EX-99.1 2 c28322exv99w1.htm EXHIBIT 99.1 Exhibit 99.1
Exhibit 99.1

 
(ASSOCIATED BANC-CORP LOGO)
NEWS RELEASE
For more information:
Investors: Joe Selner, Chief Financial Officer, 920-491-7120
Media: Janet L. Ford, VP of Public Relations, 414-278-1890


     Associated earns 37 cents per share in second quarter of 2008, and Board of Directors declares 32 cent dividend
  •   Net income of $47.4 million, or $0.37 per share
 
  •   Provision for loan losses of $59 million; net charge offs of $37 million
 
  •   Allowance for loan losses to loans ratio increased to 1.42% at June 30
 
  •   Loans up 9% annualized over March 31
 
  •   Net interest margin of 3.65%, up 7 basis points from first quarter
 
  •   Core fee-based revenue up 12% over first quarter
 
  •   Efficiency ratio improved to 50.75% for second quarter
 
  •   Tangible capital ratio of 6.50%
GREEN BAY, Wis. — July 14, 2008 — Associated Banc-Corp (NASDAQ: ASBC) reported net income of $47.4 million, or $0.37 per share, for the second quarter of 2008. Comparatively, net income was $66.5 million ($0.52 per share) for first quarter 2008 and $75.8 million ($0.59 per share) for the second quarter of 2007. Book value per share rose to $18.46 at June 30, 2008, up 5 percent over a year ago.
Net income was $113.8 million, or $0.89 per share, for the six months ending June 30, 2008, compared to net income of $149.2 million, or $1.16 per share, for the first half of 2007.
Associated’s Board of Directors declared a regular cash dividend of $0.32 per share, payable Aug. 15 to shareholders of record Aug. 7. It is the company’s 154th consecutive quarterly cash dividend. During the second quarter, Associated paid a dividend of $0.32 cents per share, up 3 percent over the second quarter of last year.
A key variance between the 2008 second and first quarter financial results was the provision for loan losses. The provision for second quarter 2008 was $59 million (representing approximately $0.30 per share after tax), compared to $23 million for first quarter (or approximately $0.12 per share after tax). Net charge offs were $37 million for second quarter, compared to $16 million for first quarter, bringing net charge offs to 67 basis points of average loans for the first half of 2008. Six housing-related commercial credits accounted for $21 million of the quarter’s $37 million in net charge offs. The allowance for loan losses to total loans ratio increased to 1.42 percent at June 30, compared to 1.32 percent at March 31, 2008.
Nonperforming loans increased $81 million during the quarter to $289 million at June 30, attributable primarily to 6 commercial credits all related to the housing industry, including five construction credits totaling $51 million and a $20 million commercial credit.
“The increase in allowance for loan losses was principally due to deterioration of collateral values in a number of commercial real estate and other commercial credits related to and affected by the downturn of the housing industry,” said Associated Chairman and CEO Paul S. Beideman. “For the remainder of 2008, we expect nonperforming loans to stabilize at the quarter end levels and net charge offs to continue at levels experienced in the second quarter.”
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ASBC 2Q ’08 page 2 of 2
Net interest income was $173 million for second quarter 2008, up from $165 million for first quarter 2008 and $157 million for the second quarter of 2007, and the net interest margin for the same quarters was 3.65 percent, 3.58 percent and 3.53 percent, respectively. The net interest margin benefited in second quarter 2008 largely from improved loan growth, lower funding costs, and higher average balances of noninterest-bearing demand deposits.
On average, loans were $16.1 billion for the second quarter of 2008, up $0.4 billion or 11 percent annualized over the first quarter of 2008, led by home equity growth (up $0.3 billion) and commercial loan growth (up $0.2 billion). At June 30, 2008, loans were $16.1 billion, up $0.4 billion (9 percent annualized) since March 31.
Deposits, on average, were $13.5 billion for the second quarter of 2008, down $0.2 billion compared to first quarter, primarily attributable to lower time deposits. Average second quarter noninterest-bearing demand deposits were $2.5 billion, up $0.1 billion over first quarter 2008 and $0.1 billion (4 percent) over second quarter 2007.
Core fee-based revenues were $69 million, up $7 million over the first quarter 2008, and up $5 million or 7 percent over the second quarter a year ago, led predominantly by increased service charges on deposit accounts for both comparable periods. Net mortgage banking income of $5 million was down nearly $2 million from first quarter 2008, primarily due to a $2 million increase in first quarter from the adoption of recent accounting standards related to fair value measurement.
Total quarterly noninterest expense was $136 million for both the second and first quarters of 2008 and $133 million for second quarter 2007. The efficiency ratio improved to 50.75% for the current quarter, benefiting from controlled expenses and growth in total revenues.
For 2008 second quarter, the effective tax rate was 26.61 percent, compared to 24.84 percent for first quarter which included a $4 million net reduction to income tax expense related to the resolution of certain tax matters, changes in estimated exposure of uncertain tax positions, and a valuation allowance adjustment on certain deferred tax assets.
“Our financial results show improved net interest income and core fee-based revenues, steady loan growth, and controlled expenses,” said Beideman. “We recognize the challenging environment in which we are operating. Given our revenue momentum and focus on managing credit risks, we believe we have the ability to generate earnings at levels that will contribute to capital.”
Associated will host a conference call for investors and analysts at 10 a.m. Central Time (CT) today, July 14, 2008, rather than as previously announced for July 17. The toll-free dial-in number for the live call is 800-762-8779. The number for international callers is 480-248-5081. Participants should ask the operator for the Associated Banc-Corp second quarter 2008 earnings call, or for call ID number 3901460. A replay of the call will be available starting at 1 p.m. CT July 14, 2008, through Aug. 4, 2008, by calling 800-406-7325 (toll-free) domestically or 303-590-3030 internationally. The call ID number, 3901460, is required to access the replay.
Associated Banc-Corp, headquartered in Green Bay, Wis., is a diversified bank holding company with total assets of $22 billion. Associated has approximately 300 banking offices serving 180 communities in Wisconsin, Illinois, and Minnesota. The company offers a full range of traditional banking services and a variety of other financial products and services. More information about Associated Banc-Corp is available at www.associatedbank.com.
Statements made in this document that 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. Forward-looking statements are based on current management expectations and, by their nature, are subject to risks and uncertainties. These statements may be identified by the use of words such as “believe,” “expect,” “anticipate,” “plan,” “estimate,” “should,” “will,” “intend,” or similar expressions. Outcomes related to such statements are subject to numerous risk factors and uncertainties including those listed in the company’s Annual Report filed on Form 10-K.
Six pages of tables follow.
 

 

 

Consolidated Balance Sheets (Unaudited)
Associated Banc-Corp
                                         
    June 30,     December 31,     Jun08 vs Dec07     June 30,     Jun08 vs Jun07  
(in thousands)   2008     2007     % Change     2007     % Change  
 
Assets
                                        
Cash and due from banks
   $ 600,972     $ 553,031       8.7 %   $ 432,887       38.8 %
Interest-bearing deposits in other financial institutions
     24,448       11,671       109.5 %     10,828       125.8 %
Federal funds sold and securities purchased under agreements to resell
     35,852       22,447       59.7 %     18,729       91.4 %
Investment securities available for sale, at fair value
     3,574,373       3,543,019       0.9 %     3,373,700       5.9 %
Loans held for sale
     52,058       94,441       (44.9 %)     75,135       (30.7 %)
Loans
     16,149,327       15,516,252       4.1 %     15,154,232       6.6 %
Allowance for loan losses
     (229,605 )     (200,570 )     14.5 %     (206,493 )     11.2 %
 
                                  
Loans, net
     15,919,722       15,315,682       3.9 %     14,947,739       6.5 %
Premises and equipment, net
     191,634       197,446       (2.9 %)     198,453       (3.4 %)
Goodwill
     929,168       929,168       0.0 %     929,168       0.0 %
Other intangible assets, net
     92,621       92,220       0.4 %     100,599       (7.9 %)
Other assets
     881,856       832,958       5.9 %     761,902       15.7 %
 
                                  
Total assets
   $ 22,302,704     $ 21,592,083       3.3 %   $ 20,849,140       7.0 %
 
                                  
 
                                        
Liabilities and Stockholders’ Equity
                                        
Noninterest-bearing deposits
   $ 2,602,026     $ 2,661,078       (2.2 %)   $ 2,466,130       5.5 %
Interest-bearing deposits, excluding Brokered CDs
     10,378,285       10,903,198       (4.8 %)     10,859,588       (4.4 %)
Brokered CDs
     398,423       409,637       (2.7 %)     751,900       (47.0 %)
 
                                  
Total deposits
     13,378,734       13,973,913       (4.3 %)     14,077,618       (5.0 %)
Short-term borrowings
     4,923,462       3,226,787       52.6 %     2,416,371       103.8 %
Long-term funding
     1,436,349       1,864,771       (23.0 %)     1,932,194       (25.7 %)
Accrued expenses and other liabilities
     210,277       196,907       6.8 %     194,046       8.4 %
 
                                  
Total liabilities
     19,948,822       19,262,378       3.6 %     18,620,229       7.1 %
Stockholders’ Equity
Preferred stock
     —       —               —          
Common stock
     1,279       1,278       0.1 %     1,278       0.1 %
Surplus
     1,048,158       1,040,694       0.7 %     1,038,517       0.9 %
Retained earnings
     1,324,476       1,305,136       1.5 %     1,250,989       5.9 %
Accumulated other comprehensive loss
     (20,031 )     (2,498 )     701.9 %     (38,714 )     (48.3 %)
Treasury stock, at cost
     —       (14,905 )     (100.0 %)     (23,159 )     (100.0 %)
 
                                  
Total stockholders’ equity
     2,353,882       2,329,705       1.0 %     2,228,911       5.6 %
 
                                  
Total liabilities and stockholders’ equity
   $ 22,302,704     $ 21,592,083       3.3 %   $ 20,849,140       7.0 %
 
                                  

 

 

Consolidated Statements of Income (Unaudited)
Associated Banc-Corp
                                                 
    For The Three Months Ended             For The Six Months Ended        
    June 30,     Quarter     June 30,     Year-to-Date  
(in thousands, except per share amounts)   2008     2007     % Change     2008     2007     % Change  
 
Interest Income
                                                
Interest and fees on loans
   $ 237,727     $ 276,981       (14.2 %)   $ 492,780     $ 550,942       (10.6 %)
Interest and dividends on investment securities and deposits in other financial institutions
                                               
Taxable
     31,878       30,583       4.2 %     63,230       61,109       3.5 %
Tax-exempt
     9,776       9,785       (0.1 %)     20,035       19,579       2.3 %
Interest on federal funds sold and securities purchased under agreements to resell
     213       324       (34.3 %)     419       507       (17.4 %)
 
                                        
Total interest income
     279,594       317,673       (12.0 %)     576,464       632,137       (8.8 %)
Interest Expense
                                                
Interest on deposits
     63,655       101,780       (37.5 %)     145,161       200,079       (27.4 %)
Interest on short-term borrowings
     24,363       35,423       (31.2 %)     52,536       70,606       (25.6 %)
Interest on long-term funding
     18,844       22,995       (18.1 %)     40,918       44,931       (8.9 %)
 
                                        
Total interest expense
     106,862       160,198       (33.3 %)     238,615       315,616       (24.4 %)
 
                                        
Net Interest Income
     172,732       157,475       9.7 %     337,849       316,521       6.7 %
Provision for loan losses
     59,001       5,193       1036.2 %     82,003       10,275       698.1 %
 
                                        
Net interest income after provision for loan losses
     113,731       152,282       (25.3 %)     255,846       306,246       (16.5 %)
Noninterest Income
                                                
Trust service fees
     10,078       10,711       (5.9 %)     20,152       21,020       (4.1 %)
Service charges on deposit accounts
     30,129       25,545       17.9 %     53,813       48,567       10.8 %
Card-based and other nondeposit fees
     12,301       11,711       5.0 %     23,726       23,034       3.0 %
Retail commissions
     16,004       15,773       1.5 %     32,119       31,252       2.8 %
Mortgage banking, net
     5,395       9,696       (44.4 %)     12,340       19,246       (35.9 %)
Bank owned life insurance income
     4,997       4,365       14.5 %     9,858       8,529       15.6 %
Asset sale gains (losses), net
     (731 )     442       (265.4 %)     (1,187 )     2,325       (151.1 %)
Investment securities gains (losses), net
     (718 )     6,075       (111.8 %)     (3,658 )     7,110       (151.4 %)
Other
     9,170       7,170       27.9 %     22,090       13,105       68.6 %
 
                                        
Total noninterest income
     86,625       91,488       (5.3 %)     169,253       174,188       (2.8 %)
Noninterest Expense
                                                
Personnel expense
     78,066       76,277       2.3 %     153,709       150,324       2.3 %
Occupancy
     12,026       11,321       6.2 %     25,290       22,908       10.4 %
Equipment
     4,653       4,254       9.4 %     9,250       8,648       7.0 %
Data processing
     8,250       7,832       5.3 %     15,371       15,510       (0.9 %)
Business development and advertising
     5,137       5,068       1.4 %     10,178       9,473       7.4 %
Other intangible amortization
     1,568       1,718       (8.7 %)     3,137       3,379       (7.2 %)
Other
     26,121       26,174       (0.2 %)     55,198       50,538       9.2 %
 
                                        
Total noninterest expense
     135,821       132,644       2.4 %     272,133       260,780       4.4 %
 
                                        
Income before income taxes
     64,535       111,126       (41.9 %)     152,966       219,654       (30.4 %)
Income tax expense
     17,176       35,301       (51.3 %)     39,142       70,434       (44.4 %)
 
                                        
Net Income
   $ 47,359     $ 75,825       (37.5 %)   $ 113,824     $ 149,220       (23.7 %)
 
                                        
 
                                                
Earnings Per Share:
                                                
Basic
   $ 0.37     $ 0.59       (37.3 %)   $ 0.89     $ 1.17       (23.9 %)
Diluted
   $ 0.37     $ 0.59       (37.3 %)   $ 0.89     $ 1.16       (23.3 %)
Average Shares Outstanding:
                                                
Basic
     127,433       127,606       (0.1 %)     127,365       127,796       (0.3 %)
Diluted
     127,964       128,750       (0.6 %)     127,880       129,034       (0.9 %)

 

 

Consolidated Statements of Income (Unaudited) — Quarterly Trend
Associated Banc-Corp
                                         
(in thousands, except per share amounts)   2Q08     1Q08     4Q07     3Q07     2Q07  
 
Interest Income
                                        
Interest and fees on loans
   $ 237,727     $ 255,053     $ 277,647     $ 283,330     $ 276,981  
Interest and dividends on investment securities and deposits in other financial institutions
                                       
Taxable
     31,878       31,352       30,712       31,140       30,583  
Tax-exempt
     9,776       10,259       10,394       9,924       9,785  
Interest on federal funds sold and securities purchased under agreements to resell
     213       206       214       214       324  
 
                              
Total interest income
     279,594       296,870       318,967       324,608       317,673  
Interest Expense
                                        
Interest on deposits
     63,655       81,506       98,678       104,596       101,780  
Interest on short-term borrowings
     24,363       28,173       32,470       31,548       35,423  
Interest on long-term funding
     18,844       22,074       23,600       25,391       22,995  
 
                              
Total interest expense
     106,862       131,753       154,748       161,535       160,198  
 
                              
Net Interest Income
     172,732       165,117       164,219       163,073       157,475  
Provision for loan losses
     59,001       23,002       15,501       8,733       5,193  
 
                              
Net interest income after provision for loan losses
     113,731       142,115       148,718       154,340       152,282  
Noninterest Income
                                        
Trust service fees
     10,078       10,074       10,723       10,886       10,711  
Service charges on deposit accounts
     30,129       23,684       25,866       26,609       25,545  
Card-based and other nondeposit fees
     12,301       11,425       12,088       12,436       11,711  
Retail commissions
     16,004       16,115       14,917       15,476       15,773  
 
                              
Total core fee-based revenue
     68,512       61,298       63,594       65,407       63,740  
Mortgage banking, net
     5,395       6,945       498       3,006       9,696  
Bank owned life insurance income
     4,997       4,861       4,240       4,650       4,365  
Asset sale gains (losses), net
     (731 )     (456 )     11,062       2,220       442  
Investment securities gains (losses), net
     (718 )     (2,940 )     (815 )     1,879       6,075  
Other
     9,170       12,920       7,094       7,758       7,170  
 
                              
Total noninterest income
     86,625       82,628       85,673       84,920       91,488  
Noninterest Expense
                                        
Personnel expense
     78,066       75,643       76,487       76,617       76,277  
Occupancy
     12,026       13,264       11,784       11,967       11,321  
Equipment
     4,653       4,597       4,820       4,440       4,254  
Data processing
     8,250       7,121       8,189       7,991       7,832  
Business development and advertising
     5,137       5,041       5,482       4,830       5,068  
Other intangible amortization
     1,568       1,569       1,758       1,979       1,718  
Other
     26,121       29,077       31,582       26,185       26,174  
 
                              
Total noninterest expense
     135,821       136,312       140,102       134,009       132,644  
 
                              
Income before income taxes
     64,535       88,431       94,289       105,251       111,126  
Income tax expense
     17,176       21,966       29,498       33,510       35,301  
 
                              
Net Income
   $ 47,359     $ 66,465     $ 64,791     $ 71,741     $ 75,825  
 
                              
 
                                        
Earnings Per Share:
                                        
Basic
   $ 0.37     $ 0.52     $ 0.51     $ 0.57     $ 0.59  
Diluted
   $ 0.37     $ 0.52     $ 0.51     $ 0.56     $ 0.59  
Average Shares Outstanding:
                                        
Basic
     127,433       127,298       127,095       126,958       127,606  
Diluted
     127,964       127,825       127,835       127,847       128,750  

 

 

Selected Quarterly Information
Associated Banc-Corp
                                                         
(in thousands, except per share and full time equivalent employee data)   YTD 2008     YTD 2007     2nd Qtr 2008     1st Qtr 2008     4th Qtr 2007     3rd Qtr 2007     2nd Qtr 2007  
 
Summary of Operations
                                                        
Net interest income
   $ 337,849     $ 316,521     $ 172,732     $ 165,117     $ 164,219     $ 163,073     $ 157,475  
Provision for loan losses
     82,003       10,275       59,001       23,002       15,501       8,733       5,193  
Asset sale gains (losses), net
     (1,187 )     2,325       (731 )     (456 )     11,062       2,220       442  
Investment securities gains (losses), net
     (3,658 )     7,110       (718 )     (2,940 )     (815 )     1,879       6,075  
Noninterest income (excluding securities & asset gains)
     174,098       164,753       88,074       86,024       75,426       80,821       84,971  
Noninterest expense
     272,133       260,780       135,821       136,312       140,102       134,009       132,644  
Income before income taxes
     152,966       219,654       64,535       88,431       94,289       105,251       111,126  
Income taxes
     39,142       70,434       17,176       21,966       29,498       33,510       35,301  
Net income
     113,824       149,220       47,359       66,465       64,791       71,741       75,825  
Taxable equivalent adjustment
     13,910       13,284       6,814       7,096       7,119       6,856       6,724  
 
Per Common Share Data (1)
                                                        
Net income:
                                                        
Basic
   $ 0.89     $ 1.17     $ 0.37     $ 0.52     $ 0.51     $ 0.57     $ 0.59  
Diluted
     0.89       1.16       0.37       0.52       0.51       0.56       0.59  
Dividends
     0.63       0.60       0.32       0.31       0.31       0.31       0.31  
Market Value:
                                                        
High
   $ 29.23     $ 35.43     $ 29.23     $ 28.86     $ 30.49     $ 33.05     $ 33.49  
Low
     19.29       32.14       19.29       22.60       25.23       26.86       32.14  
Close
     19.29       32.70       19.29       26.63       27.09       29.63       32.70  
Book value
     18.46       17.56       18.46       18.71       18.32       18.04       17.56  
 
Performance Ratios (annualized)
                                                        
Earning assets yield
     6.07 %     7.01 %     5.82 %     6.33 %     6.88 %     7.05 %     6.99 %
Interest-bearing liabilities rate
     2.86       4.04       2.53       3.19       3.82       4.02       4.06  
Net interest margin
     3.61       3.57       3.65       3.58       3.62       3.62       3.53  
Return on average assets
     1.05       1.47       0.87       1.25       1.23       1.38       1.48  
Return on average equity
     9.67       13.42       8.01       11.34       11.23       12.69       13.49  
Return on tangible average equity (2)
     16.36       22.89       13.51       19.26       19.50       22.42       23.14  
Efficiency ratio (3)
     51.75       52.73       50.75       52.79       56.78       53.44       53.23  
Effective tax rate
     25.59       32.07       26.61       24.84       31.28       31.84       31.77  
Dividend payout ratio (4)
     70.79       51.28       86.49       59.62       60.78       54.39       52.54  
 
Average Balances
                                                        
Assets
   $ 21,712,707     $ 20,466,452     $ 21,975,451     $ 21,449,963     $ 20,935,023     $ 20,678,498     $ 20,558,803  
Earning assets
     19,515,429       18,519,978       19,754,651       19,276,208       18,849,079       18,685,978       18,605,024  
Interest-bearing liabilities
     16,801,778       15,755,186       16,992,508       16,611,047       16,090,488       15,941,683       15,834,843  
Loans
     15,914,526       15,020,844       16,120,732       15,708,321       15,301,761       15,183,444       15,082,850  
Deposits
     13,568,535       13,630,815       13,493,511       13,643,559       13,760,991       13,940,970       13,702,872  
Wholesale funding
     5,622,248       4,472,630       5,950,699       5,293,797       4,750,471       4,386,354       4,482,437  
Stockholders’ equity
     2,367,799       2,241,460       2,377,841       2,357,757       2,289,522       2,242,665       2,253,872  
Stockholders’ equity / assets
     10.91 %     10.95 %     10.82 %     10.99 %     10.94 %     10.85 %     10.96 %
 
At Period End
                                                        
Assets
                   $ 22,302,704     $ 21,903,753     $ 21,592,083     $ 20,940,007     $ 20,849,140  
Loans
                     16,149,327       15,785,283       15,516,252       15,174,758       15,154,232  
Allowance for loan losses
                     229,605       207,602       200,570       200,560       206,493  
Goodwill
                     929,168       929,168       929,168       929,168       929,168  
Mortgage servicing rights, net
                     54,725       51,013       51,187       53,636       55,829  
Other intangible assets
                     37,896       39,464       41,033       42,791       44,770  
Deposits
                     13,378,734       13,882,174       13,973,913       14,158,369       14,077,618  
Wholesale funding
                     6,359,811       5,388,923       5,091,558       4,283,396       4,348,565  
Stockholders’ equity
                     2,353,882       2,382,418       2,329,705       2,291,182       2,228,911  
Stockholders’ equity / assets
                     10.55 %     10.88 %     10.79 %     10.94 %     10.69 %
Tangible equity / tangible assets (5)
                     6.50 %     6.75 %     6.59 %     6.61 %     6.31 %
Shares outstanding, end of period
                     127,537       127,365       127,160       127,035       126,910  
Shares repurchased during period, including settlements (6)
                     —       —       —       11       2,000  
Average per share cost of shares repurchased during period (6)
                   $ —     $ —     $ —     $ —     $ 32.81  
YTD shares repurchased during period, including settlements (6)
                     —       —       3,920       3,920       3,909  
YTD average per share cost of shares repurchased during period (6)
                   $ —     $ —     $ 34.15     $ 34.15     $ 34.24  
 
Selected trend information
                                                        
Average full time equivalent employees
                     5,179       5,093       5,095       5,200       5,069  
Trust assets under management, at market value
                   $ 5,900,000     $ 6,000,000     $ 6,100,000     $ 6,200,000     $ 6,100,000  
Mortgage loans originated for sale during period
                     431,757       516,780       333,331       353,233       455,928  
Mortgage portfolio serviced for others
                     6,584,000       6,472,000       6,403,000       6,297,000       6,571,000  
Mortgage servicing rights, net / Portfolio serviced for others
                     0.83 %     0.79 %     0.80 %     0.85 %     0.85 %
 
(1)   Per share data adjusted retroactively for stock splits and stock dividends.
 
(2)   Return on tangible average equity = Net income divided by average equity excluding average goodwill and other intangible assets. This is a non-GAAP financial measure.
 
(3)   Efficiency ratio = Noninterest expense divided by sum of taxable equivalent net interest income plus noninterest income, excluding investment securities gain, net, and asset sales gains, net.
 
(4)   Ratio is based upon basic earnings per share.
 
(5)   Tangible equity to tangible assets = Stockholders’ equity excluding goodwill and other intangible assets divided by assets excluding goodwill and other intangible assets. This is a non-GAAP financial measure.
 
(6)   Does not include shares repurchased for minimum tax withholding settlements on equity compensation.

 

 

Financial Summary and Comparison
Associated Banc-Corp 
                                                 
    Three months ended   Six months ended
    June 30,   June 30,
(in thousands)   2008   2007   % Change   2008   2007   % Change
         
Allowance for Loan Losses
                                                
Beginning balance
   $ 207,602     $ 203,495       2.0 %   $ 200,570     $ 203,481       (1.4 %)
Balance related to acquisition
     —       2,991       N/M       —       2,991       N/M  
Provision for loan losses
     59,001       5,193       1036.2 %     82,003       10,275       698.1 %
Charge offs
     (38,238 )     (7,258 )     426.8 %     (57,732 )     (14,127 )     308.7 %
Recoveries
     1,240       2,072       (40.2 %)     4,764       3,873       23.0 %
                         
Net charge offs
     (36,998 )     (5,186 )     613.4 %     (52,968 )     (10,254 )     416.6 %
                         
Ending balance
   $ 229,605     $ 206,493       11.2 %   $ 229,605     $ 206,493       11.2 %
                         
Credit Quality
                                                         
                    Jun08 vs Mar08                           Jun08 vs Jun07
    Jun 30, 2008   Mar 31, 2008   % Change   Dec 31, 2007   Sept 30, 2007   Jun 30, 2007   % Change
         
Nonaccrual loans
   $ 277,100     $ 197,498       40.3 %   $ 152,528     $ 142,509     $ 171,303       61.8 %
Loans 90 or more days past due and still accruing
     11,762       9,959       18.1 %     10,118       8,163       8,446       39.3 %
Restructured loans
     —       —       0.0 %     —       —       —       0.0 %
                         
Total nonperforming loans
     288,862       207,457       39.2 %     162,646       150,672       179,749       60.7 %
Other real estate owned (OREO)
     46,579       26,798       73.8 %     26,489       20,866       19,237       142.1 %
                         
Total nonperforming assets
   $ 335,441     $ 234,255       43.2 %   $ 189,135     $ 171,538     $ 198,986       68.6 %
                         
Provision for loan losses
     59,001       23,002       156.5 %     15,501       8,733       5,193       1036.2 %
Net charge offs
     36,998       15,970       131.7 %     15,491       14,666       5,186       613.4 %
 
                                                        
Allowance for loan losses / loans
     1.42 %     1.32 %             1.29 %     1.32 %     1.36 %        
Allowance for loan losses / nonperforming loans
     79.49       100.07               123.32       133.11       114.88          
Nonperforming loans / total loans
     1.79       1.31               1.05       0.99       1.19          
Nonperforming assets / total loans plus OREO
     2.07       1.48               1.22       1.13       1.31          
Nonperforming assets / total assets
     1.50       1.07               0.88       0.82       0.95          
Net charge offs / average loans (annualized)
     0.92       0.41               0.40       0.38       0.14          
Year-to-date net charge offs / average loans (annualized)
     0.67       0.41               0.27       0.22       0.14          
 
                                                        
Nonperforming loans by type:
                                                        
Commercial, financial & agricultural
   $ 78,731     $ 54,919       43.4 %   $ 32,610     $ 35,695     $ 37,230       111.5 %
Commercial real estate
     42,280       37,367       13.1 %     35,049       42,447       60,406       (30.0 %)
Real estate — construction
     110,717       56,456       96.1 %     39,837       26,602       35,796       209.3 %
Lease financing
     522       1,316       (60.3 %)     1,323       79       63       728.6 %
                         
Total commercial
     232,250       150,058       54.8 %     108,819       104,823       133,495       74.0 %
Home equity
     23,555       18,488       27.4 %     16,209       13,529       13,662       72.4 %
Installment
     5,184       4,184       23.9 %     3,881       3,290       3,043       70.4 %
                         
Total retail
     28,739       22,672       26.8 %     20,090       16,819       16,705       72.0 %
Residential mortgage
     27,873       34,727       (19.7 %)     33,737       29,030       29,549       (5.7 %)
                         
Total nonperforming loans
   $ 288,862     $ 207,457       39.2 %   $ 162,646     $ 150,672     $ 179,749       60.7 %
                         
Period End Loan Composition
                                                         
                    Jun08 vs Mar08                           Jun08 vs Jun07
    Jun 30, 2008   Mar 31, 2008   % Change   Dec 31, 2007   Sept 30, 2007   Jun 30, 2007   % Change
         
Commercial, financial & agricultural
   $ 4,423,192     $ 4,458,639       (0.8 %)   $ 4,281,091     $ 3,935,976     $ 3,958,911       11.7 %
Commercial real estate
     3,583,877       3,585,779       (0.1 %)     3,635,365       3,656,937       3,703,464       (3.2 %)
Real estate — construction
     2,351,401       2,273,125       3.4 %     2,260,766       2,215,264       2,137,276       10.0 %
Lease financing
     124,661       118,613       5.1 %     108,794       95,644       88,967       40.1 %
                         
Total commercial
     10,483,131       10,436,156       0.5 %     10,286,016       9,903,821       9,888,618       6.0 %
Home equity (a)
     2,757,684       2,387,223       15.5 %     2,269,122       2,230,640       2,144,357       28.6 %
Installment
     826,895       842,564       (1.9 %)     841,136       866,185       865,474       (4.5 %)
                         
Total retail
     3,584,579       3,229,787       11.0 %     3,110,258       3,096,825       3,009,831       19.1 %
Residential mortgage
     2,081,617       2,119,340       (1.8 %)     2,119,978       2,174,112       2,255,783       (7.7 %)
                         
Total loans
   $ 16,149,327     $ 15,785,283       2.3 %   $ 15,516,252     $ 15,174,758     $ 15,154,232       6.6 %
                         
 
(a)   Home equity includes home equity lines and residential mortgage junior liens.
Period End Deposit Composition
                                                         
                    Jun08 vs Mar08                           Jun08 vs Jun07
    Jun 30, 2008   Mar 31, 2008   % Change   Dec 31, 2007   Sept 30, 2007   Jun 30, 2007   % Change
         
Noninterest-bearing demand
   $ 2,602,026     $ 2,516,265       3.4 %   $ 2,661,078     $ 2,407,026     $ 2,466,130       5.5 %
Savings
     921,000       891,806       3.3 %     853,618       919,891       966,673       (4.7 %)
Interest-bearing demand
     1,697,910       1,788,404       (5.1 %)     1,947,551       1,881,235       1,900,227       (10.6 %)
Money market
     3,917,505       3,972,080       (1.4 %)     3,923,063       3,770,487       3,564,539       9.9 %
Brokered CDs
     398,423       731,398       (45.5 %)     409,637       800,422       751,900       (47.0 %)
Other time deposits
     3,841,870       3,982,221       (3.5 %)     4,178,966       4,379,308       4,428,149       (13.2 %)
                         
Total deposits
   $ 13,378,734     $ 13,882,174       (3.6 %)   $ 13,973,913     $ 14,158,369     $ 14,077,618       (5.0 %)
                         
 
                                                        
Network transaction deposits included above in interest-bearing demand and money market
   $ 620,440     $ 610,351       1.7 %   $ 664,982     $ 483,100     $ 536,448       15.7 %
Customer repo sweeps (b)
   $ 667,720     $ 789,218       (15.4 %)   $ 844,414     $ 874,737     $ 900,964       (25.9 %)
 
(b)   Included within short-term borrowings.
 
N/M — Not meaningful.

 

 

Net Interest Income Analysis — Taxable Equivalent Basis
Associated Banc-Corp
                                                   
    Six months ended June 30, 2008     Six months ended June 30, 2007  
    Average     Interest     Average     Average     Interest     Average  
(in thousands)   Balance     Income / Expense     Yield / Rate     Balance     Income / Expense     Yield / Rate  
         
Earning assets:
                                                
Loans: (1) (2) (3)
                                                
Commercial
   $ 10,412,253     $ 314,859       6.08 %   $ 9,697,338     $ 360,976       7.51 %
Residential mortgage
     2,215,641       66,325       6.00       2,345,020       71,331       6.10  
Retail
     3,286,632       113,484       6.93       2,978,486       120,172       8.10  
                         
Total loans
     15,914,526       494,668       6.24       15,020,844       552,479       7.41  
Investments and other
     3,600,903       95,706       5.32       3,499,134       92,942       5.31  
                         
Total earning assets
     19,515,429       590,374       6.07       18,519,978       645,421       7.01  
Other assets, net
     2,197,278                       1,946,474                  
 
                                            
Total assets
   $ 21,712,707                     $ 20,466,452                  
 
                                            
 
Interest-bearing liabilities:
                                                
Savings deposits
   $ 885,883     $ 2,091       0.47 %   $ 905,620     $ 1,911       0.43 %
Interest-bearing demand deposits
     1,802,280       9,765       1.09       1,816,668       17,684       1.96  
Money market deposits
     3,919,573       42,000       2.15       3,771,053       71,265       3.81  
Time deposits, excluding Brokered CDs
     3,968,095       80,970       4.10       4,325,023       97,001       4.52  
                         
Total interest-bearing deposits, excluding Brokered CDs
     10,575,831       134,826       2.56       10,818,364       187,861       3.50  
Brokered CDs
     603,699       10,335       3.44       464,192       12,218       5.31  
                         
Total interest-bearing deposits
     11,179,530       145,161       2.61       11,282,556       200,079       3.58  
Wholesale funding
     5,622,248       93,454       3.34       4,472,630       115,537       5.20  
                         
Total interest-bearing liabilities
     16,801,778       238,615       2.86       15,755,186       315,616       4.04  
Noninterest-bearing demand deposits
     2,389,005                       2,348,259                  
Other liabilities
     154,125                       121,547                  
Stockholders’ equity
     2,367,799                       2,241,460                  
 
                                            
Total liabilities and stockholders’ equity
   $ 21,712,707                     $ 20,466,452                  
 
                                            
 
 
                                            
Net interest income and rate spread (1)
           $ 351,759       3.21 %           $ 329,805       2.97 %
 
                                            
Net interest margin (1)
                    3.61 %                     3.57 %
Taxable equivalent adjustment
           $ 13,910                     $ 13,284          
 
                                            
   
                                                
                                                   
    Three months ended June 30, 2008     Three months ended June 30, 2007  
    Average     Interest     Average     Average     Interest     Average  
    Balance     Income / Expense     Yield / Rate     Balance     Income / Expense     Yield / Rate  
         
Earning assets:
                                                
Loans: (1) (2) (3)
                                                
Commercial
   $ 10,501,226     $ 150,134       5.75 %   $ 9,811,861     $ 182,536       7.46 %
Residential mortgage
     2,195,007       32,530       5.94       2,333,225       35,948       6.17  
Retail
     3,424,499       56,010       6.57       2,937,764       59,351       8.09  
                         
Total loans
     16,120,732       238,674       5.95       15,082,850       277,835       7.38  
Investments and other
     3,633,919       47,734       5.25       3,522,174       46,562       5.29  
                         
Total earning assets
     19,754,651       286,408       5.82       18,605,024       324,397       6.99  
Other assets, net
     2,220,800                       1,953,779                  
 
                                            
Total assets
   $ 21,975,451                     $ 20,558,803                  
 
                                            
 
                                                
Interest-bearing liabilities:
                                                
Savings deposits
   $ 910,930     $ 1,009       0.45 %   $ 928,207     $ 1,110       0.48 %
Interest-bearing demand deposits
     1,796,373       3,774       0.84       1,833,762       9,097       1.99  
Money market deposits
     3,864,739       17,546       1.83       3,723,407       35,172       3.79  
Time deposits, excluding Brokered CDs
     3,892,910       37,229       3.85       4,339,520       49,407       4.57  
                         
Total interest-bearing deposits, excluding Brokered CDs
     10,464,952       59,558       2.29       10,824,896       94,786       3.51  
Brokered CDs
     576,857       4,097       2.86       527,510       6,994       5.32  
                         
Total interest-bearing deposits
     11,041,809       63,655       2.32       11,352,406       101,780       3.60  
Wholesale funding
     5,950,699       43,207       2.92       4,482,437       58,418       5.23  
                         
Total interest-bearing liabilities
     16,992,508       106,862       2.53       15,834,843       160,198       4.06  
Noninterest-bearing demand deposits
     2,451,702                       2,350,466                  
Other liabilities
     153,400                       119,622                  
Stockholders’ equity
     2,377,841                       2,253,872                  
 
                                            
Total liabilities and stockholders’ equity
   $ 21,975,451                     $ 20,558,803                  
 
                                            
 
 
                                            
Net interest income and rate spread (1)
           $ 179,546       3.29 %           $ 164,199       2.93 %
 
                                            
Net interest margin (1)
                    3.65 %                     3.53 %
Taxable equivalent adjustment
           $ 6,814                     $ 6,724          
 
                                            
 
(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.