When
Andy Harmening took over as chief executive officer of
Associated Bank in 2021, he wanted to turn the bank
into a growth company.
On many metrics, the growth has begun. Core deposits increased 3.1% in the second half of the year. Average annual loans grew $3.3 billion to $29.5 billion, including a $979 million increase in commercial and business lending, a $719 million increase in commercial real estate lending and a $1.6 billion increase in consumer lending.
Net income for the year was down from $355 million to $171 million, including a $94 million loss in the fourth quarter. Those figures, however, were impacted by one-time items as the bank sold off a portion of its residential mortgage portfolio and incurred a special assessment from the FDIC to replenish insurance funds in the wake of bank failures this past spring.
A string of key hires
Beyond the numbers, Associated Bank is also changing with a number of key hires
connected to the strategy Harmening and his team have
laid out over the past two years. The hires include two new leaders in commercial banking, a retail banking leader, a president of private wealth, a chief information officer and a chief data officer.
The
most recent of the hires was
Steven Zandpour as executive vice president and director of retail banking. He previously led BMO’s U.S. footprint as head of specialty sales in Chicago. He’ll now be based in Milwaukee.
“You look at the consumer bank, now, the consumer bank is the foundation,” Harmening said. “You do more transactions, you talk to more customers, so you want somebody in that role that really appreciates what it means to be local from a branch perspective, from a call center perspective, from a digital perspective, from a product perspective.”
Harmening said it is also important that new hires fit the culture and “that they care about people.”
“I know that sound trite, but it matters when you’re a regional bank like us, it’s our strength,” he said, describing culture as the first thing to look at followed by someone having a vision and then finally the skillset to execute it.
The raft of new hires naturally leads to a question: Why not promote from within?
Promotions have been part of the changes Harmening has made. In October,
Gus Hernandez was named senior vice president and director of business banking, giving him responsibilities across major metro markets after previously being a commercial banking segment leader in Milwaukee and Madison. In 2022,
Dennis DeLoye was named head of community markets in addition to his role as northeast Wisconsin regional president.
“There’s certain times where you see a skillset in a place that maybe we haven’t had the depth,” Harmening said.
He pointed to
Phillip Trier’s experience with holistic banking and desire to have an impact. Trier was hired as executive vice president and commercial banking group leader. He’s tasked with accelerating the bank's commercial middle market business development and leading equipment finance and leasing, commercial deposit and treasury management sales and service strategies.
Harmening noted Zandpour brings experience at a large bank.
“That’s really valuable in today’s market as the consumer delivery changes,” Harmening said.
Part of Associated’s strategy also includes an expansion into the mass affluent market.
“We have this foundation of serving the customer,” Harmening said. “The question is, as you expand product, as you expand delivery, as you make sure that you take care of mass affluent as that upstreams to wealth, how does that all happen seamlessly? So the customer says, ‘okay, I like what's happening here.’ Steve had that. Steve had that experience.”
Of course, sometimes new hires are simply a matter of the right individual coming along at the right time. That was the case in Associated’s private wealth business.
“We were just fortunate
Jayne Hladio lived in Milwaukee,” Harmening said.
Hladio was hired in October as executive vice president and president of private wealth. Most recently she was president of Midland Wealth Management, but she previously led wealth management across 26 states for U.S. Bank.
Harmening said
John Thayer, previously head of private wealth at Associated Bank, had provided his own timeline for what he wanted to do, which helped in the transition. Thayer continued on as CEO of Associated Trust Company when Hladio was hired.
“John is fantastic,” Harmening said. “I mean he is a culture carrier for our bank, but as we move forward, we found somebody that frankly has done this at such a high level that it’s hard to match when you’re running 26 states and, by the way, delivering mass affluent upsteaming to wealth, exactly what our ambition is to do, she’s done that.”
Investing to be local
The new hires are not just at the leadership level. In the first phase of its strategic plan, Associated increased its number of commercial relationship managers by 34%. In the second phase, the bank is adding another 26 relationship managers by 2025, with 10 already hired. Another 15-20 employees will be trained as designated mass affluent bankers by early in the second quarter.
“I felt like to be a local bank, we needed to have more commercial bankers on the ground,” Harmening said.
“What’s happened is the first have, as we’ve expanded that team, it turns out that good bankers like to work with good bankers,” he added, noting that as the first hires have gotten established the bank has been able to continue to add to the team. The primary focus of the hires is to increase depth in the Milwaukee market, along some additions in northeastern Wisconsin, St. Louis, Minneapolis and Chicago.
The changes under the strategic plan have not only come as additions. When the second phase was announced, Associated also said it would cut its workforce by around 3% and has also
closed a number of branches.
Harmening said the leadership team looked at where it could invest and where it could pare back.
“If you only add, you’ll end up with a 5 to 10% expense growth rate,” he said. “The world is changing right now. People still matter, one-on-one personal touch still matters, but technology matters quite a bit.”
Associated has invested heavily in improving its digital experience and in its call centers. Harmening noted millions of customers are going through the bank’s digital portal now.
“We closed a few branches, the branch colleagues in these branches were great,” Harmening said. “I don’t like to have to make some of those decisions, but you have to make good decisions. You have to make decisions on behalf of the customer.”
Metrics to watch
There are a few key metrics Harmening is looking at in order to know if the right decisions have been made. He pointed to consumer household growth, which has been negative for a number of years although the bank is currently at about breakeven.
“We want more people banking with us in 2024 than banked with us in 2023,” Harmening said. “Now that sounds really simple, but it turns out in the industry the growth rate roughly is zero for net customers because some of the digital fintech competitors that have come in there.”
He also pointed to customer satisfaction as a leading indicator for the trend in households.
On the commercial side of the business, Harmening said he is looking for Associated to have double digit growth in treasury management.
“That means people are choosing you to bring their deposit dollars,” he said. “And when you’re doing that, that means you’re acquiring full relationships, that means you’ve become local and we’ve had that double digit growth and we expect that to continue.”
