Exhibit 99.1
 | NEWS RELEASE Investor Contact: Robb Timme, Senior Vice President, Director of Investor Relations 920-491-7059 Media Contact: Jennifer Kaminski, Vice President, Public Relations Senior Manager 920-491-7576 |
Associated Banc-Corp Reports Third Quarter 2019 Earnings of $0.49 Per Common Share,
or $0.50 Per Common Share Excluding $2 million in Acquisition Related Costs1,
Year-to-Date Earnings Per Share up 7% from Prior Year
GREEN BAY, Wis. -- October 24, 2019 -- Associated Banc-Corp (NYSE: ASB) ("Associated" or "Company") today reported net income available to common equity ("earnings") of $80 million, or $0.49 per common share for the quarter ended September 30, 2019. These amounts compare to net income available to common equity of $84 million, or $0.48 per common share for the quarter ended September 30, 2018. Earnings for the first nine months of 2019 were $1.48 per common share compared to $1.38 per common share in the same period last year.
“We were pleased with our bottom-line results in the third quarter. We benefited from strong mortgage banking revenue and improving credit quality trends which drove our earnings per share," said President and CEO Philip B. Flynn. "We continued to reposition funding sources and adjust our securities portfolio, resulting in a lower cost of funds, smaller balance sheet, and more capital flexibility. We anticipate additional funding changes as we continue to fine-tune our balance sheet for a lower rate environment."
THIRD QUARTER 2019 SUMMARY (all comparisons to the third quarter of 2018)
| • | Average loans of $23.3 billion were up 1%, or $278 million |
| • | Average deposits of $25.2 billion were up 2%, or $505 million |
| • | Net interest income of $206 million decreased $13 million, or 6% |
| • | Net interest margin of 2.81% declined 11 basis points from 2.92% |
| • | Provision for credit losses of $2 million compared to negative $5 million |
| • | Noninterest income of $101 million increased 14%, or $13 million |
| • | Noninterest expense of $201 million was down 2%, or $3 million |
| • | Income before income taxes of $104 million decreased 4%, or $4 million |
| • | During the quarter, the Company repurchased nearly 3 million shares, or $60 million, of common stock |
| • | Total dividends paid per common share were $0.17, up 13% |
| • | Return on average common equity Tier 1 decreased to 12.8% from 13.2% |
1This is a non-GAAP financial measure. Management believes these measures are meaningful because they reflect adjustments commonly made by management, investors, regulators, and analysts to evaluate the adequacy of earnings per common share, provide greater understanding of ongoing operations and enhance comparability of results with prior periods. See page 10 of the attached tables for a reconciliation of GAAP financial measures to non-GAAP financial measures which exclude acquisition related costs.
Loans
Third quarter 2019 average loans of $23.3 billion were up $278 million, or 1%, from the year ago quarter, but declined $102 million from the second quarter.
With respect to third quarter 2019 average balances by loan category:
| • | Commercial and business lending increased $564 million from the year ago quarter but decreased $119 million from the second quarter to $8.5 billion. General commercial lending drove the increase from the year ago quarter while planned de-risking of the oil & gas portfolio contributed to the decrease from the second quarter. |
| • | Consumer lending decreased $22 million from the year ago quarter and decreased $9 million from the second quarter to $9.6 billion. |
| • | Commercial real estate lending decreased $264 million from the year ago quarter to $5.2 billion. However, CRE increased $26 million from the second quarter as strong production continued to outpace paydown activity. |
Investments
Third quarter 2019 average investment securities of $6.0 billion were purposefully decreased by $968 million, or 14% from the year ago quarter, and decreased by $516 million from the second quarter as the Company used its investment portfolio as a source of funds during the third quarter, seeking to reposition its balance sheet for a declining rate environment.
| • | Taxable securities decreased $1.3 billion from the year ago quarter and decreased $491 million from the second quarter as lower yielding, primarily mortgage backed securities were sold. |
| • | Tax-exempt securities increased $291 million from the year ago quarter but decreased $25 million from the second quarter. |
Deposits
Third quarter 2019 average deposits of $25.2 billion were up $505 million, or 2% from the year ago quarter and were up $120 million compared to the second quarter. Deposit inflows from the Huntington branch acquisition that closed in June were used to pay down network transaction deposits and other higher-cost funding.
With respect to third quarter 2019 average balances by deposit category:
| • | Savings increased $716 million from the year ago quarter and increased $299 million from the second quarter to $2.6 billion. |
| • | Interest-bearing demand deposits increased $464 million from the year ago quarter and increased $468 million from the second quarter to $5.5 billion. |
| • | Time deposits increased $129 million from the year ago quarter but decreased $437 million from the second quarter to $3.1 billion. |
| • | Noninterest-bearing demand deposits increased $14 million from the year ago quarter and increased $235 million from the second quarter to $5.3 billion. |
| • | Network transaction deposits decreased $205 million from the year ago quarter and decreased $260 million from the second quarter to $1.8 billion. |
| • | Money market deposits decreased $613 million from the year ago quarter and decreased $185 million from the second quarter to $6.9 billion. |
Net Interest Income and Net Interest Margin
Third quarter 2019 net interest income of $206 million was down 6%, or $13 million, and the net interest margin decreased 11 basis points to 2.81% from the year ago quarter. Third quarter 2019 net interest income decreased 3%, or $7 million, and the net interest margin decreased six basis points from the prior quarter. The decreases were driven by compression in LIBOR rates outpacing reductions in funding costs. The net interest margin for the first nine months of 2019 was 2.86%.
| • | The average yield on total commercial loans for the third quarter of 2019 decreased seven basis points to 4.66% from the year ago quarter, and decreased 28 basis points from the prior quarter. |
| • | The average cost of total interest-bearing deposits for the third quarter of 2019 increased 20 basis points to 1.23% from the year ago quarter but decreased 12 basis points from the prior quarter. |
| • | The net free funds benefit, which is the net margin increase from noninterest-bearing deposits, increased four basis points in the third quarter of 2019 compared to the year ago quarter but was unchanged from the prior quarter. |
Noninterest Income
Third quarter 2019 total noninterest income of $101 million increased $13 million from the year ago quarter and increased $5 million from the prior quarter.
With respect to third quarter 2019 noninterest income line items:
| • | Net mortgage banking income was up $7 million from the year ago quarter and was up $1 million from the previous quarter, driven by increased settlements including the sale of approximately $240 million of loans from our portfolio. |
| • | Gains on sales of investment securities were up $4 million from the year ago quarter and up $3 million from the second quarter, reflecting our deleveraging strategy. |
| • | Insurance commissions and fees were down $1 million from the year ago quarter and were down $2 million from the previous quarter due to seasonally lower contingency fees in the third quarter. |
Noninterest Expense
Third quarter 2019 total noninterest expense of $201 million decreased 2%, or $3 million from the year ago quarter, but increased $3 million from the prior quarter. The year ago quarter included $2 million of acquisition related costs while the current quarter and prior quarter included $2 million and $4 million of acquisition related costs, respectively.
With respect to third quarter 2019 noninterest expense line items:
| • | Personnel expense decreased $1 million from the year ago quarter, but was essentially unchanged from the prior quarter despite the addition of personnel from the Huntington branch acquisition. |
| • | Occupancy expense increased $1 million from the year ago quarter and the prior quarter due primarily to the acquisition of Huntington branches. |
| • | Technology expense increased $3 million from the year ago quarter, but was relatively unchanged from the prior quarter as the company continued to make investments to enhance its online and mobile product offerings. |
| • | The Company's FDIC assessment decreased $4 million from the year ago quarter with the removal of the FDIC surcharge and decreased from the prior quarter. |
Taxes
The third quarter 2019 effective tax rate was 20% compared to 21% in the year ago quarter and 18% in the prior quarter. The lower effective tax rate in the previous quarter was due to a one-time tax benefit as the Company contributed appreciated stock to its charitable trust.
Credit
The third quarter 2019 provision for credit losses was $2 million, up from negative $5 million in the year ago quarter but down from $8 million in the prior quarter.
With respect to third quarter 2019 credit quality:
| • | Potential problem loans of $133 million were down $103 million, or 44%, from the year ago quarter and down $33 million, or 20%, from the prior quarter. |
| • | Nonaccrual loans of $129 million were down $25 million from the year ago quarter and down $38 million from the prior quarter. The nonaccrual loans to total loans ratio was 0.57% in the third quarter, compared to 0.67% in the year ago quarter and 0.72% in the prior quarter. |
| • | Other real estate owned (OREO) of $20 million was down $6 million from the year ago quarter, which was elevated due to pending Bank Mutual branch dispositions, and up $1 million from the prior quarter. |
| • | Net charge offs of $20 million were up $8 million from the year ago quarter and up $7 million from the prior quarter reflecting continued de-risking of the oil & gas portfolio. |
| • | The allowance for loan losses of $214 million was down $22 million from the year ago quarter and was down $19 million from the prior quarter. The allowance for loan losses to total loans ratio was 0.94% in the third quarter, down from 1.03% in the year ago quarter, and 1.00% in the prior quarter. |
Capital
The Company’s capital position remains strong, with a CET1 capital ratio of 10.2% at September 30, 2019. The Company’s capital ratios continue to be in excess of the Basel III “well-capitalized” regulatory benchmarks on a fully phased in basis.
During the quarter, the Company repurchased nearly 3 million shares, or $60 million, of common stock at an average price of $20.75 per share.
THIRD QUARTER 2019 EARNINGS RELEASE CONFERENCE CALL
The Company will host a conference call for investors and analysts at 4:00 p.m. Central Time (CT) today, October 24, 2019. Interested parties can access the live webcast of the call through the Investor Relations section of the Company's website, http://investor.associatedbank.com. Parties may also dial into the call at 877-407-8037 (domestic) or 201-689-8037 (international) and request the Associated Banc-Corp third quarter 2019 earnings call. The third quarter 2019 financial tables with an accompanying slide presentation will be available on the Company's website just prior to the call. An audio archive of the webcast will be available on the Company's website approximately fifteen minutes after the call is over.
ABOUT ASSOCIATED BANC-CORP
Associated Banc-Corp (NYSE: ASB) has total assets of $33 billion and is one of the top 50 publicly traded U.S. bank holding companies. Headquartered in Green Bay, Wisconsin, Associated is a leading Midwest banking franchise, offering a full range of financial products and services from more than 240 banking locations serving more than 120 communities throughout Wisconsin, Illinois and Minnesota, and commercial financial services in Indiana, Michigan, Missouri, Ohio and Texas. Associated Bank, N.A. is an Equal Housing Lender, Equal Opportunity Lender and Member FDIC. More information about Associated Banc-Corp is available at www.associatedbank.com.
FORWARD-LOOKING STATEMENTS
Statements made in this document which are not purely historical are forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995. This includes any statements regarding management’s plans, objectives, or goals for future operations, products or services, and forecasts of its revenues, earnings, or other measures of performance. Such forward-looking statements may be identified by the use of words such as “believe,” “expect,” “anticipate,” “plan,” “estimate,” “should,” “will,” “intend,” "target," “outlook,” or similar expressions. Forward-looking statements are based on current management expectations and, by their nature, are subject to risks and uncertainties. Actual results may differ materially from those contained in the forward-looking statements. Factors which may cause actual results to differ materially from those contained in such forward-looking statements include those identified in the Company’s most recent Form 10-K and subsequent SEC filings. Such factors are incorporated herein by reference.
NON-GAAP FINANCIAL MEASURES
This press release and related materials may contain references to measures which are not defined in generally accepted accounting principles (“GAAP”). Information concerning these non-GAAP financial measures can be found in the financial tables. Management believes these measures are meaningful because they reflect adjustments commonly made by management, investors, regulators, and analysts to evaluate the adequacy of earnings per common share, provide a greater understanding of ongoing operations and enhance comparability of results with prior periods.
# # #
| Associated Banc-Corp Consolidated Balance Sheets (Unaudited) | |||||||||||||||||||||
| ($ in thousands) | Sep 30, 2019 | Jun 30, 2019 | Seql Qtr $ Change | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | Comp Qtr $ Change | ||||||||||||||
| Assets | |||||||||||||||||||||
| Cash and due from banks | $ | 523,435 | $ | 382,985 | $ | 140,450 | $ | 334,095 | $ | 507,187 | $ | 374,168 | $ | 149,267 | |||||||
| Interest-bearing deposits in other financial institutions | 236,010 | 172,708 | 63,302 | 270,843 | 221,226 | 147,848 | 88,162 | ||||||||||||||
| Federal funds sold and securities purchased under agreements to resell | 100 | 1,385 | (1,285 | ) | 41,405 | 148,285 | 24,325 | (24,225 | ) | ||||||||||||
Investment securities held to maturity, at amortized cost(a) | 2,200,419 | 2,806,064 | (605,645 | ) | 2,846,689 | 2,740,511 | 2,661,755 | (461,336 | ) | ||||||||||||
Investment securities available for sale, at fair value(a) | 3,436,289 | 3,283,456 | 152,833 | 3,829,388 | 3,946,941 | 4,052,624 | (616,335 | ) | |||||||||||||
| Equity securities | 15,096 | 15,066 | 30 | 1,609 | 1,568 | 1,573 | 13,523 | ||||||||||||||
| Federal Home Loan Bank and Federal Reserve Bank stocks, at cost | 207,443 | 202,758 | 4,685 | 216,940 | 250,534 | 220,825 | (13,382 | ) | |||||||||||||
| Residential loans held for sale | 137,655 | 129,303 | 8,352 | 81,392 | 64,321 | 134,361 | 3,294 | ||||||||||||||
| Commercial loans held for sale | 11,597 | 11,000 | 597 | 15,467 | 14,943 | 30,452 | (18,855 | ) | |||||||||||||
Loans(b) | 22,754,710 | 23,249,967 | (495,257 | ) | 23,148,359 | 22,940,429 | 22,867,112 | (112,402 | ) | ||||||||||||
| Allowance for loan losses | (214,425 | ) | (233,659 | ) | 19,234 | (235,081 | ) | (238,023 | ) | (236,250 | ) | 21,825 | |||||||||
| Loans, net | 22,540,285 | 23,016,308 | (476,023 | ) | 22,913,278 | 22,702,406 | 22,630,861 | (90,576 | ) | ||||||||||||
| Bank and corporate owned life insurance | 670,739 | 668,638 | 2,101 | 665,976 | 663,203 | 661,009 | 9,730 | ||||||||||||||
| Investment in unconsolidated subsidiaries | 256,220 | 222,812 | 33,408 | 194,670 | 161,181 | 156,878 | 99,342 | ||||||||||||||
| Premises and equipment | 436,268 | 432,058 | 4,210 | 411,040 | 363,225 | 358,926 | 77,342 | ||||||||||||||
| Goodwill | 1,176,230 | 1,176,019 | 211 | 1,168,944 | 1,169,023 | 1,168,922 | 7,308 | ||||||||||||||
| Mortgage servicing rights, net | 68,168 | 66,175 | 1,993 | 66,626 | 68,193 | 67,872 | 296 | ||||||||||||||
| Other intangible assets, net | 91,089 | 93,915 | (2,826 | ) | 73,610 | 75,836 | 78,069 | 13,020 | |||||||||||||
Other assets(c) | 589,420 | 566,216 | 23,204 | 549,356 | 516,538 | 657,326 | (67,906 | ) | |||||||||||||
| Total assets | $ | 32,596,460 | $ | 33,246,869 | $ | (650,409 | ) | $ | 33,681,329 | $ | 33,615,122 | $ | 33,427,794 | $ | (831,334 | ) | |||||
| Liabilities and stockholders’ equity | |||||||||||||||||||||
| Noninterest-bearing demand deposits | $ | 5,503,223 | $ | 5,354,987 | $ | 148,236 | $ | 5,334,154 | $ | 5,698,530 | $ | 5,421,270 | $ | 81,953 | |||||||
| Interest-bearing deposits | 18,919,339 | 19,919,235 | (999,896 | ) | 20,198,903 | 19,198,863 | 19,410,342 | (491,003 | ) | ||||||||||||
| Total deposits | 24,422,562 | 25,274,222 | (851,660 | ) | 25,533,057 | 24,897,393 | 24,831,612 | (409,050 | ) | ||||||||||||
| Federal funds purchased and securities sold under agreements to repurchase | 78,028 | 83,195 | (5,167 | ) | 127,098 | 111,651 | 166,556 | (88,528 | ) | ||||||||||||
| Commercial paper | 30,416 | 28,787 | 1,629 | 32,019 | 45,423 | 43,604 | (13,188 | ) | |||||||||||||
| FHLB advances | 2,877,727 | 2,742,941 | 134,786 | 2,944,769 | 3,574,371 | 3,332,655 | (454,928 | ) | |||||||||||||
| Other long-term funding | 796,799 | 796,403 | 396 | 796,007 | 795,611 | 795,215 | 1,584 | ||||||||||||||
Accrued expenses and other liabilities(c) | 470,073 | 421,526 | 48,547 | 412,510 | 409,787 | 461,113 | 8,960 | ||||||||||||||
| Total liabilities | 28,675,605 | 29,347,075 | (671,470 | ) | 29,845,459 | 29,834,235 | 29,630,755 | (955,150 | ) | ||||||||||||
| Stockholders’ equity | |||||||||||||||||||||
| Preferred equity | 256,716 | 256,716 | — | 256,716 | 256,716 | 256,716 | — | ||||||||||||||
| Common equity | 3,664,139 | 3,643,077 | 21,061 | 3,579,153 | 3,524,171 | 3,540,322 | 123,816 | ||||||||||||||
| Total stockholders’ equity | 3,920,855 | 3,899,794 | 21,061 | 3,835,870 | 3,780,888 | 3,797,038 | 123,816 | ||||||||||||||
| Total liabilities and stockholders’ equity | $ | 32,596,460 | $ | 33,246,869 | $ | (650,409 | ) | $ | 33,681,329 | $ | 33,615,122 | $ | 33,427,794 | $ | (831,334 | ) | |||||
Numbers may not sum due to rounding.
(a) As permitted by ASU 2019-04, which was adopted during the third quarter of 2019, the Corporation made a one-time election to transfer municipal securities with a book value of $692 million from held to maturity to available for sale.
(b) During the third quarter of 2019, the Corporation sold approximately $240 million of portfolio mortgages as well as $33 million of nonaccrual and performing restructured loans.
(c) During the third quarter of 2019, the Corporation made a change in accounting policy to offset derivative assets and liabilities and cash collateral with the same counterparty where it has a legally enforceable master netting agreement in place. The change had no impact on either earnings or equity. The Corporation believes that this change is a preferable method of accounting as it provides a better reflection of the assets and liabilities on the face of the consolidated balance sheets. Adoption of this change was voluntary and has been adopted retrospectively with all prior periods presented herein restated.
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| Associated Banc-Corp Consolidated Statements of Income (Unaudited) | |||||||||||||||||||||||||||||
| ($ in thousands, except per share data) | Comp Qtr | YTD | YTD | Comp YTD | |||||||||||||||||||||||||
| 3Q19 | 3Q18 | $ Change | % Change | Sep 2019 | Sep 2018 | $ Change | % Change | ||||||||||||||||||||||
| Interest income | |||||||||||||||||||||||||||||
| Interest and fees on loans | $ | 248,579 | $ | 249,649 | $ | (1,070 | ) | — | % | $ | 768,216 | $ | 716,329 | $ | 51,887 | 7 | % | ||||||||||||
| Interest and dividends on investment securities | |||||||||||||||||||||||||||||
| Taxable | 23,485 | 29,895 | (6,410 | ) | (21 | )% | 79,248 | 90,622 | (11,374 | ) | (13 | )% | |||||||||||||||||
| Tax-exempt | 14,491 | 11,883 | 2,608 | 22 | % | 42,950 | 31,883 | 11,067 | 35 | % | |||||||||||||||||||
| Other interest | 4,865 | 4,036 | 829 | 21 | % | 13,086 | 9,366 | 3,720 | 40 | % | |||||||||||||||||||
| Total interest income | 291,420 | 295,464 | (4,044 | ) | (1 | )% | 903,500 | 848,201 | 55,299 | 7 | % | ||||||||||||||||||
| Interest expense | |||||||||||||||||||||||||||||
| Interest on deposits | 61,585 | 50,116 | 11,469 | 23 | % | 191,408 | 121,959 | 69,449 | 57 | % | |||||||||||||||||||
| Interest on federal funds purchased and securities sold under agreements to repurchase | 145 | 504 | (359 | ) | (71 | )% | 1,058 | 1,564 | (506 | ) | (32 | )% | |||||||||||||||||
| Interest on other short-term funding | 33 | 38 | (5 | ) | (13 | )% | 121 | 150 | (29 | ) | (19 | )% | |||||||||||||||||
| Interest on FHLB advances | 15,896 | 19,318 | (3,422 | ) | (18 | )% | 53,194 | 53,720 | (526 | ) | (1 | )% | |||||||||||||||||
| Interest on long-term funding | 7,396 | 6,095 | 1,301 | 21 | % | 22,188 | 15,183 | 7,005 | 46 | % | |||||||||||||||||||
| Total interest expense | 85,054 | 76,072 | 8,982 | 12 | % | 267,969 | 192,576 | 75,393 | 39 | % | |||||||||||||||||||
| Net interest income | 206,365 | 219,392 | (13,027 | ) | (6 | )% | 635,532 | 655,625 | (20,093 | ) | (3 | )% | |||||||||||||||||
| Provision for credit losses | 2,000 | (5,000 | ) | 7,000 | N/M | 16,000 | (1,000 | ) | 17,000 | N/M | |||||||||||||||||||
| Net interest income after provision for credit losses | 204,365 | 224,392 | (20,027 | ) | (9 | )% | 619,532 | 656,625 | (37,093 | ) | (6 | )% | |||||||||||||||||
| Noninterest income | |||||||||||||||||||||||||||||
| Insurance commissions and fees | 20,954 | 21,636 | (682 | ) | (3 | )% | 69,403 | 68,279 | 1,124 | 2 | % | ||||||||||||||||||
Wealth management fees(a) | 21,015 | 21,224 | (209 | ) | (1 | )% | 61,885 | 62,198 | (313 | ) | (1 | )% | |||||||||||||||||
| Service charges and deposit account fees | 16,561 | 16,904 | (343 | ) | (2 | )% | 47,102 | 49,714 | (2,612 | ) | (5 | )% | |||||||||||||||||
| Card-based fees | 10,456 | 9,783 | 673 | 7 | % | 29,848 | 29,341 | 507 | 2 | % | |||||||||||||||||||
| Other fee-based revenue | 5,085 | 4,307 | 778 | 18 | % | 14,246 | 12,559 | 1,687 | 13 | % | |||||||||||||||||||
Capital markets, net | 4,300 | 5,099 | (799 | ) | (16 | )% | 12,215 | 15,189 | (2,974 | ) | (20 | )% | |||||||||||||||||
| Mortgage banking, net | 10,940 | 4,012 | 6,928 | 173 | % | 25,118 | 16,640 | 8,478 | 51 | % | |||||||||||||||||||
| Bank and corporate owned life insurance | 4,337 | 3,540 | 797 | 23 | % | 11,482 | 10,705 | 777 | 7 | % | |||||||||||||||||||
Asset gains (losses), net(b) | 877 | (1,037 | ) | 1,914 | N/M | 2,316 | 1,353 | 963 | 71 | % | |||||||||||||||||||
| Investment securities gains (losses), net | 3,788 | 30 | 3,758 | N/M | 5,931 | (1,985 | ) | 7,916 | N/M | ||||||||||||||||||||
Other | 2,537 | 2,802 | (265 | ) | (9 | )% | 8,344 | 7,529 | 815 | 11 | % | ||||||||||||||||||
| Total noninterest income | 100,850 | 88,300 | 12,550 | 14 | % | 287,890 | 271,522 | 16,368 | 6 | % | |||||||||||||||||||
| Noninterest expense | |||||||||||||||||||||||||||||
| Personnel | 123,170 | 124,476 | (1,306 | ) | (1 | )% | 366,449 | 366,141 | 308 | — | % | ||||||||||||||||||
| Technology | 20,572 | 17,563 | 3,009 | 17 | % | 59,698 | 54,730 | 4,968 | 9 | % | |||||||||||||||||||
| Occupancy | 15,164 | 14,519 | 645 | 4 | % | 45,466 | 44,947 | 519 | 1 | % | |||||||||||||||||||
| Business development and advertising | 7,991 | 8,213 | (222 | ) | (3 | )% | 21,284 | 21,973 | (689 | ) | (3 | )% | |||||||||||||||||
| Equipment | 6,335 | 5,838 | 497 | 9 | % | 17,580 | 17,347 | 233 | 1 | % | |||||||||||||||||||
| Legal and professional | 5,724 | 5,476 | 248 | 5 | % | 14,342 | 17,173 | (2,831 | ) | (16 | )% | ||||||||||||||||||
| Loan and foreclosure costs | 1,638 | 2,439 | (801 | ) | (33 | )% | 5,599 | 5,844 | (245 | ) | (4 | )% | |||||||||||||||||
| FDIC assessment | 4,000 | 7,750 | (3,750 | ) | (48 | )% | 12,250 | 24,250 | (12,000 | ) | (49 | )% | |||||||||||||||||
| Other intangible amortization | 2,686 | 2,233 | 453 | 20 | % | 7,237 | 5,926 | 1,311 | 22 | % | |||||||||||||||||||
Acquisition related costs(c) | 1,629 | 2,271 | (642 | ) | (28 | )% | 5,995 | 29,983 | (23,988 | ) | (80 | )% | |||||||||||||||||
| Other | 12,021 | 13,634 | (1,613 | ) | (12 | )% | 34,479 | 40,323 | (5,844 | ) | (14 | )% | |||||||||||||||||
| Total noninterest expense | 200,930 | 204,413 | (3,483 | ) | (2 | )% | 590,380 | 628,636 | (38,256 | ) | (6 | )% | |||||||||||||||||
| Income before income taxes | 104,286 | 108,279 | (3,993 | ) | (4 | )% | 317,042 | 299,510 | 17,532 | 6 | % | ||||||||||||||||||
| Income tax expense | 20,947 | 22,349 | (1,402 | ) | (6 | )% | 62,356 | 54,932 | 7,424 | 14 | % | ||||||||||||||||||
| Net income | 83,339 | 85,929 | (2,590 | ) | (3 | )% | 254,686 | 244,578 | 10,108 | 4 | % | ||||||||||||||||||
| Preferred stock dividends | 3,801 | 2,409 | 1,392 | 58 | % | 11,402 | 7,077 | 4,325 | 61 | % | |||||||||||||||||||
| Net income available to common equity | $ | 79,539 | $ | 83,521 | $ | (3,982 | ) | (5 | )% | $ | 243,285 | $ | 237,501 | $ | 5,784 | 2 | % | ||||||||||||
| Earnings per common share | |||||||||||||||||||||||||||||
| Basic | $ | 0.50 | $ | 0.49 | $ | 0.01 | 2 | % | $ | 1.49 | $ | 1.40 | $ | 0.09 | 6 | % | |||||||||||||
| Diluted | $ | 0.49 | $ | 0.48 | $ | 0.01 | 2 | % | $ | 1.48 | $ | 1.38 | $ | 0.10 | 7 | % | |||||||||||||
| Average common shares outstanding | |||||||||||||||||||||||||||||
| Basic | 159,126 | 170,516 | (11,390 | ) | (7 | )% | 161,727 | 168,249 | (6,522 | ) | (4 | )% | |||||||||||||||||
| Diluted | 160,382 | 172,802 | (12,420 | ) | (7 | )% | 163,061 | 170,876 | (7,815 | ) | (5 | )% | |||||||||||||||||
N/M = Not meaningful
Numbers may not sum due to rounding.
(a) Includes trust, asset management, brokerage, and annuity fees.
| (b) | YTD 2019 includes less than $1 million of Huntington related asset losses; 3Q18 and YTD Sep 2018 include approximately $1 million and $2 million of Bank Mutual acquisition related asset losses net of asset gains, respectively. |
| (c) | Includes Bank Mutual, Huntington branch, and First Staunton acquisition related costs only. |
Page 2
| Associated Banc-Corp Consolidated Statements of Income (Unaudited) - Quarterly Trend | |||||||||||||||||||||||||||||||||
| ($ in thousands, except per share data) | Seql Qtr | Comp Qtr | |||||||||||||||||||||||||||||||
| 3Q19 | 2Q19 | $ Change | % Change | 1Q19 | 4Q18 | 3Q18 | $ Change | % Change | |||||||||||||||||||||||||
| Interest income | |||||||||||||||||||||||||||||||||
| Interest and fees on loans | $ | 248,579 | $ | 260,784 | $ | (12,205 | ) | (5 | )% | $ | 258,853 | $ | 260,661 | $ | 249,649 | $ | (1,070 | ) | — | % | |||||||||||||
| Interest and dividends on investment securities | |||||||||||||||||||||||||||||||||
| Taxable | 23,485 | 26,710 | (3,225 | ) | (12 | )% | 29,053 | 29,119 | 29,895 | (6,410 | ) | (21 | )% | ||||||||||||||||||||
| Tax-exempt | 14,491 | 14,643 | (152 | ) | (1 | )% | 13,816 | 12,899 | 11,883 | 2,608 | 22 | % | |||||||||||||||||||||
| Other interest | 4,865 | 3,995 | 870 | 22 | % | 4,226 | 3,257 | 4,036 | 829 | 21 | % | ||||||||||||||||||||||
| Total interest income | 291,420 | 306,133 | (14,713 | ) | (5 | )% | 305,948 | 305,936 | 295,464 | (4,044 | ) | (1 | )% | ||||||||||||||||||||
| Interest expense | |||||||||||||||||||||||||||||||||
| Interest on deposits | 61,585 | 67,050 | (5,465 | ) | (8 | )% | 62,773 | 54,159 | 50,116 | 11,469 | 23 | % | |||||||||||||||||||||
| Interest on federal funds purchased and securities sold under agreements to repurchase | 145 | 286 | (141 | ) | (49 | )% | 627 | 442 | 504 | (359 | ) | (71 | )% | ||||||||||||||||||||
| Interest on other short-term funding | 33 | 37 | (4 | ) | (11 | )% | 51 | 36 | 38 | (5 | ) | (13 | )% | ||||||||||||||||||||
| Interest on FHLB advances | 15,896 | 17,744 | (1,848 | ) | (10 | )% | 19,554 | 19,948 | 19,318 | (3,422 | ) | (18 | )% | ||||||||||||||||||||
| Interest on long-term funding | 7,396 | 7,396 | — | — | % | 7,396 | 7,396 | 6,095 | 1,301 | 21 | % | ||||||||||||||||||||||
| Total interest expense | 85,054 | 92,513 | (7,459 | ) | (8 | )% | 90,401 | 81,980 | 76,072 | 8,982 | 12 | % | |||||||||||||||||||||
| Net interest income | 206,365 | 213,619 | (7,254 | ) | (3 | )% | 215,547 | 223,955 | 219,392 | (13,027 | ) | (6 | )% | ||||||||||||||||||||
| Provision for credit losses | 2,000 | 8,000 | (6,000 | ) | (75 | )% | 6,000 | 1,000 | (5,000 | ) | 7,000 | N/M | |||||||||||||||||||||
| Net interest income after provision for credit losses | 204,365 | 205,619 | (1,254 | ) | (1 | )% | 209,547 | 222,955 | 224,392 | (20,027 | ) | (9 | )% | ||||||||||||||||||||
| Noninterest income | |||||||||||||||||||||||||||||||||
| Insurance commissions and fees | 20,954 | 22,985 | (2,031 | ) | (9 | )% | 25,464 | 21,232 | 21,636 | (682 | ) | (3 | )% | ||||||||||||||||||||
Wealth management fees(a) | 21,015 | 20,691 | 324 | 2 | % | 20,180 | 20,364 | 21,224 | (209 | ) | (1 | )% | |||||||||||||||||||||
| Service charges and deposit account fees | 16,561 | 15,426 | 1,135 | 7 | % | 15,115 | 16,361 | 16,904 | (343 | ) | (2 | )% | |||||||||||||||||||||
| Card-based fees | 10,456 | 10,131 | 325 | 3 | % | 9,261 | 10,316 | 9,783 | 673 | 7 | % | ||||||||||||||||||||||
| Other fee-based revenue | 5,085 | 5,178 | (93 | ) | (2 | )% | 3,983 | 5,260 | 4,307 | 778 | 18 | % | |||||||||||||||||||||
| Capital markets, net | 4,300 | 4,726 | (426 | ) | (9 | )% | 3,189 | 4,931 | 5,099 | (799 | ) | (16 | )% | ||||||||||||||||||||
| Mortgage banking, net | 10,940 | 9,466 | 1,474 | 16 | % | 4,712 | 3,271 | 4,012 | 6,928 | 173 | % | ||||||||||||||||||||||
| Bank and corporate owned life insurance | 4,337 | 3,352 | 985 | 29 | % | 3,792 | 3,247 | 3,540 | 797 | 23 | % | ||||||||||||||||||||||
Asset gains (losses), net(b) | 877 | 871 | 6 | 1 | % | 567 | (2,456 | ) | (1,037 | ) | 1,914 | N/M | |||||||||||||||||||||
| Investment securities gains (losses), net | 3,788 | 463 | 3,325 | N/M | 1,680 | — | 30 | 3,758 | N/M | ||||||||||||||||||||||||
| Other | 2,537 | 2,547 | (10 | ) | — | % | 3,260 | 1,522 | 2,802 | (265 | ) | (9 | )% | ||||||||||||||||||||
| Total noninterest income | 100,850 | 95,837 | 5,013 | 5 | % | 91,202 | 84,046 | 88,300 | 12,550 | 14 | % | ||||||||||||||||||||||
| Noninterest expense | |||||||||||||||||||||||||||||||||
| Personnel | 123,170 | 123,228 | (58 | ) | — | % | 120,050 | 116,535 | 124,476 | (1,306 | ) | (1 | )% | ||||||||||||||||||||
| Technology | 20,572 | 20,114 | 458 | 2 | % | 19,012 | 17,944 | 17,563 | 3,009 | 17 | % | ||||||||||||||||||||||
| Occupancy | 15,164 | 13,830 | 1,334 | 10 | % | 16,472 | 14,174 | 14,519 | 645 | 4 | % | ||||||||||||||||||||||
| Business development and advertising | 7,991 | 6,658 | 1,333 | 20 | % | 6,636 | 8,950 | 8,213 | (222 | ) | (3 | )% | |||||||||||||||||||||
| Equipment | 6,335 | 5,577 | 758 | 14 | % | 5,668 | 5,897 | 5,838 | 497 | 9 | % | ||||||||||||||||||||||
| Legal and professional | 5,724 | 4,668 | 1,056 | 23 | % | 3,951 | 5,888 | 5,476 | 248 | 5 | % | ||||||||||||||||||||||
| Loan and foreclosure costs | 1,638 | 1,814 | (176 | ) | (10 | )% | 2,146 | 1,566 | 2,439 | (801 | ) | (33 | )% | ||||||||||||||||||||
| FDIC assessment | 4,000 | 4,500 | (500 | ) | (11 | )% | 3,750 | 5,750 | 7,750 | (3,750 | ) | (48 | )% | ||||||||||||||||||||
| Other intangible amortization | 2,686 | 2,324 | 362 | 16 | % | 2,226 | 2,233 | 2,233 | 453 | 20 | % | ||||||||||||||||||||||
Acquisition related costs(c) | 1,629 | 3,734 | (2,105 | ) | (56 | )% | 632 | (981 | ) | 2,271 | (642 | ) | (28 | )% | |||||||||||||||||||
| Other | 12,021 | 11,331 | 690 | 6 | % | 11,128 | 15,207 | 13,634 | (1,613 | ) | (12 | )% | |||||||||||||||||||||
| Total noninterest expense | 200,930 | 197,779 | 3,151 | 2 | % | 191,671 | 193,163 | 204,413 | (3,483 | ) | (2 | )% | |||||||||||||||||||||
| Income before income taxes | 104,286 | 103,678 | 608 | 1 | % | 109,078 | 113,839 | 108,279 | (3,993 | ) | (4 | )% | |||||||||||||||||||||
| Income tax expense | 20,947 | 19,017 | 1,930 | 10 | % | 22,392 | 24,854 | 22,349 | (1,402 | ) | (6 | )% | |||||||||||||||||||||
| Net income | 83,339 | 84,661 | (1,321 | ) | (2 | )% | 86,686 | 88,985 | 85,929 | (2,590 | ) | (3 | )% | ||||||||||||||||||||
| Preferred stock dividends | 3,801 | 3,801 | — | — | % | 3,801 | 3,707 | 2,409 | 1,392 | 58 | % | ||||||||||||||||||||||
| Net income available to common equity | $ | 79,539 | $ | 80,860 | $ | (1,321 | ) | (2 | )% | $ | 82,885 | $ | 85,278 | $ | 83,521 | $ | (3,982 | ) | (5 | )% | |||||||||||||
| Earnings per common share | |||||||||||||||||||||||||||||||||
| Basic | $ | 0.50 | $ | 0.49 | $ | 0.01 | 2 | % | $ | 0.50 | $ | 0.52 | $ | 0.49 | $ | 0.01 | 2 | % | |||||||||||||||
| Diluted | $ | 0.49 | $ | 0.49 | $ | — | — | % | $ | 0.50 | $ | 0.51 | $ | 0.48 | $ | 0.01 | 2 | % | |||||||||||||||
| Average common shares outstanding | |||||||||||||||||||||||||||||||||
| Basic | 159,126 | 162,180 | (3,054 | ) | (2 | )% | 163,928 | 164,662 | 170,516 | (11,390 | ) | (7 | )% | ||||||||||||||||||||
| Diluted | 160,382 | 163,672 | (3,290 | ) | (2 | )% | 165,433 | 166,394 | 172,802 | (12,420 | ) | (7 | )% | ||||||||||||||||||||
N/M = Not meaningful
Numbers may not sum due to rounding.
(a) Includes trust, asset management, brokerage, and annuity fees.
| (b) | 2Q19 includes less than $1 million of Huntington related asset losses; 3Q18 includes approximately $1 million of Bank Mutual acquisition related asset losses net of asset gains. |
(c) Includes Bank Mutual, Huntington branch, and First Staunton acquisition related costs only.
Page 3
| Associated Banc-Corp Selected Quarterly Information | |||||||||||||||||||||
| ($ in millions except per share data; shares repurchased and outstanding in thousands) | YTD Sep 2019 | YTD Sep 2018 | 3Q19 | 2Q19 | 1Q19 | 4Q18 | 3Q18 | ||||||||||||||
| Per common share data | |||||||||||||||||||||
| Dividends | $ | 0.51 | $ | 0.45 | $ | 0.17 | $ | 0.17 | $ | 0.17 | $ | 0.17 | $ | 0.15 | |||||||
| Market value: | |||||||||||||||||||||
| High | 23.67 | 28.85 | 21.67 | 23.15 | 23.67 | 26.55 | 28.35 | ||||||||||||||
| Low | 18.64 | 23.60 | 18.64 | 19.81 | 19.77 | 18.72 | 26.00 | ||||||||||||||
| Close | 20.25 | 26.00 | 20.25 | 21.14 | 21.35 | 19.79 | 26.00 | ||||||||||||||
| Book value | 23.00 | 21.06 | 23.00 | 22.40 | 21.77 | 21.43 | 21.06 | ||||||||||||||
| Tangible book value / share | 15.05 | 13.64 | 15.05 | 14.59 | 14.21 | 13.86 | 13.64 | ||||||||||||||
| Performance ratios (annualized) | |||||||||||||||||||||
| Return on average assets | 1.02 | % | 0.99 | % | 1.00 | % | 1.02 | % | 1.05 | % | 1.07 | % | 1.02 | % | |||||||
| Effective tax rate | 19.67 | % | 18.34 | % | 20.09 | % | 18.34 | % | 20.53 | % | 21.83 | % | 20.64 | % | |||||||
Dividend payout ratio(a) | 34.23 | % | 32.14 | % | 34.00 | % | 34.69 | % | 34.00 | % | 32.69 | % | 30.61 | % | |||||||
| Net interest margin | 2.86 | % | 2.95 | % | 2.81 | % | 2.87 | % | 2.90 | % | 3.02 | % | 2.92 | % | |||||||
| Selected trend information | |||||||||||||||||||||
Average full time equivalent employees(b) | 4,703 | 4,712 | 4,782 | 4,666 | 4,660 | 4,659 | 4,707 | ||||||||||||||
| Branch count | 248 | 247 | 233 | 236 | 236 | ||||||||||||||||
Assets under management, at market value(c) | $ | 11,604 | $ | 11,475 | $ | 11,192 | $ | 10,291 | $ | 11,206 | |||||||||||
| Mortgage loans originated for sale during period | $ | 824 | $ | 848 | $ | 365 | $ | 297 | $ | 163 | $ | 245 | $ | 331 | |||||||
Mortgage loan settlements during period(d) | $ | 1,049 | $ | 827 | $ | 617 | $ | 272 | $ | 160 | $ | 305 | $ | 345 | |||||||
| Mortgage portfolio serviced for others | $ | 8,688 | $ | 8,504 | $ | 8,543 | $ | 8,601 | $ | 8,547 | |||||||||||
| Mortgage servicing rights, net / mortgage portfolio serviced for others | 0.78 | % | 0.78 | % | 0.78 | % | 0.79 | % | 0.79 | % | |||||||||||
| Shares repurchased during period | 5,954 | 5,706 | 2,892 | 1,754 | 1,308 | 3,764 | 4,349 | ||||||||||||||
| Shares outstanding, end of period | 159,291 | 168,138 | 159,291 | 162,662 | 164,418 | 164,440 | 168,138 | ||||||||||||||
| Selected quarterly ratios | |||||||||||||||||||||
| Loans / deposits | 93.17 | % | 91.99 | % | 90.66 | % | 92.14 | % | 92.09 | % | |||||||||||
| Stockholders’ equity / assets | 12.03 | % | 11.73 | % | 11.39 | % | 11.25 | % | 11.36 | % | |||||||||||
Risk-based capital(e)(f) | |||||||||||||||||||||
| Total risk-weighted assets | $ | 24,311 | $ | 24,466 | $ | 24,121 | $ | 23,843 | $ | 23,846 | |||||||||||
| Common equity Tier 1 | $ | 2,482 | $ | 2,481 | $ | 2,485 | $ | 2,450 | $ | 2,475 | |||||||||||
| Common equity Tier 1 capital ratio | 10.21 | % | 10.14 | % | 10.30 | % | 10.27 | % | 10.38 | % | |||||||||||
| Tier 1 capital ratio | 11.27 | % | 11.19 | % | 11.36 | % | 11.35 | % | 11.45 | % | |||||||||||
| Total capital ratio | 13.26 | % | 13.25 | % | 13.48 | % | 13.49 | % | 13.59 | % | |||||||||||
| Tier 1 leverage ratio | 8.57 | % | 8.49 | % | 8.50 | % | 8.49 | % | 8.45 | % | |||||||||||
| Loans | |||||||||||||||||||||
| Recorded investment on loans | $ | 22,690 | $ | 23,180 | $ | 23,078 | $ | 22,872 | $ | 22,800 | |||||||||||
Net unaccreted purchase discount on performing loans(g) | (14 | ) | (16 | ) | (16 | ) | (18 | ) | (21 | ) | |||||||||||
| Net other deferred costs | 79 | 85 | 86 | 87 | 87 | ||||||||||||||||
| Loans | $ | 22,755 | $ | 23,250 | $ | 23,148 | $ | 22,940 | $ | 22,867 | |||||||||||
Numbers may not sum due to rounding.
| (a) | Ratio is based upon basic earnings per common share. |
| (b) | Average full time equivalent employees without overtime. |
| (c) | Excludes assets held in brokerage accounts. |
| (d) | During the third quarter of 2019, the Corporation sold approximately $240 million of portfolio mortgages that resulted in an increase in the quarter and year to date periods. |
| (e) | The Federal Reserve establishes regulatory capital requirements, including well-capitalized standards for the Corporation. The regulatory capital requirements effective for the Corporation follow Basel III, subject to certain transition provisions. |
| (f) | September 30, 2019 data is estimated. |
| (g) | Includes loans obtained from the acquisition of Bank Mutual and the Huntington branch acquisition. |
Page 4
| Associated Banc-Corp Selected Asset Quality Information | |||||||||||||||||||||
| ($ in thousands) | Sep 30, 2019 | Jun 30, 2019 | Seql Qtr % Change | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | Comp Qtr % Change | ||||||||||||||
| Allowance for loan losses | |||||||||||||||||||||
| Balance at beginning of period | $ | 233,659 | $ | 235,081 | (1 | )% | $ | 238,023 | $ | 236,250 | $ | 252,601 | (7 | )% | |||||||
| Provision for loan losses | 1,000 | 12,000 | (92 | )% | 4,500 | 2,000 | (4,000 | ) | N/M | ||||||||||||
| Charge offs | (26,313 | ) | (15,761 | ) | 67 | % | (15,486 | ) | (6,151 | ) | (17,304 | ) | 52 | % | |||||||
| Recoveries | 6,079 | 2,339 | 160 | % | 8,044 | 5,923 | 4,953 | 23 | % | ||||||||||||
| Net charge offs | (20,234 | ) | (13,421 | ) | 51 | % | (7,442 | ) | (228 | ) | (12,351 | ) | 64 | % | |||||||
| Balance at end of period | $ | 214,425 | $ | 233,659 | (8 | )% | $ | 235,081 | $ | 238,023 | $ | 236,250 | (9 | )% | |||||||
| Allowance for unfunded commitments | |||||||||||||||||||||
| Balance at beginning of period | $ | 21,907 | $ | 25,836 | (15 | )% | $ | 24,336 | $ | 25,336 | $ | 26,336 | (17 | )% | |||||||
| Provision for unfunded commitments | 1,000 | (4,000 | ) | N/M | 1,500 | (1,000 | ) | (1,000 | ) | N/M | |||||||||||
| Amount recorded at acquisition | — | 70 | (100 | )% | — | — | — | N/M | |||||||||||||
| Balance at end of period | $ | 22,907 | $ | 21,907 | 5 | % | $ | 25,836 | $ | 24,336 | $ | 25,336 | (10 | )% | |||||||
| Allowance for credit losses | $ | 237,331 | $ | 255,566 | (7 | )% | $ | 260,917 | $ | 262,359 | $ | 261,586 | (9 | )% | |||||||
| Provision for credit losses | $ | 2,000 | $ | 8,000 | (75 | )% | $ | 6,000 | $ | 1,000 | $ | (5,000 | ) | N/M | |||||||
| ($ in thousands) | Sep 30, 2019 | Jun 30, 2019 | Seql Qtr % Change | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | Comp Qtr % Change | ||||||||||||||
| Net (charge offs) recoveries | |||||||||||||||||||||
| Commercial and industrial | $ | (19,918 | ) | $ | (12,177 | ) | 64 | % | $ | (7,428 | ) | $ | 2,974 | $ | (6,893 | ) | 189 | % | |||
| Commercial real estate—owner occupied | 1,483 | (104 | ) | N/M | 1,193 | 282 | (252 | ) | N/M | ||||||||||||
| Commercial and business lending | (18,435 | ) | (12,281 | ) | 50 | % | (6,235 | ) | 3,256 | (7,145 | ) | 158 | % | ||||||||
| Commercial real estate—investor | (3 | ) | 3 | N/M | 31 | (2,107 | ) | (3,958 | ) | (100 | )% | ||||||||||
| Real estate construction | 20 | 151 | (87 | )% | — | 106 | (195 | ) | N/M | ||||||||||||
| Commercial real estate lending | 17 | 153 | (89 | )% | 31 | (2,001 | ) | (4,153 | ) | N/M | |||||||||||
| Total commercial | (18,418 | ) | (12,127 | ) | 52 | % | (6,203 | ) | 1,255 | (11,298 | ) | 63 | % | ||||||||
| Residential mortgage | (393 | ) | (365 | ) | 8 | % | (457 | ) | (94 | ) | 5 | N/M | |||||||||
| Home equity | (275 | ) | 239 | N/M | 309 | (270 | ) | 200 | N/M | ||||||||||||
| Other consumer | (1,148 | ) | (1,169 | ) | (2 | )% | (1,090 | ) | (1,118 | ) | (1,258 | ) | (9 | )% | |||||||
| Total consumer | (1,816 | ) | (1,294 | ) | 40 | % | (1,239 | ) | (1,482 | ) | (1,053 | ) | 72 | % | |||||||
| Total net (charge offs) recoveries | $ | (20,234 | ) | $ | (13,421 | ) | 51 | % | $ | (7,442 | ) | $ | (228 | ) | $ | (12,351 | ) | 64 | % | ||
| (In basis points) | Sep 30, 2019 | Jun 30, 2019 | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | ||||||||||||||||
| Net charge offs to average loans (annualized) | |||||||||||||||||||||
| Commercial and industrial | (104 | ) | (64 | ) | (40 | ) | 16 | (39 | ) | ||||||||||||
| Commercial real estate—owner occupied | 63 | (4 | ) | 53 | 13 | (11 | ) | ||||||||||||||
| Commercial and business lending | (86 | ) | (57 | ) | (30 | ) | 16 | (36 | ) | ||||||||||||
| Commercial real estate—investor | — | — | — | (22 | ) | (40 | ) | ||||||||||||||
| Real estate construction | 1 | 5 | — | 3 | (5 | ) | |||||||||||||||
| Commercial real estate lending | — | 1 | — | (15 | ) | (30 | ) | ||||||||||||||
| Total commercial | (53 | ) | (35 | ) | (19 | ) | 4 | (34 | ) | ||||||||||||
| Residential mortgage | (2 | ) | (2 | ) | (2 | ) | — | — | |||||||||||||
| Home equity | (12 | ) | 11 | 14 | (12 | ) | 9 | ||||||||||||||
| Other consumer | (129 | ) | (132 | ) | (123 | ) | (121 | ) | (133 | ) | |||||||||||
| Total consumer | (8 | ) | (5 | ) | (5 | ) | (6 | ) | (4 | ) | |||||||||||
| Total net charge offs | (35 | ) | (23 | ) | (13 | ) | — | (21 | ) | ||||||||||||
| ($ in thousands) | Sep 30, 2019 | Jun 30, 2019 | Seql Qtr % Change | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | Comp Qtr % Change | ||||||||||||||
| Credit Quality | |||||||||||||||||||||
Nonaccrual loans(a) | $ | 128,939 | $ | 166,707 | (23 | )% | $ | 155,556 | $ | 127,901 | $ | 154,092 | (16 | )% | |||||||
| Other real estate owned (OREO) | 19,625 | 18,355 | 7 | % | 12,286 | 11,984 | 25,653 | (23 | )% | ||||||||||||
| Other nonperforming assets | 6,004 | — | N/M | — | — | 6,379 | (6 | )% | |||||||||||||
| Total nonperforming assets | $ | 154,568 | $ | 185,062 | (16 | )% | $ | 167,843 | $ | 139,885 | $ | 186,124 | (17 | )% | |||||||
| Loans 90 or more days past due and still accruing | $ | 1,986 | $ | 2,088 | (5 | )% | $ | 2,218 | $ | 2,165 | $ | 2,175 | (9 | )% | |||||||
| Allowance for loan losses to loans | 0.94 | % | 1.00 | % | 1.02 | % | 1.04 | % | 1.03 | % | |||||||||||
| Net unaccreted purchase discount to net purchased loans | 1.33 | % | 1.35 | % | 1.41 | % | 1.44 | % | 1.48 | % | |||||||||||
| Allowance for loan losses to nonaccrual loans | 166.30 | % | 140.16 | % | 151.12 | % | 186.10 | % | 153.32 | % | |||||||||||
| Nonaccrual loans to total loans | 0.57 | % | 0.72 | % | 0.67 | % | 0.56 | % | 0.67 | % | |||||||||||
| Nonperforming assets to total loans plus OREO | 0.68 | % | 0.80 | % | 0.72 | % | 0.61 | % | 0.81 | % | |||||||||||
| Nonperforming assets to total assets | 0.47 | % | 0.56 | % | 0.50 | % | 0.42 | % | 0.56 | % | |||||||||||
| Year-to-date net charge offs to average loans (annualized) | 0.24 | % | 0.18 | % | 0.13 | % | 0.13 | % | 0.18 | % | |||||||||||
Page 5
| Associated Banc-Corp Selected Asset Quality Information (continued) | |||||||||||||||||||||
| (In thousands) | Sep 30, 2019 | Jun 30, 2019 | Seql Qtr % Change | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | Comp Qtr % Change | ||||||||||||||
| Nonaccrual loans | |||||||||||||||||||||
| Commercial and industrial | $ | 56,536 | $ | 84,151 | (33 | )% | $ | 73,379 | $ | 41,021 | $ | 50,146 | 13 | % | |||||||
| Commercial real estate—owner occupied | 68 | 571 | (88 | )% | 890 | 3,957 | 4,779 | (99 | )% | ||||||||||||
| Commercial and business lending | 56,604 | 84,722 | (33 | )% | 74,269 | 44,978 | 54,925 | 3 | % | ||||||||||||
| Commercial real estate—investor | 4,800 | 1,485 | N/M | 776 | 1,952 | 19,725 | (76 | )% | |||||||||||||
| Real estate construction | 542 | 427 | 27 | % | 739 | 979 | 1,154 | (53 | )% | ||||||||||||
| Commercial real estate lending | 5,342 | 1,912 | 179 | % | 1,516 | 2,931 | 20,879 | (74 | )% | ||||||||||||
| Total commercial | 61,946 | 86,634 | (28 | )% | 75,784 | 47,909 | 75,804 | (18 | )% | ||||||||||||
| Residential mortgage | 57,056 | 68,166 | (16 | )% | 67,323 | 67,574 | 65,896 | (13 | )% | ||||||||||||
| Home equity | 9,828 | 11,835 | (17 | )% | 12,300 | 12,339 | 12,324 | (20 | )% | ||||||||||||
| Other consumer | 109 | 72 | 51 | % | 149 | 79 | 68 | 60 | % | ||||||||||||
| Total consumer | 66,993 | 80,073 | (16 | )% | 79,772 | 79,992 | 78,288 | (14 | )% | ||||||||||||
Total nonaccrual loans(a) | $ | 128,939 | $ | 166,707 | (23 | )% | $ | 155,556 | $ | 127,901 | $ | 154,092 | (16 | )% | |||||||
| Sep 30, 2019 | Jun 30, 2019 | Seql Qtr % Change | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | Comp Qtr % Change | |||||||||||||||
| Restructured loans (accruing) | |||||||||||||||||||||
| Commercial and industrial | $ | 15,398 | $ | 16,850 | (9 | )% | $ | 15,443 | $ | 25,478 | $ | 38,885 | (60 | )% | |||||||
| Commercial real estate—owner occupied | 1,912 | 1,970 | (3 | )% | 2,026 | 2,080 | 3,746 | (49 | )% | ||||||||||||
| Commercial and business lending | 17,311 | 18,820 | (8 | )% | 17,469 | 27,558 | 42,631 | (59 | )% | ||||||||||||
| Commercial real estate—investor | 304 | 315 | (3 | )% | 1,700 | 799 | 350 | (13 | )% | ||||||||||||
| Real estate construction | 227 | 232 | (2 | )% | 311 | 311 | 218 | 4 | % | ||||||||||||
| Commercial real estate lending | 531 | 547 | (3 | )% | 2,011 | 1,110 | 568 | (7 | )% | ||||||||||||
| Total commercial | 17,842 | 19,367 | (8 | )% | 19,480 | 28,668 | 43,199 | (59 | )% | ||||||||||||
| Residential mortgage | 3,228 | 17,645 | (82 | )% | 18,226 | 16,036 | 16,986 | (81 | )% | ||||||||||||
| Home equity | 2,017 | 7,247 | (72 | )% | 7,688 | 7,385 | 7,792 | (74 | )% | ||||||||||||
| Other consumer | 1,243 | 1,222 | 2 | % | 1,154 | 1,174 | 1,177 | 6 | % | ||||||||||||
| Total consumer | 6,487 | 26,114 | (75 | )% | 27,068 | 24,595 | 25,955 | (75 | )% | ||||||||||||
Total restructured loans (accruing)(b) | $ | 24,329 | $ | 45,481 | (47 | )% | $ | 46,548 | $ | 53,263 | $ | 69,154 | (65 | )% | |||||||
Nonaccrual restructured loans (included in nonaccrual loans)(c) | $ | 16,293 | $ | 24,332 | (33 | )% | $ | 24,172 | $ | 26,292 | $ | 33,757 | (52 | )% | |||||||
| Sep 30, 2019 | Jun 30, 2019 | Seql Qtr % Change | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | Comp Qtr % Change | |||||||||||||||
| Accruing Loans 30-89 Days Past Due | |||||||||||||||||||||
| Commercial and industrial | $ | 426 | $ | 4,909 | (91 | )% | $ | 3,295 | $ | 525 | $ | 5,732 | (93 | )% | |||||||
| Commercial real estate—owner occupied | 2,646 | 2,018 | 31 | % | 6,066 | 2,699 | 6,126 | (57 | )% | ||||||||||||
| Commercial and business lending | 3,073 | 6,926 | (56 | )% | 9,361 | 3,224 | 11,858 | (74 | )% | ||||||||||||
| Commercial real estate—investor | 636 | 1,382 | (54 | )% | 1,090 | 3,767 | 373 | 71 | % | ||||||||||||
| Real estate construction | 595 | 151 | N/M | 6,773 | 330 | 517 | 15 | % | |||||||||||||
| Commercial real estate lending | 1,232 | 1,532 | (20 | )% | 7,863 | 4,097 | 890 | 38 | % | ||||||||||||
| Total commercial | 4,304 | 8,459 | (49 | )% | 17,224 | 7,321 | 12,748 | (66 | )% | ||||||||||||
| Residential mortgage | 8,063 | 9,756 | (17 | )% | 13,274 | 9,706 | 8,899 | (9 | )% | ||||||||||||
| Home equity | 4,798 | 5,827 | (18 | )% | 6,363 | 6,049 | 8,080 | (41 | )% | ||||||||||||
| Other consumer | 2,203 | 1,838 | 20 | % | 2,364 | 2,269 | 1,979 | 11 | % | ||||||||||||
| Total consumer | 15,063 | 17,422 | (14 | )% | 22,001 | 18,024 | 18,958 | (21 | )% | ||||||||||||
| Total accruing loans 30-89 days past due | $ | 19,367 | $ | 25,881 | (25 | )% | $ | 39,225 | $ | 25,345 | $ | 31,706 | (39 | )% | |||||||
| Sep 30, 2019 | Jun 30, 2019 | Seql Qtr % Change | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | Comp Qtr % Change | |||||||||||||||
| Potential Problem Loans | |||||||||||||||||||||
| Commercial and industrial | $ | 59,427 | $ | 58,658 | 1 | % | $ | 111,772 | $ | 116,578 | $ | 144,468 | (59 | )% | |||||||
| Commercial real estate—owner occupied | 22,624 | 24,237 | (7 | )% | 48,929 | 55,964 | 32,526 | (30 | )% | ||||||||||||
| Commercial and business lending | 82,051 | 82,895 | (1 | )% | 160,701 | 172,542 | 176,994 | (54 | )% | ||||||||||||
| Commercial real estate—investor | 49,353 | 77,766 | (37 | )% | 70,613 | 67,481 | 49,842 | (1 | )% | ||||||||||||
| Real estate construction | 544 | 3,166 | (83 | )% | 4,600 | 3,834 | 3,392 | (84 | )% | ||||||||||||
| Commercial real estate lending | 49,897 | 80,932 | (38 | )% | 75,213 | 71,315 | 53,234 | (6 | )% | ||||||||||||
| Total commercial | 131,948 | 163,828 | (19 | )% | 235,914 | 243,856 | 230,228 | (43 | )% | ||||||||||||
| Residential mortgage | 1,242 | 1,983 | (37 | )% | 5,351 | 5,975 | 6,073 | (80 | )% | ||||||||||||
| Home equity | — | 32 | (100 | )% | 91 | 103 | 148 | (100 | )% | ||||||||||||
| Total consumer | 1,242 | 2,014 | (38 | )% | 5,443 | 6,078 | 6,221 | (80 | )% | ||||||||||||
| Total potential problem loans | $ | 133,189 | $ | 165,842 | (20 | )% | $ | 241,357 | $ | 249,935 | $ | 236,449 | (44 | )% | |||||||
N/M = Not meaningful
Numbers may not sum due to rounding.
(a) During the third quarter of 2019, the Corporation sold $12 million of nonaccrual loans, of which $11 million were residential mortgages and $1 million were home equity loans.
(b) During the third quarter of 2019, the Corporation sold $21 million of performing restructured loans, of which $18 million were residential mortgages and $3 million were home equity loans.
(c) During the third quarter of 2019, the Corporation sold $7 million of nonaccrual restructured loans.
Page 6
| Associated Banc-Corp Net Interest Income Analysis - Fully Tax-Equivalent Basis - Sequential and Comparable Quarter | ||||||||||||||||||||||||||
| Three Months Ended | ||||||||||||||||||||||||||
| September 30, 2019 | June 30, 2019 | September 30, 2018 | ||||||||||||||||||||||||
| ($ in thousands) | Average Balance | Interest Income /Expense | Average Yield /Rate | Average Balance | Interest Income /Expense | Average Yield /Rate | Average Balance | Interest Income /Expense | Average Yield /Rate | |||||||||||||||||
| Assets | ||||||||||||||||||||||||||
| Earning assets | ||||||||||||||||||||||||||
Loans (a) (b) (c) | ||||||||||||||||||||||||||
| Commercial and business lending | $ | 8,502,268 | $ | 96,327 | 4.49 | % | $ | 8,621,609 | $ | 103,029 | 4.79 | % | $ | 7,938,739 | $ | 91,250 | 4.56 | % | ||||||||
| Commercial real estate lending | 5,157,031 | 64,058 | 4.92 | % | 5,130,954 | 66,522 | 5.19 | % | 5,420,680 | 68,020 | 4.98 | % | ||||||||||||||
| Total commercial | 13,659,299 | 160,386 | 4.66 | % | 13,752,563 | 169,551 | 4.94 | % | 13,359,419 | 159,270 | 4.73 | % | ||||||||||||||
| Residential mortgage | 8,337,230 | 68,656 | 3.29 | % | 8,378,082 | 72,692 | 3.47 | % | 8,333,303 | 71,926 | 3.45 | % | ||||||||||||||
| Retail | 1,255,540 | 20,066 | 6.38 | % | 1,223,726 | 19,095 | 6.25 | % | 1,280,996 | 18,859 | 5.87 | % | ||||||||||||||
| Total loans | 23,252,068 | 249,108 | 4.26 | % | 23,354,371 | 261,338 | 4.48 | % | 22,973,717 | 250,055 | 4.33 | % | ||||||||||||||
| Investment securities | ||||||||||||||||||||||||||
| Taxable | 4,032,027 | 23,485 | 2.33 | % | 4,523,260 | 26,710 | 2.36 | % | 5,290,859 | 29,895 | 2.26 | % | ||||||||||||||
Tax-exempt(a) | 1,918,661 | 18,114 | 3.78 | % | 1,943,485 | 18,304 | 3.77 | % | 1,627,715 | 14,973 | 3.68 | % | ||||||||||||||
| Other short-term investments | 619,334 | 4,865 | 3.12 | % | 479,590 | 3,995 | 3.34 | % | 582,578 | 4,036 | 2.75 | % | ||||||||||||||
| Investments and other | 6,570,022 | 46,464 | 2.81 | % | 6,946,335 | 49,009 | 2.81 | % | 7,501,152 | 48,905 | 2.61 | % | ||||||||||||||
| Total earning assets | 29,822,090 | $ | 295,572 | 3.94 | % | 30,300,707 | $ | 310,347 | 4.10 | % | 30,474,870 | $ | 298,959 | 3.91 | % | |||||||||||
Other assets, net(d) | 3,331,910 | 3,138,111 | 3,005,120 | |||||||||||||||||||||||
| Total assets | $ | 33,154,000 | $ | 33,438,818 | $ | 33,479,990 | ||||||||||||||||||||
| Liabilities and stockholders' equity | ||||||||||||||||||||||||||
| Interest-bearing liabilities | ||||||||||||||||||||||||||
| Interest-bearing deposits | ||||||||||||||||||||||||||
| Savings | $ | 2,618,188 | $ | 2,164 | 0.33 | % | $ | 2,319,556 | $ | 1,686 | 0.29 | % | $ | 1,901,960 | $ | 327 | 0.07 | % | ||||||||
| Interest-bearing demand | 5,452,674 | 16,055 | 1.17 | % | 4,984,511 | 15,309 | 1.23 | % | 4,988,694 | 13,169 | 1.05 | % | ||||||||||||||
| Money market | 6,933,230 | 18,839 | 1.08 | % | 7,118,594 | 20,883 | 1.18 | % | 7,546,059 | 16,212 | 0.85 | % | ||||||||||||||
| Network transaction deposits | 1,764,961 | 10,147 | 2.28 | % | 2,024,604 | 12,456 | 2.47 | % | 1,969,915 | 10,027 | 2.02 | % | ||||||||||||||
| Time deposits | 3,107,670 | 14,381 | 1.84 | % | 3,544,317 | 16,717 | 1.89 | % | 2,978,314 | 10,382 | 1.38 | % | ||||||||||||||
| Total interest-bearing deposits | 19,876,723 | 61,585 | 1.23 | % | 19,991,581 | 67,050 | 1.35 | % | 19,384,942 | 50,116 | 1.03 | % | ||||||||||||||
| Federal funds purchased and securities sold under agreements to repurchase | 81,285 | 145 | 0.71 | % | 115,694 | 286 | 0.99 | % | 231,308 | 504 | 0.86 | % | ||||||||||||||
| Commercial paper | 28,721 | 33 | 0.45 | % | 30,612 | 37 | 0.49 | % | 43,911 | 38 | 0.35 | % | ||||||||||||||
| FHLB advances | 2,716,946 | 15,896 | 2.32 | % | 3,171,353 | 17,744 | 2.24 | % | 3,690,687 | 19,318 | 2.08 | % | ||||||||||||||
| Long-term funding | 796,561 | 7,396 | 3.71 | % | 796,169 | 7,396 | 3.72 | % | 656,055 | 6,095 | 3.72 | % | ||||||||||||||
| Total short and long-term funding | 3,623,513 | 23,469 | 2.58 | % | 4,113,829 | 25,463 | 2.48 | % | 4,621,961 | 25,956 | 2.23 | % | ||||||||||||||
| Total interest-bearing liabilities | 23,500,235 | $ | 85,054 | 1.44 | % | 24,105,410 | $ | 92,513 | 1.54 | % | 24,006,903 | $ | 76,072 | 1.26 | % | |||||||||||
| Noninterest-bearing demand deposits | 5,324,481 | 5,089,928 | 5,310,977 | |||||||||||||||||||||||
Other liabilities(d) | 425,810 | 390,585 | 400,570 | |||||||||||||||||||||||
| Stockholders’ equity | 3,903,474 | 3,852,894 | 3,761,541 | |||||||||||||||||||||||
| Total liabilities and stockholders’ equity | $ | 33,154,000 | $ | 33,438,818 | $ | 33,479,990 | ||||||||||||||||||||
| Interest rate spread | 2.50 | % | 2.56 | % | 2.65 | % | ||||||||||||||||||||
| Net free funds | 0.31 | % | 0.31 | % | 0.27 | % | ||||||||||||||||||||
| Fully tax-equivalent net interest income and net interest margin ("NIM") | $ | 210,517 | 2.81 | % | $ | 217,834 | 2.87 | % | $ | 222,887 | 2.92 | % | ||||||||||||||
| Fully tax-equivalent adjustment | 4,152 | 4,215 | 3,496 | |||||||||||||||||||||||
| Net interest income | $ | 206,365 | $ | 213,619 | $ | 219,392 | ||||||||||||||||||||
Numbers may not sum due to rounding.
| (a) | The yield on tax-exempt loans and securities is computed on a fully tax-equivalent basis using a tax rate of 21% and is net of the effects of certain disallowed interest deductions. |
| (b) | Nonaccrual loans and loans held for sale have been included in the average balances. |
| (c) | Interest income includes amortization of net deferred loan origination costs and net accreted purchase loan discount. |
(d) During the third quarter of 2019, the Corporation made a change in accounting policy to offset derivative assets and liabilities and cash collateral with the same counterparty where it has a legally enforceable master netting agreement in place. Adoption of this change was voluntary and has been adopted retrospectively with all prior periods presented herein restated.
Page 7
| Associated Banc-Corp Net Interest Income Analysis - Fully Tax-Equivalent Basis - Year Over Year | ||||||||||||||||||||||
| Nine Months Ended September 30, | ||||||||||||||||||||||
| 2019 | 2018 | |||||||||||||||||||||
| ($ in thousands) | Average Balance | Interest Income /Expense | Average Yield / Rate | Average Balance | Interest Income /Expense | Average Yield / Rate | ||||||||||||||||
| Assets | ||||||||||||||||||||||
| Earning assets | ||||||||||||||||||||||
Loans (a) (b) (c) | ||||||||||||||||||||||
| Commercial and business lending | $ | 8,500,475 | $ | 299,621 | 4.71 | % | $ | 7,652,096 | $ | 252,727 | 4.42 | % | ||||||||||
| Commercial real estate lending | 5,135,447 | 196,005 | 5.10 | % | 5,508,720 | 201,573 | 4.89 | % | ||||||||||||||
| Total commercial | 13,635,922 | 495,626 | 4.86 | % | 13,160,815 | 454,300 | 4.61 | % | ||||||||||||||
Residential mortgage | 8,360,481 | 215,329 | 3.43 | % | 8,259,305 | 208,656 | 3.37 | % | ||||||||||||||
| Retail | 1,240,793 | 58,517 | 6.29 | % | 1,269,050 | 54,623 | 5.74 | % | ||||||||||||||
| Total loans | 23,237,195 | 769,472 | 4.42 | % | 22,689,170 | 717,579 | 4.22 | % | ||||||||||||||
| Investment securities | ||||||||||||||||||||||
| Taxable | 4,507,586 | 79,248 | 2.34 | % | 5,460,873 | 90,622 | 2.21 | % | ||||||||||||||
Tax-exempt (a) | 1,902,768 | 53,687 | 3.76 | % | 1,480,426 | 40,173 | 3.62 | % | ||||||||||||||
| Other short-term investments | 523,010 | 13,086 | 3.34 | % | 430,468 | 9,366 | 2.91 | % | ||||||||||||||
| Investments and other | 6,933,364 | 146,022 | 2.80 | % | 7,371,767 | 140,161 | 2.54 | % | ||||||||||||||
| Total earning assets | 30,170,560 | $ | 915,493 | 4.05 | % | 30,060,938 | $ | 857,740 | 3.81 | % | ||||||||||||
Other assets, net(d) | 3,167,352 | 2,941,853 | ||||||||||||||||||||
| Total assets | $ | 33,337,911 | $ | 33,002,790 | ||||||||||||||||||
| Liabilities and stockholders' equity | ||||||||||||||||||||||
| Interest-bearing liabilities | ||||||||||||||||||||||
| Interest-bearing deposits | ||||||||||||||||||||||
| Savings | $ | 2,347,428 | $ | 5,000 | 0.28 | % | $ | 1,839,801 | $ | 739 | 0.05 | % | ||||||||||
| Interest-bearing demand | 5,061,561 | 45,284 | 1.20 | % | 4,744,503 | 30,904 | 0.87 | % | ||||||||||||||
| Money market | 7,144,999 | 60,509 | 1.13 | % | 7,318,400 | 38,042 | 0.69 | % | ||||||||||||||
| Network transaction deposits | 2,003,179 | 36,228 | 2.42 | % | 2,168,209 | 28,308 | 1.75 | % | ||||||||||||||
| Time deposits | 3,257,930 | 44,388 | 1.82 | % | 2,753,832 | 23,966 | 1.16 | % | ||||||||||||||
| Total interest-bearing deposits | 19,815,097 | 191,408 | 1.29 | % | 18,824,746 | 121,959 | 0.87 | % | ||||||||||||||
| Federal funds purchased and securities sold under agreements to repurchase | 124,428 | 1,058 | 1.14 | % | 255,371 | 1,564 | 0.82 | % | ||||||||||||||
| Commercial paper | 33,610 | 121 | 0.48 | % | 60,979 | 150 | 0.33 | % | ||||||||||||||
| FHLB advances | 3,172,606 | 53,194 | 2.24 | % | 4,078,588 | 53,720 | 1.76 | % | ||||||||||||||
| Long-term funding | 796,165 | 22,188 | 3.72 | % | 550,888 | 15,183 | 3.67 | % | ||||||||||||||
| Total short and long-term funding | 4,126,810 | 76,560 | 2.48 | % | 4,945,826 | 70,617 | 1.91 | % | ||||||||||||||
| Total interest-bearing liabilities | 23,941,907 | $ | 267,969 | 1.50 | % | 23,770,572 | $ | 192,576 | 1.08 | % | ||||||||||||
| Noninterest-bearing demand deposits | 5,133,573 | 5,176,858 | ||||||||||||||||||||
Other liabilities(d) | 404,941 | 381,237 | ||||||||||||||||||||
| Stockholders’ equity | 3,857,490 | 3,674,125 | ||||||||||||||||||||
| Total liabilities and stockholders’ equity | $ | 33,337,911 | $ | 33,002,790 | ||||||||||||||||||
| Interest rate spread | 2.55 | % | 2.73 | % | ||||||||||||||||||
| Net free funds | 0.31 | % | 0.22 | % | ||||||||||||||||||
| Fully tax-equivalent net interest income and net interest margin ("NIM") | $ | 647,525 | 2.86 | % | $ | 665,164 | 2.95 | % | ||||||||||||||
| Fully tax-equivalent adjustment | 11,993 | 9,539 | ||||||||||||||||||||
| Net interest income | $ | 635,532 | $ | 655,625 | ||||||||||||||||||
Numbers may not sum due to rounding.
| (a) | The yield on tax-exempt loans and securities is computed on a fully tax-equivalent basis using a tax rate of 21% and is net of the effects of certain disallowed interest deductions. |
| (b) | Nonaccrual loans and loans held for sale have been included in the average balances. |
| (c) | Interest income includes amortization of net deferred loan origination costs and net accreted purchase loan discount. |
(d) During the third quarter of 2019, the Corporation made a change in accounting policy to offset derivative assets and liabilities and cash collateral with the same counterparty where it has a legally enforceable master netting agreement in place. Adoption of this change was voluntary and has been adopted retrospectively with all prior periods presented herein restated.
Page 8
Associated Banc-Corp Loan and Deposit Composition | ||||||||||||||||||||||||||
| ($ in thousands) | ||||||||||||||||||||||||||
| Period end loan composition | Sep 30, 2019 | Jun 30, 2019 | Seql Qtr % Change | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | Comp Qtr % Change | |||||||||||||||||||
| Commercial and industrial | $ | 7,495,623 | $ | 7,579,384 | (1 | )% | $ | 7,587,597 | $ | 7,398,044 | $ | 7,159,941 | 5 | % | ||||||||||||
| Commercial real estate—owner occupied | 915,524 | 942,811 | (3 | )% | 932,393 | 920,443 | 867,682 | 6 | % | |||||||||||||||||
| Commercial and business lending | 8,411,147 | 8,522,194 | (1 | )% | 8,519,990 | 8,318,487 | 8,027,622 | 5 | % | |||||||||||||||||
| Commercial real estate—investor | 3,803,277 | 3,779,201 | 1 | % | 3,809,253 | 3,751,554 | 3,924,499 | (3 | )% | |||||||||||||||||
| Real estate construction | 1,356,508 | 1,394,815 | (3 | )% | 1,273,782 | 1,335,031 | 1,416,209 | (4 | )% | |||||||||||||||||
| Commercial real estate lending | 5,159,784 | 5,174,016 | — | % | 5,083,035 | 5,086,585 | 5,340,708 | (3 | )% | |||||||||||||||||
| Total commercial | 13,570,932 | 13,696,210 | (1 | )% | 13,603,025 | 13,405,072 | 13,368,330 | 2 | % | |||||||||||||||||
| Residential mortgage | 7,954,801 | 8,277,479 | (4 | )% | 8,323,846 | 8,277,712 | 8,227,649 | (3 | )% | |||||||||||||||||
| Home equity | 879,642 | 916,213 | (4 | )% | 868,886 | 894,473 | 901,275 | (2 | )% | |||||||||||||||||
| Other consumer | 349,335 | 360,065 | (3 | )% | 352,602 | 363,171 | 369,858 | (6 | )% | |||||||||||||||||
| Total consumer | 9,183,778 | 9,553,757 | (4 | )% | 9,545,333 | 9,535,357 | 9,498,782 | (3 | )% | |||||||||||||||||
Total loans(a) | $ | 22,754,710 | $ | 23,249,967 | (2 | )% | $ | 23,148,359 | $ | 22,940,429 | $ | 22,867,112 | — | % | ||||||||||||
| Purchased credit-impaired loans | $ | 1,710 | $ | 2,145 | $ | 4,907 | $ | 4,852 | $ | 13,133 | ||||||||||||||||
| Period end deposit and customer funding composition | Sep 30, 2019 | Jun 30, 2019 | Seql Qtr % Change | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | Comp Qtr % Change | |||||||||||||||||||
| Noninterest-bearing demand | $ | 5,503,223 | $ | 5,354,987 | 3 | % | $ | 5,334,154 | $ | 5,698,530 | $ | 5,421,270 | 2 | % | ||||||||||||
| Savings | 2,643,950 | 2,591,173 | 2 | % | 2,215,857 | 2,012,841 | 1,937,006 | 36 | % | |||||||||||||||||
| Interest-bearing demand | 5,434,955 | 6,269,035 | (13 | )% | 5,226,362 | 5,336,952 | 5,096,998 | 7 | % | |||||||||||||||||
| Money market | 7,930,676 | 7,691,775 | 3 | % | 9,005,018 | 9,033,669 | 9,087,587 | (13 | )% | |||||||||||||||||
| Brokered CDs | 16,266 | 77,543 | (79 | )% | 387,459 | 192,234 | 235,711 | (93 | )% | |||||||||||||||||
| Other time | 2,893,493 | 3,289,709 | (12 | )% | 3,364,206 | 2,623,167 | 3,053,041 | (5 | )% | |||||||||||||||||
| Total deposits | 24,422,562 | 25,274,222 | (3 | )% | 25,533,057 | 24,897,393 | 24,831,612 | (2 | )% | |||||||||||||||||
Customer funding(b) | 108,369 | 104,973 | 3 | % | 146,027 | 137,364 | 184,269 | (41 | )% | |||||||||||||||||
| Total deposits and customer funding | $ | 24,530,932 | $ | 25,379,195 | (3 | )% | $ | 25,679,083 | $ | 25,034,757 | $ | 25,015,882 | (2 | )% | ||||||||||||
Network transaction deposits(c) | $ | 1,527,910 | $ | 1,805,141 | (15 | )% | $ | 2,204,204 | $ | 2,276,296 | $ | 1,852,863 | (18 | )% | ||||||||||||
| Net deposits and customer funding (Total deposits and customer funding, excluding Brokered CDs and network transaction deposits) | $ | 22,986,756 | $ | 23,496,510 | (2 | )% | $ | 23,087,421 | $ | 22,566,227 | $ | 22,927,308 | — | % | ||||||||||||
| Quarter average loan composition | Sep 30, 2019 | Jun 30, 2019 | Seql Qtr % Change | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | Comp Qtr % Change | |||||||||||||||||||
| Commercial and industrial | $ | 7,574,448 | $ | 7,688,462 | (1 | )% | $ | 7,459,318 | $ | 7,166,092 | $ | 7,059,946 | 7 | % | ||||||||||||
| Commercial real estate—owner occupied | 927,820 | 933,146 | (1 | )% | 916,845 | 853,162 | 878,793 | 6 | % | |||||||||||||||||
| Commercial and business lending | 8,502,268 | 8,621,609 | (1 | )% | 8,376,163 | 8,019,254 | 7,938,739 | 7 | % | |||||||||||||||||
| Commercial real estate—investor | 3,768,377 | 3,806,828 | (1 | )% | 3,777,520 | 3,788,398 | 3,948,922 | (5 | )% | |||||||||||||||||
| Real estate construction | 1,388,653 | 1,324,126 | 5 | % | 1,340,406 | 1,421,344 | 1,471,758 | (6 | )% | |||||||||||||||||
| Commercial real estate lending | 5,157,031 | 5,130,954 | 1 | % | 5,117,926 | 5,209,743 | 5,420,680 | (5 | )% | |||||||||||||||||
| Total commercial | 13,659,299 | 13,752,563 | (1 | )% | 13,494,089 | 13,228,997 | 13,359,419 | 2 | % | |||||||||||||||||
| Residential mortgage | 8,337,230 | 8,378,082 | — | % | 8,366,452 | 8,314,421 | 8,333,303 | — | % | |||||||||||||||||
| Home equity | 901,291 | 869,248 | 4 | % | 883,735 | 895,412 | 906,364 | (1 | )% | |||||||||||||||||
| Other consumer | 354,249 | 354,478 | — | % | 359,238 | 365,895 | 374,632 | (5 | )% | |||||||||||||||||
| Total consumer | 9,592,770 | 9,601,809 | — | % | 9,609,426 | 9,575,728 | 9,614,298 | — | % | |||||||||||||||||
Total loans(a)(d) | $ | 23,252,068 | $ | 23,354,371 | — | % | $ | 23,103,514 | $ | 22,804,725 | $ | 22,973,717 | 1 | % | ||||||||||||
| Quarter average deposit composition | Sep 30, 2019 | Jun 30, 2019 | Seql Qtr % Change | Mar 31, 2019 | Dec 31, 2018 | Sep 30, 2018 | Comp Qtr % Change | |||||||||||||||||||
| Noninterest-bearing demand | $ | 5,324,481 | $ | 5,089,928 | 5 | % | $ | 4,982,553 | $ | 5,366,711 | $ | 5,310,977 | — | % | ||||||||||||
| Savings | 2,618,188 | 2,319,556 | 13 | % | 2,098,834 | 1,995,160 | 1,901,960 | 38 | % | |||||||||||||||||
| Interest-bearing demand | 5,452,674 | 4,984,511 | 9 | % | 4,739,662 | 4,837,223 | 4,988,694 | 9 | % | |||||||||||||||||
| Money market | 6,933,230 | 7,118,594 | (3 | )% | 7,388,174 | 7,089,449 | 7,546,059 | (8 | )% | |||||||||||||||||
| Network transaction deposits | 1,764,961 | 2,024,604 | (13 | )% | 2,225,027 | 1,880,595 | 1,969,915 | (10 | )% | |||||||||||||||||
| Time deposits | 3,107,670 | 3,544,317 | (12 | )% | 3,121,960 | 3,060,896 | 2,978,314 | 4 | % | |||||||||||||||||
| Total deposits | $ | 25,201,203 | $ | 25,081,509 | — | % | $ | 24,556,209 | $ | 24,230,034 | $ | 24,695,918 | 2 | % | ||||||||||||
N/M = Not meaningful
Numbers may not sum due to rounding.
| (a) | During the third quarter of 2019, the Corporation sold approximately $240 million of portfolio mortgages as well as $33 million of nonaccrual and performing restructured loans. |
| (b) | Includes repurchase agreements and commercial paper. |
| (c) | Included above in interest-bearing demand and money market. |
| (d) | Nonaccrual loans and loans held for sale have been included in the average balances. |
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| Associated Banc-Corp Non-GAAP Financial Measures Reconciliation | ||||||||||||||||||||||||||
| ($ in millions, except per share data) | YTD Sep 2019 | YTD Sep 2018 | 3Q19 | 2Q19 | 1Q19 | 4Q18 | 3Q18 | |||||||||||||||||||
Tangible common equity reconciliation(a) | ||||||||||||||||||||||||||
| Common equity | $ | 3,664 | $ | 3,643 | $ | 3,579 | $ | 3,524 | $ | 3,540 | ||||||||||||||||
| Goodwill and other intangible assets, net | (1,267 | ) | (1,270) | (1,243 | ) | (1,245 | ) | (1,247 | ) | |||||||||||||||||
| Tangible common equity | $ | 2,397 | $ | 2,373 | $ | 2,337 | $ | 2,279 | $ | 2,293 | ||||||||||||||||
Tangible assets reconciliation(a) | ||||||||||||||||||||||||||
| Total assets | $ | 32,596 | $ | 33,247 | $ | 33,681 | $ | 33,615 | $ | 33,428 | ||||||||||||||||
| Goodwill and other intangible assets, net | (1,267 | ) | (1,270 | ) | (1,243 | ) | (1,245 | ) | (1,247 | ) | ||||||||||||||||
| Tangible assets | $ | 31,329 | $ | 31,977 | $ | 32,439 | $ | 32,370 | $ | 32,181 | ||||||||||||||||
Average tangible common equity and average common equity tier 1 reconciliation(a) | ||||||||||||||||||||||||||
| Common equity | $ | 3,601 | $ | 3,510 | $ | 3,647 | $ | 3,596 | $ | 3,558 | $ | 3,490 | $ | 3,589 | ||||||||||||
| Goodwill and other intangible assets, net | (1,253 | ) | (1,197 | ) | (1,269 | ) | (1,247 | ) | (1,244 | ) | (1,246 | ) | (1,246 | ) | ||||||||||||
| Tangible common equity | 2,347 | 2,313 | 2,378 | 2,349 | 2,314 | 2,244 | 2,343 | |||||||||||||||||||
| Accumulated other comprehensive loss (income) | 80 | 111 | 42 | 82 | 116 | 137 | 125 | |||||||||||||||||||
| Deferred tax assets (liabilities), net | 47 | 40 | 49 | 46 | 45 | 46 | 45 | |||||||||||||||||||
| Average common equity Tier 1 | $ | 2,474 | $ | 2,464 | $ | 2,469 | $ | 2,477 | $ | 2,475 | $ | 2,427 | $ | 2,513 | ||||||||||||
Selected Trend Information(b) | ||||||||||||||||||||||||||
| Insurance commissions and fees | $ | 69 | $ | 68 | $ | 21 | $ | 23 | $ | 25 | $ | 21 | $ | 22 | ||||||||||||
Wealth management fees(c) | 62 | 62 | 21 | 21 | 20 | 20 | 21 | |||||||||||||||||||
| Service charges and deposit account fees | 47 | 50 | 17 | 15 | 15 | 16 | 17 | |||||||||||||||||||
| Card-based fees | 30 | 29 | 10 | 10 | 9 | 10 | 10 | |||||||||||||||||||
| Other fee-based revenue | 14 | 13 | 5 | 5 | 4 | 5 | 4 | |||||||||||||||||||
| Fee-based revenue | 222 | 222 | 74 | 74 | 74 | 74 | 74 | |||||||||||||||||||
| Other | 65 | 49 | 27 | 21 | 17 | 11 | 14 | |||||||||||||||||||
| Total noninterest income | $ | 288 | $ | 272 | $ | 101 | $ | 96 | $ | 91 | $ | 84 | $ | 88 | ||||||||||||
Selected equity and performance ratios(a)(d) | ||||||||||||||||||||||||||
| Tangible common equity / tangible assets | 7.65 | % | 7.42 | % | 7.20 | % | 7.04 | % | 7.13 | % | ||||||||||||||||
| Return on average equity | 8.83 | % | 8.90 | % | 8.47 | % | 8.81 | % | 9.21 | % | 9.42 | % | 9.06 | % | ||||||||||||
| Return on average tangible common equity | 13.86 | % | 13.73 | % | 13.27 | % | 13.81 | % | 14.52 | % | 15.08 | % | 14.14 | % | ||||||||||||
| Return on average common equity Tier 1 | 13.15 | % | 12.89 | % | 12.78 | % | 13.09 | % | 13.58 | % | 13.94 | % | 13.18 | % | ||||||||||||
Efficiency ratio reconciliation(e) | ||||||||||||||||||||||||||
| Federal Reserve efficiency ratio | 64.18 | % | 67.50 | % | 66.55 | % | 62.71 | % | 63.32 | % | 62.39 | % | 66.12 | % | ||||||||||||
| Fully tax-equivalent adjustment | (0.83 | )% | (0.69 | )% | (0.90 | )% | (0.84 | )% | (0.77 | )% | (0.75 | )% | (0.75 | )% | ||||||||||||
| Other intangible amortization | (0.79 | )% | (0.64 | )% | (0.89 | )% | (0.75 | )% | (0.73 | )% | (0.72 | )% | (0.73 | )% | ||||||||||||
| Fully tax-equivalent efficiency ratio | 62.58 | % | 66.18 | % | 64.78 | % | 61.13 | % | 61.83 | % | 60.93 | % | 64.66 | % | ||||||||||||
| Acquisition related costs adjustment | (0.65 | )% | (3.33 | )% | (0.53 | )% | (1.21 | )% | (0.20 | )% | 0.31 | % | (0.94 | )% | ||||||||||||
| Fully tax-equivalent efficiency ratio, excluding acquisition related costs (adjusted efficiency ratio) | 61.92 | % | 62.85 | % | 64.25 | % | 59.91 | % | 61.63 | % | 61.24 | % | 63.72 | % | ||||||||||||
| Acquisition Related Costs | YTD 2019 | YTD 2019 per share data(g) | 3Q 2019 | 3Q 2019 per share data(g) | 2Q 2019 | 2Q 2019 per share data(g) | 1Q 2019 | 1Q 2019 per share data(g) | ||||||||||||||||||
| GAAP earnings | $ | 243 | $ | 1.48 | $ | 80 | $ | 0.49 | $ | 81 | $ | 0.49 | $ | 83 | $ | 0.50 | ||||||||||
| Change of control and severance | 1 | — | 1 | — | ||||||||||||||||||||||
| Merger advisors and consultants | 1 | — | — | — | ||||||||||||||||||||||
| Facilities and other | 3 | 1 | 2 | — | ||||||||||||||||||||||
| Contract terminations and conversion costs | 2 | — | 1 | — | ||||||||||||||||||||||
| Total acquisition related costs | $ | 6 | $ | 2 | $ | 4 | $ | 1 | ||||||||||||||||||
| Less additional tax expense | $ | 1 | $ | — | $ | 1 | $ | — | ||||||||||||||||||
Earnings, excluding acquisition related costs(f) | $ | 248 | $ | 1.52 | $ | 81 | $ | 0.50 | $ | 84 | $ | 0.51 | $ | 84 | $ | 0.50 | ||||||||||
Numbers may not sum due to rounding.
| (a) | The ratio tangible common equity to tangible assets excludes goodwill and other intangible assets, net. This financial measure has been included as it is considered to be a critical metric with which to analyze and evaluate financial condition and capital strength. |
| (b) | These financial measures have been included as they provide meaningful supplemental information to assess trends in the Corporation’s results of operations. |
| (c) | Includes trust, asset management, brokerage, and annuity fees. |
| (d) | These capital measurements are used by management, regulators, investors, and analysts to assess, monitor and compare the quality and composition of our capital with the capital of other financial services companies. |
| (e) | The efficiency ratio as defined by the Federal Reserve guidance is noninterest expense (which includes the provision for unfunded commitments) divided by the sum of net interest income plus noninterest income, excluding investment securities gains / losses, net. The fully tax-equivalent efficiency ratio is noninterest expense (which includes the provision for unfunded commitments), excluding other intangible amortization, divided by the sum of fully tax-equivalent net interest income plus noninterest income, excluding investment securities gains / losses, net. The adjusted efficiency ratio is noninterest expense (which includes the provision for unfunded commitments), excluding other intangible amortization and acquisition related costs, divided by the sum of fully tax-equivalent net interest income plus noninterest income, excluding investment securities gains / losses, net and acquisition related costs. Management believes the adjusted efficiency ratio, which adjusts net interest income for the tax-favored status of certain loans and investment securities and acquisition related costs, to be a meaningful measure as it enhances the comparability of net interest income arising from taxable and tax-exempt sources and excludes acquisition related costs. |
| (f) | This is a non-GAAP financial measure. Management believes these measures are meaningful because they reflect adjustments commonly made by management, investors, regulators, and analysts to evaluate the adequacy of earnings per common share and provide greater understanding of ongoing operations and enhanced comparability of results with prior periods. |
| (g) | Diluted earnings and per share data presented after-tax. |
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