Associated Reports Third Quarter Earnings of $0.31 per share

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Fastest growing bank in the state of Wisconsin

October 15, 2015 4:15 PM EDT

GREEN BAY, Wis., Oct. 15, 2015 /PRNewswire/ -- Associated Banc-Corp (NYSE: ASB) today reported net income available to common shareholders of $47 million, or $0.31 per common share, for the quarter ended September 30, 2015.   This compares to net income available to common shareholders of $48 million, or $0.31 per common share, for the quarter ended June 30, 2015.

According to the recently released FDIC 2015 U.S. Bank Branch Summary of Deposits Data, Associated was the fastest growing bank operating in Wisconsin for the year ended June 30, 2015, based on deposit market share.

"We have enjoyed strong deposit growth over the prior year and remarkable inflows during the third quarter. We are pleased to have increased our market share in each of the states in our branch footprint. Our continued focus on the customer experience has allowed us to gain market share in a competitive and transforming industry," said President and CEO Philip B. Flynn. "As we anticipated, commercial loan growth slowed during the third quarter. Overall loan growth was supported by strong production in our residential lending area and we remain on track to deliver high single digit loan growth for the year."

 HIGHLIGHTS  

  • Average loans of $18.5 billion are up 8% from a year ago quarter
    • Average Total Consumer loans grew $231 million, or 3% from the second quarter
    • Average Total Commercial loans grew $34 million from the second quarter
  • Average deposits grew to a record $20.3 billion, up 14% from a year ago quarter
    • Average noninterest-bearing demand deposits grew $283 million, or 7% from the second quarter
  • Net interest income of $171 million increased $4 million, or 2% from the second quarter
    • Net interest margin of 2.82% reflects 1 basis point of compression
  • Noninterest income of $80 million reflects lower mortgage banking revenue and reduced insurance commissions
  • Noninterest expenses of $171 million decreased $5 million, or 3% from the second quarter
  • Return on average common equity Tier 1 was 10.2% for the third quarter
  • Capital ratios remain strong with a common equity Tier 1 ratio of 9.39% at September 30, 2015

THIRD QUARTER 2015 FINANCIAL RESULTS

Loans

Average loans of $18.5 billion increased $264 million, or 1% from the second quarter, and have increased $1.3 billion, or 8% from the year ago quarter. Total consumer average loans were up $231 million from the prior quarter.  Residential lending growth of $247 million was the largest contributor for the quarter. Commercial real estate lending average balances grew $111 million, or 3% from the second quarter.  Lower levels of general commercial lending and mortgage warehouse borrowings contributed to commercial and business lending average balances declining $78 million, or 1% from the second quarter.

Deposits

Average deposits of $20.3 billion were up $667 million, or 3% compared to the second quarter and have increased $2.4 billion, or 14% from the year ago quarter.  Money market average balances increased $436 million, or 5% from the second quarter.  Total demand deposit average balances increased $231 million, or 3% from the prior quarter. Savings average balances increased slightly from the second quarter.  Time deposits declined slightly during the quarter.

During the third quarter, the Company used deposit funding to repay over $1 billion of short and long term advances borrowed from the Federal Home Loan Bank of Chicago.

Net Interest Income and Net Interest Margin

Net interest income of $171 million was up $4 million, or 2% from the second quarter and down $2 million from the year ago quarter. Third quarter net interest margin was 2.82%, a decrease of 1 basis point from the second quarter.   The third quarter yield on earning assets declined 2 basis points to 3.13% from 3.15% in the prior quarter.  The decline is primarily attributable to yield compression in the investment portfolio.  The third quarter yield on loans of 3.38% was unchanged due to slower commercial growth and less new production dilution to the margin. Third quarter deposit expense increased 1 basis point to 22 basis points while the overall cost of funding was unchanged at 40 basis points from the prior quarter.

Noninterest Income

Noninterest income for the third quarter was $80 million, down $7 million or 8% from the second quarter and up $5 million or 7% from the year ago quarter. In the third quarter, core fee-based revenues decreased primarily due to $3 million of seasonally lower insurance commissions. Mortgage banking income also decreased $3 million from the second quarter, primarily driven by a $5 million net change in the quarter-end mark-to-market of the residential mortgage pipeline due to interest rate movements. Third quarter net investment securities gains of $3 million were primarily related to the further restructuring of the Company's investment portfolio from Fannie Mae and Freddie Mac mortgage backed securities into Ginnie Mae securities. Aggregate net asset and investment securities gains were flat quarter over quarter.  The significant year over year noninterest income increase is primarily attributable to a $4 million reserve for remediation of legacy debt protection products booked in the third quarter of 2014.

Noninterest Expense

Total noninterest expense was $171 million, down $5 million or 3% from the second quarter, and down modestly from the year ago quarter.  In the third quarter, personnel expense decreased $2 million from the prior quarter primarily due to lower severance expense. Technology expense decreased $2 million from the second quarter related to the completion of several projects. Several other expense categories including business development and advertising, foreclosure/OREO expense, loan expense, legal and professional fees, and occupancy, were also down in the third quarter.

Taxes

Third quarter income taxes were $22 million, with an effective tax rate of 30%, compared to $22 million and an effective tax rate of 31% in the prior quarter.

Credit

Net charge offs of $8 million were down $1 million from the second quarter, and up $5 million from the year ago quarter.  Potential problem loans increased to $264 million from $200 million in the second quarter, and increased from $220 million in the prior year period, due to the migration of a small number of credits.

The third quarter provision for credit losses was $8 million, up $3 million from the prior quarter.

Nonaccrual loans of $147 million were down 8% compared to the second quarter, and down 20% from the year ago quarter.  The nonaccrual loans to total loans ratio improved to 0.80% in the third quarter, down from 0.88% in the prior quarter and down from 1.07% in the year ago quarter.

The Company's allowance for loan losses of $263 million was up $1 million from the second quarter, and down $4 million from the year ago quarter. The allowance for loan losses to total loans ratio declined modestly to 1.42% in the third quarter.

Capital Ratios

The Company's capital position remains strong, with a common equity Tier 1 ratio of 9.39% at September 30, 2015. 

The Company's capital ratios continue to be in excess of the Basel III "well-capitalized" regulatory benchmarks on a fully phased in basis.

THIRD QUARTER 2015 EARNINGS RELEASE CONFERENCE CALL

The Company will host a conference call for investors and analysts at 4:00 p.m. Central Time (CT) today, October 15, 2015.  Interested parties can listen to the call live on the internet through the investor relations section of the company's website, http://investor.associatedbank.com or by dialing 877-407-8037. The slide presentation for the call will be available on the company's website just prior to the call. The number for international callers is 201-689-8037. Participants should ask the operator for the Associated Banc-Corp third quarter 2015 earnings call.

An audio archive of the webcast will be available on the company's website at http://investor.associatedbank.com approximately fifteen minutes after the call is over.

ABOUT ASSOCIATED BANC-CORP

Associated Banc-Corp (NYSE: ASB) has total assets of over $27 billion and is one of the top 50, publicly traded, U.S. bank holding companies. Headquartered in Green Bay, Wisconsin, Associated is a leading Midwest banking franchise, offering a full range of financial products and services from over 200 banking locations serving more than 100 communities throughout Wisconsin, Illinois and Minnesota, and commercial financial services in Indiana, Michigan, Missouri, Ohio and Texas. Associated Bank, N.A. is an Equal Housing Lender, Equal Opportunity Lender and Member FDIC. More information about Associated Banc-Corp is available at www.associatedbank.com.

FORWARD LOOKING STATEMENTS

Statements made in this document which are not purely historical are forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995. This includes any statements regarding management's plans, objectives, or goals for future operations, products or services, and forecasts of its revenues, earnings, or other measures of performance.  Such forward-looking statements may be identified by the use of words such as "believe", "expect", "anticipate", "plan", "estimate", "should", "will", "intend", "outlook", or similar expressions.  Forward-looking statements are based on current management expectations and, by their nature, are subject to risks and uncertainties. Actual results may differ materially from those contained in the forward-looking statements.  Factors which may cause actual results to differ materially from those contained in such forward-looking statements include those identified in the Company's most recent Form 10-K and subsequent SEC filings.  Such factors are incorporated herein by reference. 

NON-GAAP FINANCIAL MEASURES

This press release contains references to measures which are not defined in generally accepted accounting principles ("GAAP"), including "efficiency ratio," "common equity Tier 1", and "core fee-based revenue."  Information concerning these non-GAAP financial measures can be found in the attached tables.

Investor Contact:Teresa Gutierrez, Senior Vice President, Director of Investor Relations       920-491-7059

Media Contact:Cliff Bowers, Senior Vice President, Director of Public Relations 920-491-7542

 

Associated Banc-CorpConsolidated Balance Sheets (Unaudited)

(in thousands)

Sep 30, 2015

Jun 30, 2015

Seql Qtr$ Change

Mar 31, 2015

Dec 31, 2014

Sep 30, 2014

Comp Qtr$ Change

Assets

Cash and due from banks

$

303,701

$

375,369

$

(71,668)

$

355,541

$

444,113

$

381,287

$

(77,586)

Interest-bearing deposits in other financial institutions

70,023

101,573

(31,550)

488,426

571,924

74,945

(4,922)

Federal funds sold and securities purchased under agreements to resell

36,490

39,850

(3,360)

3,380

16,030

18,320

18,170

Securities held to maturity, at amortized cost

604,799

532,382

72,417

438,047

404,455

301,941

302,858

Securities available for sale, at fair value

5,403,656

5,407,998

(4,342)

5,358,310

5,396,812

5,345,422

58,234

Federal Home Loan Bank and Federal Reserve Bank stocks, at cost

160,871

160,765

106

189,222

189,107

188,875

(28,004)

Loans held for sale

105,144

151,146

(46,002)

159,963

154,935

141,672

(36,528)

Loans

18,524,773

18,303,252

221,521

17,979,032

17,593,846

17,159,090

1,365,683

Allowance for loan losses

(262,536)

(261,538)

(998)

(265,268)

(266,302)

(266,262)

3,726

Loans, net

18,262,237

18,041,714

220,523

17,713,764

17,327,544

16,892,828

1,369,409

Premises and equipment, net

271,119

274,338

(3,219)

274,591

274,688

272,283

(1,164)

Goodwill

968,844

968,844

—

968,774

929,168

929,168

39,676

Other intangible assets, net

78,380

79,055

(675)

77,984

67,582

69,201

9,179

Trading assets

43,752

35,386

8,366

42,336

35,163

34,005

9,747

Other assets

1,158,227

1,016,725

141,502

998,402

1,010,253

1,003,875

154,352

Total assets

$

27,467,243

$

27,185,145

$

282,098

$

27,068,740

$

26,821,774

$

25,653,822

$

1,813,421

Liabilities and Stockholders' Equity

Noninterest-bearing demand deposits

$

4,657,261

$

4,332,171

$

325,090

$

4,570,872

$

4,505,272

$

4,302,454

$

354,807

Interest-bearing deposits

15,901,134

14,937,392

963,742

15,280,720

14,258,232

13,898,804

2,002,330

Total deposits

20,558,395

19,269,563

1,288,832

19,851,592

18,763,504

18,201,258

2,357,137

Federal funds purchased and securities sold under agreements to repurchase

702,569

689,699

12,870

587,272

493,991

765,641

(63,072)

Other short-term funding

319,766

905,837

(586,071)

75,265

574,297

664,539

(344,773)

Long-term funding

2,679,542

3,179,734

(500,192)

3,429,925

3,930,117

2,931,547

(252,005)

Trading liabilities

45,817

37,169

8,648

44,730

37,329

36,003

9,814

Accrued expenses and other liabilities

207,357

198,752

8,605

197,818

222,285

185,256

22,101

Total liabilities

24,513,446

24,280,754

232,692

24,186,602

24,021,523

22,784,244

1,729,202

Stockholders' Equity

Preferred equity

121,379

122,015

(636)

59,727

59,727

61,024

60,355

Common stock

1,642

1,642

—

1,674

1,665

1,719

(77)

Surplus

1,455,034

1,450,200

4,834

1,505,170

1,484,933

1,583,032

(127,998)

Retained earnings

1,570,199

1,538,684

31,515

1,509,967

1,497,818

1,466,525

103,674

Accumulated other comprehensive income (loss)

15,376

2,594

12,782

24,800

(4,850)

(1,725)

17,101

Treasury stock

(209,833)

(210,744)

911

(219,200)

(239,042)

(240,997)

31,164

Total stockholders' equity

2,953,797

2,904,391

49,406

2,882,138

2,800,251

2,869,578

84,219

Total liabilities and stockholders' equity

$

27,467,243

$

27,185,145

$

282,098

$

27,068,740

$

26,821,774

$

25,653,822

$

1,813,421

 

Associated Banc-CorpConsolidated Statements of Income (Unaudited)

Comp Qtr

Comp YTD

(in thousands, except per share amounts)

3Q15

3Q14

$ Change

% Change

YTD

Sep 2015

YTD

Sep 2014

$ Change

% Change

Interest Income

Interest and fees on loans

$

155,663

$

152,030

$

3,633

2.4

%

$

460,025

$

442,046

$

17,979

4.1

%

Interest and dividends on investment securities:

Taxable

24,937

25,037

(100)

(0.4)

%

73,897

77,403

(3,506)

(4.5)

%

Tax-exempt

7,917

7,483

434

5.8

%

23,369

21,484

1,885

8.8

%

Other interest

1,489

1,503

(14)

(0.9)

%

4,952

4,814

138

2.9

%

Total interest income

190,006

186,053

3,953

2.1

%

562,243

545,747

16,496

3.0

%

Interest Expense

Interest on deposits

8,521

6,621

1,900

28.7

%

24,281

18,975

5,306

28.0

%

Interest on Federal funds purchased and securities sold under agreements to repurchase

248

390

(142)

(36.4)

%

714

1,001

(287)

(28.7)

%

Interest on other short-term funding

83

233

(150)

(64.4)

%

279

629

(350)

(55.6)

%

Interest on long-term funding

10,645

6,179

4,466

72.3

%

32,159

18,836

13,323

70.7

%

Total interest expense

19,497

13,423

6,074

45.3

%

57,433

39,441

17,992

45.6

%

Net Interest Income

170,509

172,630

(2,121)

(1.2)

%

504,810

506,306

(1,496)

(0.3)

%

Provision for credit losses

8,000

1,000

7,000

N/M

17,500

11,000

6,500

59.1

%

Net interest income after provision for credit losses

162,509

171,630

(9,121)

(5.3)

%

487,310

495,306

(7,996)

(1.6)

%

Noninterest Income

Trust service fees

12,273

12,218

55

0.5

%

36,875

35,946

929

2.6

%

Service charges on deposit accounts

17,385

17,961

(576)

(3.2)

%

48,894

51,773

(2,879)

(5.6)

%

Card-based and other nondeposit fees

12,618

12,407

211

1.7

%

38,631

37,493

1,138

3.0

%

Insurance commissions

17,561

7,860

9,701

123.4

%

57,366

33,828

23,538

69.6

%

Brokerage and annuity commissions

3,809

4,040

(231)

(5.7)

%

11,684

12,593

(909)

(7.2)

%

Total core fee-based revenue

63,646

54,486

9,160

16.8

%

193,450

171,633

21,817

12.7

%

Mortgage banking, net

6,643

6,669

(26)

(0.4)

%

23,992

18,392

5,600

30.4

%

Capital market fees, net

2,170

2,939

(769)

(26.2)

%

7,329

7,360

(31)

(0.4)

%

Bank owned life insurance income

2,448

3,506

(1,058)

(30.2)

%

7,704

10,837

(3,133)

(28.9)

%

Asset gains, net

95

4,934

(4,839)

(98.1)

%

3,084

6,561

(3,477)

(53.0)

%

Investment securities gains, net

2,796

57

2,739

N/M

4,038

469

3,569

N/M

Other

2,118

2,317

(199)

(8.6)

%

6,916

5,424

1,492

27.5

%

Total noninterest income

79,916

74,908

5,008

6.7

%

246,513

220,676

25,837

11.7

%

Noninterest Expense

Personnel expense

101,134

97,650

3,484

3.6

%

304,272

293,141

11,131

3.8

%

Occupancy

14,187

13,743

444

3.2

%

46,178

43,088

3,090

7.2

%

Equipment

6,003

6,133

(130)

(2.1)

%

17,514

18,636

(1,122)

(6.0)

%

Technology

14,748

13,573

1,175

8.7

%

46,660

40,891

5,769

14.1

%

Business development and advertising

5,964

7,467

(1,503)

(20.1)

%

18,120

17,606

514

2.9

%

Other intangible amortization

885

990

(105)

(10.6)

%

2,574

2,972

(398)

(13.4)

%

Loan expense

3,305

3,813

(508)

(13.3)

%

9,982

10,220

(238)

(2.3)

%

Legal and professional fees

4,207

4,604

(397)

(8.6)

%

13,089

13,228

(139)

(1.1)

%

Foreclosure / OREO expense

496

2,083

(1,587)

(76.2)

%

3,224

5,554

(2,330)

(42.0)

%

FDIC expense

6,000

6,859

(859)

(12.5)

%

18,500

16,805

1,695

10.1

%

Other

14,507

14,938

(431)

(2.9)

%

42,394

45,295

(2,901)

(6.4)

%

Total noninterest expense

171,436

171,853

(417)

(0.2)

%

522,507

507,436

15,071

3.0

%

Income before income taxes

70,989

74,685

(3,696)

(4.9)

%

211,316

208,546

2,770

1.3

%

Income tax expense

21,551

24,478

(2,927)

(12.0)

%

65,806

66,775

(969)

(1.5)

%

Net income

49,438

50,207

(769)

(1.5)

%

145,510

141,771

3,739

2.6

%

Preferred stock dividends

2,184

1,255

929

74.0

%

4,957

3,777

1,180

31.2

%

Net income available to common equity

$

47,254

$

48,952

$

(1,698)

(3.5)

%

$

140,553

$

137,994

$

2,559

1.9

%

Earnings Per Common Share:

Basic

$

0.31

$

0.31

$

—

—

%

$

0.93

$

0.86

$

0.07

8.1

%

Diluted

$

0.31

$

0.31

$

—

—

%

$

0.92

$

0.85

$

0.07

8.2

%

Average Common Shares Outstanding:

Basic

148,614

155,925

(7,311)

(4.7)

%

149,524

159,090

(9,566)

(6.0)

%

Diluted

149,799

156,991

(7,192)

(4.6)

%

150,704

159,993

(9,289)

(5.8)

%

N/M=Not  meaningful

 

Associated Banc-CorpConsolidated Statements of Income (Unaudited)—Quarterly Trend

Seql Qtr

Comp Qtr

(in thousands, except per share amounts)

3Q15

2Q15

$ Change

% Change

1Q15

4Q14

3Q14

$ Change

% Change

Interest Income

Interest and fees on loans

$

155,663

$

152,417

$

3,246

2.1

%

$

151,945

$

156,536

$

152,030

$

3,633

2.4

%

Interest and dividends on investment securities:

Taxable

24,937

23,868

1,069

4.5

%

25,092

25,061

25,037

(100)

(0.4)

%

Tax-exempt

7,917

7,565

352

4.7

%

7,887

7,580

7,483

434

5.8

%

Other interest

1,489

1,771

(282)

(15.9)

%

1,692

1,821

1,503

(14)

(0.9)

%

Total interest income

190,006

185,621

4,385

2.4

%

186,616

190,998

186,053

3,953

2.1

%

Interest Expense

Interest on deposits

8,521

8,141

380

4.7

%

7,619

7,319

6,621

1,900

28.7

%

Interest on Federal funds purchased and securities sold under agreements to repurchase

248

235

13

5.5

%

231

218

390

(142)

(36.4)

%

Interest on other short-term funding

83

115

(32)

(27.8)

%

81

156

233

(150)

(64.4)

%

Interest on long-term funding

10,645

10,642

3

—

%

10,872

8,644

6,179

4,466

72.3

%

Total interest expense

19,497

19,133

364

1.9

%

18,803

16,337

13,423

6,074

45.3

%

Net Interest Income

170,509

166,488

4,021

2.4

%

167,813

174,661

172,630

(2,121)

(1.2)

%

Provision for credit losses

8,000

5,000

3,000

60.0

%

4,500

5,000

1,000

7,000

N/M

Net interest income after provision for credit losses

162,509

161,488

1,021

0.6

%

163,313

169,661

171,630

(9,121)

(5.3)

%

Noninterest Income

Trust service fees

12,273

12,515

(242)

(1.9)

%

12,087

12,457

12,218

55

0.5

%

Service charges on deposit accounts

17,385

15,703

1,682

10.7

%

15,806

17,006

17,961

(576)

(3.2)

%

Card-based and other nondeposit fees

12,618

13,597

(979)

(7.2)

%

12,416

12,019

12,407

211

1.7

%

Insurance commissions

17,561

20,077

(2,516)

(12.5)

%

19,728

10,593

7,860

9,701

123.4

%

Brokerage and annuity commissions

3,809

4,192

(383)

(9.1)

%

3,683

3,496

4,040

(231)

(5.7)

%

Total core fee-based revenue

63,646

66,084

(2,438)

(3.7)

%

63,720

55,571

54,486

9,160

16.8

%

Mortgage banking, net

6,643

9,941

(3,298)

(33.2)

%

7,408

2,928

6,669

(26)

(0.4)

%

Capital market fees, net

2,170

2,692

(522)

(19.4)

%

2,467

2,613

2,939

(769)

(26.2)

%

Bank owned life insurance income

2,448

2,381

67

2.8

%

2,875

2,739

3,506

(1,058)

(30.2)

%

Asset gains, net

95

1,893

(1,798)

(95.0)

%

1,096

3,727

4,934

(4,839)

(98.1)

%

Investment securities gains, net

2,796

1,242

1,554

125.1

%

—

25

57

2,739

N/M

Other

2,118

2,288

(170)

(7.4)

%

2,510

2,040

2,317

(199)

(8.6)

%

Total noninterest income

79,916

86,521

(6,605)

(7.6)

%

80,076

69,643

74,908

5,008

6.7

%

Noninterest Expense

Personnel expense

101,134

102,986

(1,852)

(1.8)

%

100,152

97,258

97,650

3,484

3.6

%

Occupancy

14,187

14,308

(121)

(0.8)

%

17,683

14,589

13,743

444

3.2

%

Equipment

6,003

5,739

264

4.6

%

5,772

6,148

6,133

(130)

(2.1)

%

Technology

14,748

16,354

(1,606)

(9.8)

%

15,558

14,581

13,573

1,175

8.7

%

Business development and advertising

5,964

6,829

(865)

(12.7)

%

5,327

8,538

7,467

(1,503)

(20.1)

%

Other intangible amortization

885

888

(3)

(0.3)

%

801

775

990

(105)

(10.6)

%

Loan expense

3,305

3,681

(376)

(10.2)

%

2,996

3,646

3,813

(508)

(13.3)

%

Legal and professional fees

4,207

4,344

(137)

(3.2)

%

4,538

4,257

4,604

(397)

(8.6)

%

Foreclosure / OREO expense

496

1,303

(807)

(61.9)

%

1,425

1,168

2,083

(1,587)

(76.2)

%

FDIC expense

6,000

6,000

—

—

%

6,500

6,956

6,859

(859)

(12.5)

%

Other

14,507

14,384

123

0.9

%

13,503

13,889

14,938

(431)

(2.9)

%

Total noninterest expense

171,436

176,816

(5,380)

(3.0)

%

174,255

171,805

171,853

(417)

(0.2)

%

Income before income taxes

70,989

71,193

(204)

(0.3)

%

69,134

67,499

74,685

(3,696)

(4.9)

%

Income tax expense

21,551

21,793

(242)

(1.1)

%

22,462

18,761

24,478

(2,927)

(12.0)

%

Net income

49,438

49,400

38

0.1

%

46,672

48,738

50,207

(769)

(1.5)

%

Preferred stock dividends

2,184

1,545

639

41.4

%

1,228

1,225

1,255

929

74.0

%

Net income available to common equity

$

47,254

$

47,855

$

(601)

(1.3)

%

$

45,444

$

47,513

$

48,952

$

(1,698)

(3.5)

%

Earnings Per Common Share:

Basic

$

0.31

$

0.32

$

(0.01)

(3.1)

%

$

0.30

$

0.31

$

0.31

$

—

—

%

Diluted

$

0.31

$

0.31

$

—

—

%

$

0.30

$

0.31

$

0.31

$

—

—

%

Average Common Shares Outstanding:

Basic

148,614

149,903

(1,289)

(0.9)

%

150,070

151,931

155,925

(7,311)

(4.7)

%

Diluted

149,799

151,108

(1,309)

(0.9)

%

151,164

153,083

156,991

(7,192)

(4.6)

%

N/M=Not meaningful

 

Associated Banc-CorpSelected Quarterly Information

($ in millions, except per share and full timeequivalent employee data)

YTD

Sep 2015

YTD

Sep 2014

3Q15

2Q15

1Q15

4Q14

3Q14

Per Common Share Data

Dividends

$

0.30

$

0.27

$

0.10

$

0.10

$

0.10

$

0.10

$

0.09

Market Value:

High

20.84

18.90

20.55

20.84

19.07

19.37

18.90

Low

16.62

15.58

17.17

18.50

16.62

16.75

17.42

Close

17.97

17.42

17.97

20.27

18.60

18.63

17.42

Book value

18.77

18.15

18.77

18.44

18.38

18.32

18.15

Common equity Tier 1 / share (1) (6)

12.36

12.10

12.36

12.10

11.97

12.09

12.10

Tangible book value / share

$

12.23

$

12.09

$

12.23

$

11.90

$

11.95

$

12.06

$

12.09

Performance Ratios (annualized)

Return on average assets

0.72

%

0.76

%

0.72

%

0.74

%

0.71

%

0.75

%

0.78

%

Return on average tangible common equity

10.38

9.79

10.35

10.62

10.16

10.27

10.35

Return on average common equity Tier 1 (1) (6)

10.32

9.78

10.20

10.55

10.22

10.35

10.38

Effective tax rate

31.14

32.02

30.36

30.61

32.49

27.79

32.77

Dividend payout ratio (2)

32.26

31.40

32.26

31.25

33.33

32.26

29.03

Average Balances

Common stockholders' equity

$

2,792

$

2,824

$

2,798

$

2,794

$

2,785

$

2,772

$

2,815

Average common equity Tier 1 (1) (6)

$

1,821

$

1,887

$

1,837

$

1,820

$

1,804

$

1,821

$

1,871

Selected Trend Information

Average full time equivalent employees

4,436

4,435

4,421

4,465

4,422

4,320

4,359

Trust assets under management, at market value

$

7,626

$

7,700

$

7,626

$

8,068

$

8,138

$

7,993

$

7,700

Total revenue (3)

$

766

$

741

$

255

$

258

$

253

$

249

$

252

Core fee-based revenue (4)

$

194

$

172

$

64

$

66

$

64

$

56

$

54

Mortgage loans originated for sale during period

$

911

$

778

$

292

$

351

$

268

$

292

$

298

Mortgage portfolio serviced for others

$

7,907

$

8,012

$

7,907

$

7,898

$

7,920

$

7,999

$

8,012

Mortgage servicing rights, net / portfolio serviced for others

0.78

%

0.76

%

0.78

%

0.77

%

0.75

%

0.75

%

0.76

%

At Period End

Loans / deposits

90.11

%

94.99

%

90.57

%

93.77

%

94.27

%

Stockholders' equity / assets

10.75

%

10.68

%

10.65

%

10.44

%

11.19

%

Tangible common equity / tangible assets (5)

6.97

%

6.85

%

7.04

%

6.97

%

7.57

%

Tangible equity / tangible assets (5)

7.43

%

7.32

%

7.27

%

7.20

%

7.82

%

Shares outstanding, end of period

150,928

150,862

153,567

149,560

154,743

Capital (6)

Risk weighted assets (7) (8)

$

19,866

$

19,629

$

19,565

$

18,568

$

18,031

Common equity Tier 1 (1)

$

1,865

$

1,825

$

1,838

$

1,808

$

1,873

Common equity Tier 1 / risk-weighted assets (7) (8)

9.39

%

9.30

%

9.39

%

9.74

%

10.39

%

Tier 1 leverage ratio (7) (8)

7.53

%

7.53

%

7.39

%

7.48

%

7.87

%

Tier 1 risk-based capital ratio (7) (8)

9.98

%

9.89

%

9.70

%

10.06

%

10.73

%

Total risk-based capital ratio (7) (8)

12.49

%

12.41

%

12.21

%

12.66

%

11.98

%

(1)

Common equity Tier 1, a non-GAAP financial measure, is used by banking regulators, investors and analysts to assess and compare the quality and composition of our capital with the capital of other financial services companies. Management uses common equity Tier 1, along with other capital measures, to assess and monitor our capital position. Common equity Tier 1 (period end and average) is Tier 1 capital excluding qualifying perpetual preferred stock and qualifying trust preferred securities.

(2)

Ratio is based upon basic earnings per common share.

(3)

Total revenue, a non-GAAP financial measure, is the sum of taxable equivalent net interest income, core fee-based revenues, and other noninterest income categories, as presented on Pages 2 and 3 in the Consolidated Statements of Income and Pages 7 and 8 in the Net Interest Income Analysis.

(4)

Core fee-based revenue, a non-GAAP financial measure, is the sum of trust service fees, service charges on deposit accounts, card-based and other nondeposit fees, insurance commissions, and brokerage and annuity commissions, as presented on Pages 2 and 3 in the Consolidated Statements of Income.

(5)

The ratios tangible common equity to tangible assets and tangible equity to tangible assets exclude goodwill and other intangible assets, which is a non-GAAP financial measure. These financial measures have been included as they are considered to be critical metrics with which to analyze and evaluate financial condition and capital strength.

(6)

Prior to 2015, the regulatory capital requirements effective for the Corporation followed the Capital Accord of the Basel Committee on Banking Supervision ("Basel I"). Beginning January 1, 2015, the regulatory capital requirements effective for the Corporation follow Basel III, subject to certain transition provisions from Basel I over the next three years to full implementation by January 1, 2018.

(7)

September 30, 2015 data is estimated.

(8)

The Federal Reserve establishes capital adequacy requirements, including well-capitalized standards for the Corporation. The OCC establishes similar capital adequacy requirements and standards for the Bank. Regulatory capital primarily consists of Tier 1 risk-based capital and Tier 2 risk-based capital. The sum of Tier 1 risk-based capital and Tier 2 risk-based capital equals our total risk-based capital. Risk-based capital guidelines require a minimum level of capital as a percentage of risk-weighted assets. Risk-weighted assets consist of total assets plus certain off-balance sheet and market items, subject to adjustment for predefined credit risk factors.

 

Associated Banc-CorpSelected Asset Quality Information

(in thousands)

Sep 30, 2015

Jun 30, 2015

Seql Qtr

% Change

Mar 31, 2015

Dec 31, 2014

Sep 30, 2014

Comp Qtr

% Change

Allowance for Loan Losses

Beginning balance

$

261,538

$

265,268

(1.4)

%

$

266,302

$

266,262

$

271,851

(3.8)

%

Provision for loan losses

9,000

5,000

80.0

%

4,500

4,500

(3,000)

(400.0)

%

Charge offs

(11,732)

(14,537)

(19.3)

%

(13,270)

(8,778)

(14,850)

(21.0)

%

Recoveries

3,730

5,807

(35.8)

%

7,736

4,318

12,261

(69.6)

%

Net charge offs

(8,002)

(8,730)

(8.3)

%

(5,534)

(4,460)

(2,589)

209.1

%

Ending balance

$

262,536

$

261,538

0.4

%

$

265,268

$

266,302

$

266,262

(1.4)

%

Allowance for Unfunded Commitments

Beginning balance

$

24,900

$

24,900

—

%

$

24,900

$

24,400

$

20,400

22.1

%

Provision for unfunded commitments

(1,000)

—

N/M

—

500

4,000

(125.0)

%

Ending balance

$

23,900

$

24,900

(4.0)

%

$

24,900

$

24,900

$

24,400

(2.0)

%

Allowance for credit losses

$

286,436

$

286,438

—

%

$

290,168

$

291,202

$

290,662

(1.5)

%

Net Charge Offs

Sep 30, 2015

Jun 30, 2015

Seql Qtr% Change

Mar 31, 2015

Dec 31, 2014

Sep 30, 2014

Comp Qtr% Change

Commercial and industrial

$

4,709

$

3,921

20.1

%

$

4,650

$

1,323

$

572

N/M

Commercial real estate—owner occupied

(504)

1,198

(142.1)

%

739

134

2,210

(122.8)

%

Lease financing

—

—

N/M

—

9

(6)

(100.0)

%

Commercial and business lending

4,205

5,119

(17.9)

%

5,389

1,466

2,776

51.5

%

Commercial real estate—investor

496

1,856

(73.3)

%

(2,529)

(132)

(4,065)

(112.2)

%

Real estate construction

38

(673)

(105.6)

%

(743)

(116)

350

(89.1)

%

Commercial real estate lending

534

1,183

(54.9)

%

(3,272)

(248)

(3,715)

(114.4)

%

Total commercial

4,739

6,302

(24.8)

%

2,117

1,218

(939)

N/M

Home equity revolving lines of credit

533

246

116.7

%

1,220

1,094

1,098

(51.5)

%

Home equity loans junior liens

358

118

203.4

%

423

457

728

(50.8)

%

Home equity (1)

891

364

144.8

%

1,643

1,551

1,826

(51.2)

%

Installment and credit cards

810

786

3.1

%

769

990

910

(11.0)

%

Residential mortgage (1)

1,562

1,278

22.2

%

1,005

701

792

97.2

%

Total consumer

3,263

2,428

34.4

%

3,417

3,242

3,528

(7.5)

%

Total net charge offs

$

8,002

$

8,730

(8.3)

%

$

5,534

$

4,460

$

2,589

209.1

%

Net Charge Offs to Average Loans (in basis points) *

Sep 30, 2015

Jun 30, 2015

Mar 31, 2015

Dec 31, 2014

Sep 30, 2014

Commercial and industrial

31

26

32

9

4

Commercial real estate—owner occupied

(21)

48

30

5

84

Lease financing

—

—

—

7

(5)

Commercial and business lending

24

29

31

9

17

Commercial real estate—investor

6

24

(33)

(2)

(54)

Real estate construction

1

(26)

(30)

(5)

14

Commercial real estate lending

5

11

(32)

(2)

(37)

Total commercial

17

22

8

4

(3)

Home equity revolving lines of credit

24

11

56

49

50

Home equity loans junior liens

104

32

108

107

159

Home equity (1)

35

14

64

58

69

Installment and credit cards

75

73

70

86

78

Residential mortgage (1)

11

9

8

5

6

Total consumer

18

14

21

19

22

Total net charge offs

17

19

13

10

6

Credit Quality

Sep 30, 2015

Jun 30, 2015

Seql Qtr% Change

Mar 31, 2015

Dec 31, 2014

Sep 30, 2014

Comp Qtr% Change

Nonaccrual loans

$

147,454

$

160,361

(8.0)

%

$

174,346

$

177,413

$

184,138

(19.9)

%

Other real estate owned (OREO)

13,740

13,557

1.3

%

14,926

16,732

16,840

(18.4)

%

Total nonperforming assets

$

161,194

$

173,918

(7.3)

%

$

189,272

$

194,145

$

200,978

(19.8)

%

Loans 90 or more days past due and still accruing

$

1,484

$

1,662

(10.7)

%

$

1,715

$

1,623

$

1,690

(12.2)

%

Allowance for loan losses / loans

1.42

%

1.43

%

1.48

%

1.51

%

1.55

%

Allowance for loan losses / nonaccrual loans

178.05

163.09

152.15

150.10

144.60

Nonaccrual loans / total loans

0.80

0.88

0.97

1.01

1.07

Nonperforming assets / total loans plus OREO

0.87

0.95

1.05

1.10

1.17

Nonperforming assets / total assets

0.59

0.64

0.70

0.72

0.78

Net charge offs / average loans (annualized)

0.17

0.19

0.13

0.10

0.06

Year-to-date net charge offs / average loans

0.16

0.16

0.13

0.09

0.08

* Annualized

 

Associated Banc-CorpSelected Asset Quality Information (continued)

(in thousands)

Sep 30, 2015

Jun 30, 2015

Seql Qtr% Change

Mar 31, 2015

Dec 31, 2014

Sep 30, 2014

Comp Qtr% Change

Nonaccrual loans by type:

Commercial and industrial

$

58,421

$

64,738

(9.8)

%

$

61,620

$

49,663

$

51,143

14.2

%

Commercial real estate—owner occupied

13,368

18,821

(29.0)

%

21,861

25,825

24,340

(45.1)

%

Lease financing

1,763

1,656

6.5

%

1,720

1,801

1,947

(9.5)

%

Commercial and business lending

73,552

85,215

(13.7)

%

85,201

77,289

77,430

(5.0)

%

Commercial real estate—investor

6,921

6,090

13.6

%

13,742

22,685

25,106

(72.4)

%

Real estate construction

997

2,906

(65.7)

%

5,423

5,399

8,187

(87.8)

%

Commercial real estate lending

7,918

8,996

(12.0)

%

19,165

28,084

33,293

(76.2)

%

Total commercial

81,470

94,211

(13.5)

%

104,366

105,373

110,723

(26.4)

%

Home equity revolving lines of credit

8,060

8,420

(4.3)

%

9,171

9,853

10,154

(20.6)

%

Home equity loans junior liens

5,581

5,356

4.2

%

6,145

6,598

6,443

(13.4)

%

Home equity (1)

13,641

13,776

(1.0)

%

15,316

16,451

16,597

(17.8)

%

Installment and credit cards

386

454

(15.0)

%

515

613

653

(40.9)

%

Residential mortgage (1)

51,957

51,920

0.1

%

54,149

54,976

56,165

(7.5)

%

Total consumer

65,984

66,150

(0.3)

%

69,980

72,040

73,415

(10.1)

%

Total nonaccrual loans

$

147,454

$

160,361

(8.0)

%

$

174,346

$

177,413

$

184,138

(19.9)

%

Restructured loans (accruing)

Sep 30, 2015

Jun 30, 2015

Seql Qtr% Change

Mar 31, 2015

Dec 31, 2014

Sep 30, 2014

Comp Qtr% Change

Commercial and industrial

$

28,598

$

32,063

(10.8)

%

$

26,466

$

33,892

$

36,955

(22.6)

%

Commercial real estate—owner occupied

7,343

5,433

35.2

%

9,780

10,454

11,574

(36.6)

%

Commercial and business lending

35,941

37,496

(4.1)

%

36,246

44,346

48,529

(25.9)

%

Commercial real estate—investor

18,580

22,009

(15.6)

%

22,775

23,127

24,440

(24.0)

%

Real estate construction

485

714

(32.1)

%

717

727

805

(39.8)

%

Commercial real estate lending

19,065

22,723

(16.1)

%

23,492

23,854

25,245

(24.5)

%

Total commercial

55,006

60,219

(8.7)

%

59,738

68,200

73,774

(25.4)

%

Home equity revolving lines of credit

1,121

1,222

(8.3)

%

1,251

1,508

1,531

(26.8)

%

Home equity loans junior liens

5,824

6,610

(11.9)

%

6,642

6,701

7,184

(18.9)

%

Home equity (1)

6,945

7,832

(11.3)

%

7,893

8,209

8,715

(20.3)

%

Installment and credit cards

804

796

1.0

%

891

974

1,106

(27.3)

%

Residential mortgage (1)

20,054

21,373

(6.2)

%

20,295

20,833

21,008

(4.5)

%

Total consumer

27,803

30,001

(7.3)

%

29,079

30,016

30,829

(9.8)

%

Total restructured loans (accruing)

$

82,809

$

90,220

(8.2)

%

$

88,817

$

98,216

$

104,603

(20.8)

%

Restructured loans in nonaccrual loans (not included above)

$

36,583

$

43,699

(16.3)

%

$

53,553

$

57,656

$

63,314

(42.2)

%

Loans Past Due 30-89 Days

Sep 30, 2015

Jun 30, 2015

Seql Qtr% Change

Mar 31, 2015

Dec 31, 2014

Sep 30, 2014

Comp Qtr% Change

Commercial and industrial

$

2,921

$

6,357

(54.1)

%

$

1,717

$

14,747

$

3,947

(26.0)

%

Commercial real estate—owner occupied

2,018

1,090

85.1

%

1,849

10,628

2,675

(24.6)

%

Lease financing

375

—

N/M

—

—

—

N/M

Commercial and business lending

5,314

7,447

(28.6)

%

3,566

25,375

6,622

(19.8)

%

Commercial real estate—investor

1,218

19,843

(93.9)

%

2,215

1,208

15,869

(92.3)

%

Real estate construction

373

312

19.6

%

317

984

399

(6.5)

%

Commercial real estate lending

1,591

20,155

(92.1)

%

2,532

2,192

16,268

(90.2)

%

Total commercial

6,905

27,602

(75.0)

%

6,098

27,567

22,890

(69.8)

%

Home equity revolving lines of credit

6,142

5,157

19.1

%

7,150

6,725

6,739

(8.9)

%

Home equity loans junior liens

2,423

1,894

27.9

%

1,905

2,058

2,496

(2.9)

%

Home equity (1)

8,565

7,051

21.5

%

9,055

8,783

9,235

(7.3)

%

Installment and credit cards

1,723

1,655

4.1

%

1,818

1,932

1,818

(5.2)

%

Residential mortgage (1)

4,811

6,602

(27.1)

%

4,356

4,846

4,734

1.6

%

Total consumer

15,099

15,308

(1.4)

%

15,229

15,561

15,787

(4.4)

%

Total loans past due 30-89 days

$

22,004

$

42,910

(48.7)

%

$

21,327

$

43,128

$

38,677

(43.1)

%

Potential Problem Loans

Sep 30, 2015

Jun 30, 2015

Seql Qtr% Change

Mar 31, 2015

Dec 31, 2014

Sep 30, 2014

Comp Qtr% Change

Commercial and industrial

$

191,941

$

125,643

52.8

%

$

138,403

$

108,522

$

133,416

43.9

%

Commercial real estate—owner occupied

41,466

41,997

(1.3)

%

43,114

48,695

49,008

(15.4)

%

Lease financing

233

1,385

(83.2)

%

2,009

2,709

3,787

(93.8)

%

Commercial and business lending

233,640

169,025

38.2

%

183,526

159,926

186,211

25.5

%

Commercial real estate—investor

23,633

23,543

0.4

%

26,026

24,043

28,474

(17.0)

%

Real estate construction

2,354

1,327

77.4

%

1,487

1,776

2,227

5.7

%

Commercial real estate lending

25,987

24,870

4.5

%

27,513

25,819

30,701

(15.4)

%

Total commercial

259,627

193,895

33.9

%

211,039

185,745

216,912

19.7

%

Home equity revolving lines of credit

141

202

(30.2)

%

247

204

224

(37.1)

%

Home equity loans junior liens

86

230

(62.6)

%

711

676

687

(87.5)

%

Home equity (1)

227

432

(47.5)

%

958

880

911

(75.1)

%

Installment and credit cards

—

—

N/M

—

2

4

(100.0)

%

Residential mortgage (1)

3,966

5,341

(25.7)

%

6,621

3,781

2,166

83.1

%

Total consumer

4,193

5,773

(27.4)

%

7,579

4,663

3,081

36.1

%

Total potential problem loans

$

263,820

$

199,668

32.1

%

$

218,618

$

190,408

$

219,993

19.9

%

N/M = Not meaningful

(1)   During the third quarter of 2015, the Corporation completed a loan system conversion that moved closed end first lien home equity loans from a legacy system to our residential mortgage servicing platform. All prior periods have been restated to reflect this change. See Page 9 of the Financial Summary and Comparison Press Release for additional information on the dollar impact of the loan system conversion.

 

Associated Banc-CorpNet Interest Income Analysis—Taxable Equivalent Basis Sequential Quarter

Three months ended September 30, 2015

Three months ended June 30, 2015

(in thousands)

AverageBalance

InterestIncome /Expense

AverageYield /Rate

AverageBalance

InterestIncome /Expense

AverageYield /Rate

Earning assets:

Loans: (1) (2) (3)

Commercial and business lending

$

7,089,664

$

55,944

3.13

%

$

7,167,315

$

56,329

3.15

%

Commercial real estate lending

4,260,329

36,694

3.42

4,148,955

35,688

3.45

Total commercial

11,349,993

92,638

3.24

11,316,270

92,017

3.26

Residential mortgage (4)

5,658,253

47,004

3.32

5,411,193

44,447

3.29

Retail (4)

1,444,503

16,913

4.67

1,460,842

16,857

4.62

Total loans

18,452,749

156,555

3.38

18,188,305

153,321

3.38

Investment securities (1)

5,965,769

37,049

2.48

5,703,477

35,443

2.49

Other short-term investments

415,496

1,489

1.43

374,585

1,771

1.89

Investments and other

6,381,265

38,538

2.42

6,078,062

37,214

2.45

Total earning assets

24,834,014

$

195,093

3.13

24,266,367

$

190,535

3.15

Other assets, net

2,446,062

2,465,707

Total assets

$

27,280,076

$

26,732,074

Interest-bearing liabilities:

Savings deposits

$

1,357,677

$

254

0.07

%

$

1,352,616

$

259

0.08

%

Interest-bearing demand deposits

3,199,391

962

0.12

3,251,196

1,037

0.13

Money market deposits

9,538,030

4,350

0.18

9,101,589

4,088

0.18

Time deposits

1,624,661

2,955

0.72

1,630,242

2,757

0.68

Total interest-bearing deposits

15,719,759

8,521

0.22

15,335,643

8,141

0.21

Federal funds purchased and securities sold under agreements to repurchase

649,891

248

0.15

662,047

235

0.14

Other short-term funding

154,811

83

0.21

236,459

115

0.20

Long-term funding

3,024,774

10,645

1.41

3,080,954

10,642

1.38

Total short and long-term funding

3,829,476

10,976

1.15

3,979,460

10,992

1.11

Total interest-bearing liabilities

19,549,235

$

19,497

0.40

19,315,103

$

19,133

0.40

Noninterest-bearing demand deposits

4,573,840

4,290,567

Other liabilities

237,725

251,743

Stockholders' equity

2,919,276

2,874,661

Total liabilities and stockholders' equity

$

27,280,076

$

26,732,074

Net interest income and rate spread

$

175,596

2.73

%

$

171,402

2.75

%

Net interest margin

2.82

%

2.83

%

Fully tax-equivalent adjustment

$

5,087

$

4,914

Net Interest Income Analysis—Taxable Equivalent BasisComparable Quarter

Three months ended September 30, 2015

Three months ended September 30, 2014

(in thousands)

AverageBalance

InterestIncome /Expense

AverageYield /Rate

AverageBalance

InterestIncome /Expense

AverageYield /Rate

Earning assets:

Loans: (1) (2) (3)

Commercial and business lending

$

7,089,664

$

55,944

3.13

%

$

6,652,227

$

54,990

3.28

%

Commercial real estate lending

4,260,329

36,694

3.42

4,019,286

37,780

3.73

Total commercial

11,349,993

92,638

3.24

10,671,513

92,770

3.45

Residential mortgage (4)

5,658,253

47,004

3.32

4,947,713

42,840

3.46

Retail (4)

1,444,503

16,913

4.67

1,521,735

17,392

4.56

Total loans

18,452,749

156,555

3.38

17,140,961

153,002

3.55

Investment securities (1)

5,965,769

37,049

2.48

5,619,982

36,486

2.60

Other short-term investments

415,496

1,489

1.43

335,774

1,503

1.79

Investments and other

6,381,265

38,538

2.42

5,955,756

37,989

2.55

Total earning assets

24,834,014

$

195,093

3.13

23,096,717

$

190,991

3.29

Other assets, net

2,446,062

2,375,335

Total assets

$

27,280,076

$

25,472,052

Interest-bearing liabilities:

Savings deposits

$

1,357,677

$

254

0.07

%

$

1,269,994

$

254

0.08

%

Interest-bearing demand deposits

3,199,391

962

0.12

3,096,712

1,111

0.14

Money market deposits

9,538,030

4,350

0.18

7,721,167

3,153

0.16

Time deposits

1,624,661

2,955

0.72

1,545,851

2,103

0.54

Total interest-bearing deposits

15,719,759

8,521

0.22

13,633,724

6,621

0.19

Federal funds purchased and securities sold under agreements to repurchase

649,891

248

0.15

927,904

390

0.17

Other short-term funding

154,811

83

0.21

665,647

233

0.14

Long-term funding

3,024,774

10,645

1.41

2,931,714

6,179

0.84

Total short and long-term funding

3,829,476

10,976

1.15

4,525,265

6,802

0.60

Total interest-bearing liabilities

19,549,235

$

19,497

0.40

18,158,989

$

13,423

0.29

Noninterest-bearing demand deposits

4,573,840

4,239,654

Other liabilities

237,725

197,330

Stockholders' equity

2,919,276

2,876,079

Total liabilities and stockholders' equity

$

27,280,076

$

25,472,052

Net interest income and rate spread

$

175,596

2.73

%

$

177,568

3.00

%

Net interest margin

2.82

%

3.06

%

Fully tax-equivalent adjustment

$

5,087

$

4,938

(1)

The yield on tax exempt loans and securities is computed on a taxable equivalent basis using a tax rate of 35% for all periods presented and is net of the effects of certain disallowed interest deductions.

(2)

Nonaccrual loans and loans held for sale have been included in the average balances.

(3)

Interest income includes net loan fees.

(4)

During the third quarter of 2015, the Corporation completed a loan system conversion that moved closed end first lien home equity loans from a legacy system to our residential mortgage servicing platform. All prior periods have been restated to reflect this change. See Page 9 of the Financial Summary and Comparison Press Release for additional information on the dollar impact of the loan system conversion.

 

Associated Banc-CorpNet Interest Income Analysis—Taxable Equivalent Basis Year Over Year

Nine months ended September 30, 2015

Nine months ended September 30, 2014

(in thousands)

AverageBalance

InterestIncome /Expense

AverageYield /Rate

AverageBalance

InterestIncome /Expense

AverageYield /Rate

Earning assets:

Loans: (1) (2) (3)

Commercial and business lending

$

7,083,736

$

168,188

3.17

%

$

6,419,328

$

160,189

3.34

%

Commercial real estate lending

4,171,250

108,785

3.49

3,965,242

109,681

3.70

Total commercial

11,254,986

276,973

3.29

10,384,570

269,870

3.47

Residential mortgage (4)

5,435,277

134,923

3.31

4,787,306

125,460

3.50

Retail (4)

1,464,129

50,851

4.64

1,482,357

49,581

4.46

Total loans

18,154,392

462,747

3.40

16,654,233

444,911

3.57

Investment securities (1)

5,808,771

109,651

2.52

5,559,398

110,273

2.64

Other short-term investments

455,485

4,952

1.45

299,692

4,814

2.14

Investments and other

6,264,256

114,603

2.44

5,859,090

115,087

2.62

Total earning assets

24,418,648

$

577,350

3.16

22,513,323

$

559,998

3.32

Other assets, net

2,456,843

2,339,067

Total assets

$

26,875,491

$

24,852,390

Interest-bearing liabilities:

Savings deposits

$

1,329,548

$

751

0.08

%

$

1,244,483

$

715

0.08

%

Interest-bearing demand deposits

3,218,089

3,049

0.13

2,930,236

2,903

0.13

Money market deposits

9,100,867

12,223

0.18

7,413,513

8,906

0.16

Time deposits

1,616,474

8,258

0.68

1,600,472

6,451

0.54

Total interest-bearing deposits

15,264,978

24,281

0.21

13,188,704

18,975

0.19

Federal funds purchased and securities sold under agreements to repurchase

632,714

714

0.15

860,732

1,001

0.16

Other short-term funding

170,300

279

0.22

610,055

629

0.14

Long-term funding

3,277,840

32,159

1.31

2,955,797

18,836

0.85

Total short and long-term funding

4,080,854

33,152

1.08

4,426,584

20,466

0.62

Total interest-bearing liabilities

19,345,832

$

57,433

0.40

17,615,288

$

39,441

0.30

Noninterest-bearing demand deposits

4,397,894

4,160,025

Other liabilities

251,937

191,802

Stockholders' equity

2,879,828

2,885,275

Total liabilities and stockholders' equity

$

26,875,491

$

24,852,390

Net interest income and rate spread

$

519,917

2.76

%

$

520,557

3.02

%

Net interest margin

2.84

%

3.09

%

Fully tax-equivalent adjustment

$

15,107

$

14,251

(1)

The yield on tax exempt loans and securities is computed on a taxable equivalent basis using a tax rate of 35% for all periods presented and is net of the effects of certain disallowed interest deductions.

(2)

Nonaccrual loans and loans held for sale have been included in the average balances.

(3)

Interest income includes net loan fees.

(4)

During the third quarter of 2015, the Corporation completed a loan system conversion that moved closed end first lien home equity loans from a legacy system to our residential mortgage servicing platform. All prior periods have been restated to reflect this change. See Page 9 of the Financial Summary and Comparison Press Release for additional information on the dollar impact of the loan system conversion.

 

Associated Banc-Corp         Financial Summary and Comparison

(in thousands)

Period End Loan Composition

Sep 30, 2015

Jun 30, 2015

Seql Qtr% Change

Mar 31, 2015

Dec 31, 2014

Sep 30, 2014

Comp Qtr% Change

Commercial and industrial

$

6,085,473

$

6,208,192

(2.0)

%

$

6,140,420

$

5,905,902

$

5,603,899

8.6

%

Commercial real estate—owner occupied

966,689

978,183

(1.2)

%

1,003,885

1,007,937

1,014,335

(4.7)

%

Lease financing

42,607

46,900

(9.2)

%

49,496

51,529

52,600

(19.0)

%

Commercial and business lending

7,094,769

7,233,275

(1.9)

%

7,193,801

6,965,368

6,670,834

6.4

%

Commercial real estate—investor

3,183,352

3,126,440

1.8

%

3,086,980

3,056,485

3,043,361

4.6

%

Real estate construction

1,124,280

1,092,308

2.9

%

1,019,571

1,008,956

982,426

14.4

%

Commercial real estate lending

4,307,632

4,218,748

2.1

%

4,106,551

4,065,441

4,025,787

7.0

%

Total commercial

11,402,401

11,452,023

(0.4)

%

11,300,352

11,030,809

10,696,621

6.6

%

Home equity revolving lines of credit

883,573

880,628

0.3

%

879,827

887,779

880,435

0.4

%

Home equity loans junior liens

130,892

141,344

(7.4)

%

154,120

164,148

176,316

(25.8)

%

Home equity  (1)

1,014,465

1,021,972

(0.7)

%

1,033,947

1,051,927

1,056,751

(4.0)

%

Installment and credit cards

425,729

430,823

(1.2)

%

436,492

454,219

459,682

(7.4)

%

Residential mortgage (1)

5,682,178

5,398,434

5.3

%

5,208,241

5,056,891

4,946,036

14.9

%

Total consumer

7,122,372

6,851,229

4.0

%

6,678,680

6,563,037

6,462,469

10.2

%

Total loans

$

18,524,773

$

18,303,252

1.2

%

$

17,979,032

$

17,593,846

$

17,159,090

8.0

%

Period End Deposit and Customer Funding Composition

Sep 30, 2015

Jun 30, 2015

Seql Qtr% Change

Mar 31, 2015

Dec 31, 2014

Sep 30, 2014

Comp Qtr% Change

Noninterest-bearing demand

$

4,657,261

$

4,332,171

7.5

%

$

4,570,872

$

4,505,272

$

4,302,454

8.2

%

Savings

1,346,407

1,359,478

(1.0)

%

1,337,643

1,235,277

1,256,567

7.1

%

Interest-bearing demand

3,416,429

3,576,311

(4.5)

%

3,525,870

3,126,854

3,637,411

(6.1)

%

Money market

9,516,503

8,374,186

13.6

%

8,781,206

8,324,646

7,491,460

27.0

%

Brokered CDs

42,689

39,760

7.4

%

40,699

42,556

9,242

361.9

%

Other time

1,579,106

1,587,657

(0.5)

%

1,595,302

1,528,899

1,504,124

5.0

%

Total deposits

20,558,395

19,269,563

6.7

%

19,851,592

18,763,504

18,201,258

13.0

%

Customer repo sweeps

524,630

433,044

21.1

%

528,572

384,221

493,451

6.3

%

Total deposits and customer funding

$

21,083,025

$

19,702,607

7.0

%

$

20,380,164

$

19,147,725

$

18,694,709

12.8

%

Network transaction deposits included above in interest-bearing demand & money market

$

3,207,867

$

2,920,939

9.8

%

$

2,900,325

$

2,852,943

$

2,207,055

45.3

%

Brokered CDs

42,689

39,760

7.4

%

40,699

42,556

9,242

N/M

Total network and brokered funding

3,250,556

2,960,699

9.8

%

2,941,024

2,895,499

2,216,297

46.7

%

Net customer deposits and funding (2)

$

17,832,469

$

16,741,908

6.5

%

$

17,439,140

$

16,252,226

$

16,478,412

8.2

%

Quarter Average Loan Composition

Sep 30, 2015

Jun 30, 2015

Seql Qtr% Change

Mar 31, 2015

Dec 31, 2014

Sep 30, 2014

Comp Qtr% Change

Commercial and industrial

$

6,074,168

$

6,122,864

(0.8)

%

$

5,944,152

$

5,665,396

$

5,558,135

9.3

%

Commercial real estate—owner occupied

970,112

995,981

(2.6)

%

998,293

1,003,179

1,043,001

(7.0)

%

Lease financing

45,384

48,470

(6.4)

%

50,724

52,318

51,091

(11.2)

%

Commercial and business lending

7,089,664

7,167,315

(1.1)

%

6,993,169

6,720,893

6,652,227

6.6

%

Commercial real estate—investor

3,134,454

3,110,637

0.8

%

3,106,965

3,062,427

3,013,210

4.0

%

Real estate construction

1,125,875

1,038,318

8.4

%

995,768

1,003,716

1,006,076

11.9

%

Commercial real estate lending

4,260,329

4,148,955

2.7

%

4,102,733

4,066,143

4,019,286

6.0

%

Total commercial

11,349,993

11,316,270

0.3

%

11,095,902

10,787,036

10,671,513

6.4

%

Home equity revolving lines of credit

880,660

881,036

—

%

882,869

883,580

875,388

0.6

%

Home equity loans junior liens

136,254

147,391

(7.6)

%

159,378

169,845

181,880

(25.1)

%

Home equity  (1)

1,016,914

1,028,427

(1.1)

%

1,042,247

1,053,425

1,057,268

(3.8)

%

Installment and credit cards

427,589

432,415

(1.1)

%

445,268

455,000

464,467

(7.9)

%

Residential mortgage (1)

5,658,253

5,411,193

4.6

%

5,231,698

5,091,794

4,947,713

14.4

%

Total consumer

7,102,756

6,872,035

3.4

%

6,719,213

6,600,219

6,469,448

9.8

%

Total loans

$

18,452,749

$

18,188,305

1.5

%

$

17,815,115

$

17,387,255

$

17,140,961

7.7

%

Quarter Average Deposit Composition

Sep 30, 2015

Jun 30, 2015

Seql Qtr% Change

Mar 31, 2015

Dec 31, 2014

Sep 30, 2014

Comp Qtr% Change

Noninterest-bearing demand

$

4,573,840

$

4,290,567

6.6

%

$

4,326,557

$

4,367,031

$

4,239,654

7.9

%

Savings

1,357,677

1,352,616

0.4

%

1,277,469

1,264,195

1,269,994

6.9

%

Interest-bearing demand

3,199,391

3,251,196

(1.6)

%

3,203,727

3,142,537

3,096,712

3.3

%

Money market

9,538,030

9,101,589

4.8

%

8,653,260

8,209,091

7,721,167

23.5

%

Time deposits

1,624,661

1,630,242

(0.3)

%

1,594,183

1,549,565

1,545,851

5.1

%

Total deposits

$

20,293,599

$

19,626,210

3.4

%

$

19,055,196

$

18,532,419

$

17,873,378

13.5

%

N/M = Not meaningful

(1)

During the third quarter of 2015, the Corporation completed a loan system conversion that moved approximately $500 million of closed end first lien home equity loans from a legacy system to our residential mortgage servicing platform. As a result, in the third quarter of 2015, the home equity portfolio was reported at just over $1 billion and reflects only junior liens and revolving lines of credit. This compares to the $1.5 billion originally reported as home equity in the second quarter of 2015. All prior periods have been restated to reflect this change. There will be no change for regulatory reporting purposes, as these closed end first lien home equity loans have always been reported with our closed end first lien residential mortgage loans.

(2)

Total deposits and customer funding excluding total network and brokered funding.

 

Associated Banc-CorpNon-GAAP Financial Measures  Reconciliation

($ in millions)

YTD

Sep 2015

YTD

Sep 2014

3Q15

2Q15

1Q15

4Q14

3Q14

Common Equity Tier 1 Reconciliation (1):

Common Equity

$

2,832

$

2,782

$

2,823

$

2,740

$

2,809

Goodwill & Intangibles, net of deferred tax liabilities (DTLs)

(950)

(951)

(951)

(937)

(937)

Tangible Common Equity

1,882

1,831

1,872

1,803

1,872

Accumulated other comprehensive income (AOCI)

(15)

(2)

(25)

5

1

Deferred tax assets (DTAs) / Disallowed servicing assets

(2)

(4)

(9)

—

—

Common Equity Tier 1

$

1,865

$

1,825

$

1,838

$

1,808

$

1,873

Efficiency Ratio Reconciliation:

Federal Reserve efficiency ratio (2)

69.79

%

70.19

%

68.83

%

70.23

%

70.30

%

70.54

%

71.06

%

Taxable equivalent adjustment

(1.38)

%

(1.35)

%

(1.39)

%

(1.34)

%

(1.42)

%

(1.41)

%

(1.39)

%

Other intangible amortization

(0.34)

%

(0.40)

%

(0.35)

%

(0.35)

%

(0.32)

%

(0.31)

%

(0.40)

%

Fully tax-equivalent efficiency ratio (2)

68.07

%

68.44

%

67.09

%

68.54

%

68.56

%

68.82

%

69.27

%

(1)

Common equity Tier 1, a non-GAAP financial measure, is used by banking regulators, investors and analysts to assess and compare the quality and composition of our capital with the capital of other financial services companies. Management uses common equity Tier 1, along with other capital measures, to assess and monitor our capital position. Common equity Tier 1 (period end and average) is Tier 1 capital excluding qualifying perpetual preferred stock and qualifying trust preferred securities.

(2)

The efficiency ratio as defined by the Federal Reserve guidance is noninterest expense (which includes the provision for unfunded commitments) divided by the sum of net interest income plus noninterest income, excluding investment securities gains / losses, net. The fully tax-equivalent efficiency ratio is noninterest expense (which includes the provision for unfunded commitments), excluding other intangible amortization, divided by the sum of taxable equivalent net interest income plus noninterest income, excluding investment securities gains / losses.  Management believes the fully tax-equivalent efficiency ratio, which adjusts net interest income for the tax-favored status of certain loans and investment securities, to be the preferred industry measurement as it enhances the comparability of net interest income arising from taxable and tax-exempt sources. This presentation differs from our prior reporting. All periods have been adjusted to conform.

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/associated-reports-third-quarter-earnings-of-031-per-share-300160658.html

SOURCE Associated Banc-Corp


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