Investors:
Joe Selner, Chief Financial Officer
920-491-7120
Media:
Jon Drayna, Corporate Communications
920-491-7006
GREEN BAY, Wis. – July 22, 2004 — Associated Banc-Corp (NASDAQ: ASBC) earned $.58 per diluted share in the quarter ended June 30, 2004, a 13.7 percent increase from $.51 per diluted share for the same period in 2003, and up from $.53 per diluted share for the first quarter of 2004.
All share and per share information in this news release has been restated to reflect Associated’s 3-for-2 stock split, effected in the form of a stock dividend, paid May 12, 2004 to its shareholders of record as of May 7.
Return on average assets was 1.67 percent in the second quarter 2004 compared to 1.51 percent in the second quarter of 2003, and 1.57 percent in the first quarter 2004. Return on average equity was 18.87 percent compared to 17.37 percent in both the year-earlier quarter and first quarter of 2004.
For the six months ended June 30, 2004, diluted earnings per share were $1.11, up 8.8 percent from $1.02 per diluted share in the same period in 2003. Return on average assets was 1.62 percent and return on average equity was 18.12 percent, compared to 1.55 percent and 17.86 percent, respectively, for the six months ended June 30, 2003.
“We are pleased with our results in the second quarter, which reflect the progress we’re making on our strategic priorities,” Associated President and CEO Paul Beideman said. “Our asset quality is strong and continues to improve. Our fee income, particularly from insurance and brokerage activities, shows positive momentum. At the same time, sound expense control is a contributor to our performance,” he said.
Net income was $64.5 million for the quarter that ended June 30, 2004. This compares to $56.7 million for the second quarter of 2003 and $59.6 million for first quarter 2004. On a year-to-date basis net income was $124.1 million for the first half of 2004, up 8.2 percent from $114.7 million for the comparable period of 2003.
ASBC 2Q ‘04 earnings, add one
The quarter-period comparisons between 2004 and 2003 continue to be impacted by anticipated changes in mortgage banking, notably from significantly lower refinancing activity throughout the industry, which began in the fourth quarter of 2003. While the reduced refinancing activity reduced mortgage banking income, it also slowed loan prepayment speeds which supported greater value of the mortgage loan servicing asset and lowered mortgage servicing rights expense. Mortgage servicing rights expense included $6.7 million and $4.2 million of valuation reserve recovery for the three months and six months ended June 30, 2004, respectively, compared to $8.5 million and $15.8 million of additional valuation reserve for the three months and six months ended June 30, 2003, respectively.
Therefore, for the comparable second quarter periods, mortgage banking revenue was down $18.1 million while mortgage servicing rights expense was lower by $15.4 million, for a net unfavorable pre-tax impact of $2.7 million. For the first half of 2004 compared to the same period for 2003, mortgage banking fee revenue was down $33.5 million, while mortgage servicing rights expense was down $20.2 million for a net $13.3 million unfavorable pre-tax impact.
Also, Associated’s acquisition of Jabas Group, Inc., one of Wisconsin’s leading employee benefit firms, on April 1, 2004, affected the comparison of retail commission income and noninterest expenses between second quarter periods. The Jabas acquisition builds on Associated’s previous acquisition of CFG Insurance Services, Inc. on April 1, 2003. Associated merged the insurance agencies, which now operate as Associated Financial Group, LLC.
Associated Banc-Corp’s net interest income rose to $131.9 million in the second quarter, compared to $127.2 million in the second quarter of 2003 and $129.1 million in the first quarter of 2004. For the first half of 2004, net interest income was $261.0 million, up 2.5 percent compared to $254.6 million for the same period of 2003.
The net interest margin was steady at 3.80 percent for both quarters of 2004, compared to 3.79 percent for second quarter of 2003 and 3.83 percent for the first six months of 2003.
Total loans at the end of the second quarter 2004 were $10.6 billion, up from $10.4 billion at the end of the second quarter of 2003, including 2 percent growth in commercial loans and 13 percent growth in home equity loans. Total loans increased 3 percent on an annualized basis since March 31, 2004, led by 5 percent annualized growth in commercial loans. Total deposits were $9.6 billion at June 30, 2004, up from $9.5 billion a year earlier, and down from $9.7 billion at March 31, 2004, particularly from maturities of time deposits.
The company’s credit quality showed improvement as our relationship managers continue to work through problem credits with satisfactory results. Total nonperforming loans were $85.9 million, or 0.81 percent of total loans at June 30, 2004, down from $117.2 million, or 1.13 percent of loans a year ago, and $93.6 million, or 0.89 percent of loans at March 31, 2004.
Second quarter net charge-offs were $5.6 million (0.21 percent of average loans annualized), down from $10.1 million (0.38 percent annualized) for second quarter 2003 and up
ASBC 2Q ‘04 earnings, add two
slightly from $5.1 million (0.20 percent annualized) for first quarter 2004. For the first half of 2004, annualized net charge-offs were 0.20 percent of average loans, compared to 0.29 percent annualized for the same period last year. The provision for loan losses was $5.9 million for second quarter 2004, compared to $12.1 million for second quarter 2003, and $5.2 million for first quarter 2004. For the first six months of 2004 the provision for loan losses was $11.1 million, compared to $25.1 million for the same period last year. This decrease is due to improved asset quality. The allowance for loan losses was 1.69 percent of total loans at both June 30, 2004 and March 31, 2004, compared to 1.66 percent a year ago.
Excluding mortgage fee revenue, noninterest income was $46.5 million for second quarter 2004, up from $41.3 million for the second quarter of 2003, and $43.9 million for first quarter 2004. Compared to the second quarter of 2003, insurance and brokerage retail commissions increased $5.8 million (primarily due to the inclusion of Jabas and stronger fixed annuity sales commissions), credit card and other nondeposit fees were up $0.9 million, and service charges on deposit accounts were up $0.7 million. Compared to the first quarter of 2004, the $2.6 million increase was also primarily due to the inclusion of Jabas in retail commissions and increased service charges on deposits.
On a year-to-date basis, noninterest income excluding mortgage fee revenue was $90.4 million, or 12 percent higher than $80.4 million for the first half of 2003. The increase was led by insurance revenues that more than doubled given the insurance agency acquisitions, as well as growth in trust fees and service charges on deposit accounts.
Excluding mortgage servicing rights expense, noninterest expense was $92.0 million for second quarter 2004, compared to $89.2 million for the comparable 2003 period, and $86.9 million for first quarter 2004. The $2.8 million increase from the same quarter last year was primarily a result of incurring Jabas operating expenses. Compared to the first quarter of 2004, the $5.1 million increase was primarily the result of including Jabas operating expenses, as well as increased data processing costs, marketing expense and legal and professional fees.
On a year-to-date basis, noninterest expense excluding mortgage servicing rights expense was $178.9 million for the first six months of 2004, only 3 percent higher than $174.1 million for the comparative period last year. The efficiency ratio improved to 48.18 percent, compared to 49.79 percent for the first half of 2003.
“We are continuing to invest in our capabilities to diversify Associated’s revenue streams. Our asset quality and expense controls will continue to positively affect our earnings through the remainder of 2004. We are continuing to see positive momentum in our fee-based businesses,” Beideman said. “We look forward to increasing the pace of commercial lending growth as the economy improves and as we continue to implement our ‘Achieving Excellence’ sales initiative.
ASBC 2Q ‘04 earnings, add three
“Given the current trends in our business, we remain confident that we can meet or exceed the consensus of analysts’ estimates for our 2004 earnings,” Beideman said.
Associated repurchased approximately 0.2 million shares of its common stock during the second quarter of 2004 at an average cost of $27.93 per share, bringing year-to-date repurchases to 0.7 million shares at $28.91 average cost per share, compared to 1.8 million shares repurchased at $23.11 average cost per share for the first half of 2003.
“Additionally, planning for our acquisition and integration of First Federal Capital Corp. continues to progress well. We feel very positive about the benefits of this combination. We remain on target for a fourth quarter closing,” Beideman said.
The company will host a conference call for investors and analysts at 3 p.m. CDT today. The toll-free dial-in number is 877-654-5513. Participants should ask the operator for the Associated Banc-Corp earnings call, number 876-4788. An archived recording of the call will be available for two weeks.
Associated Banc-Corp has more than 200 banking offices serving more than 150 communities in Wisconsin, Illinois, and Minnesota. The company offers a full range of traditional banking services and a variety of other financial products and services. More information about Associated Banc-Corp is available at www.AssociatedBank.com.
Statements made in this document that 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. Forward-looking statements are based on current management expectations and, by their nature, are subject to risks and uncertainties. These statements may be identified by the use of words such as “believe,” “expect,” “anticipate,” “plan,” “estimate,” “should,” “will,” “intend,” or similar expressions. Outcomes related to such statements are subject to numerous risk factors and uncertainties including those listed in the company’s Annual Report filed on Form 10-K.
– 30 –
Consolidated Balance Sheets (Unaudited)
Associated Banc-Corp
June 30, December 31, June 30,
(in thousands) 2004 2003 % Change 2003 % Change
- -------------------------------------------------------------------------------------------------------------------------
Assets
Cash and due from banks $ 309,804 $ 389,140 (20.4%) $ 393,882 (21.3%)
Interest-bearing deposits in other
financial institutions 11,353 7,434 52.7% 13,456 (15.6%)
Federal funds sold and securities purchased
under agreements to resell 39,245 3,290 1092.9% 14,550 169.7%
Securities available for sale, at fair value 3,799,842 3,773,784 0.7% 3,374,834 12.6%
Loans held for sale 69,891 104,336 (33.0%) 392,563 (82.2%)
Loans 10,556,603 10,291,810 2.6% 10,387,364 1.6%
Allowance for loan losses (177,980) (177,622) 0.2% (172,440) 3.2%
-------------------------------- ----------------
Loans, net 10,378,623 10,114,188 2.6% 10,214,924 1.6%
Premises and equipment 129,401 131,315 (1.5%) 131,436 (1.5%)
Goodwill 232,528 224,388 3.6% 224,388 3.6%
Intangible assets 73,977 63,509 16.5% 50,556 46.3%
Other assets 457,892 436,510 4.9% 408,227 12.2%
-------------------------------- ----------------
Total assets $ 15,502,556 $ 15,247,894 1.7% $ 15,218,816 1.9%
================================ ================
Liabilities and Stockholders' Equity
Noninterest-bearing deposits $ 1,822,716 $ 1,814,446 0.5% $ 1,833,703 (0.6%)
Interest-bearing deposits, excluding Brokered CDs 7,497,441 7,813,267 (4.0%) 7,455,900 0.6%
Brokered CDs 263,435 165,130 59.5% 163,857 60.8%
-------------------------------- ----------------
Total deposits 9,583,592 9,792,843 (2.1%) 9,453,460 1.4%
Short-term borrowings 2,588,103 1,928,876 34.2% 2,079,371 24.5%
Long-term funding 1,827,326 2,034,160 (10.2%) 2,204,517 (17.1%)
Accrued expenses and other liabilities 124,641 143,588 (13.2%) 163,222 (23.6%)
-------------------------------- ----------------
Total liabilities 14,123,662 13,899,467 1.6% 13,900,570 1.6%
Stockholders' Equity
Preferred stock - - -
Common stock 1,105 734 50.5% 743 48.7%
Surplus 584,853 575,975 1.5% 606,660 (3.6%)
Retained earnings 791,432 724,356 9.3% 664,280 19.1%
Accumulated other comprehensive income 15,305 52,089 (70.6%) 65,822 (76.7%)
Deferred compensation (1,981) (1,981) 0.0% (1,744) 13.6%
Treasury stock, at cost (11,820) (2,746) 330.4% (17,515) (32.5%)
-------------------------------- ----------------
Total stockholders' equity 1,378,894 1,348,427 2.3% 1,318,246 4.6%
-------------------------------- ----------------
Total liabilities and stockholders' equity $ 15,502,556 $ 15,247,894 1.7% $ 15,218,816 1.9%
================================ ================
Consolidated Statements of Income (Unaudited)
Associated Banc-Corp
For The Three Months Ended, For The Six Months Ended,
June 30, June 30,
------------------------- -------------------------
(in thousands, except per share amounts) 2004 2003 % Change 2004 2003 % Change
- -----------------------------------------------------------------------------------------------------------------------------
Interest Income
Interest and fees on loans $ 137,449 $ 147,785 (7.0%) $ 272,701 $ 296,281 (8.0%)
Interest and dividends on investment securities
and deposits with other financial institutions
Taxable 30,767 25,923 18.7% 61,799 52,720 17.2%
Tax-exempt 10,267 9,942 3.3% 20,502 19,997 2.5%
Interest on federal funds sold and securities
purchased under agreements to resell 68 54 25.9% 95 89 6.7%
------------------------- -------------------------
Total interest income 178,551 183,704 (2.8%) 355,097 369,087 (3.8%)
Interest Expense
Interest on deposits 26,656 31,558 (15.5%) 54,210 63,548 (14.7%)
Interest on short-term borrowings 7,241 8,442 (14.2%) 13,780 17,009 (19.0%)
Interest on long-term funding 12,775 16,509 (22.6%) 26,153 33,881 (22.8%)
------------------------- -------------------------
Total interest expense 46,672 56,509 (17.4%) 94,143 114,438 (17.7%)
------------------------- -------------------------
Net Interest Income 131,879 127,195 3.7% 260,954 254,649 2.5%
Provision for loan losses 5,889 12,132 (51.5%) 11,065 25,092 (55.9%)
------------------------- -------------------------
Net interest income after provision for loan losses 125,990 115,063 9.5% 249,889 229,557 8.9%
Noninterest Income
Trust service fees 8,043 7,796 3.2% 15,911 14,426 10.3%
Service charges on deposit accounts 13,141 12,462 5.4% 25,538 24,273 5.2%
Mortgage banking 9,045 27,113 (66.6%) 18,071 51,613 (65.0%)
Credit card and other nondeposit fees 6,074 5,192 17.0% 11,745 12,588 (6.7%)
Retail commissions 13,162 7,407 77.7% 22,519 10,710 110.3%
Bank owned life insurance income 3,641 3,450 5.5% 6,996 6,841 2.3%
Asset sale gains (losses), net 218 (790) (127.6%) 440 (668) (165.9%)
Investment securities gains (losses), net (569) 1,027 (155.4%) 1,362 701 94.3%
Other 2,742 4,771 (42.5%) 5,874 11,550 (49.1%)
------------------------- -------------------------
Total noninterest income 55,497 68,428 (18.9%) 108,456 132,034 (17.9%)
Noninterest Expense
Personnel expense 53,612 51,733 3.6% 105,888 100,569 5.3%
Occupancy 6,864 7,151 (4.0%) 14,336 14,266 0.5%
Equipment 2,878 3,190 (9.8%) 5,877 6,434 (8.7%)
Data processing 6,128 5,602 9.4% 11,801 11,220 5.2%
Business development and advertising 4,057 3,553 14.2% 6,714 6,916 (2.9%)
Stationery and supplies 1,429 1,634 (12.5%) 2,655 3,313 (19.9%)
Mortgage servicing rights expense (2,368) 13,021 (118.2%) 4,404 24,619 (82.1%)
Other intangible amortization 934 870 7.4% 1,716 1,220 40.7%
Loan expense 1,670 950 75.8% 3,056 4,298 (28.9%)
Other 14,415 14,483 (0.5%) 26,828 25,886 3.6%
------------------------- -------------------------
Total noninterest expense 89,619 102,187 (12.3%) 183,275 198,741 (7.8%)
------------------------- -------------------------
Income before income taxes 91,868 81,304 13.0% 175,070 162,850 7.5%
Income tax expense 27,363 24,635 11.1% 51,005 48,188 5.8%
------------------------- -------------------------
Net Income $ 64,505 $ 56,669 13.8% $ 124,065 $ 114,662 8.2%
========================= =========================
Earnings Per Share:
Basic $ 0.59 $ 0.51 15.7% $ 1.13 $ 1.03 9.7%
Diluted $ 0.58 $ 0.51 13.7% $ 1.11 $ 1.02 8.8%
Average Shares Outstanding:
Basic 110,116 110,938 (0.7%) 110,205 111,157 (0.9%)
Diluted 111,520 112,025 (0.5%) 111,647 112,166 (0.5%)
Consolidated Statements of Income (Unaudited) - Quarterly Trend
Associated Banc-Corp
(in thousands, except per share amounts) 2Q04 1Q04 4Q03 3Q03 2Q03
- ----------------------------------------------------------------------------------------------------------------------------------------
Interest Income
Interest and fees on loans $ 137,449 $ 135,252 $ 137,289 $ 145,246 $ 147,785
Interest and dividends on investment securities
and deposits in other financial institutions:
Taxable 30,767 31,032 29,194 26,710 25,923
Tax-exempt 10,267 10,235 9,939 9,825 9,942
Interest on federal funds sold and securities
purchased under agreements to resell 68 27 36 38 54
-------------------------------------------------------------
Total interest income 178,551 176,546 176,458 181,819 183,704
Interest Expense
Interest on deposits 26,656 27,554 29,247 30,327 31,558
Interest on short-term borrowings 7,241 6,539 5,390 6,757 8,442
Interest on long-term funding 12,775 13,378 14,684 15,759 16,509
-------------------------------------------------------------
Total interest expense 46,672 47,471 49,321 52,843 56,509
-------------------------------------------------------------
Net Interest Income 131,879 129,075 127,137 128,976 127,195
Provision for loan losses 5,889 5,176 9,603 12,118 12,132
-------------------------------------------------------------
Net interest income after provision for
loan losses 125,990 123,899 117,534 116,858 115,063
Noninterest Income
Trust service fees 8,043 7,868 8,150 7,001 7,796
Service charges on deposit accounts 13,141 12,397 12,735 13,338 12,462
Mortgage banking 9,045 9,026 9,753 21,671 27,113
Credit card and other nondeposit fees 6,074 5,671 5,646 5,435 5,192
Retail commissions 13,162 9,357 8,031 6,830 7,407
Bank owned life insurance income 3,641 3,355 3,417 3,532 3,450
Asset sale gains (losses), net 218 222 1,366 871 (790)
Investment securities gains (losses), net (569) 1,931 - 1 1,027
Other 2,742 3,132 3,379 3,245 4,771
-------------------------------------------------------------
Total noninterest income 55,497 52,959 52,477 61,924 68,428
Noninterest Expense
Personnel expense 53,612 52,276 54,391 53,080 51,733
Occupancy 6,864 7,472 6,710 7,101 7,151
Equipment 2,878 2,999 3,206 3,178 3,190
Data processing 6,128 5,673 5,731 6,322 5,602
Business development and advertising 4,057 2,657 4,165 4,113 3,553
Stationery and supplies 1,429 1,226 1,741 1,651 1,634
Mortgage servicing rights expense (2,368) 6,772 735 4,199 13,021
Other intangible amortization 934 782 870 871 870
Loan expense 1,670 1,386 1,446 1,806 950
Other 14,415 12,413 15,125 13,486 14,483
-------------------------------------------------------------
Total noninterest expense 89,619 93,656 94,120 95,807 102,187
-------------------------------------------------------------
Income before income taxes 91,868 83,202 75,891 82,975 81,304
Income tax expense 27,363 23,642 20,282 24,589 24,635
-------------------------------------------------------------
Net Income $ 64,505 $ 59,560 $ 55,609 $ 58,386 $ 56,669
=============================================================
Earnings Per Share:
Basic $ 0.59 $ 0.54 $ 0.51 $ 0.53 $ 0.51
Diluted $ 0.58 $ 0.53 $ 0.50 $ 0.52 $ 0.51
Average Shares Outstanding:
Basic 110,116 110,294 109,965 110,209 110,938
Diluted 111,520 111,830 111,499 111,485 112,025
Selected Quarterly Information
Associated Banc-Corp
- -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
(in thousands, except per share &
full time equivalent employee data) YTD 2004 YTD 2003 2nd Qtr 2004 1st Qtr 2004 4th Qtr 2003 3rd Qtr 2003 2nd Qtr 2003
- -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Summary of Operations
Net interest income 260,954 254,649 131,879 129,075 127,137 128,976 127,195
Provision for loan losses 11,065 25,092 5,889 5,176 9,603 12,118 12,132
Asset sale gains (losses), net 440 (668) 218 222 1,366 871 (790)
Investment securities gains (losses), net 1,362 701 (569) 1,931 - 1 1,027
Noninterest income (excluding securities & asset gains) 106,654 132,001 55,848 50,806 51,111 61,052 68,191
Noninterest expense 183,275 198,741 89,619 93,656 94,120 95,807 102,187
Income before income taxes 175,070 162,850 91,868 83,202 75,891 82,975 81,304
Income taxes 51,005 48,188 27,363 23,642 20,282 24,589 24,635
Net income 124,065 114,662 64,505 59,560 55,609 58,386 56,669
Taxable equivalent adjustment 12,791 12,508 6,387 6,404 6,230 6,165 6,231
- -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Per Common Share Data (1)
Net income:
Basic $ 1.13 $ 1.03 $ 0.59 $ 0.54 $ 0.51 $ 0.53 $ 0.51
Diluted 1.11 1.02 0.58 0.53 0.50 0.52 0.51
Dividends 0.4767 0.4333 0.2500 0.2267 0.2267 0.2267 0.2267
Market Value:
High $ 30.37 $ 25.61 $ 30.13 $ 30.37 $ 28.75 $ 25.93 $ 25.61
Low 27.09 21.43 27.09 28.08 25.87 24.75 21.43
Close 29.63 24.41 29.63 29.86 28.53 25.26 24.41
Book value 12.53 11.92 12.53 12.67 12.26 11.84 11.92
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Performance Ratios (annualized)
Net interest margin (FTE) 3.80% 3.83% 3.80% 3.80% 3.81% 3.78% 3.79%
Return on average assets 1.62 1.55 1.67 1.57 1.49 1.53 1.51
Return on average equity 18.12 17.86 18.87 17.37 16.85 17.75 17.37
Efficiency ratio (2) 48.18 49.79 46.17 50.28 51.02 48.83 50.68
Effective tax rate 29.13 29.59 29.78 28.42 26.73 29.63 30.30
Dividend payout ratio (3) 42.18 42.07 42.37 41.98 44.44 42.77 44.44
- -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Average Balances
Assets $ 15,379,641 $ 14,942,330 $ 15,498,005 $ 15,261,277 $ 14,852,390 $ 15,152,676 $ 15,016,497
Earning assets 14,333,135 13,914,288 14,480,701 14,185,569 13,828,992 14,128,702 13,991,615
Interest-bearing liabilities 12,157,368 11,914,412 12,231,733 12,083,003 11,637,646 11,955,420 11,941,877
Loans 10,559,476 10,661,386 10,685,542 10,433,411 10,354,726 10,813,769 10,743,430
Deposits 9,643,509 9,011,930 9,701,945 9,585,074 9,679,789 9,485,000 9,121,204
Stockholders' equity 1,376,718 1,294,804 1,374,632 1,378,804 1,309,167 1,304,983 1,308,505
Stockholders' equity / assets 8.95% 8.67% 8.87% 9.03% 8.81% 8.61% 8.71%
- -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
At Period End
Assets $ 15,502,556 $ 15,510,868 $ 15,247,894 $ 15,114,169 $ 15,218,816
Loans 10,556,603 10,486,610 10,291,810 10,289,242 10,387,364
Allowance for loan losses 177,980 177,717 177,622 176,223 172,440
Goodwill 232,528 224,388 224,388 224,388 224,388
Mortgage servicing rights, net 48,735 39,649 42,477 36,663 27,784
Other intangible assets 25,242 20,250 21,032 21,902 22,772
Deposits 9,583,592 9,702,758 9,792,843 9,635,356 9,453,460
Stockholders' equity 1,378,894 1,395,293 1,348,427 1,300,948 1,318,246
Stockholders' equity / assets 8.89% 9.00% 8.84% 8.61% 8.66%
Shares outstanding, end of period 110,048 110,168 109,966 109,840 110,604
Shares repurchased during period 205 492 212 1,090 714
Average per share cost of shares repurchased during period $ 27.93 $ 29.32 $ 28.18 $ 24.97 $ 24.08
Year-to-date shares repurchased during period 697 492 3,091 2,880 1,789
YTD average per share cost of shares repurchased during period $ 28.91 $ 29.32 $ 24.11 $ 23.81 $ 23.11
- -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Selected trend information
Average full time equivalent employees 4,010 4,024 4,098 4,173 4,145
Trust assets under management, at market value $ 4,300,000 $ 4,300,000 $ 4,100,000 $ 3,800,000 $ 3,800,000
Mortgage loans originated for sale 579,020 359,791 524,118 1,422,747 1,229,022
Portfolio serviced for others 6,010,000 5,904,000 5,928,000 5,587,000 5,471,000
Mortgage servicing rights, net / Portfolio serviced for others 0.81% 0.67% 0.72% 0.66% 0.51%
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(1) Per share data adjusted retroactively for stock splits and stock
dividends.
(2) Efficiency ratio = Noninterest expense divided by sum of taxable equivalent
net interest income plus noninterest income, excluding investment securities gains, net,
and asset sales gains, net.
(3) Ratio is based upon basic earnings per share.
- -------------------------------------------------------------------------------------------------------------------------------
Financial Summary and Comparison
Associated Banc-Corp Three months ended Six months ended
June 30, June 30,
------------------------------------ ----------------------------------
(in thousands) 2004 2003 % Change 2004 2003 % Change
- ------------------------------------------------------------------------------ ----------------------------------
Allowance for Loan Losses
Beginning balance $ 177,717 $ 170,391 4.3% $ 177,622 $ 162,541 9.3%
Provision for loan losses 5,889 12,132 (51.5%) 11,065 25,092 (55.9%)
Charge offs (6,660) (11,537) (42.3%) (12,722) (17,291) (26.4%)
Recoveries 1,034 1,454 (28.9%) 2,015 2,098 (4.0%)
------------------------ -----------------------
Net charge offs (5,626) (10,083) (44.2%) (10,707) (15,193) (29.5%)
------------------------ -----------------------
Ending Balance $ 177,980 $ 172,440 3.2% $ 177,980 $ 172,440 3.2%
======================== =======================
- -------------------------------------------------------------------------------------------------------------------------------
Credit Quality 2Q04 vs 1Q04 2Q04 vs 2Q03
June 30, 2004 Mar 31, 2004 % Change Dec 31, 2003 Sept 30, 2003 June 30, 2003% Change
------------------------------------ -----------------------------------------------
Nonaccrual loans $ 80,622 $ 88,313 (8.7%) $ 113,944 $ 114,067 $ 110,820 (27.2%)
Loans 90 or more days past due and
still accruing 5,207 5,258 (1.0%) 7,495 11,055 6,311 (17.5%)
Restructured loans 40 42 (4.8%) 43 44 46 (13.0%)
------------------------ ----------------------------------
Total nonperforming loans 85,869 93,613 (8.3%) 121,482 125,166 117,177 (26.7%)
Other real estate owned 6,613 7,199 (8.1%) 5,457 6,380 14,707 (55.0%)
------------------------ ----------------------------------
------------------------ ----------------------------------
Total nonperforming assets 92,482 100,812 (8.3%) 126,939 131,546 131,884 (29.9%)
======================== ==================================
Provision for loan losses 5,889 5,176 13.8% 9,603 12,118 12,132 (51.5%)
Net charge offs 5,626 5,081 10.7% 8,204 8,335 10,083 (44.2%)
Allowance for loan losses / loans 1.69% 1.69% 1.73% 1.71% 1.66%
Allowance for loan losses/nonperforming loans 207.27 189.84 146.21 140.79 147.16
Nonperforming loans / total loans 0.81 0.89 1.18 1.22 1.13
Nonperforming assets / total assets 0.60 0.65 0.83 0.87 0.87
Net charge offs / average loans (annualized) 0.21 0.20 0.31 0.31 0.38
Year-to-date net charge offs / average loans 0.20 0.20 0.30 0.29 0.29
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Period End Loan Composition 2Q04 vs 1Q04 2Q04 vs 2Q03
June 30, 2004 Mar 31, 2004 % Change Dec 31, 2003 Sept 30, 2003 June 30, 2003 % Change
------------------------------------ -----------------------------------------------
Commercial, financial & agricultural $ 2,247,779 $ 2,123,846 5.8% $ 2,116,463$ 2,186,214 $ 2,312,143 (2.8%)
Real estate - construction 1,118,284 1,094,597 2.2% 1,077,731 1,035,674 975,415 14.6%
Commercial real estate 3,292,783 3,368,660 (2.3%) 3,246,954 3,240,757 3,255,918 1.1%
Lease financing 48,979 45,998 6.5% 38,968 37,193 38,666 26.7%
------------------------ ----------------------------------
Commercial 6,707,825 6,633,101 1.1% 6,480,116 6,499,838 6,582,142 1.9%
Residential mortgage 2,170,984 2,166,035 0.2% 2,145,227 2,166,187 2,202,690 (1.4%)
Home equity 1,011,489 1,007,572 0.4% 968,744 912,142 895,952 12.9%
------------------------ ----------------------------------
Residential real estate 3,182,473 3,173,607 0.3% 3,113,971 3,078,329 3,098,642 2.7%
Consumer 666,305 679,902 (2.0%) 697,723 711,075 706,580 (5.7%)
------------------------ ----------------------------------
Total loans $ 10,556,603 $10,486,610 0.7% $10,291,810$ 10,289,242$ 10,387,364 1.6%
======================== ==================================
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Period End Deposit Composition 2Q04 vs 1Q04 2Q04 vs 2Q03
June 30, 2004 Mar 31, 2004 % Change Dec 31, 2003 Sept 30, 2003 June 30, 2003 % Change
------------------------------------ -----------------------------------------------
Demand $ 1,822,716 $ 1,755,485 3.8% $ 1,814,446$ 1,804,596 $ 1,833,703 (0.6%)
Savings 948,755 918,608 3.3% 890,092 924,036 942,027 0.7%
Interest-bearing demand 2,355,287 2,375,492 (0.9%) 2,330,478 2,086,964 1,797,065 31.1%
Money market 1,477,513 1,542,875 (4.2%) 1,573,678 1,559,769 1,598,317 (7.6%)
Brokered CDs 263,435 230,983 14.0% 165,130 156,994 163,857 60.8%
Other time deposits 2,715,886 2,879,315 (5.7%) 3,019,019 3,102,997 3,118,491 (12.9%)
------------------------ ----------------------------------
Total deposits $ 9,583,592 $ 9,702,758 (1.2%) $ 9,792,843$ 9,635,356 $ 9,453,460 1.4%
======================== ==================================
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Net Interest Income Analysis - Taxable Equivalent Basis
Associated Banc-Corp Six months ended June 30, 2004 Six months ended June 30, 2003
------------------------------------------------- -------------------------------------------------
Average Interest Average Average Interest Average
(in thousands) Balance Income / Expense Yield / Rate Balance Income / Expense Yield / Rate
------------------------------------------------- -------------------------------------------------
Earning assets:
Loans: (1) (2) (3)
Commercial $ 6,608,371 $ 160,794 4.82% $ 6,399,244 $ 166,188 5.17%
Residential real estate 3,272,422 88,955 5.45 3,551,134 104,600 5.92
Consumer 678,683 23,441 6.94 711,008 26,003 7.37
----------------------------------- -----------------------------------
Total loans 5.15 5.56
10,559,476 273,190 10,661,386 296,791
Investments and other 3,773,659 94,698 5.02 3,252,902 84,804 5.22
----------------------------------- -----------------------------------
Total earning assets 14,333,135 367,888 5.11 13,914,288 381,595 5.48
Other assets, net 1,046,506 1,028,042
-------------- ---------------
Total assets $ 15,379,641 $ 14,942,330
============== ===============
Interest-bearing liabilities:
Savings deposits $ 918,775 $ 1,684 0.37% $ 927,413 $ 2,884 0.63%
Interest-bearing demand deposits 2,380,375 9,571 0.81 1,591,942 6,925 0.88
Money market deposits 1,537,955 5,952 0.78 1,668,467 8,264 1.00
Time deposits, excluding Brokered CDs 2,880,996 35,739 2.49 3,032,421 43,614 2.90
----------------------------------- -----------------------------------
Total interest-bearing deposits, excluding Brokered CDs 7,718,101 52,946 1.38 7,220,243 61,687 1.72
Brokered CDs 206,527 1,264 1.23 203,719 1,861 1.84
----------------------------------- -----------------------------------
Total interest-bearing deposits 7,924,628 54,210 1.38 7,423,962 63,548 1.73
Wholesale funding 4,232,740 39,933 1.87 4,490,450 50,890 2.26
----------------------------------- -----------------------------------
Total interest-bearing liabilities 12,157,368 94,143 1.55 11,914,412 114,438 1.93
Noninterest-bearing demand 1,718,881 1,587,968
Other liabilities 126,674 145,146
Stockholders' equity 1,376,718 1,294,804
-------------- ---------------
Total liabilities and stockholders' equity $ 15,379,641 $ 14,942,330
============== ===============
---------------------- ---------------------
Net interest income and rate spread (1) $ 273,745 3.56% $ 267,157 3.55%
====================== =====================
Net interest margin (1) 3.80% 3.83%
Taxable equivalent adjustment $ 12,791 $ 12,508
====================== =====================
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Three months ended June 30, 2004 Three months ended June 30, 2003
------------------------------------------------- -------------------------------------------------
Average Interest Average Average Interest Average
Balance Income / Expense Yield / Rate Balance Income / Expense Yield / Rate
------------------------------------------------- -------------------------------------------------
Earning assets:
Loans: (1) (2) (3)
Commercial $ 6,684,527 $ 81,007 4.80% $ 6,470,954 $ 83,333 5.10%
Residential real estate 3,334,052 45,095 5.42 3,564,125 51,778 5.81
Consumer 666,963 11,573 6.97 708,351 12,940 7.32
----------------------------------- -----------------------------------
Total loans 10,685,542 137,675 5.13 10,743,430 148,051 5.48
Investments and other 3,795,159 47,263 4.98 3,248,185 41,884 5.16
----------------------------------- -----------------------------------
Total earning assets 14,480,701 184,938 5.09 13,991,615 189,935 5.41
Other assets, net 1,017,304 1,024,882
-------------- ---------------
Total assets $ 15,498,005 $ 15,016,497
============== ===============
Interest-bearing liabilities:
Savings deposits $ 939,025 $ 843 0.36% $ 945,048 $ 1,431 0.61%
Interest-bearing demand deposits 2,396,737 4,871 0.82 1,696,412 3,812 0.90
Money market deposits 1,498,900 2,790 0.75 1,632,710 3,999 0.98
Time deposits, excluding Brokered CDs 2,824,920 17,327 2.47 3,052,046 21,549 2.83
----------------------------------- -----------------------------------
Total interest-bearing deposits, excluding Brokered CDs 7,659,582 25,831 1.36 7,326,216 30,791 1.69
Brokered CDs 268,709 825 1.24 175,215 767 1.76
----------------------------------- -----------------------------------
Total interest-bearing deposits 7,928,291 26,656 1.35 7,501,431 31,558 1.69
Wholesale funding 4,303,442 20,016 1.85 4,440,446 24,951 2.23
----------------------------------- -----------------------------------
Total interest-bearing liabilities 12,231,733 46,672 1.53 11,941,877 56,509 1.89
Noninterest-bearing demand 1,773,654 1,619,773
Other liabilities 117,986 146,342
Stockholders' equity 1,374,632 1,308,505
-------------- ---------------
Total liabilities and stockholders' equity $ 15,498,005 $ 15,016,497
============== ===============
---------------------- ---------------------
Net interest income and rate spread (1) $ 138,266 3.56% $ 133,426 3.52%
====================== =====================
Net interest margin (1) 3.80% 3.79%
Taxable equivalent adjustment $ 6,387 $ 6,231
====================== =====================
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(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.