Associated Banc-p(ASB) - 2022 Q4 - Annual Report

Capital Requirements and Regulatory Compliance - The Corporation continues to exceed all capital requirements necessary to be deemed "well-capitalized" for regulatory purposes[52] - As of December 31, 2022, the Bank satisfied the capital requirements necessary to be deemed "well capitalized"[60] - The Corporation's CET1 capital ratio is 10.31% as of December 31, 2022, down from 10.45% in 2021[391] - Total capital increased to $3,680,227,000 in 2022 from $3,570,026,000 in 2021, reflecting a growth of approximately 3.1%[391] - Total risk-weighted assets rose to $32,472,008,000 in 2022, compared to $27,242,735,000 in 2021, indicating an increase of about 19.3%[391] Deposit Insurance and Assessment Rates - The FDIC adopted a final rule to increase base deposit insurance assessment rate schedules uniformly by 2 basis points starting in 2023[63] - The Corporation's FDIC assessment rate was approximately 7 basis points for 2022[64] - The Dodd-Frank Act authorized a permanent increase in deposit insurance to $250,000 per depositor, per IDI for each account ownership category[61] Economic and Regulatory Changes - The Economic Growth Act raised the asset threshold for stress testing from $10 billion to $250 billion in total consolidated assets[55] - The Corporation elected to utilize the 2020 Capital Transition Relief, allowing a three-year phase-out period for the CECL model effects starting in 2022[54] - The Dodd-Frank Act may significantly impact the Corporation's operations, particularly through increased compliance costs from potential future consumer and fair lending regulations[95] Cybersecurity and Compliance - The final rule from federal banking agencies requires banks to notify their primary federal regulator within 36 hours of discovering a significant cybersecurity incident[76] - During 2022, the Corporation did not discover any material cybersecurity incidents, indicating effective cybersecurity measures[77] - The Dodd-Frank Act mandates that national banks have a board-approved program to ensure compliance with the Bank Secrecy Act (BSA) and includes independent testing and training requirements[78] Environmental and Climate Risk Management - Federal banking agencies have heightened their focus on climate-related risks, encouraging banks to incorporate climate risk management into governance structures and strategic planning[96] - The SEC proposed new climate-related disclosure rules that, if adopted in 2023, would require disclosures on climate-related metrics and greenhouse gas emissions in SEC filings[100] - The Corporation has established an Environmental Sustainability Risk Policy to manage environmental risks, including climate change and carbon emissions[102] Financial Performance and Income - Fully tax-equivalent net interest income increased by $234 million, or 31%, in 2022 compared to 2021, driven by strategic initiatives and rising interest rates[284] - Noninterest income decreased by $49.994 million, or 15%, in 2022 compared to 2021, primarily due to declines in mortgage banking and wealth management fees[291] - Total revenue for the Corporate and Commercial Specialty segment increased by $64 million from the year ended December 31, 2021, primarily due to higher loan balances and interest rates[400] Loan and Credit Quality - Total loans amounted to $299.37 billion, with significant contributions from commercial and business lending, and residential mortgages[287] - The provision for credit losses is based on the Corporation's reserving methodology and economic forecasts, with no material updates made to the baseline scenario used[288] - Total nonaccrual loans increased to $210,854 thousand, up from $130,443 thousand year-over-year, reflecting a significant rise in credit risk[324] Asset and Liability Management - Total assets reached $39.4 billion, a $4.3 billion increase or 12% from December 31, 2021[299] - Total deposits increased to $29.6 billion, a rise of $1.2 billion or 4% from December 31, 2021, mainly due to a $1.1 billion increase in money market deposits[300] - The Corporation's interest rate risk profile is asset sensitive as of December 31, 2022, indicating that a higher yield curve would increase income[379] Operational Efficiency and Cost Management - The return on average assets improved to 1.02% in 2022 from 0.90% in 2021[391] - Federal Reserve efficiency ratio improved to 60.36% from 66.33% in 2021, showing enhanced operational efficiency[394] - Adjusted efficiency ratio stood at 58.75%, compared to 65.36% in the previous year, indicating better cost management[394]