Associated Banc-Corp’s ASB fourth-quarter 2024 adjusted earnings of 57 cents per share surpassed the Zacks Consensus Estimate of 55 cents. Also, the bottom line compared favorably with 53 cents earned in the prior-year quarter.

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Results benefited from an increase in net interest income (NII) and adjusted non-interest income. A rise in deposit balance and lower provisions acted as tailwinds. However, higher adjusted expenses were the undermining factor.

Results excluded certain non-recurring items. After considering these, the net loss available to common shareholders was $164.5 million or $1.03 per share, compared with a net loss of $93.7 million or 62 cents per share in the year-ago quarter. 

For 2024, adjusted earnings of $2.38 per share beat the consensus estimate of $2.15 and rose 5% year over year. Net income available to common shareholders (GAAP) was $111.6 million or 72 cents per share, down from $171.5 million or $1.13 per share in the year-ago quarter.

ASB’s Adjusted Revenues Rise, Adjusted Expenses Up

Total adjusted revenues (FTE basis) for the quarter were $345.8 million, up 5% year over year. Also, the top line beat the Zacks Consensus Estimate of $343.3 million.

For 2024, total adjusted revenues grew marginally to $1.33 billion. The top line also outpaced the consensus estimate of $1.32 billion.

NII was $270.3 million, up 7%. The net interest margin was 2.81%, up 12 basis points (bps) year over year. The increase was driven by a fall in average cost of total interest-bearing liabilities. We had expected NII and net interest yield to be $268.3 million and 2.84%, respectively.

The non-interest loss was $206.8 million in the reported quarter compared with a loss of $131 million in the prior-year quarter. Excluding the loss on mortgage portfolio sale and investment securities loss, adjusted non-interest income came in at $71.8 million, rising 2%. Our estimate for the non-interest income was $65 million.

Non-interest expenses decreased 6% to $224.3 million. These included certain non-recurring charges. Excluding these, adjusted expenses were $210 million, up marginally. Our estimate for non-interest expenses was $205.4 million and did not include the abovementioned non-recurring charge.

The adjusted FTE efficiency ratio was 61.11%, down from 64.12% in the prior-year quarter. A fall in the efficiency ratio indicates an improvement in profitability.

Associated Banc-Corp’s Loans Dip, Deposits Rise

As of Dec. 31, 2024, total loans were $29.8 billion, down 1% from the prior quarter. The fall was attributable to the sale of $723 million in residential mortgages associated with the balance sheet repositioning. Our estimate for total loans was $30.4 million.

On the other hand, total deposits grew 3% to $34.6 billion. Our estimate for total deposits was $34.5 million.

Associated Banc-Corp’s Credit Quality Improves

In the reported quarter, the company recorded a provision for credit losses of $17 million, down 19% from the prior-year quarter. Our estimate for the metric was $22 million.

As of Dec. 31, 2024, total non-performing assets were $144.2 million, down 10%. Total non-accrual loans were $123.3 million, falling 17%.

Net charge-offs were $12.2 million, down 22% from the prior-year quarter.

Associated Banc-Corp’s Capital Ratios Improve

As of Dec. 31, 2024, the Tier 1 risk-based capital ratio was 10.57%, up from 9.99% recorded in the corresponding period of 2023. The common equity Tier 1 capital ratio was 10%, up from 9.39%.

Associated Banc-Corp’s Outlook for 2025

Management expects loans to grow at the rate of 5-6%. 

Total core customer deposits are estimated to rise in the range of 4-5%, while total deposits are projected to increase 1-2%.

NII is projected to jump in the 12-13% range.

After adjusting to exclude the impact of non-recurring items related to the balance sheet repositioning announced in the fourth quarter of 2024, total non-interest income is expected to be stable or grow 1%.

After adjusting to exclude the impact of the loss on prepayments of FHLB advances, total non-interest expenses are likely to rise 3-4%.

The effective tax rate is expected to be 19-21%.

Our Take on ASB

Associated Banc-Corp’s business restructuring efforts are likely to keep supporting financials. The company has a solid balance sheet position, making it well-poised for growth. However, mounting expenses are a headwind.
 

Associated Banc-Corp Price, Consensus and EPS Surprise

Associated Banc-Corp price-consensus-eps-surprise-chart | Associated Banc-Corp Quote

ASB currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of ASB’s Peers

BankUnited, Inc.’s BKU fourth-quarter 2024 earnings of 91 cents per share handily surpassed the Zacks Consensus Estimate of 71 cents. The bottom line compares favorably with 27 cents in the prior-year quarter.

BKU’s results were aided by growth in NII and non-interest income alongside lower non-interest expenses and provisions. Also, stable deposits were another positive. However, a fall in loan balance and weak asset quality were the undermining factors. 

Commerce Bancshares Inc. CBSH reported fourth-quarter 2024 earnings per share of $1.01, which surpassed the Zacks Consensus Estimate of 94 cents. The bottom line also jumped 27.8% from the prior-year quarter.

Results benefited from a rise in NII and non-interest income. Also, stable adjusted expenses posed a tailwind. However, a substantial jump in provisions hurt CBSH’s results to some extent.

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