GREEN BAY, Wis. — Jan. 19, 2006 — Associated Banc-Corp (NASDAQ: ASBC) earned $0.64 per diluted share in the fourth quarter of 2005, up 12 percent from $0.57 per share earned in the fourth quarter of 2004, and up from $0.63 per share in the third quarter of 2005. Net income for the fourth quarter 2005 was $87.6 million, up 24 percent from the fourth quarter 2004 net income of $70.9 million, and up 8 percent over third quarter 2005 net income of $81.0 million.
Associated earned $2.43 per diluted share in 2005, up 8 percent from 2004. Net income for 2005 was $320.2 million, up 24 percent from $258.3 million in 2004.
Associated’s acquisition of First Federal Capital Corp, a $4 billion thrift, on Oct. 29, 2004, and of State Financial Services Corp, a $1.5 billion commercial bank, on Oct. 3, 2005, affect comparisons to past periods.
Return on average assets (ROA) and return on average equity (ROE) for the year ended Dec. 31, 2005, were 1.53 percent and 15.24 percent, respectively. This compares to an ROA of 1.58 percent and an ROE of 17.22 percent in 2004. Return on average tangible equity (which is a non-GAAP measure that excludes the average of goodwill and other intangible assets from average equity) was 23.47 percent for 2005 compared to 22.11 percent in 2004.
Book value per share rose to $17.15 as of Dec. 31, 2005, up 10 percent compared to a year earlier. Period-end loans at Dec. 31, 2005, were $15.2 billion, up 10 percent over year-end 2004. Deposits at year-end 2005 were $13.6 billion, up 6 percent over the prior year end.
“The integrations of First Federal and State Financial in 2005 have strengthened our position in attractive markets. We look forward to delivering on this potential in 2006,” said Paul S. Beideman, Associated president and CEO.
In 2005 net charge-offs were $12.7 million (or .09 percent of average loans), compared to $17.3 million (or 0.15 percent of average loans) in 2004. Nonperforming loans at Dec. 31, 2005, totaled $98.6 million, or 0.65 percent of loans, compared to $115.0 million, or 0.83 percent of loans, a year ago. The provision for loan losses for 2005 was $13.0 million, compared to $14.7 million for 2004.
The allowance for loan losses at Dec. 31, 2005, was $203.4 million, representing 1.34 percent of total loans, and 206 percent of nonperforming loans. In comparison, the allowance was $189.8 million, or 1.37 percent of total loans, and 165 percent of nonperforming loans at Dec. 31, 2004.
Associated’s net interest income for 2005 was $672.3 million, up 22 percent from 2004‘s $552.6 million. Net interest margin for 2005 was 3.64 percent, compared to 3.80 percent for 2004. While the Federal Reserve raised short-term rates eight times in 2005, longer-term rates did not rise commensurately, causing a flattening of the yield curve and downward pressure on the margin in 2005.
For the fourth quarter of 2005, net interest income was $175.6 million, up $11.5 million or 7 percent over the third quarter of 2005. The net interest margins were 3.59 percent for the fourth quarter versus 3.56 percent in the third quarter. Fourth quarter 2005 results include State Financial as well as impacts from the company’s wholesale funding reduction strategy described last quarter.
“In the fourth quarter we have made significant progress in reducing our level of borrowed funds. As we fully implement this initiative our net interest margin and overall quality of earnings will continue to improve,” said Beideman. During the fourth quarter of 2005, excluding the State Financial acquisition, investments were reduced by approximately $430 million, deposit growth exceeded loan growth by approximately $230 million, and wholesale funding declined by $620 million. Additionally, in November, under an accelerated share repurchase program, the company repurchased approximately 1 million shares of its common stock.
Noninterest income for 2005 was $291.1 million, up 38 percent from $210.2 million in 2004. Annual growth occurred in trust service fees (up 10 percent to $35.0 million) driven by growth in new business; service charges on deposits (up 55 percent to $86.8 million) given our larger customer base; retail commissions (up 20 percent to $56.6 million) predominantly from insurance revenues; and in mortgage banking, net (up 79 percent to $36.4 million), influenced by an average portfolio serviced for others of $9.3 billion in 2005 versus $6.5 billion in 2004, and by secondary mortgage production of $1.58 billion in 2005 versus $1.62 billion in 2004.
Mortgage banking, net, for the fourth quarter of 2005 was $12.2 million, similar to $12.0 million for the third quarter of 2005, but the results stem from different dynamics. Secondary mortgage production for fourth quarter was $356 million, representing approximately 71 percent of the production for the third quarter. To better manage earnings volatility risks in its growing mortgage servicing portfolio, Associated sold approximately $1.5 billion (or 16 percent) of its mortgage portfolio serviced for others, effective Nov. 30. And finally, the valuation of the mortgage servicing asset stabilized between the quarters. The impact of these dynamics on fourth quarter versus third quarter 2005 results was a $3.1 million increase in gross mortgage banking income, which included a $5.3 million gain on the bulk servicing sale, offset by $2.9 million in higher mortgage servicing rights expense, including valuation recoveries of $1.3 million in the fourth quarter versus $4.5 million in the third quarter.
Noninterest income for the fourth quarter of 2005 was $81.0 million, up $4.1 million or 5 percent over third quarter 2005, as the fourth quarter included three months of State Financial and the third quarter included none.
Noninterest expenses were a critical focus during 2005 as the company integrated two acquisitions and refined certain operational structures. Noninterest expense for 2005 was $480.5 million, up 27 percent from $377.9 million in 2004, given the timing of the acquisitions. However, the efficiency ratio (a measure of noninterest expense to total revenues) remained steady at 48.99 percent for 2005 compared to 48.04 percent for 2004.
Noninterest expense for the fourth quarter of 2005 was $125.5 million, up $8.2 million or 7 percent over the third quarter of 2005, as State Financial was added at the start of the fourth quarter.
“We enter 2006 with a stronger distribution system in attractive markets, more effective sales and marketing, solid asset quality, and a more efficient organizational structure. This progress makes us confident in our ability to achieve our strategic priorities,” Beideman said. “In addition, our balance sheet deleveraging initiative is on track and producing the desired result.
“We are comfortable that we can meet or exceed the current First Call consensus EPS estimates for Associated in 2006,” he said. “The effect of expensing of stock options, a required accounting change in 2006, is estimated to be less than $2 million pre-tax for options granted to date, as options granted in January and December 2005 are fully vested by year end 2005.”
The company paid dividends of $1.06 per share in 2005, up 9 percent from $0.98 in 2004, making 2005 Associated’s 35th consecutive year of increasing dividends.
Associated repurchased approximately 3.5 million shares of its common stock in 2005 at an average cost of $32.43 per share (including the two accelerated share repurchases during 2005 totaling approximately 3 million shares), compared to 1.1 million shares at an average cost per share of $30.43 during 2004. Associated starts 2006 with an authorization to repurchase approximately 2.6 million shares.
Associated will host a conference call for investors and analysts at 3 p.m. CST today. The toll-free dial-in number is 877-654-5513. Participants should ask the operator for the Associated Banc-Corp year-end earnings call, or for call ID number 4359258. A taped play-back of the call will be available through Feb. 2 by calling 800-642-1687.
Associated Banc-Corp, headquartered in Green Bay, Wis., is a diversified multibank holding company with total assets of $22 billion. Associated has more than 300 banking offices serving more than 170 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 to be filed on Form 10-K.
Six pages of tables follow.
Consolidated Balance Sheets (Unaudited)
Associated Banc-Corp
December 31, December 31,
(in thousands) 2005 2004 % Change
- --------------------------------------------------------------------------------------------------------
Assets
Cash and due from banks $ 460,230 $ 389,311 18.2%
Interest-bearing deposits in other financial institutions 14,254 13,321 7.0%
Federal funds sold and securities purchased
under agreements to resell 17,811 55,440 (67.9%)
Securities available for sale, at fair value 4,711,605 4,815,344 (2.2%)
Loans held for sale 57,710 64,964 (11.2%)
Loans 15,206,464 13,881,887 9.5%
Allowance for loan losses (203,404) (189,762) 7.2%
---------------------------------
Loans, net 15,003,060 13,692,125 9.6%
Premises and equipment 206,153 184,944 11.5%
Goodwill 877,680 679,993 29.1%
Intangible assets 120,358 119,440 0.8%
Other assets 631,221 505,254 24.9%
---------------------------------
Total assets $22,100,082 $20,520,136 7.7%
=================================
Liabilities and Stockholders' Equity
Noninterest-bearing deposits $ 2,504,926 $ 2,347,611 6.7%
Interest-bearing deposits, excluding Brokered CDs 10,538,856 10,077,069 4.6%
Brokered CDs 529,307 361,559 46.4%
---------------------------------
Total deposits 13,573,089 12,786,239 6.2%
Short-term borrowings 2,666,307 2,926,716 (8.9%)
Long-term funding 3,348,476 2,604,540 28.6%
Accrued expenses and other liabilities 187,232 185,222 1.1%
---------------------------------
Total liabilities 19,775,104 18,502,717 6.9%
Stockholders' Equity
Preferred stock - -
Common stock 1,357 1,300 4.4%
Surplus 1,301,004 1,127,205 15.4%
Retained earnings 1,029,247 858,847 19.8%
Accumulated other comprehensive income (loss) (3,938) 41,205 (109.6%)
Deferred compensation (2,081) (2,122) (1.9%)
Treasury stock, at cost (611) (9,016) (93.2%)
---------------------------------
Total stockholders' equity 2,324,978 2,017,419 15.2%
---------------------------------
Total liabilities and stockholders' equity $22,100,082 $20,520,136 7.7%
=================================
Consolidated Statements of Income (Unaudited)
Associated Banc-Corp
For The Three Months Ended, For The Year Ended,
December 31, December 31,
----------------------------- -----------------------------
(in thousands, except per share amounts) 2005 2004 % Change 2005 2004 % Change
- -------------------------------------------------------------------------------------------------------------------------------
Interest Income
Interest and fees on loans $252,443 $179,612 40.5% $889,374 $594,702 49.5%
Interest and dividends on investment securities
and deposits with other financial institutions
Taxable 41,486 37,631 10.2% 164,404 131,020 25.5%
Tax-exempt 10,325 10,047 2.8% 39,310 40,804 (3.7%)
Interest on federal funds sold and securities
purchased under agreements to resell 289 260 11.2% 937 596 57.2%
----------------------------- -----------------------------
Total interest income 304,543 227,550 33.8% 1,094,025 767,122 42.6%
Interest Expense
Interest on deposits 66,934 36,835 81.7% 213,052 118,236 80.2%
Interest on short-term borrowings 26,828 14,898 80.1% 89,356 38,940 129.5%
Interest on long-term funding 35,186 17,360 102.7% 119,362 57,319 108.2%
----------------------------- -----------------------------
Total interest expense 128,948 69,093 86.6% 421,770 214,495 96.6%
----------------------------- -----------------------------
Net Interest Income 175,595 158,457 10.8% 672,255 552,627 21.6%
Provision for loan losses 3,676 3,603 2.0% 13,019 14,668 (11.2%)
----------------------------- -----------------------------
Net interest income after provision for
loan losses 171,919 154,854 11.0% 659,236 537,959 22.5%
Noninterest Income
Trust service fees 9,055 8,107 11.7% 35,017 31,791 10.1%
Service charges on deposit accounts 23,073 16,943 36.2% 86,783 56,153 54.5%
Mortgage banking, net 12,166 6,046 101.2% 36,395 20,331 79.0%
Credit card and other nondeposit fees 10,033 8,183 22.6% 37,439 26,181 43.0%
Retail commissions 13,624 12,727 7.0% 56,604 47,171 20.0%
Bank owned life insurance income 3,022 2,525 19.7% 9,942 13,101 (24.1%)
Asset sale gains, net 2,766 432 N/M 3,945 1,181 N/M
Investment securities gains (losses), net 1,179 (719) N/M 4,116 637 N/M
Other 6,126 4,793 27.8% 13,701 52.1%
----------------------------- -----------------------------
Total noninterest income 81,044 59,037 37.3% 291,086 210,247 38.4%
Noninterest Expense
Personnel expense 68,619 65,193 5.3% 274,941 224,548 22.4%
Occupancy 10,287 8,297 24.0% 38,961 29,572 31.7%
Equipment 4,361 3,855 13.1% 16,792 12,754 31.7%
Data processing 7,240 5,966 21.4% 27,390 23,632 15.9%
Business development and advertising 4,999 4,271 17.0% 17,661 14,975 17.9%
Stationery and supplies 1,869 1,567 19.3% 6,956 5,436 28.0%
Other intangible amortization 2,418 1,699 42.3% 8,607 4,350 97.9%
Other 25,746 19,119 34.7% 89,155 62,602 42.4%
----------------------------- -----------------------------
Total noninterest expense 125,539 109,967 14.2% 480,463 377,869 27.2%
----------------------------- -----------------------------
Income before income taxes 127,424 103,924 22.6% 469,859 370,337 26.9%
Income tax expense 39,783 33,069 20.3% 149,698 112,051 33.6%
----------------------------- -----------------------------
Net Income $ 87,641 $ 70,855 23.7% $320,161 $258,286 24.0%
============================= =============================
Earnings Per Share:
Basic $ 0.65 $ 0.57 14.0% $ 2.45 $ 2.28 7.5%
Diluted $ 0.64 $ 0.57 12.3% $ 2.43 $ 2.25 8.0%
Average Shares Outstanding:
135,684 130,554
Basic 123,509 9.9% 113,532 15.0%
Diluted 137,005 125,296 9.3% 131,931 115,025 14.7%
- -------------------------------------------------
N/M - Not meaningful.
Consolidated Statements of Income (Unaudited) - Quarterly Trend
Associated Banc-Corp
(in thousands, except per share amounts) 4Q05 3Q05 2Q05 1Q05 4Q04
- --------------------------------------------------------------------------------------------------------------------
Interest Income
Interest and fees on loans $ 252,443 $ 223,202 $ 213,420 $ 200,309 $ 179,612
Interest and dividends on investment securities
and deposits in other financial institutions
Taxable 41,486 40,050 41,834 41,034 37,631
Tax-exempt 10,325 9,755 9,507 9,723 10,047
Interest on federal funds sold and securities
purchased under agreements to resell 289 384 182 82 260
---------------------------------------------------------------------
Total interest income 304,543 273,391 264,943 251,148 227,550
Interest Expense
Interest on deposits 66,934 53,598 48,087 44,433 36,835
Interest on short-term borrowings 26,828 23,628 21,731 17,169 14,898
Interest on long-term funding 35,186 32,087 28,451 23,638 17,360
---------------------------------------------------------------------
Total interest expense 128,948 109,313 98,269 85,240 69,093
---------------------------------------------------------------------
Net Interest Income 175,595 164,078 166,674 165,908 158,457
Provision for loan losses 3,676 3,345 3,671 2,327 3,603
---------------------------------------------------------------------
Net interest income after provision for
loan losses 171,919 160,733 163,003 163,581 154,854
Noninterest Income
Trust service fees 9,055 8,667 8,967 8,328 8,107
Service charges on deposit accounts 23,073 22,830 22,215 18,665 16,943
Mortgage banking, net 12,166 11,969 2,376 9,884 6,046
Credit card and other nondeposit fees 10,033 9,505 8,790 9,111 8,183
Retail commissions 13,624 12,905 15,370 14,705 12,727
Bank owned life insurance income 3,022 2,441 2,311 2,168 2,525
Asset sale gains (losses), net 2,766 942 539 (302) 432
Investment securities gains (losses), net 1,179 1,446 1,491 - (719)
Other 6,126 6,260 (355) 8,814 4,793
---------------------------------------------------------------------
Total noninterest income 81,044 76,965 61,704 71,373 59,037
Noninterest Expense
Personnel expense 68,619 66,403 66,934 72,985 65,193
Occupancy 10,287 9,412 9,374 9,888 8,297
Equipment 4,361 4,199 4,214 4,018 3,855
Data processing 7,240 7,129 6,728 6,293 5,966
Business development and advertising 4,999 4,570 4,153 3,939 4,271
Stationery and supplies 1,869 1,599 1,644 1,844 1,567
Other intangible amortization 2,418 1,903 2,292 1,994 1,699
Other 25,746 22,133 20,995 20,281 19,119
---------------------------------------------------------------------
Total noninterest expense 125,539 117,348 116,334 121,242 109,967
---------------------------------------------------------------------
Income before income taxes 127,424 120,350 108,373 113,712 103,924
Income tax expense 39,783 39,315 34,358 36,242 33,069
---------------------------------------------------------------------
Net Income $ 87,641 $ 81,035 $ 74,015 $ 77,470 $ 70,855
=====================================================================
Earnings Per Share:
Basic $ 0.65 $ 0.63 $ 0.57 $ 0.60 $ 0.57
Diluted $ 0.64 $ 0.63 $ 0.57 $ 0.59 $ 0.57
Average Shares Outstanding:
Basic 135,684 127,875 128,990 129,781 123,509
Diluted 137,005 129,346 130,463 131,358 125,296
Selected Quarterly Information
Associated Banc-Corp
(in thousands, except per share & full time equivalent employee data)
YTD 2005 YTD 2004 4th Qtr 2005 3rd Qtr 2005 2nd Qtr 2005 1st Qtr 2005 4th Qtr 2004
- ----------------------------------------------------------------------------------------------------------------------------------------------------------------------
Summary of Operations
Net interest income $672,255 $552,627 $175,595 $164,078 $166,674 $165,908 $158,457
Provision for loan losses 13,019 14,668 3,676 3,345 3,671 2,327 3,603
Asset sale gains (losses), net 3,945 1,181 2,766 942 539 (302) 432
Investment securities gains (losses), net 4,116 637 1,179 1,446 1,491 - (719)
Noninterest income (excluding securities & asset gains) 283,025 208,429 77,099 74,577 59,674 71,675 59,324
Noninterest expense 480,463 377,869 125,539 117,348 116,334 121,242 109,967
Income before income taxes 469,859 370,337 127,424 120,350 108,373 113,712 103,924
Income taxes 149,698 112,051 39,783 39,315 34,358 36,242 33,069
Net income 320,161 258,286 87,641 81,035 74,015 77,470 70,855
Taxable equivalent adjustment 25,509 25,528 6,766 6,347 6,174 6,222 6,342
- ----------------------------------------------------------------------------------------------------------------------------------------------------------------------
Per Common Share Data (1)
Net income:
Basic $ 2.45 $ 2.28 $ 0.65 $ 0.63 $ 0.57 $ 0.60 $ 0.57
Diluted 2.43 2.25 0.64 0.63 0.57 0.59 0.57
Dividends 1.0600 0.9767 0.2700 0.2700 0.2700 0.2500 0.2500
Market Value:
High $ 34.74 $ 34.85 $ 33.23 $ 34.74 $ 33.89 $ 33.50 $ 34.85
Low 29.09 27.09 29.09 30.29 30.11 30.60 32.08
Close 32.55 33.23 32.55 30.48 33.58 31.23 33.23
Book value 17.15 15.56 17.15 16.12 15.80 15.62 15.56
- ----------------------------------------------------------------------------------------------------------------------------------------------------------------------
Performance Ratios (annualized)
Earning assets yield 5.84% 5.21% 6.12% 5.83% 5.71% 5.51% 5.31%
Interest-bearing liabilities rate 2.57 1.67 2.98 2.66 2.42 2.13 1.85
Net interest margin 3.64 3.80 3.59 3.56 3.63 3.68 3.74
Return on average assets 1.53 1.58 1.58 1.56 1.44 1.54 1.49
Return on average equity 15.24 17.22 14.99 15.85 14.62 15.52 15.46
Return on tangible average equity (2) 23.47 22.11 22.70 24.55 22.65 24.13 22.47
Efficiency ratio (3) 48.99 48.04 48.38 47.90 50.03 49.73 49.07
Effective tax rate 31.86 30.26 31.22 32.67 31.70 31.87 31.82
Dividend payout ratio (4) 43.27 42.84 41.54 42.86 47.37 41.67 43.86
- ----------------------------------------------------------------------------------------------------------------------------------------------------------------------
Average Balances
Assets $ 20,921,575 $ 16,365,762 $ 22,022,165 $ 20,607,901 $ 20,574,770 $ 20,467,698 $ 18,956,445
Earning assets 19,181,630 15,202,928 20,080,758 18,960,035 18,916,921 18,756,555 17,437,618
Interest-bearing liabilities 16,410,899 12,868,370 17,090,134 16,198,492 16,207,719 16,139,002 14,761,878
Loans 14,347,707 11,174,856 15,154,225 14,163,827 14,084,246 13,977,621 12,858,394
Deposits 12,462,981 10,144,528 13,282,910 12,133,719 12,069,719 12,359,040 11,658,646
Stockholders' equity 2,101,389 1,499,606 2,320,134 2,027,785 2,030,929 2,024,265 1,822,715
Stockholders' equity / assets 10.04% 9.16% 10.54% 9.84% 9.87% 9.89% 9.62%
- ----------------------------------------------------------------------------------------------------------------------------------------------------------------------
At Period End
Assets $ 22,100,082 $ 20,741,731 $ 20,753,714 $ 20,502,442 $ 20,520,136
Loans 15,206,464 14,107,137 14,054,506 13,923,196 13,881,887
Allowance for loan losses 203,404 190,080 190,024 189,917 189,762
Goodwill 877,680 679,993 679,993 679,993 679,993
Mortgage servicing rights, net 68,841 78,688 74,103 78,182 76,247
Other intangible assets 51,517 37,004 38,907 41,199 43,193
Deposits 13,573,089 12,181,025 12,098,631 12,193,904 12,786,239
Stockholders' equity 2,324,978 2,062,565 2,018,435 2,025,071 2,017,419
Stockholders' equity / assets 10.52% 9.94% 9.73% 9.88% 9.83%
Tangible equity / tangible assets (5) 6.59% 6.72% 6.49% 6.59% 6.54%
Shares outstanding, end of period 135,602 127,985 127,743 129,622 129,695
Shares repurchased during period 974 - 2,111 411 376
Average per share cost of shares repurchased during
period $ 30.82 $ - $ 33.10 $ 32.76 $ 33.25
Year-to-date shares repurchased during period 3,496 2,522 2,522 411 1,073
YTD average per share cost of shares repurchased
during period $ 32.43 $ 33.05 $ 33.05 $ 32.76 $ 30.43
- ----------------------------------------------------------------------------------------------------------------------------------------------------------------------
Selected trend information
Average full time equivalent employees 5,113 4,815 4,889 5,132 4,746
Trust assets under management, at market value $ 5,000,000 $ 4,900,000 $ 4,800,000 $ 4,700,000 $ 4,600,000
Mortgage loans originated for sale 356,280 498,343 385,677 337,406 427,951
Portfolio serviced for others 8,028,000 9,492,000 9,479,000 9,528,000 9,543,000
Mortgage servicing rights, net/Portfolio serviced for
others 0.86% 0.83% 0.78% 0.82% 0.80%
- ----------------------------------------------------------------------------------------------------------------------------------------------------------------------
(1) Per share data adjusted retroactively for stock splits and stock dividends.
(2) Return on tangible average equity = Net income divided by average equity excluding average goodwill and other intangible assets.
This is a non-GAAP financial measure.
(3) 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.
(4) Ratio is based upon basic earnings per share.
(5) Tangible equity to tangible assets = Stockholders' equity excluding goodwill and other intangible assets divided by assets
excluding goodwill and other intangible assets. This is a non-GAAP financial measure.
- -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Financial Summary and Comparison
Associated Banc-Corp Three months ended Year ended
December 31, December 31,
----------------------------------------------------- ------------------------------------------------------
(in thousands) 2005 2004 % Change 2005 2004 % Change
- ----------------------------------------------------------------------------------------------------------- ------------------------------------------------------
Allowance for Loan Losses
Beginning balance $ 190,080 $ 175,007 8.6% $ 189,762 $ 177,622 6.8%
Balance related to acquisition 13,283 14,750 (9.9%) 13,283 14,750 (9.9%)
Provision for loan losses 3,676 3,603 2.0% 13,019 14,668 (11.2%)
Charge offs (11,142) (5,710) 95.1% (27,743) (22,202) 25.0%
Recoveries 7,507 2,112 255.4% 15,083 4,924 206.3%
----------------------------------- --------------------------------------
Net charge offs (3,635) (3,598) 1.0% (12,660) (17,278) (26.7%)
----------------------------------- --------------------------------------
Ending Balance $ 203,404 $ 189,762 7.2% $ 203,404 $ 189,762 7.2%
=================================== ======================================
- -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Credit Quality 4Q05 vs 3Q05 4Q05 vs 4Q04
Dec 31, 2005 Sept 30, 2005 % Change June 30, 2005 Mar 31, 2005 Dec 31, 2004 % Change
----------------------------------------------------- -----------------------------------------------------------------------
Nonaccrual loans $ 95,313 $ 107,298 (11.2%) $ 109,698 $ 99,835 $ 112,761 (15.5%)
Loans 90 or more days past due and still accruing 3,270 3,354 (2.5%) 2,806 3,068 2,153 51.9%
Restructured loans 32 33 (3.0%) 35 36 37 (13.5%)
----------------------------------- ------------------------------------------------------
Total nonperforming loans 98,615 110,685 (10.9%) 112,539 102,939 114,951 (14.2%)
Other real estate owned 11,336 10,017 13.2% 3,685 4,019 3,915 189.6%
----------------------------------- ------------------------------------------------------
Total nonperforming assets 109,951 120,702 (8.9%) 116,224 106,958 118,866 (7.5%)
=================================== ======================================================
Provision for loan losses 3,676 3,345 9.9% 3,671 2,327 3,603 2.0%
Net charge offs 3,635 3,289 10.5% 3,564 2,172 3,598 1.0%
Allowance for loan losses / loans 1.34% 1.35% 1.35% 1.36% 1.37%
Allowance for loan losses / nonperforming loans 206.26 171.73 168.85 184.49 165.08
Nonperforming loans / total loans 0.65 0.78 0.80 0.74 0.83
Nonperforming assets / total assets 0.50 0.58 0.56 0.52 0.58
Net charge offs / average loans (annualized) 0.10 0.09 0.10 0.06 0.11
Year-to-date net charge offs / average loans 0.09 0.09 0.08 0.06 0.15
- ------------------------------------------------------------------------------------------------------------------------------------------------------------------
Period End Loan Composition 4Q05 vs 3Q05 4Q05 vs 4Q04
Dec 31, 2005 Sept 30, 2005 % Change June 30, 2005 Mar 31, 2005 Dec 31, 2004 % Change
----------------------------------------------------- -----------------------------------------------------------------------
Commercial, financial & agricultural $ 3,417,343 $ 3,213,656 6.3% $ 3,086,663 $ 2,852,462 $ 2,803,333 21.9%
Real estate - construction 1,783,267 1,519,681 17.3% 1,640,941 1,569,013 1,459,629 22.2%
Commercial real estate 4,064,327 3,648,169 11.4% 3,650,726 3,813,465 3,933,131 3.3%
Lease financing 61,315 57,270 7.1% 53,270 50,181 50,718 20.9%
----------------------------------- ------------------------------------------------------
Commercial 9,326,252 8,438,776 10.5% 8,431,600 8,285,121 8,246,811 13.1%
Home equity (a) 2,025,055 1,878,436 7.8% 1,806,236 1,744,676 1,866,485 8.5%
Installment 1,003,938 1,024,356 (2.0%) 1,025,621 1,048,510 1,054,011 (4.8%)
----------------------------------- ------------------------------------------------------
Retail 3,028,993 2,902,792 4.3% 2,831,857 2,793,186 2,920,496 3.8%
Residential mortgage 2,851,219 2,765,569 3.1% 2,791,049 2,844,889 2,714,580 5.0%
----------------------------------- ------------------------------------------------------
Total loans $ 15,206,464 $ 14,107,137 7.8% $ 14,054,506 $ 13,923,196 $ 13,881,887 9.5%
=================================== ======================================================
- -------------------------------------------------------
(a) Home equity includes home equity lines and residential mortgage junior liens.
- ------------------------------------------------------------------------------------------------------------------------------------------------------------------
Period End Deposit Composition 4Q05 vs 3Q05 4Q05 vs 4Q04
Dec 31, 2005 Sept 30, 2005 % Change June 30, 2005 Mar 31, 2005 Dec 31, 2004 % Change
----------------------------------------------------- -----------------------------------------------------------------------
Noninterest-bearing demand $ 2,504,926 $ 2,256,774 11.0% $ 2,250,482 $ 2,156,592 $ 2,347,611 6.7%
Savings 1,079,851 1,074,234 0.5% 1,117,922 1,137,120 1,116,158 (3.3%)
Interest-bearing demand 2,549,782 2,252,711 13.2% 2,227,188 2,485,548 2,854,880 (10.7%)
Money market 2,629,933 2,240,606 17.4% 2,094,796 2,112,490 2,083,717 26.2%
Brokered CDs 529,307 407,459 29.9% 491,781 218,111 361,559 46.4%
Other time deposits 4,279,290 3,949,241 8.4% 3,916,462 4,084,043 4,022,314 6.4%
----------------------------------- ------------------------------------------------------
Total deposits $ 13,573,089 $ 12,181,025 11.4% $ 12,098,631 $ 12,193,904 $ 12,786,239 6.2%
=================================== ======================================================
- ------------------------------------------------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------------------------------------
Net Interest Income Analysis - Taxable Equivalent Basis
Associated Banc-Corp Year ended December 31, 2005 Year ended December 31, 2004
----------------------------------------------- ----------------------------------------------
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 $8,574,996 $ 532,116 6.21% $6,928,494 $350,889 5.06%
Residential mortgage 2,875,438 161,095 5.60 2,170,600 122,453 5.64
Retail 2,897,273 198,086 6.84 2,075,762 122,406 5.90
--------------------------------- ---------------------------------
Total loans 14,347,707 891,297 6.21 11,174,856 595,748 5.33
Investments and other 4,833,923 228,237 4.72 4,028,072 196,902 4.89
--------------------------------- ---------------------------------
Total earning assets 19,181,630 1,119,534 5.84 15,202,928 792,650 5.21
Other assets, net 1,739,945 1,162,834
-------------- ---------------
Total assets $20,921,575 $16,365,762
============== ===============
Interest-bearing liabilities:
Savings deposits $1,125,417 $ 3,877 0.34% $ 967,930 $ 3,487 0.36%
Interest-bearing demand deposits 2,337,462 26,611 1.14 2,406,280 19,874 0.83
Money market deposits 2,262,369 45,626 2.02 1,628,208 14,259 0.88
Time deposits, excluding Brokered CDs 4,083,500 123,550 3.03 3,042,933 76,930 2.53
--------------------------------- ---------------------------------
Total interest-bearing deposits, excluding Brokered CDs 9,808,748 199,664 2.04 8,045,351 114,550 1.42
Brokered CDs 394,305 13,388 3.40 232,066 3,686 1.59
--------------------------------- ---------------------------------
Total interest-bearing deposits 10,203,053 213,052 2.09 8,277,417 118,236 1.43
Wholesale funding 6,207,846 208,718 3.36 4,590,953 96,259 2.10
--------------------------------- ---------------------------------
Total interest-bearing liabilities 16,410,899 421,770 2.57 12,868,370 214,495 1.67
Noninterest-bearing demand 2,259,928 1,867,111
Other liabilities 149,359 130,675
Stockholders' equity 2,101,389 1,499,606
-------------- ---------------
Total liabilities and stockholders' equity $20,921,575 $16,365,762
============== ===============
-------------------- -------------------
Net interest income and rate spread (1) $697,764 3.27% $578,155 3.54%
==================== ===================
Net interest margin (1) 3.64% 3.80%
Taxable equivalent adjustment $ 25,509 $ 25,528
==================== ===================
- ----------------------------------------------------------------------------------------------------------------------------------------------------------
Three months ended December 31, 2005 Three months ended December 31, 2004
----------------------------------------------- ----------------------------------------------
Average Interest Average Average Interest Average
Balance Income/Expense Yield/Rate Balance Income/Expense Yield/Rate
----------------------------------------------- ----------------------------------------------
Earning assets:
Loans: (1) (2) (3)
Commercial $9,222,512 $156,412 6.64% $7,702,801 $104,124 5.29%
Residential mortgage 2,905,463 41,482 5.68 2,552,396 36,050 5.63
Retail 3,026,250 55,120 7.25 2,603,197 39,751 6.07
--------------------------------- ---------------------------------
Total loans 15,154,225 253,014 6.58 12,858,394 179,925 5.52
Investments and other 4,926,533 58,295 4.73 4,579,224 53,967 4.71
--------------------------------- ---------------------------------
Total earning assets 20,080,758 311,309 6.12 17,437,618 233,892 5.31
Other assets, net 1,941,407 1,518,827
-------------- ---------------
Total assets $22,022,165 $18,956,445
============== ===============
Interest-bearing liabilities:
Savings deposits $1,150,777 $ 800 0.28% $1,087,220 $ 959 0.35%
Interest-bearing demand deposits 2,210,056 7,082 1.27 2,525,312 5,688 0.90
Money market deposits 2,623,223 17,121 2.59 1,918,149 5,012 1.04
Time deposits, excluding Brokered CDs 4,342,185 37,004 3.38 3,634,972 23,703 2.59
--------------------------------- ---------------------------------
Total interest-bearing deposits, excluding Brokered CDs 10,326,241 62,007 2.38 9,165,653 35,362 1.53
Brokered CDs 483,100 4,927 4.05 278,812 1,473 2.10
--------------------------------- ---------------------------------
Total interest-bearing deposits 10,809,341 66,934 2.46 9,444,465 36,835 1.55
Wholesale funding 6,280,793 62,014 3.87 5,317,413 32,258 2.38
--------------------------------- ---------------------------------
Total interest-bearing liabilities 17,090,134 128,948 2.98 14,761,878 69,093 1.85
Noninterest-bearing demand 2,473,569 2,214,181
Other liabilities 138,328 157,671
Stockholders' equity 2,320,134 1,822,715
-------------- ---------------
Total liabilities and stockholders' equity $22,022,165 $18,956,445
============== ===============
-------------------- -------------------
Net interest income and rate spread (1) $182,361 3.14% $164,799 3.46%
==================== ===================
Net interest margin (1) 3.59% 3.74%
Taxable equivalent adjustment $ 6,766 $ 6,342
==================== ===================
- ----------------------------------------------------------------------------------------------------------------------------------------------------------
(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.
