GREEN BAY, Wis., Jan. 20, 2022 /PRNewswire/ -- Associated Banc-Corp (NYSE: ASB) ("Associated" or "Company") today reported net income available to common equity ("earnings") of $74 million, or $0.49 per common share, for the quarter ended December 31, 2021. These amounts compare to earnings of $62 million, or $0.40 per common share for the quarter ended December 31, 2020 and earnings of $85 million, or $0.56 per common share for the quarter ended September 30, 2021. For the year ended December 31, 2021, the Company reported earnings of $334 million, or $2.18 per common share. These amounts compare to earnings of $288 million, or $1.86 per common share, for the year ended December 31, 2020.

"This quarter was marked by a resurgence in lending growth as commercial outstandings, line utilization, and our new initiatives all kicked into gear," said President and CEO Andy Harmening. "We were pleased to grow in most of our key loan and deposit verticals and took advantage of the positive economic backdrop to largely exit our remaining Oil & Gas exposure at minimal cost. We see 2022 as primed for a rebound in general commercial lending," he continued. "Alongside the balance sheet growth, we also enjoyed growing revenues, expanding margins, and further positive credit trends."

2021 SUMMARY (all comparisons to 2020)

• Full-year average loans of $24.1 billion were down 2%, or $480 million
• Full-year average deposits of $27.7 billion were up 6%, or $1.7 billion
• Net interest income of $726 million decreased 5%, or $37 million
• • Average cost of total interest-bearing deposits decreased 26 basis points to 0.09%
• Provision for credit losses was negative $88 million, compared to a provision of $174 million
• Noninterest income of $332 million decreased 35%, or $182 million
• • Fee-based revenues¹ increased 8%, or $15 million
• Noninterest expense of $710 million decreased 9%, or $66 million
• Net income available to common equity was up $45 million, to $334 million
• Earnings per common share increased $0.32, to $2.18
• Tangible book value per share was $17.87, up 7% from $16.67

The Company also announced today that Executive Vice President, CFO Christopher Del Moral-Niles will retire from Associated later this year. To ensure a seamless transition, Mr. Del Moral-Niles will continue in his role until a successor is in place. The Company has retained Diversified Search Group to assist in the search for a successor. Additional details can be found in the press release available at http://investor.associatedbank.com.

Loans

Fourth quarter 2021 period-end total loans of $24.2 billion were up approximately 3%, or $603 million from the prior quarter and were down 1%, or $227 million from the same period last year. Excluding PPP, period-end total loans of $24.2 billion were up over 3%, or $719 million from the prior quarter and were up 2%, or $475 million from the same period last year. With respect to fourth quarter 2021 period-end balances by loan category:

• Commercial and business lending (excluding PPP) increased $551 million from the prior quarter and increased $755 million from the same period last year to $9.4 billion.
• Commercial real estate lending increased $62 million from the prior quarter and increased $11 million from the same period last year to $6.2 billion.
• Consumer lending was $8.6 billion, up $107 million from the prior quarter and down $291 million from the same period last year.
• PPP loans decreased $116 million from the prior quarter and decreased $702 million from the same period last year to $66 million.

Fourth quarter 2021 average total loans of $23.8 billion were down $89 million from the prior quarter and were down 4%, or $887 million from the same period last year. Excluding PPP, average total loans of $23.7 billion were up $72 million from the prior quarter and were down $72 million from the same period last year. With respect to fourth quarter 2021 average balances by loan category:

• Commercial and business lending (excluding PPP) increased $133 million from the prior quarter and increased $328 million compared to the same period last year to $8.8 billion.
• Commercial real estate lending decreased $26 million from the prior quarter and decreased $24 million from the same period last year to $6.1 billion.
• Consumer lending was $8.7 billion, down $35 million from the prior quarter and down $376 million from the same period last year.
• PPP loans decreased $160 million from the prior quarter and decreased $815 million from the same period last year to $115 million.

Full-year 2021 average loans of $24.1 billion were down 2%, or $480 million from 2020. With respect to full-year 2021 average balances by loan category compared to 2020:

• Commercial and business lending (excluding PPP) decreased $77 million to $8.6 billion.
• Commercial real estate lending increased $345 million to $6.2 billion.
• Consumer lending decreased $519 million to $8.8 billion.
• PPP loans decreased $229 million to $472 million.

In 2022, we expect Auto Finance loan growth of more than $1.2 billion and Total Commercial loan growth of $750 million to $1 billion.

Deposits

Fourth quarter 2021 period-end deposits of $28.5 billion were up 2%, or $615 million compared to the prior quarter and were up 7%, or $2.0 billion from the same period last year. Low-cost core deposits (interest-bearing demand, noninterest-bearing demand and savings) made up 68% of deposit balances as of December 31, 2021. With respect to fourth quarter 2021 period-end balances by deposit category:

• Noninterest-bearing demand deposits increased $334 million from the prior quarter and increased $842 million from the same period last year to $8.5 billion.
• Savings increased $132 million from the prior quarter and increased $760 million from the same period last year to $4.4 billion.
• Interest-bearing demand deposits increased $612 million from the prior quarter and increased $929 million from the same period last year to $7.0 billion.
• Money market deposits decreased $399 million from the prior quarter and decreased $138 million from the same period last year to $7.2 billion.
• Time deposits decreased $64 million from the prior quarter and decreased $410 million from the same period last year to $1.3 billion.
• Network transaction deposits (included in money market and interest-bearing deposits) decreased $162 million from the prior quarter and decreased $430 million from the same period last year to $767 million.

Fourth quarter 2021 average deposits of $28.4 billion were up 1%, or $328 million compared to the prior quarter and were up 6%, or $1.7 billion from the same period last year. With respect to fourth quarter 2021 average balances by deposit category:

• Noninterest-bearing demand deposits increased $275 million from the prior quarter and increased $740 million from the same period last year to $8.4 billion.
• Savings increased $119 million from the prior quarter and increased $739 million from the same period last year to $4.4 billion.
• Interest-bearing demand deposits increased $162 million from the prior quarter and increased $766 million from the same period last year to $6.5 billion.
• Money market deposits decreased $118 million from the prior quarter and increased $353 million from the same period last year to $6.9 billion.
• Time deposits decreased $53 million from the prior quarter and decreased $507 million from the same period last year to $1.4 billion.
• Network transaction deposits decreased $56 million from the prior quarter and decreased $427 million from the same period last year to $838 million.

Full-year 2021 average deposits of $27.7 billion were up 6%, or $1.7 billion from 2020. With respect to full-year 2021 average balances by deposit category as compared to 2020:

• Noninterest-bearing demand deposits increased $1.2 billion to $8.1 billion.
• Savings increased $832 million to $4.1 billion.
• Interest-bearing demand deposits increased $531 million to $6.1 billion.
• Money market deposits increased $431 million to $6.9 billion.
• Network transaction deposits decreased $513 million to $930 million.
• Time deposits decreased $786 million to $1.5 billion.

Net Interest Income and Net Interest Margin

Full-year 2021 net interest income of $726 million was down 5%, or $37 million from 2020. Net interest margin of 2.39% was down 14 basis points from the prior year. The decreases in net interest income and margin were driven by continued low interest rates and significant increases in liquidity during 2021.

• The average yield on total earning assets decreased 39 basis points from the prior year to 2.62%.
• The average cost of interest-bearing liabilities decreased 32 basis points from the prior year to 0.33%.
• The net free funds benefit compressed 7 basis points from the prior year to 0.10%.

Fourth quarter 2021 net interest income of $187 million was up 2%, or $3 million from the prior quarter and the net interest margin increased 2 basis points from the prior quarter to 2.40%. Compared to the same period last year, net interest income decreased 1%, or $1 million, and the net interest margin decreased 9 basis points.

• The average yield on total earning assets for the fourth quarter of 2021 was flat to the prior quarter and decreased 21 basis points from the same period last year to 2.59%.
• The average cost of total interest-bearing liabilities for the fourth quarter of 2021 decreased 3 basis points from the prior quarter and decreased 16 basis points from the same period last year to 0.27%.
• The net free funds benefit for the fourth quarter of 2021 decreased 1 basis point from the prior quarter and decreased 4 basis points compared to the same period last year.

We expect total net interest income to exceed $800 million in 2022.

Noninterest Income

Full-year 2021 noninterest income of $332 million decreased $182 million from the prior year. The decrease was largely driven by $9 million in investment securities gains in 2020 as well as several non-routine items in 2020, including $163 million in asset gains tied to the sale of Associated Benefits and Risk Consulting (ABRC) and a $7 million gain on branch sales. The sale of ABRC in 2020 also drove a $45 million reduction in insurance revenues year-over-year. Excluding 2020 ABRC revenues and related gains, all other noninterest income increased 9%, or $27 million year-over-year.  With respect to 2021 noninterest income line items:

• Service charges and deposit account fees increased $8 million from the prior year primarily driven by increased customer activity in 2021 and fee waivers implemented during 2020 in response to the pandemic.
• Net mortgage banking income increased $5 million from the prior year, driven by a recovery of $16 million in 2021 as opposed to an impairment of $18 million in 2020, partially offset by lower gains on mortgages sold of $29 million.
• Wealth management fees increased $5 million from the prior year, driven by higher market valuations.
• Card-based fees increased $4 million from the prior year, driven by increased customer activity.

Fourth quarter 2021 total noninterest income of $82 million decreased $1 million from the prior quarter and decreased $4 million from the same period last year. With respect to fourth quarter 2021 noninterest income line items:

• Capital markets fees increased $3 million from the prior quarter and increased $4 million from the same period last year.
• Mortgage Banking, net was $8 million for the fourth quarter, down $3 million from the prior quarter and down $6 million from the same period last year, driven by slowing refinance activity.

We expect total noninterest income to exceed $300 million in 2022.

Noninterest Expense

Full-year 2021 noninterest expense of $710 million decreased 9%, or $66 million from the prior year. Included in 2020 noninterest expense figures is the loss on prepayments of FHLB advances of $45 million. With respect to full year 2021 noninterest expense line items:

• Personnel costs decreased $5 million from the prior year, largely driven by reduced headcount, partially offset by increased incentive plan expenses.
• Loan and foreclosure costs decreased $4 million from the prior year, driven by lower costs associated with resolving loans.
• Business development and advertising increased $3 million from the prior year as business activity resumed in 2021.

Fourth quarter 2021 total noninterest expense of $182 million increased $4 million from the prior quarter and increased $9 million compared to the same period last year. With respect to fourth quarter 2021 noninterest expense line items:

• Personnel expense was flat to the prior quarter and increased $10 million from the same period last year, driven by higher incentive compensation, added costs tied to our strategic initiatives, and the implementation of a minimum wage increase.
• Occupancy expense increased $1 million from both the prior quarter and the same period last year.
• Other expense increased $3 million from the prior quarter and increased $2 million from the same period last year.    

We expect 2022 noninterest expense to be approximately $725 million to $740 million.

Taxes

The fourth quarter 2021 tax expense was $15 million compared to $23 million of tax expense in the prior quarter and $17 million of tax expense in the same period last year. The effective tax rate for fourth quarter 2021 was 16.5% compared to an effective tax rate of 20.6% in the prior quarter and an effective tax rate of 20.1% 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 compared to the prior quarter and the same period last year.

We expect the annual 2022 tax rate to be between 19% to 21%, assuming no change in the corporate tax rate.

Credit

Full-year 2021 provision for credit losses was negative $88 million, compared to a provision of $174 million in the prior year.

The fourth quarter 2021 provision for credit losses was negative $6 million, compared to a negative provision of $24 million in the prior quarter and provision of $17 million in the same period last year. With respect to fourth quarter 2021 credit quality:

• Nonaccrual loans of $130 million were down $5 million, or 3%, from the prior quarter and down $80 million, or 38% from the same period last year. The nonaccrual loans to total loans ratio was 0.54% in the fourth quarter, down from 0.57% in the prior quarter and down from 0.86% in the same period last year.
• Net charge offs of $6 million were down $1 million, or 17%, from the prior quarter and down $21 million, or 76%, from the same period last year.
• The allowance for credit losses on loans (ACLL) of $320 million was down $12 million from the prior quarter and down $112 million compared to the same period last year. The ACLL to total loans ratio was 1.32% in the fourth quarter, down from 1.41% in the prior quarter and down from 1.76% in the same period last year.

In 2022, 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 10.3% at December 31, 2021. 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 2021 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 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 fourth quarter 2021 earnings call. The fourth quarter 2021 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 $35 billion and is Wisconsin's largest bank holding company. 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, and commercial financial services in Indiana, Michigan, Missouri, 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