Associated Banc-Corp Repositions Balance Sheet, to Incur a Loss in Q4

Core Viewpoint - Associated Banc-Corp (ASB) is undertaking balance sheet repositioning transactions aimed at supporting its organic growth strategy, despite anticipating a net loss in the fourth quarter of 2024 [1][6]. Group 1: Balance Sheet Repositioning Details - ASB sold approximately $1.3 billion of investment securities with an average yield of 1.87% and plans to sell $0.7 billion of low-yielding mortgage loans, primarily from single-product relationships, with the sale expected to close in the first quarter of 2025 [2]. - The repositioning transactions are projected to result in a post-tax loss of $253 million, but ASB reinvested the proceeds from the sale of investment securities into nearly $1.5 billion of higher-yielding securities, which will yield an average of 5.08% [3]. Group 2: Financial Impact and Projections - On a proforma basis, the repositioning is expected to add approximately $15.8 million to the net interest income for the third quarter of 2024 and increase the net interest margin by 19 basis points [4]. - The strategy is anticipated to enhance ASB's earnings, boost capital, and provide additional capacity for loan growth, while also reducing the percentage of residential mortgage loans relative to total loans [4]. Group 3: Market Performance and Peer Comparison - ASB's shares have increased by 22.8% over the past three months, outperforming the industry average of 20.8% [7]. - In comparison, peers such as Civista Bancshares (CIVB) and MidWestOne Financial Group (MOFG) have also shown strong performance, with CIVB's shares gaining 38.1% and MOFG's shares increasing by 19.6% in the same period [10][11].