Associated Banc-corp ((ASB)) has held its Q4 earnings call. Read on for the main highlights of the call.
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Associated Banc-Corp’s recent earnings call was marked by a sense of optimism as the company reported strong financial performance and outlined strategic growth initiatives. The discussion highlighted significant loan and deposit growth, as well as a proactive approach to repositioning the balance sheet, though these gains were partially tempered by nonrecurring losses and a rise in delinquencies. Despite these challenges, the overall sentiment conveyed by the management was positive, with a clear focus on future expansion and growth.
Strong Loan and Deposit Growth
In the fourth quarter of 2024, Associated Banc-Corp experienced significant growth in its loan and deposit segments. Adjusted loan growth surpassed $500 million, while core customer deposits increased by nearly $900 million, underscoring the company’s successful expansion efforts in these areas.
Significant Balance Sheet Repositioning
The company took decisive steps to enhance its financial structure by selling approximately $700 million in low-yielding mortgage loans and $1.3 billion in available-for-sale securities. This strategic repositioning aimed to optimize the balance sheet and improve overall financial health.
Positive Financial Performance
Despite encountering nonrecurring items, Associated Banc-Corp reported adjusted earnings per share of $0.57. This result highlights the resilience and robustness of its core businesses, which continue to perform strongly.
Increased Commercial and Business Lending
The commercial and business lending segments saw growth of over $300 million, contributing significantly to the overall loan expansion. This development reflects the company’s commitment to supporting business clients and expanding its lending portfolio.
Improvement in Nonaccrual Loans and Charge-offs
A notable decrease in nonaccrual loans, charge-offs, and provisions was observed compared to previous quarters and years, indicating an improvement in the company’s credit quality and risk management practices.
Nonrecurring Losses from Balance Sheet Repositioning
The balance sheet repositioning led to nonrecurring losses, with a $130 million loss from mortgage sales and a $148 million net loss on securities sales. These impacted the noninterest income but were part of strategic moves to strengthen the company’s financial position.
Increased Delinquencies
The company reported a $24 million increase in total bank-wide delinquencies from the previous quarter. This rise presents a challenge that Associated Banc-Corp will need to address moving forward.
Higher Noninterest Expenses
Noninterest expenses increased by $9 million from the third quarter, largely driven by accelerated hiring and strategic investments. These expenditures reflect the company’s focus on long-term growth and capacity building.
Forward-Looking Guidance
Associated Banc-Corp’s management provided an optimistic outlook for 2025, projecting total loan growth of 5% to 6% and core customer deposit growth of 4% to 5%. Additionally, net interest income is expected to grow between 12% and 13%, supported by a strategic balance sheet repositioning. The company plans to manage noninterest expense growth within 3% to 4% and anticipates maintaining a CET1 ratio of 10% to 10.5%. These forecasts suggest the company is well-positioned to capitalize on its strategic initiatives.
In conclusion, Associated Banc-Corp’s earnings call revealed strong financial performance and a positive outlook for the future. Key takeaways include robust loan and deposit growth, strategic balance sheet actions, and a focus on expanding core business operations. Despite challenges such as nonrecurring losses and increased delinquencies, the company remains optimistic about its growth trajectory heading into 2025.
