The $41 billion-asset bank said Thursday that total loans of $29.5 billion were up 1% from both the prior quarter and a year earlier. It posted growth in business and consumer loans. The bank forecasted loan growth of 4% to 6% for all of 2024.
The progress comes on the heels of a lumpy 2023 for Associated and many
The bank last year also laid off about 3% of its more than 4,000 employees and launched a process of closing 14 branches and cutting discretionary spending to reduce expenses. Even as it made cuts, it continued to invest in a
The bank said during the fourth quarter of last year that it had inked a deal to sell about $1 billion of mortgage loans and also sold about $800 million of investment securities.
Executives said the shifts began to pay off in the first quarter. Despite uncertainty about the direction of interest rates and federal data that showed a slowing national economy in the first quarter, they expect more advances on the lending front this year across their Upper Midwest markets.
"While recent economic data has clouded the macro outlook over the remainder of the year, we're encouraged by the resilience we've seen in our Midwestern footprint, where unemployment levels in Wisconsin and Minnesota remain at or below 3%," President and CEO Andrew Harmening told analysts during an earnings call late Thursday.
"The consumer remains relatively healthy despite rising prices, and our commercial customers continue to explore investments in their businesses," he added. "We've anchored ourselves in stable Midwestern markets, and we developed a diversified [commercial real estate] portfolio with limited exposure to key pressure points, such as rent-controlled multifamily or downtown office properties. Given the pressures from elevated rates, we have continued to see signs of normalization in the portfolio" in terms of credit quality. But it "has been on a case-by-case basis. We have yet to see any meaningful negative trends concerning specific asset classes or geographies."
Overall, regional and national banks have struggled to increase lending this year amid high borrowing costs. Federal Reserve data showed that, in early April, large-bank lending decreased slightly from a year earlier and has hovered in flattish territory for weeks. Lending "remains very weak" at an industry level, said Piper Sandler analyst Scott Siefers.
Against that backdrop, Siefers called Associated's first-quarter results "solid."
Associated's increase in lending came with some growing pains, as first-quarter charge-offs increased to $22 million from $16 million in the prior quarter and $3 million a year earlier. Its nonaccrual loans to total loans ratio rose to 0.60% in the first quarter, up from 0.51% in the prior quarter and up from 0.40% a year earlier.
First-quarter average deposits of $33.3 billion were up 3% from the prior quarter and 11% from the same period last year. Like many of its peers, Associated's interest-bearing accounts increased and funding costs climbed from a year as a result.
Deposit and other interest-bearing liability costs jumped 107 basis points from the same period in 2023 to 3.55%. Such costs, however, were flat from the prior quarter. The bank's net interest margin of 2.79% followed a similar path. It was 28 basis points lower than a year earlier but up a notable 10 basis points from the prior quarter.
Higher rates on new loans helped to support the margin. Associated said its average yield on total loans for the first quarter increased 14 basis points from the prior quarter and spiked 73 basis points from a year earlier to 6.22%.
Associated reported net income available to common equity of $78 million, or 52 cents per share.
The latest results compared to a loss of $94 million, or a loss of 62 cents per share, for the prior quarter, and earnings of $100 million, or 66 cents, a year earlier. The previous quarter's loss was due to charges tied to the sales of mortgage loans and investment securities.
