Associated Banc-Corp 8-K, filed Dec 4, 2024
Associated Banc-Corp (ASB)
About this 8-K
Associated Banc-Corp filed this 8-K on December 4, 2024.
Items reported
- Item 7.01: Regulation FD disclosure
- Item 8.01: Other events
- Item 9.01: Financial statements and exhibits
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934
| Date of Report (Date of earliest event reported) |
| (Exact name of registrant as specified in its charter) |
| (State or other jurisdiction of incorporation) | (Commission File Number) |
(IRS Employer Identification No.) |
| (Address of principal executive offices) | (Zip code) |
| Registrant’s telephone number, including area code | ( |
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
| Item 7.01 | Regulation FD Disclosure |
Associated Banc-Corp (the “Company”) is furnishing herewith a strategic update presentation providing detailed information about the balance sheet repositioning described under Item 8.01 of this Current Report on Form 8-K.
| Item 8.01 | Other Events. |
On December 4, 2024, the Company announced balance sheet repositioning transactions intended to accelerate the Company’s organic growth strategy.
The press release issued by the Company on December 4, 2024 related to the balance sheet repositioning transactions is attached hereto as Exhibit 99.1 and incorporated herein by reference, and the strategic update presentation described under Item 7.01, above, is furnished herewith as Exhibit 99.2.
| Item 9.01 | Financial Statements and Exhibits. |
(d) Exhibits
| 99.1 | Press Release dated December 4, 2024 |
| 99.2 | Strategic Update Presentation dated December 4, 2024 |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
2
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Associated Banc-Corp | |
| (Registrant) | |
| Date: December 4, 2024 | By: /s/ Randall J. Erickson |
| Randall J. Erickson | |
| Executive Vice President, General Counsel and Corporate Secretary |
3
Exhibit 99.1
News Release
Media Contact: Andrea Kozek
Senior Manager, Public Relations
920-491-7518
Investor Contact: Ben McCarville
Vice President | Director of Investor Relations
920-491-7059
Associated Banc-Corp announces balance sheet repositioning to support organic growth strategy
GREEN BAY, Wis. – December 4, 2024 – Associated Banc-Corp (NYSE: ASB) today announced balance sheet repositioning transactions to accelerate the Company’s organic growth strategy. Pursuant to the terms of the transactions, Associated sold approximately $1.3 billion of investment securities and has agreed to sell approximately $0.7 billion in mortgage loans, primarily in single-product relationships. The sale of the mortgage loans is expected to close in the first quarter of 2025.
“We are now three years into an organic growth strategy that has provided tailwinds across our company, including improved customer satisfaction, net household growth, and an infusion of talent in key areas,” said President and CEO Andy Harmening. “This balance sheet repositioning supports and accelerates our organic strategy by enhancing our earnings profile, boosting capital, and providing additional capacity for loan growth. As we continue to execute on our plan going forward, we feel well-positioned to attract and deepen customer relationships, take market share in key commercial markets, and enhance the value of our franchise. We look forward to sharing updates on our progress along the way.”
The transactions are expected to result in an after-tax loss of approximately $253 million which will cause the Company to report a net loss for the fourth quarter of 2024.
The transactions are expected to increase Associated’s wholesale funding capacity by paying down FHLB advances, while also removing low-yielding assets from the books. The Company has also chosen to reinvest approximately $1.5 billion into investment securities.
The Company expects to provide additional details on this balance sheet repositioning in a conference call for investors and analysts at 4:30 p.m. Central Time (CT) today, December 4, 2024. Interested parties can access the live webcast of the call through the Investor Relations section of the Company's website, http://investor.associatedbank.com. Parties may also dial into the call at 877-407-8037 (domestic) or 201-689-8037 (international) and request the Associated Banc-Corp strategic update call. An accompanying slide presentation will be available on the Company's website just prior to the call. An audio archive of the webcast will be available on the Company's website approximately fifteen minutes after the call is over.
An investor presentation will be furnished as an exhibit to a Form 8-K with the Securities and Exchange Commission and will be accessible via Associated Banc-Corp's Investor Relations website at http://investor.associatedbank.com.
ABOUT ASSOCIATED BANC-CORP
Associated Banc-Corp (NYSE: ASB) has total assets of $42 billion and is the largest bank holding company based in Wisconsin. Headquartered in Green Bay, Wisconsin, Associated is a leading Midwest banking franchise, offering a full range of financial products and services from nearly 200 banking locations serving more than 100 communities throughout Wisconsin, Illinois and Minnesota. The Company also operates loan production offices in Indiana, Michigan, Missouri, New York, Ohio and Texas. Associated Bank, N.A. is an Equal Housing Lender, Equal Opportunity Lender and Member FDIC. More information about Associated Banc-Corp is available at www.associatedbank.com.
FORWARD-LOOKING STATEMENTS
Statements made in this presentation which are not purely historical are forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995. This includes any statements regarding management’s plans, objectives, or goals for future operations, products or services, and forecasts of its revenues, earnings, or other measures of performance. Such forward-looking statements may be identified by the use of words such as “believe,” “expect,” “anticipate,” “plan,” “estimate,” “should,” “intend,” "target,” “outlook,” “project,” “guidance,” “forecast,” or similar expressions. Forward-looking statements are based on current management expectations and, by their nature, are subject to risks and uncertainties. Actual results may differ materially from those contained in the forward-looking statements. Factors which may cause actual results to differ materially from those contained in such forward-looking statements include those identified in the Company’s most recent Form 10-K and subsequent Form 10-Qs and other SEC filings, and such factors are incorporated herein by reference.
NON-GAAP FINANCIAL MEASURES
This press release and related materials may contain references to measures which are not defined in generally accepted accounting principles (“GAAP”). Information concerning these non-GAAP financial measures can be found in the financial tables. Management believes these measures are meaningful because they reflect adjustments commonly made by management, investors, regulators, and analysts to evaluate the adequacy of earnings per common share, provide a greater understanding of ongoing operations and enhance comparability of results with prior periods.
# # #
Exhibit 99.2
December 4, 2024 Strategic Update Presentation Associated Banc - Corp
1 Important Disclosures Important note regarding forward - looking statements: Statements made in this presentation which are not purely historical are forward - looking statements, as defined in the Private Securities Litigation Reform Act of 1995. This includes any statements regarding management’s plans, objectives, or goals for future operations, products or services, and forecasts of its revenues, earnings, or other measures of performance. Such forward - looking statements may be identified by the use of words such as “believe,” “expect,” “anticipate,” “plan,” “estimate,” “should,” “intend,” "target,” “outlook,” “project,” “guidance,” “forecast,” or si mil ar expressions. Forward - looking statements are based on current management expectations and, by their nature, are subject to risks and uncertainties. Actual results may differ materially from those contained in the forward - looking statements. Factors which may cause actual results to differ materially from those contained in such forward - looking statements include those identified in the Company’s most recent Form 10 - K and subsequent Form 10 - Qs and other SEC filings, and such factors are incorporated herein by reference. Trademarks: All trademarks, service marks, and trade names referenced in this material are official trademarks and the property of their respective owners. Presentation: Within the charts and tables presented, certain segments, columns and rows may not sum to totals shown due to rounding. Non - GAAP Measures: This presentation includes certain non - GAAP financial measures. These non - GAAP measures are provided in addition to, and not as substitutes for, measures of our financial performance determined in accordance with GAAP. Our calculation of these non - GAAP measures may not be comparable to similarly titled measures of other companies due to potential differences between companies in the method of calculation. As a result, the use of these non - GAAP measures has limitations and should not be considered superior to, in isolation from, or as a substitute for, related GAAP measures. Reconciliations of these non - GAAP financial measures to the most directly comparable GAAP financial measures can be found at the end of this presentation.
2 Advancing our Growth Strategy Phase 1 Foundational for Growth 2021 - 2023 Phase 2 Advancing our Growth Strategy 2023 - Present Upgraded Product & Service Offerings Launched Mass Affluent Strategy Modernized Digital Banking Experience Introduced “Champion of You” Brand Strategy Enhanced Lending Capabilities Executed 4Q23 Balance Sheet Repositioning Filled Multiple Key Leadership Roles Rebalanced Consumer Lending Approach Quarterly Product & Digital Upgrades On Track to Add 26 Comm’l & Business RMs We’re three years into an organic growth strategy combining targeted initiatives with our legacy strengths ▪ Highest mobile banking satisfaction score since internal tracking began in 2018 4 ▪ Total checking household growth of 1.5% in 3Q (annualized) ▪ Highest annual net promoter score since internal tracking began in 2017 3 ▪ Named #1 for Retail Banking Customer Satisfaction in the Upper Midwest by J.D. Power 2 ▪ Expanded commercial & business RMs by 39% from 12/31/21 to 12/4/24 Recent Highlights 1 1 All figures as of or for the period ended September 30, 2024 unless otherwise noted. 2 Based on JD Power 2024 U.S. Retail Banking Satisfaction study conducted January 2023 through January 2024. For award informat io n, visit jdpower.com/awards. 3 Annual net promoter score as measured by a customer’s likelihood to recommend Associated Bank to family and friends as indica te d in our internal Consumer Relationship Survey. 2024 YTD through September 30, 2024. 4 Based on year - over - year customer satisfaction scores from internal transactional surveys. 2024 data through September 30, 2024.
3 Improving our Return Profile Over Time 1 Our efforts to remix the balance sheet & drive toward improved profitability are on track Strategy Progress Since 2021 Growing diversified asset classes to decrease reliance on legacy low - yielding, low - relationship value asset classes ▪ Expanded Commercial RM base across footprint ▪ Increased total commercial loans by $3.4 billion vs. 3Q21 (+23%) ▪ Added $2.7 billion in fixed - rate prime/super prime Auto Finance balances ▪ Exited TPO mortgage business in 1Q23 ▪ Sold $969 million in mortgage loans & pivoted to “originate to sell” model in 4Q23 ▪ Shifted to balanced RM scorecard to deepen Commercial relationships ▪ Modernized digital banking experience ▪ Quarterly upgrades to products & services ▪ $1.2 billion in net new Mass Affluent deposits ▪ Repaid $849 million of FHLB Advances in 4Q23 Liabilities Assets Auto Finance Relationship Commercial Low - Relationship Mortgage Low - Relationship Commercial Wholesale Funding Sources Core Customer Deposits 2 Attracting & deepening customer relationships to decrease reliance on wholesale & network funding sources 1 All updates as of or for the period ended September 30, 2024 unless otherwise noted. 2 This is a non - GAAP financial measure. See appendix for a reconciliation of non - GAAP financial measures to GAAP financial measure s.
4 Accelerating our Growth Strategy Summary of actions taken in November & December 2024 Common Stock Offering Securities Sale & Reinvestment Residential Mortgage Loan Sale 1 3 Sold ~$1.3 billion of AFS securities and reinvested into ~$1.5 billion of securities at higher rates ▪ Weighted avg. yield of 1.87% on securities sold ▪ Weighted avg. yield of 5.08% on securities reinvested ▪ Duration of ~4 years on securities reinvested Announced a common stock offering on 11/14/2024 to bolster capital & support our organic growth strategy ▪ Issued 13.8 million new shares of ASB common stock at $25.00 / share ▪ 6.3% discount to last sale (11/14/2024) ▪ Raised ~$330.7 million in capital Agreed to sell ~$0.7 billion in low - yielding residential mortgage loans, primarily in single - product relationships ▪ ~$0.2 billion in ARMs ▪ ~$0.5 billion in fixed - rate mortgages ▪ Weighted avg. yield of ~2.99% 2 Balance Sheet Repositioning
5 1 All figures shown are approximations unless otherwise noted. 2 Transaction expected to close in the first quarter of 2025. 3 Reflects transaction pricing as of December 4, 2024. We’ve sold ~$1.3 billion in securities & have agreed to sell ~$0.7 billion in residential mortgage loans Balance Sheet Repositioning Transaction Summary 1 $0.7 billion in residential mortgage loans sold Loan Sales Agreement 2 Wtd. avg. yield ~2.99% $1.3 billion in AFS securities sold Securities Sold Wtd. avg. yield 1.87% $253 million (4Q 2024) Estimated One - Time Loss (After - Tax) 3 Repay $0.6 billion of FHLB advances 2 Use of Proceeds Wtd. avg. cost ~5.90% Reinvest into $1.5 billion of GNMA securities Wtd. avg. yield ~5.08% / Duration ~4 years
6 $0.56 $0.56 $0.03 $0.59 3Q 2024 Actual 3Q 2024 Pro Forma 9.72% 9.72% 0.39% 10.11% 3Q 2024 Actual 3Q 2024 Pro Forma 1 Return on average tangible common equity. This is a non - GAAP financial measure. See appendix for a reconciliation of non - GAAP financial measures to GAAP financial measure s. Earnings Per Share Impact (Diluted) Net Interest Margin Impact 11.52% 11.52% 0.83% 12.35% 3Q 2024 Actual 3Q 2024 Pro Forma ROATCE 1 Impact CET1 Ratio Impact + + Our common stock offering & balance sheet repositioning combine to enhance our earnings profile & capital levels Key Benefits of Offering + Repositioning 2.78% 2.78% 0.19% 2.97% 3Q 2024 Actual 3Q 2024 Pro Forma + +
7 ($ in millions) Mortgage Loans Sold 2 FHLB Advances Paydown 2 Securities Reinvestment On a 3Q 2024 pro forma basis, this transaction adds ~$15.8 million to our quarterly net interest income Net +$15.8M NII impact $1.3B @ 1.87% $0.7B @ 2.99% $0.6B @ ~5.9% $1.5B @ 5.08% 3Q Pro Forma Net Interest Income Walkforward 1 Securities Sold 1 All figures shown are approximations unless otherwise noted. Yield / cost percentages calculated on a weighted average basis. 2 Transaction expected to close in the first quarter of 2025.
8 $0.9 $2.0 $2.9 $3.6 $3.6 $7.6 $8.3 $8.8 $7.8 $7.1 $6.1 $6.9 $7.3 $7.2 $7.2 $9.0 $10.6 $11.2 $11.4 $11.4 $7.7 $7.2 $8.4 $9.1 $9.4 $3.1 $3.0 $3.1 $3.1 $3.1 $34.4 $38.0 $41.6 $42.2 $41.8 3Q 2021 3Q 2022 3Q 2023 3Q 2024 3Q 2024 Pro Forma Repositioning enables us to accelerate our organic strategy by disposing of low - yielding, long - duration assets Period End Total Assets ($ in billions) Commercial & Business Lending Loans Commercial Real Estate Loans Residential Mortgage Loans Auto Finance, Home Equity & Other Consumer Loans Other Assets Securities + Cash Residential Mortgage Loans / Total Loans Other Pro Forma Impacts 32.1% 29.9% 29.1% 26.0% 24.2% ( 1.8% ) 3Q 2021 3Q 2022 3Q 2023 3Q 2024 3Q 2024 Pro Forma
9 Summary of Expected Benefits 1 Improved Net Interest Margin Improved Pro Forma Capital & Enhanced Capital Generation Improved Return on Average Tangible Common Equity 2 Our offering & repositioning work together to enhance earnings, boost capital, & provide capacity for growth 1 All pro forma figures as of or for the period ended September 30, 2024. 2 This is a non - GAAP financial measure. See appendix for a reconciliation of non - GAAP financial measures to GAAP financial measure s. ▪ Pro forma NIM of 2.97% ▪ ~19bps improvement vs. 3Q 2024 actual (2.78%) ▪ Pro forma CET1 ratio of 10.11% ▪ ~39bps improvement vs. 3Q 2024 actual (9.72%) ▪ Pro forma ROATCE of 12.35% ▪ ~83bps improvement vs. 3Q 2024 actual (11.52%) Improved Capacity for Organic Loan Growth ▪ Pro forma residential mortgage loans / total loans of 24.2% ▪ ~183bps reduction vs. 3Q 2024 actual (26.0%) ▪ ~794bps reduction vs. 3Q 2021 actual (32.1%)
Appendix
11 Common Stock Offering Transaction Summary Associated Banc - Corp Issuer ASB / NYSE Ticker / Listing 13.8 million shares @ $25.00 per share Offering Size ~$330.7 million Net Proceeds (6.3%) Discount to Last Sale (11/14/2024) November 14, 2024 Offering Announced General corporate purposes to support continued organic growth, which may include investments in Associated Bank, NA and potential balance sheet optimization strategies Use of Proceeds 90 days for directors and executive officers Lock - Up BofA Securities, J.P. Morgan Bookrunners We completed a common stock offering in November to bolster capital & support our organic growth strategy
12 Reconciliation & Definitions of Non - GAAP Items 3Q 2024 2Q 2024 1Q 2024 4Q 2023 3Q 2023 Period End Core Customer Deposits Reconciliation ($ in millions) $33,554 $32,691 $33,713 $33,446 $32,123 Total deposits (4,243) (4,062) (3,931) (4,447) (3,351) Brokered CDs (1,567) (1,503) (1,793) (1,566) (1,649) Network transaction deposits $27,745 $27,127 $27,989 $27,432 $27,123 Core customer deposits 3Q 2024 2Q 2024 1Q 2024 4Q 2023 3Q 2023 Quarterly Average Core Customer Deposits Reconciliation ($ in millions) $33,321 $32,629 $33,267 $32,192 $32,002 Total deposits (4,248) (3,928) (4,269) (3,471) (3,429) Brokered CDs (1,644) (1,595) (1,652) (1,617) (1,640) Network transaction deposits $27,429 $27,106 $27,346 $27,105 $26,933 Core customer deposits 3Q 2024 Pro Forma 3Q 2024 Adjusted Net Income Available to Common Equity Reconciliation ($ in millions) $97 $85 Net income available to common equity 2 2 Other intangible amortization, net of tax $99 $87 Adjusted net income available to common equity 1 This financial measure has been included as it is considered to be a critical metric with which to analyze and evaluate finan cia l condition and capital strength. 3Q 2024 Pro Forma 3Q 2024 Average Tangible Common Equity Reconciliation 1 ($ in millions) $4,343 $4,137 Common equity (1,140) (1,140) Goodwill and other intangible assets, net $3,203 $2,997 Tangible common equity