ASB Associated Banc Corp

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 OR 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) January 22, 2015

 

 

Associated Banc-Corp

(Exact name of registrant as specified in its chapter)

 

 

 

Wisconsin		001-31343		39-1098068
(State or other jurisdiction of incorporation)		(Commission File Number)		(IRS Employer Identification No.)

 

433 Main Street, Green Bay, Wisconsin		54301
(Address of principal executive offices)		(Zip code)

Registrant’s telephone number, including area code 920-491-7500

(Former name or former address, if changed since last report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

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Item 2.02. Results of Operations and Financial Condition.

On January 22, 2015, Associated Banc-Corp announced its earnings for the quarter ended December 31, 2014. A copy of the registrant’s press release containing this information and the slide presentation discussed on the conference call for investors and analysts on January 22, 2015, are being furnished as Exhibit 99.1 and Exhibit 99.2, respectively, to this Report on Form 8-K and are incorporated herein by reference.

The information furnished pursuant to this Item 2.02, including Exhibit 99.1 and Exhibit 99.2, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities under that Section and shall not be deemed to be incorporated by reference into any filing of the Registrant under the Securities Act of 1933 or the Exchange Act.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

The following exhibits are furnished as part of this Report on Form 8-K:

 

99.1

Press release of the registrant dated January 22, 2015, containing financial information for the quarter ended December 31, 2014.

 

99.2

Slide presentation discussed on the conference call for investors and analysts on January 22, 2015.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

		Associated Banc-Corp
		(Registrant)

 

Date: January 22, 2015		By:		/s/ Christopher J. Del Moral-Niles
				Christopher J. Del Moral-Niles
				Chief Financial Officer

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ASSOCIATED BANC-CORP

Exhibit Index to Current Report on Form 8-K

 

Exhibit Number
99.1		Press release of the registrant dated January 22, 2015, containing financial information for the quarter ended December 31, 2014.
99.2		Slide presentation discussed on the conference call for investors and analysts on January 22, 2015.

Exhibit 99.1

 

		NEWS RELEASE
		Investor Contact: Brian Klaus, Senior Vice President, Director of Investor Relations 920-491-7059
		Media Contact: Cliff Bowers, Senior Vice President, Director of Public Relations 920-491-7542

Associated Reports 2014 Earnings of $1.16 per share on Record

Loans and Deposits

Fourth Quarter Earnings of $0.31 per share, up 11% from last year

GREEN BAY, Wis. –– January 22, 2015 –– Associated Banc-Corp (NYSE: ASB) today reported net income to common shareholders of $186 million, or $1.16 per common share, for the year ended December 31, 2014. This compares to net income to common shareholders of $184 million, or $1.10 per common share, for the year ended December 31, 2013.

For the quarter ended December 31, 2014, the Company reported earnings per share of $0.31 per common share. This compares to $0.28 per common share, for the quarter ended December 31, 2013.

“Overall we are pleased with this year’s financial results and accomplishments. We continued to grow our balance sheet, total revenues, and bottom line earnings. In addition, we have continued to make substantial investments in the bank which will position us for the future, while slightly reducing total expenses” said President and CEO Philip B. Flynn. “We remain focused on opportunistic ways to deploy capital while delivering increased value to our shareholders. We are also happy to kick off 2015 with last week’s announcement regarding the acquisition of the insurance agency, Ahmann-Martin.”

2014 HIGHLIGHTS

 

•

Average loans grew $1.2 billion, or 8% from a year ago to $16.8 billion

 

•

Average total commercial loan balances grew $1 billion, or 10% from last year

 

•

Average deposits grew $209 million, or 1% from a year ago to $17.6 billion

 

•

Average checking balances grew $119 million, or 2% from last year

 

•

Net interest income of $681 million increased $35 million, or 5% from last year

 

•

Noninterest expenses of $679 million were down slightly from 2013

 

•

During the year, the Company repurchased $259 million, or approximately 14.3 million shares, of common stock at an average cost of $18.12 per share

 

•

Return on Tier 1 common equity for 2014 was 9.9%

 

•

2014 fourth quarter return on Tier 1 common equity was 10.4%

 

•

Total dividends per common share of $0.37 in 2014 were up 12% from last year

 

•

Capital ratios remain strong with a Tier 1 common equity ratio of 9.74% at year end

– more –

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FOURTH QUARTER AND 2014 FINANCIAL RESULTS

Loans

Average loans of $16.8 billion for 2014 were up $1.2 billion, or 8% from 2013. Total average commercial loans for 2014 grew $1 billion, or 10% from a year ago to $10.5 billion. Commercial and business lending average balances grew $686 million, or 12% from 2013. Commercial real estate lending average balances grew $285 million, or 8% from 2013. Residential mortgage average balances for 2014 grew $488 million, or 13% from a year ago to $4.2 billion. Offsetting part of the 2014 total loan growth was the continued run off in home equity balances, with an average balance decline of $276 million, or 14% from 2013.

Fourth quarter 2014 average loans increased $246 million, or 1% from the third quarter and have increased $1.6 billion, or 10% from the year ago quarter. Growth in residential mortgage and commercial loans was partially offset by declines in the home equity and installment loan portfolios.

For the period ended December 31, 2014, total loans of $17.6 billion were up $435 million, or 3% from the end of the prior quarter, and were up $1.7 billion, or 11% from December 31, 2013. Total commercial loans of $11 billion at December 31, 2014 were up $1.2 billion, or 12% from the prior year end.

Deposits

2014 average deposits of $17.6 billion were up $209 million, or 1% from 2013. Total average checking, savings, and money market balances growth of $471 million was partially offset by declines in time deposit balances of $262 million during the year.

Average deposits of $18.5 billion for the fourth quarter were up $659 million, or 4% compared to the third quarter and have increased $651 million, or 4%, from the year ago quarter. Money market average balances increased $488 million, or 6% from the third quarter and are up $460 million, or 6% from the year ago quarter. Fourth quarter average checking balances increased $173 million, or 2% from the third quarter and are up $304 million, or 4% from the year ago quarter.

For the period ended December 31, 2014, total deposits of $18.8 billion were up $562 million, or 3% from the end of the prior quarter, and were up $1.5 billion, or 9% from December 31, 2013. Money market balances of $8.3 billion at December 31, 2014 were up $1.4 billion, or 21% from the prior year end.

Net Interest Income and Net Interest Margin

Net interest income of $681 million for 2014 was up $35 million, or 5% from 2013. Fourth quarter net interest income of $175 million increased 1% from the prior quarter and was up $7 million, or 4% compared to the year ago quarter.

- more –

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Net interest margin of 3.08% for 2014 declined 9 basis points from 2013. Fourth quarter net interest margin was 3.04%, a decrease of 2 basis points from the 3.06% reported in the third quarter and a decrease of 19 basis points from a year ago.

Fourth quarter asset yields of 3.32% were up 3 basis points from the prior quarter. Asset yield compression was more than offset by interest recoveries and prepayment fees of nearly $5 million. The net interest margin impact of this $5 million was approximately 8 basis points during the quarter.

Total interest-bearing funding costs of 0.35% were up 6 basis points from the third quarter. Long-term funding costs increased in the fourth quarter as a result of the $500 million debt issued in November. The net effect of this transaction decreased net interest margin by approximately 5 basis points for the quarter.

Noninterest Income and Expense

Noninterest income of $290 million for 2014 was down $23 million, or 7% compared to 2013. This decline was primarily attributed to net mortgage banking income, which was down $28 million, or 56% from 2013.

Fourth quarter noninterest income was $70 million, down $5 million, or 7% from the third quarter and down $6 million, or 8% from the year ago quarter. Mortgage banking income declined $4 million from the prior quarter and $5 million from the year ago quarter. Insurance commissions increased $3 million from the prior quarter, primarily related to the establishment of a $4 million reserve in the third quarter for remediation on legacy debt protection products. Fourth quarter asset gains declined $1 million from the prior quarter.

2014 total noninterest expense of $679 million was down slightly from 2013. Increases in technology, FDIC, and advertising expenses were more than offset by declines in personnel, occupancy, professional fees and foreclosure/OREO expenses.

Total noninterest expense for the fourth quarter of $172 million was flat compared to the third quarter and down $7 million from the year ago quarter.

Taxes

2014 income taxes of $86 million were up $6 million from 2013. The effective tax rate for 2014 was 31% compared to 30% last year.

Credit

Net charge offs of $4 million for the fourth quarter were up $2 million from the third quarter, but are down $1 million from the year ago quarter. Potential problem loans of $190 million declined $30 million, or 13% from the prior quarter. The fourth quarter provision for credit losses of $5 million was up $4 million from the prior quarter.

- more –

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The Company’s allowance for loan losses was $266 million, equal to 1.51% of loans and reflects a coverage ratio of 150% of nonaccrual loans at December 31, 2014.

Nonaccrual loans of $177 million were down 4% compared to the third quarter and were also down 4% from the year ago quarter. The ratio of nonaccrual loans to total loans was down from the previous quarter and stands at 1.01%.

Capital

During the fourth quarter, the Company repurchased $100 million of common stock in two separate accelerated share repurchase transactions.

The Company’s capital position remains strong, with a Tier 1 common equity ratio of 9.74% at December 31, 2014. The Company’s capital ratios continue to be in excess of the Basel III “well-capitalized” regulatory benchmarks on a fully phased in basis.

FOURTH QUARTER 2014 EARNINGS RELEASE CONFERENCE CALL

The Company will host a conference call for investors and analysts at 4:00 p.m. Central Time (CT) today, January 22, 2015. Interested parties can listen to the call live on the internet through the investor relations section of the company’s website, https://www.associatedbank.com/investor or by dialing 877-407-8037. The 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 fourth quarter 2014 earnings call.

An audio archive of the webcast will be available on the company’s website at https://www.associatedbank.com/investor approximately fifteen minutes after the call is over.

ABOUT ASSOCIATED BANC-CORP

Associated Banc-Corp (NYSE: ASB) has total assets of $27 billion and is one of the top 50, publicly traded, U.S. bank holding companies. Headquartered in Green Bay, Wis., Associated is a leading Midwest banking franchise, offering a full range of financial products and services in 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.

- more –

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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”), including “efficiency ratio,” “Tier 1 common equity”, and “core fee-based revenue.” Information concerning these non-GAAP financial measures can be found in the attached tables.

# # #

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Associated Banc-Corp Consolidated Balance Sheets (Unaudited)
(in thousands)		December 31, 2014				September 30, 2014				Seql Qtr $ Change				June 30, 2014				March 31, 2014				December 31, 2013				Comp Qtr $ Change
Assets
Cash and due from banks		$	444,113			$	381,287			$	62,826			$	549,883			$	526,951			$	455,482			$	(11,369	)
Interest-bearing deposits in other financial institutions			571,924				74,945				496,979				78,233				92,071				126,018				445,906
Federal funds sold and securities purchased under agreements to resell			16,030				18,320				(2,290	)			18,135				4,400				20,745				(4,715	)
Securities held to maturity, at amortized cost			404,455				301,941				102,514				246,050				193,759				175,210				229,245
Securities available for sale, at fair value			5,396,812				5,345,422				51,390				5,506,379				5,277,908				5,250,585				146,227
Federal Home Loan Bank and Federal
Reserve Bank stocks, at cost			189,107				188,875				232				186,247				181,360				181,249				7,858
Loans held for sale			154,935				141,672				13,263				78,657				46,529				64,738				90,197
Loans			17,593,846				17,159,090				434,756				17,045,052				16,441,444				15,896,261				1,697,585
Allowance for loan losses			(266,302	)			(266,262	)			(40	)			(271,851	)			(267,916	)			(268,315	)			2,013
Loans, net			17,327,544				16,892,828				434,716				16,773,201				16,173,528				15,627,946				1,699,598
Premises and equipment, net			274,688				272,283				2,405				264,735				269,257				270,890				3,798
Goodwill			929,168				929,168				—				929,168				929,168				929,168				—
Other intangible assets, net			67,582				69,201				(1,619	)			70,538				72,629				74,464				(6,882	)
Trading assets			35,163				34,005				1,158				40,630				40,822				43,728				(8,565	)
Other assets			1,010,253				1,003,875				6,378				985,930				997,815				1,006,697				3,556
Total assets		$	26,821,774			$	25,653,822			$	1,167,952			$	25,727,786			$	24,806,197			$	24,226,920			$	2,594,854
Liabilities and Stockholders’ Equity
Noninterest-bearing demand deposits		$	4,505,272			$	4,302,454			$	202,818			$	4,211,057			$	4,478,981			$	4,626,312			$	(121,040	)
Interest-bearing deposits			14,258,232				13,898,804				359,428				13,105,202				13,030,946				12,640,855				1,617,377
Total deposits			18,763,504				18,201,258				562,246				17,316,259				17,509,927				17,267,167				1,496,337
Federal funds purchased and securities sold under agreements to repurchase			493,991				765,641				(271,650	)			959,051				939,254				475,442				18,549
Other short-term funding			574,297				664,539				(90,242	)			1,378,120				308,652				265,484				308,813
Long-term funding			3,930,117				2,931,547				998,570				2,931,809				2,932,040				3,087,267				842,850
Trading liabilities			37,329				36,003				1,326				43,311				43,450				46,470				(9,141	)
Accrued expenses and other liabilities			222,285				185,256				37,029				169,290				171,850				193,800				28,485
Total liabilities			24,021,523				22,784,244				1,237,279				22,797,840				21,905,173				21,335,630				2,685,893
Stockholders’ Equity
Preferred equity			59,727				61,024				(1,297	)			61,024				61,158				61,862				(2,135	)
Common stock			1,665				1,719				(54	)			1,750				1,750				1,750				(85	)
Surplus			1,484,933				1,583,032				(98,099	)			1,628,356				1,623,323				1,617,990				(133,057	)
Retained earnings			1,497,818				1,466,525				31,293				1,432,518				1,402,549				1,392,508				105,310
Accumulated other comprehensive income (loss)			(4,850	)			(1,725	)			(3,125	)			10,494				(11,577	)			(24,244	)			19,394
Treasury stock			(239,042	)			(240,997	)			1,955				(204,196	)			(176,179	)			(158,576	)			(80,466	)
Total stockholders’ equity			2,800,251				2,869,578				(69,327	)			2,929,946				2,901,024				2,891,290				(91,039	)
Total liabilities and stockholders’ equity		$	26,821,774			$	25,653,822			$	1,167,952			$	25,727,786			$	24,806,197			$	24,226,920			$	2,594,854

 

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Associated Banc-Corp Consolidated Statements of Income (Unaudited)
		For The Three Months Ended December 31,								Quarter								For The Year Ended December 31,								Year-to-Date
(in thousands, except per share amounts)		2014				2013				$ Change				% Change				2014				2013				$ Change				% Change
Interest Income
Interest and fees on loans		$	156,536			$	148,884			$	7,652				5.1	%		$	598,582			$	587,526			$	11,056				1.9	%
Interest and dividends on investment securities:
Taxable			25,061				24,316				745				3.1	%			102,464				88,919				13,545				15.2	%
Tax-exempt			7,580				6,884				696				10.1	%			29,064				27,345				1,719				6.3	%
Other interest			1,821				1,453				368				25.3	%			6,635				5,193				1,442				27.8	%
Total interest income			190,998				181,537				9,461				5.2	%			736,745				708,983				27,762				3.9	%
Interest Expense
Interest on deposits			7,319				7,340				(21	)			(0.3	%)			26,294				31,267				(4,973	)			(15.9	%)
Interest on Federal funds purchased and securities sold under agreements to repurchase			218				271				(53	)			(19.6	%)			1,219				1,322				(103	)			(7.8	%)
Interest on other short-term funding			156				228				(72	)			(31.6	%)			785				1,519				(734	)			(48.3	%)
Interest on long-term funding			8,644				6,499				2,145				33.0	%			27,480				29,332				(1,852	)			(6.3	%)
Total interest expense			16,337				14,338				1,999				13.9	%			55,778				63,440				(7,662	)			(12.1	%)
Net Interest Income			174,661				167,199				7,462				4.5	%			680,967				645,543				35,424				5.5	%
Provision for credit losses			5,000				2,300				2,700				117.4	%			16,000				10,100				5,900				58.4	%
Net interest income after provision for credit losses			169,661				164,899				4,762				2.9	%			664,967				635,443				29,524				4.6	%
Noninterest Income
Trust service fees			12,457				11,938				519				4.3	%			48,403				45,633				2,770				6.1	%
Service charges on deposit accounts			17,006				17,330				(324	)			(1.9	%)			68,779				70,009				(1,230	)			(1.8	%)
Card-based and other nondeposit fees			12,019				12,684				(665	)			(5.2	%)			49,512				49,913				(401	)			(0.8	%)
Insurance commissions			10,593				11,274				(681	)			(6.0	%)			44,421				44,024				397				0.9	%
Brokerage and annuity commissions			3,496				3,881				(385	)			(9.9	%)			16,089				14,877				1,212				8.1	%
Total core fee-based revenue			55,571				57,107				(1,536	)			(2.7	%)			227,204				224,456				2,748				1.2	%
Mortgage banking, net			2,928				8,277				(5,349	)			(64.6	%)			21,320				48,847				(27,527	)			(56.4	%)
Capital market fees, net			2,613				2,771				(158	)			(5.7	%)			9,973				13,080				(3,107	)			(23.8	%)
Bank owned life insurance income			2,739				2,787				(48	)			(1.7	%)			13,576				11,855				1,721				14.5	%
Asset gains, net			3,727				2,687				1,040				38.7	%			10,288				5,413				4,875				90.1	%
Investment securities gains (losses), net			25				(18	)			43				N/M				494				564				(70	)			(12.4	%)
Other			2,040				2,262				(222	)			(9.8	%)			7,464				8,884				(1,420	)			(16.0	%)
Total noninterest income			69,643				75,873				(6,230	)			(8.2	%)			290,319				313,099				(22,780	)			(7.3	%)
Noninterest Expense
Personnel expense			97,258				101,215				(3,957	)			(3.9	%)			390,399				397,015				(6,616	)			(1.7	%)
Occupancy			14,589				14,684				(95	)			(0.6	%)			57,677				59,409				(1,732	)			(2.9	%)
Equipment			6,148				6,509				(361	)			(5.5	%)			24,784				25,351				(567	)			(2.2	%)
Technology			14,581				12,963				1,618				12.5	%			55,472				49,445				6,027				12.2	%
Business development and advertising			8,538				7,834				704				9.0	%			26,144				23,346				2,798				12.0	%
Other intangible amortization			775				1,011				(236	)			(23.3	%)			3,747				4,043				(296	)			(7.3	%)
Loan expense			3,646				3,677				(31	)			(0.8	%)			13,866				13,162				704				5.3	%
Legal and professional fees			4,257				5,916				(1,659	)			(28.0	%)			17,485				20,226				(2,741	)			(13.6	%)
Foreclosure / OREO expense			1,168				2,829				(1,661	)			(58.7	%)			6,722				10,068				(3,346	)			(33.2	%)
FDIC expense			6,956				4,879				2,077				42.6	%			23,761				19,461				4,300				22.1	%
Other			13,889				17,650				(3,761	)			(21.3	%)			59,184				59,123				61				0.1	%
Total noninterest expense			171,805				179,167				(7,362	)			(4.1	%)			679,241				680,649				(1,408	)			(0.2	%)
Income before income taxes			67,499				61,605				5,894				9.6	%			276,045				267,893				8,152				3.0	%
Income tax expense			18,761				13,847				4,914				35.5	%			85,536				79,201				6,335				8.0	%
Net income			48,738				47,758				980				2.1	%			190,509				188,692				1,817				1.0	%
Preferred stock dividends			1,225				1,273				(48	)			(3.8	%)			5,002				5,158				(156	)			(3.0	%)
Net income available to common equity		$	47,513			$	46,485			$	1,028				2.2	%		$	185,507			$	183,534			$	1,973				1.1	%
Earnings Per Common Share:
Basic		$	0.31			$	0.28			$	0.03				10.7	%		$	1.17			$	1.10			$	0.07				6.4	%
Diluted		$	0.31			$	0.28			$	0.03				10.7	%		$	1.16			$	1.10			$	0.06				5.5	%
Average Common Shares Outstanding:
Basic			151,931				162,611				(10,680	)			(6.6	%)			157,286				165,584				(8,298	)			(5.0	%)
Diluted			153,083				163,235				(10,152	)			(6.2	%)			158,254				165,802				(7,548	)			(4.6	%)
N/M = Not meaningful

 

Page 2

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Associated Banc-Corp Consolidated Statements of Income (Unaudited)—Quarterly Trend
										Sequential Qtr																				Comparable Qtr
(in thousands, except per share amounts)		4Q14				3Q14				$ Change				% Change				2Q14				1Q14				4Q13				$ Change				% Change
Interest Income
Interest and fees on loans		$	156,536			$	152,030			$	4,506				3.0	%		$	146,629			$	143,387			$	148,884			$	7,652				5.1	%
Interest and dividends on investment securities:
Taxable			25,061				25,037				24				0.1	%			26,109				26,257				24,316				745				3.1	%
Tax-exempt			7,580				7,483				97				1.3	%			7,030				6,971				6,884				696				10.1	%
Other interest			1,821				1,503				318				21.2	%			1,862				1,449				1,453				368				25.3	%
Total interest income			190,998				186,053				4,945				2.7	%			181,630				178,064				181,537				9,461				5.2	%
Interest Expense
Interest on deposits			7,319				6,621				698				10.5	%			6,195				6,159				7,340				(21	)			(0.3	%)
Interest on Federal funds purchased and securities sold under agreements to repurchase			218				390				(172	)			(44.1	%)			306				305				271				(53	)			(19.6	%)
Interest on other short-term funding			156				233				(77	)			(33.0	%)			280				116				228				(72	)			(31.6	%)
Interest on long-term funding			8,644				6,179				2,465				39.9	%			6,146				6,511				6,499				2,145				33.0	%
Total interest expense			16,337				13,423				2,914				21.7	%			12,927				13,091				14,338				1,999				13.9	%
Net Interest Income			174,661				172,630				2,031				1.2	%			168,703				164,973				167,199				7,462				4.5	%
Provision for credit losses			5,000				1,000				4,000				N/M				5,000				5,000				2,300				2,700				117.4	%
Net interest income after provision for credit losses			169,661				171,630				(1,969	)			(1.1	%)			163,703				159,973				164,899				4,762				2.9	%
Noninterest Income
Trust service fees			12,457				12,218				239				2.0	%			12,017				11,711				11,938				519				4.3	%
Service charges on deposit accounts			17,006				17,961				(955	)			(5.3	%)			17,412				16,400				17,330				(324	)			(1.9	%)
Card-based and other nondeposit fees			12,019				12,407				(388	)			(3.1	%)			12,577				12,509				12,684				(665	)			(5.2	%)
Insurance commissions			10,593				7,860				2,733				34.8	%			13,651				12,317				11,274				(681	)			(6.0	%)
Brokerage and annuity commissions			3,496				4,040				(544	)			(13.5	%)			4,520				4,033				3,881				(385	)			(9.9	%)
Total core fee-based revenue			55,571				54,486				1,085				2.0	%			60,177				56,970				57,107				(1,536	)			(2.7	%)
Mortgage banking, net			2,928				6,669				(3,741	)			(56.1	%)			5,362				6,361				8,277				(5,349	)			(64.6	%)
Capital market fees, net			2,613				2,939				(326	)			(11.1	%)			2,099				2,322				2,771				(158	)			(5.7	%)
Bank owned life insurance income			2,739				3,506				(767	)			(21.9	%)			3,011				4,320				2,787				(48	)			(1.7	%)
Asset gains, net			3,727				4,934				(1,207	)			(24.5	%)			899				728				2,687				1,040				38.7	%
Investment securities gains (losses), net			25				57				(32	)			(56.1	%)			34				378				(18	)			43				N/M
Other			2,040				2,317				(277	)			(12.0	%)			665				2,442				2,262				(222	)			(9.8	%)
Total noninterest income			69,643				74,908				(5,265	)			(7.0	%)			72,247				73,521				75,873				(6,230	)			(8.2	%)
Noninterest Expense
Personnel expense			97,258				97,650				(392	)			(0.4	%)			97,793				97,698				101,215				(3,957	)			(3.9	%)
Occupancy			14,589				13,743				846				6.2	%			13,785				15,560				14,684				(95	)			(0.6	%)
Equipment			6,148				6,133				15				0.2	%			6,227				6,276				6,509				(361	)			(5.5	%)
Technology			14,581				13,573				1,008				7.4	%			14,594				12,724				12,963				1,618				12.5	%
Business development and advertising			8,538				7,467				1,071				14.3	%			5,077				5,062				7,834				704				9.0	%
Other intangible amortization			775				990				(215	)			(21.7	%)			991				991				1,011				(236	)			(23.3	%)
Loan expense			3,646				3,813				(167	)			(4.4	%)			3,620				2,787				3,677				(31	)			(0.8	%)
Legal and professional fees			4,257				4,604				(347	)			(7.5	%)			4,436				4,188				5,916				(1,659	)			(28.0	%)
Foreclosure / OREO expense			1,168				2,083				(915	)			(43.9	%)			1,575				1,896				2,829				(1,661	)			(58.7	%)
FDIC expense			6,956				6,859				97				1.4	%			4,945				5,001				4,879				2,077				42.6	%
Other			13,889				14,938				(1,049	)			(7.0	%)			14,882				15,475				17,650				(3,761	)			(21.3	%)
Total noninterest expense			171,805				171,853				(48	)			(0.0	%)			167,925				167,658				179,167				(7,362	)			(4.1	%)
Income before income taxes			67,499				74,685				(7,186	)			(9.6	%)			68,025				65,836				61,605				5,894				9.6	%
Income tax expense			18,761				24,478				(5,717	)			(23.4	%)			21,660				20,637				13,847				4,914				35.5	%
Net income			48,738				50,207				(1,469	)			(2.9	%)			46,365				45,199				47,758				980				2.1	%
Preferred stock dividends			1,225				1,255				(30	)			(2.4	%)			1,278				1,244				1,273				(48	)			(3.8	%)
Net income available to common equity		$	47,513			$	48,952			$	(1,439	)			(2.9	%)		$	45,087			$	43,955			$	46,485			$	1,028				2.2	%
Earnings Per Common Share:
Basic		$	0.31			$	0.31			$	—				0.0	%		$	0.28			$	0.27			$	0.28			$	0.03				10.7	%
Diluted		$	0.31			$	0.31			$	—				0.0	%		$	0.28			$	0.27			$	0.28			$	0.03				10.7	%
Average Common Shares Outstanding:
Basic			151,931				155,925				(3,994	)			(2.6	%)			159,940				161,467				162,611				(10,680	)			(6.6	%)
Diluted			153,083				156,991				(3,908	)			(2.5	%)			160,838				162,188				163,235				(10,152	)			(6.2	%)
N/M = Not meaningful.

 

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Associated Banc-Corp Selected Quarterly Information
($ in millions, except per share and full time equivalent employee data)		YTD 2014				YTD 2013				4Q14				3Q14				2Q14				1Q14				4Q13
Per Common Share Data
Dividends		$	0.37			$	0.33			$	0.10			$	0.09			$	0.09			$	0.09			$	0.09
Market Value:
High			19.37				17.60				19.37				18.90				18.39				18.35				17.56
Low			15.58				13.46				16.75				17.42				16.82				15.58				15.34
Close			18.63				17.40				18.63				17.42				18.08				18.06				17.40
Book value			18.32				17.40				18.32				18.15				17.99				17.64				17.40
Tier 1 common equity / share			12.09				11.77				12.09				12.10				12.04				11.88				11.77
Tangible book value / share		$	12.06			$	11.62			$	12.06			$	12.09			$	12.11			$	11.80			$	11.62
Performance Ratios (annualized)
Return on average assets			0.76	%			0.81	%			0.75	%			0.78	%			0.75	%			0.76	%			0.80	%
Return on average tangible common equity			9.91				9.73				10.27				10.35				9.56				9.45				9.87
Return on average Tier 1 common equity (1)			9.92				9.77				10.35				10.38				9.56				9.38				9.78
Effective tax rate			30.99				29.56				27.79				32.77				31.84				31.35				22.48
Dividend payout ratio (3)			31.62				30.00				32.26				29.03				32.14				33.33				32.14
Average Balances
Common stockholders’ equity		$	2,811			$	2,829			$	2,772			$	2,815			$	2,830			$	2,827			$	2,810
Average Tier 1 common equity (1)		$	1,871			$	1,878			$	1,821			$	1,871			$	1,892			$	1,900			$	1,885
Selected Trend Information
Average full time equivalent employees			4,406				4,728				4,320				4,359				4,431				4,517				4,584
Trust assets under management, at market value		$	7,993			$	7,424			$	7,993			$	7,700			$	7,720			$	7,535			$	7,424
Total revenue (4)		$	991			$	979			$	249			$	252			$	246			$	243			$	248
Core fee-based revenue (5)		$	227			$	224			$	56			$	54			$	60			$	57			$	57
Mortgage loans originated for sale during period		$	1,070			$	2,304			$	292			$	298			$	276			$	204			$	327
Mortgage portfolio serviced for others		$	7,999			$	8,084			$	7,999			$	8,012			$	8,052			$	8,084			$	8,084
Mortgage servicing rights, net / Portfolio serviced for others			0.75	%			0.78	%			0.75	%			0.76	%			0.76	%			0.77	%			0.78	%
At Period End
Loans / deposits											93.77	%			94.27	%			98.43	%			93.90	%			92.06	%
Risk weighted assets (6) (7)										$	18,568			$	18,031			$	17,911			$	17,075			$	16,694
Tier 1 common equity (1)										$	1,808			$	1,873			$	1,920			$	1,912			$	1,913
Stockholders’ equity / assets											10.44	%			11.19	%			11.39	%			11.69	%			11.93	%
Tangible common equity / tangible assets (8)											6.97	%			7.57	%			7.79	%			7.96	%			8.11	%
Tangible equity / tangible assets (8)											7.20	%			7.82	%			8.03	%			8.22	%			8.38	%
Tier 1 common equity / risk-weighted assets (6) (7)											9.74	%			10.39	%			10.72	%			11.20	%			11.46	%
Tier 1 leverage ratio (6) (7)											7.48	%			7.87	%			8.26	%			8.46	%			8.70	%
Tier 1 risk-based capital ratio (6) (7)											10.06	%			10.73	%			11.06	%			11.56	%			11.83	%
Total risk-based capital ratio (6) (7)											12.66	%			11.98	%			12.31	%			12.81	%			13.09	%
Shares outstanding, end of period											149,560				154,743				159,480				161,012				162,623
Non-GAAP Financial Measures Reconciliation
Efficiency ratio (2)			69.97	%			71.04	%			70.33	%			69.44	%			69.70	%			70.41	%			73.70	%
Taxable equivalent adjustment			(1.36	)			(1.45	)			(1.40	)			(1.36	)			(1.32	)			(1.35	)			(1.49	)
Asset gains, net			0.73				0.39				1.05				1.36				0.26				0.22				0.80
Other intangible amortization			(0.39	)			(0.42	)			(0.32	)			(0.40	)			(0.41	)			(0.42	)			(0.42	)
Efficiency ratio, fully taxable equivalent (2)			68.95	%			69.56	%			69.66	%			69.04	%			68.23	%			68.86	%			72.59	%

 

(1)

Tier 1 common equity, a non-GAAP financial measure, is used by banking regulators, investors and analysts to assess and compare the quality and composition of our capital with the capital of other financial services companies. Management uses Tier 1 common equity, along with other capital measures, to assess and monitor our capital position. Tier 1 common equity (period end and average) is Tier 1 capital excluding qualifying perpetual preferred stock and qualifying trust preferred securities.

(2)

Efficiency ratio is defined by the Federal Reserve guidance as noninterest expense divided by the sum of net interest income plus noninterest income, excluding investment securities gains / losses, net. Efficiency ratio, fully taxable equivalent, is noninterest expense, excluding other intangible amortization, divided by the sum of taxable equivalent net interest income plus noninterest income, excluding investment securities gains / losses, net and asset gains / losses, net. This efficiency ratio is presented on a taxable equivalent basis, which adjusts net interest income for the tax-favored status of certain loans and investment securities. Management believes this measure to be the preferred industry measurement of net interest income as it enhances the comparability of net interest income arising from taxable and tax-exempt sources and it excludes certain specific revenue items (such as investment securities gains / losses, net and asset gains / losses, net).

(3)	Ratio is based upon basic earnings per common share.

(4)	Total revenue, a non-GAAP financial measure, is the sum of taxable equivalent net interest income, core fee-based revenues, and other noninterest income categories, as presented on Page 2 in the Consolidated Statements of Income and Page 6 in the Net Interest Income Analysis.

(5)	Core fee-based revenue, a non-GAAP financial measure, is the sum of trust service fees, service charges on deposit accounts, card-based and other nondeposit fees, insurance commissions, and brokerage and annuity commissions, as presented on Page 2 in the Consolidated Statements of Income.

(6)	December 31, 2014 data is estimated.

(7)

The Federal Reserve establishes capital adequacy requirements, including well-capitalized standards for the Corporation. The OCC establishes similar capital adequacy requirements and standards for the Bank. Regulatory capital primarily consists of Tier 1 risk-based capital and Tier 2 risk-based capital. The sum of Tier 1 risk-based capital and Tier 2 risk-based capital equals our total risk-based capital. Risk-based capital guidelines require a minimum level of capital as a percentage of risk-weighted assets. Risk-weighted assets consist of total assets plus certain off-balance sheet and market items, subject to adjustment for predefined credit risk factors.

(8)

Tangible equity, tangible common equity and tangible assets exclude goodwill and other intangible assets, which is a non-GAAP financial measure. These financial measures have been included as they are considered to be critical metrics with which to analyze and evaluate financial condition and capital strength.

 

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Associated Banc-Corp Selected Asset Quality Information
(in thousands)		Dec 31, 2014				Sep 30, 2014				Dec14 vs Sep14 % Change				Jun 30, 2014				Mar 31, 2014				Dec 31, 2013				Dec14 vs Dec13 % Change
Allowance for Loan Losses
Beginning balance		$	266,262			$	271,851				(2.1	%)		$	267,916			$	268,315			$	271,724				(2.0	%)
Provision for loan losses			4,500				(3,000	)			N/M				6,500				5,000				2,000				125.0	%
Charge offs			(8,778	)			(14,850	)			(40.9	%)			(9,107	)			(11,361	)			(18,742	)			(53.2	%)
Recoveries			4,318				12,261				(64.8	%)			6,542				5,962				13,333				(67.6	%)
Net charge offs			(4,460	)			(2,589	)			72.3	%			(2,565	)			(5,399	)			(5,409	)			(17.5	%)
Ending balance		$	266,302			$	266,262				0.0	%		$	271,851			$	267,916			$	268,315				(0.8	%)
Allowance for Unfunded Commitments
Beginning balance		$	24,400			$	20,400				19.6	%		$	21,900			$	21,900			$	21,600				13.0	%
Provision for unfunded commitments			500				4,000				(87.5	%)			(1,500	)			—				300				66.7	%
Ending balance		$	24,900			$	24,400				2.0	%		$	20,400			$	21,900			$	21,900				13.7	%
Allowance for credit losses		$	291,202			$	290,662				0.2	%		$	292,251			$	289,816			$	290,215				0.3	%
Net Charge Offs		Dec 31, 2014				Sep 30, 2014				Dec14 vs Sep14 % Change				Jun 30, 2014				Mar 31, 2014				Dec 31, 2013				Dec14 vs Dec13 % Change
Commercial and industrial		$	1,323			$	572				131.3	%		$	(1,377	)		$	2,725			$	4,555				(71.0	%)
Commercial real estate—owner occupied			134				2,210				(93.9	%)			(550	)			(124	)			967				(86.1	%)
Lease financing			9				(6	)			N/M				29				—				(16	)			N/M
Commercial and business lending			1,466				2,776				(47.2	%)			(1,898	)			2,601				5,506				(73.4	%)
Commercial real estate—investor			(132	)			(4,065	)			(96.8	%)			(239	)			(1,031	)			137				N/M
Real estate construction			(116	)			350				(133.1	%)			795				113				(3,130	)			(96.3	%)
Commercial real estate lending			(248	)			(3,715	)			(93.3	%)			556				(918	)			(2,993	)			(91.7	%)
Total commercial			1,218				(939	)			N/M				(1,342	)			1,683				2,513				(51.5	%)
Home equity revolving lines of credit			1,094				1,098				(0.4	%)			1,380				1,182				966				13.3	%
Home equity loans 1st liens			206				118				74.6	%			448				406				372				(44.6	%)
Home equity loans junior liens			457				728				(37.2	%)			948				859				1,111				(58.9	%)
Home equity			1,757				1,944				(9.6	%)			2,776				2,447				2,449				(28.3	%)
Installment and credit cards			990				910				8.8	%			247				113				(611	)			N/M
Residential mortgage			495				674				(26.6	%)			884				1,156				1,058				(53.2	%)
Total consumer			3,242				3,528				(8.1	%)			3,907				3,716				2,896				11.9	%
Total net charge offs		$	4,460			$	2,589				72.3	%		$	2,565			$	5,399			$	5,409				(17.5	%)
Net Charge Offs to Average Loans (in basis points) *		Dec 31, 2014				Sep 30, 2014								Jun 30, 2014				Mar 31, 2014				Dec 31, 2013
Commercial and industrial			9				4								(10	)			22				38
Commercial real estate—owner occupied			5				84								(20	)			(5	)			34
Lease financing			7				(5	)							22				—				(12	)
Commercial and business lending			9				17								(12	)			17				37
Commercial real estate—investor			(2	)			(54	)							(3	)			(14	)			2
Real estate construction			(5	)			14								33				5				(145	)
Commercial real estate lending			(2	)			(37	)							6				(10	)			(32	)
Total commercial			4				(3	)							(5	)			7				10
Home equity revolving lines of credit			49				50								64				55				44
Home equity loans 1st liens			14				7								26				23				19
Home equity loans junior liens			107				159								196				171				205
Home equity			42				45								64				55				52
Installment and credit cards			86				78								25				11				(59	)
Residential mortgage			4				6								9				12				11
Total consumer			19				22								25				25				19
Total net charge offs			10				6								6				14				14
Credit Quality		Dec 31, 2014				Sep 30, 2014				Dec14 vs Sep14 % Change				Jun 30, 2014				Mar 31, 2014				Dec 31, 2013				Dec14 vs Dec13 % Change
Nonaccrual loans		$	177,413			$	184,138				(3.7	%)		$	179,226			$	177,978			$	185,428				(4.3	%)
Other real estate owned (OREO)			16,732				16,840				(0.6	%)			17,729				19,173				18,118				(7.6	%)
Total nonperforming assets		$	194,145			$	200,978				(3.4	%)		$	196,955			$	197,151			$	203,546				(4.6	%)
Loans 90 or more days past due and still accruing		$	1,623			$	1,690				(4.0	%)		$	1,776			$	723			$	2,350				(30.9	%)
Allowance for loan losses / loans			1.51	%			1.55	%							1.59	%			1.63	%			1.69	%
Allowance for loan losses / nonaccrual loans			150.10				144.60								151.68				150.53				144.70
Nonaccrual loans / total loans			1.01				1.07								1.05				1.08				1.17
Nonperforming assets / total loans plus OREO			1.10				1.17								1.15				1.20				1.28
Nonperforming assets / total assets			0.72				0.78								0.77				0.79				0.84
Net charge offs / average loans (annualized)			0.10				0.06								0.06				0.14				0.14
Year-to-date net charge offs / average loans			0.09				0.08								0.10				0.14				0.25
Nonaccrual loans by type:
Commercial and industrial		$	49,663			$	51,143				(2.9	%)		$	40,846			$	38,488			$	37,719				31.7	%
Commercial real estate—owner occupied			25,825				24,340				6.1	%			31,725				26,735				29,664				(12.9	%)
Lease financing			1,801				1,947				(7.5	%)			1,541				172				69				N/M
Commercial and business lending			77,289				77,430				(0.2	%)			74,112				65,395				67,452				14.6	%
Commercial real estate—investor			22,685				25,106				(9.6	%)			28,135				33,611				37,596				(39.7	%)
Real estate construction			5,399				8,187				(34.1	%)			6,988				6,667				6,467				(16.5	%)
Commercial real estate lending			28,084				33,293				(15.6	%)			35,123				40,278				44,063				(36.3	%)
Total commercial			105,373				110,723				(4.8	%)			109,235				105,673				111,515				(5.5	%)
Home equity revolving lines of credit			9,853				10,154				(3.0	%)			10,056				10,356				11,883				(17.1	%)
Home equity loans 1st liens			5,290				4,664				13.4	%			4,634				5,341				6,135				(13.8	%)
Home equity loans junior liens			6,598				6,443				2.4	%			6,183				6,788				7,149				(7.7	%)
Home equity			21,741				21,261				2.3	%			20,873				22,485				25,167				(13.6	%)
Installment and credit cards			613				653				(6.1	%)			771				915				1,114				(45.0	%)
Residential mortgage			49,686				51,501				(3.5	%)			48,347				48,905				47,632				4.3	%
Total consumer			72,040				73,415				(1.9	%)			69,991				72,305				73,913				(2.5	%)
Total nonaccrual loans		$	177,413			$	184,138				(3.7	%)		$	179,226			$	177,978			$	185,428				(4.3	%)

 

*	Annualized.

 

N/M	= Not meaningful.

 

 

Page 5

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Associated Banc-Corp Selected Asset Quality Information (continued)
(in thousands)		Dec 31, 2014				Sep 30, 2014				Dec14 vs Sep14 % Change				Jun 30, 2014				Mar 31, 2014				Dec 31, 2013				Dec14 vs Dec13 % Change
Restructured loans (accruing)
Commercial and industrial		$	33,892			$	36,955				(8.3	%)		$	28,849			$	27,776			$	32,517				4.2	%
Commercial real estate—owner occupied			10,454				11,574				(9.7	%)			12,168				11,579				13,009				(19.6	%)
Commercial and business lending			44,346				48,529				(8.6	%)			41,017				39,355				45,526				(2.6	%)
Commercial real estate—investor			23,127				24,440				(5.4	%)			41,758				46,020				44,946				(48.5	%)
Real estate construction			727				805				(9.7	%)			1,224				2,954				3,793				(80.8	%)
Commercial real estate lending			23,854				25,245				(5.5	%)			42,982				48,974				48,739				(51.1	%)
Total commercial			68,200				73,774				(7.6	%)			83,999				88,329				94,265				(27.7	%)
Home equity revolving lines of credit			1,508				1,531				(1.5	%)			1,527				1,178				1,117				35.0	%
Home equity loans 1st liens			1,857				1,867				(0.5	%)			1,674				1,656				1,436				29.3	%
Home equity loans junior liens			6,701				7,184				(6.7	%)			7,243				6,738				7,080				(5.4	%)
Home equity			10,066				10,582				(4.9	%)			10,444				9,572				9,633				4.5	%
Installment and credit cards			974				1,106				(11.9	%)			1,185				225				246				295.9	%
Residential mortgage			18,976				19,141				(0.9	%)			18,753				18,798				19,841				(4.4	%)
Total consumer			30,016				30,829				(2.6	%)			30,382				28,595				29,720				1.0	%
Total restructured loans (accruing)		$	98,216			$	104,603				(6.1	%)		$	114,381			$	116,924			$	123,985				(20.8	%)
Restructured loans in nonaccrual loans (not included above)		$	57,656			$	63,314				(8.9	%)		$	72,388			$	74,231			$	59,585				(3.2	%)
Loans Past Due 30-89 Days		Dec 31, 2014				Sep 30, 2014				Dec14 vs Sep14 % Change				Jun 30, 2014				Mar 31, 2014				Dec 31, 2013				Dec14 vs Dec13 % Change
Commercial and industrial		$	14,747			$	3,947				273.6	%		$	2,519			$	4,126			$	6,826				116.0	%
Commercial real estate—owner occupied			10,628				2,675				297.3	%			6,323				5,342				3,106				242.2	%
Lease financing			—				—				N/M				556				567				—				N/M
Commercial and business lending			25,375				6,622				283.2	%			9,398				10,035				9,932				155.5	%
Commercial real estate—investor			1,208				15,869				(92.4	%)			2,994				7,188				23,215				(94.8	%)
Real estate construction			984				399				146.6	%			258				679				1,954				(49.6	%)
Commercial real estate lending			2,192				16,268				(86.5	%)			3,252				7,867				25,169				(91.3	%)
Total commercial			27,567				22,890				20.4	%			12,650				17,902				35,101				(21.5	%)
Home equity revolving lines of credit			6,725				6,739				(0.2	%)			6,986				5,344				6,728				(0.0	%)
Home equity loans 1st liens			1,800				1,503				19.8	%			1,685				1,469				1,110				62.2	%
Home equity loans junior liens			2,058				2,496				(17.5	%)			2,138				3,006				2,842				(27.6	%)
Home equity			10,583				10,738				(1.4	%)			10,809				9,819				10,680				(0.9	%)
Installment and credit cards			1,932				1,818				6.3	%			1,734				1,269				1,150				68.0	%
Residential mortgage			3,046				3,231				(5.7	%)			7,070				4,498				6,118				(50.2	%)
Total consumer			15,561				15,787				(1.4	%)			19,613				15,586				17,948				(13.3	%)
Total loans past due 30-89 days		$	43,128			$	38,677				11.5	%		$	32,263			$	33,488			$	53,049				(18.7	%)
Potential Problem Loans		Dec 31, 2014				Sep 30, 2014				Dec14 vs Sep14 % Change				Jun 30, 2014				Mar 31, 2014				Dec 31, 2013				Dec14 vs Dec13 % Change
Commercial and industrial		$	108,522			$	133,416				(18.7	%)		$	187,251			$	109,027			$	113,669				(4.5	%)
Commercial real estate—owner occupied			48,695				49,008				(0.6	%)			57,757				64,785				56,789				(14.3	%)
Lease financing			2,709				3,787				(28.5	%)			2,280				3,065				1,784				51.8	%
Commercial and business lending			159,926				186,211				(14.1	%)			247,288				176,877				172,242				(7.2	%)
Commercial real estate—investor			24,043				28,474				(15.6	%)			31,903				34,790				52,429				(54.1	%)
Real estate construction			1,776				2,227				(20.3	%)			4,473				4,870				5,263				(66.3	%)
Commercial real estate lending			25,819				30,701				(15.9	%)			36,376				39,660				57,692				(55.2	%)
Total commercial			185,745				216,912				(14.4	%)			283,664				216,537				229,934				(19.2	%)
Home equity revolving lines of credit			204				224				(8.9	%)			277				310				303				(32.7	%)
Home equity loans junior liens			676				687				(1.6	%)			822				741				1,810				(62.7	%)
Home equity			880				911				(3.4	%)			1,099				1,051				2,113				(58.4	%)
Installment and credit cards			2				4				(50.0	%)			844				—				50				(96.0	%)
Residential mortgage			3,781				2,166				74.6	%			2,445				2,091				3,312				14.2	%
Total consumer			4,663				3,081				51.3	%			4,388				3,142				5,475				(14.8	%)
Total potential problem loans		$	190,408			$	219,993				(13.4	%)		$	288,052			$	219,679			$	235,409				(19.1	%)

N/M = Not meaningful.

 

Page 6

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Associated Banc-Corp Net Interest Income Analysis—Taxable Equivalent Basis Sequential Quarter
		Three months ended December 31, 2014												Three months ended September 30, 2014
(in thousands)		Average Balance				Interest Income /Expense				Average Yield /Rate				Average Balance				Interest Income /Expense				Average Yield /Rate
Earning assets:
Loans: (1) (2) (3)
Commercial and business lending		$	6,720,893			$	59,197				3.50	%		$	6,652,227			$	54,990				3.28	%
Commercial real estate lending			4,066,143				37,122				3.62				4,019,286				37,780				3.73
Total commercial			10,787,036				96,319				3.54				10,671,513				92,770				3.45
Residential mortgage			4,490,075				36,228				3.23				4,309,121				35,264				3.27
Retail			2,110,144				24,942				4.71				2,160,327				24,968				4.60
Total loans			17,387,255				157,489				3.60				17,140,961				153,002				3.55
Investment securities (1)			5,697,598				36,658				2.57				5,619,982				36,486				2.60
Other short-term investments			407,644				1,821				1.78				335,774				1,503				1.79
Investments and other			6,105,242				38,479				2.52				5,955,756				37,989				2.55
Total earning assets			23,492,497			$	195,968				3.32				23,096,717			$	190,991				3.29
Other assets, net			2,388,268												2,375,335
Total assets		$	25,880,765											$	25,472,052
Interest-bearing liabilities:
Savings deposits		$	1,264,195			$	253				0.08	%		$	1,269,994			$	254				0.08	%
Interest-bearing demand deposits			3,142,537				1,220				0.15				3,096,712				1,111				0.14
Money market deposits			8,209,091				3,547				0.17				7,721,167				3,153				0.16
Time deposits			1,549,565				2,299				0.59				1,545,851				2,103				0.54
Total interest-bearing deposits			14,165,388				7,319				0.20				13,633,724				6,621				0.19
Federal funds purchased and securities sold under agreements to repurchase			600,969				218				0.14				927,904				390				0.17
Other short-term funding			464,866				156				0.13				665,647				233				0.14
Long-term funding			3,221,574				8,644				1.07				2,931,714				6,179				0.84
Total short and long-term funding			4,287,409				9,018				0.84				4,525,265				6,802				0.60
Total interest-bearing liabilities			18,452,797			$	16,337				0.35				18,158,989			$	13,423				0.29
Noninterest-bearing demand deposits			4,367,031												4,239,654
Other liabilities			228,600												197,330
Stockholders’ equity			2,832,337												2,876,079
Total liabilities and stockholders’ equity		$	25,880,765											$	25,472,052
Net interest income and rate spread						$	179,631				2.97	%						$	177,568				3.00	%
Net interest margin											3.04	%											3.06	%
Taxable equivalent adjustment						$	4,970											$	4,938
Net Interest Income Analysis—Taxable Equivalent Basis Comparable Quarter		Three months ended December 31, 2014												Three months ended December 31, 2013
(in thousands)		Average Balance				Interest Income /Expense				Average Yield /Rate				Average Balance				Interest Income /Expense				Average Yield /Rate
Earning assets:
Loans: (1) (2) (3)
Commercial and business lending		$	6,720,893			$	59,197				3.50	%		$	5,882,438			$	51,498				3.47	%
Commercial real estate lending			4,066,143				37,122				3.62				3,736,314				40,241				4.28
Total commercial			10,787,036				96,319				3.54				9,618,752				91,739				3.79
Residential mortgage			4,490,075				36,228				3.23				3,856,944				32,201				3.34
Retail			2,110,144				24,942				4.71				2,272,588				25,851				4.53
Total loans			17,387,255				157,489				3.60				15,748,284				149,791				3.78
Investment securities (1)			5,697,598				36,658				2.57				5,188,616				35,331				2.72
Other short-term investments			407,644				1,821				1.78				305,165				1,453				1.90
Investments and other			6,105,242				38,479				2.52				5,493,781				36,784				2.68
Total earning assets			23,492,497			$	195,968				3.32				21,242,065			$	186,575				3.50
Other assets, net			2,388,268												2,316,660
Total assets		$	25,880,765											$	23,558,725
Interest-bearing liabilities:
Savings deposits		$	1,264,195			$	253				0.08	%		$	1,200,338			$	248				0.08	%
Interest-bearing demand deposits			3,142,537				1,220				0.15				2,852,090				1,047				0.15
Money market deposits			8,209,091				3,547				0.17				7,748,650				3,399				0.17
Time deposits			1,549,565				2,299				0.59				1,727,138				2,646				0.61
Total interest-bearing deposits			14,165,388				7,319				0.20				13,528,216				7,340				0.22
Federal funds purchased and securities sold under agreements to repurchase			600,969				218				0.14				613,943				271				0.18
Other short-term funding			464,866				156				0.13				726,551				228				0.12
Long-term funding			3,221,574				8,644				1.07				1,266,464				6,499				2.05
Total short and long-term funding			4,287,409				9,018				0.84				2,606,958				6,998				1.07
Total interest-bearing liabilities			18,452,797			$	16,337				0.35				16,135,174			$	14,338				0.35
Noninterest-bearing demand deposits			4,367,031												4,353,315
Other liabilities			228,600												197,598
Stockholders’ equity			2,832,337												2,872,638
Total liabilities and stockholders’ equity		$	25,880,765											$	23,558,725
Net interest income and rate spread						$	179,631				2.97	%						$	172,237				3.15	%
Net interest margin											3.04	%											3.23	%
Taxable equivalent adjustment						$	4,970											$	5,038

 

(1)	The yield on tax exempt loans and securities is computed on a taxable equivalent basis using a tax rate of 35% for all periods presented and is net of the effects of certain disallowed interest deductions.

(2)	Nonaccrual loans and loans held for sale have been included in the average balances.

(3)	Interest income includes net loan fees.

 

Page 7

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Associated Banc-Corp Net Interest Income Analysis—Taxable Equivalent Basis Year Over Year
		Year ended December 31, 2014												Year ended December 31, 2013
(in thousands)		Average Balance				Interest Income /Expense				Average Yield /Rate				Average Balance				Interest Income /Expense				Average Yield /Rate
Earning assets:
Loans: (1) (2) (3)
Commercial and business lending		$	6,495,338			$	219,386				3.38	%		$	5,809,578			$	208,039				3.58	%
Commercial real estate lending			3,990,675				146,802				3.68				3,705,526				149,539				4.04
Total commercial			10,486,013				366,188				3.49				9,515,104				357,578				3.76
Residential mortgage			4,202,727				137,731				3.28				3,714,544				123,275				3.32
Retail			2,150,254				98,481				4.58				2,433,497				110,338				4.53
Total loans			16,838,994				602,400				3.58				15,663,145				591,191				3.77
Investment securities (1)			5,594,232				146,931				2.63				4,995,331				132,671				2.66
Other short-term investments			326,902				6,635				2.03				321,652				5,193				1.61
Investments and other			5,921,134				153,566				2.59				5,316,983				137,864				2.59
Total earning assets			22,760,128			$	755,966				3.32				20,980,128			$	729,055				3.47
Other assets, net			2,351,469												2,325,630
Total assets		$	25,111,597											$	23,305,758
Interest-bearing liabilities:
Savings deposits		$	1,249,452			$	968				0.08	%		$	1,188,910			$	942				0.08	%
Interest-bearing demand deposits			2,983,747				4,124				0.14				2,827,778				4,517				0.16
Money market deposits			7,614,042				12,452				0.16				7,322,476				13,702				0.19
Time deposits			1,587,641				8,750				0.55				1,849,718				12,106				0.65
Total interest-bearing deposits			13,434,882				26,294				0.20				13,188,882				31,267				0.24
Federal funds purchased and securities sold under agreements to repurchase			795,257				1,219				0.15				675,574				1,322				0.20
Other short-term funding			573,460				785				0.14				1,198,264				1,519				0.13
Long-term funding			3,022,787				27,480				0.91				901,927				29,332				3.25
Total short and long-term funding			4,391,504				29,484				0.67				2,775,765				32,173				1.16
Total interest-bearing liabilities			17,826,386			$	55,778				0.31				15,964,647			$	63,440				0.40
Noninterest-bearing demand deposits			4,212,202												4,249,313
Other liabilities			201,077												199,486
Stockholders’ equity			2,871,932												2,892,312
Total liabilities and stockholders’ equity		$	25,111,597											$	23,305,758
Net interest income and rate spread						$	700,188				3.01	%						$	665,615				3.07	%
Net interest margin											3.08	%											3.17	%
Taxable equivalent adjustment						$	19,221											$	20,072

 

(1)	The yield on tax exempt loans and securities is computed on a taxable equivalent basis using a tax rate of 35% for all periods presented and is net of the effects of certain disallowed interest deductions.

(2)	Nonaccrual loans and loans held for sale have been included in the average balances.

(3)	Interest income includes net loan fees.

 

Page 8

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Associated Banc-Corp
Financial Summary and Comparison
Period End Loan Composition		Dec 31, 2014				Sep 30, 2014				Dec14 vs Sep14 % Change				Jun 30, 2014				Mar 31, 2014				Dec 31, 2013				Dec14 vs Dec13 % Change
Commercial and industrial		$	5,905,902			$	5,603,899				5.4	%		$	5,616,205			$	5,222,141			$	4,822,680				22.5	%
Commercial real estate—owner occupied			1,007,937				1,014,335				(0.6	%)			1,070,463				1,098,089				1,114,715				(9.6	%)
Lease financing			51,529				52,600				(2.0	%)			51,873				52,500				55,483				(7.1	%)
Commercial and business lending			6,965,368				6,670,834				4.4	%			6,738,541				6,372,730				5,992,878				16.2	%
Commercial real estate—investor			3,056,485				3,043,361				0.4	%			2,990,732				3,001,219				2,939,456				4.0	%
Real estate construction			1,008,956				982,426				2.7	%			1,000,421				969,617				896,248				12.6	%
Commercial real estate lending			4,065,441				4,025,787				1.0	%			3,991,153				3,970,836				3,835,704				6.0	%
Total commercial			11,030,809				10,696,621				3.1	%			10,729,694				10,343,566				9,828,582				12.2	%
Home equity revolving lines of credit			887,779				880,435				0.8	%			866,042				856,679				874,840				1.5	%
Home equity loans 1st liens			584,131				619,774				(5.8	%)			659,598				705,835				742,120				(21.3	%)
Home equity loans junior liens			164,148				176,316				(6.9	%)			187,732				199,488				208,054				(21.1	%)
Home equity			1,636,058				1,676,525				(2.4	%)			1,713,372				1,762,002				1,825,014				(10.4	%)
Installment and credit cards			454,219				459,682				(1.2	%)			469,203				393,321				407,074				11.6	%
Residential mortgage			4,472,760				4,326,262				3.4	%			4,132,783				3,942,555				3,835,591				16.6	%
Total consumer			6,563,037				6,462,469				1.6	%			6,315,358				6,097,878				6,067,679				8.2	%
Total loans		$	17,593,846			$	17,159,090				2.5	%		$	17,045,052			$	16,441,444			$	15,896,261				10.7	%
Period End Deposit and Customer Funding Composition		Dec 31, 2014				Sep 30, 2014				Dec14 vs Sep14 % Change				Jun 30, 2014				Mar 31, 2014				Dec 31, 2013				Dec14 vs Dec13 % Change
Noninterest-bearing demand		$	4,505,272			$	4,302,454				4.7	%		$	4,211,057			$	4,478,981			$	4,626,312				(2.6	%)
Savings			1,235,277				1,256,567				(1.7	%)			1,275,493				1,252,669				1,159,512				6.5	%
Interest-bearing demand			3,126,854				3,637,411				(14.0	%)			2,918,900				3,084,457				2,889,705				8.2	%
Money market			8,324,646				7,491,460				11.1	%			7,348,650				7,069,173				6,906,442				20.5	%
Brokered CDs			42,556				9,242				360.5	%			44,809				51,235				50,450				(15.6	%)
Other time			1,528,899				1,504,124				1.6	%			1,517,350				1,573,412				1,634,746				(6.5	%)
Total deposits			18,763,504				18,201,258				3.1	%			17,316,259				17,509,927				17,267,167				8.7	%
Customer repo sweeps			384,221				493,451				(22.1	%)			489,886				548,179				419,247				(8.4	%)
Total deposits and customer funding		$	19,147,725			$	18,694,709				2.4	%		$	17,806,145			$	18,058,106			$	17,686,414				8.3	%
Network transaction deposits included above in interest-bearing demand & money market		$	2,852,943			$	2,207,055				29.3	%		$	2,238,923			$	2,141,976			$	1,936,403				47.3	%
Brokered CDs			42,556				9,242				360.5	%			44,809				51,235				50,450				(15.6	%)
Total network and brokered funding			2,895,499				2,216,297				30.6	%			2,283,732				2,193,211				1,986,853				45.7	%
Net customer deposits and funding (1)		$	16,252,226			$	16,478,412				(1.4	%)		$	15,522,413			$	15,864,895			$	15,699,561				3.5	%
(1)    Total deposits and customer funding excluding total network and brokered funding.
Quarter Average Loan Composition		Dec 31, 2014				Sep 30, 2014				Dec14 vs Sep14 % Change				Jun 30, 2014				Mar 31, 2014				Dec 31, 2013				Dec14 vs Dec13 % Change
Commercial and industrial		$	5,665,396			$	5,558,135				1.9	%		$	5,335,488			$	4,983,943			$	4,709,435				20.3	%
Commercial real estate—owner occupied			1,003,179				1,043,001				(3.8	%)			1,081,552				1,093,114				1,119,186				(10.4	%)
Lease financing			52,318				51,091				2.4	%			51,804				54,128				53,817				(2.8	%)
Commercial and business lending			6,720,893				6,652,227				1.0	%			6,468,844				6,131,185				5,882,438				14.3	%
Commercial real estate—investor			3,062,427				3,013,210				1.6	%			3,014,827				2,993,046				2,878,176				6.4	%
Real estate construction			1,003,716				1,006,076				(0.2	%)			953,021				914,317				858,138				17.0	%
Commercial real estate lending			4,066,143				4,019,286				1.2	%			3,967,848				3,907,363				3,736,314				8.8	%
Total commercial			10,787,036				10,671,513				1.1	%			10,436,692				10,038,548				9,618,752				12.1	%
Home equity revolving lines of credit			883,580				875,388				0.9	%			866,952				868,614				876,938				0.8	%
Home equity loans 1st liens			601,719				638,592				(5.8	%)			681,607				724,995				767,857				(21.6	%)
Home equity loans junior liens			169,845				181,880				(6.6	%)			193,727				203,984				214,557				(20.8	%)
Home equity			1,655,144				1,695,860				(2.4	%)			1,742,286				1,797,593				1,859,352				(11.0	%)
Installment and credit cards			455,000				464,467				(2.0	%)			389,794				401,742				413,236				10.1	%
Residential mortgage			4,490,075				4,309,121				4.2	%			4,077,617				3,926,734				3,856,944				16.4	%
Total consumer			6,600,219				6,469,448				2.0	%			6,209,697				6,126,069				6,129,532				7.7	%
Total loans		$	17,387,255			$	17,140,961				1.4	%		$	16,646,389			$	16,164,617			$	15,748,284				10.4	%
Quarter Average Deposit Composition		Dec 31, 2014				Sep 30, 2014				Dec14 vs Sep14 % Change				Jun 30, 2014				Mar 31, 2014				Dec 31, 2013				Dec14 vs Dec13 % Change
Noninterest-bearing demand		$	4,367,031			$	4,239,654				3.0	%		$	4,073,310			$	4,166,305			$	4,353,315				0.3	%
Savings			1,264,195				1,269,994				(0.5	%)			1,267,297				1,195,337				1,200,338				5.3	%
Interest-bearing demand			3,142,537				3,096,712				1.5	%			2,894,446				2,796,247				2,852,090				10.2	%
Money market			8,209,091				7,721,167				6.3	%			7,340,244				7,173,106				7,748,650				5.9	%
Time deposits			1,549,565				1,545,851				0.2	%			1,597,535				1,659,277				1,727,138				(10.3	%)
Total deposits		$	18,532,419			$	17,873,378				3.7	%		$	17,172,832			$	16,990,272			$	17,881,531				3.6	%

 

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