Associated Banc-p(ASB) - 2021 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[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]