Associated Banc-p(US:ASB)2024-04-26 01:50Financial Data and Key Metrics Changes - The company reported diluted GAAP earnings of $0.52 per share for Q1 2024, indicating underlying strength in core earnings despite a challenging operating environment [12][48] - Core customer deposits grew by 2% in Q1, marking the third consecutive quarter of deposit growth, with a total increase of $1.4 billion since mid-2023 [13][25] - Net interest income (NII) for Q1 was $258 million, a $4 million increase from the previous quarter, with a net interest margin (NIM) increase of 10 basis points to 2.79% [28][30] Business Line Data and Key Metrics Changes - Loans grew by $278 million in Q1, driven by growth in the prime/super prime auto portfolio and commercial and industrial (C&I) segments [14][26] - Non-interest income was $65 million, up $3 million from the same period last year, but down $5 million from the previous quarter [15][34] - Non-interest expense for Q1 was $198 million, which included $8 million in FDIC special assessment costs, reflecting a focus on expense discipline [36] Market Data and Key Metrics Changes - The company noted resilience in its Midwestern markets, with unemployment levels in Wisconsin and Minnesota remaining at or below 3% [8] - The consumer remains relatively healthy despite rising prices, and commercial customers are exploring investments while being cautious of current challenges [8] Company Strategy and Development Direction - The company is focused on executing Phase 2 of its strategic plan, which includes key hires, product launches, and enhancing customer experiences [11][20] - The strategic plan aims for total loan growth of 4% to 6%, core customer deposit growth of 3% to 5%, and net interest income growth of 2% to 4% for 2024 [23][48] - The company emphasizes quality, relationship-focused loan growth to enhance profitability and reduce reliance on lower-yielding assets [47] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's position due to disciplined credit practices and a strong foundation in stable markets [8][12] - Despite macroeconomic uncertainties, the company expects to see continued progress throughout the year, with a focus on maintaining expense discipline [12][48] Other Important Information - The company was recognized by J.D. Power for retail banking satisfaction in the Upper Midwest and received awards for workplace culture [10][18] - The allowance for credit losses increased by $2 million to $388 million, reflecting loan growth in select areas [40] Q&A Session Summary Question: Margin guidance and rate cut assumptions - Management indicated that margin guidance remains unchanged despite the removal of three rate cut assumptions, suggesting a neutral impact from potential rate changes [50][51] Question: Non-interest-bearing deposit growth - The company expects non-interest-bearing deposits to stabilize around $5.8 billion to $5.9 billion, with a goal to grow closer to $6 billion by year-end [54][55] Question: Savings and money market growth drivers - Growth in savings and money market accounts is attributed to increased household deposits and expansion in the mass affluent segment [57][58] Question: Fee income and capital markets outlook - Management remains confident in the fee income range despite fluctuations, expecting a rebound in capital markets activity in the second half of the year [69][71] Question: Expense trajectory and hiring plans - Expenses are expected to rise gradually throughout the year as the company continues to invest in marketing and technology while filling key positions [76][78] Question: Customer demand and loan growth expectations - Management noted steady growth in commercial loans, driven by quality hires and a strong pipeline of customer conversations [80][81] Question: Exposure to the trucking industry - The company's exposure to the trucking industry is limited, with $700 million in commitments, and management sees no emerging risks in this area [83]