Associated Banc-p(US:ASB)2026-02-12 21:21Capital Requirements and Regulatory Compliance - The Corporation continues to exceed all capital requirements necessary to be deemed "well-capitalized" for regulatory purposes[76]. - Under the CECL model, the Corporation elected to delay the estimated impact on regulatory capital through December 31, 2021, with a phased-in impact starting at 25% per year from January 1, 2022[78]. - The asset threshold for conducting company-run stress tests was raised from $10 billion to $250 billion, and the Corporation is no longer subject to Dodd-Frank Act stress testing requirements[79]. - The Corporation's CET1 capital ratio improved to 10.49% in 2025 from 10.01% in 2024, while the Tier 1 capital ratio increased to 11.04% from 10.58%[436]. - Total capital increased to $4,593,079,000 in 2025, up from $4,282,597,000 in 2024, reflecting a strong capital position[436]. Deposit Insurance and Assessments - The FDIC adopted a final rule to increase base deposit insurance assessment rates uniformly by 2 basis points starting in 2023[90]. - A special assessment at an annual rate of 13.4 basis points will be collected beginning with the first quarterly assessment period of 2024 to recover losses associated with protecting uninsured depositors[91]. - Total uninsured deposits were $17.0 billion, $15.5 billion, and $14.8 billion at December 31, 2025, 2024, and 2023 respectively, with estimated uninsured and uncollateralized deposits at $9.4 billion or 26.5% of total deposits at December 31, 2025[402]. Asset and Loan Growth - The Corporation anticipates that its total consolidated assets will exceed $50 billion upon completion of its proposed acquisition of American National[93]. - Total assets reached $45.2 billion as of December 31, 2025, an increase of $2.2 billion, or 5%, from December 31, 2024[341]. - Loans amounted to $31.2 billion at December 31, 2025, up $1.4 billion, or 5%, primarily due to increases in commercial and business lending and auto finance loans[341]. - Total loans increased by $1.4 billion, or 5%, from December 31, 2024, driven by increases in commercial and industrial lending and auto finance[383]. Interest Income and Expenses - Average earning assets increased by $2.0 billion, or 5%, from 2024[328]. - Interest income from total loans decreased by $47.8 million in 2025 compared to 2024, with a significant drop in commercial real estate lending contributing to a net decrease of $52.5 million[329]. - The Federal Reserve decreased the federal funds target interest rate by 100 basis points in the second half of 2024 and 75 basis points in the second half of 2025, impacting interest income[327]. - The Corporation is slightly asset sensitive, which affected interest income earned on loans but was offset by lower interest expense on interest-bearing deposits[327]. Noninterest Income and Expenses - Noninterest income for 2025 totaled $286.4 million, a substantial increase of $295.8 million from a loss of $9.4 million in 2024, driven by improvements in capital markets and mortgage banking[332][334]. - Total noninterest expense increased by $37.2 million in 2025, reaching $855.6 million, primarily due to higher personnel costs and other operational expenses[335]. - The effective tax rate for 2025 was 17.85%, significantly higher than 8.41% in 2024, attributed to strategic portfolio reallocations and deferred tax benefits recognized in 2024[337]. Credit Risk Management - The Corporation's credit risk management process includes detailed underwriting and periodic reviews to monitor borrower performance[348]. - The allowance for credit losses on loans to nonaccrual loans ratio increased to 417.56% in 2025, compared to 326.40% in 2024 and 258.98% in 2023[368]. - The Corporation's credit risk management includes ongoing monitoring of loan delinquency status and quarterly reviews of FICO score deterioration and property devaluation for home equity loans[363]. Acquisition and Strategic Initiatives - During Q4 2025, the Corporation announced a definitive agreement to acquire American National, incurring nonrecurring costs related to this acquisition[440]. - The Corporation's average full-time equivalents (FTEs) decreased by 144 to 3,886 in 2025, indicating a reduction in workforce[335]. Investment Securities - The total fair value of the investment securities portfolio increased to $5.397563 billion at December 31, 2025, from $4.581434 billion at December 31, 2024[389]. - The net unrealized gains in the investment securities portfolio were $29.75 million at December 31, 2025, compared to a loss of $24.52 million at December 31, 2024[389]. - The Corporation sold lower yielding AFS securities with a carrying value of $1.1 billion at a net loss of $148.2 million during Q4 2024, reinvesting proceeds into higher yielding GNMA securities[390]. Liquidity and Funding - The Corporation's liquidity sources are sufficient to meet present and future liquidity needs, with total available liquidity of $17.5 billion as of December 31, 2025[410]. - The Corporation had $6.2 billion available for future funding from FHLB Chicago and $6.4 billion available for discount window borrowings as of December 31, 2025[408]. - Short-term funding sources increased to $3.2 billion, an increase of $1.4 billion, or 84%, from December 31, 2024, primarily due to a $1.6 billion increase in short-term FHLB advances[403]. Performance Metrics - Net income for 2025 was $474,777,000, significantly higher than $123,145,000 in 2024, showcasing improved profitability[438]. - The total revenue for fully tax-equivalent efficiency ratio was $1,504,395,000 in 2025, up from $1,196,907,000 in 2024, reflecting revenue growth[438]. - The Corporation's tangible common equity ratio improved to 8.29% in 2025 from 7.82% in 2024, indicating enhanced capital efficiency[436].