433 Main Street
Green Bay, Wisconsin 54301
920-491-7007 PHONE
September 6, 2017
Mr. David Irving
United States Securities and Exchange Commission
Washington, D.C. 20549
Re: Associated Banc-Corp
Form 10-K for the Fiscal Year Ended December 31, 2016
Filed February 6, 2017
File No. 001-31343
Dear Mr. Irving:
Associated Banc-Corp (the “Corporation” or “Associated”) respectfully submits the following information to provide additional clarity to the changes included in the original response letter filed with the Securities and Exchange Commission (the “SEC” or “Commission”) on July 25, 2017 concerning the Corporation’s annual report on Form 10-K for the fiscal year ended December 31, 2016 (the “2016 Form 10-K”). For reference purposes, the text of the Comment Letter has been reproduced below in bold followed by Associated’s clarification to the original response. Proposed disclosures for future filings are included in the responses.
Form 10-K for the Fiscal Year Ended December 31, 2016
Item 8: Financial Statements and Supplementary Data, page 71
Note 4 (Indicated as Note 5 of the original SEC comment letter), Loans, page 97
| 1. | We note on page 97 that you present impaired loans with and without a related allowance of $221.0 million and $134.1 million, respectively, and a related allowance of $46.5 million. We also note on page 101, that you present loans individually evaluated for impairment and the related allowance of $214.4 million and $24.1 million, respectively. Please explain this difference in your response, as well as any differences in the impaired loan disclosures in subsequent 10-Q’s, and revise future filings as necessary. |
Clarification to the Original Response to Item #1:
The Corporation acknowledges the tables included in the original response letter over-disclosed the loans individually evaluated for impairment in accordance with ASC Topic 310 and the loans collectively evaluated for impairment in accordance with ASC Topic 450. In accordance with ASC 310-10-35-13a, the Corporation evaluates smaller-balance homogeneous impaired loans collectively for impairment. In future filings, the Corporation will revise the Allowance for Loan Losses and Impaired Loans tables to clearly reflect this distinction. Presented below are the revised Allowance for Loan Losses and Impaired Loans Tables the Corporation proposes to include in future filings utilizing financial information as of December 31, 2016.
Allowance for Loan Losses Table, Page 101
A summary of the changes in the allowance for loan losses by portfolio segment for the year ended December 31, 2016, was as follows.
| $ in Thousands | Commercial and industrial | Commercial real estate — owner occupied | Commercial real estate — investor | Real estate construction | Residential mortgage | Home equity | Other consumer | Total | |||||||||||||||||||||||
| December 31, 2015 | $ | 129,959 | $ | 18,680 | $ | 43,018 | $ | 25,266 | $ | 28,261 | $ | 23,555 | $ | 5,525 | $ | 274,264 | |||||||||||||||
| Charge offs | (71,016 | ) | (512 | ) | (1,504 | ) | (558 | ) | (4,332 | ) | (4,686 | ) | (3,831 | ) | (86,439 | ) | |||||||||||||||
| Recoveries | 14,543 | 74 | 1,624 | 203 | 755 | 3,491 | 820 | 21,510 | |||||||||||||||||||||||
| Net charge offs | (56,473 | ) | (438 | ) | 120 | (355 | ) | (3,577 | ) | (1,195 | ) | (3,011 | ) | (64,929 | ) | ||||||||||||||||
| Provision for loan losses | 66,640 | (4,208 | ) | 2,147 | 2,021 | 2,362 | (1,996 | ) | 2,034 | 69,000 | |||||||||||||||||||||
| December 31, 2016 | $ | 140,126 | $ | 14,034 | $ | 45,285 | $ | 26,932 | $ | 27,046 | $ | 20,364 | $ | 4,548 | $ | 278,335 | |||||||||||||||
| Allowance for loan losses: | |||||||||||||||||||||||||||||||
| Individually evaluated for impairment | $ | 21,047 | $ | 23 | $ | 3,410 | $ | 84 | $ | 6,438 | $ | 3,943 | $ | 109 | $ | 35,054 | |||||||||||||||
| Collectively evaluated for impairment | 119,079 | 14,011 | 41,875 | 26,848 | 20,608 | 16,421 | 4,439 | 243,281 | |||||||||||||||||||||||
| Total allowance for loan losses | $ | 140,126 | $ | 14,034 | $ | 45,285 | $ | 26,932 | $ | 27,046 | $ | 20,364 | $ | 4,548 | $ | 278,335 | |||||||||||||||
| Loans: | |||||||||||||||||||||||||||||||
| Individually evaluated for impairment | $ | 213,271 | $ | 13,983 | $ | 32,908 | $ | 509 | $ | 43,876 | $ | 11,176 | $ | 1,012 | $ | 316,735 | |||||||||||||||
| Collectively evaluated for impairment | 6,275,743 | 883,741 | 3,541,824 | 1,431,988 | 6,288,451 | 923,267 | 392,967 | 19,737,981 | |||||||||||||||||||||||
| Total loans | $ | 6,489,014 | $ | 897,724 | $ | 3,574,732 | $ | 1,432,497 | $ | 6,332,327 | $ | 934,443 | $ | 393,979 | $ | 20,054,716 | |||||||||||||||
Impaired Loans Table, Page 97
The following table presents impaired loans individually evaluated under ASC Topic 310 at December 31, 2016.
Recorded Investment | Unpaid Principal Balance | Related Allowance | Average Recorded Investment | Interest Income Recognized | |||||||||||||||
| ($ in Thousands) | |||||||||||||||||||
| Loans with a related allowance | |||||||||||||||||||
| Commercial and industrial | $ | 99,786 | $ | 105,175 | $ | 21,047 | $ | 104,808 | $ | 2,345 | |||||||||
| Commercial real estate — owner occupied | 5,544 | 5,568 | 23 | 5,840 | 263 | ||||||||||||||
| Commercial and business lending | 105,330 | 110,743 | 21,070 | 110,648 | 2,608 | ||||||||||||||
| Commercial real estate — investor | 26,764 | 27,031 | 3,410 | 30,665 | 2,120 | ||||||||||||||
| Real estate construction | 509 | 648 | 84 | 529 | 31 | ||||||||||||||
| Commercial real estate lending | 27,273 | 27,679 | 3,494 | 31,194 | 2,151 | ||||||||||||||
| Total commercial | 132,603 | 138,422 | 24,564 | 141,842 | 4,759 | ||||||||||||||
| Residential mortgage | 37,902 | 39,979 | 6,438 | 38,608 | 1,551 | ||||||||||||||
| Home equity | 11,070 | 11,909 | 3,943 | 11,420 | 627 | ||||||||||||||
| Other consumer | 1,012 | 1,023 | 109 | 1,021 | 2 | ||||||||||||||
| Total consumer | 49,984 | 52,911 | 10,490 | 51,049 | 2,180 | ||||||||||||||
| Total loans | $ | 182,587 | $ | 191,333 | $ | 35,054 | $ | 192,891 | $ | 6,939 | |||||||||
| Loans with no related allowance | |||||||||||||||||||
| Commercial and industrial | $ | 113,485 | $ | 134,863 | $ | — | $ | 117,980 | $ | 1,519 | |||||||||
| Commercial real estate — owner occupied | 8,439 | 9,266 | — | 8,759 | 138 | ||||||||||||||
| Commercial and business lending | 121,924 | 144,129 | — | 126,739 | 1,657 | ||||||||||||||
| Commercial real estate — investor | 6,144 | 6,478 | — | 7,092 | — | ||||||||||||||
| Real estate construction | — | — | — | — | — | ||||||||||||||
| Commercial real estate lending | 6,144 | 6,478 | — | 7,092 | — | ||||||||||||||
| Total commercial | 128,068 | 150,607 | — | 133,831 | 1,657 | ||||||||||||||
| Residential mortgage | 5,974 | 6,998 | — | 6,610 | 184 | ||||||||||||||
| Home equity | 106 | 107 | — | 107 | 4 | ||||||||||||||
| Other consumer | — | — | — | — | — | ||||||||||||||
| Total consumer | 6,080 | 7,105 | — | 6,717 | 188 | ||||||||||||||
| Total loans | $ | 134,148 | $ | 157,712 | $ | — | $ | 140,548 | $ | 1,845 | |||||||||
| Total | |||||||||||||||||||
| Commercial and industrial | $ | 213,271 | $ | 240,038 | $ | 21,047 | $ | 222,788 | $ | 3,864 | |||||||||
| Commercial real estate — owner occupied | 13,983 | 14,834 | 23 | 14,599 | 401 | ||||||||||||||
| Commercial and business lending | 227,254 | 254,872 | 21,070 | 237,387 | 4,265 | ||||||||||||||
| Commercial real estate — investor | 32,908 | 33,509 | 3,410 | 37,757 | 2,120 | ||||||||||||||
| Real estate construction | 509 | 648 | 84 | 529 | 31 | ||||||||||||||
| Commercial real estate lending | 33,417 | 34,157 | 3,494 | 38,286 | 2,151 | ||||||||||||||
| Total commercial | 260,671 | 289,029 | 24,564 | 275,673 | 6,416 | ||||||||||||||
| Residential mortgage | 43,876 | 46,977 | 6,438 | 45,218 | 1,735 | ||||||||||||||
| Home equity | 11,176 | 12,016 | 3,943 | 11,527 | 631 | ||||||||||||||
| Other consumer | 1,012 | 1,023 | 109 | 1,021 | 2 | ||||||||||||||
| Total consumer | 56,064 | 60,016 | 10,490 | 57,766 | 2,368 | ||||||||||||||
| Total loans | $ | 316,735 | $ | 349,045 | $ | 35,054 | $ | 333,439 | $ | 8,784 | |||||||||
Note 18, Fair Value Measurements, page 127
| 2. | You noted provision for credit losses of $75.2 million from non-recurring changes in the fair value of impaired loans of $79.3 million in the table on page 131 disclosing details concerning assets and liabilities measured at fair value on a nonrecurring basis. Please address the following: |
| • | Revise future filings to enhance your description of the inputs used in the fair value measurement, including quantitative information about the significant unobservable inputs. Refer to ASC 820-10-50-2.bbb; and |
| • | Explain how the provision for credit losses of $75.2 million reconciles with the total provision for credit losses of $70.0 million included in the Consolidated Statements of Income. |
Clarification to the Original Response to Item #2:
The provision for credit losses figure of $75.2 million on impaired loans included in the 2016 Form 10-K and the original response letter primarily relate to nonaccrual oil and gas loan relationships, as reflected in Table 8 on page 44 of the 2016 Form 10-K. In future filings, the Corporation will expand the Fair Value Measurements Note to include additional information regarding the impaired loans included in the fair value disclosures.
On behalf of Associated, and as requested in your letter, the Corporation acknowledges that:
| • | Associated is responsible for the adequacy and accuracy of the disclosure in its filings; |
| • | Staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filing; and |
| • | Associated may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States. |
We believe this letter is responsive to your comments. Please feel free to contact me at 920-491-7007 if you have any questions or need further information.
Sincerely,
/s/ Christopher J. Del Moral-Niles
Christopher J. Del Moral-Niles
Chief Financial Officer
Associated Banc-Corp
/s/ Tammy C. Stadler
Tammy C. Stadler
Principal Accounting Officer
Associated Banc-Corp