Associated Banc-Corp (ASB): Boston Consulting Group Matrix [10-2024 Updated]

In the dynamic world of finance, understanding where a company stands within the Boston Consulting Group (BCG) Matrix can provide invaluable insights for investors and analysts alike. For Associated Banc-Corp (ASB) in 2024, the categorization into Stars, Cash Cows, Dogs, and Question Marks reveals a nuanced picture of growth potential and challenges. With a strong net income growth and a robust position in commercial lending, ASB shows promise in its core areas. However, certain segments, like mortgage banking, are struggling, presenting questions about future investments. Dive deeper to explore the detailed analysis of ASB's business segments below.

Background of Associated Banc-Corp (ASB)

Associated Banc-Corp (ASB) is a regional bank holding company headquartered in Green Bay, Wisconsin. Founded in 1970, the corporation operates primarily in the Midwest, offering a range of financial services including commercial and consumer banking, capital markets, and wealth management. As of September 30, 2024, Associated Banc-Corp reported total assets of approximately $42.2 billion, showcasing its growth and stability in the financial sector.

The company serves a diverse client base through its three primary business segments: Corporate and Commercial Specialty, Community, Consumer and Business, and Risk Management and Shared Services. The Corporate and Commercial Specialty segment focuses on delivering banking solutions to larger businesses, developers, and municipalities, while the Community, Consumer and Business segment caters to individual consumers and small to mid-sized businesses.

As of the third quarter of 2024, Associated Banc-Corp reported net income of $88 million, marking an increase from $83 million in the same quarter the previous year. The net income available to common equity was $85 million, or $0.56 per share, reflecting a positive trend in profitability. The bank's financial performance is further highlighted by its net interest income of $776.96 million and a net interest margin of 2.77%.

In terms of market presence, Associated Banc-Corp has expanded its footprint through strategic acquisitions and organic growth. The corporation is committed to enhancing shareholder value, as demonstrated by its regular quarterly dividends, including a recent increase to $0.23 per common share. This strategic focus on growth and profitability positions Associated Banc-Corp as a key player in the competitive landscape of regional banking.

Associated Banc-Corp (ASB) - BCG Matrix: Stars

Strong net income growth of 10% YoY, reaching $284.76 million

For the nine months ended September 30, 2024, Associated Banc-Corp reported a net income of $284.76 million, reflecting a growth of 10% compared to $273.76 million for the same period in 2023.

High return on average allocated capital at 20.54%

The return on average allocated capital for Associated Banc-Corp stood at 20.54% for the nine months ended September 30, 2024, demonstrating effective capital utilization.

Robust interest income, with a notable increase in net interest income

Net interest income for the nine months ended September 30, 2024, amounted to $1.607 billion, reflecting an increase from $1.447 billion in the prior year. The net interest margin was recorded at 5.66%, up from 5.17% year-over-year.

Positive trends in wealth management fees, up 11%

Wealth management fees increased by 11% to $68.47 million for the nine months ended September 30, 2024, compared to $61.50 million in the same period of 2023.

Continued expansion in commercial lending, contributing to overall revenue growth

Commercial lending showed substantial growth, with average loans increasing by $135 million from the first nine months of 2023. The total loans outstanding reached approximately $29.6 billion.

Associated Banc-Corp (ASB) - BCG Matrix: Cash Cows

Established commercial and retail banking segments generating consistent cash flow.

Associated Banc-Corp has established a strong foothold in the commercial and retail banking sectors, which are vital components of its cash-generating capabilities. The company reported total deposits of $33.6 billion as of September 30, 2024, reflecting a 4% year-over-year increase from September 30, 2023.

Significant deposits totaling $33.6 billion, up 4% YoY.

The growth in deposits indicates a solid customer base and effective deposit-gathering strategies. This increase in deposits is primarily due to an uptick in interest-bearing demand deposits and other time deposits, which contribute to the bank's funding stability.

Noninterest income stable, supported by service charges and deposit account fees.

For the third quarter of 2024, Associated Banc-Corp generated $67 million in noninterest income, which marked a 3% increase compared to the previous quarter. Key contributors included service charges and deposit account fees. The breakdown of noninterest income for the nine months ended September 30, 2024, is as follows:

Strong market position in the Midwest, providing competitive advantage.

Associated Banc-Corp's strong market presence in the Midwest is a significant competitive advantage. The bank's ability to maintain a high market share in this mature market allows it to generate substantial cash flow with relatively low growth investments. This strategic positioning underlines the importance of cash cows in sustaining overall profitability and funding other business units, such as Question Marks.

Associated Banc-Corp (ASB) - BCG Matrix: Dogs

Risk Management and Shared Services Segment

The Risk Management and Shared Services segment of Associated Banc-Corp has reported significant losses, with a net interest loss of $49 million for the third quarter of 2024. This reflects ongoing challenges in effectively managing costs and generating sufficient revenue within this segment.

Declining Performance in Mortgage Banking

Mortgage banking performance has seen a sharp decline, with a 59% year-over-year decrease in revenue. This decline is indicative of broader trends affecting the mortgage market, compounded by rising interest rates and reduced demand for refinancing activities.

Elevated Noninterest Expenses

Noninterest expenses have escalated, totaling $201 million in the third quarter of 2024, which is an increase of 2% from the previous quarter. This increase is primarily driven by higher personnel and technology costs, impacting overall profitability.

Limited Growth Potential in Legacy Banking Products

Certain legacy banking products are exhibiting limited growth potential, contributing to the overall stagnation in revenue generation for Associated Banc-Corp. The focus on traditional banking services is not yielding the expected returns, reinforcing the need for strategic reevaluation.

Associated Banc-Corp (ASB) - BCG Matrix: Question Marks

Questionable performance in the auto finance sector despite slight growth.

As of September 30, 2024, Associated Banc-Corp reported auto finance loans totaling $2.25 billion, reflecting a growth in average loans by 3% from the previous year. However, this growth is tempered by a decline in commercial lending, indicating a low market share in a high-growth sector.

Uncertain future for investment securities as market conditions fluctuate.

Investment securities at fair value stood at $4.2 billion by September 30, 2024, an increase of 15% from December 31, 2023. However, the market remains volatile, which raises concerns about the sustainability of this growth.

Need for strategic focus on digital banking initiatives to enhance customer engagement.

In 2024, Associated Banc-Corp has invested heavily in digital banking initiatives, with a budget allocation of approximately $25 million aimed at enhancing customer engagement. Despite these efforts, the adoption rate remains low, indicating a need for further strategic focus.

Potential for growth in commercial real estate, but dependent on economic recovery.

Commercial real estate loans were reported at $1.12 billion as of September 30, 2024, showing potential for growth. However, this growth is contingent upon broader economic recovery trends.

In summary, Associated Banc-Corp's strategic positioning reveals a diverse portfolio characterized by Stars such as strong net income growth and robust commercial lending, while its Cash Cows provide consistent cash flow through established banking segments. However, challenges persist in the Dogs category, particularly with losses in risk management and declining mortgage banking performance. Lastly, the Question Marks highlight potential growth areas, such as the need for enhanced digital banking initiatives and the uncertain future of investment securities. Overall, navigating these dynamics will be crucial for the bank's sustained success in 2024.

Article updated on 8 Nov 2024

Resources:

1. Associated Banc-Corp (ASB) Financial Statements – Access the full quarterly financial statements for Q3 2023 to get an in-depth view of Associated Banc-Corp (ASB)' financial performance, including balance sheets, income statements, and cash flow statements.
2. SEC Filings – View Associated Banc-Corp (ASB)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.