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Associated Banc-p(ASB) - 2021 Q4 - Earnings Call Transcript
ASBAssociated Banc-p(ASB)2022-01-21 02:20
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Financial Data and Key Metrics Changes - The company reported a significant loan growth of 600millioninQ4,equatingtoa10600 million in Q4, equating to a 10% annualized growth rate, despite intentional reductions in PPP and oil and gas portfolios [8][12][19] - Full year EPS reached 2.18, with net interest income increasing by 3millionfromthepriorquarter,drivenbyhighernet−interestincomeacrossmostsegments[8][19]−Totalnon−interestexpenseforthefullyearwas3 million from the prior quarter, driven by higher net-interest income across most segments [8][19] - Total non-interest expense for the full year was 710 million, down 66millionfromtheprioryear,withQ4expensesincreasingbyonly266 million from the prior year, with Q4 expenses increasing by only 2% [9][24] Business Line Data and Key Metrics Changes - The commercial loan book grew by nearly 500 million in Q4, representing over a 13% annualized growth rate, with general commercial loans being the primary driver [10][12] - The new auto finance initiative added nearly 140millioninhigh−qualityautoloans,withover4,500loansbooked[11][12]−Creditcardbalancesincreasedby6140 million in high-quality auto loans, with over 4,500 loans booked [11][12] - Credit card balances increased by 6% quarter-over-quarter, indicating growing consumer confidence [11] Market Data and Key Metrics Changes - Average deposits increased by nearly 1.7 billion in Q4, or 6% year-over-year, with growth concentrated in low-cost deposit categories [22] - The company expects full year auto finance loan growth of over 1.2billionandtotalcommercialloangrowthof1.2 billion and total commercial loan growth of 750 million to 1billionin2022[14][30]CompanyStrategyandDevelopmentDirection−Thecompanyisfocusedonexpandingitscommercialandsmallbusinesssegments,withanewcommercialrealestateofficeestablishedinHouston[17]−AdigitalbankplatformissettopilotinQ22022,aimedatimprovinguserexperiencethroughFinTechpartnerships[18]−Thecompanyiscommittedtomaintainingexpensedisciplinewhilerollingoutstrategicinitiatives,expectingnon−interestexpensestobebetween1 billion in 2022 [14][30] Company Strategy and Development Direction - The company is focused on expanding its commercial and small business segments, with a new commercial real estate office established in Houston [17] - A digital bank platform is set to pilot in Q2 2022, aimed at improving user experience through FinTech partnerships [18] - The company is committed to maintaining expense discipline while rolling out strategic initiatives, expecting non-interest expenses to be between 725 million and $740 million in 2022 [24][30] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the economic recovery, noting a strengthening economy and improving credit dynamics [6][7] - The company anticipates strong loan growth in 2022, supported by a positive economic backdrop and increased line utilization [14][30] - Management indicated that they expect to adjust provisions in line with loan growth and changing economic conditions [28][81] Other Important Information - The CFO, Chris Niles, announced his retirement after nearly 12 years, with a search for a successor underway [31][32] - The company has seen a steady decline in non-accrual loans, which decreased by 3% in Q4 and 38% year-over-year [19][28] Q&A Session Summary Question: Margin projection and rate hikes - Management indicated that the margin is expected to improve, with a target of reaching 2.50% and potentially moving towards 2.75% in the future, depending on rate hikes [36][39] Question: Outlook on revenue growth - Management confirmed that the revenue growth outlook remains consistent, with strong pipelines and initiatives on track [42][60] Question: Mortgage portfolio stability - Management expects stability in the mortgage portfolio as rates rise, with a proactive approach to home equity lending [51] Question: Provision adjustments - Management indicated that provisions may need to be adjusted upwards in line with loan growth, moving from a release to a build standpoint [81]