GREEN BAY, Wis., Oct. 19, 2017 /PRNewswire/ -- Associated
Banc-Corp (NYSE: ASB) today reported net income available to common
equity of $63 million, or
$0.41 per common share for the
quarter ended September 30,
2017. This compares to net income available to common equity
of $52 million, or $0.34 per common share for the quarter ended
September 30, 2016.
"Associated continues to benefit from its strong customer
deposit franchise. According to recently released FDIC 2017
Summary of Deposit data, Associated increased its deposit market
share across its footprint and grew deposits by 10% in our
Wisconsin market. Customer
deposits and funding, excluding network deposits, increased by a
net 8% from the prior year and funded all of our year-over-year
growth," said President and CEO Philip B.
Flynn. "The quarter further benefited from strong credit
quality dynamics, lower provision, and improving efficiency. We
remain committed to delivering year-over-year mid-single digit
annual average loan growth, an improving net interest margin, and
expense growth of less than 1%."
THIRD QUARTER SUMMARY (all comparisons to the year ago
quarter)
- Average loans of $20.9 billion
grew $846 million, or 4%
- Average deposits of $22.4 billion
grew $1.0 billion, or 5%
- Net interest income of $190
million increased $12 million,
or 6%
- Net interest margin of 2.84% improved 7 basis points from
2.77%
- Provision for credit losses of $5
million was down from $21
million
- Noninterest income of $86 million
was down $9 million, reflecting lower
mortgage banking income
- Noninterest expense of $177
million increased $2 million,
or 1%
- During the quarter, the Company repurchased approximately 1.6
million shares, or $37 million, of
common stock
- Return on average common equity Tier 1 (CET1) improved to 11.7%
from 10.5%
- Total dividends per common share of $0.12 were up 9%
THIRD QUARTER FINANCIAL RESULTS
Loans
Year-to-date average loans were up 5% from the comparable period
last year. Third quarter average loans of $20.9 billion were up $846
million, or 4% from the year ago quarter and were up
$377 million, or 2% from the second
quarter.
With respect to third quarter average balances by loan
category:
- Consumer lending increased $988
million from the year ago quarter driven by the Company's on
balance sheet mortgage retention strategy and grew $371 million from the second quarter to
$8.6 billion.
- Commercial real estate lending increased $118 million from the year ago quarter driven by
growth in construction lending and grew $9
million from the second quarter to $5.0 billion.
- Commercial and business lending decreased $259 million from the year ago quarter to
$7.3 billion, primarily due to lower
mortgage warehouse line utilization and reduced oil and gas
outstandings. This portfolio decreased $3
million from the prior quarter.
Deposits
Year-to-date average deposits were up 5% from the comparable
period last year. Third quarter average deposits of $22.4 billion were up $1.0
billion, or 5% from the year ago quarter and were up
$918 million, or 4% from the second
quarter, reflecting seasonal patterns. The loan to deposit ratio
was 94% at quarter-end. Network transaction deposits were down
$1.1 billion, or 30% from the year
ago quarter.
With respect to third quarter average balances by deposit
category:
- Savings and time deposits increased $732
million from the year ago quarter and increased $440 million from the second quarter to
$3.7 billion, driven by seasonal
inflows of public funds.
- Money market deposits increased $279
million from the year ago quarter and increased $303 million from the second quarter to
$9.4 billion.
- Interest-bearing demand deposits increased $196 million from the year ago quarter and
increased $75 million from the second
quarter to $4.3 billion.
- Noninterest-bearing demand deposits decreased $170 million from the year ago quarter, but
increased $100 million from the
second quarter to $5.0 billion.
Net Interest Income and Net Interest Margin
Net interest income of $190
million was up $12 million, or
6% from the year ago quarter, with net interest margin increasing 7
basis points, from 2.77% to 2.84% year-over-year. Third quarter net
interest income increased $6 million,
or 3% from the second quarter, with net interest margin modestly
expanding.
- The average yield on total loans increased 42 basis points to
3.77% from the year ago quarter and increased 15 basis points from
the prior quarter.
- The average cost of interest-bearing deposits increased 31
basis points to 0.63% from the year ago quarter and increased 12
basis points from the prior quarter.
- The net free funds benefit, the benefit of holding
noninterest-bearing demand deposits, increased to 17 basis points
from 9 basis points in the year ago quarter and increased 3 basis
points from the prior quarter.
Noninterest Income
Third quarter total noninterest income of $86 million decreased $9
million from the year ago quarter, reflecting lower mortgage
banking activity. Noninterest income increased $3 million from the prior quarter.
With respect to third quarter noninterest income line items:
- Mortgage banking decreased $12
million from the year ago quarter primarily due to lower
portfolio loan sales that generated $9
million during the year ago quarter. Mortgage banking
increased $2 million from the second
quarter as we resumed our historical practice of originating loans
for sale in the secondary market.
- Bank owned life insurance income ("BOLI") was up $3 million from the year ago and prior quarters
driven by increased policy payouts.
Noninterest Expense
Third quarter total noninterest expense of $177 million was up $2
million, or 1% from the year ago quarter and up $1 million from the second quarter. The
efficiency ratio continued to improve year-over-year and
quarter-over-quarter.
With respect to third quarter noninterest expense line
items:
- Occupancy expense was down $3
million from the year ago quarter and down $1 million from the prior quarter, primarily
driven by the benefits from ongoing internal consolidation
efforts.
- Business development and advertising increased $3 million from the year ago quarter and was up
$1 million from the prior quarter
driven by the Company's expanded fall advertising campaigns.
Taxes
The 2017 year-to-date effective tax rate was 28% compared to 30%
in the comparable period last year, reflecting a change in
accounting standards related to stock compensation and a recent
favorable tax court ruling.
Credit
The third quarter provision for credit losses of $5 million was down $16
million from the year ago quarter and down $7 million from the prior quarter.
- Potential problem loans of $259
million were down $182 million
from the year ago quarter and down $4
million from the prior quarter.
- Nonaccrual loans of $211 million
were down $79 million from the year
ago quarter and down $21 million from
the prior quarter. The nonaccrual loans to total loans ratio
improved to 1.01% in the third quarter, compared to 1.46% in the
year ago quarter, and 1.12% in the prior quarter.
- Third quarter net charge offs of $11
million were down $8 million
from the year ago quarter and down $2
million from the prior quarter.
- The allowance for loan losses of $277
million was up $7 million from
the year ago quarter and was down $5
million from the prior quarter. The allowance for loan
losses to total loans ratio was 1.32% in the third quarter,
compared to 1.36% in the year ago quarter, and 1.35% in the prior
quarter.
- The allowance related to the oil and gas portfolio was
$30 million at September 30, 2017 and represented 5.2% of total
oil and gas loans.
Capital
The Company's capital position remains strong, with a CET1 ratio
of 9.9% at September 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.
THIRD 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, October 19, 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 third quarter 2017 earnings call.
The third 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
$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.
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
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SOURCE Associated Banc-Corp