GREEN BAY, Wis., July 21, 2016 /PRNewswire/ -- Associated
Banc-Corp (NYSE: ASB) today reported net income available to common
equity of $47 million, or
$0.31 per common share, for the
quarter ended June 30, 2016. This
compares to net income available to common equity of $40 million, or $0.27 per common share, for the quarter ended
March 31, 2016.
"This quarter's results demonstrated our ability to grow in a
challenging environment. We benefit from a mix of diverse
businesses and are encouraged by the consistent demand across our
product offerings. We delivered record loan growth, and together
with a stable margin, saw a significant increase in net interest
income. We are also pleased to report stronger fee-based revenue
which highlights the resiliency of our fee product offerings," said
President and CEO Philip B. Flynn.
"We held expenses in line with prior quarters and we are on target
to deliver improved efficiency for the fifth straight year. Outside
of energy, our credit quality metrics remain sound and net charge
offs were at cyclical lows. Our customers look to Associated as a
partner for growth as we continue to enhance our capabilities while
delivering value to our shareholders."
SECOND QUARTER SUMMARY
- Average loans of $19.6 billion
grew $719 million, or 4% from the
first quarter
- Total commercial lending accounted for 75% of average loan
growth
- Average deposits of $20.3 billion
declined $286 million, or 1% from the
first quarter
- Net interest income of $177
million, up $5 million, or 3%
from the first quarter
- Net interest margin of 2.81% was stable from the first
quarter
- Provision for credit losses of $14
million, down $6 million from
the first quarter
- Noninterest income of $82
million, down $1 million from
the prior quarter
- Fee-based revenue of $67 million,
up $2 million from the first
quarter
- Noninterest expense of $174
million was flat from the first quarter
- Return on average common equity Tier 1 (CET1) was 9.9%
- Total dividends per common share of $0.11 in the quarter, up 10% from the year ago
quarter
- Capital ratios remain strong with a CET1 ratio of 9.2% at
quarter end
SECOND QUARTER RESULTS
Loans
Second quarter average loans of $19.6
billion increased $719 million
from the first quarter, and have increased $1.5 billion from the year ago quarter.
With respect to second quarter average balances,
- Commercial and business lending grew $354 million from the first quarter to
$7.5 billion, with growth driven by
general commercial lending, mortgage warehouse, and power and
utilities. Commercial and business lending increased $307 million, or 4%, from the year ago
quarter.
- Commercial real estate lending grew $185
million from the first quarter to $4.7 billion. Commercial real estate lending has
increased $505 million, or 12%, from
the year ago quarter.
- Consumer lending grew $181
million from the first quarter to $7.5 billion, and increased $641 million, or 9%, from the year ago
quarter.
Deposits
Second quarter average deposits of $20.3
billion decreased $286 million
from the first quarter, and have increased $663 million from the year ago quarter.
With respect to second quarter average balances,
- Noninterest-bearing demand deposits decreased modestly from the
first quarter to $5.0 billion, and
have grown $679 million, or 16%, from
the year ago quarter.
- Interest-bearing demand deposits increased $420 million from the first quarter to
$3.6 billion, and grew $390 million, or 12%, from the year ago
quarter.
- Savings deposits increased $77
million from the first quarter to $1.4 billion, and have grown $92 million, or 7%, from the year ago
quarter.
- Money market deposits declined $739
million from the first quarter to $8.7 billion, and have declined $409 million, or 4%, from the year ago
quarter.
- Time deposits declined slightly from the first quarter to
$1.5 billion, and have decreased
$90 million, or 6%, from the year ago
quarter.
Net Interest Income and Net Interest Margin
Second quarter net interest income of $177 million was up $5
million, or 3% from the first quarter and up $10 million, or 6% from the year ago quarter.
Second quarter net interest margin of 2.81% was flat from the prior
quarter and 2 basis points lower than the year ago quarter.
- Interest and fees on loans increased $3
million, or 2%, from the first quarter. This increase was
partially offset by $1 million in
lower interest income from investment securities.
- Interest expense on deposits declined modestly from the first
quarter, partially attributable to lower rates paid on
interest-bearing demand, savings, and time deposit balances.
- Interest on long-term funding decreased $3 million from the first quarter, driven by the
retirement of $430 million of the
Company's senior notes in February
2016.
Noninterest Income
Second quarter total noninterest income of $82 million was down $1
million, or 1% from the first quarter and down $4 million, or 5% from the year ago quarter.
- Fee-based revenue increased $2
million from the first quarter, due to increases across all
categories including trust service fees, service charges on deposit
accounts, card-based and other nondeposit fees, insurance
commissions, and brokerage and annuity commissions.
- Mortgage banking income decreased modestly from the first
quarter. While gain on sales benefitted from higher volumes of
mortgage loans originated for sale during the period, these were
offset by adverse fair value marks on the Company's pipeline and
the mortgage servicing rights valuation; reflecting lower rates at
quarter end.
- All remaining noninterest income categories, on a combined
basis, were down $3 million from the
prior quarter primarily related to lower bank owned life insurance
income and lower asset gains in the second quarter.
Noninterest Expense
Second quarter total noninterest expense of $174 million was flat from the first quarter, and
down $2 million, or 1% from the year
ago quarter.
- Lower business development and advertising, occupancy,
foreclosure and OREO expense, and legal and professional fees
contributed to a $3 million reduction
in expenses from the first quarter.
- These savings were partially offset by $3 million in higher FDIC, personnel, and other
expenses.
Taxes
Second quarter income taxes were $21
million with an effective tax rate of 30%, compared to
$19 million and 31% in the first
quarter, and $22 million and 31% in
the year ago quarter.
Credit
The provision for credit losses was $14
million in the second quarter, down $6 million from the prior quarter, primarily
attributed to a change in estimate resulting from further
segmentation of mortgage warehouse loans within our specialized
lending business.
- Nonaccrual loans of $283 million
were down $4 million from the first
quarter. The nonaccrual loans to total loans ratio was 1.43% in the
second quarter and was down from 1.49% in the prior quarter.
- Net charge offs of $21 million
were up $4 million from the first
quarter. Net charge offs in the second quarter were primarily
attributable to oil and gas related charge offs of $19 million.
- Potential problem loans of $457
million were up $56 million
from the first quarter, related to risk rating migration in the
general commercial and oil and gas portfolios.
- The allowance for loan losses of $268
million was down $10 million
from the first quarter. The allowance for loan losses to total
loans was 1.35% in the second quarter, compared to 1.44% in the
first quarter.
- The allowance related to the oil and gas portfolio was
$42 million, down $7 million from March 31,
2016, and was flat to December 31,
2015. The allowance on this portfolio reflects year to date
net charge offs of $32 million. The
allowance represented 5.6% of total oil and gas loans at
June 30, 2016, flat to 5.6% at
December 31, 2015.
- The allowance for unfunded commitments of $27 million increased $3
million from the first quarter, driven by risk rating
migration and new volumes.
Capital
The Company's capital position remains strong, with a common
equity Tier 1 ratio of 9.2% at June
30, 2016. 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 2016 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 21,
2016. Interested parties can listen to the call live on the
internet through the investor relations section of the Company's
website, http://investor.associatedbank.com or by dialing
877-407-8037. The second quarter 2016 financial tables and an
accompanying slide presentation for the call will be available on
the Company's website just prior to the call. The number for
international callers is 201-689-8037. Participants should ask the
operator for the Associated Banc-Corp second quarter 2016 earnings
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
$29 billion and is one of the top 50
publicly traded U.S. bank holding companies. Headquartered in
Green Bay, Wisconsin, Associated
is a leading Midwest banking franchise, offering a full range of
financial products and services from over 200 banking locations
serving more than 100 communities throughout Wisconsin, Illinois and Minnesota, and commercial financial services
in Indiana, Michigan, Missouri, Ohio and Texas. Associated Bank, N.A. is an Equal
Housing Lender, Equal Opportunity Lender and Member FDIC. More
information about Associated Banc-Corp is available at
www.associatedbank.com.
FORWARD LOOKING STATEMENTS
Statements made in this document which are not purely
historical are forward-looking statements, as defined in the
Private Securities Litigation Reform Act of 1995. This includes any
statements regarding management's plans, objectives, or goals for
future operations, products or services, and forecasts of its
revenues, earnings, or other measures of performance. Such
forward-looking statements may be identified by the use of words
such as "believe", "expect", "anticipate", "plan", "estimate",
"should", "will", "intend", "outlook", or similar
expressions. Forward-looking statements are based on current
management expectations and, by their nature, are subject to risks
and uncertainties. Actual results may differ materially from those
contained in the forward-looking statements. Factors which may
cause actual results to differ materially from those contained in
such forward-looking statements include those identified in the
Company's most recent Form 10-K and subsequent SEC filings.
Such factors are incorporated herein by reference.
NON-GAAP FINANCIAL MEASURES
This press
release contains references to measures which are not defined in
generally accepted accounting principles ("GAAP"). Information
concerning these non-GAAP financial measures can be found in the
financial tables.
Investor Contact:
Teresa
Gutierrez, Senior Vice President, Director of Investor
Relations
920-491-7059
Media Contact:
Jennifer
Kaminski, Vice President, Manager of Public Relations
920-491-7576
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SOURCE Associated Banc-Corp