GREEN BAY, Wis., Oct. 20, 2016 /PRNewswire/ -- Associated
Banc-Corp (NYSE: ASB) today reported net income available to common
equity of $52 million, or
$0.34 per common share, for the
quarter ended September 30,
2016. This compares to net income available to common
equity of $47 million, or
$0.31 per common share, for both the
quarters ended June 30, 2016 and
September 30, 2015.
"In the third quarter, we reached record deposit levels. We saw
significant seasonal deposit inflows and we are particularly
pleased with double-digit year over year growth in demand deposits.
Average loans continued to grow and we remain on track to meet our
2016 loan guidance. Mortgage banking activity and record capital
markets revenues drove noninterest income higher in the third
quarter, which more than offset seasonally lower insurance
commissions and additional loan loss provisions," said President
and CEO Philip B. Flynn.
THIRD QUARTER SUMMARY
- Average loans of $20.1 billion
increased $411 million, or 2% from
the second quarter
- Total commercial lending grew 10% year over year
- Average deposits of $21.4 billion
increased $1.1 billion, or 5% from
the second quarter
- Noninterest-bearing demand deposits grew 13% year over
year
- Net interest income of $179
million was up $2 million, or
1% from the second quarter
- Net interest income grew 5% year over year
- Net interest margin of 2.77%, down from 2.81% in the second
quarter
- Net interest margin was down 5 basis points year over year
- Provision for credit losses of $21
million was up $7 million from
the second quarter
- Noninterest income of $95 million
was up $13 million, or 16% from the
second quarter
- Noninterest expense of $175
million was up $1 million, or
1% from the second quarter
- Return on average common equity Tier 1 (CET1) was 10.5%, up
from 9.9% in the second quarter
- Total dividends per common share of $0.11 were up 10% from the year ago quarter
- Capital ratios remain strong with a CET1 ratio of 9.3% at
quarter end, compared to 9.2% at prior quarter end
THIRD QUARTER RESULTS
Loans
Third quarter average loans of $20.1
billion increased $411
million, or 2% from the second quarter, and have increased
$1.6 billion, or 9% from the year ago
quarter.
With respect to third quarter average balances,
- Commercial real estate lending grew $202
million, or 4% from the second quarter to $4.9 billion. Commercial real estate lending has
increased $595 million, or 14% from
the year ago quarter.
- Consumer lending grew $106
million, net of $239 million
of portfolio loan sales, or 1% from the second quarter to
$7.6 billion, and has increased
$517 million, or 7% from the year ago
quarter.
- Commercial and business lending grew $103 million, or 1% from the second quarter to
$7.6 billion, with growth driven by
mortgage warehouse and power and utilities. Commercial and business
lending has increased $488 million,
or 7% from the year ago quarter.
Deposits
Third quarter average deposits of $21.4
billion increased $1.1
billion, or 5% from the second quarter, and have increased
$1.1 billion, or 5% from the year ago
quarter.
With respect to third quarter average balances,
- Interest-bearing demand deposits grew $511 million, or 14% from the second quarter to
$4.2 billion, and have grown
$952 million, or 30% from the year
ago quarter.
- Noninterest-bearing demand deposits grew $192 million, or 4% from the second quarter to
$5.2 billion, and have grown
$588 million, or 13% from the year
ago quarter.
- Savings and time deposits increased modestly from the second
quarter. Savings deposits have grown $91
million, or 7% from the year ago quarter. Time deposits have
decreased $71 million, or 4% from the
year ago quarter.
- Money market deposits grew $396
million, or 5% from the second quarter to $9.1 billion, but have decreased $449 million, or 5% from the year ago quarter as
we continue to optimize our funding costs.
Net Interest Income and Net Interest Margin
Third quarter net interest income of $179
million was up $2 million, or
1% from the second quarter, and was up $8
million, or 5% from the year ago quarter. Third quarter net
interest margin of 2.77% was 5 basis points lower than the year ago
quarter.
- Interest and fees on loans increased $4
million, or 3% from the second quarter. The total loan yield
of 3.35% was unchanged from the second quarter.
- Interest expense on deposits increased $1 million, or 12% from the second quarter. Total
deposits costs, including the benefit of free funds, were
essentially unchanged from the second quarter.
- The yields on investment securities declined from the second
quarter, and accounted for the majority of the margin
compression.
Noninterest Income
Third quarter total noninterest income of $95 million was up $13
million, or 16% from the second quarter, and was up
$15 million, or 19% from the year ago
quarter.
- Mortgage banking income increased $14
million to $18 million for the
quarter. The Company benefitted from higher volumes of mortgage
loans originated for sale during the quarter, and recorded a
$2 million positive fair value mark
on its loan pipeline at quarter end. Portfolio loan sales generated
$9 million of gross gains during the
quarter.
- Capital market fees increased $3
million to $7 million for the
quarter on higher derivative and syndication activity.
- Fee-based revenue decreased $2
million from the second quarter due to seasonally lower
insurance commissions. All other fee-based revenue categories were
higher in the third quarter, including service charges on deposit
accounts, trust service fees, card-based and other nondeposit fees,
and brokerage and annuity commissions.
- All other noninterest income categories, collectively,
decreased $2 million from the second
quarter, primarily attributable to lower investment securities
gains. The Company did not engage in further restructuring of its
investment portfolio during the third quarter.
Noninterest Expense
Third quarter total noninterest expense of $175 million was up $1
million, or 1% from the second quarter, and was up
$4 million, or 2% from the year ago
quarter.
- Personnel expense increased $2
million from the second quarter and included $1 million of severance.
- Occupancy expense increased from the second quarter, due to a
$2 million lease termination charge
related to planned consolidation of office space in Chicago.
- All other noninterest expense categories, collectively,
decreased $3 million from the prior
quarter primarily related to lower business development and
advertising expense.
Taxes
Third quarter income tax expense was $24
million with an effective tax rate of 31%, compared to
$21 million and 30% in the second
quarter, and $22 million and 30% in
the year ago quarter.
Credit
The provision for credit losses was $21
million in the third quarter, up $7
million from the prior quarter, with the increase primarily
attributable to the Company's oil and gas portfolio.
- Nonaccrual loans of $290 million
were up $7 million from the second
quarter. The nonaccrual loans to total loans ratio was 1.46% in the
third quarter, compared to 1.43% in the prior quarter.
- Net charge offs of $18 million
were down $2 million from the second
quarter. Net charge offs in the third quarter were primarily
attributable to oil and gas related charge offs of $22 million, which were partially offset by
recoveries in the commercial portfolio.
- Potential problem loans of $441
million were down $16 million
from the second quarter.
- The allowance for loan losses of $270
million was up $2 million from
the second quarter. The allowance for loan losses to total loans
was 1.36% in the third quarter, compared to 1.35% in the second
quarter.
- The allowance related to the oil and gas portfolio was
$38 million, compared to $42 million at June 30,
2016, and $29 million at
September 30, 2015. The allowance on
this portfolio reflects year to date net charge offs of
$53 million. The allowance
represented 5.5% of total oil and gas loans at September 30, 2016, compared to 5.6% at
June 30, 2016, and 3.8% at
September 30, 2015.
Capital
The Company's capital position remains strong, with a common
equity Tier 1 ratio of 9.3% at September
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.
THIRD 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, October 20, 2016.
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 third quarter 2016 earnings call.
The third quarter 2016 financial tables and 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
$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