Financial Data and Key Metrics Changes - The first-quarter earnings per share were $0.58, up 45% from the fourth quarter [8] - First-quarter net interest income was $176 million, down $12 million from the fourth quarter [16] - Nonaccrual loans decreased by 23% quarter-over-quarter, while net charge-offs fell to $5 million, down about 83% from the fourth quarter [9] - The tangible book value per share increased to $16.95 as of the end of the month [9] Business Line Data and Key Metrics Changes - Average first-quarter loans increased by $1.2 billion or 5% compared to the first quarter of 2020 [10] - Mortgage banking income increased by $9 million quarter-over-quarter, reflecting strong mortgage originations [19] - Noninterest income for the first quarter was $95 million, up over 11% from the fourth quarter [19] Market Data and Key Metrics Changes - Average deposits were up $2.5 billion or 10% over the first quarter of 2020 [14] - Low-cost deposits accounted for approximately 65% of total deposits at the end of the quarter [15] - Record levels of checking account deposit inflows were driven by additional government stimulus [8] Company Strategy and Development Direction - The company is expanding its consumer lending platform to include indirect auto lending, expecting to originate $200 million or more in 2021 [12][13] - The company aims to grow its indirect auto outstandings into a multibillion-dollar loan portfolio over time [13] - The management expressed optimism about loan growth in the latter part of the year, particularly in commercial real estate lending [11] Management Comments on Operating Environment and Future Outlook - Management noted a strengthening economy and improving credit dynamics across all portfolios [7] - The company expects full-year commercial loan growth of approximately 2% to 4%, excluding PPP loans [11] - Management anticipates that net interest margin will gradually expand over the course of the second through fourth quarters [16] Other Important Information - The company is revising its noninterest income guidance up by $30 million, now expecting between $310 million and $330 million for the year [21] - The allowance for loan losses was $404 million, down from $431 million in the prior quarter [24] - The company is targeting Common Equity Tier 1 ratio at or above 9.5% [25] Q&A Session Summary Question: What is the outlook for fee improvement for the remainder of the year? - Management expects mortgage banking to remain strong and anticipates significant loan demand in the back half of the year, contributing to fee income [30] Question: What is the credit box for the new auto lending product? - The company will operate in the higher credit quality area, focusing on prime and near-prime customers [34] Question: What is holding back from larger buybacks? - There is no specific barrier; future buybacks will be reviewed by the new CEO, and capital deployment will be done thoughtfully [36] Question: What is the outlook for net interest income? - Management believes quarterly net interest income has bottomed and expects improvement as mortgage refinance dynamics abate [39] Question: What are the drivers behind the general commercial decline? - The decline is attributed to low line utilization, currently at about 32%, which is expected to increase as business activity picks up [49] Question: What is the expected impact of the infrastructure bill? - Customers in the heavy civil contracting space are eager to get started, indicating readiness for increased activity [68]

Capital Requirements and Regulatory Compliance - The Corporation continues to exceed all capital requirements necessary to be deemed "well-capitalized" for regulatory purposes[64] - As of December 31, 2021, the Bank satisfied the capital requirements necessary to be deemed "well capitalized"[74] - The Economic Growth Act raised the asset threshold for annual company-run stress tests from $10 billion to $250 billion in total consolidated assets[66] - The FDIC's minimum Deposit Insurance Fund (DIF) reserve ratio was set at 1.35% of estimated insured deposits, which was achieved by September 30, 2018[79] - The Corporation's FDIC assessment rate was approximately 6 basis points for 2021[81] - The final rule issued by the FDIC on December 15, 2020, clarified regulations governing brokered deposits, effective from April 1, 2021[85] - The Corporation is subject to periodic Community Reinvestment Act (CRA) reviews and received a "Satisfactory" CRA rating in its most recent evaluation[90] - The Corporation elected to utilize the 2020 Capital Transition Relief as permitted under applicable regulations[65] - The FDIC has the authority to impose higher than normal capital requirements for institutions with a high-risk profile[73] Consumer Privacy and Data Protection - The Corporation is subject to various U.S. and international laws regarding consumer privacy and data protection, including the Gramm-Leach-Bliley Act, which limits the disclosure of non-public consumer information[91] - The California Consumer Privacy Act, effective January 2020, imposes new privacy rights and obligations on companies handling personal data, with similar laws being considered in multiple states and countries[92] - A final rule effective April 1, 2022, requires banking organizations to notify regulators of significant cybersecurity incidents within 36 hours of discovery[92] Cybersecurity and Risk Management - During 2021, the Corporation did not experience any material cybersecurity incidents, indicating effective risk management practices[95] - The Bank Secrecy Act mandates that national banks develop compliance programs to prevent money laundering, including internal controls and independent testing[96] - The Patriot Act requires financial institutions to implement policies to prevent access to the financial system by terrorists and criminals, enhancing customer identification and reporting suspicious activities[97] - The National Defense Authorization Act enacted significant changes to the Bank Secrecy Act, including a beneficial ownership registry for certain corporate entities[99] Financial Performance and Income - Net interest income for 2021 was $726 million, a decrease of $36 million or 5% compared to 2020, primarily due to a low interest rate environment[300] - Average earning assets increased by $291 million or 1% to $31.1 billion in 2021, driven by a $770 million or 12% increase in investments and short-term investments[300] - Average loans decreased by $480 million or 2%, with residential mortgages down $343 million or 4% and PPP loans down $229 million or 33%[300] - Average noninterest-bearing demand deposits increased by $1.2 billion or 17% to $8.1 billion, attributed to customers holding government stimulus proceeds[300] - Noninterest income totaled $332,364 thousand in 2021, a decrease of 35% from $514,056 thousand in 2020, primarily due to a significant drop in asset gains and insurance commissions[305] Loan Portfolio and Credit Losses - The provision for credit losses is based on the Corporation's reserving methodology, focusing on qualitative and quantitative factors, with a forecast using Moody's baseline scenario[303] - Nonperforming assets totaled $160,062 thousand as of December 31, 2021, down from $225,123 thousand in 2020[340] - The allowance for credit losses on loans to nonaccrual loans ratio was 245.16% as of December 31, 2021, indicating strong coverage[340] - The allowance for credit losses on loans decreased to $319.791 million in 2021 from $431.478 million in 2020, representing a reduction of approximately 26%[352] - Net charge-offs decreased by $77 million, or 76%, from December 31, 2020, primarily due to improved performance in the commercial and industrial portfolio[359] Asset and Deposit Growth - Total assets increased by $1.7 billion, or 5%, to $35.1 billion as of December 31, 2021, compared to the previous year[314] - Total deposits rose by $2.0 billion, or 7%, to $28.5 billion, driven by increases in demand deposits and savings deposits of $1.8 billion and $760 million, respectively[314] - Total investment securities increased by $1.6 billion, or 32%, to $6.6 billion, resulting from the deployment of cash into higher yielding assets[314] Equity and Capital Ratios - The Corporation's CET1 capital ratio as of December 31, 2021, is 10.31%, slightly down from 10.45% in 2020[413] - The total capital ratio for the Corporation as of December 31, 2021, is 13.10%, down from 14.02% in 2020[413] - The total stockholders' equity to total assets ratio is 11.47% as of December 31, 2021, down from 12.24% in 2020[413] - Return on average assets improved to 1.02% in 2021 from 0.90% in 2020[413] Efficiency and Cost Management - Total noninterest expense decreased by 9% to $709,924 thousand in 2021 from $776,034 thousand in 2020, indicating improved cost management[309] - The efficiency ratio as defined by the Federal Reserve increased to 66.33% in 2021 from 61.76% in 2020[418] - Adjusted efficiency ratio improved to 65.36% in 2021 compared to 62.76% in 2020[418] Segment Performance - Total revenue for the Corporate and Commercial Specialty segment increased to $570,903,000 in 2021, up 3% from $554,991,000 in 2020[425] - Net income for the Community, Consumer, and Business segment decreased to $56,728,000 in 2021, down 14% from $66,210,000 in 2020[425] - Provision for credit losses in the Risk Management and Shared Services segment showed a significant improvement, with a benefit of $(168,944,000) in 2021 compared to a provision of $92,365,000 in 2020[425]

Financial Data and Key Metrics Changes - The company reported a significant loan growth of $600 million in Q4, equating to a 10% annualized growth rate, despite intentional reductions in PPP and oil and gas portfolios [8][12][19] - Full year EPS reached $2.18, with net interest income increasing by $3 million from the prior quarter, driven by higher net-interest income across most segments [8][19] - Total non-interest expense for the full year was $710 million, down $66 million from the prior year, with Q4 expenses increasing by only 2% [9][24] Business Line Data and Key Metrics Changes - The commercial loan book grew by nearly $500 million in Q4, representing over a 13% annualized growth rate, with general commercial loans being the primary driver [10][12] - The new auto finance initiative added nearly $140 million in high-quality auto loans, with over 4,500 loans booked [11][12] - Credit card balances increased by 6% quarter-over-quarter, indicating growing consumer confidence [11] Market Data and Key Metrics Changes - Average deposits increased by nearly $1.7 billion in Q4, or 6% year-over-year, with growth concentrated in low-cost deposit categories [22] - The company expects full year auto finance loan growth of over $1.2 billion and total commercial loan growth of $750 million to $1 billion in 2022 [14][30] Company Strategy and Development Direction - The company is focused on expanding its commercial and small business segments, with a new commercial real estate office established in Houston [17] - A digital bank platform is set to pilot in Q2 2022, aimed at improving user experience through FinTech partnerships [18] - The company is committed to maintaining expense discipline while rolling out strategic initiatives, expecting non-interest expenses to be between $725 million and $740 million in 2022 [24][30] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the economic recovery, noting a strengthening economy and improving credit dynamics [6][7] - The company anticipates strong loan growth in 2022, supported by a positive economic backdrop and increased line utilization [14][30] - Management indicated that they expect to adjust provisions in line with loan growth and changing economic conditions [28][81] Other Important Information - The CFO, Chris Niles, announced his retirement after nearly 12 years, with a search for a successor underway [31][32] - The company has seen a steady decline in non-accrual loans, which decreased by 3% in Q4 and 38% year-over-year [19][28] Q&A Session Summary Question: Margin projection and rate hikes - Management indicated that the margin is expected to improve, with a target of reaching 2.50% and potentially moving towards 2.75% in the future, depending on rate hikes [36][39] Question: Outlook on revenue growth - Management confirmed that the revenue growth outlook remains consistent, with strong pipelines and initiatives on track [42][60] Question: Mortgage portfolio stability - Management expects stability in the mortgage portfolio as rates rise, with a proactive approach to home equity lending [51] Question: Provision adjustments - Management indicated that provisions may need to be adjusted upwards in line with loan growth, moving from a release to a build standpoint [81]

Associated Banc-Corp (NYSE:ASB) Q3 2021 Earnings Conference Call October 21, 2021 5:00 PM ET Company Participants Andy Harmening - President & CEO Chris Niles - CFO Pat Ahern - Chief Credit Officer Ben McCarville - VP, Director of IR Conference Call Participants Scott Siefers - Piper Sandler Michael Young - Truist Operator Good afternoon, everyone, and welcome to Associated Banc-Corp's Third Quarter 2021 Earnings Conference Call. My name is Shemali, and I will be your operator today. At this time, all parti ...