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What changed in ASSOCIATED BANC-CORP's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of ASSOCIATED BANC-CORP's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+537 added−591 removedSource: 10-K (2025-02-12) vs 10-K (2024-02-08)

Top changes in ASSOCIATED BANC-CORP's 2024 10-K

537 paragraphs added · 591 removed · 384 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

89 edited+52 added−74 removed109 unchanged
Biggest changeNotable aspects of the rule include (1) the establishment of bright-line standards for determining whether an entity meets the statutory definition of "deposit broker"; (2) the identification of a number of business relationships in which the agent of nominee is automatically not deemed to be a "deposit broker" because their primary purpose is not the placement of funds with depository institutions (the "primary purpose exception"); (3) the establishment of a more transparent application process for entities that seek the "primary purpose exception", but do not qualify as one of the identified business relationships to which the exception is automatically applicable; and (4) the clarification that third parties that have an exclusive deposit-placement arrangement with only one IDI are not considered a "deposit broker." Full compliance with the amended brokered deposits regulation was required by January 1, 2022. 11 The FDIC staff continues to implement the final rule through the issuance of interpretative guidance and other administrative actions.
Biggest changeNotable aspects of that framework include the following: (1) standards for determining whether an entity meets the statutory definition of "deposit broker"; (2) the enumeration of several business relationships in which the agent of nominee is automatically not deemed to be a "deposit broker" because their primary purpose is not the placement of funds with depository institutions (the "primary purpose exception"); (3) an application process for entities that seek to rely upon the "primary purpose exception" to the "deposit broker" definition, but do not qualify as one of the identified business relationships to which the exception is automatically applicable; (4) notice requirements for certain designated business exceptions; (5) a waiver process applicable to “adequately capitalized” banks seeking to accept, renew or rollover brokered deposits; and (6) additional terms and standards further implementing the limited statutory exception for reciprocal deposits noted above.
In addition, national banks are required to adopt a customer identification program as part of their BSA compliance program. National banks are also required to file SARs when they detect certain known or suspected violations of federal law or suspicious transactions related to a money laundering activity or a violation of the BSA.
In addition, national banks are required to adopt a customer identification program as part of their BSA compliance program. National banks are also required to file SARs when they detect certain known or suspected violations of federal law or suspicious transactions related to money laundering activity or a violation of the BSA.
Although the federal banking agencies have not developed formal regulations governing the digital asset activities of banking organizations, the supervisory framework summarized above dictates that, in order to effectively identify and manage digital asset-related risks and obtain supervisory non-objection to the proposed engagement in digital asset activities, banking organizations must implement appropriate risk management practices, including with respect to board and management oversight, policies and procedures, risk assessments, internal controls and monitoring.
Although the federal banking agencies have not developed formal regulations governing the digital asset activities of banking organizations, the supervisory framework summarized above currently dictates that, in order to effectively identify and manage digital asset-related risks and obtain supervisory non-objection to the proposed engagement in digital asset activities, banking organizations must implement appropriate risk management practices, including with respect to board and management oversight, policies and procedures, risk assessments, internal controls and monitoring.
The guidance applies broadly to any business agreement between a banking organization and another entity, by contract or otherwise (including affiliated entities), and it requires banking organizations to analyze the risks associated with each third-party relationship and establish effective governance and risk management processes for all stages of a third-party relationship, including planning, due diligence and third-party selection, contract negotiation, ongoing monitoring, and termination.
The guidance applies broadly to any business agreement between a banking organization and another entity, by contract or otherwise (including affiliated entities), and it requires banking organizations to analyze the risks associated with each third-party relationship and establish effective governance and risk management processes for all stages of a third-party 6 relationship, including planning, due diligence and third-party selection, contract negotiation, ongoing monitoring, and termination.
The Patriot Act mandates that financial 13 service companies implement additional policies and procedures and take heightened measures designed to address any or all of the following matters: customer identification programs, money laundering, terrorist financing, identifying and reporting suspicious activities and currency transactions, currency crimes, and cooperation between financial institutions and law enforcement authorities.
The Patriot Act mandates that financial service companies implement additional policies and procedures and take heightened measures designed to address any or all of the following matters: customer identification programs, money laundering, terrorist financing, identifying and reporting suspicious activities and currency transactions, currency crimes, and cooperation between financial institutions and law enforcement authorities.
The appropriate federal regulatory authorities have indicated that paying dividends that deplete a bank’s capital base to an inadequate level would be an unsafe and unsound banking practice and that banking organizations should generally pay dividends only out of current operating earnings.
The appropriate federal regulatory authorities have indicated that 7 paying dividends that deplete a bank’s capital base to an inadequate level would be an unsafe and unsound banking practice and that banking organizations should generally pay dividends only out of current operating earnings.
Although the Corporation will continue to monitor and stress test its capital consistent with the safety and soundness expectations of the 9 federal regulators, the Corporation no longer publishes stress testing results as a result of the legislative and regulatory amendments.
Although the Corporation will continue to monitor and stress test its capital consistent with the safety and soundness expectations of the federal regulators, the Corporation no longer publishes stress testing results as a result of the legislative and regulatory amendments.
The CFPB also has implemented the TILA-RESPA Integrated 15 Disclosure rules, which harmonize disclosure and certain regulatory compliance requirements required under those two statutes with respect to residential mortgage loans.
The CFPB also has implemented the TILA-RESPA Integrated Disclosure rules, which harmonize disclosure and certain regulatory compliance requirements required under those two statutes with respect to residential mortgage loans.
At December 31, 2023, we owned one nationally chartered commercial bank headquartered in Green Bay, Wisconsin, which serves local communities across the upper Midwest, one nationally chartered trust company headquartered in Milwaukee, Wisconsin, and 12 limited purpose banking and nonbanking subsidiaries either located in or conducting business primarily in our three state branch footprint (Wisconsin, Illinois, and Minnesota) that are closely related or incidental to the business of banking or financial in nature.
At December 31, 2024, we owned one nationally chartered commercial bank headquartered in Green Bay, Wisconsin, which serves local communities across the upper Midwest, one nationally chartered trust company headquartered in Milwaukee, Wisconsin, and 12 limited purpose banking and nonbanking subsidiaries either located in or conducting business primarily in our three-state branch footprint (Wisconsin, Illinois, and Minnesota) that are closely related or incidental to the business of banking or financial in nature.
Alternatively, the mortgage lender can originate "qualified mortgages," or QMs, which generally are mortgage loans without negative amortization, interest-only payments, balloon payments, or terms exceeding 30 years. QMs are entitled by rule to a presumption that the creditor making the loan satisfied the ATR requirements provided certain requirements are met. The Corporation is predominantly an originator of compliant QMs.
Alternatively, the mortgage lender can originate QMs, which generally are mortgage loans without negative amortization, interest-only payments, balloon payments, or terms exceeding 30 years. QMs are entitled by rule to a presumption that the creditor making the loan satisfied the ATR requirements provided certain requirements are met. The Corporation is predominantly an originator of compliant QMs.
At December 31, 2023, the Bank satisfied the capital requirements necessary to be deemed “well-capitalized.” In the event of a change to this status, the imposition of any of the measures described above could have a material adverse effect on the Corporation and on its profitability and operations.
At December 31, 2024, the Bank satisfied the capital requirements necessary to be deemed “well-capitalized.” In the event of a change to this status, the imposition of any of the measures described above could have a material adverse effect on the Corporation and on its profitability and operations.
See Note 4 Loans of the notes to consolidated financial statements in Part II, Item 8, Financial Statements and Supplementary Data, for additional information on loans to related parties. Community Reinvestment Act Requirements Associated Bank is subject to periodic CRA reviews by the OCC.
See Note 3 Loans of the notes to consolidated financial statements in Part II, Item 8, Financial Statements and Supplementary Data, for additional information on loans to related parties. Community Reinvestment Act Requirements Associated Bank is subject to periodic CRA reviews by the OCC.
For further detail on capital and capital ratios, see discussion under the Liquidity and Capital sections under Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, and under Part II, Item 8, Financial Statements and Supplementary Data, Note 19 Regulatory Matters of the notes to consolidated financial statements.
For further detail on capital and capital ratios, see discussion under the Liquidity and Capital sections under Part II, Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, and under Part II, Item 8, Financial Statements and Supplementary Data, Note 18 Regulatory Matters of the notes to consolidated financial statements.
Pursuant to the Dodd-Frank Act, the FDIC has backup enforcement authority over a depository institution holding company, such as the Parent Company, if the conduct or threatened conduct of such holding company poses a risk to the DIF, although such authority may not be used if the holding company is generally in sound condition and does not pose a foreseeable and material risk to the DIF.
Additionally, under the Dodd-Frank Act, the FDIC has backup enforcement authority over a depository institution holding company, such as the Parent Company, if the conduct or threatened conduct of such holding company poses a risk to the DIF, although such authority may not be used if the holding company is generally in sound condition and does not pose a foreseeable and material risk to the DIF.
Holding Company Dividends In addition, we and the Bank are subject to various general regulatory policies and requirements relating to the payment of dividends, including requirements to maintain adequate capital above regulatory minimums.
Holding Company Dividends In addition, the Corporation and the Bank are subject to various general regulatory policies and requirements relating to the payment of dividends, including requirements to maintain adequate capital above regulatory minimums.
On October 18, 2022, the FDIC adopted a final rule, applicable to all IDIs, to increase base deposit insurance assessment rate schedules uniformly by 2 bp beginning in the first quarterly assessment period of 2023.
In 2022, the FDIC adopted a final rule, applicable to all IDIs, to increase base deposit insurance assessment rate schedules uniformly by 2 bp beginning in the first quarterly assessment period of 2023.
Other Banking Regulations The Bank is also subject to a variety of other regulations with respect to the operation of its businesses, including but not limited to the Dodd-Frank Act, which among other restrictions placed limitations on the interchange fees charged for debit card transactions, TILA, Truth in Savings Act, Equal Credit Opportunity Act, Electronic Funds Transfer Act, Fair Housing Act, Home Mortgage Disclosure Act, Fair Debt Collection Practices Act, Fair Credit Reporting Act, Expedited Funds Availability (Regulation CC), Reserve Requirements (Regulation D), Insider Transactions (Regulation O), Privacy of Consumer Information (Regulation P), Margin Stock Loans (Regulation U), Right To Financial Privacy Act, Flood Disaster Protection Act, Homeowners Protection Act, Servicemembers Civil Relief Act, RESPA, TCPA, CAN-SPAM Act, Children’s Online Privacy Protection Act, and the John Warner NDAA.
Other Banking Regulations The Bank is also subject to a variety of other regulations with respect to the operation of its businesses, including but not limited to the Dodd-Frank Act, which among other restrictions placed limitations on the interchange fees charged for debit card transactions, TILA, Truth in Savings Act, ECOA, EFTA, Fair Housing Act, Home Mortgage Disclosure Act, Fair Debt Collection Practices Act, FCRA, Expedited Funds Availability (Regulation CC), Reserve Requirements (Regulation D), Insider Transactions (Regulation O), Privacy of Consumer Information (Regulation P), Margin Stock Loans (Regulation U), Right To Financial Privacy Act, Flood Disaster Protection Act, Homeowners Protection Act, Servicemembers Civil Relief Act, RESPA, TCPA, CAN-SPAM Act, Children’s Online Privacy Protection Act, and the John Warner NDAA.
Further, the federal banking agencies have in recent years increased their focus on banks’ third-party risk management controls and practices. On June 6, 2023, the federal banking agencies, including the OCC, adopted interagency guidance on risk management of third-party relationships.
Further, the federal banking agencies have in recent years increased their focus on banks’ third-party risk management controls and practices. The federal banking agencies, including the OCC, adopted interagency guidance on risk management of third-party relationships.
Measured by total assets reported at December 31, 2023, we are the largest bank holding company headquartered in Wisconsin.
Measured by total assets reported at December 31, 2024, we are the largest bank holding company headquartered in Wisconsin.
Transactions with Affiliates and Insiders Transactions between our national banking subsidiary and its related parties or any affiliate are governed by Sections 23A and 23B of the Federal Reserve Act. An affiliate is any company or entity, which controls, is controlled by or is under common control with the bank.
Transactions with Affiliates and Insiders Transactions between the Bank and its related parties or any affiliate are governed by Sections 23A and 23B of the Federal Reserve Act. An affiliate is any company or entity, which controls, is controlled by or is under common control with the bank.
Tier 2 capital is comprised of capital instruments and related surplus, meeting specified requirements, and may include cumulative preferred stock and long-term perpetual preferred stock, mandatory convertible securities, intermediate preferred stock and subordinated debt. Also included in Tier 2 capital is the allowance for credit losses limited to a maximum of 1.25 percent of risk-weighted assets.
Tier 2 capital is comprised of capital instruments and related surplus, meeting specified requirements, and may include cumulative preferred stock and long-term perpetual preferred stock, mandatory convertible securities, intermediate preferred stock and subordinated debt. Also included in Tier 2 capital is the ACL limited to a maximum of 1.25 percent of risk-weighted assets.
The EMS is intended to help manage environmental and climate risk in a comprehensive, systematic, planned and documented manner, and to help all policy practices integrate into the Corporation's Enterprise Risk Management program and align them with business objectives. Oversight for climate-related risks includes Board-level, senior management and Board and management committee oversight.
The Program is intended to help manage environmental and climate risk in a comprehensive, systematic, planned and documented manner, and to help policy practices integrate into the Corporation's Enterprise Risk Management program and align them with business objectives and any applicable laws. Oversight for climate-related risks includes Board-level, senior management and Board and management committee oversight.
Further, on August 8, 2023, the Federal Reserve announced the establishment of a Novel Activities Supervision Program, which is designed in part to enhance the Federal Reserve’s supervision processes in respect of banking organizations’ crypto-asset related activities and use of distributed ledger technologies and other novel technologies in the delivery of financial products and services.
Most recently, in August 2023, the Federal Reserve announced the establishment of a Novel Activities Supervision Program, which is designed in part to enhance the Federal Reserve’s supervision processes in respect of banking organizations’ crypto-asset related activities and use of distributed ledger technologies and other novel technologies in the delivery of financial products and services.
Under the CECL model, we are required to present certain financial assets carried at amortized cost, such as loans held for investment and HTM securities, at the net amount expected to be collected.
Current Expected Credit Loss Treatment Under the current CECL model, we are required to present certain financial assets carried at amortized cost, such as loans held for investment and HTM securities, at the net amount expected to be collected.
For this reason, fostering a culture where people feel valued, respected, and comfortable sharing ideas and perspectives is a core focus of the Corporation. Our culture is anchored in the belief that we are better together, and great ideas can come from anywhere in the Corporation.
We believe our success begins and ends with people. For this reason, fostering a culture where people feel valued, respected, and comfortable sharing ideas and perspectives is a core focus of the Corporation. Our culture is anchored in the belief that we are better together, and great ideas can come from anywhere in the Corporation.
In recent years, the CFPB—with the support of the current Presidential Administration—has launched an initiative aimed at eliminating or restricting a number of fees assessed by financial institutions, including overdraft and non-sufficient funds fees as well as other transaction- and account management-related fees deemed by the CFPB to be “junk fees.” The CFPB has carried out its initiative through a mixture of supervision, examination and enforcement actions.
In recent years, the CFPB—with the support of the Biden Administration—has launched an initiative aimed at eliminating or restricting a number of fees assessed by financial institutions, including overdraft and NSF fees as well as other transaction- and account management-related fees deemed by the CFPB to be “junk fees.” The CFPB has carried out its initiative through a mixture of supervision, examination and enforcement actions.
The increase was instituted to account for extraordinary growth in insured deposits during the first and second quarters of 2020, which caused a substantial decrease in the DIF reserve ratio. The FDIC indicated that the new assessment rate schedules will remain in effect until the DIF reserve ratio meets or exceeds 2 percent.
The increase was instituted to account for extraordinary growth in insured deposits during the first and second quarters of 2020, which caused a substantial decrease in the DIF reserve ratio. The new assessment rate schedules are expected to remain in effect until the DIF reserve ratio meets or exceeds 2 percent.
For example, the California Privacy Protection Agency is currently in the process of finalizing regulations under the CCPA regarding the use of automated decision making.
Of note, the California Privacy Protection Agency is currently in the process of finalizing regulations under the CCPA regarding the use of automated decision making.
On December 3, 2019, three federal banking agencies and FinCEN issued a joint statement clarifying the compliance procedures and reporting requirements that banks must file for customers engaged in the growth or cultivation of hemp, including a clear statement that banks need not file a SAR on customers engaged in the growth or cultivation of hemp in accordance with applicable laws and regulations.
Following the legalization of domestic production of hemp, three federal banking agencies and FinCEN issued a joint statement clarifying the compliance procedures and reporting requirements that banks must file for customers engaged in the growth or cultivation of hemp, including a clear statement that banks need not file a SAR on customers engaged in the growth or cultivation of hemp in accordance with applicable laws and regulations.
Services Through Associated Bank and various nonbanking subsidiaries, we provide a broad array of banking and nonbanking products and services to individuals and businesses through 196 banking branches at December 31, 2023, serving more than 100 communities, primarily within our three-state branch footprint.
Services Through Associated Bank and various nonbanking subsidiaries, we provide a broad array of banking and nonbanking products and services to individuals and businesses through 188 banking branches as of December 31, 2024, serving more than 100 communities, primarily within our three-state branch footprint.
The operational and managerial standards in the Guidelines relate to the following: (1) internal controls and information systems; (2) internal audit systems; (3) loan documentation; (4) credit underwriting; (5) interest rate exposure; (6) asset growth; (7) 6 compensation, fees and benefits; (8) asset quality; and (9) earnings.
The Guidelines establish certain safety and soundness standards for all depository institutions. The operational and managerial standards in the Guidelines relate to the following: (1) internal controls and information systems; (2) internal audit systems; (3) loan documentation; (4) credit underwriting; (5) interest rate exposure; (6) asset growth; (7) compensation, fees and benefits; (8) asset quality; and (9) earnings.
As of December 31, 2023: • Nearly 3,000 colleagues and spouses participated in an annual wellness visit with a primary care provider. • Nearly 1,725 colleagues received a well-being reimbursement for the purchase of items such as gym memberships, home fitness equipment, and/or fitness tracking devices.
As of December 31, 2024: • Over 2,700 colleagues and spouses participated in an annual wellness visit with a primary care provider. • Nearly 1,650 colleagues received a well-being reimbursement for the purchase of items such as gym memberships, home fitness equipment, and/or fitness tracking devices.
Some federal consumer financial laws enforced by the CFPB include the Equal Credit Opportunity Act, TILA, the Truth in Savings Act, the Home Mortgage Disclosure Act, RESPA, the Fair Debt Collection Practices Act, and the Fair Credit Reporting Act.
Some federal consumer financial laws enforced by the CFPB include the ECOA, TILA, the Truth in Savings Act, the Home Mortgage Disclosure Act, RESPA, the Fair Debt Collection Practices Act, and the FCRA.
Pursuant to SEC regulations and NYSE rules enacted in 2022, we adopted a "clawback" policy with respect to the recovery of incentive-based compensation paid to current or former executive officers in the event of material noncompliance with any financial reporting requirement under the securities laws. A copy of our clawback policy is attached as Exhibit 97 to this 10-K.
Pursuant to SEC regulations and NYSE rules enacted in 2022, we adopted a "clawback" policy with respect to the recovery of incentive-based compensation paid to current or former executive officers in the event of material noncompliance with any financial reporting requirement under the securities laws.
Pursuant to this “scorecard” method, two scores (a performance score and a loss severity score) will be combined and converted to an initial base assessment rate. The performance score measures an institution’s financial performance and ability to withstand stress.
Pursuant to this “scorecard” method, two scores (a performance score and a loss severity score) will be combined and converted to an initial base assessment rate. The performance score measures an institution’s financial performance and ability to withstand stress. The loss severity score measures the relative magnitude of potential losses to the DIF in the event of the institution’s failure.
The findings of the supervisory initiatives will be included in reports of examination. Deficiencies will be incorporated into the organization’s supervisory ratings, which can affect the organization’s ability to make acquisitions and take other actions.
Deficiencies will be incorporated into the organization’s supervisory ratings, which can affect the organization’s ability to make acquisitions and take other actions.
The Federal Reserve will review, as part of its standard, risk-focused examination process, the incentive compensation arrangements of banking organizations, such as the Corporation, that are not “large, complex banking organizations.” These reviews will be tailored to each organization based on the scope and complexity of the organization’s activities and the prevalence of incentive compensation arrangements.
A copy of our clawback policy is attached as Exhibit 97 to this Annual Report on 10-K. 14 The Federal Reserve will review, as part of its standard, risk-focused examination process, the incentive compensation arrangements of banking organizations, such as the Corporation, that are not “large, complex banking organizations.” These reviews will be tailored to each organization based on the scope and complexity of the organization’s activities and the prevalence of incentive compensation arrangements.
The agencies’ previous capital regulations were amended in 2013 following the enactment of the Dodd-Frank Act to strengthen the components of regulatory capital, increase risk-based capital requirements, and make selected changes to the calculation of risk-weighted assets.
The Federal Reserve, the OCC and the FDIC have adopted risk-based capital regulations implementing certain provisions of the Dodd-Frank Act and Basel III. The agencies’ previous capital regulations were amended in 2013 following the enactment of the Dodd-Frank Act to strengthen the components of regulatory capital, increase risk-based capital requirements, and make selected changes to the calculation of risk-weighted assets.
The CFPB has the authority to create and enforce consumer protection rules and regulations and has the power to examine us for compliance with such rules and regulations. The CFPB also has the authority to prohibit “unfair, deceptive or abusive” acts and practices.
We are also subject to the enforcement and rule-making authority of the CFPB regarding consumer financial products. The CFPB has the authority to create and enforce consumer protection rules and regulations and has the power to examine us for compliance with such rules and regulations. The CFPB also has the authority to prohibit “unfair, deceptive or abusive” acts and practices.
In 2023, we added a third program aimed at successfully onboarding new leaders. Colleague Engagement: By strengthening our workforce and providing opportunities for all colleagues to apply their talent and grow as professionals, we strive to foster pride in working for Associated and to be recognized as the employer of choice among Midwestern financial services firms.
By strengthening our workforce and providing opportunities for colleagues to apply their talent and grow as professionals, we strive to foster pride in working for Associated and to be recognized as the employer of choice among Midwestern financial services firms. Colleague engagement is a focus for our company.
The Bank would be considered a large bank with assets of greater than $10 billion under the final rule and therefore will be evaluated under new lending, retail services and products, community development financing, and community development services tests.
CRA evaluations and data collection requirements will be tailored based on bank size and type. The Bank would be considered a large bank with assets of greater than $10 billion under the final rule and therefore will be evaluated under retail lending, retail services and products, community development financing, and community development services tests.
See Item 1A, Risk Factors — Operational Risks for additional discussion of this topic. Banking Acquisitions We are required to obtain prior Federal Reserve approval before acquiring more than 5 percent of the voting shares, or substantially all of the assets, of a bank holding company, bank or savings association.
Banking Acquisitions We are required to obtain prior Federal Reserve approval before acquiring more than 5 percent of the voting shares, or substantially all of the assets, of a bank holding company, bank or savings association.
On October 19, 2023, the CFPB announced a proposed rule to adopt a regulation regarding personal financial data rights that is designed to promote “open banking.” If enacted as proposed, the regulation would require, among other things, that data providers, including any financial institution, make available to consumers and certain authorized third parties upon request certain covered transaction, account and payment information.
On October 22, 2024, the CFPB adopted a final rule regarding personal financial data rights that is designed to promote “open banking.” The final rule requires, among other things, that data providers, including any financial institution, make available to consumers and certain authorized third parties upon request certain covered transaction, account and payment 12 information.
Historically, deposit insurance premiums we have paid to the FDIC have been deductible for federal income tax purposes; however, the Tax Act disallows the deduction of such premium payments for banking organizations with total consolidated assets of $50 billion or more.
The termination of deposit insurance for the Bank would have a material adverse effect on our earnings, operations and financial condition. 10 Historically, deposit insurance premiums we have paid to the FDIC have been deductible for federal income tax purposes; however, the Tax Act disallows the deduction of such premium payments for banking organizations with total consolidated assets of $50 billion or more.
See Item 1A, Risk Factors — Operational Risks for additional discussion of this topic. 7 Banking Subsidiary Dividends The Parent Company is a legal entity separate and distinct from the Bank and other nonbanking subsidiaries. A substantial portion of our cash flow comes from dividends paid to us by Associated Bank.
Banking Subsidiary Dividends The Parent Company is a legal entity separate and distinct from the Bank and other nonbanking subsidiaries. A substantial portion of our cash flow comes from dividends paid to us by Associated Bank.
The proposed rule, which would not apply to the Corporation and the Bank as proposed, would substantially revise the existing regulatory capital framework for institutions with $100 billion or more of assets. See Item 1A, Risk Factors — Legal, Regulatory, Compliance and Reputational Risks for additional discussion of this topic.
The proposed rule, which would not apply to the Corporation and the Bank as proposed, would substantially revise the existing regulatory capital framework for institutions with $100 billion or more of assets.
Privacy, Data Protection, and Cybersecurity We are subject to a number of U.S. federal, state, local and foreign laws and regulations relating to consumer privacy and data protection. Under privacy protection provisions of the GLBA and its implementing regulations and guidance, we are limited in our ability to disclose certain non-public information about consumers to nonaffiliated third parties.
Under privacy protection provisions of the GLBA and its implementing regulations and guidance, we are limited in our ability to disclose certain non-public information about consumers to nonaffiliated third parties.
To support its supervisory function, the OCC has the authority to assess and charge fees on all national banks according to a set fee schedule. On December 1, 2023, the OCC published its assessment rates for the 2024 calendar year. The OCC elected to maintain its general assessment schedule from 2023 with no adjustments for inflation.
To support its supervisory 5 function, the OCC has the authority to assess and charge fees on all national banks according to a set fee schedule. On November 27, 2024, the OCC published its assessment rates for the 2025 calendar year.
None of our colleagues are represented by unions. Talent Acquisition, Development, and Retention: We believe attracting and retaining diverse talent in a highly competitive candidate market fuels our ability to serve our customers and support our communities. We are focused on sourcing talent from all backgrounds through engagement with workforce development programs, partnerships with diverse organizations, and active campus recruitment.
We believe attracting and retaining talent in a highly competitive candidate market fuels our ability to serve our customers and support our communities. We are focused on sourcing talent from all backgrounds through engagement with workforce development programs, partnerships with various organizations, and active campus recruitment. As a result, we were able to hire over 650 external candidates in 2024.
The final rule simplified and streamlined compliance requirements for firms that do not have significant trading activities and enhanced requirements for firms that do. Under the rule, compliance requirements are based on the amount of assets and liabilities that a bank trades.
The Volcker Rule was subsequently revised to simplify and streamline compliance requirements for firms that do not have significant trading activities and enhance requirements for firms that do. Under the current framework, compliance requirements are based on the amount of assets and liabilities that a bank trades.
The final rule will take effect on April 1, 2024; however, compliance with the majority of the final rule's provisions will not be required until January 1, 2026, and the data reporting requirements of the final rule will not take effect until January 1, 2027.
Compliance with the majority of the final rule's provisions otherwise would not have been required until January 1, 2026 and the data reporting requirements of the final rule would not have taken effect until January 1, 2027.
In assessing an institution’s capital adequacy, the OCC takes into consideration not only these numeric factors, but qualitative factors as well, and has the authority to establish higher capital requirements for individual institutions where deemed necessary. 8 In addition to establishing the minimum regulatory capital requirements, the capital regulations limit capital distributions and certain discretionary bonus payments to management if the institution does not hold a capital conservation buffer consisting of 2.5 percent of CET1 capital to risk-weighted assets above the amount necessary to meet its minimum risk-based capital requirements.
In addition to establishing the minimum regulatory capital requirements, the capital regulations limit capital distributions and certain discretionary bonus payments to management if the institution does not hold a capital conservation buffer consisting of 2.5 percent of CET1 capital to risk-weighted assets above the amount necessary to meet its minimum risk-based capital requirements.
The Corporation has established an Environmental Sustainability Risk Policy and Environmental Sustainability Statement focused on environmental risk management; climate change, carbon emissions and natural resources; and environmental and social lending which will serve as the foundation to Associated's Environmental Sustainability Risk Management System, a system for supporting the Environmental Sustainability Risk Policy and environmental sustainability risk reporting.
The Corporation has established an Environmental Risk Management Policy and Program ("Program") Statement focused on environmental risk management; our environmental focus on efficient energy and resource use; and the environmental sustainability transition which will serve as the foundation to Associated's Environmental Sustainability Risk Management Program, a program for supporting environmental sustainability risk reporting.
Taken together, these measures offer institutions a transition period of up to five years. The Corporation elected to utilize the 2020 Capital Transition Relief as permitted under applicable regulations. As a result, the three-year phase-out period described above commenced in 2022.
The Corporation elected to utilize the Capital Transition Relief in 2020 as permitted under applicable regulations, and the three-year transition period described above commenced in 2022.
Under the final rule, the assessment base for an IDI will be equal to the institution’s estimated uninsured deposits as of December 31, 2022, adjusted to exclude the first $5 billion in estimated uninsured deposits.
Under the final rule, the assessment base for an IDI is equal to the institution’s estimated uninsured deposits as of December 31, 2022, adjusted to exclude the first $5 billion in estimated uninsured deposits. The FDIC started collecting the special assessment at an annual rate of 13.4 bp beginning with the first quarterly assessment period of 2024.
The CFPB has examination and enforcement authority over all banks with more than $10 billion in assets, such as the Bank. Standards for Safety and Soundness The federal banking agencies have adopted the Interagency Guidelines for Establishing Standards for Safety and Soundness (the “Guidelines”). The Guidelines establish certain safety and soundness standards for all depository institutions.
The CFPB has examination and enforcement authority over all banks with more than $10 billion in assets. For additional information, please refer to Item 1— Business — Supervision and Regulation — Consumer Financial Services Regulations. Standards for Safety and Soundness The federal banking agencies have adopted the Interagency Guidelines for Establishing Standards for Safety and Soundness (the “Guidelines”).
Through internal and external training and development programs, we aim to help our colleagues improve their skills so they can achieve their career goals and transition to more challenging roles. • Beginning in 2023, the Corporation initiated individual development plans for all colleagues designed to enhance colleague development, growth and career pathing through identification of career interests, and detailed action plans focused on development areas. • In 2023, we introduced significant training and resources for development and career planning to include workshops for both leaders and colleagues.
Through internal and external training and development programs, we aim to help our colleagues improve their skills so they can achieve their career goals and transition to more challenging roles. • Beginning in 2024, the Corporation initiated quarterly progress reviews for all colleagues designed to enhance colleague development, growth, and performance through consistent coaching and feedback. • In 2024, we introduced significant training and resources for development and career planning to include new leadership development programs and workshops for both leaders and colleagues. • During 2024, we completed over 330 individual career coaching sessions and offered nearly 70 hours of training to assist colleagues in creating meaningful performance and development objectives.
A financial institution also should have a robust business continuity program to recover from a cyberattack and procedures for monitoring the security of third-party service providers that may have access to nonpublic data at the institution. See Item 1A, Risk Factors — Operational Risks for additional discussion of this topic.
A financial institution also should have a business continuity program to recover from a cyberattack and procedures for monitoring the security of third-party service providers that may have access to nonpublic data at the institution. Additionally, recent and ongoing developments may impact our data security- and privacy-related internal controls and risk profile.
The CRA does not establish specific lending requirements or programs for financial institutions and does not limit the ability of such institutions to develop products and services believed best-suited for a particular community. An institution’s CRA assessment may be used by its regulators in their evaluation of certain applications, including a merger, acquisition or the establishment of a branch office.
The CRA does not establish specific lending requirements or programs for financial institutions and does not limit the ability of such institutions to develop products and services believed best-suited for a particular community.
The FDIC has the flexibility to adopt actual rates that are higher or lower than the total base assessment rates adopted without notice and comment, if certain conditions are met.
Total scores are converted pursuant to a predetermined formula into an initial base assessment rate. Assessment rates range from 2.5 bp to 45 bp for large institutions. The FDIC has the flexibility to adopt actual rates that are higher or lower than the total base assessment rates adopted without notice and comment, if certain conditions are met.
Associated Bank, our only subsidiary that accepts insured deposits, is also subject to examination by the FDIC. We are subject to the enforcement and rule-making authority of the CFPB regarding consumer financial products.
Associated Bank, our only subsidiary that accepts insured deposits, is also subject to examination by the FDIC.
Institutions must file a capital restoration plan with the OCC within 45 days of the date it receives a notice from the OCC that it is “undercapitalized,” “significantly undercapitalized,” or “critically undercapitalized.” Compliance with a capital restoration plan must be guaranteed by a parent holding company.
In certain situations, a federal banking agency may reclassify a well-capitalized institution as adequately capitalized and may require an adequately capitalized or undercapitalized institution to comply with supervisory actions as if the institution were in the next lower category. 9 Institutions must file a capital restoration plan with the OCC within 45 days of the date it receives a notice from the OCC that it is “undercapitalized,” “significantly undercapitalized,” or “critically undercapitalized.” Compliance with a capital restoration plan must be guaranteed by a parent holding company.
These laws and regulations could be changed drastically in the future, which could affect our profitability, our ability to compete effectively, or the composition of the financial services industry in which we compete. 18 Government Monetary Policies and Economic Controls Our earnings and growth, as well as the earnings and growth of the banking industry, are affected by the credit policies of monetary authorities, including the Federal Reserve.
The laws and regulations to which we are subject are constantly under review by Congress, the federal regulatory agencies, and the state authorities. These laws and regulations could be changed drastically in the future, which could affect our profitability, our ability to compete effectively, or the composition of the financial services industry in which we compete.
During 2023, many of our colleagues and community members responded to and recognized our efforts: • Colleague engagement is a focus for our company. During 2023, 92% of our colleagues provided feedback through an annual workplace survey conducted by a third-party on key topics related to the overall health and culture of the organization.
During 2024, 91% of our colleagues provided feedback through an annual workplace survey conducted by a third-party on key topics related to the overall health and culture of the organization. The survey respondent percentage is well above the average response rate for commercial banks.
Other Regulatory Authorities In addition to regulation, supervision and examination by federal banking agencies, the Corporation and certain of its subsidiaries, including those that engage in securities brokerage, dealing and investment advisory activities, are subject to other federal and applicable state securities laws and regulations, and to supervision and examination by other regulatory authorities, including the SEC, FINRA, NYSE, DOL and others.
Other Regulatory Authorities In addition to regulation, supervision and examination by federal banking agencies, the Corporation and certain of its subsidiaries, including those that engage in securities brokerage, dealing and investment advisory activities, are subject to other federal and applicable state securities laws and regulations, and to supervision and examination by other regulatory authorities, including the SEC, FINRA, NYSE, DOL and others. 17 Separately, in June of 2019, pursuant to the Dodd-Frank Act, the SEC adopted Regulation Best Interest, which, among other things, establishes a new standard of conduct for a broker-dealer to act in the best interest of a retail customer when making a recommendation of any securities transaction or investment strategy involving securities to such customer.
Digital Asset Regulation The federal banking agencies have issued interpretive guidance and statements regarding the engagement by banking organizations in certain digital asset activities.
Digital Asset Regulation In recent years, the federal banking agencies have expressed increased concerns regarding the engagement by banking organizations in certain digital assets activities and issued a series of guidance materials addressing digital asset-related risks.
Further, on November 16, 2023, the FDIC issued a final rule to implement a special assessment to recover the loss to the DIF associated with protecting uninsured depositors following the closure of SVB and SBNY.
At December 31, 2024, our estimated level of uninsured deposits was $15.5 billion. The Corporation’s assessment rate for FDIC was approximately 10 bp for 2024. Further, in 2023, the FDIC issued a final rule to implement a special assessment to recover the loss to the DIF associated with protecting uninsured depositors following the closure of SVB and SBNY.
Under the final rule, the agencies will evaluate a bank’s CRA performance based upon the varied activities that it conducts and the communities in which it operates. CRA evaluations and data collection requirements will be tailored based on bank size and type.
On October 24, 2023, the federal banking agencies jointly issued a final rule to strengthen and modernize the existing CRA regulations. Under the final rule, the agencies will evaluate a bank’s CRA performance based upon the varied activities that it conducts and the communities in which it operates.
Consumers and, in some instances, state and federal regulators, must be notified in the event of a data breach under applicable state laws and federal regulations. The changing privacy laws in the United States, Europe and elsewhere create new individual privacy rights and impose increased obligations on companies handling personal information, including the CCPA, as amended by the CPRA.
The changing privacy laws in the United States, Europe and elsewhere create new individual privacy rights and impose increased obligations on companies handling personal information, including the CCPA, as amended by the CPRA. While GLBA-regulated nonpublic, personal information generally is exempt under the CCPA, the CCPA and other state laws apply to other personal information processed by the Bank.
We are not dependent upon a single or a few customers, the loss of which would have a material adverse effect on us. 3 Human Capital Matters We are very fortunate to have a diverse, committed team of approximately 4,100 colleagues at December 31, 2023 who are capable, determined and empowered to drive our company forward.
Human Capital Matters We are very fortunate to have a team of approximately 4,000 colleagues at December 31, 2024 who are capable, determined and empowered to drive our company forward. None of our colleagues are represented by unions.
In addition, these regulators must establish regulations or guidelines requiring enhanced disclosure to regulators of incentive-based compensation arrangements.
The prospects and timing for the adoption of the proposed rule remain uncertain because both the Federal Reserve and the SEC have not joined the proposal. In addition, these regulators must establish regulations or guidelines requiring enhanced disclosure to regulators of incentive-based compensation arrangements.
As a result, we were able to hire nearly 750 external candidates in 2023. At the same time, in 2023, we had low voluntary turnover of 12% while 20% of colleagues advanced their careers at the Corporation through nearly 850 internal promotions or lateral moves.
At the same time, in 2024, we had low voluntary turnover of 12% while 21% of colleagues advanced their careers at the Corporation through nearly 850 internal promotions or lateral moves. At December 31, 2024, the average tenure of our workforce was 8.8 years while the average tenure of our executive leadership team was 11.0 years.
Our business is primarily relationship-driven and is organized into three reportable segments: Corporate and Commercial Specialty; Community, Consumer, and Business; and Risk Management and Shared Services. See Note 21 Segment Reporting of the notes to consolidated financial statements in Part II, Item 8, Financial Statements and Supplementary Data, for additional information concerning our reportable segments.
Our business is primarily relationship-driven and is organized into three reportable segments: Corporate and Commercial Specialty; Community, Consumer, and Business; and Risk Management and Shared Services.
Market-based Pay and Rewards: We regularly review our pay and benefits programs so that we are offering a total compensation package, including salary, incentive opportunities, and benefits that we believe is fair, equitable, and competitive in our marketplace. 4 Culture: We believe our success begins and ends with people.
The total value for well-being reimbursements was over $300,000. • Over 1,300 colleagues earned incentives through our Total Well-being program totaling over $160,000. We regularly review our pay and benefits programs so that we are offering a total rewards package (including salary, incentives, benefits, and well-being opportunities) that we believe is fair, equitable, and competitive in our marketplace.
The final rule took effect April 1, 2019. However, on August 26, 2020, the federal bank regulatory agencies issued a final rule that provided institutions that had adopted the CECL accounting standard in 2020 with the option to mitigate the estimated capital effects of CECL for two years, followed by a three-year transition period.
The federal banking regulators have issued two final rules providing financial institutions with the option to delay the estimated impact on regulatory capital stemming from the CECL model. The two final rules, taken together, provided financial institutions with the option to mitigate the estimated capital effects of the CECL model for two years followed by a three-year phase-in period.
The final rule includes CRA assessment areas associated with mobile and online banking, and new metrics and benchmarks to assess retail lending performance. In addition, the final rule emphasizes smaller loans and investments that can have a high impact and be more responsive to the needs of LMI communities.
In addition, the final rule emphasizes smaller loans and investments that can have a high impact and be more responsive to the needs of LMI communities. On March 29, 2024, a federal district court in Texas granted a preliminary injunction barring implementation of the final rule.
These efforts are supported by the work of our seven Colleague Resource Groups and the members that drive actions and events.
Our efforts are supported by the work of our seven CRGs. These groups, which are open to all employees, are centered on development and colleague growth.
In 2023, we used our expertise to provide loans and investments as well as financial support to: • Promote affordable housing, • Provide small business lending, and • Advance neighborhood development through philanthropic support. These initiatives and investments create opportunities for individuals, families, and businesses to fully participate in and share the rewards of building economic stability in our communities.
Our commitment to our communities goes beyond providing banking services. We use our expertise and financial resources to support communities in accordance with the CRA requirements.These initiatives and investments create opportunities for individuals, families, and businesses to fully participate in and share the rewards of building economic stability in our communities. Competition The financial services industry is highly competitive.
The survey respondent percentage is well above the average response rate for commercial banks. For the seventh year in a row, we received more than 8,000 colleague comments, including more than 9,000 in 2023, which we believe demonstrates that colleagues are interested in, and comfortable with, sharing candid feedback. • Associated Bank continues to be recognized as a Top Workplace.
For the eighth year in a row, we received more than 8,000 colleague comments, including more than 10,000 in 2024, which we believe demonstrates that colleagues are interested in, and comfortable with, sharing candid feedback. We are pleased to support total health and well-being through a variety of benefits, programs, activities, and educational opportunities throughout the year.
These assessments continued until the bonds matured in September 2019. The Corporation’s assessment rate for FDIC was approximately 9 bp for 2023. The FDIC is authorized to conduct examinations of and require reporting by FDIC-insured institutions.
The FDIC is authorized to conduct examinations of and require reporting by FDIC-insured institutions.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeLegislators and the leadership of the federal banking agencies noted that inadequate prudential regulation of regional banking organizations (generally, institutions with less than $250 billion in total assets), insufficient supervision of such organizations, poor management and inadequate risk management practices, specifically including interest rate and liquidity risks in consideration of each institution’s business model, and substantial uninsured deposit liabilities were causes of the failures.
Biggest changeThe agencies concluded that a significant contributing factor to the failures of such institutions was the concentration of uninsured deposits, coupled with inadequate prudential regulation and supervision of regional banking organizations, poor management and inadequate risk management practices.
Other factors that influence our credit ratings include changes to the rating agencies’ methodologies for our industry or certain security types; the rating agencies’ assessment of the general operating environment for financial services companies; our relative positions in the markets in which we compete; our various risk exposures and risk management policies and activities; pending litigation and other contingencies; our reputation; our liquidity position, diversity of funding sources and funding costs; the current and expected level and volatility of our earnings; our capital position and capital management practices; our corporate governance; current or future regulatory and legislative initiatives; and the agencies’ views on whether the U.S. government would provide meaningful support to the Corporation or its subsidiaries in a crisis.
Other factors that influence our credit ratings include changes to the rating agencies’ methodologies for our industry or certain security types; the rating agencies’ assessment of the general operating environment for financial services companies; our relative positions in the markets in which we compete; our various risk exposures and risk management policies and activities; pending litigation and other contingencies; our reputation; our liquidity position, diversity of funding sources and funding costs; the current and expected level and volatility of our earnings; our capital position and capital management practices; our corporate governance; current or future regulatory and legislative initiatives; and the agencies’ views on whether the U.S. government would provide meaningful 21 support to the Corporation or its subsidiaries in a crisis.
Our ability to compete successfully depends on a number of factors, including, among other things: • the ability to develop, maintain, and build upon long-term customer relationships based on top quality service, high ethical standards, and safe, sound assets; • the ability to expand our market position; • the scope, relevance, and pricing of products and services offered to meet customer needs and demands; • the rate at which we introduce new products and services relative to our competitors; • customer satisfaction with our level of service; and 32 • industry and general economic trends.
Our ability to compete successfully depends on a number of factors, including, among other things: • the ability to develop, maintain, and build upon long-term customer relationships based on top quality service, high ethical standards, and safe, sound assets; • the ability to expand our market position; • the scope, relevance, and pricing of products and services offered to meet customer needs and demands; • the rate at which we introduce new products and services relative to our competitors; • customer satisfaction with our level of service; and • industry and general economic trends.
Cyber-attacks involving large financial institutions, including distributed denial of service attacks designed to disrupt external customer-facing services, nation state cyberattacks and ransomware attacks designed to deny organizations access to key internal resources or systems or other critical data, as well as targeted social engineering and phishing email and text message attacks designed to allow unauthorized persons to obtain access to an institution’s information systems and data or that of its customers, are becoming more common and increasingly sophisticated.
Cyber-attacks involving large financial institutions, including distributed denial of service attacks designed to disrupt external customer-facing services, nation state cyber-attacks and ransomware attacks designed to deny organizations access to key internal resources or systems or other critical data, as well as targeted social engineering and phishing email and text message attacks designed to allow unauthorized persons to obtain access to an institution’s information systems and data or that of its customers, are becoming more common and increasingly sophisticated.
A deterioration in economic conditions, including those arising from government shutdowns, defaults, anticipated defaults or rating agency downgrades of sovereign debt (including debt of the U.S.), or increases in unemployment, could result in an increase in loan delinquencies and NPAs, decreases in loan collateral values, and a decrease in demand for our products and services, among other things, any of which could have a material adverse impact on our financial condition and results of operations.
A deterioration in economic conditions, including those arising from government shutdowns, defaults, anticipated defaults or rating agency downgrades of sovereign debt (including debt of the U.S.), or increases in unemployment, could result in an increase in loan delinquencies and NPAs, decreases in loan collateral 32 values, and a decrease in demand for our products and services, among other things, any of which could have a material adverse impact on our financial condition and results of operations.
Any actual or perceived failure to comply with evolving regulatory frameworks around the development and use of AI, machine learning and automated decision making could adversely affect our business, results of operations, and financial condition. We are dependent upon third parties for certain information system, data management and processing services, and to provide key components of our business infrastructure .
Any actual or perceived failure to comply with evolving regulatory frameworks around the development and use of AI, machine learning and automated decision making could adversely affect our business, results of operations, and financial condition. 26 We are dependent upon third parties for certain information system, data management and processing services, and to provide key components of our business infrastructure .
When negative evidence (e.g., cumulative losses in recent years, history of operating loss or tax credit carryforwards expiring unused) exists, more positive evidence than negative evidence will be necessary. 29 The impact of each of these impairment matters could have a material adverse effect on our business, results of operations, and financial condition.
When negative evidence (e.g., cumulative losses in recent years, history of operating loss or tax credit carryforwards expiring unused) exists, more positive evidence than negative evidence will be necessary. The impact of each of these impairment matters could have a material adverse effect on our business, results of operations, and financial condition.
In the policy statement, the regulators noted that banks should maintain actionable contingency funding plans that take into account a range of possible stress 22 scenarios, assess the stability of their funding and maintain a broad range of funding sources, ensure that collateral is available for borrowing, and review and revise contingency funding plans periodically and more frequently as market conditions and strategic initiatives change.
In the policy statement, the regulators noted that banks should maintain actionable contingency funding plans that take into account a range of possible stress scenarios, assess the stability of their funding and maintain a broad range of funding sources, ensure that collateral is available for borrowing, and review and revise contingency funding plans periodically and more frequently as market conditions and strategic initiatives change.
Our securities prices can fluctuate widely in response to a variety of factors including, among other things: 40 • actual or anticipated variations in quarterly results of operations or financial condition; • operating results and stock price performance of other companies that investors deem comparable to us; • news reports relating to trends, concerns, and other issues in the financial services industry; • perceptions in the marketplace regarding us and/or our competitors; • new technology used or services offered by competitors; • significant acquisitions or business combinations, strategic partnerships, joint ventures, or capital commitments by or involving us or our competitors; • failure to integrate acquisitions or realize anticipated benefits from acquisitions; • changes in government regulations; • changes in international trade policy and any resulting disputes or reprisals; • geopolitical conditions, such as acts or threats of terrorism or military conflicts; and • recommendations by securities analysts.
Our securities prices can fluctuate widely in response to a variety of factors including, among other things: • actual or anticipated variations in quarterly results of operations or financial condition; • operating results and stock price performance of other companies that investors deem comparable to us; • news reports relating to trends, concerns, and other issues in the financial services industry; • perceptions in the marketplace regarding us and/or our competitors; • new technology used or services offered by competitors; • significant acquisitions or business combinations, strategic partnerships, joint ventures, or capital commitments by or involving us or our competitors; • failure to integrate acquisitions or realize anticipated benefits from acquisitions; 39 • changes in government regulations; • changes in international trade policy and any resulting disputes or reprisals; • geopolitical conditions, such as acts or threats of terrorism or military conflicts; and • recommendations by securities analysts.
Finally, we cannot guarantee that any costs and liabilities incurred in relation to an attack or incident will be covered by our existing insurance policies or that applicable insurance will be available to us in the future on economically reasonable terms or at all. From time to time, the Corporation engages in acquisitions, including acquisitions of depository institutions.
Finally, we cannot guarantee that 24 any costs and liabilities incurred in relation to an attack or incident will be covered by our existing insurance policies or that applicable insurance will be available to us in the future on economically reasonable terms or at all. From time to time, the Corporation engages in acquisitions, including acquisitions of depository institutions.
Any such downturn in economic output, especially domestically and in the regions in which we operate, may adversely affect our asset quality, deposit levels, loan demand and results of operations. As a result of the economic and geopolitical factors discussed above, financial institutions also face heightened credit risk, among other forms of risk.
Any such downturn in economic output, especially domestically and in the regions in which we operate, may adversely affect our asset quality, deposit levels, loan demand and results of operations. 18 As a result of the economic and geopolitical factors discussed above, financial institutions also face heightened credit risk, among other forms of risk.
Other states have proposed legislation similar to SB 253. The Climate-Related Financial Risk Act (referred to as SB 261) mandates U.S. businesses with annual revenues over $500 million doing business in California to bi-annually disclose climate-related financial risks and their mitigation strategies beginning January 1, 2026.
Other states have proposed legislation similar to SB 253. Additionally, the Climate-Related Financial Risk Act (referred to as SB 261) mandates U.S. businesses with annual revenues over $500 million doing business in California to bi-annually disclose climate-related financial risks and their mitigation strategies beginning January 1, 2026.
Acquiring other banks, businesses, or branches involves potential adverse impact to our financial results and various other risks commonly associated with acquisitions, including, among other things: • incurring time and expense associated with identifying and evaluating potential acquisitions and negotiating potential transactions, and with integrating acquired businesses, resulting in the diversion of resources from the operation of our existing businesses; • difficulty in estimating the value of target companies or assets and in evaluating credit, operations, management, and market risks associated with those companies or assets; • payment of a premium over book and market values that may dilute our tangible book value and earnings per share in the short and long term; • potential exposure to unknown or contingent liabilities of the target company, including, without limitation, liabilities for regulatory and compliance issues; • exposure to potential asset quality issues of the target company; 34 • there may be volatility in reported income as goodwill impairment losses could occur irregularly and in varying amounts; • difficulties, inefficiencies or cost overruns associated with the integration of the operations, personnel, technologies, services, and products of acquired companies with ours; • inability to realize the expected revenue increases, cost savings, increases in geographic or product presence, and/or other projected benefits; • potential disruption to our business; • the possible loss of key employees and customers of the target company; and • potential changes in banking or tax laws or regulations that may affect the target company.
Acquiring other banks, businesses, or branches involves potential adverse impact to our financial results and various other risks commonly associated with acquisitions, including, among other things: • incurring time and expense associated with identifying and evaluating potential acquisitions and negotiating potential transactions, and with integrating acquired businesses, resulting in the diversion of resources from the operation of our existing businesses; • difficulty in estimating the value of target companies or assets and in evaluating credit, operations, management, and market risks associated with those companies or assets; • payment of a premium over book and market values that may dilute our tangible book value and earnings per share in the short and long term; • potential exposure to unknown or contingent liabilities of the target company, including, without limitation, liabilities for litigation, regulatory and compliance issues; • exposure to potential asset quality issues of the target company; • there may be volatility in reported income as goodwill impairment losses could occur irregularly and in varying amounts; • difficulties, inefficiencies or cost overruns associated with the integration of the operations, personnel, technologies, services, and products of acquired companies with ours; 33 • inability to realize the expected revenue increases, cost savings, increases in geographic or product presence, and/or other projected benefits; • potential disruption to our business; • the possible loss of key employees and customers of the target company; and • potential changes in banking or tax laws or regulations that may affect the target company.
If any such challenges are made and are not resolved in our favor, they could have a material adverse effect on our financial condition and results of operations. We are subject to claims and litigation pertaining to fiduciary responsibility. From time to time, customers make claims and take legal action pertaining to the performance of our fiduciary responsibilities.
If 38 any such challenges are made and are not resolved in our favor, they could have a material adverse effect on our financial condition and results of operations. We are subject to claims and litigation pertaining to fiduciary responsibility. From time to time, customers make claims and take legal action pertaining to the performance of our fiduciary responsibilities.
As a result of uncertain domestic political conditions, including potential future federal government shutdowns, the possibility of the federal government defaulting on its obligations for a period of time due to debt ceiling limitations or other unresolved political issues, investments in financial instruments issued or guaranteed by the federal government pose liquidity risks.
As a result of uncertain domestic political conditions, 31 including potential future federal government shutdowns, the possibility of the federal government defaulting on its obligations for a period of time due to debt ceiling limitations or other unresolved political issues, investments in financial instruments issued or guaranteed by the federal government pose liquidity risks.
Despite our ongoing compliance efforts, we may become 39 subject to regulatory enforcement actions with respect to our programs and practices with respect to overdraft and non-sufficient funds fees. In addition, as supervisory expectations and industry practices regarding overdraft protection programs change, our continued offering of overdraft protection may result in negative public opinion and increased reputation risk.
Despite our ongoing compliance efforts, we may become subject to regulatory enforcement actions with respect to our programs and practices with respect to overdraft and non-sufficient funds fees. In addition, as supervisory expectations and industry practices regarding overdraft protection programs change, our continued offering of overdraft protection may result in negative public opinion and increased reputation risk.
Furthermore, our right to participate in a distribution of assets upon any of our subsidiaries’ liquidation or reorganization is subject to the prior claims of that subsidiary’s creditors, including holders of any preferred stock of that subsidiary. 41 Our articles of incorporation, bylaws, and certain banking laws may have an anti-takeover effect.
Furthermore, our right to participate in a distribution of assets upon any of our subsidiaries’ liquidation or reorganization is subject to the prior claims of that subsidiary’s creditors, including holders of any preferred stock of that subsidiary. Our articles of incorporation, bylaws, and certain banking laws may have an anti-takeover effect.
Reliance on inaccurate or misleading financial statements, credit reports, or other financial 21 information could cause us to enter into unfavorable transactions, which could have a material adverse effect on our financial condition and results of operations. Lack of system integrity or credit quality related to funds settlement could result in a financial loss.
Reliance on inaccurate or misleading financial statements, credit reports, or other financial information could cause us to enter into unfavorable transactions, which could have a material adverse effect on our financial condition and results of operations. Lack of system integrity or credit quality related to funds settlement could result in a financial loss.
The remediation costs and any other financial liabilities associated with an environmental hazard could have a material adverse effect on our financial condition and results of operations. Liquidity and Interest Rate Risks Impairment of our access to liquidity could affect our ability to meet our obligations.
The remediation costs and any other financial liabilities associated with an environmental hazard could have a material adverse effect on our financial condition and results of operations. 20 Liquidity and Interest Rate Risks Impairment of our access to liquidity could affect our ability to meet our obligations.
We could be required to apply a new or revised standard retroactively, resulting in our restating prior period financial statements in material amounts. 42 Our internal controls may be ineffective. Management regularly reviews and updates our internal controls, disclosure controls and procedures, and corporate governance policies and procedures.
We could be required to apply a new or revised standard retroactively, resulting in our restating prior period financial statements in material amounts. Our internal controls may be ineffective. Management regularly reviews and updates our internal controls, disclosure controls and procedures, and corporate governance policies and procedures.
Third-party vendors provide key components of our business infrastructure, such as internet connections, network access and core application processing. While we have selected these third-party vendors in accordance with supervisory requirements, we 28 do not control their actions.
Third-party vendors provide key components of our business infrastructure, such as internet connections, network access and core application processing. While we have selected these third-party vendors in accordance with supervisory requirements, we do not control their actions.
The implementation and administration by the SEC of Regulation Best Interest, as well as any new state laws that impose a fiduciary duty, may negatively impact our results of operation, as well as increase costs associated with legal, compliance, operations, and information technology.
The administration by the SEC of Regulation Best Interest, as well as any new state laws that impose a fiduciary duty, may negatively impact our results of operation, as well as increase costs associated with legal, compliance, operations, and information technology.
Specifically, the OCC noted in the bulletin that APSN transaction and representment fee practices may present a heightened risk of violations of Section 5 of the Federal Trade Commission Act of 2010, which prohibits unfair, deceptive, or abusive acts or practices.
Specifically, the OCC noted in a 2023 bulletin that APSN transaction and representment fee practices may present a heightened risk of violations of Section 5 of the Federal Trade Commission Act of 2010, which prohibits unfair, deceptive, or abusive acts or practices.
Any successful cyber-attack may also subject the Corporation to regulatory investigations, litigation (including class action litigation) or enforcement, or require the payment of regulatory fines or penalties or undertaking costly remediation efforts with respect to third parties affected by a cyber security incident, all or any of which could adversely affect the Corporation’s business, financial condition or results of operations and damage its reputation.
Any successful cyber-attack may also subject the Corporation to regulatory investigations, litigation (including class action litigation) or enforcement, or require the payment of regulatory fines or penalties or undertaking costly remediation efforts with respect to third parties affected by a cybersecurity incident, all or any of which could adversely affect the Corporation’s business, financial condition or results of operations and damage its reputation.
Compliance with ever-evolving federal and state laws relating to the handling of information about individuals involves significant expenditure and resources, and any failure by us or our vendors to comply may result in significant liability, negative publicity, and/or an erosion of trust, which could materially adversely affect our business, results of operations, and financial condition.
Compliance with the rapidly evolving federal and state laws relating to the handling of information about individuals involves significant expenditure and resources, and any failure by us or our vendors to comply may result in significant liability, negative publicity, and/or an erosion of trust, which could materially adversely affect our business, results of operations, and financial condition.
Because payments on loans secured by CRE often depend upon the successful operation and management of the properties and the businesses which operate from within them, repayment of such loans may be affected by factors outside the borrower’s control, such as adverse conditions in the real estate market or the economy or changes in government regulation.
Because payments on loans secured by CRE often depend upon the successful operation and management of the properties and the businesses that operate from within them, repayment of such loans may be affected by factors outside the borrower’s control, such as adverse conditions in the real estate market or the economy or changes in government regulation.
The integration of core systems and processes for such transactions often occurs after the closing, which may create elevated risk of cyber incidents. The Corporation may be subject to the data risks and cyber security vulnerabilities of the acquired company until the Corporation has sufficient time to fully integrate the acquiree’s customers and operations.
The integration of core systems and processes for such transactions often occurs after the closing, which may create elevated risk of cyber incidents. The Corporation may be subject to the data risks and cybersecurity vulnerabilities of the acquired company until the Corporation has sufficient time to fully integrate the acquiree’s customers and operations.
Given the lack of empirical data on the credit and other financial risks posed by climate change, it is impossible to predict how climate change may impact our financial condition and 30 operations; however, as a banking organization, the physical effects of climate change may present certain unique risks to the Corporation.
Given the lack of empirical data on the credit and other financial risks posed by climate change, it is impossible to predict how climate change may impact our financial condition and operations; however, as a banking organization, the effects of climate change may present certain unique risks to the Corporation.
In addition, bank regulatory agencies periodically review our allowance for credit losses and may require an increase in the provision for credit losses or the recognition of additional loan charge offs, based on judgments different than those of management.
In addition, bank regulatory agencies periodically review our ACLL and may require an increase in the provision for credit losses or the recognition of additional loan charge offs, based on judgments different than those of management.
The above measures may also result in the imposition of taxes and fees, the required purchase of emission credits, and the implementation of significant operational changes, each of which may require the Corporation to expend significant capital and incur compliance, operating, maintenance and remediation costs.
Certain measures may also result in the imposition of taxes and fees, the required purchase of emission credits, and the implementation of significant operational changes, each of which may require the Corporation to expend significant capital and incur compliance, operating, maintenance and remediation costs.
We maintain an allowance for credit losses, which is a reserve established through a provision for credit losses charged to expense, that represents management’s best estimate of probable credit losses over the life of the loan within the existing portfolio of loans.
We maintain an ACLL, which is a reserve established through a provision for credit losses charged to expense, that represents management’s best estimate of probable credit losses over the life of the loan within the existing portfolio of loans.
In any case, credit performance over the medium- and long-term is susceptible to economic and market forces and therefore forecasts remain uncertain; however, some degree of instability in the CRE markets is expected in the coming quarters as loans are refinanced in markets with higher vacancy rates under current economic conditions.
In any case, credit performance over the medium- and long-term is susceptible to economic and market forces and therefore forecasts remain uncertain; however, some degree of instability in the CRE markets is expected in the coming quarters as loans continue to be refinanced in markets with higher vacancy rates under current economic conditions.
The additional cost to the Corporation of our cyber security monitoring and protection systems and controls includes the cost of hardware and software, third party technology providers, consulting and forensic testing firms, insurance premium costs and legal fees, in addition to the incremental cost of our personnel who focus a substantial portion of their responsibilities on cyber security.
The additional cost to the Corporation of our cybersecurity monitoring and protection systems and controls includes the cost of hardware and software, third party technology providers, consulting and forensic testing firms, insurance premium costs and legal fees, in addition to the incremental cost of our personnel who focus a substantial portion of their responsibilities on cybersecurity.
Disclosure requirements imposed by different regulators may not always be uniform, which may result in increased complexity, and cost, for compliance. Additionally, many of our suppliers and business partners may be subject to similar requirements, which may augment or create additional risks, including risks that may not be known to us.
Disclosure 28 requirements imposed by different regulators may not always be uniform, which may result in increased complexity, and cost, for compliance. Additionally, many of our suppliers, business partners, and other stakeholders may be subject to similar requirements, which may augment or create additional risks, including risks that may not be known to us.
The unexpected loss of services of one or more of our key personnel could have a material adverse impact on our business because of their skills, knowledge of our markets, years of industry experience, and the difficulty of promptly finding qualified replacement personnel. Loss of key employees may disrupt relationships with certain customers.
The unexpected loss of services of one or more of our key personnel could have a material adverse impact on our business because of their skills, knowledge of our markets, years of industry experience, and the difficulty of promptly finding qualified replacement personnel. 41 Loss of key colleagues may disrupt relationships with certain customers.
During 2023, the annual impairment test conducted in May, using a qualitative assessment, indicated that the estimated fair value of all of the Corporation’s reporting units exceeded the carrying value.
During 2024, the annual impairment test conducted in May, using a qualitative assessment, indicated that the estimated fair value of all of the Corporation’s reporting units exceeded the carrying value.
Accordingly, the federal banking agencies have expressed concerns about weaknesses in the current CRE market and have applied increased regulatory scrutiny to institutions with CRE loan portfolios that are fast growing or large relative to the institutions' total capital.
Accordingly, the federal banking agencies have continued to express concerns about weaknesses in the current CRE market and have applied increased regulatory scrutiny to institutions with CRE loan portfolios that are fast growing or large relative to the institutions' total capital.
Further evaluation of recent developments in the banking sector may lead to governmental initiatives intended to prevent future bank failures and stem significant deposit outflows from the banking sector, including (i) legislation aimed at preventing similar future bank runs and failures and stabilizing confidence in the banking sector over the long term, (ii) agency rulemaking to modify and enhance relevant regulatory requirements, specifically with respect to liquidity risk management, deposit concentrations, capital adequacy, stress testing and contingency planning, and safe and sound banking practices, and (iii) enhancement of the agencies’ supervision and examination policies and priorities.
Continued regulatory concern over possible future bank failures may lead to further governmental initiatives intended to prevent future bank failures and stem significant deposit outflows from the banking sector, including (i) legislation aimed at preventing similar future bank runs and failures and stabilizing confidence in the banking sector over the long term, (ii) agency rulemaking to modify and enhance relevant regulatory requirements, specifically with respect to liquidity risk management, deposit concentrations, capital adequacy, stress testing and contingency planning, and safe and sound banking practices, and (iii) enhancement of the agencies’ supervision and examination policies and priorities.
The CFPB has reshaped the consumer financial laws through rulemaking and enforcement of the prohibitions against unfair, deceptive and abusive business practices. Compliance with any such change may impact the business operations of depository institutions offering consumer financial products or services, including the Bank.
The CFPB has reshaped the consumer financial laws through rulemaking and enforcement of the prohibitions against unfair, deceptive and abusive business practices. Compliance with such initiatives may impact the business operations of depository institutions offering consumer financial products or services, including the Bank.
Because our loan portfolio contains a number of commercial loans with balances over $25 million, the deterioration of one or a few of these loans could cause a significant increase in nonaccrual loans, which could have a material adverse effect on our financial condition and results of operations. CRE lending may expose us to increased lending risks.
Because our loan portfolio contains a number of commercial loans with significant balances, the 19 deterioration of one or a few of these loans could cause a significant increase in nonaccrual loans, which could have a material adverse effect on our financial condition and results of operations. CRE lending may expose us to increased lending risks.
As a result, implementation standards and enforcement practices are likely to remain uncertain for the foreseeable future, and we cannot yet determine the impact future laws, regulations, standards, or perception of their requirements may have on our business.
The implementation standards and enforcement practices are likely to remain uncertain for the foreseeable future, and we cannot yet determine the impact future laws, regulations, standards, or perception of their requirements may have on our business.
In 2022, the Corporation eliminated non-sufficient funds fees, overdraft protection transfer fees, and continuous overdraft fees and reduced the daily limit of overdraft fee occurrences from four to two. We may further modify our overdraft program and practices in response to competitive pressures, supervisory guidance and observable trends from public enforcement actions.
In 2022, the Corporation eliminated NSF fees, overdraft protection transfer fees, and continuous overdraft fees and reduced the daily limit of overdraft fee occurrences from four to two. We may further modify our overdraft program and practices in response to competitive pressures, supervisory guidance and observable trends from public enforcement actions.
At December 31, 2023, we had goodwill of $1.1 billion, which represents approximately 26% of stockholders’ equity. In assessing the realizability of DTAs, management considers whether it is more likely than not that some portion or all of the DTAs will not be realized.
At December 31, 2024, we had goodwill of $1.1 billion, which represents approximately 24% of stockholders’ equity. In assessing the realizability of DTAs, management considers whether it is more likely than not that some portion or all of the DTAs will not be realized.
Our business is primarily relationship-driven in that many of our key employees have extensive customer relationships. Loss of a key employee with such customer relationships may lead to the loss of business if the customers were to follow that employee to a competitor or otherwise choose to transition to another financial services provider.
Our business is primarily relationship-driven in that many of our key colleagues have extensive customer relationships. Loss of a key colleague with such customer relationships may lead to the loss of business if the customers were to follow that colleague to a competitor or otherwise choose to transition to another financial services provider.
The determination of the appropriate level of the allowance for credit losses inherently involves a high degree of subjectivity and requires us to make significant estimates of current credit risks using existing qualitative and quantitative information, all of which may undergo material changes.
The determination of the appropriate level of the ACLL inherently involves a high degree of subjectivity and requires us to make significant estimates of current credit risks using existing qualitative and quantitative information, all of which may undergo material changes.
As of December 31, 2023, approximately 62% of our loan portfolio consisted of commercial and industrial, real estate construction, and CRE loans (collectively, "commercial loans"). Commercial loans are generally viewed as having more inherent risk of default than residential mortgage loans or other consumer loans.
As of December 31, 2024, approximately 64% of our loan portfolio consisted of commercial and industrial, real estate construction, and CRE loans (collectively, "commercial loans"). Commercial loans are generally viewed as having more inherent risk of default than residential mortgage loans or other consumer loans.
In October 2023, California Governor Gavin Newsom signed two climate-related disclosure bills into law.
For example, in October 2023, California Governor Gavin Newsom signed two climate-related disclosure bills into law.
An increase in the allowance for credit losses would result in a decrease in net income, and possibly risk-based capital, and could have a material adverse effect on our financial condition and results of operations. We are subject to lending concentration risks.
An increase in the ACLL would result in a decrease in net income, and possibly risk-based capital, and could have a material adverse effect on our financial condition and results of operations. We are subject to lending concentration risks.
As a result of our growth in this portfolio over the past several years and planned future growth, these loans require more ongoing evaluation and monitoring and we are implementing enhanced risk management policies, procedures and controls.
As a result of our growth in this portfolio over the past several years and planned future growth, these loans require more ongoing evaluation and monitoring and we are continuously enhancing risk management policies, procedures and controls as needed.
Although the Corporation conducts comprehensive due diligence of cyber-security policies, procedures and controls of our acquisition counterparties, and the Corporation maintains adequate policies, procedures, controls and information security protocols to facilitate a successful integration, there can be no assurance that such measures, controls and protocols are sufficient to withstand a cyber-attack or other security breach with respect to the companies we acquire, particularly during the period of time between closing and final integration. 26 We rely heavily on communications and information systems to conduct our business.
Although the Corporation conducts comprehensive due diligence of cybersecurity policies, procedures and controls of our acquisition counterparties, and the Corporation maintains adequate policies, procedures, controls and information security protocols to facilitate a successful integration, there can be no assurance that such measures, controls and protocols are sufficient to withstand a cyber-attack or other security breach with respect to the companies we acquire, particularly during the period of time between closing and final integration.
These restrictions may cause the prices of our customers' products to increase, which could reduce demand for such products, or reduce our customers' margins, and adversely impact their revenues, financial results, and ability to service debt. This in turn could adversely affect our financial condition and results of operations.
The above and other potential tariffs and trade restrictions may cause the prices of our customers' products to increase, which could reduce demand for such products, or reduce our customers' margins, and adversely impact their revenues, financial results, and ability to service debt. This in turn could adversely affect our financial condition and results of operations.
Many other states are currently reviewing or proposing the need for greater regulation of the collection, sharing, use and other processing of information related to individuals for marketing purposes or otherwise, and there remains increased interest at the federal level as well.
Many other states are currently reviewing or proposing the need for greater regulation of the collection, sharing, use and other processing of information related to individuals for marketing purposes or otherwise, and there remains interest in expanding personal information protection requirements at the federal level as well.
The CFPB has pursued a more aggressive enforcement policy with respect to a range of regulatory compliance matters under the current Presidential Administration, specifically including fair lending, loan servicing, financial institution sales and marketing practices, and financial institution consumer fee and account management practices.
The CFPB pursued a more aggressive enforcement policy with respect to a range of regulatory compliance matters under the Biden Administration, specifically including fair lending, credit reporting, loan servicing, financial institution sales and marketing practices, and financial institution consumer fee and account management practices.
Changes in economic conditions affecting borrowers, new information regarding existing loans, identification of additional problem loans, and other factors, both within and outside of our control, may require an increase in the allowance for credit losses.
Changes in economic conditions affecting borrowers, new information regarding existing loans, identification of additional problem loans, and other factors, both within and outside of our control, may require an increase in the ACLL.
An entity holding as little as a 5% interest in our outstanding common stock could, under certain circumstances, be subject to regulation as a "bank holding company." An entity (including a "group" composed of natural persons) owning or controlling with the power to vote 25% or more of our outstanding common stock, or 5% or more if such holder otherwise exercises a "controlling influence" over us, may be subject to regulation as a "bank holding company" in accordance with the BHC Act.
As a result, if you acquire our common stock, you may lose some or all of your investment. 40 An entity holding as little as a 5% interest in our outstanding common stock could, under certain circumstances, be subject to regulation as a "bank holding company." An entity (including a "group" composed of natural persons) owning or controlling with the power to vote 25% or more of our outstanding common stock, or 5% or more if such holder otherwise exercises a "controlling influence" over us, may be subject to regulation as a "bank holding company" in accordance with the BHC Act.
Representment fees refer to assessing an additional fee each time a third party submits the same transaction for payment after a bank returns the transaction for non-sufficient funds.
Representment fees refer to assessing an additional fee each time a third party submits the same transaction for payment after a bank returns the transaction for NSF.
We depend on the accuracy and completeness of information furnished by and on behalf of our customers and counterparties. In deciding whether to extend credit or enter into other transactions, we may rely on information furnished by or on behalf of customers and counterparties, including financial statements, credit reports, and other financial information.
In deciding whether to extend credit or enter into other transactions, we may rely on information furnished by or on behalf of customers and counterparties, including financial statements, credit reports, and other financial information.
Rating agencies could make adjustments to our credit ratings at any time, and there can be no assurance that they will maintain our ratings at current levels or that downgrades will not occur. In August 2023, Moody’s and S&P Global Ratings each downgraded our long-term issuer credit ratings.
Rating agencies could make adjustments to our credit ratings at any time, and there can be no assurance that they will maintain our ratings at current levels or that downgrades will not occur. In August 2023, Moody’s and S&P Global Ratings each downgraded our long-term issuer credit ratings, and the ratings remained unchanged as of December 31, 2024.
Also, our interest rate risk modeling techniques and assumptions likely may not fully predict or capture the impact of actual interest rate changes on our balance sheet. The impact of interest rates on our mortgage banking business can have a significant impact on revenues.
Also, our interest rate risk modeling techniques and assumptions may not fully predict or capture the impact of actual interest rate changes on our balance sheet. The impact of interest rates on our mortgage banking business can have a significant impact on revenues. Changes in interest rates can impact our mortgage-related revenues and net revenues associated with our mortgage activities.
Accordingly, it remains unclear what the U.S. government or foreign governments will or will not do with respect to tariffs already imposed, additional tariffs that may be imposed, or international trade agreements and policies. 20 Our allowance for credit losses may be insufficient.
At this time, it remains unclear what the U.S. government or foreign governments will or will not do with respect to additional tariffs that may be imposed or international trade agreements and policies. Our allowance for credit losses on loans may be insufficient.
Any enhanced regulatory scrutiny of bank mergers and acquisitions and revision of the framework for merger application review may adversely affect the marketplace for such transactions, could result in our acquisitions in future periods being delayed, impeded or restricted in certain respects and result in new rules that possibly limit the size of financial institutions we may be able to acquire in the future and alter the terms for such transactions. 35 Legal, Regulatory, Compliance and Reputational Risks We are subject to extensive government regulation and supervision.
Any enhanced regulatory scrutiny of bank mergers and acquisitions and revision of the framework for merger application review may adversely affect the marketplace for such transactions, could result in our acquisitions in future periods being delayed, impeded 34 or restricted in certain respects and result in new rules that possibly limit the size of financial institutions we may be able to acquire in the future and alter the terms for such transactions.
The SEC’s Regulation Best Interest which was implemented in 2019 established a new standard of conduct for a broker-dealer to act in the best interest of a retail customer when making a recommendation of any securities transaction or investment strategy involving securities to such customer.
The SEC’s Regulation Best Interest establishes a new standard of conduct for a broker-dealer to act in the best interest of a retail customer when making a recommendation of any securities transaction or investment strategy involving securities to such 36 customer.
These conditions include short-term and long-term interest rates, inflation, money supply, political issues, ramifications of conflicts including the Russia-Ukraine conflict, legislative and regulatory changes, fluctuations in both debt and equity capital markets, broad trends in industry and finance, the strength of the United States economy, and uncertainty in financial markets 33 globally, all of which are beyond our control.
These conditions include short-term and long-term interest rates, inflation, money supply, political issues, ramifications of conflicts including the Russia-Ukraine conflict, Israeli-Palestinian conflict, the recent coup in Syria and other conflicts and government turmoil in the Middle East and Europe, legislative and regulatory changes, fluctuations in both debt and equity capital markets, broad trends in industry and finance, the strength of the United States economy, and uncertainty in financial markets globally, all of which are beyond our control.
Numerous class-action suits under federal and state laws have been filed in recent years against companies who conduct telemarketing and/or SMS texting programs, with many resulting in multi-million-dollar settlements to the plaintiffs. Any future such litigation against us could be costly and time-consuming to defend.
Numerous class-action suits under federal and state laws have been filed in recent years against companies who conduct telemarketing and/or SMS texting programs, and any future such litigation against us could be costly and time-consuming to defend.
Further, staff changes to key positions within the CFPB under the current Presidential Administration have resulted in the CFPB pursuing more strict enforcement policies, specifically in the area of fair lending, loan servicing, collections and other consumer related areas.
Further, staff changes to key positions within the CFPB under the Biden Presidential Administration resulted in the CFPB pursuing more strict enforcement policies, specifically in the area of fair lending, loan servicing, collections and other consumer related areas, which may change with the Trump Administration.
Although management has established disaster recovery policies and procedures, the occurrence of any such event could have a material adverse effect on our business, which, in turn, could have a material adverse effect on our financial condition and results of operations.
Although management has established disaster recovery policies and procedures, there is no guarantee these will be successful, and the occurrence of any such event could have a material adverse effect on our business, which, in turn, could have a material adverse effect on our financial condition and results of operations.
For example, the negative effect on revenue from a decrease in the fair value of residential MSRs is immediate, but any offsetting revenue benefit from more originations and the MSRs relating to the new loans would accrue over time.
For example, the negative effect on revenue from a decrease in the fair value of residential MSRs is immediate, but any offsetting revenue benefit from more originations and the MSRs relating to the new loans would be recognized during the month of origination.
Although these new guidelines do not apply to a banking organization of our size, as the Corporation continues to grow and expand the scope of our operations, our regulators generally will expect us to enhance our internal control programs and processes, including with respect to risk management and stress testing under a variety of adverse scenarios and related capital planning.
As the Corporation continues to grow and expand the scope of our operations, our regulators generally will expect us to enhance our internal control programs and processes, including with respect to risk management and stress testing under a variety of adverse scenarios and related capital planning.
We have experienced cybersecurity attacks in the past and our communications and information systems may experience an interruption or breach in security from future attacks. We have experienced cybersecurity attacks in the past.
We rely heavily on communications and information systems to conduct our business. We have experienced cybersecurity attacks in the past and our communications and information systems may experience an interruption or breach in security from future attacks. We have experienced cybersecurity attacks in the past.
Federal and state banking agencies closely examine the mortgage and mortgage servicing activities of depository financial institutions. Should any of these regulators have serious concerns with respect to our mortgage or mortgage servicing activities in this regard, the regulators’ response to such concerns could result in material adverse effects on our growth strategy and profitability.
Should any of these regulators have serious concerns with respect to our mortgage or mortgage servicing activities in this regard, the regulators’ response to such concerns could result in material adverse effects on our growth strategy and profitability.
Our policy generally has been to originate CRE loans primarily in the states in which the Bank operates. At December 31, 2023, CRE loans, including owner occupied, investor, and real estate construction loans, totaled $8.5 billion, or 29%, of our total loan portfolio.
Our policy generally has been to originate CRE loans primarily in the states in which the Bank operates. At December 31, 2024, CRE loans, including owner occupied, investor, and real estate construction loans, totaled $8.4 billion, or 28%, of our total loan portfolio and 195% of total risk-based capital.
Consumers can also complete transactions, such as paying bills and/or transferring funds directly without the assistance of banks. Although the digital asset marketplace has in recent months experienced substantial instability, transactions utilizing digital assets, including cryptocurrencies, stablecoins and other similar assets, have increased substantially over the course of the last several years.
Consumers can also complete transactions, such as paying bills and/or transferring funds directly without the assistance of banks. Transactions utilizing digital assets, including cryptocurrencies, stablecoins and other similar assets, have increased substantially over the course of the last several years.
Our success depends on the general economic conditions of the specific local markets in which we operate, particularly Wisconsin, Illinois and Minnesota.
Our profitability depends significantly on economic conditions in the states within which we do business. Our success depends on the general economic conditions of the specific local markets in which we operate, particularly Wisconsin, Illinois and Minnesota.
In particular, there has been an observed increase in the number of distributed denial of service attacks against the financial sector, for which the increase is believed to be partially attributable to politically motivated attacks as well as financial demands coupled with extortion.
Cyber-attacks continue to evolve and become more pervasive throughout the financial services sector. In particular, there has been an observed increase in the number of distributed denial of service and ransomware attacks against the financial sector, for which the increase is believed to be partially attributable to politically motivated attacks as well as financial demands coupled with extortion.
The level of the allowance for credit losses reflects management’s continuing evaluation of industry concentrations; specific credit risks; loan loss experience; current loan portfolio quality; present economic, political, and regulatory conditions; and unidentified losses inherent in the current loan portfolio.
The ACLL, in the judgment of management, is necessary to reserve for estimated credit losses and risks inherent in the loan portfolio. The level of the ACLL reflects management’s continuing evaluation of industry concentrations; specific credit risks; loan loss experience; current loan portfolio quality; present economic, political, and regulatory conditions; and unidentified losses inherent in the current loan portfolio.
Credit ratings are subject to ongoing review by rating agencies, which consider a number of factors, including our financial strength, performance, prospects and operations as well as factors not under our control.
Adverse changes to our credit ratings could limit our access to funding and increase our borrowing costs. Credit ratings are subject to ongoing review by rating agencies, which consider a number of factors, including our financial strength, performance, prospects and operations as well as factors not under our control.
In response to the failures of SVB, SBNY, and First Republic Bank, many large depositors across the industry have withdrawn deposits in excess of applicable deposit insurance limits and deposited these funds in other financial institutions and, in many instances, moved these funds into money market mutual funds or other similar securities accounts in an effort to diversify the risk of further bank failure(s).
In the months preceding and following these failures, many large depositors withdrew deposits in excess of applicable deposit insurance limits and deposited these funds in other financial institutions and, in many instances, moved these funds into money market mutual funds or other similar securities accounts in an effort to diversify the risk of further bank failure(s).
Changes in interest rates can impact our mortgage-related revenues and net revenues associated with our mortgage activities. A decline in mortgage rates generally increases the demand for mortgage loans as borrowers refinance, but also generally leads to accelerated payoffs. Conversely, in a constant or increasing rate environment, we would expect fewer loans to be refinanced and a decline in payoffs.
A decline in mortgage rates generally increases the demand for mortgage loans as borrowers refinance, but also generally leads to accelerated payoffs. Conversely, in a constant or increasing rate environment, we would expect fewer loans to be refinanced and a decline in payoffs.
Accordingly, digital asset service providers, which at present are not subject to the extensive regulation of banking organizations and other financial institutions, have become active competitors for our customers’ banking business.
Accordingly, digital asset service providers, which at present are not subject to supervision and regulation comparable to that which is faced by banking organizations and other financial institutions, have become active competitors for our customers’ banking business.
In addition, the federal banking agencies, including the OCC, and the CFPB have in recent years adopted a more aggressive enforcement posture—specifically with respect to fair lending and loan servicing, bank and financial institution sales practices, management of consumer accounts and the charging of various fees.
In addition, the federal banking agencies, including the OCC, and the CFPB have in recent years adopted a more aggressive enforcement posture—specifically with respect to fair lending and loan servicing, bank and financial institution sales practices, management of consumer accounts and the charging of various fees. 35 The Bank faces risks related to the adoption of future legislation and potential changes in federal regulatory agency leadership, policies, and priorities.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThe Corporation’s Incident Response Plan helps reduce the risks related to security incidents by providing guidelines on responding to incidents by focusing on a roadmap for coordinating personnel, policies, and procedures to ensure incidents are detected, analyzed, and handled. • Third-Party Risk Management: Management of the Corporation’s third parties, including vendors and service providers, is conducted through a risk-based approach and the level of due diligence is driven from risk factors established by Corporate Risk Management.
Biggest changeThe Corporation’s Incident Response Plan helps reduce the risks related to security incidents by providing guidelines on responding to incidents by focusing on a roadmap for coordinating personnel, policies, and procedures. • Third-Party Risk Management: Management of the Corporation’s third parties, including vendors and service providers, is conducted through a risk-based approach and the level of due diligence is driven from risk factors established by Corporate Risk Management. • Security Awareness and Education: The Corporation provides annual, mandatory training for personnel regarding security awareness as a means to equip the Corporation’s personnel with the understanding of how to properly use and protect the computing resources entrusted to them, and to communicate the Corporation’s information security policies, standards, processes and practices. 42 The Corporation leverages regular assessments to identify current and potential threats and vulnerabilities within the Corporation’s environment, using vulnerability scanning tools, penetration testing, system management tools, and process and procedural reviews.
The Corporation leverages the following guidelines and frameworks to develop and maintain the Information Security Program: FFIEC Information Security IT Examination Handbook, FFIEC Business Continuity Planning Handbook, FFIEC Cybersecurity Assessment Tool, Center for Internet Security Critical Security Controls, National Institute of Standards and Technology Special Publication 800 Series, ISO-27000 Standard and GLBA 501(b).
The Corporation leverages the following guidelines and frameworks to develop and maintain the Information Security Program: FFIEC Information Security IT Examination Handbook, FFIEC Business Continuity Planning Handbook, FFIEC Cybersecurity Assessment Tool, Center for Internet Security Critical Security Controls, National Institute of Standards and Technology Cybersecurity Framework, National Institute of Standards and Technology Special Publication 800 Series, ISO-27000 Standard and GLBA 501(b).
These assets represent a blend of 43 various management (e.g., policies), operational (e.g., standards and processes), and technical controls (e.g., tools and configurations). • Cyber Defense Center and the Incident Response Plan: The Corporation has a Security Operations Center, known as the “Cyber Defense Center,” which provides continual security monitoring 24 hours per day, seven days per week, where resources actively deliver threat analysis, vulnerability management, intrusion detection, intrusion hunting and red team exercises.
These assets represent a blend of various management (e.g., policies), operational (e.g., standards and processes), and technical controls (e.g., tools and configurations). • Cyber Defense Center and the Incident Response Plan: The Corporation has a Security Operations Center, known as the “Cyber Defense Center,” which provides continual security monitoring 24 hours per day, seven days per week, where resources deliver threat analysis, vulnerability management, intrusion detection, intrusion hunting and red team exercises.
The CISO holds an undergraduate degree in Management Information Systems and has attained the professional Information Systems 44 Audit and Control Association certification of Certified Information Security Manager in 2005.
The CISO holds an undergraduate degree in Management Information Systems and has attained the professional Information Systems Audit and Control Association certification of Certified Information Security Manager in 2005.
The CIO holds an undergraduate degree in business management, with a minor in international business, and is currently pursuing a master’s degree in cybersecurity and has served in various roles in information technology for over 30 years, including serving as either the Chief Technology Officer or Chief Information Officer of four public companies.
The CIO holds an undergraduate degree in business management, with a minor in international business, and is currently pursuing a master’s degree in cybersecurity and has served in various roles in information technology for over 40 years, including serving as either the Chief Technology Officer or CIO of four public companies.
The Corporation’s CEO and General Counsel each hold degrees in their respective fields, and each has extensive experience managing risks at the Corporation and similar financial institutions, including risks arising from cybersecurity threats.
The Corporation’s Chief Executive Officer and General Counsel each hold degrees in their respective fields, and each has extensive experience managing risks at the Corporation and similar financial institutions, including risks arising from cybersecurity threats.
The CISO has served in various roles in Information Technology and Information Security for over 35 years, including serving in a Chief Information Security Officer role of two large public companies, including Associated Bank for 17 years.
The CISO has served in various roles in Information Technology and Information Security for over 35 years, including serving in the CISO role of two large public companies, including Associated Bank for 18 years.
Governance The Board of Directors, through the ERC, provides direction and oversight of the enterprise-wide risk management framework of the Corporation, including the management of risks arising from cybersecurity threats. The ERC reviews and approves the Information Security Policy.
Governance The Board of Directors, through the ERC, provides direction and oversight of the enterprise-wide risk management framework of the Corporation, and cybersecurity represents a component of the Corporation's overall approach to enterprise-wide risk management. The ERC reviews and approves the Information Security Policy.
ITEM 1C. Cybersecurity Risk Management and Strategy The Corporation recognizes the security of our banking operations is critical to protecting our customers, maintaining our reputation and preserving the value of the Corporation.
ITEM 1C. Cybersecurity Risk Management and Strategy The Corporation recognizes the security of our banking operations is critical to protecting our customers, maintaining our reputation and preserving the value of the Corporation. The Corporation's Information Security Program establishes policies and procedures for the measurement of the effectiveness and efficiency of information security controls related to both design and operations.
To facilitate the success of the Corporation’s cybersecurity risk management program, multidisciplinary teams throughout the Corporation are deployed to address cybersecurity threats and to respond to cybersecurity incidents.
The CISO, under the guidance of our CIO, CRO, Chief Executive Officer and General Counsel, works collaboratively across the Corporation to implement an information security program. To facilitate the success of the Corporation’s cybersecurity risk management program, multidisciplinary teams throughout the Corporation are deployed to address cybersecurity threats and to respond to cybersecurity incidents.
To our knowledge, cybersecurity threats, including as a result of any previous cybersecurity incidents, have not materially affected the Corporation, including its business strategy, results of operations or financial condition. With regard to the possible impact of future cybersecurity threats or incidents, see Item 1A, Risk Factors — Operational Risks.
We face risks from cybersecurity threats that, if realized, are reasonably likely to materially affect us, including our operations, business strategy, results of operations, or financial condition. See Item 1A, Risk Factors — Operational Risks for additional disclosures with regard to the possible impact of future cybersecurity threats or incidents.
As one of the elements of the Corporation’s overall enterprise-wide risk management approach, the Information Security Program is focused on the following key areas: • Security Operation and Governance: As discussed in more detail under the heading “Governance,” the ERC has delegated to senior management responsibility for managing the Information Security Program.
Among other things, the Information Security Program is focused on the following key areas: • Security Operation and Governance: As discussed in more detail under the heading “Governance,” senior management carries out this mandate through the Operational Risk and Enterprise Risk Management Committees.
Removed
The Board of Directors, through the ERC, provides direction and oversight of the enterprise-wide risk management framework of the Corporation, and cybersecurity represents a component of the Corporation’s overall approach to enterprise-wide risk management. The Information Security Program establishes policies and procedures for the measurement of the effectiveness and efficiency of information security controls related to both design and operations.
Added
This does not imply that we meet any particular technical standards, specifications, or requirements, only that we use these guidelines and frameworks as a guide to help us identify, assess, and manage cybersecurity risks relevant to our business.
Removed
Senior management carries out this mandate through the Operational Risk and Enterprise Risk Management Committees.
Added
The Corporation conducts a variety of assessments throughout the year, both internally and through third parties. We have not identified risks from known cybersecurity threats, including as a result of any prior cybersecurity incidents, that have materially affected us, including our operations, business strategy, results of operations, or financial condition.
Removed
The process provides awareness and collaboration across all internal teams including Information Security and Business Resumption. A Technical Requirements review process is conducted on new or significantly changed third parties, applications, or technology to ensure that systems or third parties meet certain security baseline requirements.
Removed
This process is aimed at advocating the necessary security, infrastructure, and application standards or controls so that information systems and the third party have recovery plans in place. • Security Awareness and Education: The Corporation provides annual, mandatory training for personnel regarding security awareness as a means to equip the Corporation’s personnel with the understanding of how to properly use and protect the computing resources entrusted to them, and to communicate the Corporation’s information security policies, standards, processes and practices.
Removed
The Corporation leverages regular assessments to identify current and potential threats and vulnerabilities within the Corporation’s environment. Technical vulnerabilities are identified using automated vulnerability scanning tools, penetration testing, and system management tools, whereas non-technical vulnerabilities are identified via process or procedural reviews. The Corporation conducts a variety of assessments throughout the year, both internally and through third parties.
Removed
Vulnerability assessment and penetration tests are performed on a regular basis to provide the Corporation with an unbiased view of its environment and controls. Vulnerabilities identified during these assessments are inventoried in a centralized tracking system and reported to management on a regular basis.
Removed
A multi-step approach is applied to identify, report and remediate these vulnerabilities, and the Corporation adjusts its information security policies, standards, processes and practices as necessary based on the information provided by these assessments. The results of key assessments are reported in summary to the Board of Directors annually.
Removed
The CISO, under the guidance of our CIO, CRO, CEO and General Counsel, works collaboratively across the Corporation to implement a program designed to protect the Corporation’s information systems from cybersecurity threats and to promptly respond to any cybersecurity incidents in accordance with the Corporation’s incident response and recovery plans including an assessment of the potential materiality of any cybersecurity incident.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeITEM 2. Properties The Corporation operated 2.4 million square feet of space spread across 222 facilities, including 196 banking branches at December 31, 2023. Our corporate headquarters is located at 433 Main Street in Green Bay, Wisconsin and is approximately 118,000 square feet.
Biggest changeITEM 2. Properties The Corporation operated 2.4 million square feet of space spread across 213 facilities at December 31, 2024. Our corporate headquarters is located at 433 Main Street in Green Bay, Wisconsin and is approximately 118,000 square feet.
Most of the banking locations are freestanding buildings owned by us, with a drive thru and a parking lot; a smaller subset resides in supermarkets and office towers, which are generally leased. Associated Bank also operated loan production offices in Indiana, Michigan, Missouri, New York, Ohio and Texas.
Most of the banking locations are freestanding buildings owned by us, with a drive thru and a parking lot; a smaller subset resides in supermarkets and office towers, which are generally leased. Associated Bank also operated loan production offices in Indiana, Michigan, Missouri, New York, Ohio and Texas. 43
Based on gross square feet, at December 31, 2023, Associated Bank owned 92% of our total property portfolio. At December 31, 2023, Associated Bank operated 196 banking branches serving over 100 different communities throughout Wisconsin, Illinois, and Minnesota.
Based on gross square feet, at December 31, 2024, Associated Bank owned 92% of our total property portfolio. At December 31, 2024, Associated Bank operated 188 banking branches serving over 100 different communities throughout Wisconsin, Illinois, and Minnesota.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeWilliams Age: 64 Terry L. Williams has been Executive Vice President, Chief Information Officer of Associated and Associated Bank since January 2023. Prior to joining Associated, he served as Chief Information Officer and Chief Technology Officer for Belcan, LLC from 2016 to 2022.
Biggest changePrior to that, he served for several years as Senior Vice President, Senior Regional Manager, where he oversaw the Chicago, Minneapolis, Institutional, and REIT teams. Terry L. Williams - Age: 65 Terry L. Williams has been Executive Vice President, Chief Information Officer of Associated and Associated Bank since January 2023.
He had been a partner at Godfrey & Kahn S.C. from 1990 to 2002 prior to joining M&I as its general counsel. Mr. Erickson served as a director of Renaissance Learning, Inc., a publicly-held educational software company, from 2009 until it was acquired by Permira Funds in 2011. Jayne C. Hladio - Age: 56 Jayne C.
He had been a partner at Godfrey & Kahn, S.C. from 1990 to 2002 prior to joining M&I as its general counsel. Mr. Erickson served as a director of Renaissance Learning, Inc., a publicly-held educational software company, from 2009 until it was acquired by Permira Funds in 2011. Jayne C. Hladio - Age: 57 Jayne C.
Prior to that, he served as Chief Marketing Officer from 2015 to 2018 and Senior Vice President of Deposit Products & Pricing at Huntington Bank from 2010 to 2015. Dennis M. DeLoye - Age: 60 Dennis M. DeLoye has been Executive Vice President, Head of Community Markets and Regional President Northeast Wisconsin of Associated and Associated Bank since April 2022.
Prior to that, he served as Chief Marketing Officer from 2015 to 2018 and Senior Vice President of Deposit Products & Pricing at Huntington Bank from 2010 to 2015. Dennis M. DeLoye - Age: 61 Dennis M. DeLoye has been Executive Vice President, Head of Community Markets and Regional President Northeast Wisconsin of Associated and Associated Bank since April 2022.
Prior to joining Associated, he served as senior executive vice president, consumer and business banking director for Huntington Bank from 2017 to 2021. Mr. Harmening also held several key consumer, small business and commercial banking positions at Bank of The West from 2005 to 2017. Patrick E. Ahern - Age: 57 Patrick E.
Prior to joining Associated, he served as senior executive vice president, consumer and business banking director for Huntington Bank from 2017 to 2021. Mr. Harmening also held several key consumer, small business and commercial banking positions at Bank of The West from 2005 to 2017. Patrick E. Ahern - Age: 58 Patrick E.
He joined Associated in March 2010 with upwards of 20 years of banking experience, having previously served as President of Union Bank’s UnionBanCal Equities and head of its Capital Markets division from September 2007 to March 2010, and as head of the National Banking and Asset Management teams from October 2002 to September 2007. Terry L.
He joined Associated in March 2010 with upwards of 20 years of banking experience, having previously served as President of Union Bank’s UnionBanCal Equities and head of its Capital Markets division from September 2007 to March 2010, and as head of the National Banking and Asset Management teams from October 2002 to September 2007.
Bank; Senior Vice President, Head of Consumer Banking Regional Executive at Charter One (Citizens) Royal Bank of Scotland from October 2005 to January 2009; and Senior Vice President, Strategic Growth Executive, Retail / Affluent Wealth and Denovo Delivery at Fifth Third Bank from September 1994 to October 2005. Nicole M. Kitowski - Age: 48 Nicole M.
Bank; Senior Vice President, Head of Consumer Banking Regional Executive at Charter One (Citizens) Royal Bank of Scotland from October 2005 to January 2009; and Senior Vice President, Strategic Growth Executive, Retail / Affluent Wealth and Denovo Delivery at Fifth Third Bank from September 1994 to October 2005. Nicole M. Kitowski - Age: 49 Nicole M.
She joined Associated in August 2008 as a member of the finance team and has held multiple leadership roles. Prior to joining Associated, she held senior finance roles at Schneider National, Inc. from January 2002 to August 2008. Randall J. Erickson - Age: 64 Randall J.
She joined Associated in August 2008 as a member of the finance team and has held multiple leadership roles. Prior to joining Associated, she held senior finance roles at Schneider National, Inc. from January 2002 to August 2008. 44 Randall J. Erickson - Age: 65 Randall J.
Ahern joined Associated as a Senior Vice President in 2010 to manage the CRE portfolio underwriting and administrative teams, before moving into the role Corporate Senior Credit Officer in 2018. He has more than 30 years of experience in CRE and corporate credit, including experience with LaSalle Bank and Bank of America. 45 Matthew R.
Ahern joined Associated as a Senior Vice President in 2010 to manage the CRE portfolio underwriting and administrative teams, before moving into the role Corporate Senior Credit Officer in 2018. He has more than 30 years of experience in CRE and corporate credit, including experience with LaSalle Bank and Bank of America. Matthew R. Braeger - Age: 50 Matthew R.
Previously, he held audit management positions with Fiserv, Inc. and public accounting audit roles with Ernst & Young, LLP. Mr. Braeger has more than 20 years of auditing experience, primarily in banking technology and financial services. Bryan J. Carson - Age: 53 Bryan J.
Previously, he held audit management positions with Fiserv, Inc. and public accounting audit roles with Ernst & Young, LLP. Mr. Braeger has more than 24 years of auditing experience, primarily in banking technology and financial services. Bryan J. Carson - Age: 54 Bryan J.
Schmidt has been Executive Vice President, Head of CRE of Associated and Associated Bank since January 2016 and was appointed Head of Facilities and Twin Cities Market President in July 2022. He joined Associated in April 2015 as Executive Vice President of CRE. He was named Deputy Head of CRE in September 2015. Mr.
Schmidt - Age: 62 Paul G. Schmidt has been Executive Vice President, Head of CRE of Associated and Associated Bank since January 2016 and was appointed Head of Facilities and Twin Cities Market President in July 2022. He joined Associated in April 2015 as Executive Vice President of CRE. He was named Deputy Head of CRE in September 2015. Mr.
Braeger - Age: 48 Matthew R. Braeger has been Executive Vice President, Chief Audit Executive of Associated and Associated Bank since February 2018. He served as Deputy Chief Audit Executive from October 2017 to February 2018. He joined Associated in April 2013 as Senior Vice President, Business Support Audit Director.
Braeger has been Executive Vice President, Chief Audit Executive of Associated and Associated Bank since February 2018. He served as Deputy Chief Audit Executive from October 2017 to February 2018. He joined Associated in April 2013 as Senior Vice President, Business Support Audit Director.
Mr. DeLoye previously served as Executive Vice President, Deputy Head of Community Markets and Regional President Northeast Wisconsin from November 2021 to April 2022. DeLoye joined Associated in 2016 and has served as community market president for the Central and Northern Wisconsin markets. Angie M. DeWitt - Age: 54 Angie M.
Mr. DeLoye previously served as Executive Vice President, Deputy Head of Community Markets and Regional President Northeast Wisconsin from November 2021 to April 2022. DeLoye joined Associated in 2016, serving as Community Market President for the Central and Northern Wisconsin markets until November 2021. Angie M. DeWitt - Age: 55 Angie M.
No person other than those listed below has been chosen to become an executive officer of Associated. The information presented below is as of February 8, 2024. Andrew J. Harmening - Age: 54 Andrew J. Harmening has been President, Chief Executive Officer of Associated and Associated Bank and member of the Board of Directors since April 2021.
No person other than those listed below has been chosen to become an executive officer of Associated. The information presented below is as of February 12, 2025. Andrew J. Harmening - Age: 55 Andrew J. Harmening has been President, Chief Executive Officer of Associated and Associated Bank and member of the Board of Directors since April 2021.
Meyer has been Executive Vice President, Chief Financial Officer of Associated and Associated Bank since August 2022. Prior to joining Associated, Derek served as the Executive Vice President, Corporate Treasurer of Huntington Bank from 2019 to June 2022. Mr. Meyer also served as Executive Vice President, Financial Planning & Analysis Director from February 2015 to 2019.
Derek S. Meyer - Age: 58 Derek S. Meyer has been Executive Vice President, Chief Financial Officer of Associated and Associated Bank since August 2022. Prior to joining Associated, Derek served as the Executive Vice President, Corporate Treasurer of Huntington Bank from 2019 to June 2022. Mr.
Utz has been Executive Vice President, Head of Corporate Banking and Milwaukee Market President of Associated and Associated Bank since September 2015 and was Head of Wealth Management from April 2020 to July 2021.
Utz has been Executive Vice President, Head of Specialized Industries and Capital Markets, and Milwaukee Market President of Associated and Associated Bank since November 2024. Previously, Mr. Utz served as Head of Corporate Banking from September 2015 to November 2024 and was Head of Wealth Management from April 2020 to July 2021.
During his 22 years at Huntington Bank, he held various senior leadership roles and was responsible for crucial finance functions including treasury, financial planning and analysis, stress testing, mergers and acquisition due diligence, regulatory matters, and process and controls implementation. Paul G. Schmidt - Age: 61 Paul G.
Meyer also served as Executive Vice President, Financial Planning & Analysis Director from 2011 to 2019. During his 22 years at Huntington Bank, he held various senior leadership roles and was responsible for crucial finance functions including treasury, financial planning and analysis, stress testing, mergers and acquisition due diligence, regulatory matters, and process and controls implementation. Paul G.
She joined Associated in 1992 and has held leadership roles in Consumer Banking, Operations and Technology, and Corporate Risk, including Deputy Chief Risk Officer from March 2016 to February 2018 and Corporate BSA, AML, OFAC Officer from June 2014 to March 2016. 46 Derek S. Meyer - Age: 57 Derek S.
Kitowski has been Executive Vice President, Chief Risk Officer of Associated and Associated Bank since February 2018. She joined Associated in 1992 and has held leadership roles in Consumer Banking, Operations and Technology, and Corporate Risk, including Deputy Chief Risk Officer from March 2016 to February 2018 and Corporate BSA, AML, OFAC Officer from June 2014 to March 2016.
Prior to that, he served as Executive Vice President and General Manager Customer-Facing Solutions of Standard Register from 2014 to 2015. 47 PART II
Prior to joining Associated, he served as Chief Information Officer and Chief Technology Officer for Belcan, LLC from 2016 to 2022. Prior to that, he served as Executive Vice President and General Manager Customer-Facing Solutions of Standard Register from 2014 to 2015.
Schmidt brings more than 32 years of banking experience to Associated. Most recently, he held the position of Executive Vice President, Division Manager, CRE at Wells Fargo from 2002 to 2015. Tammy C. Stadler - Age: 58 Tammy C. Stadler has been Executive Vice President, Corporate Controller and Chief Accounting Officer of Associated and Associated Bank since July 2021.
Schmidt brings more than 41 years of banking experience to Associated. Most recently, he held the position of Executive Vice President, Division Manager, CRE at Wells Fargo from 2002 to 2015. David L. Stein - Age: 61 David L.
Morgan Chase & Co., and one of its predecessors, Bank One Corporation, from 1989 until joining Associated in 2005. John A. Utz - Age: 55 John A.
Morgan Chase & Co., and one of its predecessors, Bank One Corporation, from 1989 until joining Associated in 2005. Phillip Trier - Age: 46 Phillip Trier has been Executive Vice President, Head of Corporate and Commercial Banking of Associated and Associated Bank since November 2024. He joined Associated in 2023 as Executive Vice President, Commercial Banking Group Leader.
Removed
Kitowski has been Executive Vice President, Chief Risk Officer of Associated and Associated Bank since February 2018.
Added
Prior to joining Associated, he spent 23 years at U.S. Bank where he held various positions of increasing responsibility. Most recently he served as the Midwest region executive where he was responsible for leading commercial banking across 11 states from April 2022 to November 2023.
Removed
She previously served as Executive Vice President, Principal Accounting Officer from April 2017 until July 2021. She joined Associated in April 1996 as Corporate Tax Director and has served as Executive Vice President, Corporate Controller since April 2014. From 1992 to 1996 she was the Assistant Treasurer and Taxes for Air Wisconsin Airline Corp.
Added
Prior to that, he served as Commercial Banking Region Leader and Twin Cities Market President from 2013 to 2022. In addition, he led several national industry verticals including title & escrow, HOA property management, alternative investment and fintech. 45 John A. Utz - Age: 56 John A.
Removed
From 1990 to 1992 she held the position of Senior Tax Analyst with Fort Howard Paper Corp. Prior to her time with Fort Howard, Ms. Stadler worked as a certified public accountant with Coopers and Lybrand and Deloitte and Touche. David L. Stein - Age: 60 David L.
Added
Gregory Warsek - Age: 60 Gregory Warsek has been Executive Vice President, Deputy Head of Commercial Real Estate and Facilities of Associated and Associated Bank since November 2024. He joined Associated in 2002 as Senior Vice President and Market Leader in Chicago. He went on to grow the group by opening the St.
Added
Louis office and expanding the business into the Institutional and REIT space. He has held multiple leadership roles at Associated from February 2002 to November 2024, most recently serving as Executive Vice President, Group Leader, overseeing all the CRE revenue lines of business from September 2022 to November 2024.
Added
Steven Zandpour - Age: 48 Steven Zandpour has been Executive Vice President, Deputy Head of Consumer and Business Banking of Associated and Associated Bank since January 1, 2025. He joined Associated in January 2024 as Executive Vice President, Director of Consumer and Business Banking. Prior to joining Associated, he served as U.S.
Added
Head of Specialty Sales at BMO U.S. from February 2019 to January 2024, overseeing financial results for the Mortgage, Business Banking, and Mass Affluent segments across the institution's U.S. footprint. From July 2014 to February 2019, he served as Regional President, Head of Retail Banking for the Chicago region at BMO U.S. 46 PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeHistorical stock price performance shown on the graph is not necessarily indicative of the future price performance. 5 Year Trend 2018 2019 2020 2021 2022 2023 Associated Banc-Corp $ 100.0 $ 114.9 $ 92.6 $ 126.8 $ 134.2 $ 129.2 S&P 500 Index $ 100.0 $ 131.2 $ 154.9 $ 199.0 $ 163.1 $ 205.5 S&P 400 Regional Banks Sub-Industry Index $ 100.0 $ 124.4 $ 112.8 $ 159.5 $ 153.0 $ 150.9 KBW Nasdaq Regional Banking Total Return Index $ 100.0 $ 123.8 $ 113.0 $ 154.5 $ 143.7 $ 143.2 Source: Bloomberg The Total Shareholder Return Performance Graph shall not be deemed incorporated by reference by any general statement incorporating by reference this Annual Report on Form 10-K into any filing under the Securities Act or under the Exchange Act, except to the extent the Corporation specifically incorporates this information by reference, and shall not otherwise be deemed filed under such Acts.
Biggest changeHistorical stock price performance shown on the graph is not necessarily indicative of the future price performance. 5 Year Trend 2019 2020 2021 2022 2023 2024 Associated Banc-Corp $ 100.0 $ 80.6 $ 110.4 $ 116.8 $ 112.5 $ 130.4 S&P 500 Index $ 100.0 $ 118.1 $ 151.7 $ 124.3 $ 156.6 $ 195.6 S&P 400 Regional Banks Sub-Industry Index $ 100.0 $ 90.7 $ 128.3 $ 123.0 $ 121.3 $ 141.4 KBW Nasdaq Regional Banking Total Return Index $ 100.0 $ 91.3 $ 124.7 $ 116.1 $ 115.6 $ 130.9 Source: Bloomberg The Total Shareholder Return Performance Graph shall not be deemed incorporated by reference by any general statement incorporating by reference this Annual Report on Form 10-K into any filing under the Securities Act or under the Exchange Act, except to the extent the Corporation specifically incorporates this information by reference, and shall not otherwise be deemed filed under such Acts.
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Information in response to this item is incorporated by reference to the discussion of dividend restrictions under Part I, Item 1, Business - Supervision and Regulation - Holding Company Dividends, and in Note 10 Stockholders' Equity of the notes to consolidated financial statements included under Part II, Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K.
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Information in response to this item is incorporated by reference to the discussion of dividend restrictions under Part I, Item 1, Business - Supervision and Regulation - Holding Company Dividends, and in Note 9 Stockholders' Equity of the notes to consolidated financial statements included under Part II, Item 8, Financial Statements and Supplementary Data, of this Annual Report on Form 10-K.
The maximum number of shares that may yet be purchased under this authorization is based on the closing share price on December 31, 2023. 48 Total Shareholder Return Performance Graph Set forth below is a line graph (and the underlying data points) comparing the yearly percentage change in the cumulative total shareholder return (change in year-end stock price plus reinvested dividends) on the Corporation’s common stock with the cumulative total return of the S&P 500 Index, the S&P 400 Regional Banks Sub-Industry Index, and the KBW Nasdaq Regional Banking Total Return Index for the period of five fiscal years commencing on January 1, 2019 and ending December 31, 2023.
The maximum number of shares that may yet be purchased under this authorization is based on the closing share price on December 31, 2024. 47 Total Shareholder Return Performance Graph Set forth below is a line graph (and the underlying data points) comparing the yearly percentage change in the cumulative total shareholder return (change in year-end stock price plus reinvested dividends) on the Corporation’s common stock with the cumulative total return of the S&P 500 Index, the S&P 400 Regional Banks Sub-Industry Index, and the KBW Nasdaq Regional Banking Total Return Index for the period of five fiscal years commencing on January 1, 2020 and ending December 31, 2024.
The graph assumes the respective values of the investment in the Corporation’s common stock and each index were $100 on December 31, 2018.
The graph assumes the respective values of the investment in the Corporation’s common stock and each index were $100 on December 31, 2019.
During the fourth quarter of 2023, the Corporation repurchased approximately $86,000 of common stock, all of which were repurchases related to tax withholding on equity compensation, with no open market repurchases during the quarter. The repurchase details are presented in the table below.
During the fourth quarter of 2024, the Corporation repurchased approximately $227,000 of common stock, all of which were repurchases related to tax withholding on equity compensation, with no open market repurchases during the quarter. The repurchase details are presented in the table below.
For a detailed discussion of the common stock and depositary share purchases during 2023 and 2022, see Part II, Item 8, Note 10 Stockholders' Equity of the notes to consolidated financial statements.
For a detailed discussion of the common stock and depositary share purchases during 2024 and 2023, see Part II, Item 8, Note 9 Stockholders' Equity of the notes to consolidated financial statements.
These purchases do not count against the maximum value of shares remaining available for purchase under the Board of Directors' authorization. (b) At December 31, 2023, there remained $80 million authorized to be repurchased under the Board of Directors' 2021 authorization.
These purchases do not count against the maximum value of shares remaining available for purchase under the Board of Directors' authorization. (b) At December 31, 2024, there remained $61 million authorized to be repurchased under the Board of Directors' 2021 $100 million authorization.
The Corporation’s common stock is traded on the NYSE under the symbol ASB. The number of shareholders of record of the Corporation’s common stock, $0.01 par value, as of January 31, 2024, was 6,669. Certain of the Corporation’s shares are held in “nominee” or “street” name and the number of beneficial owners of such shares was 29,828.
The Corporation’s common stock is traded on the NYSE under the symbol ASB. The number of shareholders of record of the Corporation’s common stock, $0.01 par value, as of January 31, 2025, was 6,201. Certain of the Corporation’s shares are held in “nominee” or “street” name and the number of beneficial owners of such shares was 34,351.
Common Stock Purchases Total Number of Shares Purchased (a) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (b) Period October 1, 2023 - October 31, 2023 — $ — — November 1, 2023 - November 30, 2023 2,704 16.88 — December 1, 2023 - December 31, 2023 1,889 21.28 — Total 4,593 $ 18.69 — 3,723,512 (a) During the fourth quarter of 2023, all common shares repurchased were for minimum tax withholding settlements on equity compensation.
Common Stock Purchases Total Number of Shares Purchased (a) Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs (b) Period October 1, 2024 - October 31, 2024 5,213 $ 21.98 — November 1, 2024 - November 30, 2024 2,541 26.78 — December 1, 2024 - December 31, 2024 1,717 25.72 — Total 9,471 $ 23.95 — 2,567,221 (a) During the fourth quarter of 2024, all common shares repurchased were for minimum tax withholding settlements on equity compensation.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

107 edited+18 added−46 removed83 unchanged
Biggest changeFor 2024, the Corporation expects noninterest expense growth of 2% to 3%. 50 Income Statement Analysis Net Interest Income Table 1 Net Interest Income Analysis Years Ended December 31, 2023 2022 2021 ($ in thousands) Average Balance Interest Income / Expense Average Yield / Rate Average Balance Interest Income / Expense Average Yield / Rate Average Balance Interest Income / Expense Average Yield / Rate Assets Earning assets Loans (a)(b)(c) Commercial and business lending $ 10,831,275 $ 740,017 6.83 % $ 9,852,303 $ 384,155 3.90 % $ 9,104,483 $ 250,085 2.75 % Commercial real estate lending 7,314,651 520,028 7.11 % 6,595,635 281,485 4.27 % 6,156,214 178,354 2.90 % Total commercial 18,145,926 1,260,045 6.94 % 16,447,938 665,640 4.05 % 15,260,697 428,439 2.81 % Residential mortgage 8,696,706 293,446 3.37 % 8,052,277 245,975 3.05 % 7,847,564 221,099 2.82 % Auto finance 1,793,959 89,454 4.99 % 805,179 30,749 3.82 % 19,815 871 4.39 % Other retail 897,702 80,189 8.93 % 894,948 52,266 5.84 % 929,905 44,852 4.82 % Total loans 29,534,293 1,723,134 5.83 % 26,200,341 994,630 3.80 % 24,057,980 695,260 2.89 % Investment securities Taxable 5,243,805 146,006 2.78 % 4,362,394 75,444 1.73 % 3,369,612 37,916 1.13 % Tax-exempt (a) 2,288,328 79,673 3.48 % 2,419,262 82,771 3.42 % 2,036,030 73,975 3.63 % Other short-term investments 564,284 28,408 5.03 % 570,887 11,475 2.01 % 1,644,995 7,833 0.48 % Investments and other 8,096,417 254,087 3.14 % 7,352,542 169,690 2.31 % 7,050,637 119,724 1.70 % Total earning assets $ 37,630,710 $ 1,977,221 5.25 % $ 33,552,884 $ 1,164,320 3.47 % $ 31,108,616 $ 814,984 2.62 % Other assets, net 3,018,214 3,105,049 3,355,640 Total assets $ 40,648,923 $ 36,657,932 $ 34,464,257 Liabilities and stockholders' equity Interest-bearing liabilities Interest-bearing deposits Savings $ 4,773,366 $ 63,945 1.34 % $ 4,652,774 $ 5,033 0.11 % $ 4,138,732 $ 1,435 0.03 % Interest-bearing demand 6,904,514 154,136 2.23 % 6,638,592 35,169 0.53 % 6,113,660 4,610 0.08 % Money market 6,668,930 177,311 2.66 % 7,164,518 36,370 0.51 % 6,940,513 4,028 0.06 % Network transaction deposits 1,469,616 75,294 5.12 % 821,804 14,721 1.79 % 929,544 1,120 0.12 % Time deposits 4,905,748 202,939 4.14 % 1,315,793 7,016 0.53 % 1,495,060 7,429 0.50 % Total interest-bearing deposits 24,722,174 673,624 2.72 % 20,593,482 98,309 0.48 % 19,617,508 18,622 0.09 % Federal funds purchased and securities sold under agreements to repurchase 345,519 12,238 3.54 % 388,701 3,480 0.90 % 207,132 143 0.07 % Commercial paper 8,582 1 0.01 % 20,540 2 0.01 % 49,546 22 0.04 % FHLB advances 3,741,790 196,535 5.25 % 2,784,403 75,487 2.71 % 1,623,508 36,493 2.25 % Long-term funding 504,438 36,080 7.15 % 249,478 10,653 4.27 % 407,912 17,053 4.18 % Total short and long-term funding 4,600,329 244,855 5.32 % 3,443,123 89,621 2.60 % 2,288,098 53,712 2.35 % Total interest-bearing liabilities $ 29,322,503 $ 918,479 3.13 % $ 24,036,605 $ 187,931 0.78 % $ 21,905,605 $ 72,334 0.33 % Noninterest-bearing demand deposits 6,620,965 8,163,703 8,075,906 Other liabilities 594,318 482,538 403,296 Stockholders’ equity 4,111,138 3,975,086 4,079,449 Total liabilities and stockholders’ equity $ 40,648,923 $ 36,657,932 $ 34,464,257 Interest rate spread 2.12 % 2.69 % 2.29 % Net free funds 0.69 % 0.22 % 0.10 % Fully tax-equivalent net interest income and net interest margin $ 1,058,742 2.81 % $ 976,389 2.91 % $ 742,650 2.39 % Fully tax-equivalent adjustment 19,168 19,068 16,796 Net interest income $ 1,039,573 $ 957,321 $ 725,855 (a) The yield on tax-exempt loans and securities is computed on a fully tax-equivalent basis using a tax rate of 21% and is net of the effects of certain disallowed interest deductions.
Biggest changeThe increase in net interest income was driven by growth of earning assets while margin compressed as a result of a shift in mix within deposits into higher cost funding from noninterest-bearing demand deposits. • Provision for credit losses was $85 million in 2024, compared to $83 million in 2023. • Noninterest income (loss) of $(9) million in 2024 decreased $73 million from 2023, primarily due to higher investment securities losses related to nonrecurring items from the balance sheet repositioning announced in the fourth quarter of 2024. • Noninterest expense of $818 million in 2024 increased $5 million, or 1%, from 2023, as a result of increased personnel expense as the Corporation continues to execute our growth strategy and the loss on prepayments of FHLB advances related to the balance sheet repositioning announced in the fourth quarter of 2024, partially offset by decreased FDIC assessment expense. 49 Income Statement Analysis Net Interest Income Table 1 Net Interest Income Analysis Years Ended December 31, 2024 2023 2022 ($ in thousands) Average Balance Interest Income / Expense Average Yield / Rate Average Balance Interest Income / Expense Average Yield / Rate Average Balance Interest Income / Expense Average Yield / Rate Assets Earning assets Loans (a)(b)(c) Commercial and business lending $ 11,069,185 $ 786,963 7.11 % $ 10,831,275 $ 740,017 6.83 % $ 9,852,303 $ 384,155 3.90 % Commercial real estate lending 7,270,239 538,228 7.40 % 7,314,651 520,028 7.11 % 6,595,635 281,485 4.27 % Total commercial 18,339,424 1,325,191 7.23 % 18,145,926 1,260,045 6.94 % 16,447,938 665,640 4.05 % Residential mortgage 7,907,962 278,804 3.53 % 8,696,706 293,446 3.37 % 8,052,277 245,975 3.05 % Auto finance 2,576,979 144,892 5.62 % 1,793,959 89,454 4.99 % 805,179 30,749 3.82 % Other retail 872,994 83,386 9.55 % 897,702 80,189 8.93 % 894,948 52,266 5.84 % Total loans 29,697,360 1,832,274 6.17 % 29,534,293 1,723,134 5.83 % 26,200,341 994,630 3.80 % Investment securities Taxable 5,690,238 199,424 3.50 % 5,243,805 146,006 2.78 % 4,362,394 75,444 1.73 % Tax-exempt (a) 2,111,523 71,458 3.38 % 2,288,328 79,673 3.48 % 2,419,262 82,771 3.42 % Other short-term investments 668,730 37,291 5.58 % 564,284 28,408 5.03 % 570,887 11,475 2.01 % Investments and other 8,470,491 308,173 3.64 % 8,096,417 254,087 3.14 % 7,352,542 169,690 2.31 % Total earning assets $ 38,167,851 $ 2,140,446 5.61 % $ 37,630,710 $ 1,977,221 5.25 % $ 33,552,884 $ 1,164,320 3.47 % Other assets, net 3,166,002 3,018,214 3,105,049 Total assets $ 41,333,853 $ 40,648,923 $ 36,657,932 Liabilities and stockholders' equity Interest-bearing liabilities Interest-bearing deposits Savings $ 5,080,045 $ 85,450 1.68 % $ 4,773,366 $ 63,945 1.34 % $ 4,652,774 $ 5,033 0.11 % Interest-bearing demand 7,443,738 193,900 2.60 % 6,904,514 154,136 2.23 % 6,638,592 35,169 0.53 % Money market 5,994,171 181,444 3.03 % 6,668,930 177,311 2.66 % 7,164,518 36,370 0.51 % Network transaction deposits 1,645,695 85,788 5.21 % 1,469,616 75,294 5.12 % 821,804 14,721 1.79 % Time deposits 7,481,486 355,221 4.75 % 4,905,748 202,939 4.14 % 1,315,793 7,016 0.53 % Total interest-bearing deposits 27,645,135 901,804 3.26 % 24,722,174 673,624 2.72 % 20,593,482 98,309 0.48 % Federal funds purchased and securities sold under agreements to repurchase 272,069 11,754 4.32 % 345,519 12,238 3.54 % 388,701 3,480 0.90 % Other short-term funding 403,214 20,420 5.06 % 8,582 1 0.01 % 20,540 2 0.01 % FHLB advances 1,793,734 98,520 5.49 % 3,741,790 196,535 5.25 % 2,784,403 75,487 2.71 % Long-term funding 640,842 45,781 7.14 % 504,438 36,080 7.15 % 249,478 10,653 4.27 % Total short and long-term funding 3,109,859 176,475 5.67 % 4,600,329 244,855 5.32 % 3,443,123 89,621 2.60 % Total interest-bearing liabilities $ 30,754,994 $ 1,078,279 3.51 % $ 29,322,503 $ 918,479 3.13 % $ 24,036,605 $ 187,931 0.78 % Noninterest-bearing demand deposits 5,745,960 6,620,965 8,163,703 Other liabilities 530,537 594,318 482,538 Stockholders’ equity 4,302,362 4,111,138 3,975,086 Total liabilities and stockholders’ equity $ 41,333,853 $ 40,648,923 $ 36,657,932 Interest rate spread 2.10 % 2.12 % 2.69 % Net free funds 0.68 % 0.69 % 0.22 % Fully tax-equivalent net interest income and net interest margin $ 1,062,167 2.78 % $ 1,058,742 2.81 % $ 976,389 2.91 % Fully tax-equivalent adjustment 14,919 19,168 19,068 Net interest income $ 1,047,248 $ 1,039,573 $ 957,321 (a) The yield on tax-exempt loans and securities is computed on a fully tax-equivalent basis using a tax rate of 21% and is net of the effects of certain disallowed interest deductions.
Subject to management's analysis of the current interest rate environment, among other market factors, the Corporation may choose to retain mortgage loan production on its balance sheet. 59 The Corporation’s underwriting and risk-based pricing guidelines for residential mortgage loans include minimum borrower FICO score and maximum LTV of the property securing the loan.
Subject to management's analysis of the current interest rate environment, among other market factors, the Corporation may choose to retain mortgage loan production on its balance sheet. The Corporation’s underwriting and risk-based pricing guidelines for residential mortgage loans include minimum borrower FICO score and maximum LTV of the property securing the loan.
The net interest margin 51 exceeds the interest rate spread because net free funds, principally noninterest-bearing demand deposits and stockholders’ equity, also support earning assets. To compare tax-exempt asset yields to taxable yields, the yield on tax-exempt loans and investment securities is computed on a fully tax-equivalent basis.
The net interest margin exceeds the interest rate spread because net free funds, principally noninterest-bearing demand deposits and stockholders’ equity, also support earning assets. To compare tax-exempt asset yields to taxable yields, the yield on tax-exempt loans and investment securities is computed on a fully tax-equivalent basis.
To assess the appropriateness of the ACLL, the Corporation focuses on the evaluation of many factors, including but not limited to: evaluation of facts and issues related to specific loans, management’s ongoing review and grading of the loan portfolio, credit report refreshes, consideration of historical loan loss and delinquency experience on each portfolio category, trends in past due and nonaccrual loans, the level of potential problem loans, the risk characteristics of the various classifications of loan segments, changes in the size and character of the loan portfolio, concentrations of loans to specific borrowers or industries, existing economic conditions and economic forecasts, the fair value of underlying collateral, funding assumptions on lines, and other qualitative and quantitative factors which could affect potential credit losses.
To assess the appropriateness of the ACLL, the Corporation focuses on the evaluation of many factors, including but not limited to: evaluation of facts and issues related to specific loans, management’s ongoing review and grading of the loan portfolio, credit report refreshes, consideration of historical loan loss and delinquency experience on each portfolio category, trends in past due and nonaccrual loans, the risk characteristics of the various classifications of loan segments, changes in the size and character of the loan portfolio, concentrations of loans to specific borrowers or industries, existing economic conditions and economic forecasts, the fair value of underlying collateral, funding assumptions on lines, and other qualitative and quantitative factors which could affect potential credit losses.
Interest rate spread and net interest margin are utilized to measure and explain changes in net interest income. Interest rate spread is the difference between the yield on earning assets and the rate paid on interest-bearing liabilities that fund those assets. The net interest margin is expressed as the percentage of net interest income to average earning assets.
Interest rate spread and net interest margin are utilized to measure and explain changes in net interest income. Interest rate spread is the difference between the yield on earning assets and the rate paid on interest-bearing liabilities that fund those assets. 50 The net interest margin is expressed as the percentage of net interest income to average earning assets.
As with EAR simulations, assumptions about the timing and variability of balance sheet cash flows are critical in the MVE analysis. Particularly important are the assumptions driving prepayments and the expected changes in 75 balances and pricing of the indeterminate deposit portfolios.
As with EAR simulations, assumptions about the timing and variability of balance sheet cash flows are critical in the MVE analysis. Particularly important are the assumptions driving prepayments and the expected changes in balances and pricing of the indeterminate deposit portfolios.
The Corporation’s capital ratios are summarized in the following table. Compliance with regulatory minimum capital requirements is a tool used in assessing the Corporation's capital adequacy, but not determinative of how the Corporation would fare under extreme stress.
The Corporation’s capital ratios are summarized in the following table. 75 Compliance with regulatory minimum capital requirements is a tool used in assessing the Corporation's capital adequacy, but not determinative of how the Corporation would fare under extreme stress.
The evaluation process combines many factors: management’s ongoing review and grading of the loan portfolio using a dual risk rating system leveraging probability of default and loss given default, consideration of historical loan loss and delinquency experience, trends in past due and nonaccrual loans, risk characteristics of the various classifications of loans, concentrations of loans to specific borrowers or industries, existing economic conditions and forecasts, the fair value of underlying collateral, and other qualitative and quantitative factors which 81 could affect future credit losses.
The evaluation process combines many factors: management’s ongoing review and grading of the loan portfolio using a dual risk rating system leveraging probability of default and loss given default, consideration of historical loan loss and delinquency experience, trends in past due and nonaccrual loans, risk characteristics of the various classifications of loans, concentrations of loans to specific borrowers or industries, existing economic conditions and forecasts, the fair value of underlying collateral, and other qualitative and quantitative factors which 79 could affect future credit losses.
These agencies may require additions to the ACLL or may require that certain loan balances be charged off or downgraded into criticized loan categories when their credit evaluations differ from those of management, based on their judgments about information available to them at the time of their examinations. 66 Investment Securities Portfolio Management of the investment securities portfolio involves the maximization of income while actively monitoring the portfolio's liquidity, market risk, quality of the investment securities, and its role in balance sheet and capital management.
These agencies may require additions to the ACLL or may require that certain loan balances be charged off or downgraded into criticized loan categories when their credit evaluations differ from those of management, based on their judgments about information available to them at the time of their examinations. 65 Investment Securities Portfolio Management of the investment securities portfolio involves the maximization of income while actively monitoring the portfolio's liquidity, market risk, quality of the investment securities, and its role in balance sheet and capital management.
As a financial institution that engages in transactions involving an array of financial products, the Corporation is exposed to both market risk and interest rate risk. In addition to market risk, interest rate risk is measured and managed through a number of methods.
As a financial institution that engages in transactions involving an array of financial products, the Corporation is exposed to both market risk and interest rate risk. In addition to market risk, interest rate risk is 73 measured and managed through a number of methods.
Whereas, EAR simulation highlights exposures over a relatively short time horizon, valuation analysis incorporates all cash flows over the estimated remaining life of all balance sheet and derivative positions.
Whereas, EAR simulation highlights exposures over a relatively short time horizon, valuation analysis incorporates all cash flows over the estimated remaining life of all 74 balance sheet and derivative positions.
For a discussion of 2022 results compared to 2021, see the Corporation's Annual Report on Form 10-K for the year ended December 31, 2022 . Overview The Corporation is a bank holding company headquartered in Wisconsin, providing a broad array of banking and nonbanking products and services to businesses and consumers primarily within our three-state footprint.
For a discussion of 2023 results compared to 2022, see the Corporation's Annual Report on Form 10-K for the year ended December 31, 2023 . Overview The Corporation is a bank holding company headquartered in Wisconsin, providing a broad array of banking and nonbanking products and services to businesses and consumers primarily within our three-state footprint.
Residential mortgage products generally are underwritten using FHLMC and FNMA secondary marketing guidelines. Home equity: Home equity consists of both home equity lines of credit and closed-end home equity loans.
Residential mortgage products generally are underwritten using FHLMC and FNMA secondary marketing guidelines. 58 Home equity: Home equity consists of both home equity lines of credit and closed-end home equity loans.
It should be read in conjunction with the consolidated financial statements and footnotes and the selected financial data presented elsewhere in this report. Within the tables presented, certain columns and rows may not sum due to the use of rounded numbers for disclosure purposes. The detailed financial discussion that follows focuses on 2023 results compared to 2022.
It should be read in conjunction with the consolidated financial statements and footnotes and the selected financial data presented elsewhere in this report. Within the tables presented, certain columns and rows may not sum due to the use of rounded numbers for disclosure purposes. The detailed financial discussion that follows focuses on 2024 results compared to 2023.
The CRE-owner occupied portfolio is spread over a diverse range of industries, none of which exceed 2% of total loan exposure. 58 The credit risk related to commercial and business lending is largely influenced by general economic conditions and the resulting impact on a borrower’s operations or on the value of underlying collateral, if any.
The CRE-owner occupied portfolio is spread over a diverse range of industries, none of which exceed 2% of total loan exposure. 57 The credit risk related to commercial and business lending is largely influenced by general economic conditions and the resulting impact on a borrower’s operations or on the value of underlying collateral, if any.
Once charged off, there is usually less opportunity for recovery of these smaller consumer loans. Credit risk is primarily controlled by reviewing the creditworthiness of the borrowers, monitoring payment histories, and taking appropriate collateral and guarantee positions. 60 Nonperforming Assets Management is committed to a proactive nonaccrual and problem loan identification philosophy.
Once charged off, there is usually less opportunity for recovery of these smaller consumer loans. Credit risk is primarily controlled by reviewing the creditworthiness of the borrowers, monitoring payment histories, and taking appropriate collateral and guarantee positions. 59 Nonperforming Assets Management is committed to a proactive nonaccrual and problem loan identification philosophy.
See Tables 11 and 12 for additional information regarding the activity in the ACLL. Management believes the level of ACLL to be appropriate at December 31, 2023. Consolidated net income and stockholders’ equity could be affected if management’s estimate of the ACLL is subsequently materially different, requiring additional or less provision for credit losses to be recorded.
See Tables 11 and 12 for additional information regarding the activity in the ACLL. Management believes the level of ACLL to be appropriate at December 31, 2024. Consolidated net income and stockholders’ equity could be affected if management’s estimate of the ACLL is subsequently materially different, requiring additional or less provision for credit losses to be recorded.
Strong capital ratios, credit quality, and core earnings are also essential to maintaining cost effective access to wholesale funding markets. At December 31, 2023, the Corporation was in compliance with its internal liquidity objectives and had sufficient asset-based liquidity to meet its obligations even under a stressed scenario.
Strong capital ratios, credit quality, and core earnings are also essential to maintaining cost effective access to wholesale funding markets. At December 31, 2024, the Corporation was in compliance with its internal liquidity objectives and had sufficient asset-based liquidity to meet its obligations even under a stressed scenario.
Significant loan concentrations are considered to exist when there are amounts loaned to numerous borrowers engaged in similar activities that would cause them to be similarly impacted by economic or other conditions. At December 31, 2023, no significant concentrations existed in the Corporation’s loan portfolio in excess of 10% of total loan exposure.
Significant loan concentrations are considered to exist when there are amounts loaned to numerous borrowers engaged in similar activities that would cause them to be similarly impacted by economic or other conditions. At December 31, 2024, no significant concentrations existed in the Corporation’s loan portfolio in excess of 10% of total loan exposure.
The assessment of overall capital adequacy depends on a variety of factors, including asset quality, liquidity, stability of earnings, changing competitive forces, economic conditions in markets served, and strength of management. At December 31, 2023, the capital ratios of the Corporation and its banking subsidiaries were in excess of regulatory minimum requirements.
The assessment of overall capital adequacy depends on a variety of factors, including asset quality, liquidity, stability of earnings, changing competitive forces, economic conditions in markets served, and strength of management. At December 31, 2024, the capital ratios of the Corporation and its banking subsidiaries were in excess of regulatory minimum requirements.
Table 18 Estimated % Change in Rate Sensitive EAR Over 12 Months Dynamic Forecast December 31, 2023 Static Forecast December 31, 2023 Dynamic Forecast December 31, 2022 Static Forecast December 31, 2022 Gradual Rate Change 100 bp increase in interest rates 1.9% 2.2% 3.9% 3.4% 200 bp increase in interest rates 3.8% 4.3% 7.8% 6.8% 100 bp decrease in interest rates (1.3)% (1.5)% (3.4)% (2.9)% 200 bp decrease in interest rates (2.6)% (3.1)% (6.7)% (5.7)% We also perform valuation analysis, which we use for discerning levels of risk present in the balance sheet and derivative positions that might not be taken into account in the EAR simulation analysis.
Table 18 Estimated % Change in Rate Sensitive EAR Over 12 Months Dynamic Forecast December 31, 2024 Static Forecast December 31, 2024 Dynamic Forecast December 31, 2023 Static Forecast December 31, 2023 Gradual Rate Change 100 bp increase in interest rates 1.0% 0.7% 1.9% 2.2% 200 bp increase in interest rates 2.0% 1.3% 3.8% 4.3% 100 bp decrease in interest rates (0.5)% (0.2)% (1.3)% (1.5)% 200 bp decrease in interest rates (1.3)% (0.8)% (2.6)% (3.1)% We also perform valuation analysis, which we use for discerning levels of risk present in the balance sheet and derivative positions that might not be taken into account in the EAR simulation analysis.
Table 1 provides average daily balances of earning assets and interest-bearing liabilities, the associated interest income and expense, and the corresponding interest rates earned and paid, as well as net interest income, interest rate spread, and net interest margin on a fully tax-equivalent basis for the years ended December 31, 2023, 2022, and 2021.
Table 1 provides average daily balances of earning assets and interest-bearing liabilities, the associated interest income and expense, and the corresponding interest rates earned and paid, as well as net interest income, interest rate spread, and net interest margin on a fully tax-equivalent basis for the years ended December 31, 2024, 2023, and 2022.
The targeted long-term guidelines were unchanged during 2023 and 2022. Furthermore, certain sub-asset classes within the respective portfolios are further defined and dollar limitations are placed on these sub-portfolios. These guidelines and limits are reviewed quarterly and approved annually by the ERC. These guidelines and limits are designed to create balance and diversification within the loan portfolios.
The targeted long-term guidelines were unchanged during 2024 and 2023. Furthermore, certain sub-asset classes within the respective portfolios are further defined and dollar limitations are placed on these sub-portfolios. These guidelines and limits are reviewed quarterly and approved annually by the ERC. These guidelines and limits are designed to create balance and diversification within the loan portfolios.
The Corporation’s interest rate risk profile is such that, generally, a higher yield curve adds to income while a lower yield curve has a negative impact on earnings. The Corporation's EAR profile is asset sensitive at December 31, 2023. MVE and EAR are complementary interest rate risk metrics and should be viewed together.
The Corporation’s interest rate risk profile is such that, generally, a higher yield curve adds to income while a lower yield curve has a negative impact on earnings. The Corporation's EAR profile is asset sensitive at December 31, 2024. MVE and EAR are complementary interest rate risk metrics and should be viewed together.
Contractual Obligations, Commitments, Off-Balance Sheet Arrangements, and Contingent Liabilities The following table summarizes significant contractual obligations and other commitments at December 31, 2023, at those amounts contractually due to the recipient, including any unamortized premiums or discounts, hedge basis adjustments, or other similar carrying value adjustments.
Contractual Obligations, Commitments, Off-Balance Sheet Arrangements, and Contingent Liabilities The following table summarizes significant contractual obligations and other commitments at December 31, 2024, at those amounts contractually due to the recipient, including any unamortized premiums or discounts, hedge basis adjustments, or other similar carrying value adjustments.
See Note 4 Loans of the notes to consolidated financial statements for additional information on managing overall credit quality. The loan portfolio is widely diversified by types of borrowers, industry groups, and market areas primarily within the Corporation's lending footprint.
See Note 3 Loans of the notes to consolidated financial statements for additional information on managing overall credit quality. The loan portfolio is widely diversified by types of borrowers, industry groups, and market areas primarily within the Corporation's lending footprint.
Indirect Auto: The Corporation currently purchases retail auto sales contracts via a network of approved auto dealerships across 14 states throughout the Northeast, Mid-Atlantic, and Midwestern United States. The auto dealerships finance the sale of automobiles as the initial lender and then assign the contracts to the Corporation pursuant to dealer agreements.
Indirect Auto: The Corporation currently purchases retail auto sales contracts via a network of approved auto dealerships across 16 states throughout the Northeast, Mid-Atlantic, and Midwestern United States. The auto dealerships finance the sale of automobiles as the initial lender and then assign the contracts to the Corporation pursuant to dealer agreements.
During the fourth quarter of 2023 as part of the balance sheet repositioning, the Corporation sold lower yielding AFS securities with a carrying value of $715 million at a net loss of $65 million and reinvested the proceeds in higher yielding and lower risk-weighted GNMA securities.
During the fourth quarter of 2023 as part of the balance sheet repositioning, the Corporation sold lower yielding AFS securities with a carrying value of $715 million at a net loss of $65 million and reinvested the proceeds into higher yielding and lower risk-weighted GNMA securities.
See management’s accounting policy for nonaccrual loans in Note 1 Summary of Significant Accounting Policies and Note 4 Loans of the notes to consolidated financial statements for additional nonaccrual loan disclosures. See also sections Credit Risk and Allowance for Credit Losses on Loans.
See management’s accounting policy for nonaccrual loans in Note 1 Summary of Significant Accounting Policies and Note 3 Loans of the notes to consolidated financial statements for additional nonaccrual loan disclosures. See also sections Credit Risk and Allowance for Credit Losses on Loans.
While a gradual shift in interest rates was used in this analysis to provide an estimate of exposure under a probable scenario, an instantaneous shift in interest rates would have a more significant impact. No EAR breaches occurred during 2023.
While a gradual shift in interest rates was used in this analysis to provide an estimate of exposure under a probable scenario, an instantaneous shift in interest rates would have a more significant impact. No EAR breaches occurred during 2024.
At December 31, 2023, the MVE profile indicates a decrease in net balance sheet value due to instantaneous upward changes in rates and an increase in net balance sheet value due to instantaneous downward changes in rates.
At December 31, 2024, the MVE profile indicates a decrease in net balance sheet value due to instantaneous upward changes in rates and an increase in net balance sheet value due to instantaneous downward changes in rates.
See Note 1 Summary of Significant Accounting Policies and Note 4 Loans of the notes to consolidated financial statements as well as the Allowance for Credit Losses on Loans section.
See Note 1 Summary of Significant Accounting Policies and Note 3 Loans of the notes to consolidated financial statements as well as the Allowance for Credit Losses on Loans section.
See also Note 4 Loans of the notes to consolidated financial statements for additional ACLL disclosures. Table 5 provides information on loan growth and period end loan composition, Table 10 provides additional information regarding NPAs, and Table 11 and Table 12 provide additional information regarding activity in the ACLL.
See also Note 3 Loans of the notes to consolidated financial statements for additional ACLL disclosures. Table 5 provides information 61 on loan growth and period end loan composition, Table 10 provides additional information regarding NPAs, and Table 11 and Table 12 provide additional information regarding activity in the ACLL.
The residential mortgage portfolio is focused primarily in the Corporation's three-state branch footprint, with approximately 88% of the outstanding loan balances in the Corporation's branch footprint at December 31, 2023. The rates on adjustable rate mortgages adjust based upon the movement in the underlying index which is then added to a margin and rounded to the nearest 0.125%.
The residential mortgage portfolio is focused primarily in the Corporation's three-state branch footprint, with approximately 89% of the outstanding loan balances in the Corporation's branch footprint at December 31, 2024. The rates on adjustable rate mortgages adjust based upon the movement in the underlying index which is then added to a margin and rounded to the nearest 0.125%.
The forecast the Corporation used for December 31, 2023 was the Moody's baseline scenario from November 2023, which was reviewed against the December 2023 baseline scenario with no material updates made, over a 2 year reasonable and supportable period with straight-line reversion to historical losses over the second year of the period. Assessing these factors involves significant judgment.
The forecast the Corporation used for December 31, 2024 was the Moody's baseline scenario from November 2024, which was reviewed against the December 2024 baseline scenario with no material updates made, over a two year reasonable and supportable period with straight-line reversion to historical losses over the second year of the period. Assessing these factors involves significant judgment.
During 2023, total assets increased to $41.0 billion, up $1.6 billion compared to year-end 2022, primarily due to an increase in AFS investment securities, at fair value of $859 million and loans of $417 million.
During 2023, total assets increased to $41.0 billion, up $1.6 billion compared to year-end 2022, primarily due to increases in AFS investment securities, at fair value of $859 million and loans of $417 million.
Table 13 Investment Securities Portfolio At December 31, ($ in thousands) 2023 % of Total 2022 % of Total 2021 % of Total AFS investment securities Amortized cost U.S.
Table 13 Investment Securities Portfolio At December 31, ($ in thousands) 2024 % of Total 2023 % of Total 2022 % of Total AFS investment securities Amortized cost U.S.
The forecast the Corporation used for December 31, 2023 was the Moody's baseline scenario from November 2023, which was reviewed against the December 2023 baseline scenario with no material updates made, over a 2 year reasonable and supportable period with straight-line reversion to historical losses over the second year of the period.
The forecast the Corporation used for December 31, 2024 was the Moody's baseline scenario from November 2024, which was reviewed against the December 2024 baseline scenario with no material updates made, over a two-year reasonable and supportable period with straight-line reversion to historical losses over the second year of the period.
During the fourth quarter of 2023, the Corporation completed a one-time mortgage portfolio sale of $969 million of residential mortgages sold at a loss of $136 million related to the balance sheet repositioning.
During the fourth quarter of 2023, the Corporation completed a mortgage portfolio sale of $969 million of residential mortgages sold at a loss of $136 million related to the balance sheet repositioning announced during the fourth quarter of 2023.
(b) Availability based on internal policy limitations. The Corporation includes outstanding deposits that have received a primary purpose exemption in the brokered deposit classification as they have similar funding characteristics and risk as brokered deposits. (c) Availability based on internal policy limitations.
(b) Availability based on internal policy limitations. The Corporation includes outstanding deposits that have received a primary purpose exemption in the brokered deposit classification as they have similar funding characteristics and risk as brokered deposits. (c) Estimated availability based on the Corporation's current internal funding considerations.
The loan segmentation used in calculating the ACLL at December 31, 2023 and December 31, 2022 was generally comparable.
The loan segmentation used in calculating the ACLL at December 31, 2024 and December 31, 2023 was generally comparable.
At December 31, 2023, a 10% change in loans classified as special mention or worse would result in a +/- 3 bp change in the ACLL to total loans ratio. The Corporation believes the level of the ACLL is appropriate.
At December 31, 2024, a 10% change in loans classified as special mention or worse would result in a +/- 4 bp change in the ACLL to total loans ratio. The Corporation believes the level of the ACLL is appropriate.
Table 19 Market Value of Equity Sensitivity December 31, 2023 December 31, 2022 Instantaneous Rate Change 100 bp increase in interest rates (10.1) % (4.2) % 200 bp increase in interest rates (20.1) % (8.2) % 100 bp decrease in interest rates 9.7 % 4.3 % 200 bp decrease in interest rates 18.5 % 8.0 % Since MVE measures the discounted present value of cash flows over the estimated lives of instruments, the change in MVE does not directly correlate to the degree that earnings would be impacted over a shorter time horizon (i.e., the current year).
Table 19 Market Value of Equity Sensitivity December 31, 2024 December 31, 2023 Instantaneous Rate Change 100 bp increase in interest rates (9.1) % (10.1) % 200 bp increase in interest rates (18.5) % (20.1) % 100 bp decrease in interest rates 7.1 % 9.7 % 200 bp decrease in interest rates 12.6 % 18.5 % Since MVE measures the discounted present value of cash flows over the estimated lives of instruments, the change in MVE does not directly correlate to the degree that earnings would be impacted over a shorter time horizon (i.e., the current year).
Commercial and business lending: The commercial and business lending classification primarily includes commercial loans to large corporations, middle market companies, small businesses, and asset-based and equipment financing.
Commercial and business lending: The commercial and business lending classification primarily includes commercial loans to large corporations, middle market companies, small businesses, and ABL and equipment financing.
Credit risk for non-government guaranteed student loans, short-term personal installment loans, and credit cards is influenced by general economic conditions, the characteristics of individual borrowers, and the nature of the loan collateral. Risks of loss are generally on smaller average balances per loan spread over many borrowers.
Other consumer: Other consumer consists of student loans, short-term personal installment loans, and credit cards. Credit risk for other consumer loans is influenced by general economic conditions, the characteristics of individual borrowers, and the nature of the loan collateral. Risks of loss are generally on smaller average balances per loan spread over many borrowers.
Based on the amount of collateral pledged, the FHLB established a collateral value from which the Bank may draw advances, and issue letters of credit in favor of public fund depositors, against the collateral. As of December 31, 2023, the Bank had $6.0 billion available for future funding.
Based on the amount of collateral pledged, the FHLB established a collateral value from which the Bank may draw advances, and issue letters of credit in favor of public fund depositors, against the collateral. As of December 31, 2024, the Bank had $7.1 billion available for future funding.
At December 31, 2023, $19.5 billion, or 67%, of the total loans outstanding and $16.4 billion, or 90%, of the commercial loans outstanding were floating rate, adjustable rate, re-pricing within one year, or maturing within one year. Credit Risk An active credit risk management process is used for commercial loans to ensure that sound and consistent credit decisions are made.
At December 31, 2024, $20.0 billion, or 67%, of the total loans outstanding and $16.9 billion, or 90%, of the commercial loans outstanding were floating rate, adjustable rate, re-pricing within one year, or maturing within one year. Credit Risk An active credit risk management process is used for commercial loans to ensure that sound and consistent credit decisions are made.
Table 9 Largest Real Estate Construction Property Type Exposures December 31, 2023 % of Total Loan Exposure % of Total Real Estate - Construction Loan Exposure Multi-Family 5 % 45 % Industrial 2 % 24 % The remaining real estate construction portfolio is spread over various other property types, none of which exceed 2% of total loan exposure.
Table 9 Largest Real Estate Construction Property Type Exposures December 31, 2024 % of Total Loan Exposure % of Total Real Estate Construction Loan Exposure Multi-Family 5 % 54 % The remaining real estate construction portfolio is spread over various other property types, none of which exceed 2% of total loan exposure.
Table 8 Largest Commercial Real Estate-Investor Property Type Exposures December 31, 2023 % of Total Loan Exposure % of Total Commercial Real Estate - Investor Loan Exposure Multi-Family 4 % 33 % Industrial 3 % 25 % Office 3 % 21 % The remaining CRE-investor portfolio is spread over various other property types, none of which exceed 2% of total loan exposure.
Table 8 Largest Commercial Real Estate - Investor Property Type Exposures December 31, 2024 % of Total Loan Exposure % of Total Commercial Real Estate - Investor Loan Exposure Multi-Family 5 % 38 % Industrial 3 % 25 % Office 2 % 18 % The remaining CRE-investor portfolio is spread over various other property types, none of which exceed 2% of total loan exposure.
Factors that may affect the adequacy of the Corporation's capital include the inherent limitations of fair value estimates and the assumptions thereof, the inherent limitations of the regulatory risk-weights assigned to various asset types, the inherent limitations of accounting classifications of certain investments and the effect on their measurement, external macroeconomic conditions and their effects on capital and the Corporation's ability to raise capital or refinance capital commitments, and the extent of steps taken by state or federal government authorities in periods of extreme stress. 76 For additional information regarding the potential for additional regulation and supervision, see Part I, Item 1A, Risk Factors.
Factors that may affect the adequacy of the Corporation's capital include the inherent limitations of fair value estimates and the assumptions thereof, the inherent limitations of the regulatory risk-weights assigned to various asset types, the inherent limitations of accounting classifications of certain investments and the effect on their measurement, external macroeconomic conditions and their effects on capital and the Corporation's ability to raise capital or refinance capital commitments, and the extent of steps taken by state or federal government authorities in periods of extreme stress.
The MVE measures in the 100 bp and 200 bp increase in interest rates scenarios are both outside of the policy limit, which have been reported to the Corporation's Board. The above EAR and MVE measures do not include all actions that management may undertake to manage this risk in response to anticipated changes in interest rates.
The MVE measure in the 200 bp increase in interest rates scenario is outside of the policy limit, which has been reported to the Corporation's Board. The above EAR and MVE measures do not include all actions that management may undertake to manage this risk in response to anticipated changes in interest rates.
That result is then subjected to any periodic caps to produce the borrower's interest rate for the coming term. Most of the adjustable rate mortgages have an initial fixed rate term of 3, 5, 7 or 10 years.
That result is then subjected to any periodic caps to produce the borrower's interest rate for the coming term. Adjustable rate mortgages are typically offered with an initial fixed rate term of 5, 7 or 10 years.
See section Other Funding Sources and Note 9 Short and Long-Term Funding of the notes to consolidated financial statements for additional details on funding. 56 Loans Table 5 Period End Loan Composition As of December 31, 2023 2022 2021 2020 2019 ($ in thousands) Amount % of Total Amount % of Total Amount % of Total Amount % of Total Amount % of Total Commercial and industrial $ 9,731,555 33 % $ 9,759,454 34 % $ 8,452,385 35 % $ 8,469,179 35 % $ 7,354,594 32 % Commercial real estate — owner occupied 1,061,700 4 % 991,722 3 % 971,326 4 % 900,912 4 % 911,265 4 % Commercial and business lending 10,793,255 37 % 10,751,176 37 % 9,423,711 39 % 9,370,091 38 % 8,265,858 36 % Commercial real estate — investor 5,124,245 18 % 5,080,344 18 % 4,384,569 18 % 4,342,584 18 % 3,794,517 17 % Real estate construction 2,271,398 8 % 2,155,222 7 % 1,808,976 7 % 1,840,417 8 % 1,420,900 6 % Commercial real estate lending 7,395,644 25 % 7,235,565 25 % 6,193,545 26 % 6,183,001 25 % 5,215,417 23 % Total commercial 18,188,898 62 % 17,986,742 62 % 15,617,256 64 % 15,553,091 64 % 13,481,275 59 % Residential mortgage 7,864,891 27 % 8,511,550 30 % 7,567,310 31 % 7,878,324 32 % 8,136,980 36 % Auto finance 2,256,162 8 % 1,382,073 5 % 143,045 1 % 11,177 — % 2,982 — % Home equity 628,526 2 % 624,353 2 % 595,615 2 % 707,255 3 % 852,025 4 % Other consumer 277,740 1 % 294,851 1 % 301,723 1 % 301,876 1 % 348,177 2 % Total consumer 11,027,319 38 % 10,812,828 38 % 8,607,693 36 % 8,898,632 36 % 9,340,164 41 % Total loans $ 29,216,218 100 % $ 28,799,569 100 % $ 24,224,949 100 % $ 24,451,724 100 % $ 22,821,440 100 % Commercial real estate and real estate construction loan detail Non-owner occupied $ 3,362,085 66 % $ 3,313,959 65 % $ 2,972,584 68 % $ 2,969,906 68 % $ 2,589,838 68 % Multi-family 1,759,504 34 % 1,762,608 35 % 1,405,264 32 % 1,360,305 31 % 1,201,835 32 % Farmland 2,656 — % 3,776 — % 6,720 — % 12,373 — % 2,844 — % Commercial real estate — investor $ 5,124,245 100 % $ 5,080,344 100 % $ 4,384,569 100 % $ 4,342,584 100 % $ 3,794,517 100 % 1-4 family construction $ 275,292 12 % $ 436,210 20 % $ 380,160 21 % $ 270,467 15 % $ 261,908 18 % All other construction 1,996,106 88 % 1,719,012 80 % 1,428,816 79 % 1,569,950 85 % 1,158,992 82 % Real estate construction $ 2,271,398 100 % $ 2,155,222 100 % $ 1,808,976 100 % $ 1,840,417 100 % $ 1,420,900 100 % The Corporation has long-term guidelines relative to the proportion of Commercial and Business, CRE, and Consumer loan commitments within the overall loan portfolio, with each targeted to represent 30 to 40% of the overall loan portfolio.
See section Other Funding Sources and Note 8 Short and Long-Term Funding of the notes to consolidated financial statements for additional details on funding. 55 Loans Table 5 Period End Loan Composition As of December 31, 2024 2023 2022 2021 2020 ($ in thousands) Amount % of Total Amount % of Total Amount % of Total Amount % of Total Amount % of Total Commercial and industrial $ 10,573,741 36 % $ 9,731,555 33 % $ 9,759,454 34 % $ 8,452,385 35 % $ 8,469,179 35 % Commercial real estate — owner occupied 1,143,741 4 % 1,061,700 4 % 991,722 3 % 971,326 4 % 900,912 4 % Commercial and business lending 11,717,483 39 % 10,793,255 37 % 10,751,176 37 % 9,423,711 39 % 9,370,091 38 % Commercial real estate — investor 5,227,975 18 % 5,124,245 18 % 5,080,344 18 % 4,384,569 18 % 4,342,584 18 % Real estate construction 1,982,632 7 % 2,271,398 8 % 2,155,222 7 % 1,808,976 7 % 1,840,417 8 % Commercial real estate lending 7,210,607 24 % 7,395,644 25 % 7,235,565 25 % 6,193,545 26 % 6,183,001 25 % Total commercial 18,928,090 64 % 18,188,898 62 % 17,986,742 62 % 15,617,256 64 % 15,553,091 64 % Residential mortgage 7,047,541 24 % 7,864,891 27 % 8,511,550 30 % 7,567,310 31 % 7,878,324 32 % Auto finance 2,810,220 9 % 2,256,162 8 % 1,382,073 5 % 143,045 1 % 11,177 — % Home equity 664,252 2 % 628,526 2 % 624,353 2 % 595,615 2 % 707,255 3 % Other consumer 318,483 1 % 277,740 1 % 294,851 1 % 301,723 1 % 301,876 1 % Total consumer 10,840,496 36 % 11,027,319 38 % 10,812,828 38 % 8,607,693 36 % 8,898,632 36 % Total loans $ 29,768,586 100 % $ 29,216,218 100 % $ 28,799,569 100 % $ 24,224,949 100 % $ 24,451,724 100 % Commercial real estate and real estate construction loan detail Non-owner occupied $ 3,210,509 61 % $ 3,362,085 66 % $ 3,313,959 65 % $ 2,972,584 68 % $ 2,969,906 68 % Multi-family 2,015,401 39 % 1,759,504 34 % 1,762,608 35 % 1,405,264 32 % 1,360,305 31 % Farmland 2,065 — % 2,656 — % 3,776 — % 6,720 — % 12,373 — % Commercial real estate — investor $ 5,227,975 100 % $ 5,124,245 100 % $ 5,080,344 100 % $ 4,384,569 100 % $ 4,342,584 100 % 1-4 family construction $ 160,699 8 % $ 275,292 12 % $ 436,210 20 % $ 380,160 21 % $ 270,467 15 % All other construction 1,821,933 92 % 1,996,106 88 % 1,719,012 80 % 1,428,816 79 % 1,569,950 85 % Real estate construction $ 1,982,632 100 % $ 2,271,398 100 % $ 2,155,222 100 % $ 1,808,976 100 % $ 1,840,417 100 % The Corporation has long-term guidelines relative to the proportion of Commercial and Business, CRE, and Consumer loan commitments within the overall loan portfolio, with each targeted to represent 30 to 40% of the overall loan portfolio.
The ability to take new advances under this program ends in March 2024. • A $200 million Parent Company commercial paper program, of which none was outstanding at December 31, 2023. • Dividends and service fees from subsidiaries, as well as the proceeds from issuance of capital, which are also funding sources for the Parent Company. • Acquisition related equity issuances by the Parent Company; the Corporation has filed a shelf registration statement with the SEC under which the Parent Company may, from time to time, offer shares of the Corporation’s common stock in connection with acquisitions of businesses, assets, or securities of other companies. • Other issuances by the Parent Company; the Corporation maintains on file with the SEC a universal shelf registration statement, under which the Parent Company may offer the following securities, either separately or in units: debt securities, preferred stock, depositary shares, common stock, and warrants. • Bank issuances; the Bank may also issue institutional CDs, network transaction deposits, and brokered CDs. • Global Bank Note Program issuances; the Bank has implemented a program pursuant to which it may from time to time offer up to $2.0 billion aggregate principal amount of its unsecured senior and subordinated notes.
As of December 31, 2024, the Bank had $2.8 billion available for discount window borrowings. • A $200 million Parent Company commercial paper program, of which none was outstanding at December 31, 2024. • Dividends and service fees from subsidiaries, as well as the proceeds from issuance of capital, which are also funding sources for the Parent Company. • Acquisition related equity issuances by the Parent Company; the Corporation has filed a shelf registration statement with the SEC under which the Parent Company may, from time to time, offer shares of the Corporation’s common stock in connection with acquisitions of businesses, assets, or securities of other companies. • Other issuances by the Parent Company; the Corporation maintains on file with the SEC a universal shelf registration statement, under which the Parent Company may offer the following securities, either separately or in units: debt securities, preferred stock, depositary shares, common stock, and warrants. • Bank issuances; the Bank may also issue institutional CDs, network transaction deposits, and brokered CDs. • Global Bank Note Program issuances; the Bank has implemented a program pursuant to which it may offer up to $2.0 billion aggregate principal amount of its unsecured senior and subordinated notes. 72 The following table presents secured and total available liquidity sources, estimated uninsured and uncollateralized deposits (excluding intercompany deposits), and coverage of estimated uninsured and uncollateralized deposits.
Liquidity The objective of liquidity risk management is to ensure that the Corporation has the ability to generate sufficient cash or cash equivalents in a timely and cost effective manner to satisfy the cash flow requirements of depositors and borrowers and to meet its other commitments as they become due.
See Table 1 for additional information on average funding and rates. Liquidity The objective of liquidity risk management is to ensure that the Corporation has the ability to generate sufficient cash or cash equivalents in a timely and cost-effective manner to satisfy the cash flow requirements of depositors and borrowers and to meet its other commitments as they become due.
The total allowance is available to absorb losses from any segment of the loan portfolio. 63 Table 11 Allowance for Credit Losses on Loans Years Ended December 31, ($ in thousands) 2023 2022 2021 2020 2019 Allowance for loan losses Balance at beginning of period $ 312,720 $ 280,015 $ 383,702 $ 201,371 $ 238,023 Cumulative effect of ASU 2016-13 adoption (CECL) N/A N/A N/A 112,457 N/A Balance at beginning of period, adjusted 312,720 280,015 383,702 313,828 238,023 Provision for loan losses 87,000 34,000 (80,000) 164,457 18,500 Provision for loan losses recorded at acquisition — — — 2,543 — Gross up of allowance for PCD loans at acquisition — — — 3,504 — Loans charged off Commercial and industrial (45,687) (4,491) (21,564) (80,320) (63,315) Commercial real estate — owner occupied (25) — — (419) (222) Commercial and business lending (45,713) (4,491) (21,564) (80,739) (63,537) Commercial real estate — investor (252) (50) (14,346) (22,920) — Real estate construction (25) (48) (5) (19) (60) Commercial real estate lending (277) (98) (14,351) (22,938) (60) Total commercial (45,989) (4,588) (35,915) (103,677) (63,597) Residential mortgage (952) (567) (880) (1,867) (3,322) Auto finance (5,950) (1,041) (22) (7) — Home equity (424) (587) (668) (1,719) (1,846) Other consumer (5,453) (3,363) (3,168) (4,783) (5,548) Total consumer (12,779) (5,558) (4,738) (8,376) (10,716) Total loans charged off (58,768) (10,146) (40,652) (112,053) (74,313) Recoveries of loans previously charged off Commercial and industrial 3,015 5,282 8,564 7,004 11,875 Commercial real estate — owner occupied 11 13 120 147 2,795 Commercial and business lending 3,026 5,295 8,684 7,151 14,670 Commercial real estate — investor 3,016 50 3,162 643 31 Real estate construction 80 106 126 49 302 Commercial real estate lending 3,095 156 3,288 692 333 Total commercial 6,121 5,451 11,972 7,844 15,003 Residential mortgage 541 908 841 500 692 Auto finance 1,241 98 31 25 10 Home equity 1,262 1,385 2,854 1,978 2,599 Other consumer 978 1,010 1,267 1,076 858 Total consumer 4,021 3,401 4,993 3,579 4,158 Total recoveries 10,142 8,852 16,965 11,422 19,161 Net (charge offs) (48,626) (1,294) (23,687) (100,631) (55,152) Balance at end of period $ 351,094 $ 312,720 $ 280,015 $ 383,702 $ 201,371 Allowance for unfunded commitments Balance at beginning of period $ 38,776 $ 39,776 $ 47,776 $ 21,907 $ 24,336 Cumulative effect of ASU 2016-13 adoption (CECL) N/A N/A N/A 18,690 N/A Balance at beginning of period, adjusted 38,776 39,776 47,776 40,597 24,336 Provision for unfunded commitments (4,000) (1,000) (8,000) 7,000 (2,500) Amount recorded at acquisition — — — 179 70 Balance at end of period $ 34,776 $ 38,776 $ 39,776 $ 47,776 $ 21,907 Allowance for credit losses on loans $ 385,870 $ 351,496 $ 319,791 $ 431,478 $ 223,278 Provision for credit losses on loans 83,000 33,000 (88,000) 174,000 16,000 64 Table 11 Allowance for Credit Losses on Loans (continued) Years Ended December 31, ($ in thousands) 2023 2022 2021 2020 2019 Net loan (charge offs) recoveries Commercial and industrial $ (42,672) $ 791 $ (13,000) $ (73,316) $ (51,441) Commercial real estate — owner occupied (15) 13 120 (272) 2,573 Commercial and business lending (42,687) 804 (12,880) (73,588) (48,868) Commercial real estate — investor 2,763 — (11,184) (22,277) 31 Real estate construction 55 58 121 31 243 Commercial real estate lending 2,819 58 (11,063) (22,246) 274 Total commercial (39,868) 862 (23,943) (95,834) (48,594) Residential mortgage (411) 341 (38) (1,367) (2,630) Auto finance (4,709) (943) 9 19 10 Home equity 837 798 2,186 259 753 Other consumer (4,475) (2,353) (1,901) (3,707) (4,690) Total consumer (8,758) (2,157) 256 (4,797) (6,558) Total net (charge offs) $ (48,626) $ (1,294) $ (23,687) $ (100,631) $ (55,152) Ratios Allowance for credit losses on loans to total loans 1.32 % 1.22 % 1.32 % 1.76 % 0.98 % Allowance for credit losses on loans to net charge offs 7.9x N/M 13.5x 4.3x 4.0x Loan evaluation method for ACLL Individually evaluated for impairment $ 15,492 $ 10,324 $ 15,194 $ 79,831 $ 14,026 Collectively evaluated for impairment 370,378 341,172 304,597 351,646 209,252 Total ACLL $ 385,870 $ 351,496 $ 319,791 $ 431,478 $ 223,278 Loan balance Individually evaluated for impairment $ 62,712 $ 76,577 $ 115,643 $ 259,497 $ 111,595 Collectively evaluated for impairment 29,153,505 28,722,992 24,109,306 24,192,227 22,709,845 Total loan balance $ 29,216,218 $ 28,799,569 $ 24,224,949 $ 24,451,724 $ 22,821,440 Table 12 Net (Charge Offs) Recoveries (a) Years Ended December 31, (In basis points) 2023 2022 2021 2020 2019 Net loan (charge offs) recoveries Commercial and industrial (44) 1 (16) (86) (69) Commercial real estate — owner occupied — — 1 (3) 28 Commercial and business lending (39) 1 (14) (78) (58) Commercial real estate — investor 5 — (26) (54) — Real estate construction — — 1 — 2 Commercial real estate lending 4 — (18) (38) 1 Total commercial (22) 1 (16) (63) (36) Residential mortgage — — — (2) (3) Auto finance (26) (12) 4 14 37 Home equity 14 13 34 3 9 Other consumer (161) (79) (65) (117) (133) Total consumer (8) (2) — (5) (7) Total net (charge offs) (16) — (10) (41) (24) (a) Ratio of net charge offs to average loans by loan type. 65 Notable Contributions to the Change in the Allowance for Credit Losses on Loans • Total loans increased $417 million, or 1%, from December 31, 2022, driven by increases in auto finance and CRE lending resulting from the Corporation's strategic initiatives, partially offset by a decrease in residential mortgage lending.
The total allowance is available to absorb losses from any segment of the loan portfolio. 62 Table 11 Allowance for Credit Losses on Loans Years Ended December 31, ($ in thousands) 2024 2023 2022 2021 2020 Allowance for loan losses Balance at beginning of period $ 351,094 $ 312,720 $ 280,015 $ 383,702 $ 201,371 Cumulative effect of ASU 2016-13 adoption (CECL) N/A N/A N/A N/A 112,457 Balance at beginning of period, adjusted 351,094 312,720 280,015 383,702 313,828 Provision for loan losses 81,000 87,000 34,000 (80,000) 164,457 Provision for loan losses recorded at acquisition — — — — 2,543 Gross up of allowance for PCD loans at acquisition — — — — 3,504 Loans charged off Commercial and industrial (47,517) (45,687) (4,491) (21,564) (80,320) Commercial real estate — owner occupied (3) (25) — — (419) Commercial and business lending (47,520) (45,713) (4,491) (21,564) (80,739) Commercial real estate — investor (11,187) (252) (50) (14,346) (22,920) Real estate construction — (25) (48) (5) (19) Commercial real estate lending (11,187) (277) (98) (14,351) (22,938) Total commercial (58,707) (45,989) (4,588) (35,915) (103,677) Residential mortgage (1,029) (952) (567) (880) (1,867) Auto finance (9,541) (5,950) (1,041) (22) (7) Home equity (216) (424) (587) (668) (1,719) Other consumer (6,922) (5,453) (3,363) (3,168) (4,783) Total consumer (17,709) (12,779) (5,558) (4,738) (8,376) Total loans charged off (76,415) (58,768) (10,146) (40,652) (112,053) Recoveries of loans previously charged off Commercial and industrial 2,148 3,015 5,282 8,564 7,004 Commercial real estate — owner occupied 7 11 13 120 147 Commercial and business lending 2,155 3,026 5,295 8,684 7,151 Commercial real estate — investor — 3,016 50 3,162 643 Real estate construction 65 80 106 126 49 Commercial real estate lending 65 3,095 156 3,288 692 Total commercial 2,220 6,121 5,451 11,972 7,844 Residential mortgage 280 541 908 841 500 Auto finance 2,905 1,241 98 31 25 Home equity 1,366 1,262 1,385 2,854 1,978 Other consumer 1,096 978 1,010 1,267 1,076 Total consumer 5,647 4,021 3,401 4,993 3,579 Total recoveries 7,867 10,142 8,852 16,965 11,422 Net (charge offs) (68,549) (48,626) (1,294) (23,687) (100,631) Balance at end of period $ 363,545 $ 351,094 $ 312,720 $ 280,015 $ 383,702 Allowance for unfunded commitments Balance at beginning of period $ 34,776 $ 38,776 $ 39,776 $ 47,776 $ 21,907 Cumulative effect of ASU 2016-13 adoption (CECL) N/A N/A N/A N/A 18,690 Balance at beginning of period, adjusted 34,776 38,776 39,776 47,776 40,597 Provision for unfunded commitments 4,000 (4,000) (1,000) (8,000) 7,000 Amount recorded at acquisition — — — — 179 Balance at end of period $ 38,776 $ 34,776 $ 38,776 $ 39,776 $ 47,776 Allowance for credit losses on loans $ 402,322 $ 385,870 $ 351,496 $ 319,791 $ 431,478 Provision for credit losses on loans 85,000 83,000 33,000 (88,000) 174,000 63 Table 11 Allowance for Credit Losses on Loans (continued) Years Ended December 31, ($ in thousands) 2024 2023 2022 2021 2020 Net loan (charge offs) recoveries Commercial and industrial $ (45,369) $ (42,672) $ 791 $ (13,000) $ (73,316) Commercial real estate — owner occupied 4 (15) 13 120 (272) Commercial and business lending (45,365) (42,687) 804 (12,880) (73,588) Commercial real estate — investor (11,187) 2,763 — (11,184) (22,277) Real estate construction 65 55 58 121 31 Commercial real estate lending (11,122) 2,819 58 (11,063) (22,246) Total commercial (56,487) (39,868) 862 (23,943) (95,834) Residential mortgage (750) (411) 341 (38) (1,367) Auto finance (6,637) (4,709) (943) 9 19 Home equity 1,150 837 798 2,186 259 Other consumer (5,826) (4,475) (2,353) (1,901) (3,707) Total consumer (12,062) (8,758) (2,157) 256 (4,797) Total net (charge offs) $ (68,549) $ (48,626) $ (1,294) $ (23,687) $ (100,631) Ratios Allowance for credit losses on loans to total loans 1.35 % 1.32 % 1.22 % 1.32 % 1.76 % Allowance for credit losses on loans to net charge offs 5.9x 7.9x N/M 13.5x 4.3x Loan evaluation method for ACLL Individually evaluated for impairment $ 5,689 $ 15,492 $ 10,324 $ 15,194 $ 79,831 Collectively evaluated for impairment 396,632 370,378 341,172 304,597 351,646 Total ACLL $ 402,322 $ 385,870 $ 351,496 $ 319,791 $ 431,478 Loan balance Individually evaluated for impairment $ 37,172 $ 62,712 $ 76,577 $ 115,643 $ 259,497 Collectively evaluated for impairment 29,731,414 29,153,505 28,722,992 24,109,306 24,192,227 Total loan balance $ 29,768,586 $ 29,216,218 $ 28,799,569 $ 24,224,949 $ 24,451,724 Table 12 Net (Charge Offs) Recoveries (a) Years Ended December 31, (In basis points) 2024 2023 2022 2021 2020 Net loan (charge offs) recoveries Commercial and industrial (46) (44) 1 (16) (86) Commercial real estate — owner occupied — — — 1 (3) Commercial and business lending (41) (39) 1 (14) (78) Commercial real estate — investor (22) 5 — (26) (54) Real estate construction — — — 1 — Commercial real estate lending (15) 4 — (18) (38) Total commercial (31) (22) 1 (16) (63) Residential mortgage (1) — — — (2) Auto finance (26) (26) (12) 4 14 Home equity 19 14 13 34 3 Other consumer (219) (161) (79) (65) (117) Total consumer (11) (8) (2) — (5) Total net (charge offs) (23) (16) — (10) (41) (a) Ratio of net charge offs to average loans by loan type. 64 Notable Contributions to the Change in the Allowance for Credit Losses on Loans • Total loans increased $552 million, or 2%, from December 31, 2023, driven by increases in commercial and industrial lending, auto finance, and CRE-investor lending, partially offset by a decrease in residential mortgage lending, mainly due to the Corporation's balance sheet repositioning in December 2024, and real estate construction lending.
Estimated uninsured and uncollateralized deposits, excluding intercompany deposits, were 22.7 % of total deposits at December 31, 2023, compared to 30.1% at December 31, 2022 and 32.8 % at December 31, 2021.
Estimated uninsured and uncollateralized deposits, excluding intercompany deposits, were 23.0% of total deposits at December 31, 2024, compared to 22.7% at December 31, 2023 and 30.1% at December 31, 2022.
Table 2 presents additional information to facilitate the review and discussion of fully tax-equivalent net interest income, interest rate spread, and net interest margin. Notable Contributions to the Change in 2023 Net Interest Income • Fully tax-equivalent net interest income and net interest income were both up $82 million, or 8% and 9%, respectively, compared to 2022.
Table 2 presents additional information to facilitate the review and discussion of fully tax-equivalent net interest income, interest rate spread, and net interest margin. Notable Contributions to the Change in 2024 Net Interest Income • Fully tax-equivalent net interest income was up $3 million and net interest income was up $8 million, or 1%, compared to 2023.
Income Taxes The Corporation recognized income tax expense of $23 million for 2023, compared to income tax expense of $94 million for 2022. The Corporation's effective tax rate was 11.21% for 2023, compared to an effective tax rate of 20.34% for 2022.
Income Taxes The Corporation recognized income tax expense of $11 million for 2024, compared to income tax expense of $23 million for 2023. The Corporation's effective tax rate was 8.41% for 2024, compared to an effective tax rate of 11.21% for 2023.
See also Note 4 Loans of the notes to consolidated financial statements and section Nonperforming Assets for additional disclosures on the changes in asset quality. • For the year ended December 31, 2023, net charge offs increased $47 million from December 31, 2022, primarily driven by an increase in charge off amounts in the Corporation's commercial and industrial portfolio.
See also Note 3 Loans of the notes to consolidated financial statements and section Nonperforming Assets for additional disclosures on the changes in asset quality. • For the year ended December 31, 2024, net charge offs increased $20 million, or 41%, from December 31, 2023, primarily driven by an increase in net charge offs in the Corporation's CRE-investor portfolio.
Treasury securities $ 963 — % $ 936 — % $ 1,001 — % Obligations of state and political subdivisions (municipal securities) 1,554,059 46 % 1,551,647 46 % 1,739,988 74 % Residential mortgage-related securities: FNMA/FHLMC 804,393 24 % 816,771 24 % 36,139 2 % GNMA 46,170 1 % 49,628 1 % 49,631 2 % Private-label 289,507 9 % 303,505 9 % — — % Commercial mortgage-related securities: FNMA/FHLMC 632,914 19 % 615,839 18 % 419,400 18 % GNMA 52,619 2 % 62,691 2 % 102,506 4 % Total fair value $ 3,380,624 100 % $ 3,401,018 100 % $ 2,348,664 100 % Net unrealized holding gains (losses) $ (479,610) $ (559,433) $ 109,662 Equity securities Equity securities carrying value and fair value $ 41,651 100 % $ 25,216 100 % $ 18,352 100 % At December 31, 2023, the Corporation’s investment securities portfolio did not contain securities of any single non-government or non-GSE issuer that were payable from and secured by the same source of revenue or taxing authority where the aggregate carrying value of such securities exceeded 5% of stockholders’ equity.
Treasury securities $ 999 — % $ 963 — % $ 936 — % Obligations of state and political subdivisions (municipal securities) 1,486,642 47 % 1,554,059 46 % 1,551,647 46 % Residential mortgage-related securities: FNMA/FHLMC 721,946 23 % 804,393 24 % 816,771 24 % GNMA 39,927 1 % 46,170 1 % 49,628 1 % Private-label 266,353 8 % 289,507 9 % 303,505 9 % Commercial mortgage-related securities: FNMA/FHLMC 623,595 20 % 632,914 19 % 615,839 18 % GNMA 46,032 1 % 52,619 2 % 62,691 2 % Total fair value $ 3,185,494 100 % $ 3,380,624 100 % $ 3,401,018 100 % Net unrealized holding (losses) $ (553,253) $ (479,610) $ (559,433) Equity securities Equity securities carrying value and fair value $ 23,242 100 % $ 41,651 100 % $ 25,216 100 % At December 31, 2024, the Corporation’s investment securities portfolio did not contain securities of any single non-government or non-GSE issuer that were payable from and secured by the same source of revenue or taxing authority where the aggregate carrying value of such securities exceeded 5% of stockholders’ equity.
Table 21 Capital Ratios As of December 31, ($ in thousands) 2023 2022 2021 Risk-based capital (a) CET1 $ 3,074,938 $ 3,035,578 $ 2,808,289 Tier 1 capital 3,269,050 3,229,690 3,001,074 Total capital 3,997,205 3,680,227 3,570,026 Total risk-weighted assets 32,732,710 32,469,862 27,242,735 Modified CECL transitional amount 44,851 67,276 89,702 CET1 capital ratio 9.39 % 9.35 % 10.31 % Tier 1 capital ratio 9.99 % 9.95 % 11.02 % Total capital ratio 12.21 % 11.33 % 13.10 % Tier 1 leverage ratio 8.06 % 8.59 % 8.83 % Selected equity and performance ratios Total stockholders’ equity / total assets 10.18 % 10.19 % 11.47 % Dividend payout ratio (b) 74.56 % 34.32 % 34.55 % Return on average assets 0.45 % 1.00 % 1.02 % Noninterest expense / average assets 2.00 % 2.04 % 2.06 % ( a)The Federal Reserve establishes regulatory capital requirements, including well-capitalized standards for the Corporation.
Table 21 Capital Ratios As of December 31, ($ in thousands) 2024 2023 2022 Risk-based capital (a) CET1 $ 3,396,836 $ 3,074,938 $ 3,035,578 Tier 1 capital 3,590,948 3,269,050 3,229,690 Total capital 4,282,597 3,997,205 3,680,227 Total risk-weighted assets 33,950,173 32,732,710 32,469,862 Modified CECL transitional amount 22,425 44,851 67,276 CET1 capital ratio 10.01 % 9.39 % 9.35 % Tier 1 capital ratio 10.58 % 9.99 % 9.95 % Total capital ratio 12.61 % 12.21 % 11.33 % Tier 1 leverage ratio 8.73 % 8.06 % 8.59 % Selected equity and performance ratios Total stockholders’ equity / total assets 10.70 % 10.18 % 10.19 % Dividend payout ratio (b) 121.92 % 74.56 % 34.32 % Return on average assets 0.30 % 0.45 % 1.00 % Noninterest expense / average assets 1.98 % 2.00 % 2.04 % ( a)The Federal Reserve establishes regulatory capital requirements, including well-capitalized standards for the Corporation.
These limits and guidelines reflect the Corporation's risk appetite for interest rate risk over both short-term and long-term horizons. The major sources of the Corporation's non-trading interest rate risk are timing differences in the maturity and re-pricing characteristics of assets and liabilities, changes in the shape of the yield curve, and the potential exercise of explicit or embedded options.
The major sources of the Corporation's non-trading interest rate risk are timing differences in the maturity and re-pricing characteristics of assets and liabilities, changes in the shape of the yield curve, and the potential exercise of explicit or embedded options.
The primary objectives of market risk management are to minimize any adverse effect that changes in market risk factors may have on net interest income and to offset the risk of price changes for certain assets recorded at fair value. 74 Interest Rate Risk The primary goal of interest rate risk management is to control exposure to interest rate risk within policy limits approved by the Board of Directors.
The primary objectives of market risk management are to minimize any adverse effect that changes in market risk factors may have on net interest income and to offset the risk of price changes for certain assets recorded at fair value.
(b) Yields on tax-exempt securities are computed on a fully tax-equivalent basis using a tax rate of 21% and are net of the effects of certain disallowed interest deductions. 71 Analysis of Deposits and Funding Deposits and Customer Funding The following table summarizes the composition of our deposits and customer funding: Table 15 Period End Deposit and Customer Funding Composition As of December 31, 2023 2022 2021 ($ in thousands) Amount % of Total Amount % of Total Amount % of Total Noninterest-bearing demand $ 6,119,956 18 % $ 7,760,811 26 % $ 8,504,077 30 % Savings 4,835,701 14 % 4,604,848 16 % 4,410,198 15 % Interest-bearing demand 8,843,967 26 % 7,100,727 24 % 7,019,782 25 % Money market 6,330,453 19 % 8,239,610 28 % 7,185,111 25 % Brokered CDs 4,447,479 13 % 541,916 2 % — — % Other time deposits 2,868,494 9 % 1,388,242 5 % 1,347,262 5 % Total deposits 33,446,049 100 % 29,636,154 100 % 28,466,430 100 % Other customer funding (a) 106,620 261,767 354,142 Total deposits and other customer funding $ 33,552,669 $ 29,897,921 $ 28,820,572 Network transaction deposits (b) $ 1,566,139 $ 979,003 $ 766,965 Net deposits and other customer funding (c) $ 27,539,051 $ 28,377,001 $ 28,053,607 (a) Includes repurchase agreements and commercial paper .
(b) Yields on tax-exempt securities are computed on a fully tax-equivalent basis using a tax rate of 21% and are net of the effects of certain disallowed interest deductions. 70 Deposits and Customer Funding The following table summarizes the composition of our deposits and customer funding: Table 15 Period End Deposit and Customer Funding Composition As of December 31, 2024 2023 2022 ($ in thousands) Amount % of Total Amount % of Total Amount % of Total Noninterest-bearing demand $ 5,775,657 17 % $ 6,119,956 18 % $ 7,760,811 26 % Savings 5,133,295 15 % 4,835,701 14 % 4,604,848 16 % Interest-bearing demand 9,124,741 26 % 8,843,967 26 % 7,100,727 24 % Money market 6,637,915 19 % 6,330,453 19 % 8,239,610 28 % Brokered CDs 4,276,309 12 % 4,447,479 13 % 541,916 2 % Other time deposits 3,700,518 11 % 2,868,494 9 % 1,388,242 5 % Total deposits 34,648,434 100 % 33,446,049 100 % 29,636,154 100 % Other customer funding (a) 100,044 106,620 261,767 Total deposits and other customer funding $ 34,748,478 $ 33,552,669 $ 29,897,921 Network transaction deposits (b) $ 1,758,388 $ 1,566,139 $ 979,003 Net deposits and other customer funding (c) $ 28,713,780 $ 27,539,051 $ 28,377,001 (a) Includes repurchase agreements and commercial paper .
Treasury securities $ 999 — % $ 999 — % $ 1,000 — % Obligations of state and political subdivisions (municipal securities) 1,682,473 44 % 1,732,351 44 % 1,628,759 73 % Residential mortgage-related securities: FNMA/FHLMC 941,973 24 % 961,231 24 % 34,347 2 % GNMA 48,979 1 % 52,979 1 % 48,053 2 % Private-label 345,083 9 % 364,728 9 % — — % Commercial mortgage-related securities: FNMA/FHLMC 780,995 20 % 778,796 20 % 425,937 19 % GNMA 59,733 2 % 69,369 2 % 100,907 5 % Total amortized cost and carrying value $ 3,860,235 100 % $ 3,960,451 100 % $ 2,239,003 100 % Fair value U.S.
Treasury securities $ 1,000 — % $ 999 — % $ 999 — % Obligations of state and political subdivisions (municipal securities) 1,659,722 44 % 1,682,473 44 % 1,732,351 44 % Residential mortgage-related securities: FNMA/FHLMC 885,476 24 % 941,973 24 % 961,231 24 % GNMA 43,693 1 % 48,979 1 % 52,979 1 % Private-label 324,182 9 % 345,083 9 % 364,728 9 % Commercial mortgage-related securities: FNMA/FHLMC 772,456 21 % 780,995 20 % 778,796 20 % GNMA 52,219 1 % 59,733 2 % 69,369 2 % Total amortized cost and carrying value $ 3,738,747 100 % $ 3,860,235 100 % $ 3,960,451 100 % Fair value U.S.
As part of management's historical practice of originating and servicing residential mortgage loans, generally the Corporation's 30 year, agency conforming, fixed-rate residential real estate mortgage loans have been sold in the secondary market with servicing rights retained.
The Corporation generally retains certain fixed-rate residential real estate mortgages in its loan portfolio, including retail and private banking jumbo mortgages and CRA-related mortgages. As part of management's historical practice of originating and servicing residential mortgage loans, generally the Corporation's 30-year, agency conforming, fixed-rate residential real estate mortgage loans have been sold in the secondary market with servicing rights retained.
Treasury securities $ 39,984 1 % $ 124,441 4 % $ 124,291 3 % Agency securities — — % 15,000 1 % 15,000 — % Obligations of state and political subdivisions (municipal securities) 94,008 3 % 235,693 8 % 381,517 9 % Residential mortgage-related securities: FNMA/FHLMC 1,274,052 34 % 1,820,642 61 % 2,709,399 62 % GNMA 2,021,242 54 % 502,537 17 % 66,189 2 % Private-label — — % — — % 332,028 8 % Commercial mortgage-related securities: FNMA/FHLMC 18,691 — % 19,038 1 % 357,240 8 % GNMA 161,928 4 % 115,031 4 % 165,439 4 % Asset backed securities: FFELP 135,832 4 % 157,138 5 % 177,974 4 % SBA 1,077 — % 4,512 — % 6,594 — % Other debt securities 3,000 — % 3,000 — % 3,000 — % Total amortized cost $ 3,749,814 100 % $ 2,997,032 100 % $ 4,338,671 100 % Fair value U.S.
Treasury securities $ — — % $ 39,984 1 % $ 124,441 4 % Agency securities — — % — — % 15,000 1 % Obligations of state and political subdivisions (municipal securities) 3,063 — % 94,008 3 % 235,693 8 % Residential mortgage-related securities: FNMA/FHLMC 120,272 3 % 1,274,052 34 % 1,820,642 61 % GNMA 4,236,199 92 % 2,021,242 54 % 502,537 17 % Commercial mortgage-related securities: FNMA/FHLMC 18,332 — % 18,691 — % 19,038 1 % GNMA 116,275 3 % 161,928 4 % 115,031 4 % Asset backed securities: FFELP 108,319 2 % 135,832 4 % 157,138 5 % SBA 495 — % 1,077 — % 4,512 — % Other debt securities 3,000 — % 3,000 — % 3,000 — % Total amortized cost $ 4,605,954 100 % $ 3,749,814 100 % $ 2,997,032 100 % Fair value U.S.
Additionally, FHLB advances were down $2.4 billion as the proceeds from the issuance of brokered CDs and the balance sheet repositioning were used to pay down these advances.
Additionally, FHLB advances were down $2.4 billion as the proceeds from the issuance of brokered CDs and the balance sheet repositioning were used to pay down these advances. Quantitative and Qualitative Disclosures about Market Risk Market risk and interest rate risk are managed centrally.
Average interest-bearing deposits increased $4.1 billion, or 20%, compared to 2022, primarily driven by increases in time deposits, network transaction deposits, interest-bearing demand deposits, and savings deposits, partially offset by a decrease in money market deposits. Average noninterest-bearing demand deposits decreased $1.5 billion, or 19%, compared to 2022.
Average interest-bearing deposits increased $2.9 billion, or 12%, compared to 2023, primarily driven by increases in time deposits, interest-bearing demand deposits, savings deposits, and network transaction deposits, partially offset by a decrease in money market deposits.
Treasury securities $ 35,902 1 % $ 109,378 4 % $ 122,957 3 % Agency securities — — % 13,532 — % 14,897 — % Obligations of state and political subdivisions (municipal securities) 91,817 3 % 230,714 8 % 400,457 9 % Residential mortgage-related securities: FNMA/FHLMC 1,120,794 31 % 1,604,610 59 % 2,691,879 62 % GNMA 2,042,675 57 % 497,596 18 % 67,780 2 % Private-label — — % — — % 329,724 8 % Commercial mortgage-related securities: FNMA/FHLMC 16,937 — % 17,142 1 % 350,623 8 % GNMA 154,793 4 % 110,462 4 % 166,799 4 % Asset backed securities: FFELP 133,975 4 % 151,191 6 % 177,325 4 % SBA 1,051 — % 4,477 — % 6,580 — % Other debt securities 2,950 — % 2,922 — % 2,994 — % Total fair value and carrying value $ 3,600,892 100 % $ 2,742,025 100 % $ 4,332,015 100 % Net unrealized holding gains (losses) $ (148,922) $ (255,007) $ (6,656) 67 Table 13 Investment Securities Portfolio (continued) At December 31, ($ in thousands) 2023 % of Total 2022 % of Total 2021 % of Total HTM investment securities Amortized cost U.S.
Treasury securities $ — — % $ 35,902 1 % $ 109,378 4 % Agency securities — — % — — % 13,532 — % Obligations of state and political subdivisions (municipal securities) 3,005 — % 91,817 3 % 230,714 8 % Residential mortgage-related securities: FNMA/FHLMC 110,928 2 % 1,120,794 31 % 1,604,610 59 % GNMA 4,227,727 92 % 2,042,675 57 % 497,596 18 % Commercial mortgage-related securities: FNMA/FHLMC 17,000 — % 16,937 — % 17,142 1 % GNMA 111,475 2 % 154,793 4 % 110,462 4 % Asset backed securities: FFELP 107,839 2 % 133,975 4 % 151,191 6 % SBA 471 — % 1,051 — % 4,477 — % Other debt securities 2,989 — % 2,950 — % 2,922 — % Total fair value and carrying value $ 4,581,434 100 % $ 3,600,892 100 % $ 2,742,025 100 % Net unrealized holding (losses) $ (24,520) $ (148,922) $ (255,007) 66 Table 13 Investment Securities Portfolio (continued) At December 31, ($ in thousands) 2024 % of Total 2023 % of Total 2022 % of Total HTM investment securities Amortized cost U.S.
During the third quarter of 2021, the Corporation redeemed all outstanding Series D Preferred Stock, for $99 million. 77 Table 22 Non-GAAP Measures At or for the Year Ended December 31, ($ in thousands) 2023 2022 2021 2020 2019 Selected equity and performance ratios (a)(b)(c) Tangible common equity / tangible assets 7.11 % 6.97 % 7.86 % 7.94 % 7.71 % Return on average equity 4.45 % 9.21 % 8.60 % 7.78 % 8.44 % Return on average tangible common equity 6.44 % 13.77 % 12.99 % 12.31 % 13.53 % Return on average CET1 5.51 % 12.23 % 12.08 % 11.23 % 12.59 % Return on average tangible assets 0.48 % 1.05 % 1.07 % 0.95 % 1.05 % Average stockholders' equity / average assets 10.11 % 10.84 % 11.84 % 11.51 % 11.72 % Tangible common equity reconciliation (a) Common equity $ 3,979,861 $ 3,821,378 $ 3,831,658 $ 3,737,421 $ 3,665,407 Goodwill and other intangible assets, net (1,145,464) (1,154,274) (1,163,085) (1,177,554) (1,264,531) Tangible common equity $ 2,834,398 $ 2,667,104 $ 2,668,573 $ 2,559,867 $ 2,400,876 Tangible assets reconciliation (a) Total assets $ 41,015,855 $ 39,405,727 $ 35,104,253 $ 33,419,783 $ 32,386,478 Goodwill and other intangible assets, net (1,145,464) (1,154,274) (1,163,085) (1,177,554) (1,264,531) Tangible assets $ 39,870,392 $ 38,251,453 $ 33,941,167 $ 32,242,230 $ 31,121,947 Average tangible common equity and average CET1 reconciliation (a) Common equity $ 3,917,026 $ 3,781,658 $ 3,789,331 $ 3,633,259 $ 3,615,153 Goodwill and other intangible assets, net (1,149,939) (1,158,829) (1,168,560) (1,227,561) (1,256,668) Tangible common equity 2,767,087 2,622,829 2,620,771 2,405,698 2,358,485 Modified CECL transitional amount 44,851 67,276 102,307 115,052 N/A Accumulated other comprehensive loss 274,874 174,208 1,234 2,643 68,946 Deferred tax assets, net 27,532 34,361 40,011 43,789 46,980 Average CET1 $ 3,114,344 $ 2,898,675 $ 2,764,323 $ 2,567,182 $ 2,474,411 Average tangible assets reconciliation (a) Total assets $ 40,648,923 $ 36,657,932 $ 34,464,257 $ 34,265,207 $ 33,046,604 Goodwill and other intangible assets, net (1,149,939) (1,158,829) (1,168,560) (1,227,561) (1,256,668) Tangible assets $ 39,498,984 $ 35,499,103 $ 33,295,697 $ 33,037,646 $ 31,789,936 Adjusted net income reconciliation (b) Net income $ 182,956 $ 366,122 $ 350,994 $ 306,771 $ 326,790 Other intangible amortization, net of tax 6,608 6,608 6,633 7,644 7,461 Adjusted net income $ 189,564 $ 372,730 $ 357,627 $ 314,415 $ 334,251 Adjusted net income available to common equity reconciliation (b) Net income available to common equity $ 171,456 $ 354,622 $ 333,883 $ 288,413 $ 311,587 Other intangible amortization, net of tax 6,608 6,608 6,633 7,644 7,461 Adjusted net income available to common equity $ 178,064 $ 361,230 $ 340,516 $ 296,057 $ 319,049 End of period core customer deposits reconciliation Total deposits $ 33,446,049 $ 29,636,154 $ 28,466,430 $ 26,482,481 $ 23,779,064 Network transaction deposits (1,566,139) (979,003) (766,965) (1,197,093) (1,336,286) Brokered CDs (4,447,479) (541,916) — — (5,964) Core customer deposits $ 27,432,431 $ 28,115,235 $ 27,699,464 $ 25,285,387 $ 22,436,814 Efficiency ratio reconciliation (d) Federal Reserve efficiency ratio 69.70 % 60.36 % 66.33 % 61.76 % 65.38 % Fully tax-equivalent adjustment (1.13) % (0.92) % (1.04) % (0.77) % (0.85) % Other intangible amortization (0.76) % (0.71) % (0.84) % (0.80) % (0.82) % Fully tax-equivalent efficiency ratio 67.82 % 58.74 % 64.47 % 60.20 % 63.72 % FDIC special assessment (2.32) % — % — % — % — % Acquisitions, dispositions, branch sales, and announced initiatives (7.02) % (0.10) % (0.51) % 4.49 % (0.60) % Adjusted efficiency ratio 58.48 % 58.65 % 63.96 % 64.70 % 63.12 % (a) Tangible common equity and tangible assets exclude goodwill and other intangible assets, net.
See Note 9 Stockholders' Equity and Note 18 Regulatory Matters of the notes to consolidated financial statements for additional capital disclosures. 76 Table 22 Non-GAAP Measures At or for the Year Ended December 31, ($ in thousands) 2024 2023 2022 2021 2020 Selected equity and performance ratios (a)(b)(c) Tangible common equity / tangible assets 7.82 % 7.11 % 6.97 % 7.86 % 7.94 % Return on average equity 2.86 % 4.45 % 9.21 % 8.60 % 7.78 % Return on average tangible common equity 3.99 % 6.44 % 13.77 % 12.99 % 12.31 % Return on average CET1 3.49 % 5.51 % 12.23 % 12.08 % 11.23 % Return on average tangible assets 0.32 % 0.48 % 1.05 % 1.07 % 0.95 % Average stockholders' equity / average assets 10.41 % 10.11 % 10.84 % 11.84 % 11.51 % Tangible common equity reconciliation (a) Common equity $ 4,411,450 $ 3,979,861 $ 3,821,378 $ 3,831,658 $ 3,737,421 Goodwill and other intangible assets, net (1,136,653) (1,145,464) (1,154,274) (1,163,085) (1,177,554) Tangible common equity $ 3,274,797 $ 2,834,398 $ 2,667,104 $ 2,668,573 $ 2,559,867 Tangible assets reconciliation (a) Total assets $ 43,023,068 $ 41,015,855 $ 39,405,727 $ 35,104,253 $ 33,419,783 Goodwill and other intangible assets, net (1,136,653) (1,145,464) (1,154,274) (1,163,085) (1,177,554) Tangible assets $ 41,886,415 $ 39,870,392 $ 38,251,453 $ 33,941,167 $ 32,242,230 Average tangible common equity and average CET1 reconciliation (a) Common equity $ 4,108,251 $ 3,917,026 $ 3,781,658 $ 3,789,331 $ 3,633,259 Goodwill and other intangible assets, net (1,141,198) (1,149,939) (1,158,829) (1,168,560) (1,227,561) Tangible common equity 2,967,052 2,767,087 2,622,829 2,620,771 2,405,698 Modified CECL transitional amount 22,425 44,851 67,276 102,307 115,052 Accumulated other comprehensive loss 188,425 274,874 174,208 1,234 2,643 Deferred tax assets, net 20,954 27,532 34,361 40,011 43,789 Average CET1 $ 3,198,857 $ 3,114,344 $ 2,898,675 $ 2,764,323 $ 2,567,182 Average tangible assets reconciliation (a) Total assets $ 41,333,853 $ 40,648,923 $ 36,657,932 $ 34,464,257 $ 34,265,207 Goodwill and other intangible assets, net (1,141,198) (1,149,939) (1,158,829) (1,168,560) (1,227,561) Tangible assets $ 40,192,655 $ 39,498,984 $ 35,499,103 $ 33,295,697 $ 33,037,646 Adjusted net income reconciliation (b) Net income $ 123,145 $ 182,956 $ 366,122 $ 350,994 $ 306,771 Other intangible amortization, net of tax 6,608 6,608 6,608 6,633 7,644 Adjusted net income $ 129,753 $ 189,564 $ 372,730 $ 357,627 $ 314,415 Adjusted net income available to common equity reconciliation (b) Net income available to common equity $ 111,645 $ 171,456 $ 354,622 $ 333,883 $ 288,413 Other intangible amortization, net of tax 6,608 6,608 6,608 6,633 7,644 Adjusted net income available to common equity $ 118,253 $ 178,064 $ 361,230 $ 340,516 $ 296,057 Efficiency ratio reconciliation (d) Federal Reserve efficiency ratio 69.58 % 69.70 % 60.36 % 66.33 % 61.76 % Fully tax-equivalent adjustment (0.87) % (1.13) % (0.92) % (1.04) % (0.77) % Other intangible amortization (0.75) % (0.76) % (0.71) % (0.84) % (0.80) % Fully tax-equivalent efficiency ratio 67.97 % 67.82 % 58.74 % 64.47 % 60.20 % FDIC special assessment (0.29) % (2.32) % — % — % — % Acquisitions, dispositions, branch sales, and announced initiatives (7.75) % (7.02) % (0.10) % (0.51) % 4.49 % Adjusted efficiency ratio 59.93 % 58.48 % 58.65 % 63.96 % 64.70 % (a) The ratio tangible common equity to tangible assets excludes goodwill and other intangible assets, net.
As a result, amounts reported for 2023 and forward will not be comparable to prior period reported amounts. Nonaccrual loans: Nonaccrual loans are considered to be one indicator of potential future loan losses.
Under this update, TDRs were eliminated and replaced with a modified loan classification. As a result, amounts reported for 2023 and forward will not be comparable to periods reported for 2022 and prior. Nonaccrual loans: Nonaccrual loans are considered to be one indicator of potential future loan losses.
See section Loans and Note 4 Loans of the notes to consolidated financial statements for additional information on loans. • At December 31, 2023, total deposits of $33.4 billion were up $3.8 billion, or 13%, from December 31, 2022, driven by increases in brokered CDs of $3.9 billion and interest-bearing demand deposits of $1.7 billion, or 25%, partially offset by decreases in money market deposits of $1.9 billion, or 23%, and noninterest-bearing demand deposits of $1.6 billion, or 21%.
See section Loans and Note 3 Loans of the notes to consolidated financial statements for additional information on loans. • At December 31, 2024, total deposits of $34.6 billion were up $1.2 billion, or 4%, from December 31, 2023, driven by increases in other time deposits of $832 million, or 29%, money market of $307 million, or 5%, savings of $298 million, or 6%, and interest-bearing demand of $281 million, or 3%, partially offset by decreases in noninterest-bearing demand of $344 million, or 6%, and brokered CDs of $171 million, or 4%.
Table 10 provides detailed information regarding NPAs, which include nonaccrual loans, OREO, and other nonperforming assets: Table 10 Nonperforming Assets As of December 31, ($ in thousands) 2023 2022 2021 2020 2019 Nonperforming assets Commercial and industrial $ 62,022 $ 14,329 $ 6,279 $ 61,859 $ 46,312 Commercial real estate — owner occupied 1,394 — — 1,058 67 Commercial and business lending 63,416 14,329 6,279 62,917 46,380 Commercial real estate — investor — 29,380 60,677 78,220 4,409 Real estate construction 6 105 177 353 493 Commercial real estate lending 6 29,485 60,855 78,573 4,902 Total commercial 63,422 43,814 67,134 141,490 51,282 Residential mortgage 71,142 58,480 55,362 59,337 57,844 Auto finance 5,797 1,490 52 49 — Home equity 8,508 7,487 7,726 9,888 9,104 Other consumer 128 197 170 91 152 Total consumer 85,574 67,654 63,309 69,364 67,099 Total nonaccrual loans 148,997 111,467 130,443 210,854 118,380 Commercial real estate owned 914 325 984 2,185 3,530 Residential real estate owned 1,290 2,878 3,666 1,194 5,696 Bank properties real estate owned (a) 8,301 11,580 24,969 10,889 11,874 OREO 10,506 14,784 29,619 14,269 21,101 Other nonperforming assets (b) 919 215 — — 6,004 Total nonperforming assets $ 160,421 $ 126,466 $ 160,062 $ 225,123 $ 145,485 Accruing loans past due 90 days or more Commercial $ 19,812 $ 282 $ 151 $ 175 $ 342 Consumer 1,876 1,446 1,111 1,423 1,917 Total accruing loans past due 90 days or more $ 21,689 $ 1,728 $ 1,263 $ 1,598 $ 2,259 Restructured loans (accruing) (c) Commercial $ 306 $ 13,093 $ 22,763 $ 41,119 $ 18,944 Consumer 2,414 19,775 19,768 10,973 7,097 Total restructured loans (accruing) $ 2,719 $ 32,868 $ 42,530 $ 52,092 $ 26,041 Nonaccrual restructured loans (included in nonaccrual loans) (c) $ 805 $ 20,127 $ 17,426 $ 20,190 $ 22,494 Ratios Nonaccrual loans to total loans 0.51 % 0.39 % 0.54 % 0.86 % 0.52 % NPAs to total loans plus OREO and other nonperforming assets 0.55 % 0.44 % 0.66 % 0.92 % 0.64 % NPAs to total assets 0.39 % 0.32 % 0.46 % 0.67 % 0.45 % Allowance for credit losses on loans to nonaccrual loans 258.98 % 315.34 % 245.16 % 204.63 % 188.61 % 61 Table 10 Nonperforming Assets (continued) As of December 31, ($ in thousands) 2023 2022 2021 2020 2019 Accruing loans 30-89 days past due Commercial and industrial $ 5,565 $ 6,283 $ 715 $ 6,119 $ 821 Commercial real estate — owner occupied 358 230 163 373 1,369 Commercial and business lending 5,923 6,512 878 6,492 2,190 Commercial real estate — investor 18,697 1,067 616 12,793 1,812 Real estate construction — 39 1,620 991 97 Commercial real estate lending 18,697 1,105 2,236 13,784 1,909 Total commercial 24,619 7,618 3,114 20,276 4,099 Residential mortgage 13,446 9,874 6,169 10,385 9,274 Auto finance 17,386 9,408 11 57 — Home equity 4,208 5,607 3,711 4,802 5,647 Other consumer 2,166 1,610 2,307 1,543 2,083 Total consumer 37,205 26,499 12,198 16,786 17,005 Total accruing loans 30-89 days past due $ 61,825 $ 34,117 $ 15,312 $ 37,062 $ 21,104 Potential problem loans Commercial and industrial $ 197,202 $ 136,549 $ 140,258 $ 139,489 $ 110,308 Commercial real estate — owner occupied 38,699 34,422 26,723 26,179 19,889 Commercial and business lending 235,900 170,971 166,981 165,668 130,197 Commercial real estate — investor 196,163 92,535 106,138 91,396 29,449 Real estate construction — 970 21,408 19,046 — Commercial real estate lending 196,163 93,505 127,546 110,442 29,449 Total commercial 432,063 264,476 294,527 276,111 159,646 Residential mortgage 784 1,978 2,214 3,749 1,451 Home equity 118 197 165 2,068 — Total consumer 901 2,175 2,379 5,817 1,451 Total potential problem loans $ 432,965 $ 266,651 $ 296,905 $ 281,928 $ 161,097 (a) Primarily closed branches and other bank operated real estate facilities, pending disposition.
Table 10 provides detailed information regarding NPAs, which include nonaccrual loans, OREO, and repossessed assets, and also includes information on accruing loans past due and restructured loans: Table 10 Nonperforming Assets As of December 31, ($ in thousands) 2024 2023 2022 2021 2020 Nonperforming assets Commercial and industrial $ 19,084 $ 62,022 $ 14,329 $ 6,279 $ 61,859 Commercial real estate — owner occupied 1,501 1,394 — — 1,058 Commercial and business lending 20,585 63,416 14,329 6,279 62,917 Commercial real estate — investor 16,705 — 29,380 60,677 78,220 Real estate construction 30 6 105 177 353 Commercial real estate lending 16,735 6 29,485 60,855 78,573 Total commercial 37,320 63,422 43,814 67,134 141,490 Residential mortgage 70,038 71,142 58,480 55,362 59,337 Auto finance 7,402 5,797 1,490 52 49 Home equity 8,378 8,508 7,487 7,726 9,888 Other consumer 122 128 197 170 91 Total consumer 85,941 85,574 67,654 63,309 69,364 Total nonaccrual loans 123,260 148,997 111,467 130,443 210,854 Commercial real estate owned 11,914 914 325 984 2,185 Residential real estate owned 2,068 1,290 2,878 3,666 1,194 Bank properties real estate owned 6,235 8,301 11,580 24,969 10,889 OREO 20,217 10,506 14,784 29,619 14,269 Repossessed assets 687 919 215 — — Total nonperforming assets $ 144,164 $ 160,421 $ 126,466 $ 160,062 $ 225,123 Accruing loans past due 90 days or more Commercial $ 642 $ 19,812 $ 282 $ 151 $ 175 Consumer 2,547 1,876 1,446 1,111 1,423 Total accruing loans past due 90 days or more $ 3,189 $ 21,689 $ 1,728 $ 1,263 $ 1,598 Restructured loans (accruing) (a) Commercial $ 475 $ 306 $ 13,093 $ 22,763 $ 41,119 Consumer 3,057 2,414 19,775 19,768 10,973 Total restructured loans (accruing) $ 3,531 $ 2,719 $ 32,868 $ 42,530 $ 52,092 Nonaccrual restructured loans (included in nonaccrual loans) (a) $ 2,581 $ 805 $ 20,127 $ 17,426 $ 20,190 Ratios Nonaccrual loans to total loans 0.41 % 0.51 % 0.39 % 0.54 % 0.86 % NPAs to total loans plus OREO and repossessed assets 0.48 % 0.55 % 0.44 % 0.66 % 0.92 % NPAs to total assets 0.34 % 0.39 % 0.32 % 0.46 % 0.67 % Allowance for credit losses on loans to nonaccrual loans 326.40 % 258.98 % 315.34 % 245.16 % 204.63 % 60 Table 10 Nonperforming Assets (continued) As of December 31, ($ in thousands) 2024 2023 2022 2021 2020 Accruing loans 30-89 days past due Commercial and industrial $ 1,260 $ 5,565 $ 6,283 $ 715 $ 6,119 Commercial real estate — owner occupied 1,634 358 230 163 373 Commercial and business lending 2,893 5,923 6,512 878 6,492 Commercial real estate — investor 36,391 18,697 1,067 616 12,793 Real estate construction 21 — 39 1,620 991 Commercial real estate lending 36,412 18,697 1,105 2,236 13,784 Total commercial 39,305 24,619 7,618 3,114 20,276 Residential mortgage 14,892 13,446 9,874 6,169 10,385 Auto finance 14,850 17,386 9,408 11 57 Home equity 4,625 4,208 5,607 3,711 4,802 Other consumer 3,128 2,166 1,610 2,307 1,543 Total consumer 37,496 37,205 26,499 12,198 16,786 Total accruing loans 30-89 days past due $ 76,801 $ 61,825 $ 34,117 $ 15,312 $ 37,062 (a) On January 1, 2023, the Corporation adopted ASU 2022-02.
See section Investment Securities Portfolio and Note 3 Investment Securities of the notes to consolidated financial statements for additional information on the Corporation's portfolio of investment securities. • At December 31, 2023, total loans were $29.2 billion, up $417 million, or 1%, from December 31, 2022, due to increases of $874 million, or 63%, in auto finance and $160 million, or 2%, in CRE lending, partially offset by a decrease of $647 million, or 8%, in residential mortgages as a result of a one-time mortgage portfolio sale related to the balance sheet repositioning announced in the fourth quarter of 2023.
See section Investment Securities Portfolio and Note 2 Investment Securities of the notes to consolidated financial statements for additional information on the Corporation's portfolio of investment securities. • At December 31, 2024, total loans were $29.8 billion, up $552 million, or 2%, from December 31, 2023, primarily due to increases of $924 million, or 9%, in commercial and business lending and $554 million, or 25%, in auto finance, partially offset by a decrease of $817 million, or 10%, in residential mortgage as a result of a nonrecurring mortgage portfolio sale related to the balance sheet repositioning announced in the fourth quarter of 2024 and the sale closed in January 2025, which was the primary driver of a $614 million increase in residential loans held for sale, and a decrease of $185 million, or 3%, in CRE lending.
Department of the Treasury and are backed by the full faith and credit of the U.S. government. Municipal Securities: The municipal securities relate to various state and political subdivisions and school districts. The municipal securities portfolio is regularly assessed for credit quality and deterioration.
Treasury Securities: U.S. Treasury Securities, including Treasury bills, notes, and bonds, are debt obligations issued by the U.S. Department of the Treasury and are backed by the full faith and credit of the U.S. government. Municipal Securities: The municipal securities relate to various state and political subdivisions and school districts.
Management believes the adjusted efficiency ratio is a meaningful measure as it enhances the comparability of net interest income arising from taxable and tax-exempt sources and provides a better measure as to how the Corporation is managing its expenses by adjusting for one-time costs like the FDIC special assessment and announced initiatives. 78 Segment Review The Corporation’s reportable segments have been determined based upon its internal profitability reporting system, which is organized by strategic business unit.
Management believes the adjusted efficiency ratio is a meaningful measure as it enhances the comparability of net interest income arising from taxable and tax-exempt sources and provides a better measure as to how the Corporation is managing its expenses by adjusting for nonrecurring costs like the FDIC special assessment and announced initiatives. 77 Segment Review The reportable segments are Corporate and Commercial Specialty; Community, Consumer and Business; and Risk Management and Shared Services.
Table 16 Maturity Distribution – Time Deposits of $250,000 or More ($ in thousands) December 31, 2023 Three months or less $ 236,580 Over three months through six months 159,141 Over six months through twelve months 98,469 Over twelve months 28,436 Total $ 522,626 Selected period end deposit information is detailed in Note 8 Deposits of the notes to consolidated financial statements, including a maturity distribution of all time deposits at December 31, 2023.
Table 16 Maturity Distribution – Time Deposits of $250,000 or More ($ in thousands) December 31, 2024 Three months or less $ 333,936 Over three months through six months 301,734 Over six months through twelve months 119,747 Over twelve months 2,259 Total $ 757,675 Selected period end deposit information is detailed in Note 7 Deposits of the notes to consolidated financial statements, including a maturity distribution of all time deposits at December 31, 2024.
Table 7 Largest Commercial and Industrial Industry Group Exposures, by NAICS Subsector December 31, 2023 NAICS Subsector Outstanding Balance Total Exposure % of Total Loan Exposure Real Estate (a) 531 $ 1,830,774 $ 3,515,883 9 % Utilities (b) 221 2,449,882 3,026,705 7 % Credit Intermediation and Related Activities (c) 522 728,036 1,818,559 4 % Merchant Wholesalers, Durable Goods 423 480,616 903,738 2 % (a) Includes REIT lines (b) 58% of the total utilities exposure comes from renewable energy sources (wind, solar, hydroelectric, and geothermal).
Table 7 Largest Commercial and Industrial Industry Group Exposures, by NAICS Subsector December 31, 2024 NAICS Subsector Outstanding Balance Total Exposure % of Total Loan Exposure Real Estate (a) 531 $ 2,073,512 $ 3,606,140 9 % Utilities (b) 221 2,570,337 3,254,783 8 % Credit Intermediation and Related Activities (c) 522 836,075 1,591,084 4 % Merchant Wholesalers, Durable Goods 423 606,781 1,036,982 3 % (a) Includes REIT lines (b) 59% of the total utilities exposure comes from renewable energy sources (wind, solar, hydroelectric, and geothermal).

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeITEM 7A. Quantitative and Qualitative Disclosures About Market Risk Information required by this item is set forth in Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, under the captions Quantitative and Qualitative Disclosures about Market Risk and Interest Rate Risk. 82
Biggest changeITEM 7A. Quantitative and Qualitative Disclosures About Market Risk Information required by this item is set forth in Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, under the captions Quantitative and Qualitative Disclosures about Market Risk and Interest Rate Risk. 80

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