GREEN
BAY, Wis., Jan. 26, 2023 /PRNewswire/
-- Associated Banc-Corp (NYSE: ASB) ("Associated" or
"Company") today reported net income available to common equity
("earnings") of $106 million, or
$0.70 per common share, for the
quarter ended December 31, 2022.
These amounts compare to earnings of $74
million, or $0.49 per common
share for the quarter ended December 31,
2021 and earnings of $93
million, or $0.62 per common
share for the quarter ended September 30,
2022. For the year ended December 31,
2022, the Company reported earnings of $355 million, or
$2.34 per common share. These amounts
compare to earnings of $334 million, or $2.18 per common share, for the year ended
December 31, 2021.
"This quarter served as a fitting exclamation point for the most
profitable year in our company's 162-year history," said President
and CEO Andy Harmening. "By
listening to our customers and empowering our colleagues, we've
enhanced engagement, deepened relationships, and delivered more
meaningful solutions to the communities we serve. This momentum has
enabled us to add nearly $4.6 billion
in high-quality loan balances over the course of the year, expand
margins, drive operating leverage into the double-digits, and
enhance our profitability profile. Importantly, we've achieved all
of this without abandoning our foundational discipline on expenses
and credit quality."
"While we're proud of what we've accomplished so far, we feel
like we're just getting started," Harmening continued. "As we shift
to 2023, we're closely monitoring the economic environment, but
continue to feel well-positioned thanks to the diversifying
benefits of our strategic plan and our decade-long effort to
de-risk our balance sheet. We've laid the groundwork to create a
stronger Associated Bank for years to come."
2022 SUMMARY (all comparisons to 2021)
- End of period total commercial loans were up $2.4 billion to $18.0
billion
- End of period total consumer loans were up $2.2 billion to $10.8
billion
- End of period total deposits were up $1.2 billion to $29.6
billion
- Net interest income was up $231
million to $957 million
- Noninterest income was down $50
million to $282 million
- Noninterest expense was up $37
million to $747 million
- Provision for credit losses was $33
million, compared to a negative provision of $88 million in 2021
- Net income available to common equity was up $21 million to $355
million
- Earnings per common share increased $0.16 to $2.34
Loans
Fourth quarter 2022 period-end total loans of $28.8 billion were up 4%, or $982 million, from the prior quarter and were up
19%, or $4.6 billion from the same
period last year. With respect to fourth quarter 2022 period-end
balances by loan category:
- Commercial and business lending increased $179 million from the prior quarter and increased
$1.3 billion from the same period
last year to $10.8 billion.
- Commercial real estate lending increased $336 million from the prior quarter and increased
$1.0 billion from the same period
last year to $7.2 billion.
- Consumer lending increased $467
million from the prior quarter and increased $2.2 billion from the same period last year to
$10.8 billion.
Fourth quarter 2022 average total loans of $28.2 billion were up 4%, or $1.1 billion, from the prior quarter and were up
18%, or $4.4 billion, from the same
period last year. With respect to fourth quarter 2022 average
balances by loan category:
- Commercial and business lending increased $338 million from the prior quarter and increased
$1.6 billion compared to the same
period last year to $10.5
billion.
- Commercial real estate lending increased $294 million from the prior quarter and increased
$928 million from the same period
last year to $7.1 billion.
- Consumer lending increased $508
million from the prior quarter and increased $1.9 billion from the same period last year to
$10.6 billion.
Full year 2022 average loans of $26.2
billion were up 9%, or $2.1
billion, from 2021. With respect to full year 2022 average
balances by loan category:
- Commercial and business lending increased $748 million to $9.9
billion.
- Commercial real estate lending increased $439 million to $6.6
billion.
- Consumer lending increased $955
million to $9.8 billion.
In 2023, we expect total loan growth of 7% to 9% on an end of
period basis as compared to the year ended December 31, 2022.
Deposits
Fourth quarter 2022 period-end deposits of $29.6 billion were up 1%, or $438 million, from the prior quarter and were up
4%, or $1.2 billion from the same
period last year. With respect to fourth quarter 2022 period-end
balances by deposit category:
- Noninterest-bearing demand deposits decreased $464 million from the prior quarter and decreased
$743 million from the same period
last year to $7.8 billion.
- Savings decreased $104 million
from the prior quarter and increased $195
million from the same period last year to $4.6 billion.
- Interest-bearing demand deposits decreased $21 million from the prior quarter and increased
$81 million from the same period last
year to $7.1 billion.
- Money market deposits increased $330
million from the prior quarter and increased $1.1 billion from the same period last year to
$8.2 billion.
- Total time deposits increased $696
million from the prior quarter and increased $583 million from the same period last year to
$1.9 billion.
- Network transaction deposits (included in money market and
interest-bearing deposits) increased $115
million from the prior quarter and increased $212 million from the same period last year to
$979 million.
Fourth quarter 2022 average deposits of $29.3 billion were up 2%, or $453 million, from the prior quarter and were up
3%, or $925 million from the same
period last year. With respect to fourth quarter 2022 average
balances by deposit category:
- Noninterest-bearing demand deposits decreased $31 million from the prior quarter and decreased
$328 million from the same period
last year to $8.1 billion.
- Savings decreased $75 million
from the prior quarter and increased $293
million from the same period last year to $4.7 billion.
- Interest-bearing demand deposits increased $244 million from the prior quarter and increased
$325 million from the same period
last year to $6.8 billion.
- Money market deposits increased $55
million from the prior quarter and increased $490 million from the same period last year to
$7.4 billion.
- Total time deposits increased $232
million from the prior quarter and increased $82 million from the same period last year to
$1.5 billion.
- Network transaction deposits increased $28 million from the prior quarter and increased
$63 million from the same period last
year to $901 million.
Full year 2022 average deposits of $28.8
billion were up 4%, or $1.1
billion from 2021. With respect to full year 2022 average
balances by deposit category:
- Noninterest-bearing demand deposits increased $88 million to $8.2
billion.
- Savings increased $514 million to
$4.7 billion.
- Interest-bearing demand deposits increased $525 million to $6.6
billion.
- Money market deposits increased $224
million to $7.2 billion.
- Network transaction deposits decreased $108 million to $822
million.
- Time deposits decreased $179
million to $1.3 billion.
Net Interest Income and Net Interest Margin
Full year 2022 net interest income of $957 million was up 32%, or $231 million, from 2021. Net interest margin of
2.91% was up 52 basis points from the prior year. The
increases in net interest income and margin were driven by the
execution of our strategic initiatives and rising interest rates
during 2022.
- The average yield on total earning assets increased 85 basis
points from the prior year to 3.47%.
- The average cost of interest-bearing liabilities increased 45
basis points from the prior year to 0.78%.
- The net free funds benefit increased 12 basis points from the
prior year to 0.22%.
Fourth quarter 2022 net interest income of $289 million was
up 9%, or $25 million, from the prior
quarter. Net interest margin of 3.31% was up 18 basis points from
the prior quarter. Compared to the same period last year, net
interest income increased 55%, or $102
million, and the net interest margin increased 91 basis
points.
- The average yield on total earning assets for the fourth
quarter of 2022 increased 74 basis points from the prior quarter
and increased 187 basis points from the same period last year to
4.46%.
- The average cost of total interest-bearing liabilities for the
fourth quarter of 2022 increased 77 basis points from the prior
quarter and increased 131 basis points from the same period last
year to 1.58%.
- The net free funds benefit for the fourth quarter of 2022
increased 21 basis points from the prior quarter and increased 35
basis points from the same period last year to 0.43%.
We expect total net interest income growth of 15% to 17% in
2023.
Noninterest Income
Full year 2022 noninterest income of $282 million decreased
$50 million from the prior year. The decrease was largely
influenced by market-driven decreases in mortgage banking income
and wealth management fees, customer-friendly changes to our
overdraft program, and asset gains recognized during 2021. With
respect to 2022 noninterest income line items:
- Mortgage Banking, net decreased $32
million from the prior year, driven by slowing refinance
activity and higher retention of mortgages on our balance
sheet.
- Asset gains (losses), net decreased $10
million from the prior year, driven primarily by gains on
private equity investments in 2021.
- Wealth management fees decreased $6
million from the prior year, driven by lower market
valuations.
- Service charges and deposit account fees decreased $2 million from the prior year. Guided by
customer feedback, we announced several customer-friendly changes
to our overdraft program in the third quarter of 2022.
Fourth quarter 2022 total noninterest income of $62 million decreased $9
million from the prior quarter and decreased $20 million from the same period last year. With
respect to fourth quarter 2022 noninterest income line items:
- Investment securities gains (losses) decreased $8 million from the prior quarter and decreased
$2 million from the same period last
year.
- Capital markets fees decreased $2
million from the prior quarter and decreased $4 million from the same period last year.
- Mortgage Banking, net was $2
million for the fourth quarter, flat to the prior quarter
and down $6 million from the same
period last year, driven by slowing refinance activity and higher
retention of mortgages on our balance sheet.
We expect total noninterest income to compress by 6% to 8% in
2023.
Noninterest Expense
Full year 2022 noninterest expense of $747 million increased 5%, or $37 million, from the prior year as we continued
to invest in people and technology. With respect to full year 2022
noninterest expense line items:
- Personnel expense increased $27
million from the prior year, largely driven by higher
incentive compensation and additional hiring tied to our strategic
initiatives.
- Technology expense increased $9
million from the prior year, driven by digital investments
tied to our strategic initiatives.
- Business development and advertising increased $4 million from the prior year as business
activity picked up throughout the year.
Fourth quarter 2022 total noninterest expense of $197 million increased $1
million from the prior quarter and increased $14 million from the same period last year. With
respect to fourth quarter 2022 noninterest expense line items:
- Personnel expense was flat to the prior quarter and increased
$11 million from the same period last
year.
- Technology expense increased $3
million from the prior quarter and increased $5 million from the same period last year.
- Occupancy expense increased $2
million from the prior quarter and decreased $1 million from the same period last year.
We expect noninterest expense to grow by 4% to 6% in 2023.
Taxes
The fourth quarter 2022 tax expense was $25 million compared to $26 million of tax expense in the prior quarter
and $15 million of tax expense in the
same period last year. The effective tax rate for fourth quarter
2022 was 18.9% compared to an effective tax rate of 21.4% in the
prior quarter and an effective tax rate of 16.5% in the same period
last year. The lower effective tax rate in fourth quarter 2021 was
due in part to an increase in tax-exempt interest and benefits from
bank and corporate owned life insurance.
In 2023, we expect the annual effective tax rate to be between
20% and 21%, assuming no change in the corporate tax rate.
Credit
Full year 2022 provision for credit losses was $33 million,
compared to a negative provision of $88 million in the prior
year. The increase in provision in 2022 was primarily driven by
loan growth related to our strategic initiatives.
The fourth quarter 2022 provision for credit losses was
$20 million, compared to a provision
of $17 million in the prior quarter
and a negative provision of $6 million in the same period last
year. With respect to fourth quarter 2022 credit quality:
- Nonaccrual loans of $111 million
were down $5 million, or 4%, from the
prior quarter and down $19 million,
or 15%, from the same period last year. The nonaccrual loans to
total loans ratio was 0.39% in the fourth quarter, down from 0.42%
in the prior quarter and down from 0.54% in the same period last
year.
- Net charge offs of $1 million
were down $1 million, or 37%, from
the prior quarter and down $5
million, or 82%, from the same period last year.
- The allowance for credit losses on loans (ACLL) of $351 million was up $19
million from the prior quarter and up $32 million from the same period last year. The
ACLL to total loans ratio was 1.22% in the fourth quarter, up from
1.20% in the prior quarter and down from 1.32% 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 9.35% at December 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.
FOURTH 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, January 26, 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 fourth quarter 2022 earnings call.
The fourth 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
$39 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