flat compared to the prior quarter and down
from 1.41% in the same period last year.
Going forward, we expect any provision adjustments 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 9.4% at September 30,
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.
Based on current market dynamics, we now expect our TCE ratio to
land within a range of 7.00% to 7.25% at year-end.
THIRD 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, October 20, 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 third quarter 2022 earnings call.
The third 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
$38 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
View original
content:https://www.prnewswire.com/news-releases/associated-banc-corp-reports-third-quarter-2022-net-income-available-to-common-equity-of-93-million-or-0-62-per-common-share-301655460.html
SOURCE Associated Banc-Corp