8-K: Associated Banc-Corp Announces First Quarter 2025 Investor Presentation, Outlines Growth Strategy

Associated Banc-Corp unveils its investor presentation for the first quarter of 2025, highlighting its growth strategy focused on positive operating leverage, disciplined credit and expense management, and improving returns through balance sheet optimization.

Summary

• Associated Banc-Corp (ASB) released its first quarter 2025 investor presentation on February 10, 2025.
• The presentation outlines the company's strategy, which focuses on strong positive operating leverage, growth with disciplined credit and expense management, and improving returns driven by balance sheet mix shift.
• ASB has assets of $43 billion, loans of $30 billion, equity of $5 billion, and deposits of $35 billion as of December 31, 2024.
• The company is the largest bank holding company based in Wisconsin, with origins dating back to 1861.
• Key initiatives include upgrading the value proposition through digital investments, driving high-quality household growth, expanding commercial presence, and improving profitability with relationship loan and deposit growth.
• ASB invested approximately $35 million in digital since 2022.
• The company aims to complete Phase 2 RM hiring by Q1 2025.
• Commercial & Industrial (C&I) loan growth is projected to be +$1.2 billion in FY 2025.
• The company grew Commercial & Business relationship managers by 44% from December 31, 2021, to December 31, 2024.
• Core customer deposits totaled $28.6 billion as of Q4 2024.
• The company is projecting total loan growth of 5% to 6% and total deposit growth of 1% to 2% for FY 2025.
• Core customer deposit growth is projected to be 4% to 5% for FY 2025.
• Net interest income is expected to increase by 12% to 13% in FY 2025.
• The effective tax rate is projected to be between 19% and 21% for FY 2025.
• The CET1 capital ratio is expected to be between 10% and 10.5% for FY 2025.

Sentiment

Score: 7

Explanation: The document presents a positive outlook with growth projections and strategic initiatives, but also acknowledges risks associated with forward-looking statements. The sentiment is moderately positive.

Positives

• The company is focused on improving its return profile through diversified asset classes and deepening customer relationships.
• ASB has successfully grown commercial and business lending loans by $2.3 billion from 12/31/2021 to 12/31/2024 (+24%).
• The company has launched a new Mass Affluent program, driving $1.5B in net new deposits since the program launch in December 2022.
• ASB is attracting and deepening deposit relationships to decrease reliance on wholesale funding.
• The company has seen a 42% increase in digital sales in 2024 vs 2021.
• Consumer checking household acquisition is up 18% vs 2023.
• Consumer checking household attrition is down 2% vs 2023.

Risks

• The document contains forward-looking statements that are subject to risks and uncertainties.
• Actual results may differ materially from those contained in the forward-looking statements due to factors identified in the company's SEC filings.

Future Outlook

Associated Banc-Corp provides FY 2025 guidance, projecting growth in total loans, total deposits, core customer deposits, and net interest income, with an effective tax rate between 19% and 21% and a CET1 capital ratio between 10% and 10.5%.

Management Comments

• Management plans, objectives, or goals for future operations, products or services are considered forward-looking statements.
• Management expects momentum from Phase 2 initiatives in 2024 to carry into 2025.

Industry Context

The presentation highlights ASB's efforts to modernize its digital banking experience and expand its commercial presence, aligning with broader industry trends of digital transformation and market share expansion among regional banks.

Comparison to Industry Standards

• ASB's focus on growing commercial and industrial loans aligns with strategies employed by regional banks like Fifth Third Bancorp and KeyCorp, which have also emphasized commercial lending growth.
• The investment in digital banking platforms mirrors moves by larger institutions like Bank of America and JPMorgan Chase, who are heavily investing in technology to enhance customer experience and drive efficiency.
• The emphasis on core customer deposit growth is a common theme among banks seeking to reduce reliance on wholesale funding, similar to strategies pursued by companies like U.S. Bancorp.
• ASB's CET1 ratio target of 10% to 10.5% is within the range of peer banks, indicating a focus on maintaining a strong capital position.

Stakeholder Impact

• Shareholders can expect improved profitability and returns through the company's strategic initiatives.
• Customers will benefit from upgraded digital banking experiences and enhanced product offerings.
• Employees will have opportunities for growth within the expanding commercial team.
• The company's focus on core customer deposits aims to strengthen its financial position, benefiting creditors.

Next Steps

• Complete Phase 2 RM hiring by 1Q 2025.
• Continue quarterly upgrades to products & services.
• Focus on growing diversified asset classes.
• Attract & deepen customer relationships to decrease reliance on wholesale & network funding sources.

Key Dates