8-K: Associated Banc-Corp Announces Second Quarter 2024 Earnings, Reports $0.74 EPS

Associated Banc-Corp reported second quarter 2024 earnings of $0.74 per common share, or $0.52 per share excluding a one-time tax benefit.

Summary

• Associated Banc-Corp announced net income available to common equity of $113 million, or $0.74 per common share, for the quarter ended June 30, 2024.
• Excluding a one-time tax benefit, earnings were $80 million, or $0.52 per common share.
• This compares to earnings of $78 million, or $0.52 per common share, for the quarter ended March 31, 2024, and $84 million, or $0.56 per common share, for the quarter ended June 30, 2023.
• The company experienced total quarterly average loan growth of $211 million, but a decrease in total quarterly average core customer deposits of $240 million.
• Net interest income was $257 million, with a net interest margin of 2.75%.
• Noninterest income totaled $65 million, while noninterest expense was $196 million.
• The provision for credit losses was $23 million, and the allowance for credit losses on loans to total loans ratio was 1.32%.

Sentiment

Score: 6

Explanation: The sentiment is moderately positive due to strong earnings and strategic progress, but tempered by lowered guidance and deposit outflows.

Positives

• The company achieved strong financial results during the quarter through steady revenues, credit stability, and capital accretion.
• Associated Banc-Corp reported the strongest consumer checking household growth in over a decade.
• The company has industry-leading customer satisfaction scores.
• The company's capital position remains strong, with a CET1 capital ratio of 9.68%.

Negatives

• Total quarterly average core customer deposits decreased by $240 million compared to the first quarter of 2024.
• Total quarterly average deposit decreased by $638 million compared to the first quarter of 2024.
• The net interest margin decreased to 2.75%, reflecting a 4 basis point decrease from the prior quarter.
• The company now expects 2024 total loan growth to finish at the lower end of its previous 4% to 6% range.
• The company now expects 2024 core customer deposit growth to finish at the lower end of its previous 3% to 5% range.

Risks

• Macro uncertainty remains a concern in the near-term.
• The company is experiencing funding cost pressure.
• There is ongoing competition in the marketplace for deposits.
• The company has revised its outlook for loan and deposit growth to the lower end of previous ranges.

Future Outlook

The company expects 2024 total loan growth and core customer deposit growth to finish at the lower end of their previous ranges. Total net interest income growth is expected to be 1% to 3% in 2024. Total noninterest income is expected to finish within a range of negative 1% to 1% growth in 2024. Total noninterest expense is expected to grow by 2% to 3% in 2024. The annual effective tax rate is expected to be between 19% and 21% in 2024.

Management Comments

• President and CEO Andy Harmening stated that the company continued to build momentum by adding talent and deploying product and digital enhancements.
• He also noted encouraging trends in several foundational performance measures, including industry-leading customer satisfaction scores and the strongest consumer checking household growth in over a decade.
• Harmening mentioned that the company delivered strong financial results through steady revenues, credit stability, and capital accretion.
• He stated that while macro uncertainty remains top of mind, the company feels well-positioned moving to the back half of the year.

Industry Context

The announcement reflects the challenges and opportunities faced by regional banks in the current economic environment, including managing deposit flows, maintaining net interest margins, and navigating credit risks. The company's focus on strategic initiatives and talent acquisition aligns with industry trends towards digital transformation and customer-centric approaches.

Comparison to Industry Standards

• The company's net interest margin of 2.75% is within the range of other regional banks, but the decrease from the prior quarter indicates some pressure on profitability.
• The loan growth of $211 million is a positive sign, but the decrease in core customer deposits of $240 million is a concern, as many banks are facing similar deposit pressures.
• The CET1 capital ratio of 9.68% is above regulatory benchmarks, indicating a strong capital position compared to industry standards.
• The company's focus on digital enhancements and customer satisfaction aligns with industry best practices, but the revised outlook for loan and deposit growth suggests some challenges in execution.

Stakeholder Impact

• Shareholders will be impacted by the earnings results and revised outlook.
• Employees will be impacted by the company's strategic initiatives and talent acquisition efforts.
• Customers will benefit from the company's product and digital enhancements.
• Creditors will be impacted by the company's capital position and credit quality.

Next Steps

• The company will continue to execute its strategic plan.
• The company will focus on attracting and deepening customer relationships to decrease reliance on wholesale and network funding sources.
• The company will continue to invest in strategic initiatives.

Key Dates

Keywords

earnings, net income, loan growth, deposit growth, net interest income, net interest margin, credit losses, capital ratio, financial results, banking