EX-99.1 2 d424178dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

 

 

LOGO

   NEWS RELEASE
   Investor Contact:
  

Jessica Vanden Heuvel, Vice President, Director of Investor Relations

  

920-491-7059

   Media Contact:
  

Jennifer Kaminski, Vice President, Public Relations Senior Manager

  

920-491-7576

 

 

Associated Banc-Corp Reports Second Quarter Earnings of $0.36 per share

Earnings per share up 16% from prior year

Robust loan growth and improving fee-based income trends

GREEN BAY, Wis. — July 20, 2017 — Associated Banc-Corp (NYSE: ASB) today reported net income available to common equity of $56 million, or $0.36 per common share for the quarter ended June 30, 2017. This compares to net income available to common equity of $47 million, or $0.31 per common share for the quarter ended June 30, 2016.

“Robust loan growth and improving fee-based income trends drove this quarter’s results. Our residential mortgage retention strategy contributed to most of this quarter’s loan growth and we are also pleased to report solid commercial and business lending growth. We also benefited from improving fee-based revenue streams; particularly, card-based and nondeposit fees, trust service fees, and brokerage and annuity commissions which contributed to bottom line expansion,” said President and CEO Philip B. Flynn. “Disciplined expense controls combined with improving credit trends rounded out the quarter. We remain on track to deliver on our full year guidance.”

SECOND QUARTER SUMMARY

 

•   Average loans of $20.5 billion grew $880 million, or 4% from the year ago quarter

 

•   Average deposits of $21.5 billion grew $1.2 billion, or 6% from the year ago quarter

 

•   Net interest income of $184 million increased $7 million, or 4% from the year ago quarter

 

•   Net interest margin of 2.83% improved from 2.81% in the year ago quarter

 

•   Provision for credit losses of $12 million improved $2 million, or 14% from the year ago quarter

 

•   Noninterest income of $82 million improved modestly from the year ago quarter

 

•   Noninterest expense of $176 million increased $2 million, or 1% from the year ago quarter

 

•   Return on average common equity Tier 1 (CET1) improved to 10.6% from 9.9% in the year ago quarter

 

•   Total dividends per common share of $0.12 were up 9% from the year ago quarter

 

•   Capital ratios remain strong with a CET1 ratio of 9.9% at quarter end

SECOND QUARTER FINANCIAL RESULTS

Loans

Year-to-date average loans were up over 5% from the first half of last year. Second quarter average loans of $20.5 billion were up 4%, or $880 million from the year ago quarter and were up $449 million from the first quarter.

With respect to second quarter average balances:

 

•   Consumer lending increased 10%, or $723 million from the year ago quarter and grew $363 million from the first quarter to $8.2 billion, primarily driven by the Company’s on balance sheet mortgage retention strategy.

 

•   Commercial real estate lending increased 7%, or $310 million from the year ago quarter to $5.0 billion, primarily driven by increased construction lending, but decreased $36 million from the first quarter.

 

•   Commercial and business lending decreased 2% from the year ago quarter to $7.3 billion, primarily driven by reductions in the oil and gas portfolio, however, commercial and business lending increased $122 million from the first quarter.

Deposits

Year-to-date average deposits were up over 5% from the first half of last year. Second quarter average deposits of $21.5 billion were up 6%, or $1.2 billion from the year ago quarter and were up modestly from the first quarter. The loan to deposit ratio was 96% at quarter-end.

With respect to second quarter average balances:

 

•   Interest-bearing demand deposits increased 17%, or $632 million from the year ago quarter to $4.3 billion and increased $21 million from the first quarter.

 

•   Savings and time deposits increased 10%, or $308 million from the year ago quarter and increased $214 million from the first quarter to $3.3 billion.

 

•   Money market deposits increased 4%, or $372 million from the year ago quarter to $9.1 billion, but decreased $104 million from the first quarter.

 

•   Noninterest-bearing demand deposits decreased 2%, or $78 million from the year ago quarter and decreased $74 million from the first quarter to $4.9 billion, reflecting expected seasonal patterns.

Net Interest Income and Net Interest Margin

Net interest income was up 4%, or $7 million from the year ago quarter, with net interest margin increasing 2 basis points year over year. Second quarter net interest income of $184 million was up 2%, or $4 million from the first quarter.

 

•   The average yield on total loans increased 27 basis points to 3.62% from the year ago quarter and increased 11 basis points from the prior quarter.

 

•   The average cost of interest-bearing deposits increased 20 basis points to 0.51% from the year ago quarter and increased 9 basis points from the prior quarter.

Noninterest Income

Second quarter total noninterest income of $82 million improved modestly from the year ago quarter and increased 3%, or $3 million from the prior quarter.

With respect to second quarter noninterest income line items:

 

•   Card-based and other nondeposit fees were up $1 million from the year ago and prior quarters.

 

•   Mortgage banking was up $1 million from the year ago quarter primarily driven by a favorable change in the mortgage servicing rights valuation.

 

•   Combined, trust service fees and brokerage and annuity commissions were up over $1 million year over year and up from the first quarter.

Noninterest Expense

Second quarter total noninterest expense of $176 million was up $2 million, or 1% from the year ago quarter and up $3 million, or 2% from the prior quarter. The year-to-date efficiency ratio improved by over 200 basis points from the comparable period last year.

With respect to second quarter noninterest expense line items:

 

•   Personnel expense was up $3 million from the year ago quarter primarily driven by increased health insurance costs.

 

•   Technology expense was up $1 million from the year ago and prior quarters as the Company continues to invest in solutions that drive operational efficiency.

 

•   All other noninterest expense line items, collectively, decreased $2 million from the year ago quarter and increased $2 million from the prior quarter.

Taxes

Second quarter income tax expense was $20 million with an effective tax rate of 26%, compared to $21 million and 30% in the year ago quarter, and $21 million and 27% in the prior quarter. The second quarter’s lower effective tax rate benefited from a partial release of reserves due a favorable state tax court ruling.

Credit

The second quarter provision for credit losses of $12 million was down $2 million from the year ago quarter, but up $3 million from the prior quarter.

 

•   Potential problem loans of $263 million were down $194 million from the year ago quarter and down $77 million from the prior quarter.

 

•   Nonaccrual loans of $232 million were down $51 million from the year ago quarter and down $28 million from the prior quarter. The nonaccrual loans to total loans ratio improved to 1.12% in the second quarter, compared to 1.43% in the year ago quarter, and 1.29% in the prior quarter.

 

•   Second quarter net charge offs of $13 million were down $8 million from the year ago quarter and up $7 million from the prior quarter.

 

•   The allowance for loan losses of $281 million was up $13 million from the year ago quarter and was down $2 million from the prior quarter. The allowance for loan losses to total loans ratio was 1.35% in the second quarter and the year ago quarter compared to 1.40% in the prior quarter.

 

•   The allowance related to the oil and gas portfolio was $33 million at June 30, 2017 and represented 5.4% of total oil and gas loans.

Capital

The Company’s capital position remains strong, with a CET1 ratio of 9.9% at June 30, 2017. The Company’s capital ratios continue to be in excess of the Basel III “well-capitalized” regulatory benchmarks on a fully phased in basis.

SECOND QUARTER 2017 EARNINGS RELEASE CONFERENCE CALL

The Company will host a conference call for investors and analysts at 4:00 p.m. Central Time (CT) today, July 20, 2017. Interested parties can access the live webcast of the call through the Investor Relations section of the Company’s website, http://investor.associatedbank.com. Parties may also dial into the call at 877-407-8037 (domestic) or 201-689-8037 (international) and request the Associated Banc-Corp second quarter 2017 earnings call. The second quarter 2017 financial tables with an accompanying slide presentation will be available on the Company’s website just prior to the call. An audio archive of the webcast will be available on the Company’s website approximately fifteen minutes after the call is over.

ABOUT ASSOCIATED BANC-CORP

Associated Banc-Corp (NYSE: ASB) has total assets of nearly $30 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 and related materials may contain references to measures which are not defined in generally accepted accounting principles (“GAAP”). Information concerning these non-GAAP financial measures can be found in the financial tables.

# # #

Associated Banc-Corp

Consolidated Balance Sheets (Unaudited)

 

(In thousands)

   Jun 30, 2017     Mar 31, 2017     Seql Qtr $
Change		     Dec 31, 2016     Sep 30, 2016     Jun 30, 2016     Comp Qtr $
Change		  

Assets

              

Cash and due from banks

   $ 396,677     $ 332,601     $ 64,076     $ 446,558     $ 356,047     $ 333,000     $ 63,677  

Interest-bearing deposits in other financial institutions

     126,232       337,167       (210,935 )      149,175       240,010       131,680       (5,448 ) 

Federal funds sold and securities purchased under agreements to resell

     43,000       19,700       23,300       46,500       14,250       13,200       29,800  

Investment securities held to maturity, at amortized cost

     2,255,395       1,554,843       700,552       1,273,536       1,253,494       1,236,140       1,019,255  

Investment securities available for sale, at fair value

     3,687,470       4,300,490       (613,020 )      4,680,226       4,846,088       4,801,766       (1,114,296 ) 

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

     181,180       139,273       41,907       140,001       140,215       194,501       (13,321 ) 

Residential loans held for sale(1)

     41,620       34,051       7,569       108,010       213,883       253,682       (212,062 ) 

Commercial loans held for sale

     4,772       2,901       1,871       12,474       16,912       30,694       (25,922 ) 

Loans

     20,783,069       20,147,683       635,386       20,054,716       19,844,005       19,815,286       967,783  

Allowance for loan losses

     (281,101 )      (282,672 )      1,571       (278,335 )      (269,540 )      (267,780 )      (13,321 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Loans, net

     20,501,968       19,865,011       636,957       19,776,381       19,574,465       19,547,506       954,462  

Premises and equipment, net

     328,404       332,884       (4,480 )      330,315       329,726       331,427       (3,023 ) 

Goodwill

     972,006       972,006       —         971,951       971,951       971,951       55  

Mortgage servicing rights, net

     59,395       60,702       (1,307 )      61,476       58,414       57,474       1,921  

Other intangible assets, net

     14,530       15,026       (496 )      15,377       15,902       16,427       (1,897 ) 

Trading assets

     48,576       49,306       (730 )      52,398       60,780       77,112       (28,536 ) 

Other assets

     1,107,800       1,093,896       13,904       1,074,937       1,060,627       1,042,139       65,661  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total assets

   $ 29,769,025     $ 29,109,857     $ 659,168     $ 29,139,315     $ 29,152,764     $ 29,038,699     $ 730,326  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Liabilities and Stockholders’ Equity

              

Noninterest-bearing demand deposits

   $ 5,038,162     $ 5,338,212     $ (300,050 )    $ 5,392,208     $ 5,337,677     $ 5,039,336     $ (1,174 ) 

Interest-bearing deposits

     16,580,018       16,489,823       90,195       16,496,240       16,410,035       15,253,514       1,326,504  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total deposits

     21,618,180       21,828,035       (209,855 )      21,888,448       21,747,712       20,292,850       1,325,330  

Federal funds purchased and securities sold under agreements to repurchase

     607,669       650,188       (42,519 )      508,347       698,772       509,150       98,519  

Other short-term funding

     794,813       430,679       364,134       583,688       541,321       1,402,407       (607,594 ) 

Long-term funding

     3,262,120       2,761,955       500,165       2,761,795       2,761,635       3,511,475       (249,355 ) 

Trading liabilities

     47,143       47,561       (418 )      51,103       62,301       79,466       (32,323 ) 

Accrued expenses and other liabilities

     247,598       246,645       953       254,622       243,908       213,204       34,394  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total liabilities

     26,577,523       25,965,063       612,460       26,048,003       26,055,649       26,008,552       568,971  

Stockholders’ Equity

              

Preferred equity

     159,929       159,929       —         159,929       159,929       120,201       39,728  

Common equity:

              

Common stock

     1,630       1,630       —         1,630       1,630       1,630       —    

Surplus

     1,474,301       1,469,744       4,557       1,459,498       1,459,161       1,453,285       21,016  

Retained earnings

     1,747,632       1,709,514       38,118       1,695,764       1,662,778       1,629,915       117,717  

Accumulated other comprehensive income (loss)

     (53,470 )      (56,344 )      2,874       (54,679 )      (1,254 )      13,453       (66,923 ) 

Treasury stock, at cost

     (138,520 )      (139,679 )      1,159       (170,830 )      (185,129 )      (188,337 )      49,817  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total common equity

     3,031,573       2,984,865       46,708       2,931,383       2,937,186       2,909,946       121,627  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total stockholders’ equity

     3,191,502       3,144,794       46,708       3,091,312       3,097,115       3,030,147       161,355  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total liabilities and stockholders’ equity

   $ 29,769,025     $ 29,109,857     $ 659,168     $ 29,139,315     $ 29,152,764     $ 29,038,699     $ 730,326  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

(1) Effective January 1, 2017, residential loans originated for sale are accounted for under the fair value option. Prior periods have not been restated.

 

Page 6

Associated Banc-Corp

Consolidated Statements of Income (Unaudited)

 

                 Comp Qtr     YTD     YTD      Comp YTD  

(in thousands, except per share data)

    2Q17     2Q16     $ Change     % Change     Jun 2017     Jun 2016      $ Change     % Change  

Interest Income

                  

Interest and fees on loans

    $ 184,246     $ 163,059     $ 21,187       13 %    $ 357,895     $ 322,715      $ 35,180       11 % 

Interest and dividends on investment securities:

                  

Taxable

      23,658       24,270       (612 )      (3 )%      47,133       49,786        (2,653 )      (5 )% 

Tax-exempt

      8,143       7,894       249       3 %      16,272       15,724        548       3 % 

Other interest

      1,553       1,318       235       18 %      3,089       2,385        704       30 % 
  

 

 

    

 

 

    

 

 

      

 

 

    

 

 

     

 

 

    

Total interest income

      217,600       196,541       21,059       11 %      424,389       390,610        33,779       9 % 

Interest Expense

                  

Interest on deposits

      21,180       11,678       9,502       81 %      38,104       23,444        14,660       63 % 

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

      824       378       446       118 %      1,339       674        665       99 % 

Interest on other short-term funding

      1,827       845       982       116 %      2,907       1,360        1,547       114 % 

Interest on long-term funding

      9,950       6,923       3,027       44 %      17,946       16,428        1,518       9 % 
  

 

 

    

 

 

    

 

 

      

 

 

    

 

 

     

 

 

    

Total interest expense

      33,781       19,824       13,957       70 %      60,296       41,906        18,390       44 % 
  

 

 

    

 

 

    

 

 

      

 

 

    

 

 

     

 

 

    

Net Interest Income

      183,819       176,717       7,102       4 %      364,093       348,704        15,389       4 % 

Provision for credit losses

      12,000       14,000       (2,000 )      (14 )%      21,000       34,000        (13,000 )      (38 )% 
  

 

 

    

 

 

    

 

 

      

 

 

    

 

 

     

 

 

    

Net interest income after provision for credit losses

      171,819       162,717       9,102       6 %      343,093       314,704        28,389       9 % 

Noninterest Income

                  

Trust service fees

      12,346       11,509       837       7 %      24,281       22,956        1,325       6 % 

Service charges on deposit accounts

      16,030       16,444       (414 )      (3 )%      32,386       32,717        (331 )      (1 )% 

Card-based and other nondeposit fees

      13,764       12,717       1,047       8 %      26,229       24,708        1,521       6 % 

Insurance commissions

      20,853       22,005       (1,152 )      (5 )%      42,473       43,387        (914 )      (2 )% 

Brokerage and annuity commissions

      4,346       4,098       248       6 %      8,679       7,892        787       10 % 

Mortgage banking, net

      5,027       4,067       960       24 %      9,606       8,271        1,335       16 % 

Capital market fees, net

      4,042       3,793       249       7 %      7,925       7,331        594       8 % 

Bank owned life insurance income

      3,899       2,973       926       31 %      6,514       7,743        (1,229 )      (16 )% 

Asset gains (losses), net

      (466 )      (343 )      (123 )      36 %      (700 )      181        (881 )      N/M  

Investment securities gains (losses), net

      356       3,116       (2,760 )      (89 )%      356       6,214        (5,858 )      (94 )% 

Other

      2,213       1,789       424       24 %      4,492       3,960        532       13 % 
  

 

 

    

 

 

    

 

 

      

 

 

    

 

 

     

 

 

    

Total noninterest income

      82,410       82,168       242       —   %      162,241       165,360        (3,119 )      (2 )% 

Noninterest Expense

                  

Personnel expense

      104,683       102,129       2,554       3 %      209,102       203,527        5,575       3 % 

Occupancy

      12,832       13,215       (383 )      (3 )%      28,051       27,017        1,034       4 % 

Equipment

      5,234       5,396       (162 )      (3 )%      10,719       10,842        (123 )      (1 )% 

Technology

      15,473       14,450       1,023       7 %      29,893       28,714        1,179       4 % 

Business development and advertising

      7,152       6,591       561       9 %      12,987       14,802        (1,815 )      (12 )% 

Other intangible amortization

      496       539       (43 )      (8 )%      1,009       1,043        (34 )      (3 )% 

Loan expense

      2,974       3,442       (468 )      (14 )%      5,594       6,663        (1,069 )      (16 )% 

Legal and professional fees

      5,711       4,856       855       18 %      9,877       9,881        (4 )      —   % 

Foreclosure / OREO expense, net

      1,182       1,330       (148 )      (11 )%      2,687       3,207        (520 )      (16 )% 

FDIC expense

      8,000       8,750       (750 )      (9 )%      16,000       16,500        (500 )      (3 )% 

Other

      12,579       13,662       (1,083 )      (8 )%      24,088       26,135        (2,047 )      (8 )% 
  

 

 

    

 

 

    

 

 

      

 

 

    

 

 

     

 

 

    

Total noninterest expense

      176,316       174,360       1,956       1 %      350,007       348,331        1,676       —   % 
  

 

 

    

 

 

    

 

 

      

 

 

    

 

 

     

 

 

    

Income before income taxes

      77,913       70,525       7,388       10 %      155,327       131,733        23,594       18 % 

Income tax expense

      19,930       21,434       (1,504 )      (7 )%      41,074       40,108        966       2 % 
  

 

 

    

 

 

    

 

 

      

 

 

    

 

 

     

 

 

    

Net income

      57,983       49,091       8,892       18 %      114,253       91,625        22,628       25 % 

Preferred stock dividends

      2,339       2,169       170       8 %      4,669       4,367        302       7 % 
  

 

 

    

 

 

    

 

 

      

 

 

    

 

 

     

 

 

    

Net income available to common equity

    $ 55,644     $ 46,922     $ 8,722       19 %    $ 109,584     $ 87,258      $ 22,326       26 % 
  

 

 

    

 

 

    

 

 

      

 

 

    

 

 

     

 

 

    

Earnings Per Common Share:

                  

Basic

    $ 0.36     $ 0.31     $ 0.05       16 %    $ 0.72     $ 0.58      $ 0.14       24 % 

Diluted

    $ 0.36     $ 0.31     $ 0.05       16 %    $ 0.71     $ 0.58      $ 0.13       22 % 

Average Common Shares Outstanding:

                  

Basic

      151,573       148,511       3,062       2 %      151,196       148,556        2,640       2 % 

Diluted

      154,302       149,530       4,772       3 %      154,147       149,518        4,629       3 % 

N/M - Not meaningful

                  

 

Page 7

Associated Banc-Corp

Consolidated Statements of Income (Unaudited)—Quarterly Trend

 

                Seql Qtr                       Comp Qtr  

(In thousands, except per share data)

   2Q17     1Q17     $ Change     % Change     4Q16     3Q16     2Q16     $ Change     % Change  

Interest Income

                  

Interest and fees on loans

   $ 184,246     $ 173,649     $ 10,597       6 %    $ 169,473     $ 167,350     $ 163,059     $ 21,187       13 % 

Interest and dividends on investment securities:

                  

Taxable

     23,658       23,475       183       1 %      22,418       22,948       24,270       (612 )      (3 )% 

Tax-exempt

     8,143       8,129       14       —   %      8,184       8,141       7,894       249       3 % 

Other interest

     1,553       1,536       17       1 %      1,380       1,064       1,318       235       18 % 
 

 

 

    

 

 

    

 

 

      

 

 

    

 

 

    

 

 

    

 

 

    

Total interest income

     217,600       206,789       10,811       5 %      201,455       199,503       196,541       21,059       11 % 

Interest Expense

                  

Interest on deposits

     21,180       16,924       4,256       25 %      13,773       13,118       11,678       9,502       81 % 

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

     824       515       309       60 %      314       326       378       446       118 % 

Interest on other short-term funding

     1,827       1,080       747       69 %      458       296       845       982       116 % 

Interest on long-term funding

     9,950       7,996       1,954       24 %      6,875       7,229       6,923       3,027       44 % 
 

 

 

    

 

 

    

 

 

      

 

 

    

 

 

    

 

 

    

 

 

    

Total interest expense

     33,781       26,515       7,266       27 %      21,420       20,969       19,824       13,957       70 % 
 

 

 

    

 

 

    

 

 

      

 

 

    

 

 

    

 

 

    

 

 

    

Net Interest Income

     183,819       180,274       3,545       2 %      180,035       178,534       176,717       7,102       4 % 

Provision for credit losses

     12,000       9,000       3,000       33 %      15,000       21,000       14,000       (2,000 )      (14 )% 
 

 

 

    

 

 

    

 

 

      

 

 

    

 

 

    

 

 

    

 

 

    

Net interest income after provision for credit losses

     171,819       171,274       545       —   %      165,035       157,534       162,717       9,102       6 % 

Noninterest Income

                  

Trust service fees

     12,346       11,935       411       3 %      12,211       11,700       11,509       837       7 % 

Service charges on deposit accounts

     16,030       16,356       (326 )      (2 )%      16,447       17,445       16,444       (414 )      (3 )% 

Card-based and other nondeposit fees

     13,764       12,465       1,299       10 %      12,592       12,777       12,717       1,047       8 % 

Insurance commissions

     20,853       21,620       (767 )      (4 )%      17,977       19,431       22,005       (1,152 )      (5 )% 

Brokerage and annuity commissions

     4,346       4,333       13       —   %      4,188       4,155       4,098       248       6 % 

Mortgage banking, net

     5,027       4,579       448       10 %      11,559       18,291       4,067       960       24 % 

Capital market fees, net

     4,042       3,883       159       4 %      7,716       7,012       3,793       249       7 % 

Bank owned life insurance income

     3,899       2,615       1,284       49 %      3,338       3,290       2,973       926       31 % 

Asset gains (losses), net

     (466 )      (234 )      (232 )      99 %      767       (1,034 )      (343 )      (123 )      36 % 

Investment securities gains (losses), net

     356       —         356       N/M       3,115       (13 )      3,116       (2,760 )      (89 )% 

Other

     2,213       2,279       (66 )      (3 )%      2,379       2,180       1,789       424       24 % 
 

 

 

    

 

 

    

 

 

      

 

 

    

 

 

    

 

 

    

 

 

    

Total noninterest income

     82,410       79,831       2,579       3 %      92,289       95,234       82,168       242       —   % 

Noninterest Expense

                  

Personnel expense

     104,683       104,419       264       —   %      107,491       103,819       102,129       2,554       3 % 

Occupancy

     12,832       15,219       (2,387 )      (16 )%      13,690       15,362       13,215       (383 )      (3 )% 

Equipment

     5,234       5,485       (251 )      (5 )%      5,328       5,319       5,396       (162 )      (3 )% 

Technology

     15,473       14,420       1,053       7 %      14,413       14,173       14,450       1,023       7 % 

Business development and advertising

     7,152       5,835       1,317       23 %      6,298       5,251       6,591       561       9 % 

Other intangible amortization

     496       513       (17 )      (3 )%      525       525       539       (43 )      (8 )% 

Loan expense

     2,974       2,620       354       14 %      3,443       3,535       3,442       (468 )      (14 )% 

Legal and professional fees

     5,711       4,166       1,545       37 %      5,184       4,804       4,856       855       18 % 

Foreclosure / OREO expense, net

     1,182       1,505       (323 )      (21 )%      677       960       1,330       (148 )      (11 )% 

FDIC expense

     8,000       8,000       —         —   %      9,250       9,000       8,750       (750 )      (9 )% 

Other

     12,579       11,509       1,070       9 %      12,616       12,566       13,662       (1,083 )      (8 )% 
 

 

 

    

 

 

    

 

 

      

 

 

    

 

 

    

 

 

    

 

 

    

Total noninterest expense

     176,316       173,691       2,625       2 %      178,915       175,314       174,360       1,956       1 % 
 

 

 

    

 

 

    

 

 

      

 

 

    

 

 

    

 

 

    

 

 

    

Income before income taxes

     77,913       77,414       499       1 %      78,409       77,454       70,525       7,388       10 % 

Income tax expense

     19,930       21,144       (1,214 )      (6 )%      23,576       23,638       21,434       (1,504 )      (7 )% 
 

 

 

    

 

 

    

 

 

      

 

 

    

 

 

    

 

 

    

 

 

    

Net income

     57,983       56,270       1,713       3 %      54,833       53,816       49,091       8,892       18 % 

Preferred stock dividends

     2,339       2,330       9       —   %      2,348       2,188       2,169       170       8 % 
 

 

 

    

 

 

    

 

 

      

 

 

    

 

 

    

 

 

    

 

 

    

Net income available to common equity

   $ 55,644     $ 53,940     $ 1,704       3 %    $ 52,485     $ 51,628     $ 46,922     $ 8,722       19 % 
 

 

 

    

 

 

    

 

 

      

 

 

    

 

 

    

 

 

    

 

 

    

Earnings Per Common Share:

                  

Basic

   $ 0.36     $ 0.36     $ —         —   %    $ 0.35     $ 0.34     $ 0.31     $ 0.05       16 % 

Diluted

   $ 0.36     $ 0.35     $ 0.01       3 %    $ 0.34     $ 0.34     $ 0.31     $ 0.05       16 % 

Average Common Shares Outstanding:

                  

Basic

     151,573       150,815       758       1 %      149,253       148,708       148,511       3,062       2 % 

Diluted

     154,302       153,869       433       —   %      151,563       149,973       149,530       4,772       3 % 

N/M - Not meaningful

                  

 

Page 8

Associated Banc-Corp

Selected Quarterly Information

 

($ in millions, except share and per share, full time

equivalent employee data and branch count)

   YTD
Jun 2017		     YTD
Jun 2016		     2Q17     1Q17     4Q16     3Q16     2Q16  

Per Common Share Data

              

Dividends

   $ 0.24     $ 0.22     $ 0.12     $ 0.12     $ 0.12     $ 0.11     $ 0.11  

Market value:

              

High

     26.50       18.84       25.50       26.50       25.15       19.91       18.84  

Low

     23.25       15.48       23.25       23.40       19.05       16.49       15.84  

Close

     25.20       17.15       25.20       24.40       24.70       19.59       17.15  

Book value

     19.70       19.27       19.70       19.42       19.27       19.42       19.27  

Tangible book value / share

   $ 13.29     $ 12.72     $ 13.29     $ 13.00     $ 12.78     $ 12.89     $ 12.72  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Performance Ratios (Annualized)

              

Return on average assets

     0.79 %      0.66 %      0.80 %      0.79 %      0.75 %      0.74 %      0.69 % 

Effective tax rate

     26.44 %      30.45 %      25.58 %      27.31 %      30.07 %      30.52 %      30.39 % 

Dividend payout ratio(1)

     33.33 %      37.93 %      32.43 %      33.33 %      34.29 %      32.35 %      35.48 % 

Net interest margin

     2.83 %      2.81 %      2.83 %      2.84 %      2.80 %      2.77 %      2.81 % 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Selected Trend Information

              

Average full time equivalent employees

     4,361       4,394       4,352       4,370       4,439       4,477       4,415  

Branch count

         214       215       217       217       215  

Trust assets under management, at market value

       $ 8,997     $ 8,716     $ 8,302     $ 8,179     $ 7,944  

Mortgage loans originated for sale during period

   $ 220     $ 518     $ 119     $ 101     $ 287     $ 466     $ 324  

Mortgage loan settlements during period

   $ 364     $ 492     $ 167     $ 197     $ 396     $ 655     $ 270  

Mortgage portfolio serviced for others

       $ 7,768     $ 7,909     $ 7,975     $ 8,011     $ 7,776  

Mortgage servicing rights, net / mortgage portfolio serviced for others

         0.76 %      0.77 %      0.77 %      0.73 %      0.74 % 

Shares outstanding, end of period

         153,848       153,734       152,121       151,243       151,036  
     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Selected Quarterly Ratios

              

Loans / deposits

         96.14 %      92.30 %      91.62 %      91.25 %      97.65 % 

Stockholders’ equity / assets

         10.72 %      10.80 %      10.61 %      10.62 %      10.43 % 
     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Risk-based Capital (2) (3)

              

Total risk-weighted assets

       $ 21,590     $ 21,129     $ 21,341     $ 21,265     $ 21,168  

Common equity Tier 1

       $ 2,130     $ 2,085     $ 2,033     $ 1,984     $ 1,941  

Common equity Tier 1 capital ratio

         9.87 %      9.87 %      9.52 %      9.33 %      9.17 % 

Tier 1 capital ratio

         10.61 %      10.62 %      10.27 %      10.08 %      9.73 % 

Total capital ratio

         13.01 %      13.05 %      12.68 %      12.49 %      12.16 % 

Tier 1 leverage ratio

         8.09 %      8.05 %      7.83 %      7.64 %      7.43 % 
     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

(1) Ratio is based upon basic earnings per common share.
(2) The Federal Reserve establishes regulatory capital requirements, including well-capitalized standards for the Corporation. The regulatory capital requirements effective for the Corporation follow Basel III, subject to certain transition provisions.
(3) June 30, 2017 data is estimated.

 

Page 9

Associated Banc-Corp

Selected Asset Quality Information    

 

(In thousands)    Jun 30, 2017     Mar 31, 2017     Seql Qtr
% Change		     Dec 31, 2016     Sep 30, 2016     Jun 30, 2016     Comp Qtr
% Change		  

Allowance for Loan Losses

               

Balance at beginning of period

    $ 282,672     $ 278,335       2 %    $ 269,540     $ 267,780     $ 277,370       2 % 

Provision for loan losses

      11,000       10,000       10 %      18,000       20,000       11,000       —   % 

Charge offs

      (15,376 )      (11,854 )      30 %      (11,609 )      (28,964 )      (24,621 )      (38 )% 

Recoveries

      2,805       6,191       (55 )%      2,404       10,724       4,031       (30 )% 
  

 

 

    

 

 

      

 

 

    

 

 

    

 

 

    

Net charge offs

      (12,571 )      (5,663 )      122 %      (9,205 )      (18,240 )      (20,590 )      (39 )% 
  

 

 

    

 

 

      

 

 

    

 

 

    

 

 

    

Balance at end of period

    $ 281,101     $ 282,672       (1 )%    $ 278,335     $ 269,540     $ 267,780       5 % 
  

 

 

    

 

 

      

 

 

    

 

 

    

 

 

    

Allowance for Unfunded Commitments

               

Balance at beginning of period

    $ 24,400     $ 25,400       (4 )%    $ 28,400     $ 27,400     $ 24,400       —   % 

Provision for unfunded commitments

      1,000       (1,000 )      (200 )%      (3,000 )      1,000       3,000       (67 )% 
  

 

 

    

 

 

      

 

 

    

 

 

    

 

 

    

Balance at end of period

    $ 25,400     $ 24,400       4 %    $ 25,400     $ 28,400     $ 27,400       (7 )% 
  

 

 

    

 

 

      

 

 

    

 

 

    

 

 

    

Allowance for credit losses

    $ 306,501     $ 307,072       —   %    $ 303,735     $ 297,940     $ 295,180       4 % 
  

 

 

    

 

 

      

 

 

    

 

 

    

 

 

    

Provision for credit losses

    $ 12,000     $ 9,000       33 %    $ 15,000     $ 21,000     $ 14,000       (14 )% 
  

 

 

    

 

 

      

 

 

    

 

 

    

 

 

    
Net Charge Offs    Jun 30, 2017     Mar 31, 2017     Seql Qtr
% Change		     Dec 31, 2016     Sep 30, 2016     Jun 30, 2016     Comp Qtr
% Change		  

Commercial and industrial

    $ (11,046 )    $ (4,368 )      153 %    $ (6,566 )    $ (16,407 )    $ (18,564 )      (40 )% 

Commercial real estate—owner occupied

      43       19       126 %      (221 )      (154 )      (20 )      N/M  
  

 

 

    

 

 

      

 

 

    

 

 

    

 

 

    

Commercial and business lending

      (11,003 )      (4,349 )      153 %      (6,787 )      (16,561 )      (18,584 )      (41 )% 

Commercial real estate—investor

      (126 )      (514 )      (75 )%      5       (564 )      (560 )      (78 )% 

Real estate construction

      (26 )      11       N/M       (86 )      (22 )      (219 )      (88 )% 
  

 

 

    

 

 

      

 

 

    

 

 

    

 

 

    

Commercial real estate lending

      (152 )      (503 )      (70 )%      (81 )      (586 )      (779 )      (80 )% 
  

 

 

    

 

 

      

 

 

    

 

 

    

 

 

    

Total commercial

      (11,155 )      (4,852 )      130 %      (6,868 )      (17,147 )      (19,363 )      (42 )% 

Residential mortgage

      (564 )      (128 )      N/M       (1,048 )      (540 )      (757 )      (25 )% 

Home equity

      54       173       (69 )%      (491 )      125       317       (83 )% 

Other consumer

      (906 )      (856 )      6 %      (798 )      (678 )      (787 )      15 % 
  

 

 

    

 

 

      

 

 

    

 

 

    

 

 

    

Total consumer

      (1,416 )      (811 )      75 %      (2,337 )      (1,093 )      (1,227 )      15 % 
  

 

 

    

 

 

      

 

 

    

 

 

    

 

 

    

Total net charge offs

    $ (12,571 )    $ (5,663 )      122 %    $ (9,205 )    $ (18,240 )    $ (20,590 )      (39 )% 
  

 

 

    

 

 

      

 

 

    

 

 

    

 

 

    
Net Charge Offs to Average Loans (in basis points)*    Jun 30, 2017     Mar 31, 2017           Dec 31, 2016     Sep 30, 2016     Jun 30, 2016        

Commercial and industrial

      (69 )      (28 )        (40 )      (98 )      (114 )   

Commercial real estate—owner occupied

      2       1         (10 )      (7 )      (1 )   
  

 

 

    

 

 

      

 

 

    

 

 

    

 

 

    

Commercial and business lending

      (60 )      (24 )        (36 )      (87 )      (100 )   

Commercial real estate—investor

      (2 )      (6 )        N/M       (6 )      (7 )   

Real estate construction

      (1 )      N/M         (3 )      (1 )      (7 )   
  

 

 

    

 

 

      

 

 

    

 

 

    

 

 

    

Commercial real estate lending

      (1 )      (4 )        (1 )      (5 )      (7 )   
  

 

 

    

 

 

      

 

 

    

 

 

    

 

 

    

Total commercial

      (36 )      (16 )        (22 )      (55 )      (64 )   

Residential mortgage

      (3 )      (1 )        (7 )      (3 )      (5 )   

Home equity

      2       8         (21 )      5       13    

Other consumer

      (98 )      (90 )        (80 )      (67 )      (78 )   
  

 

 

    

 

 

      

 

 

    

 

 

    

 

 

    

Total consumer

      (7 )      (4 )        (12 )      (6 )      (7 )   
  

 

 

    

 

 

      

 

 

    

 

 

    

 

 

    

Total net charge offs

      (25 )      (11 )        (18 )      (36 )      (42 )   
  

 

 

    

 

 

      

 

 

    

 

 

    

 

 

    
Credit Quality    Jun 30, 2017     Mar 31, 2017     Seql Qtr
% Change		     Dec 31, 2016     Sep 30, 2016     Jun 30, 2016     Comp Qtr
% Change		  

Nonaccrual loans

    $ 231,888     $ 259,991       (11 )%    $ 275,303     $ 289,911     $ 282,602       (18 )% 

Other real estate owned (OREO)

      7,782       7,540       3 %      10,274       14,499       13,669       (43 )% 

Other nonperforming assets

      7,418       7,418       —   %      7,418       —         —         N/M  
  

 

 

    

 

 

      

 

 

    

 

 

    

 

 

    

Total nonperforming assets

    $ 247,088     $ 274,949       (10 )%    $ 292,995     $ 304,410     $ 296,271       (17 )% 
  

 

 

    

 

 

      

 

 

    

 

 

    

 

 

    

Loans 90 or more days past due and still accruing

    $ 1,535     $ 1,720       (11 )%    $ 1,613     $ 1,511     $ 1,494       3 % 

Allowance for loan losses to loans

      1.35 %      1.40 %        1.39 %      1.36 %      1.35 %   

Allowance for loan losses to nonaccrual loans

      121.22 %      108.72 %        101.10 %      92.97 %      94.76 %   

Nonaccrual loans to total loans

      1.12 %      1.29 %        1.37 %      1.46 %      1.43 %   

Nonperforming assets to total loans plus OREO

      1.19 %      1.36 %        1.46 %      1.53 %      1.49 %   

Nonperforming assets to total assets

      0.83 %      0.94 %        1.01 %      1.04 %      1.02 %   

Year-to-date net charge offs to average loans *

      0.18 %      0.11 %        0.33 %      0.38 %      0.39 %   

 

* Annualized

N/M = Not meaningful

 

Page 10

Associated Banc-Corp

Selected Asset Quality Information (continued)

 

(in thousands)    Jun 30, 2017      Mar 31, 2017      Seql Qtr
% Change		     Dec 31, 2016      Sep 30, 2016      Jun 30, 2016      Comp Qtr
% Change		  

Nonaccrual loans

                    

Commercial and industrial

    $ 141,475      $ 164,891        (14 )%    $ 183,371      $ 205,902      $ 193,439        (27 )% 

Commercial real estate—owner occupied

      15,800        17,925        (12 )%      9,544        6,995        9,635        64 % 
  

 

 

     

 

 

       

 

 

     

 

 

     

 

 

     

Commercial and business lending

      157,275        182,816        (14 )%      192,915        212,897        203,074        (23 )% 

Commercial real estate—investor

      7,206        8,273        (13 )%      18,051        8,028        11,528        (37 )% 

Real estate construction

      1,717        1,247        38 %      844        864        957        79 % 
  

 

 

     

 

 

       

 

 

     

 

 

     

 

 

     

Commercial real estate lending

      8,923        9,520        (6 )%      18,895        8,892        12,485        (29 )% 
  

 

 

     

 

 

       

 

 

     

 

 

     

 

 

     

Total commercial

      166,198        192,336        (14 )%      211,810        221,789        215,559        (23 )% 

Residential mortgage

      51,975        54,183        (4 )%      50,236        53,475        52,300        (1 )% 

Home equity

      13,482        13,212        2 %      13,001        14,347        14,363        (6 )% 

Other consumer

      233        260        (10 )%      256        300        380        (39 )% 
  

 

 

     

 

 

       

 

 

     

 

 

     

 

 

     

Total consumer

      65,690        67,655        (3 )%      63,493        68,122        67,043        (2 )% 
  

 

 

     

 

 

       

 

 

     

 

 

     

 

 

     

Total nonaccrual loans

    $ 231,888      $ 259,991        (11 )%    $ 275,303      $ 289,911      $ 282,602        (18 )% 
  

 

 

     

 

 

       

 

 

     

 

 

     

 

 

     
Restructured loans (accruing)    Jun 30, 2017      Mar 31, 2017      Seql Qtr
% Change		     Dec 31, 2016      Sep 30, 2016      Jun 30, 2016      Comp Qtr
% Change		  

Commercial and industrial

    $ 31,540      $ 30,852        2 %    $ 31,884      $ 30,248      $ 29,179        8 % 

Commercial real estate—owner occupied

      4,145        5,532        (25 )%      5,490        7,445        7,509        (45 )% 
  

 

 

     

 

 

       

 

 

     

 

 

     

 

 

     

Commercial and business lending

      35,685        36,384        (2 )%      37,374        37,693        36,688        (3 )% 

Commercial real estate—investor

      14,628        14,563        —   %      15,289        15,352        20,191        (28 )% 

Real estate construction

      321        327        (2 )%      359        365        372        (14 )% 
  

 

 

     

 

 

       

 

 

     

 

 

     

 

 

     

Commercial real estate lending

      14,949        14,890        —   %      15,648        15,717        20,563        (27 )% 
  

 

 

     

 

 

       

 

 

     

 

 

     

 

 

     

Total commercial

      50,634        51,274        (1 )%      53,022        53,410        57,251        (12 )% 

Residential mortgage

      17,624        18,535        (5 )%      18,100        18,049        18,314        (4 )% 

Home equity

      7,985        8,209        (3 )%      7,756        7,685        6,955        15 % 

Other consumer

      1,082        1,041        4 %      979        926        906        19 % 
  

 

 

     

 

 

       

 

 

     

 

 

     

 

 

     

Total consumer

      26,691        27,785        (4 )%      26,835        26,660        26,175        2 % 
  

 

 

     

 

 

       

 

 

     

 

 

     

 

 

     

Total restructured loans (accruing)

    $ 77,325      $ 79,059        (2 )%    $ 79,857      $ 80,070      $ 83,426        (7 )% 
  

 

 

     

 

 

       

 

 

     

 

 

     

 

 

     

Restructured loans included in nonaccrual loans (not included with restructed loans (accruing))

    $ 51,715      $ 78,902        (34 )%    $ 29,385      $ 31,758      $ 34,841        48 % 
  

 

 

     

 

 

       

 

 

     

 

 

     

 

 

     
Accruing Loans 30-89 Days Past Due    Jun 30, 2017      Mar 31, 2017      Seql Qtr
% Change		     Dec 31, 2016      Sep 30, 2016      Jun 30, 2016      Comp Qtr
% Change		  

Commercial and industrial

    $ 1,255      $ 1,675        (25 )%    $ 1,413      $ 950      $ 2,124        (41 )% 

Commercial real estate—owner occupied

      1,284        970        32 %      1,384        869        193        N/M  
  

 

 

     

 

 

       

 

 

     

 

 

     

 

 

     

Commercial and business lending

      2,539        2,645        (4 )%      2,797        1,819        2,317        10 % 

Commercial real estate—investor

      899        1,122        (20 )%      931        630        2,715        (67 )% 

Real estate construction

      135        431        (69 )%      369        402        524        (74 )% 
  

 

 

     

 

 

       

 

 

     

 

 

     

 

 

     

Commercial real estate lending

      1,034        1,553        (33 )%      1,300        1,032        3,239        (68 )% 
  

 

 

     

 

 

       

 

 

     

 

 

     

 

 

     

Total commercial

      3,573        4,198        (15 )%      4,097        2,851        5,556        (36 )% 

Residential mortgage

      9,165        7,243        27 %      8,142        6,697        7,382        24 % 

Home equity

      5,924        4,512        31 %      5,849        5,473        7,730        (23 )% 

Other consumer

      1,746        1,658        5 %      3,189        2,046        1,895        (8 )% 
  

 

 

     

 

 

       

 

 

     

 

 

     

 

 

     

Total consumer

      16,835        13,413        26 %      17,180        14,216        17,007        (1 )% 
  

 

 

     

 

 

       

 

 

     

 

 

     

 

 

     

Total accruing loans 30-89 days past due

    $ 20,408      $ 17,611        16 %    $ 21,277      $ 17,067      $ 22,563        (10 )% 
  

 

 

     

 

 

       

 

 

     

 

 

     

 

 

     
Potential Problem Loans    Jun 30, 2017      Mar 31, 2017      Seql Qtr
% Change		     Dec 31, 2016      Sep 30, 2016      Jun 30, 2016      Comp Qtr
% Change		  

Commercial and industrial

    $ 142,607      $ 218,930        (35 )%    $ 227,196      $ 351,290      $ 379,818        (62 )% 

Commercial real estate—owner occupied

      60,724        58,994        3 %      64,524        47,387        45,671        33 % 
  

 

 

     

 

 

       

 

 

     

 

 

     

 

 

     

Commercial and business lending

      203,331        277,924        (27 )%      291,720        398,677        425,489        (52 )% 

Commercial real estate—investor

      48,569        49,217        (1 )%      51,228        36,765        25,081        94 % 

Real estate construction

      8,901        10,141        (12 )%      2,465        1,929        2,117        N/M  
  

 

 

     

 

 

       

 

 

     

 

 

     

 

 

     

Commercial real estate lending

      57,470        59,358        (3 )%      53,693        38,694        27,198        111 % 
  

 

 

     

 

 

       

 

 

     

 

 

     

 

 

     

Total commercial

      260,801        337,282        (23 )%      345,413        437,371        452,687        (42 )% 

Residential mortgage

      1,576        2,155        (27 )%      5,615        3,226        3,953        (60 )% 

Home equity

      208        220        (5 )%      114        78        94        121 % 
  

 

 

     

 

 

       

 

 

     

 

 

     

 

 

     

Total consumer

      1,784        2,375        (25 )%      5,729        3,304        4,047        (56 )% 
  

 

 

     

 

 

       

 

 

     

 

 

     

 

 

     

Total potential problem loans

    $ 262,585      $ 339,657        (23 )%    $ 351,142      $ 440,675      $ 456,734        (43 )% 
  

 

 

     

 

 

       

 

 

     

 

 

     

 

 

     

N/M = Not meaningful

 

Page 11

Associated Banc-Corp

Net Interest Income Analysis—Fully Tax-Equivalent Basis — Sequential and Comparable Quarter    

 

    Quarter ended,  
    June 30, 2017     March 31, 2017     June 30, 2016  
(In thousands)   Average
Balance		     Interest
Income /
Expense		     Average
Yield /
Rate		     Average
Balance		     Interest
Income /
Expense		     Average
Yield /
Rate		     Average
Balance		     Interest
Income /
Expense		     Average
Yield /
Rate		  

Assets

                  

Earning assets:

                  

Loans: (1) (2) (3)

                  

Commercial and business lending

   $ 7,321,523     $ 65,507       3.59 %    $ 7,199,481     $ 60,680       3.42 %    $ 7,474,633     $ 59,088       3.18 % 

Commercial real estate lending

     4,964,257       47,562       3.84 %      4,999,994       45,135       3.66 %      4,654,111       40,169       3.47 % 
 

 

 

    

 

 

      

 

 

    

 

 

      

 

 

    

 

 

    

Total commercial

     12,285,780       113,069       3.69 %      12,199,475       105,815       3.52 %      12,128,744       99,257       3.29 % 

Residential mortgage

     6,957,865       56,097       3.23 %      6,564,600       53,306       3.25 %      6,129,924       48,382       3.16 % 

Retail

     1,278,345       16,048       5.03 %      1,308,650       15,450       4.74 %      1,383,317       16,378       4.74 % 
 

 

 

    

 

 

      

 

 

    

 

 

      

 

 

    

 

 

    

Total loans

     20,521,990       185,214       3.62 %      20,072,725       174,571       3.51 %      19,641,985       164,017       3.35 % 

Investment securities:

                  

Taxable

     4,781,488       23,658       1.98 %      4,830,421       23,475       1.94 %      4,967,437       24,270       1.95 % 

Tax-exempt(1)

     1,143,736       12,459       4.36 %      1,138,010       12,438       4.37 %      1,064,252       12,077       4.54 % 

Other short-term investments

     297,341       1,553       2.09 %      298,158       1,536       2.08 %      294,375       1,318       1.80 % 
 

 

 

    

 

 

      

 

 

    

 

 

      

 

 

    

 

 

    

Investments and other

     6,222,565       37,670       2.42 %      6,266,589       37,449       2.39 %      6,326,064       37,665       2.38 % 
 

 

 

    

 

 

      

 

 

    

 

 

      

 

 

    

 

 

    

Total earning assets

     26,744,555     $ 222,884       3.34 %      26,339,314     $ 212,020       3.24 %      25,968,049     $ 201,682       3.12 % 

Other assets, net

     2,454,351           2,441,013           2,674,427      
 

 

 

        

 

 

        

 

 

      

Total assets

   $ 29,198,906         $ 28,780,327         $ 28,642,476      
 

 

 

        

 

 

        

 

 

      

Liabilities and stockholders’ equity

                  

Interest-bearing liabilities:

                  

Interest-bearing deposits:

                  

Savings

   $ 1,541,129     $ 201       0.05 %    $ 1,465,811     $ 188       0.05 %    $ 1,445,020     $ 228       0.06 % 

Interest-bearing demand

     4,272,620       5,506       0.52 %      4,251,357       4,210       0.40 %      3,640,733       2,144       0.24 % 

Money market

     9,064,874       11,763       0.52 %      9,169,141       9,388       0.42 %      8,692,782       6,309       0.29 % 

Time deposits

     1,752,255       3,710       0.85 %      1,613,331       3,138       0.79 %      1,540,424       2,997       0.78 % 
 

 

 

    

 

 

      

 

 

    

 

 

      

 

 

    

 

 

    

Total interest-bearing deposits

     16,630,878       21,180       0.51 %      16,499,640       16,924       0.42 %      15,318,959       11,678       0.31 % 

Federal funds purchased and securities sold under agreements to repurchase

     489,571       824       0.67 %      495,311       515       0.42 %      674,360       378       0.23 % 

Other short-term funding

     842,305       1,827       0.87 %      683,306       1,080       0.64 %      1,209,511       845       0.28 % 
 

 

 

    

 

 

      

 

 

    

 

 

      

 

 

    

 

 

    

Total short-term funding

     1,331,876       2,651       0.80 %      1,178,617       1,595       0.55 %      1,883,871       1,223       0.26 % 

Long-term funding

     2,932,348       9,950       1.36 %      2,761,850       7,996       1.17 %      3,052,581       6,923       0.91 % 
 

 

 

    

 

 

      

 

 

    

 

 

      

 

 

    

 

 

    

Total short and long-term funding

     4,264,224       12,601       1.18 %      3,940,467       9,591       0.98 %      4,936,452       8,146       0.66 % 
 

 

 

    

 

 

      

 

 

    

 

 

      

 

 

    

 

 

    

Total interest-bearing liabilities

     20,895,102     $ 33,781       0.65 %      20,440,107     $ 26,515       0.52 %      20,255,411     $ 19,824       0.39 % 

Noninterest-bearing demand deposits

     4,892,271           4,966,082           4,969,994      

Other liabilities

     246,395           250,747           228,027      

Stockholders’ equity

     3,165,138           3,123,391           3,189,044      
 

 

 

        

 

 

        

 

 

      

Total liabilities and stockholders’ equity

   $ 29,198,906         $ 28,780,327         $ 28,642,476      
 

 

 

        

 

 

        

 

 

      

Interest rate spread

         2.69 %          2.72 %          2.73 % 

Net free funds

         0.14 %          0.12 %          0.08 % 
   

 

 

    

 

 

      

 

 

    

 

 

      

 

 

    

 

 

  

Fully tax-equivalent net interest income and net interest margin

     $ 189,103       2.83 %      $ 185,505       2.84 %      $ 181,858       2.81 % 
   

 

 

    

 

 

      

 

 

    

 

 

      

 

 

    

 

 

  

Fully tax-equivalent adjustment

       5,284           5,231           5,141    
   

 

 

        

 

 

        

 

 

    

Net interest income

     $ 183,819         $ 180,274         $ 176,717    
   

 

 

        

 

 

        

 

 

    

 

(1) The yield on tax-exempt loans and securities is computed on a fully tax-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.

 

Page 12

Associated Banc-Corp

Net Interest Income Analysis—Fully Tax-Equivalent Basis — Year Over Year

 

     Six Months ended June 30,  
     2017     2016  
(in thousands)    Average
Balance		      Interest
Income /Expense		      Average
Yield /Rate		     Average
Balance		      Interest
Income /Expense		      Average
Yield /Rate		  

Assets

                 

Earning assets:

                 

Loans: (1) (2) (3)

                 

Commercial and business lending

    $ 7,260,839      $ 126,187        3.50 %    $ 7,297,847      $ 116,380        3.21 % 

Commercial real estate lending

      4,982,027        92,697        3.75 %      4,561,821        79,158        3.49 % 
  

 

 

     

 

 

       

 

 

     

 

 

     

Total commercial

      12,242,866        218,884        3.60 %      11,859,668        195,538        3.31 % 

Residential mortgage

      6,762,319        109,404        3.24 %      6,025,102        96,130        3.19 % 

Retail

      1,293,414        31,497        4.88 %      1,397,638        32,984        4.73 % 
  

 

 

     

 

 

       

 

 

     

 

 

     

Total loans

      20,298,599        359,785        3.56 %      19,282,408        324,652        3.38 % 

Investment securities:

                 

Taxable

      4,805,819        47,133        1.96 %      5,000,754        49,786        1.99 % 

Tax-exempt (1)

      1,140,889        24,897        4.36 %      1,054,731        24,057        4.56 % 

Other short-term investments

      297,747        3,089        2.09 %      282,318        2,385        1.70 % 
  

 

 

     

 

 

       

 

 

     

 

 

     

Investments and other

      6,244,455        75,119        2.41 %      6,337,803        76,228        2.41 % 
  

 

 

     

 

 

       

 

 

     

 

 

     

Total earning assets

      26,543,054      $ 434,904        3.29 %      25,620,211      $ 400,880        3.14 % 

Other assets, net

      2,447,719             2,450,451        
  

 

 

          

 

 

        

Total assets

    $ 28,990,773           $ 28,070,662        
  

 

 

          

 

 

        

Liabilities and stockholders’ equity

                 

Interest-bearing liabilities:

                 

Interest-bearing deposits:

                 

Savings

    $ 1,503,678      $ 389        0.05 %    $ 1,406,333      $ 464        0.07 % 

Interest-bearing demand

      4,262,047        9,716        0.46 %      3,430,571        4,176        0.24 % 

Money market

      9,116,719        21,150        0.47 %      9,062,514        12,753        0.28 % 

Time deposits

      1,683,177        6,849        0.82 %      1,549,351        6,051        0.79 % 
  

 

 

     

 

 

       

 

 

     

 

 

     

Total interest-bearing deposits

      16,565,621        38,104        0.46 %      15,448,769        23,444        0.31 % 

Federal funds purchased and securities sold under agreements to repurchase

      492,425        1,339        0.55 %      617,007        674        0.22 % 

Other short-term funding

      763,245        2,907        0.77 %      993,704        1,360        0.28 % 
  

 

 

     

 

 

       

 

 

     

 

 

     

Total short-term funding

      1,255,670        4,246        0.68 %      1,610,711        2,034        0.25 % 

Long-term funding

      2,847,570        17,946        1.27 %      2,817,560        16,428        1.17 % 
  

 

 

     

 

 

       

 

 

     

 

 

     

Total short and long-term funding

      4,103,240        22,192        1.09 %      4,428,271        18,462        0.84 % 
  

 

 

     

 

 

       

 

 

     

 

 

     

Total interest-bearing liabilities

      20,668,861      $ 60,296        0.59 %      19,877,040      $ 41,906        0.42 % 

Noninterest-bearing demand deposits

      4,928,973             4,983,197        

Other liabilities

      248,559             230,528        

Stockholders’ equity

      3,144,380             2,979,897        
  

 

 

          

 

 

        

Total liabilities and stockholders’ equity

    $ 28,990,773           $ 28,070,662        
  

 

 

          

 

 

        

Interest rate spread

            2.70 %            2.72 % 

Net free funds

            0.13 %            0.09 % 
     

 

 

     

 

 

       

 

 

     

 

 

  

Fully tax-equivalent net interest income and net interest margin

       $ 374,608        2.83 %       $ 358,974        2.81 % 
     

 

 

     

 

 

       

 

 

     

 

 

  

Fully tax-equivalent adjustment

         10,515             10,270     
     

 

 

          

 

 

     

Net interest income

       $ 364,093           $ 348,704     
     

 

 

          

 

 

     

 

(1) The yield on tax exempt loans and securities is computed on a fully tax-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.

 

Page 13

Associated Banc-Corp

Loan and Deposit Composition

(In thousands)    

 

Period End Loan Composition   Jun 30, 2017     Mar 31, 2017     Seql Qtr
% Change		     Dec 31, 2016     Sep 30, 2016     Jun 30, 2016     Comp Qtr
% Change		  

Commercial and industrial

   $ 6,571,000     $ 6,300,646       4 %    $ 6,489,014     $ 6,721,557     $ 6,701,986       (2 )% 

Commercial real estate—owner occupied

     845,336       878,391       (4 )%      897,724       892,678       921,736       (8 )% 
 

 

 

    

 

 

      

 

 

    

 

 

    

 

 

    

Commercial and business lending

     7,416,336       7,179,037       3 %      7,386,738       7,614,235       7,623,722       (3 )% 

Commercial real estate—investor

     3,329,585       3,415,355       (3 )%      3,574,732       3,530,370       3,495,791       (5 )% 

Real estate construction

     1,651,805       1,553,205       6 %      1,432,497       1,314,431       1,285,573       28 % 
 

 

 

    

 

 

      

 

 

    

 

 

    

 

 

    

Commercial real estate lending

     4,981,390       4,968,560       —   %      5,007,229       4,844,801       4,781,364       4 % 
 

 

 

    

 

 

      

 

 

    

 

 

    

 

 

    

Total commercial

     12,397,726       12,147,597       2 %      12,393,967       12,459,036       12,405,086       —   % 

Residential mortgage

     7,115,457       6,715,282       6 %      6,332,327       6,034,166       6,035,720       18 % 

Home equity

     897,111       911,969       (2 )%      934,443       951,594       968,771       (7 )% 

Other consumer

     372,775       372,835       —   %      393,979       399,209       405,709       (8 )% 
 

 

 

    

 

 

      

 

 

    

 

 

    

 

 

    

Total consumer

     8,385,343       8,000,086       5 %      7,660,749       7,384,969       7,410,200       13 % 
 

 

 

    

 

 

      

 

 

    

 

 

    

 

 

    

Total loans

   $ 20,783,069     $ 20,147,683       3 %    $ 20,054,716     $ 19,844,005     $ 19,815,286       5 % 
 

 

 

    

 

 

      

 

 

    

 

 

    

 

 

    
Period End Deposit and Customer Funding Composition   Jun 30, 2017     Mar 31, 2017     Seql Qtr
% Change		     Dec 31, 2016     Sep 30, 2016     Jun 30, 2016     Comp Qtr
% Change		  

Noninterest-bearing demand

   $ 5,038,162     $ 5,338,212       (6 )%    $ 5,392,208     $ 5,337,677     $ 5,039,336       —   % 

Savings

     1,552,820       1,530,155       1 %      1,431,494       1,441,187       1,451,801       7 % 

Interest-bearing demand

     3,858,739       4,736,236       (19 )%      4,687,656       4,548,390       3,789,138       2 % 

Money market

     9,228,129       8,608,523       7 %      8,770,963       8,894,357       8,448,543       9 % 

Brokered CDs

     131,184       54,993       139 %      52,725       44,373       46,268       184 % 

Other time

     1,809,146       1,559,916       16 %      1,553,402       1,481,728       1,517,764       19 % 
 

 

 

    

 

 

      

 

 

    

 

 

    

 

 

    

Total deposits

     21,618,180       21,828,035       (1 )%      21,888,448       21,747,712       20,292,850       7 % 

Customer funding

     262,318       326,823       (20 )%      300,197       477,607       464,880       (44 )% 
 

 

 

    

 

 

      

 

 

    

 

 

    

 

 

    

Total deposits and customer funding

   $ 21,880,498     $ 22,154,858       (1 )%    $ 22,188,645     $ 22,225,319     $ 20,757,730       5 % 
 

 

 

    

 

 

      

 

 

    

 

 

    

 

 

    

Network transaction deposits (1)

   $ 3,220,956     $ 3,417,380       (6 )%    $ 3,895,467     $ 3,730,513     $ 3,141,214       3 % 

Total deposits and customer funding, excluding Brokered CDs and network transaction deposits

   $ 18,528,358     $ 18,682,485       (1 )%    $ 18,240,453     $ 18,450,433     $ 17,570,248       5 % 
 

 

 

    

 

 

      

 

 

    

 

 

    

 

 

    
Quarter Average Loan Composition   Jun 30, 2017     Mar 31, 2017     Seql Qtr
% Change		     Dec 31, 2016     Sep 30, 2016     Jun 30, 2016     Comp Qtr
% Change		  

Commercial and industrial

   $ 6,449,250     $ 6,313,389       2 %    $ 6,514,974     $ 6,674,688     $ 6,559,613       (2 )% 

Commercial real estate—owner occupied

     872,273       886,092       (2 )%      891,836       902,782       915,020       (5 )% 
 

 

 

    

 

 

      

 

 

    

 

 

    

 

 

    

Commercial and business lending

     7,321,523       7,199,481       2 %      7,406,810       7,577,470       7,474,633       (2 )% 

Commercial real estate—investor

     3,359,817       3,502,769       (4 )%      3,546,559       3,532,861       3,448,741       (3 )% 

Real estate construction

     1,604,440       1,497,225       7 %      1,368,084       1,322,966       1,205,370       33 % 
 

 

 

    

 

 

      

 

 

    

 

 

    

 

 

    

Commercial real estate lending

     4,964,257       4,999,994       (1 )%      4,914,643       4,855,827       4,654,111       7 % 
 

 

 

    

 

 

      

 

 

    

 

 

    

 

 

    

Total commercial

     12,285,780       12,199,475       1 %      12,321,453       12,433,297       12,128,744       1 % 

Residential mortgage

     6,957,865       6,564,600       6 %      6,317,769       6,255,264       6,129,924       14 % 

Home equity

     906,208       923,896       (2 )%      942,620       961,034       975,313       (7 )% 

Other consumer

     372,137       384,754       (3 )%      395,228       403,181       408,004       (9 )% 
 

 

 

    

 

 

      

 

 

    

 

 

    

 

 

    

Total consumer

     8,236,210       7,873,250       5 %      7,655,617       7,619,479       7,513,241       10 % 
 

 

 

    

 

 

      

 

 

    

 

 

    

 

 

    

Total loans

   $ 20,521,990     $ 20,072,725       2 %    $ 19,977,070     $ 20,052,776     $ 19,641,985       4 % 
 

 

 

    

 

 

      

 

 

    

 

 

    

 

 

    
Quarter Average Deposit Composition   Jun 30, 2017     Mar 31, 2017     Seql Qtr
% Change		     Dec 31, 2016     Sep 30, 2016     Jun 30, 2016     Comp Qtr
% Change		  

Noninterest-bearing demand

   $ 4,892,271     $ 4,966,082       (1 )%    $ 5,294,078     $ 5,161,802     $ 4,969,994       (2 )% 

Savings

     1,541,129       1,465,811       5 %      1,451,803       1,448,223       1,445,020       7 % 

Interest-bearing demand

     4,272,620       4,251,357       1 %      4,140,072       4,151,708       3,640,733       17 % 

Money market

     9,064,874       9,169,141       (1 )%      9,296,364       9,088,943       8,692,782       4 % 

Time deposits

     1,752,255       1,613,331       9 %      1,560,145       1,553,349       1,540,424       14 % 
 

 

 

    

 

 

      

 

 

    

 

 

    

 

 

    

Total deposits

   $ 21,523,149     $ 21,465,722       —   %    $ 21,742,462     $ 21,404,025     $ 20,288,953       6 % 
 

 

 

    

 

 

      

 

 

    

 

 

    

 

 

    

 

(1) Included above in interest-bearing demand and money market.

 

Page 14

Associated Banc-Corp

Non-GAAP Financial Measures Reconciliation

 

($ in millions)   YTD
Jun 2017		     YTD
Jun 2016		     2Q17     1Q17     4Q16     3Q16     2Q16  

Tangible Common Equity Reconciliation (1)

              

Common equity

       $ 3,032     $ 2,985     $ 2,931     $ 2,937     $ 2,910  

Goodwill and other intangible assets, net

         (987 )      (987 )      (987 )      (988 )      (988 ) 
     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Tangible common equity

       $ 2,045     $ 1,998     $ 1,944     $ 1,949     $ 1,922  
     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Tangible Assets Reconciliation (1)

              

Total assets

       $ 29,769     $ 29,110     $ 29,139     $ 29,153     $ 29,039  

Goodwill and other intangible assets, net

         (987 )      (987 )      (987 )      (988 )      (988 ) 
     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Tangible assets

       $ 28,782     $ 28,123     $ 28,152     $ 28,165     $ 28,051  
     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Average Tangible Common Equity and Average Common Equity Tier 1 Reconciliation (1)

              

Common equity

   $ 2,985     $ 2,859     $ 3,005     $ 2,963     $ 2,925     $ 2,911     $ 2,869  

Goodwill and other intangible assets, net

     (987 )      (989 )      (987 )      (987 )      (988 )      (988 )      (989 ) 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Tangible common equity

     1,998       1,870       2,018       1,976       1,937       1,923       1,880  

Less: Accumulated other comprehensive income / loss

     52       2       50       54       28       (3 )      1  

Less: Deferred tax assets / deferred tax liabilities, net

     31       33       32       32       33       33       32  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Average common equity Tier 1

   $ 2,081     $ 1,905     $ 2,100     $ 2,062     $ 1,998     $ 1,953     $ 1,913  
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Selected Trend Information (2)

              

Trust service fees

       $ 12     $ 12     $ 12     $ 12     $ 12  

Service charges on deposit accounts

         16       16       16       18       16  

Card-based and other nondeposit fees

         14       13       13       13       13  

Insurance commissions

         21       22       18       19       22  

Brokerage and annuity commissions

         4       4       4       4       4  
     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Fee-based revenue

         67       67       63       66       67  

Other

         15       13       29       29       15  
     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Total noninterest income

       $ 82     $ 80     $ 92     $ 95     $ 82  
     

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Selected Equity and Performance Ratios (1) (3)

              

Tangible common equity / tangible assets

         7.11 %      7.10 %      6.91 %      6.92 %      6.85 % 

Return on average equity

     7.33 %      6.18 %      7.35 %      7.31 %      7.07 %      7.03 %      6.19 % 

Return on average tangible common equity

     11.06 %      9.38 %      11.06 %      11.07 %      10.78 %      10.68 %      10.04 % 

Return on average common equity Tier 1

     10.62 %      9.21 %      10.63 %      10.61 %      10.45 %      10.52 %      9.86 % 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Efficiency Ratio Reconciliation (4)

              

Federal Reserve efficiency ratio

     66.54 %      69.18 %      66.69 %      66.39 %      65.35 %      64.40 %      69.34 % 

Fully tax-equivalent adjustment

     (1.30 )%      (1.36 )%      (1.30 )%      (1.30 )%      (1.25 )%      (1.21 )%      (1.36 )% 

Other intangible amortization

     (0.19 )%      (0.21 )%      (0.18 )%      (0.20 )%      (0.20 )%      (0.19 )%      (0.21 )% 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Fully tax-equivalent efficiency ratio

     65.05 %      67.61 %      65.21 %      64.89 %      63.90 %      63.00 %      67.77 % 
 

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

 

(1) The ratio tangible common equity to tangible assets excludes goodwill and other intangible assets, net. This financial measure has been included as it is considered to be a critical metric with which to analyze and evaluate financial condition and capital strength.
(2) These financial measures have been included as they provide meaningful supplemental information to assess trends in the Corporation’s results of operations. May not match the income statement due to rounding.
(3) These capital measurements are used by management, regulators, investors, and analysts to assess, monitor and compare the quality and composition of our capital with the capital of other financial services companies.
(4) 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 fully tax-equivalent net interest income plus noninterest income, excluding investment securities gains / losses, net. 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.

 

Page 15