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 Full Year 2018 Earnings of $1.89 Per Common Share,
Earnings per share up 33% from the prior year
GREEN BAY, Wis. -- January 24, 2019 -- Associated Banc-Corp (NYSE: ASB) ("Associated" or "Company") today reported net income available to common equity ("earnings") of $323 million, or $1.89 per common share for the year ended December 31, 2018. Earnings per common share ("EPS") for the year ended December 31, 2018 included $31 million of acquisition related costs. These amounts compare to net income available to common equity of $220 million, or $1.42 per common share for the year ended December 31, 2017. The Company reported earnings of $0.51 per common share for the quarter ended December 31, 2018, compared to $0.31 per common share for the quarter ended December 31, 2017.
“2018 was a year of significant accomplishments for Associated. We completed the Bank Mutual acquisition and ended the year with record levels of checking deposits. We announced the acquisition of the Wisconsin branch operations of The Huntington National Bank, which will further enhance our core franchise, and we look forward to welcoming Huntington's customers to Associated in the second quarter," said President and CEO Philip B. Flynn. "We are pleased with our 2018 results, which were driven by loan growth and higher fee revenues related to our acquisitions. We benefited from efficiency gains and a benign credit environment. For 2019, we expect modest loan growth, higher fee revenues, and continued efficiency gains to drive increasing returns on capital for our shareholders."
2018 HIGHLIGHTS (all comparisons to the previous year)
• | Average loans of $22.7 billion were up 10%, or $2.1 billion |
• | Average deposits of $24.1 billion were up 10%, or $2.1 billion |
• | Net interest income of $880 million increased $138 million, or 19% |
• | Net interest margin of 2.97% improved 15 basis points from 2.82% |
• | Provision for credit losses was zero, down from $26 million |
• | Noninterest income of $356 million increased 7%, or $23 million |
• | Noninterest expense of $822 million, including $29 million of acquisition related costs, was up 16%, or $113 million |
• | Income before income taxes was up 22%, or $75 million |
• | During the year, the Company repurchased over 9 million shares, or $240 million, of common stock |
• | Total dividends paid per common share were $0.62, up 24% |
• | Return on average common equity Tier 1 increased to 13.2% from 10.4% |
2018 FULL YEAR AND FOURTH QUARTER FINANCIAL RESULTS
Loans
Full year 2018 average loans of $22.7 billion were up 10%, or $2.1 billion from 2017, primarily driven by the Bank Mutual acquisition. With respect to full year 2018 average balances by loan category as compared to 2017:
• | Consumer lending increased $1.2 billion, or 14%, to $9.5 billion. |
• | Commercial and business lending increased $490 million, or 7%, to $7.7 billion. |
• | Commercial real estate lending increased $481 million, or 10%, to $5.4 billion. |
Fourth quarter 2018 average loans of $22.8 billion were up $1.9 billion, or 9%, from the year ago quarter but were down $169 million from the third quarter as loan growth in commercial and business lending was outpaced by run off in the commercial real estate portfolio.
With respect to fourth quarter 2018 average balances by loan category:
• | Commercial and business lending increased $841 million from the year ago quarter and increased $81 million from the third quarter to $8.0 billion. General commercial lending and oil & gas specialized lending drove the increase from the year ago quarter. |
• | Consumer lending increased $764 million from the year ago quarter but was down $39 million from the third quarter to $9.6 billion as seasonality and higher interest rates tempered mortgage activity. |
• | Commercial real estate lending increased $336 million from the year ago quarter but decreased $211 million from the third quarter to $5.2 billion. |
For 2019, the Company expects to achieve 3% to 6% average loan growth.
Deposits
Full year 2018 average deposits of $24.1 billion increased 10%, or $2.1 billion from 2017, driven primarily by the addition of Bank Mutual customers and increased focus on and pricing of time deposit offerings.
With respect to full year 2018 average balances by deposit category as compared to 2017:
• | Money market deposits increased $939 million, or 15% to $7.3 billion. |
• | Time deposits increased $852 million, or 43% to $2.8 billion. |
• | Interest-bearing demand deposits increased $815 million, or 21% to $4.8 billion. |
• | Savings increased $352 million, or 23% to $1.9 billion. |
• | Noninterest-bearing demand deposits increased $241 million, or 5% to $5.2 billion. |
• | Network transaction deposits decreased $1.0 billion, or 33% to $2.1 billion. |
Fourth quarter 2018 average deposits of $24.2 billion were up $2.0 billion, or 9% from the year ago quarter, but were down $466 million compared to the third quarter of 2018 due to seasonal outflows from municipal customers. Fourth quarter period end deposits were $24.9 billion, up $66 million from the end of the third quarter.
With respect to fourth quarter 2018 average balances by deposit category:
• | Time deposits increased $706 million from the year ago quarter and increased $83 million from the third quarter of 2018 to $3.1 billion. |
• | Interest-bearing demand deposits increased $669 million from the year ago quarter, but decreased $151 million from the third quarter of 2018 to $4.8 billion. |
• | Money market deposits increased $569 million from the year ago quarter, but decreased $457 million from the third quarter of 2018 to $7.1 billion. |
• | Savings increased $441 million from the year ago quarter and increased $93 million from the third quarter of 2018 to $2.0 billion. |
• | Noninterest-bearing demand deposits increased $233 million from the year ago quarter and increased $56 million from the third quarter of 2018 to $5.4 billion. |
• | Network transaction deposits decreased $637 million from the year ago quarter and decreased $89 million from the third quarter of 2018 to $1.9 billion. |
The loan to deposit ratio was 92% at year end. The Company expects to continue maintain its loan to deposit ratio between 90% and 100% in 2019, with some seasonality.
Net Interest Income and Net Interest Margin
Full year 2018 net interest income of $880 million was up 19%, or $138 million from 2017. Net interest margin of 2.97% was up 15 basis points from the prior year.
• | The average yield on total commercial loans increased 97 basis points to 4.73% from the prior year. |
• | The average cost of interest-bearing deposits increased 38 basis points to 0.94% from the prior year. |
• | The net free funds benefit, the benefit of holding noninterest-bearing demand deposits, increased 10 basis points from the prior year. |
Fourth quarter 2018 net interest income of $224 million was up 20%, or $37 million, with the net interest margin increasing 23 basis points to 3.02% from the year ago quarter. Fourth quarter 2018 net interest income increased 2%, or $5 million, with the net interest margin increasing 10 basis points from the prior quarter.
• | The average yield on total commercial loans for the fourth quarter of 2018 increased 118 basis points to 5.07% from the year ago quarter and increased 34 basis points from the prior quarter. |
• | The average cost of total interest-bearing deposits for the fourth quarter of 2018 increased 49 basis points to 1.14% from the year ago quarter and increased 11 basis points from the prior quarter. |
• | The net free funds benefit increased 12 basis points in the fourth quarter of 2018 compared to the year ago quarter and increased 3 basis points from the prior quarter. |
The Company expects a stable to improving full-year net interest margin, given continued upward Fed Funds rate activity.
Noninterest Income
Full year 2018 total noninterest income of $356 million increased $23 million reflecting the contributions of acquisitions made in the fourth quarter of 2017 and in 2018.
• | Brokerage and advisory revenues increased $8 million from the prior year, driven by the Whitnell acquisition and the generally strong equity markets through the first three quarters of 2018. |
• | Insurance commissions increased $8 million from the prior year, driven by the Diversified Insurance Solutions and Anderson Insurance acquisitions. |
• | Card-based and loan fees were up $5 million from the prior year. |
Fourth quarter 2018 total noninterest income of $84 million was essentially unchanged from the year ago quarter, but decreased $4 million from the prior quarter.
With respect to fourth quarter 2018 noninterest income line items:
• | Card-based and loan fees increased $2 million from the year ago quarter and increased $1 million from the prior quarter. |
• | Insurance revenues were up $2 million from the year ago quarter, driven by acquisitions noted above, and were flat compared to the previous quarter. |
• | Capital markets were down $2 million from a very strong fourth quarter of 2017, and were essentially unchanged from the previous quarter. |
• | Asset losses were $2 million greater versus the year ago quarter and were $1 million greater than the prior quarter due to Bank Mutual related items. |
The Company expects to earn between $360 million and $375 million of noninterest income in 2019.
Noninterest Expense
Full year 2018 noninterest expense of $822 million increased 16%, or $113 million from the prior year and included $29 million of acquisition related costs.
• | Personnel costs increased $54 million from the prior year, principally related to operating Bank Mutual as a stand-alone entity from February through conversion in June. Bank Mutual operations were wound down through the third quarter. This also reflected certain severance and other contractual personnel costs. |
• | Technology expense increased $10 million from the prior year, driven by investments made in solutions to enhance operational efficiency and the customer experience. |
Fourth quarter 2018 total noninterest expense of $193 million increased 6%, or $11 million from the year ago quarter, but decreased $11 million from the prior quarter. Fourth quarter 2018 noninterest expense included a $1 million recovery of Bank Mutual acquisition related costs.
With respect to fourth quarter 2018 noninterest expense line items:
• | Personnel expense increased $10 million from the year ago quarter, primarily driven by additional colleagues brought on through acquisitions. Personnel expense decreased $8 million from the third quarter of 2018. |
• | Occupancy expense increased $1 million from the year ago quarter, with most of the increase coming from the additional expense of acquired Bank Mutual facilities. Occupancy expense was essentially unchanged from the prior quarter. |
• | Acquisition related costs decreased $3 million from the prior quarter. |
The Company expects its 2019 noninterest expense will be approximately $800 million.
Taxes
Full year 2018 effective tax rate was 19% compared to 32% in 2017. The decrease is primarily due to the Tax Cut and Jobs Act signed into law on December 22, 2017.
• | The fourth quarter 2018 effective tax rate was 22% compared to 21% in the prior quarter. |
• | For 2019, the Company expects its effective tax rate to be in the range of 21%-23%. |
Credit
Full year 2018 provision for credit losses was zero, down from $26 million in the prior year.
The fourth quarter 2018 provision for credit losses was $1 million, up from zero in the year ago quarter and up from negative $5 million in the prior quarter. With respect to fourth quarter 2018 credit quality:
• | Nonperforming assets of $140 million were down $89 million from the year ago quarter and were down $46 million from the prior quarter. |
• | Nonaccrual loans of $128 million were down $81 million from the year ago quarter and were down $26 million from the prior quarter. The decrease from the prior quarter was primarily driven by payoffs. The nonaccrual loans to total loans ratio was 0.56% in the fourth quarter, compared to 1.00% in the year ago quarter, and 0.67% in the prior quarter. |
• | Net charge offs were essentially zero, down $10 million from the year ago quarter and down $12 million from the prior quarter. |
• | The allowance for loan losses of $238 million was down $28 million from the year ago quarter and was up $2 million from the prior quarter. The allowance for loan losses to total loans ratio was 1.04% in the fourth quarter of 2018, compared to 1.28% in the year ago quarter, and 1.03% in the prior quarter. |
The Company expects its 2019 provision for credit losses to adjust with changes to risk grade, other indications of credit quality, and loan volume.
Capital
The Company’s capital position remains strong, with a CET1 capital ratio of 10.3% at December 31, 2018. 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 2018, the Company repurchased over 9 million shares, or $240 million, of common stock at an average price of $25.29 per share. This included fourth quarter repurchases of approximately 4 million shares, or $89 million, of common stock at an average price of $23.55 per share.
FOURTH QUARTER 2018 EARNINGS RELEASE CONFERENCE CALL
The Company will host a conference call for investors and analysts at 4:00 p.m. Central Time (CT) today, January 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 fourth quarter 2018 earnings call. The fourth quarter 2018 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 $34 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 230 banking locations serving more than 110 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.
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Associated Banc-Corp Consolidated Balance Sheets (Unaudited) | |||||||||||||||||||||
(In thousands) | Dec 31, 2018 | Sep 30, 2018 | Seql Qtr $ Change | Jun 30, 2018 | Mar 31, 2018 | Dec 31, 2017 | Comp Qtr $ Change | ||||||||||||||
Assets | |||||||||||||||||||||
Cash and due from banks | $ | 507,187 | $ | 374,168 | $ | 133,019 | $ | 396,761 | $ | 328,260 | $ | 483,666 | $ | 23,521 | |||||||
Interest-bearing deposits in other financial institutions | 221,226 | 147,848 | 73,378 | 71,462 | 94,918 | 199,702 | 21,524 | ||||||||||||||
Federal funds sold and securities purchased under agreements to resell | 148,285 | 24,325 | 123,960 | 3,150 | 10,000 | 32,650 | 115,635 | ||||||||||||||
Investment securities held to maturity, at amortized cost | 2,740,511 | 2,661,755 | 78,756 | 2,602,247 | 2,443,203 | 2,282,853 | 457,658 | ||||||||||||||
Investment securities available for sale, at fair value | 3,948,510 | 4,054,197 | (105,687 | ) | 4,261,651 | 4,485,875 | 4,043,446 | (94,936 | ) | ||||||||||||
Federal Home Loan Bank and Federal Reserve Bank stocks, at cost | 250,534 | 220,825 | 29,709 | 249,040 | 233,216 | 165,331 | 85,203 | ||||||||||||||
Residential loans held for sale | 64,321 | 134,361 | (70,040 | ) | 143,022 | 103,953 | 85,544 | (21,223 | ) | ||||||||||||
Commercial loans held for sale | 14,943 | 30,452 | (15,509 | ) | — | 6,091 | — | 14,943 | |||||||||||||
Loans | 22,940,429 | 22,867,112 | 73,317 | 22,976,786 | 22,810,491 | 20,784,991 | 2,155,438 | ||||||||||||||
Allowance for loan losses | (238,023 | ) | (236,250 | ) | (1,773 | ) | (252,601 | ) | (257,058 | ) | (265,880 | ) | 27,857 | ||||||||
Loans, net | 22,702,406 | 22,630,861 | 71,545 | 22,724,184 | 22,553,433 | 20,519,111 | 2,183,295 | ||||||||||||||
Bank and corporate owned life insurance | 663,203 | 661,009 | 2,194 | 659,592 | 657,841 | 591,057 | 72,146 | ||||||||||||||
Investment in unconsolidated subsidiaries | 161,181 | 156,878 | 4,303 | 161,676 | 166,124 | 170,473 | (9,292 | ) | |||||||||||||
Trading assets | 88,943 | 140,328 | (51,385 | ) | 132,919 | 102,890 | 69,675 | 19,268 | |||||||||||||
Premises and equipment | 363,225 | 358,926 | 4,299 | 361,385 | 381,327 | 330,963 | 32,262 | ||||||||||||||
Goodwill | 1,169,023 | 1,168,922 | 101 | 1,166,665 | 1,153,156 | 976,239 | 192,784 | ||||||||||||||
Mortgage servicing rights, net | 68,193 | 67,872 | 321 | 66,980 | 66,407 | 58,384 | 9,809 | ||||||||||||||
Other intangible assets, net | 75,836 | 78,069 | (2,233 | ) | 80,346 | 79,714 | 15,580 | 60,256 | |||||||||||||
Other assets | 460,331 | 578,206 | (117,875 | ) | 571,566 | 500,099 | 458,920 | 1,410 | |||||||||||||
Total assets | $ | 33,647,859 | $ | 33,489,002 | $ | 158,857 | $ | 33,652,647 | $ | 33,366,505 | $ | 30,483,594 | $ | 3,164,265 | |||||||
Liabilities and stockholders’ equity | |||||||||||||||||||||
Noninterest-bearing demand deposits | $ | 5,698,530 | $ | 5,421,270 | $ | 277,260 | $ | 5,341,361 | $ | 5,458,473 | $ | 5,478,416 | $ | 220,114 | |||||||
Interest-bearing deposits | 19,198,863 | 19,410,342 | (211,479 | ) | 18,474,953 | 18,367,129 | 17,307,546 | 1,891,317 | |||||||||||||
Total deposits | 24,897,393 | 24,831,612 | 65,781 | 23,816,314 | 23,825,602 | 22,785,962 | 2,111,431 | ||||||||||||||
Federal funds purchased and securities sold under agreements to repurchase | 111,651 | 166,556 | (54,905 | ) | 203,733 | 283,954 | 324,815 | (213,164 | ) | ||||||||||||
Commercial paper | 45,423 | 43,604 | 1,819 | 52,791 | 82,420 | 67,467 | (22,044 | ) | |||||||||||||
FHLB advances | 3,574,371 | 3,332,655 | 241,716 | 4,797,857 | 4,515,887 | 3,184,168 | 390,203 | ||||||||||||||
Other long-term funding | 795,611 | 795,215 | 396 | 497,619 | 497,451 | 497,282 | 298,329 | ||||||||||||||
Trading liabilities | 87,668 | 138,940 | (51,272 | ) | 131,612 | 100,247 | 67,660 | 20,008 | |||||||||||||
Accrued expenses and other liabilities | 354,855 | 383,381 | (28,526 | ) | 382,476 | 348,246 | 318,797 | 36,058 | |||||||||||||
Total liabilities | 29,866,971 | 29,691,963 | 175,008 | 29,882,403 | 29,653,806 | 27,246,151 | 2,620,820 | ||||||||||||||
Stockholders’ equity(1) | |||||||||||||||||||||
Preferred equity | 256,716 | 256,716 | — | 159,401 | 159,853 | 159,929 | 96,787 | ||||||||||||||
Common equity | |||||||||||||||||||||
Common stock | 1,752 | 1,752 | — | 1,751 | 1,741 | 1,618 | 134 | ||||||||||||||
Surplus | 1,828,081 | 1,824,544 | 3,537 | 1,820,053 | 1,813,987 | 1,454,188 | 373,893 | ||||||||||||||
Retained earnings | 2,065,948 | 2,013,024 | 52,924 | 1,955,406 | 1,895,280 | 1,819,230 | 246,718 | ||||||||||||||
Accumulated other comprehensive income (loss) | (124,972 | ) | (135,520 | ) | 10,548 | (119,888 | ) | (107,673 | ) | (62,758 | ) | (62,214 | ) | ||||||||
Treasury stock, at cost | (246,638 | ) | (163,478 | ) | (83,160 | ) | (46,479 | ) | (50,488 | ) | (134,764 | ) | (111,874 | ) | |||||||
Total common equity | 3,524,171 | 3,540,322 | (16,151 | ) | 3,610,843 | 3,552,847 | 3,077,514 | 446,657 | |||||||||||||
Total stockholders’ equity | 3,780,888 | 3,797,038 | (16,151 | ) | 3,770,244 | 3,712,699 | 3,237,443 | 543,445 | |||||||||||||
Total liabilities and stockholders’ equity | $ | 33,647,859 | $ | 33,489,002 | $ | 158,857 | $ | 33,652,647 | $ | 33,366,505 | $ | 30,483,594 | $ | 3,164,265 |
Numbers may not sum due to rounding.
(1) During 2018, unvested options, restricted stock awards, and restricted stock units were reclassified within stockholders' equity. This reclassification resulted in a net reduction in period end common shares outstanding, but had no impact on basic or diluted average common shares outstanding. There was no impact to earnings, expenses, or total stockholders' equity.
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Associated Banc-Corp Consolidated Statements of Income (Unaudited) | ||||||||||||||||||||||||||||||
(In thousands, except per share data) | Comp Qtr | YTD | YTD | Comp YTD | ||||||||||||||||||||||||||
4Q18 | 4Q17 | $ Change | % Change | Dec 2018 | Dec 2017 | $ Change | % Change | |||||||||||||||||||||||
Interest income | ||||||||||||||||||||||||||||||
Interest and fees on loans | $ | 260,661 | $ | 194,133 | $ | 66,528 | 34 | % | $ | 976,990 | $ | 749,000 | $ | 227,990 | 30 | % | ||||||||||||||
Interest and dividends on investment securities | ||||||||||||||||||||||||||||||
Taxable | 29,119 | 25,614 | 3,505 | 14 | % | 119,741 | 96,909 | 22,832 | 24 | % | ||||||||||||||||||||
Tax-exempt | 12,899 | 8,437 | 4,462 | 53 | % | 44,782 | 32,977 | 11,805 | 36 | % | ||||||||||||||||||||
Other interest | 3,257 | 2,138 | 1,119 | 52 | % | 12,623 | 7,719 | 4,904 | 64 | % | ||||||||||||||||||||
Total interest income | 305,936 | 230,322 | 75,614 | 33 | % | 1,154,137 | 886,605 | 267,532 | 30 | % | ||||||||||||||||||||
Interest expense | ||||||||||||||||||||||||||||||
Interest on deposits | 54,159 | 28,143 | 26,016 | 92 | % | 176,118 | 94,025 | 82,093 | 87 | % | ||||||||||||||||||||
Interest on Federal funds purchased and securities sold under agreements to repurchase | 442 | 420 | 22 | 5 | % | 2,006 | 2,527 | (521 | ) | (21 | )% | |||||||||||||||||||
Interest on other short-term funding | 36 | 54 | (18 | ) | (33 | )% | 186 | 293 | (107 | ) | (37 | )% | ||||||||||||||||||
Interest on FHLB advances | 19,948 | 10,156 | 9,792 | 96 | % | 73,668 | 30,364 | 43,304 | 143 | % | ||||||||||||||||||||
Interest on long-term funding | 7,396 | 4,544 | 2,852 | 63 | % | 22,579 | 18,176 | 4,403 | 24 | % | ||||||||||||||||||||
Total interest expense | 81,980 | 43,317 | 38,663 | 89 | % | 274,557 | 145,385 | 129,172 | 89 | % | ||||||||||||||||||||
Net interest income | 223,955 | 187,005 | 36,950 | 20 | % | 879,580 | 741,220 | 138,360 | 19 | % | ||||||||||||||||||||
Provision for credit losses | 1,000 | — | 1,000 | N/M | — | 26,000 | (26,000 | ) | (100 | )% | ||||||||||||||||||||
Net interest income after provision for credit losses | 222,955 | 187,005 | 35,950 | 19 | % | 879,580 | 715,220 | 164,360 | 23 | % | ||||||||||||||||||||
Noninterest income | ||||||||||||||||||||||||||||||
Insurance commissions and fees | 21,232 | 19,186 | 2,046 | 11 | % | 89,511 | 81,474 | 8,037 | 10 | % | ||||||||||||||||||||
Service charges and deposit account fees | 16,361 | 15,773 | 588 | 4 | % | 66,075 | 64,427 | 1,648 | 3 | % | ||||||||||||||||||||
Card-based and loan fees | 15,575 | 13,840 | 1,735 | 13 | % | 57,474 | 52,688 | 4,786 | 9 | % | ||||||||||||||||||||
Trust and asset management fees | 13,371 | 13,125 | 246 | 2 | % | 54,316 | 50,191 | 4,125 | 8 | % | ||||||||||||||||||||
Brokerage and advisory fees | 6,993 | 6,864 | 129 | 2 | % | 28,246 | 19,935 | 8,311 | 42 | % | ||||||||||||||||||||
Capital markets, net | 4,931 | 7,107 | (2,176 | ) | (31 | )% | 20,120 | 19,642 | 478 | 2 | % | |||||||||||||||||||
Mortgage banking, net | 3,271 | 3,169 | 102 | 3 | % | 19,911 | 19,360 | 551 | 3 | % | ||||||||||||||||||||
Bank and corporate owned life insurance | 3,247 | 3,156 | 91 | 3 | % | 13,951 | 16,250 | (2,299 | ) | (14 | )% | |||||||||||||||||||
Asset gains (losses), net (1) | (2,456 | ) | (528 | ) | (1,928 | ) | N/M | (1,103 | ) | (1,244 | ) | 141 | (11 | )% | ||||||||||||||||
Investment securities gains (losses), net | — | 75 | (75 | ) | (100 | )% | (1,985 | ) | 434 | (2,419 | ) | N/M | ||||||||||||||||||
Other | 1,522 | 2,777 | (1,255 | ) | (45 | )% | 9,051 | 9,523 | (472 | ) | (5 | )% | ||||||||||||||||||
Total noninterest income | 84,046 | 84,544 | (498 | ) | (1 | )% | 355,568 | 332,680 | 22,888 | 7 | % | |||||||||||||||||||
Noninterest expense | ||||||||||||||||||||||||||||||
Personnel | 116,535 | 107,031 | 9,504 | 9 | % | 482,676 | 428,976 | 53,700 | 13 | % | ||||||||||||||||||||
Technology | 17,944 | 17,878 | 66 | — | % | 72,674 | 63,004 | 9,670 | 15 | % | ||||||||||||||||||||
Occupancy | 14,174 | 13,497 | 677 | 5 | % | 59,121 | 53,842 | 5,279 | 10 | % | ||||||||||||||||||||
Business development and advertising | 8,950 | 8,195 | 755 | 9 | % | 30,923 | 28,946 | 1,977 | 7 | % | ||||||||||||||||||||
Equipment | 5,897 | 5,250 | 647 | 12 | % | 23,243 | 21,201 | 2,042 | 10 | % | ||||||||||||||||||||
Legal and professional | 5,888 | 6,384 | (496 | ) | (8 | )% | 23,061 | 22,509 | 552 | 2 | % | |||||||||||||||||||
Card issuance and loan costs | 2,232 | 2,836 | (604 | ) | (21 | )% | 12,386 | 11,760 | 626 | 5 | % | |||||||||||||||||||
Foreclosure / OREO expense, net | 909 | 1,285 | (376 | ) | (29 | )% | 3,603 | 4,878 | (1,275 | ) | (26 | )% | ||||||||||||||||||
FDIC assessment | 5,750 | 7,500 | (1,750 | ) | (23 | )% | 30,000 | 31,300 | (1,300 | ) | (4 | )% | ||||||||||||||||||
Other intangible amortization | 2,233 | 500 | 1,733 | N/M | 8,159 | 1,959 | 6,200 | N/M | ||||||||||||||||||||||
Acquisition related costs (2) | (981 | ) | — | (981 | ) | N/M | 29,002 | — | 29,002 | N/M | ||||||||||||||||||||
Other | 13,632 | 11,343 | 2,289 | 20 | % | 46,951 | 40,758 | 6,193 | 15 | % | ||||||||||||||||||||
Total noninterest expense | 193,163 | 181,699 | 11,464 | 6 | % | 821,799 | 709,133 | 112,666 | 16 | % | ||||||||||||||||||||
Income before income taxes | 113,839 | 89,850 | 23,989 | 27 | % | 413,349 | 338,767 | 74,582 | 22 | % | ||||||||||||||||||||
Income tax expense | 24,854 | 39,840 | (14,986 | ) | (38 | )% | 79,786 | 109,503 | (29,717 | ) | (27 | )% | ||||||||||||||||||
Net income | 88,985 | 50,010 | 38,975 | 78 | % | 333,562 | 229,264 | 104,298 | 45 | % | ||||||||||||||||||||
Preferred stock dividends | 3,707 | 2,339 | 1,368 | 58 | % | 10,784 | 9,347 | 1,437 | 15 | % | ||||||||||||||||||||
Net income available to common equity | $ | 85,278 | $ | 47,671 | $ | 37,607 | 79 | % | $ | 322,779 | $ | 219,917 | $ | 102,862 | 47 | % | ||||||||||||||
Earnings per common share | ||||||||||||||||||||||||||||||
Basic | $ | 0.52 | $ | 0.31 | $ | 0.21 | 68 | % | $ | 1.92 | $ | 1.45 | $ | 0.47 | 32 | % | ||||||||||||||
Diluted | $ | 0.51 | $ | 0.31 | $ | 0.20 | 65 | % | $ | 1.89 | $ | 1.42 | $ | 0.47 | 33 | % | ||||||||||||||
Average common shares outstanding | ||||||||||||||||||||||||||||||
Basic | 164,662 | 150,563 | 14,099 | 9 | % | 167,345 | 150,877 | 16,468 | 11 | % | ||||||||||||||||||||
Diluted | 166,394 | 153,449 | 12,945 | 8 | % | 169,732 | 153,647 | 16,085 | 10 | % |
N/M = Not meaningful
Numbers may not sum due to rounding.
(1) | YTD Dec 2018 includes approximately $2 million of Bank Mutual acquisition related asset losses net of asset gains. |
(2) | Includes Bank Mutual and Huntington 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 | ||||||||||||||||||||||||||||||||
4Q18 | 3Q18 | $ Change | % Change | 2Q18 | 1Q18 | 4Q17 | $ Change | % Change | ||||||||||||||||||||||||||
Interest income | ||||||||||||||||||||||||||||||||||
Interest and fees on loans | $ | 260,661 | $ | 249,649 | $ | 11,012 | 4 | % | $ | 246,646 | $ | 220,034 | $ | 194,133 | $ | 66,528 | 34 | % | ||||||||||||||||
Interest and dividends on investment securities | ||||||||||||||||||||||||||||||||||
Taxable | 29,119 | 29,895 | (776 | ) | (3 | )% | 30,623 | 30,104 | 25,614 | 3,505 | 14 | % | ||||||||||||||||||||||
Tax-exempt | 12,899 | 11,883 | 1,016 | 9 | % | 10,783 | 9,217 | 8,437 | 4,462 | 53 | % | |||||||||||||||||||||||
Other interest | 3,257 | 4,036 | (779 | ) | (19 | )% | 3,153 | 2,177 | 2,138 | 1,119 | 52 | % | ||||||||||||||||||||||
Total interest income | 305,936 | 295,464 | 10,472 | 4 | % | 291,205 | 261,532 | 230,322 | 75,614 | 33 | % | |||||||||||||||||||||||
Interest expense | ||||||||||||||||||||||||||||||||||
Interest on deposits | 54,159 | 50,116 | 4,043 | 8 | % | 38,431 | 33,412 | 28,143 | 26,016 | 92 | % | |||||||||||||||||||||||
Interest on Federal funds purchased and securities sold under agreements to repurchase | 442 | 504 | (62 | ) | (12 | )% | 538 | 522 | 420 | 22 | 5 | % | ||||||||||||||||||||||
Interest on other short-term funding | 36 | 38 | (2 | ) | (5 | )% | 51 | 60 | 54 | (18 | ) | (33 | )% | |||||||||||||||||||||
Interest on FHLB advances | 19,948 | 19,318 | 630 | 3 | % | 21,279 | 13,123 | 10,156 | 9,792 | 96 | % | |||||||||||||||||||||||
Interest on long-term funding | 7,396 | 6,095 | 1,301 | 21 | % | 4,544 | 4,544 | 4,544 | 2,852 | 63 | % | |||||||||||||||||||||||
Total interest expense | 81,980 | 76,072 | 5,908 | 8 | % | 64,843 | 51,661 | 43,317 | 38,663 | 89 | % | |||||||||||||||||||||||
Net Interest income | 223,955 | 219,392 | 4,563 | 2 | % | 226,362 | 209,871 | 187,005 | 36,950 | 20 | % | |||||||||||||||||||||||
Provision for credit losses | 1,000 | (5,000 | ) | 6,000 | (120 | )% | 4,000 | — | — | 1,000 | N/M | |||||||||||||||||||||||
Net interest income after provision for credit losses | 222,955 | 224,392 | (1,437 | ) | (1 | )% | 222,362 | 209,871 | 187,005 | 35,950 | 19 | % | ||||||||||||||||||||||
Noninterest income | ||||||||||||||||||||||||||||||||||
Insurance commissions and fees | 21,232 | 21,636 | (404 | ) | (2 | )% | 23,996 | 22,648 | 19,186 | 2,046 | 11 | % | ||||||||||||||||||||||
Service charges and deposit account fees | 16,361 | 16,904 | (543 | ) | (3 | )% | 16,390 | 16,420 | 15,773 | 588 | 4 | % | ||||||||||||||||||||||
Card-based and loan fees | 15,575 | 14,090 | 1,485 | 11 | % | 14,387 | 13,422 | 13,840 | 1,735 | 13 | % | |||||||||||||||||||||||
Trust and asset management fees | 13,371 | 14,140 | (769 | ) | (5 | )% | 13,437 | 13,369 | 13,125 | 246 | 2 | % | ||||||||||||||||||||||
Brokerage and advisory fees | 6,993 | 7,084 | (91 | ) | (1 | )% | 6,896 | 7,273 | 6,864 | 129 | 2 | % | ||||||||||||||||||||||
Capital markets, net | 4,931 | 5,099 | (168 | ) | (3 | )% | 4,783 | 5,306 | 7,107 | (2,176 | ) | (31 | )% | |||||||||||||||||||||
Mortgage banking, net | 3,271 | 4,012 | (741 | ) | (18 | )% | 6,258 | 6,370 | 3,169 | 102 | 3 | % | ||||||||||||||||||||||
Bank and corporate owned life insurance | 3,247 | 3,540 | (293 | ) | (8 | )% | 3,978 | 3,187 | 3,156 | 91 | 3 | % | ||||||||||||||||||||||
Asset gains (losses), net (1) | (2,456 | ) | (1,037 | ) | (1,419 | ) | 137 | % | 2,497 | (107 | ) | (528 | ) | (1,928 | ) | N/M | ||||||||||||||||||
Investment securities gains (losses), net | — | 30 | (30 | ) | (100 | )% | (2,015 | ) | — | 75 | (75 | ) | (100 | )% | ||||||||||||||||||||
Other | 1,522 | 2,802 | (1,280 | ) | (46 | )% | 2,235 | 2,492 | 2,777 | (1,255 | ) | (45 | )% | |||||||||||||||||||||
Total noninterest income | 84,046 | 88,300 | (4,254 | ) | (5 | )% | 92,842 | 90,380 | 84,544 | (498 | ) | (1 | )% | |||||||||||||||||||||
Noninterest expense | ||||||||||||||||||||||||||||||||||
Personnel | 116,535 | 124,476 | (7,941 | ) | (6 | )% | 123,980 | 117,685 | 107,031 | 9,504 | 9 | % | ||||||||||||||||||||||
Technology | 17,944 | 17,563 | 381 | 2 | % | 19,452 | 17,715 | 17,878 | 66 | — | % | |||||||||||||||||||||||
Occupancy | 14,174 | 14,519 | (345 | ) | (2 | )% | 15,071 | 15,357 | 13,497 | 677 | 5 | % | ||||||||||||||||||||||
Business development and advertising | 8,950 | 8,213 | 737 | 9 | % | 7,067 | 6,693 | 8,195 | 755 | 9 | % | |||||||||||||||||||||||
Equipment | 5,897 | 5,838 | 59 | 1 | % | 5,953 | 5,556 | 5,250 | 647 | 12 | % | |||||||||||||||||||||||
Legal and professional | 5,888 | 5,476 | 412 | 8 | % | 6,284 | 5,413 | 6,384 | (496 | ) | (8 | )% | ||||||||||||||||||||||
Card issuance and loan costs | 2,232 | 3,677 | (1,445 | ) | (39 | )% | 3,173 | 3,304 | 2,836 | (604 | ) | (21 | )% | |||||||||||||||||||||
Foreclosure / OREO expense, net | 909 | 950 | (41 | ) | (4 | )% | 1,021 | 723 | 1,285 | (376 | ) | (29 | )% | |||||||||||||||||||||
FDIC assessment | 5,750 | 7,750 | (2,000 | ) | (26 | )% | 8,250 | 8,250 | 7,500 | (1,750 | ) | (23 | )% | |||||||||||||||||||||
Other intangible amortization | 2,233 | 2,233 | — | — | % | 2,168 | 1,525 | 500 | 1,733 | N/M | ||||||||||||||||||||||||
Acquisition related costs (2) | (981 | ) | 2,271 | (3,252 | ) | (143 | )% | 7,107 | 20,605 | — | (981 | ) | N/M | |||||||||||||||||||||
Other | 13,632 | 11,445 | 2,187 | 19 | % | 11,732 | 10,140 | 11,343 | 2,289 | 20 | % | |||||||||||||||||||||||
Total noninterest expense | 193,163 | 204,413 | (11,250 | ) | (6 | )% | 211,258 | 212,965 | 181,699 | 11,464 | 6 | % | ||||||||||||||||||||||
Income before income taxes | 113,839 | 108,279 | 5,560 | 5 | % | 103,947 | 87,285 | 89,850 | 23,989 | 27 | % | |||||||||||||||||||||||
Income tax expense | 24,854 | 22,349 | 2,505 | 11 | % | 14,754 | 17,829 | 39,840 | (14,986 | ) | (38 | )% | ||||||||||||||||||||||
Net income | 88,985 | 85,929 | 3,056 | 4 | % | 89,192 | 69,456 | 50,010 | 38,975 | 78 | % | |||||||||||||||||||||||
Preferred stock dividends | 3,707 | 2,409 | 1,298 | 54 | % | 2,329 | 2,339 | 2,339 | 1,368 | 58 | % | |||||||||||||||||||||||
Net income available to common equity | $ | 85,278 | $ | 83,521 | $ | 1,757 | 2 | % | $ | 86,863 | $ | 67,117 | $ | 47,671 | $ | 37,607 | 79 | % | ||||||||||||||||
Earnings per common share | ||||||||||||||||||||||||||||||||||
Basic | $ | 0.52 | $ | 0.49 | $ | 0.03 | 6 | % | $ | 0.51 | $ | 0.41 | $ | 0.31 | $ | 0.21 | 68 | % | ||||||||||||||||
Diluted | $ | 0.51 | $ | 0.48 | $ | 0.03 | 6 | % | $ | 0.50 | $ | 0.40 | $ | 0.31 | $ | 0.20 | 65 | % | ||||||||||||||||
Average common shares outstanding | ||||||||||||||||||||||||||||||||||
Basic | 164,662 | 170,516 | (5,854 | ) | (3 | )% | 170,633 | 163,520 | 150,563 | 14,099 | 9 | % | ||||||||||||||||||||||
Diluted | 166,394 | 172,802 | (6,408 | ) | (4 | )% | 173,409 | 166,432 | 153,449 | 12,945 | 8 | % |
N/M = Not meaningful
Numbers may not sum due to rounding.
(1) | 3Q18 includes approximately $1 million of Bank Mutual acquisition related asset losses net of asset gains; 2Q18 includes approximately $1 million of Bank Mutual acquisition related asset losses net of asset gains. |
(2) | Includes Bank Mutual and Huntington acquisition related costs only. |
Page 3
Associated Banc-Corp Selected Quarterly Information | ||||||||||||||||||||||
(In millions, except share and per share, full time equivalent employee and branch count data) | YTD Dec 2018 | YTD Dec 2017 | 4Q18 | 3Q18 | 2Q18 | 1Q18 | 4Q17 | |||||||||||||||
Per common share data | ||||||||||||||||||||||
Dividends | $ | 0.62 | $ | 0.50 | $ | 0.17 | $ | 0.15 | $ | 0.15 | $ | 0.15 | $ | 0.14 | ||||||||
Market value: | ||||||||||||||||||||||
High | 28.85 | 26.50 | 26.55 | 28.35 | 28.85 | 26.90 | 26.10 | |||||||||||||||
Low | 18.72 | 21.25 | 18.72 | 26.00 | 24.20 | 23.60 | 24.00 | |||||||||||||||
Close | 19.79 | 25.40 | 19.79 | 26.00 | 27.30 | 24.85 | 25.40 | |||||||||||||||
Book value | 21.43 | 20.13 | 21.43 | 21.06 | 20.95 | 20.78 | 20.13 | |||||||||||||||
Tangible book value / share | 13.86 | 13.65 | 13.86 | 13.64 | 13.71 | 13.57 | 13.65 | |||||||||||||||
Performance ratios (annualized) | ||||||||||||||||||||||
Return on average assets | 1.01 | % | 0.78 | % | 1.07 | % | 1.02 | % | 1.07 | % | 0.88 | % | 0.66 | % | ||||||||
Effective tax rate | 19.30 | % | 32.32 | % | 21.83 | % | 20.64 | % | 14.19 | % | 20.43 | % | 44.34 | % | ||||||||
Dividend payout ratio (1) | 32.29 | % | 34.48 | % | 32.69 | % | 30.61 | % | 29.41 | % | 36.59 | % | 45.16 | % | ||||||||
Net interest margin | 2.97 | % | 2.82 | % | 3.02 | % | 2.92 | % | 3.02 | % | 2.92 | % | 2.79 | % | ||||||||
Selected trend information | ||||||||||||||||||||||
Average full time equivalent employees (2) | 4,699 | 4,307 | 4,659 | 4,707 | 4,792 | 4,637 | 4,303 | |||||||||||||||
Branch count | 236 | 236 | 237 | 271 | 213 | |||||||||||||||||
Assets under management, at market value (3) | $ | 10,291 | $ | 11,206 | $ | 10,776 | $ | 10,540 | $ | 10,555 | ||||||||||||
Mortgage loans originated for sale during period | $ | 1,092 | $ | 715 | $ | 245 | $ | 331 | $ | 319 | $ | 198 | $ | 249 | ||||||||
Mortgage loan settlements during period | $ | 1,132 | $ | 820 | $ | 305 | $ | 345 | $ | 294 | $ | 188 | $ | 268 | ||||||||
Mortgage portfolio serviced for others | $ | 8,601 | $ | 8,547 | $ | 8,501 | $ | 8,507 | $ | 7,647 | ||||||||||||
Mortgage servicing rights, net / mortgage portfolio serviced for others | 0.79 | % | 0.79 | % | 0.79 | % | 0.78 | % | 0.76 | % | ||||||||||||
Shares outstanding, end of period (6) | 164,440 | 168,138 | 172,358 | 170,995 | 152,846 | |||||||||||||||||
Selected quarterly ratios | ||||||||||||||||||||||
Loans / deposits | 92.14 | % | 92.09 | % | 96.47 | % | 95.74 | % | 91.22 | % | ||||||||||||
Stockholders’ equity / assets | 11.24 | % | 11.34 | % | 11.20 | % | 11.13 | % | 10.62 | % | ||||||||||||
Risk-based capital (4) (5) | ||||||||||||||||||||||
Total risk-weighted assets | $ | 23,875 | $ | 23,907 | $ | 24,059 | $ | 23,535 | $ | 21,544 | ||||||||||||
Common equity Tier 1 | $ | 2,450 | $ | 2,475 | $ | 2,528 | $ | 2,474 | $ | 2,172 | ||||||||||||
Common equity Tier 1 capital ratio | 10.26 | % | 10.35 | % | 10.51 | % | 10.51 | % | 10.08 | % | ||||||||||||
Tier 1 capital ratio | 11.33 | % | 11.42 | % | 11.17 | % | 11.19 | % | 10.82 | % | ||||||||||||
Total capital ratio | 13.47 | % | 13.56 | % | 13.36 | % | 13.45 | % | 13.22 | % | ||||||||||||
Tier 1 leverage ratio | 8.48 | % | 8.43 | % | 8.32 | % | 8.48 | % | 8.02 | % | ||||||||||||
Loans | ||||||||||||||||||||||
Recorded investment on loans | $ | 22,872 | $ | 22,800 | $ | 22,916 | $ | 22,756 | $ | 20,699 | ||||||||||||
Net unaccreted Bank Mutual purchase discount | (18 | ) | (21 | ) | (26 | ) | (34 | ) | — | |||||||||||||
Net other deferred costs | 87 | 87 | 87 | 88 | 86 | |||||||||||||||||
Loans | $ | 22,940 | $ | 22,867 | $ | 22,977 | $ | 22,810 | $ | 20,785 |
Numbers may not sum due to rounding.
(1) | Ratio is based upon basic earnings per common share. |
(2) | Average full time equivalent employees without overtime. |
(3) | Excludes assets held in brokerage accounts. |
(4) | 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. |
(5) | December 31, 2018 data is estimated. |
(6) | During 2018, unvested options, restricted stock awards, and restricted stock units were reclassified within stockholders' equity. This reclassification resulted in a net reduction in period end common shares outstanding, but had no impact on basic or diluted average common shares outstanding. There was no impact to earnings, expenses, or total stockholders' equity. |
Page 4
Associated Banc-Corp Selected Asset Quality Information | |||||||||||||||||||||
(In thousands) | Dec 31, 2018 | Sep 30, 2018 | Seql Qtr % Change | Jun 30, 2018 | Mar 31, 2018 | Dec 31, 2017 | Comp Qtr % Change | ||||||||||||||
Allowance for loan losses | |||||||||||||||||||||
Balance at beginning of period | $ | 236,250 | $ | 252,601 | (6 | )% | $ | 257,058 | $ | 265,880 | $ | 276,551 | (15 | )% | |||||||
Provision for loan losses | 2,000 | (4,000 | ) | (150 | )% | 4,000 | 500 | — | N/M | ||||||||||||
Charge offs | (6,151 | ) | (17,304 | ) | (64 | )% | (14,926 | ) | (12,155 | ) | (14,289 | ) | (57 | )% | |||||||
Recoveries | 5,923 | 4,953 | 20 | % | 6,470 | 2,832 | 3,618 | 64 | % | ||||||||||||
Net charge offs | (228 | ) | (12,351 | ) | (98 | )% | (8,456 | ) | (9,323 | ) | (10,671 | ) | (98 | )% | |||||||
Balance at end of period | $ | 238,023 | $ | 236,250 | 1 | % | $ | 252,601 | $ | 257,058 | $ | 265,880 | (10 | )% | |||||||
Allowance for unfunded commitments | |||||||||||||||||||||
Balance at beginning of period | $ | 25,336 | $ | 26,336 | (4 | )% | $ | 26,336 | $ | 24,400 | $ | 24,400 | 4 | % | |||||||
Provision for unfunded commitments | (1,000 | ) | (1,000 | ) | — | % | — | (500 | ) | — | N/M | ||||||||||
Amount recorded at acquisition | — | — | N/M | — | 2,436 | — | N/M | ||||||||||||||
Balance at end of period | $ | 24,336 | $ | 25,336 | (4 | )% | $ | 26,336 | $ | 26,336 | $ | 24,400 | — | % | |||||||
Allowance for credit losses | $ | 262,359 | $ | 261,586 | — | % | $ | 278,937 | $ | 283,394 | $ | 290,280 | (10 | )% | |||||||
Provision for credit losses | $ | 1,000 | $ | (5,000 | ) | (120 | )% | $ | 4,000 | $ | — | $ | — | N/M | |||||||
Dec 31, 2018 | Sep 30, 2018 | Seql Qtr % Change | Jun 30, 2018 | Mar 31, 2018 | Dec 31, 2017 | Comp Qtr % Change | |||||||||||||||
Net charge offs | |||||||||||||||||||||
Commercial and industrial | $ | 2,974 | $ | (6,893 | ) | (143 | )% | $ | (6,606 | ) | $ | (6,599 | ) | $ | (8,212 | ) | (136 | )% | |||
Commercial real estate—owner occupied | 282 | (252 | ) | N/M | 270 | (1,025 | ) | (246 | ) | N/M | |||||||||||
Commercial and business lending | 3,256 | (7,145 | ) | (146 | )% | (6,336 | ) | (7,624 | ) | (8,458 | ) | (138 | )% | ||||||||
Commercial real estate—investor | (2,107 | ) | (3,958 | ) | (47 | )% | (1,189 | ) | 8 | (164 | ) | N/M | |||||||||
Real estate construction | 106 | (195 | ) | (154 | )% | 48 | 189 | (365 | ) | (129 | )% | ||||||||||
Commercial real estate lending | (2,001 | ) | (4,153 | ) | (52 | )% | (1,141 | ) | 197 | (529 | ) | N/M | |||||||||
Total commercial | 1,255 | (11,298 | ) | (111 | )% | (7,477 | ) | (7,427 | ) | (8,987 | ) | (114 | )% | ||||||||
Residential mortgage | (94 | ) | 5 | N/M | (135 | ) | (131 | ) | (966 | ) | (90 | )% | |||||||||
Home equity | (270 | ) | 200 | N/M | 140 | (677 | ) | 330 | (182 | )% | |||||||||||
Other consumer | (1,118 | ) | (1,258 | ) | (11 | )% | (984 | ) | (1,088 | ) | (1,048 | ) | 7 | % | |||||||
Total consumer | (1,482 | ) | (1,053 | ) | 41 | % | (979 | ) | (1,896 | ) | (1,684 | ) | (12 | )% | |||||||
Total net charge offs | $ | (228 | ) | $ | (12,351 | ) | (98 | )% | $ | (8,456 | ) | $ | (9,323 | ) | $ | (10,671 | ) | (98 | )% | ||
(In basis points) | Dec 31, 2018 | Sep 30, 2018 | Jun 30, 2018 | Mar 31, 2018 | Dec 31, 2017 | ||||||||||||||||
Net charge offs to average loans (annualized) | |||||||||||||||||||||
Commercial and industrial | 16 | (39 | ) | (39 | ) | (41 | ) | (51 | ) | ||||||||||||
Commercial real estate—owner occupied | 13 | (11 | ) | 12 | (48 | ) | (12 | ) | |||||||||||||
Commercial and business lending | 16 | (36 | ) | (33 | ) | (42 | ) | (47 | ) | ||||||||||||
Commercial real estate—investor | (22 | ) | (40 | ) | (12 | ) | — | (2 | ) | ||||||||||||
Real estate construction | 3 | (5 | ) | 1 | 5 | (10 | ) | ||||||||||||||
Commercial real estate lending | (15 | ) | (30 | ) | (8 | ) | 1 | (4 | ) | ||||||||||||
Total commercial | 4 | (34 | ) | (22 | ) | (24 | ) | (30 | ) | ||||||||||||
Residential mortgage | — | — | (1 | ) | (1 | ) | (5 | ) | |||||||||||||
Home equity | (12 | ) | 9 | 6 | (30 | ) | 15 | ||||||||||||||
Other consumer | (121 | ) | (133 | ) | (105 | ) | (115 | ) | (109 | ) | |||||||||||
Total consumer | (6 | ) | (4 | ) | (4 | ) | (8 | ) | (8 | ) | |||||||||||
Total net charge offs | — | (21 | ) | (15 | ) | (17 | ) | (20 | ) | ||||||||||||
(In thousands) | Dec 31, 2018 | Sep 30, 2018 | Seql Qtr % Change | Jun 30, 2018 | Mar 31, 2018 | Dec 31, 2017 | Comp Qtr % Change | ||||||||||||||
Credit Quality | |||||||||||||||||||||
Nonaccrual loans | $ | 127,901 | $ | 154,092 | (17 | )% | $ | 204,460 | $ | 208,553 | $ | 208,546 | (39 | )% | |||||||
Other real estate owned (OREO)(1) | 11,984 | 25,653 | (53 | )% | 27,207 | 16,919 | 12,608 | (5 | )% | ||||||||||||
Other nonperforming assets | — | 6,379 | (100 | )% | 7,059 | 7,117 | 7,418 | (100 | )% | ||||||||||||
Total nonperforming assets | $ | 139,885 | $ | 186,124 | (25 | )% | $ | 238,726 | $ | 232,589 | $ | 228,572 | (39 | )% | |||||||
Loans 90 or more days past due and still accruing | $ | 2,165 | $ | 2,175 | — | % | $ | 1,839 | $ | 3,393 | $ | 1,867 | 16 | % | |||||||
Allowance for loan losses to loans | 1.04 | % | 1.03 | % | 1.10 | % | 1.13 | % | 1.28 | % | |||||||||||
Net unaccreted purchase discount to net purchased loans | 1.44 | % | 1.48 | % | 1.58 | % | 1.80 | % | — | % | |||||||||||
Allowance for loan losses to nonaccrual loans | 186.10 | % | 153.32 | % | 123.55 | % | 123.26 | % | 127.49 | % | |||||||||||
Nonaccrual loans to total loans | 0.56 | % | 0.67 | % | 0.89 | % | 0.91 | % | 1.00 | % | |||||||||||
Nonperforming assets to total loans plus OREO | 0.61 | % | 0.81 | % | 1.04 | % | 1.02 | % | 1.10 | % | |||||||||||
Nonperforming assets to total assets | 0.42 | % | 0.56 | % | 0.71 | % | 0.70 | % | 0.75 | % | |||||||||||
Year-to-date net charge offs to average loans (annualized) | 0.13 | % | 0.18 | % | 0.16 | % | 0.17 | % | 0.19 | % |
(1) | The March 31, 2018 to June 30, 2018 change in OREO was primarily due to the closure of Bank Mutual properties. |
Page 5
Associated Banc-Corp Selected Asset Quality Information (continued) | |||||||||||||||||||||
(In thousands) | Dec 31, 2018 | Sep 30, 2018 | Seql Qtr % Change | Jun 30, 2018 | Mar 31, 2018 | Dec 31, 2017 | Comp Qtr % Change | ||||||||||||||
Nonaccrual loans | |||||||||||||||||||||
Commercial and industrial | $ | 41,021 | $ | 50,146 | (18 | )% | $ | 81,776 | $ | 102,667 | $ | 112,786 | (64 | )% | |||||||
Commercial real estate—owner occupied | 3,957 | 4,779 | (17 | )% | 18,649 | 20,636 | 22,740 | (83 | )% | ||||||||||||
Commercial and business lending | 44,978 | 54,925 | (18 | )% | 100,425 | 123,303 | 135,526 | (67 | )% | ||||||||||||
Commercial real estate—investor | 1,952 | 19,725 | (90 | )% | 26,503 | 15,574 | 4,729 | (59 | )% | ||||||||||||
Real estate construction | 979 | 1,154 | (15 | )% | 1,544 | 1,219 | 974 | 1 | % | ||||||||||||
Commercial real estate lending | 2,931 | 20,879 | (86 | )% | 28,047 | 16,793 | 5,703 | (49 | )% | ||||||||||||
Total commercial | 47,909 | 75,804 | (37 | )% | 128,472 | 140,096 | 141,229 | (66 | )% | ||||||||||||
Residential mortgage | 67,574 | 65,896 | 3 | % | 62,896 | 55,100 | 53,632 | 26 | % | ||||||||||||
Home equity | 12,339 | 12,324 | — | % | 12,958 | 13,218 | 13,514 | (9 | )% | ||||||||||||
Other consumer | 79 | 68 | 16 | % | 134 | 139 | 171 | (54 | )% | ||||||||||||
Total consumer | 79,992 | 78,288 | 2 | % | 75,988 | 68,456 | 67,317 | 19 | % | ||||||||||||
Total nonaccrual loans | $ | 127,901 | $ | 154,092 | (17 | )% | $ | 204,460 | $ | 208,553 | $ | 208,546 | (39 | )% | |||||||
Dec 31, 2018 | Sep 30, 2018 | Seql Qtr % Change | Jun 30, 2018 | Mar 31, 2018 | Dec 31, 2017 | Comp Qtr % Change | |||||||||||||||
Restructured loans (accruing) | |||||||||||||||||||||
Commercial and industrial | $ | 25,478 | $ | 38,885 | (34 | )% | $ | 32,438 | $ | 29,580 | $ | 30,047 | (15 | )% | |||||||
Commercial real estate—owner occupied | 2,080 | 3,746 | (44 | )% | 3,820 | 3,892 | 3,989 | (48 | )% | ||||||||||||
Commercial and business lending | 27,558 | 42,631 | (35 | )% | 36,258 | 33,472 | 34,036 | (19 | )% | ||||||||||||
Commercial real estate—investor | 799 | 350 | 128 | % | 372 | 13,683 | 14,389 | (94 | )% | ||||||||||||
Real estate construction | 311 | 218 | 43 | % | 222 | 305 | 310 | — | % | ||||||||||||
Commercial real estate lending | 1,110 | 568 | 95 | % | 594 | 13,988 | 14,699 | (92 | )% | ||||||||||||
Total commercial | 28,668 | 43,199 | (34 | )% | 36,852 | 47,460 | 48,735 | (41 | )% | ||||||||||||
Residential mortgage | 16,036 | 16,986 | (6 | )% | 17,934 | 19,902 | 17,068 | (6 | )% | ||||||||||||
Home equity | 7,385 | 7,792 | (5 | )% | 7,900 | 8,098 | 7,705 | (4 | )% | ||||||||||||
Other consumer | 1,174 | 1,177 | — | % | 1,037 | 1,041 | 1,110 | 6 | % | ||||||||||||
Total consumer | 24,595 | 25,955 | (5 | )% | 26,871 | 29,041 | 25,883 | (5 | )% | ||||||||||||
Total restructured loans (accruing) | $ | 53,263 | $ | 69,154 | (23 | )% | $ | 63,723 | $ | 76,501 | $ | 74,618 | (29 | )% | |||||||
Nonaccrual restructured loans (included in nonaccrual loans) | $ | 26,292 | $ | 33,757 | (22 | )% | $ | 38,005 | $ | 23,827 | $ | 23,486 | 12 | % | |||||||
Dec 31, 2018 | Sep 30, 2018 | Seql Qtr % Change | Jun 30, 2018 | Mar 31, 2018 | Dec 31, 2017 | Comp Qtr % Change | |||||||||||||||
Accruing Loans 30-89 Days Past Due | |||||||||||||||||||||
Commercial and industrial | $ | 525 | $ | 5,732 | (91 | )% | $ | 588 | $ | 880 | $ | 271 | 94 | % | |||||||
Commercial real estate—owner occupied | 2,699 | 6,126 | (56 | )% | 193 | 511 | 48 | N/M | |||||||||||||
Commercial and business lending | 3,224 | 11,858 | (73 | )% | 781 | 1,391 | 319 | N/M | |||||||||||||
Commercial real estate—investor | 3,767 | 373 | N/M | 828 | 240 | 374 | N/M | ||||||||||||||
Real estate construction | 330 | 517 | (36 | )% | 19,765 | 490 | 251 | 31 | % | ||||||||||||
Commercial real estate lending | 4,097 | 890 | N/M | 20,593 | 730 | 625 | N/M | ||||||||||||||
Total commercial | 7,321 | 12,748 | (43 | )% | 21,374 | 2,121 | 944 | N/M | |||||||||||||
Residential mortgage | 9,706 | 8,899 | 9 | % | 9,341 | 15,133 | 9,552 | 2 | % | ||||||||||||
Home equity | 6,049 | 8,080 | (25 | )% | 7,270 | 5,868 | 6,825 | (11 | )% | ||||||||||||
Other consumer | 2,269 | 1,979 | 15 | % | 1,735 | 1,811 | 2,007 | 13 | % | ||||||||||||
Total consumer | 18,024 | 18,958 | (5 | )% | 18,346 | 22,812 | 18,384 | (2 | )% | ||||||||||||
Total accruing loans 30-89 days past due | $ | 25,345 | $ | 31,706 | (20 | )% | $ | 39,720 | $ | 24,934 | $ | 19,328 | 31 | % | |||||||
Dec 31, 2018 | Sep 30, 2018 | Seql Qtr % Change | Jun 30, 2018 | Mar 31, 2018 | Dec 31, 2017 | Comp Qtr % Change | |||||||||||||||
Potential Problem Loans | |||||||||||||||||||||
Commercial and industrial | $ | 116,578 | $ | 144,468 | (19 | )% | $ | 172,177 | $ | 196,766 | $ | 113,778 | 2 | % | |||||||
Commercial real estate—owner occupied | 55,964 | 32,526 | 72 | % | 38,879 | 34,410 | 41,997 | 33 | % | ||||||||||||
Commercial and business lending | 172,542 | 176,994 | (3 | )% | 211,056 | 231,176 | 155,775 | 11 | % | ||||||||||||
Commercial real estate—investor | 67,481 | 49,842 | 35 | % | 24,790 | 46,970 | 19,291 | N/M | |||||||||||||
Real estate construction | 3,834 | 3,392 | 13 | % | 3,168 | 1,695 | — | N/M | |||||||||||||
Commercial real estate lending | 71,315 | 53,234 | 34 | % | 27,958 | 48,665 | 19,291 | N/M | |||||||||||||
Total commercial | 243,856 | 230,228 | 6 | % | 239,014 | 279,841 | 175,066 | 39 | % | ||||||||||||
Residential mortgage | 5,975 | 6,073 | (2 | )% | 2,355 | 2,155 | 1,616 | N/M | |||||||||||||
Home equity | 103 | 148 | (30 | )% | 142 | 188 | 195 | (47 | )% | ||||||||||||
Other consumer | — | — | N/M | 6 | — | — | N/M | ||||||||||||||
Total consumer | 6,078 | 6,221 | (2 | )% | 2,503 | 2,343 | 1,811 | N/M | |||||||||||||
Total potential problem loans | $ | 249,935 | $ | 236,449 | 6 | % | $ | 241,517 | $ | 282,184 | $ | 176,877 | 41 | % |
N/M = Not meaningful
Numbers may not sum due to rounding.
Page 6
Associated Banc-Corp Net Interest Income Analysis - Fully Tax-Equivalent Basis - Sequential and Comparable Quarter | ||||||||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||||||||
December 31, 2018 | September 30, 2018 | December 31, 2017 | ||||||||||||||||||||||||
(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 (1) (2) (3) | ||||||||||||||||||||||||||
Commercial and business lending | $ | 8,019,254 | $ | 96,539 | 4.78 | % | $ | 7,938,739 | $ | 91,250 | 4.56 | % | $ | 7,178,384 | $ | 68,440 | 3.79 | % | ||||||||
Commercial real estate lending | 5,209,743 | 72,364 | 5.51 | % | 5,420,680 | 68,020 | 4.98 | % | 4,873,889 | 49,744 | 4.05 | % | ||||||||||||||
Total commercial | 13,228,997 | 168,903 | 5.07 | % | 13,359,419 | 159,270 | 4.73 | % | 12,052,273 | 118,184 | 3.89 | % | ||||||||||||||
Residential mortgage | 8,314,421 | 73,158 | 3.52 | % | 8,333,303 | 71,926 | 3.45 | % | 7,546,288 | 59,979 | 3.18 | % | ||||||||||||||
Retail | 1,261,307 | 18,982 | 6.00 | % | 1,280,996 | 18,859 | 5.87 | % | 1,265,055 | 16,853 | 5.31 | % | ||||||||||||||
Total loans | 22,804,725 | 261,043 | 4.55 | % | 22,973,717 | 250,055 | 4.33 | % | 20,863,616 | 195,016 | 3.72 | % | ||||||||||||||
Investment securities | ||||||||||||||||||||||||||
Taxable | 5,087,746 | 29,119 | 2.29 | % | 5,290,859 | 29,895 | 2.26 | % | 4,986,279 | 25,614 | 2.05 | % | ||||||||||||||
Tax-exempt (1) | 1,740,964 | 16,253 | 3.73 | % | 1,627,715 | 14,973 | 3.68 | % | 1,206,078 | 12,909 | 4.28 | % | ||||||||||||||
Other short-term investments | 383,286 | 3,257 | 3.38 | % | 582,578 | 4,036 | 2.75 | % | 382,762 | 2,138 | 2.22 | % | ||||||||||||||
Investments and other | 7,211,997 | 48,629 | 2.70 | % | 7,501,152 | 48,905 | 2.61 | % | 6,575,119 | 40,661 | 2.47 | % | ||||||||||||||
Total earning assets | 30,016,722 | $ | 309,672 | 4.11 | % | 30,474,870 | $ | 298,959 | 3.91 | % | 27,438,735 | $ | 235,677 | 3.42 | % | |||||||||||
Other assets, net | 3,045,836 | 3,059,317 | 2,542,484 | |||||||||||||||||||||||
Total assets | $ | 33,062,558 | $ | 33,534,187 | $ | 29,981,219 | ||||||||||||||||||||
Liabilities and stockholders' equity | ||||||||||||||||||||||||||
Interest-bearing liabilities | ||||||||||||||||||||||||||
Interest-bearing deposits | ||||||||||||||||||||||||||
Savings | $ | 1,995,160 | $ | 696 | 0.14 | % | $ | 1,901,960 | $ | 327 | 0.07 | % | $ | 1,554,639 | $ | 209 | 0.05 | % | ||||||||
Interest-bearing demand | 4,837,223 | 14,006 | 1.15 | % | 4,988,694 | 13,169 | 1.05 | % | 4,168,550 | 6,565 | 0.62 | % | ||||||||||||||
Money market | 7,089,449 | 16,532 | 0.93 | % | 7,546,059 | 16,212 | 0.85 | % | 6,520,052 | 7,226 | 0.44 | % | ||||||||||||||
Network transaction deposits | 1,880,595 | 10,943 | 2.31 | % | 1,969,915 | 10,027 | 2.02 | % | 2,517,737 | 7,945 | 1.25 | % | ||||||||||||||
Time deposits | 3,060,896 | 11,982 | 1.55 | % | 2,978,314 | 10,382 | 1.38 | % | 2,354,828 | 6,198 | 1.04 | % | ||||||||||||||
Total interest-bearing deposits | 18,863,323 | 54,159 | 1.14 | % | 19,384,942 | 50,116 | 1.03 | % | 17,115,806 | 28,143 | 0.65 | % | ||||||||||||||
Federal funds purchased and securities sold under agreements to repurchase | 134,748 | 442 | 1.30 | % | 231,308 | 504 | 0.86 | % | 279,817 | 420 | 0.60 | % | ||||||||||||||
Commercial paper | 41,528 | 36 | 0.35 | % | 43,911 | 38 | 0.35 | % | 66,927 | 54 | 0.32 | % | ||||||||||||||
FHLB advances | 3,654,905 | 19,948 | 2.17 | % | 3,690,687 | 19,318 | 2.08 | % | 3,368,517 | 10,156 | 1.20 | % | ||||||||||||||
Long-term funding | 795,379 | 7,396 | 3.72 | % | 656,055 | 6,095 | 3.72 | % | 497,188 | 4,544 | 3.66 | % | ||||||||||||||
Total short and long-term funding | 4,626,560 | 27,822 | 2.39 | % | 4,621,961 | 25,956 | 2.23 | % | 4,212,449 | 15,174 | 1.43 | % | ||||||||||||||
Total interest-bearing liabilities | 23,489,883 | $ | 81,980 | 1.39 | % | 24,006,903 | $ | 76,072 | 1.26 | % | 21,328,255 | $ | 43,317 | 0.81 | % | |||||||||||
Noninterest-bearing demand deposits | 5,366,711 | 5,310,977 | 5,133,977 | |||||||||||||||||||||||
Other liabilities | 459,204 | 454,767 | 302,981 | |||||||||||||||||||||||
Stockholders’ equity | 3,746,760 | 3,761,541 | 3,216,006 | |||||||||||||||||||||||
Total liabilities and stockholders’ equity | $ | 33,062,558 | $ | 33,534,187 | $ | 29,981,219 | ||||||||||||||||||||
Interest rate spread | 2.72 | % | 2.65 | % | 2.61 | % | ||||||||||||||||||||
Net free funds | 0.30 | % | 0.27 | % | 0.18 | % | ||||||||||||||||||||
Fully tax-equivalent net interest income and net interest margin ("NIM") | $ | 227,692 | 3.02 | % | $ | 222,887 | 2.92 | % | $ | 192,360 | 2.79 | % | ||||||||||||||
Fully tax-equivalent adjustment | 3,736 | 3,496 | 5,355 | |||||||||||||||||||||||
Net interest income | $ | 223,955 | $ | 219,392 | $ | 187,005 |
Numbers may not sum due to rounding.
(1) | Beginning in 2018, 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. Prior to 2018, the yield on tax-exempt loans and securities was computed on a fully tax-equivalent basis using a tax rate of 35% and was 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 amortization of net deferred loan origination costs and net accreted purchase loan discount. |
Page 7
Associated Banc-Corp Net Interest Income Analysis - Fully Tax-Equivalent Basis - Year Over Year | ||||||||||||||||||||||
Years Ended December 31, | ||||||||||||||||||||||
2018 | 2017 | |||||||||||||||||||||
(In thousands) | Average Balance | Interest Income /Expense | Average Yield / Rate | Average Balance | Interest Income /Expense | Average Yield / Rate | ||||||||||||||||
Assets | ||||||||||||||||||||||
Earning assets | ||||||||||||||||||||||
Loans (1) (2) (3) | ||||||||||||||||||||||
Commercial and business lending | $ | 7,744,640 | $ | 349,266 | 4.51 | % | $ | 7,254,613 | $ | 265,796 | 3.66 | % | ||||||||||
Commercial real estate lending | 5,433,361 | 273,937 | 5.04 | % | 4,952,605 | 192,838 | 3.89 | % | ||||||||||||||
Total commercial | 13,178,001 | 623,203 | 4.73 | % | 12,207,218 | 458,634 | 3.76 | % | ||||||||||||||
Residential mortgage | 8,289,432 | 281,814 | 3.40 | % | 7,105,486 | 229,210 | 3.23 | % | ||||||||||||||
Retail | 1,250,863 | 73,605 | 5.88 | % | 1,279,679 | 64,892 | 5.07 | % | ||||||||||||||
Total loans | 22,718,297 | 978,622 | 4.31 | % | 20,592,383 | 752,736 | 3.66 | % | ||||||||||||||
Investment securities | ||||||||||||||||||||||
Taxable | 5,366,825 | 119,741 | 2.23 | % | 4,861,597 | 96,909 | 1.99 | % | ||||||||||||||
Tax-exempt (1) | 1,546,096 | 56,426 | 3.65 | % | 1,166,665 | 50,455 | 4.32 | % | ||||||||||||||
Other short-term investments | 418,576 | 12,623 | 3.02 | % | 379,239 | 7,719 | 2.04 | % | ||||||||||||||
Investments and other | 7,331,497 | 188,790 | 2.58 | % | 6,407,501 | 155,083 | 2.42 | % | ||||||||||||||
Total earning assets | 30,049,793 | $ | 1,167,412 | 3.88 | % | 26,999,884 | $ | 907,819 | 3.36 | % | ||||||||||||
Other assets, net | 3,003,612 | 2,485,849 | ||||||||||||||||||||
Total assets | $ | 33,053,405 | $ | 29,485,733 | ||||||||||||||||||
Liabilities and stockholders' equity | ||||||||||||||||||||||
Interest-bearing liabilities | ||||||||||||||||||||||
Interest-bearing deposits | ||||||||||||||||||||||
Savings | $ | 1,878,960 | $ | 1,435 | 0.08 | % | $ | 1,527,161 | $ | 816 | 0.05 | % | ||||||||||
Interest-bearing demand | 4,767,873 | 44,911 | 0.94 | % | 3,953,014 | 20,344 | 0.51 | % | ||||||||||||||
Money market | 7,260,692 | 54,573 | 0.75 | % | 6,321,603 | 22,991 | 0.36 | % | ||||||||||||||
Network transaction deposits | 2,095,715 | 39,251 | 1.87 | % | 3,145,554 | 31,455 | 1.00 | % | ||||||||||||||
Time deposits | 2,831,229 | 35,948 | 1.27 | % | 1,979,709 | 18,419 | 0.93 | % | ||||||||||||||
Total interest-bearing deposits | 18,834,469 | 176,118 | 0.94 | % | 16,927,041 | 94,025 | 0.56 | % | ||||||||||||||
Federal funds purchased and securities sold under agreements to repurchase | 224,967 | 2,006 | 0.89 | % | 415,086 | 2,527 | 0.61 | % | ||||||||||||||
Commercial paper | 56,076 | 186 | 0.33 | % | 91,797 | 293 | 0.32 | % | ||||||||||||||
FHLB advances | 3,971,797 | 73,668 | 1.85 | % | 3,114,545 | 30,364 | 0.97 | % | ||||||||||||||
Long-term funding | 612,513 | 22,579 | 3.69 | % | 496,930 | 18,176 | 3.66 | % | ||||||||||||||
Total short and long-term funding | 4,865,353 | 98,439 | 2.02 | % | 4,118,358 | 51,360 | 1.25 | % | ||||||||||||||
Total interest-bearing liabilities | 23,699,823 | $ | 274,557 | 1.16 | % | 21,045,399 | $ | 145,385 | 0.69 | % | ||||||||||||
Noninterest-bearing demand deposits | 5,237,580 | 4,996,561 | ||||||||||||||||||||
Other liabilities | 423,570 | 271,139 | ||||||||||||||||||||
Stockholders’ equity | 3,692,433 | 3,172,634 | ||||||||||||||||||||
Total liabilities and stockholders’ equity | $ | 33,053,405 | $ | 29,485,733 | ||||||||||||||||||
Interest rate spread | 2.72 | % | 2.67 | % | ||||||||||||||||||
Net free funds | 0.25 | % | 0.15 | % | ||||||||||||||||||
Fully tax-equivalent net interest income and net interest margin | $ | 892,855 | 2.97 | % | $ | 762,434 | 2.82 | % | ||||||||||||||
Fully tax-equivalent adjustment | 13,275 | 21,214 | ||||||||||||||||||||
Net interest income | $ | 879,580 | $ | 741,220 |
Numbers may not sum due to rounding.
(1) | Beginning in 2018, 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. Prior to 2018, the yield on tax-exempt loans and securities was computed on a fully tax-equivalent basis using a tax rate of 35% and was 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 amortization of net deferred loan origination costs and net accreted purchase loan discount. |
Page 8
Associated Banc-Corp Loan and Deposit Composition | ||||||||||||||||||||||||||
(In thousands) | ||||||||||||||||||||||||||
Period end loan composition (3) | Dec 31, 2018 | Sep 30, 2018 | Seql Qtr % Change | Jun 30, 2018 | Mar 31, 2018 | Dec 31, 2017 | Comp Qtr % Change | |||||||||||||||||||
Commercial and industrial | $ | 7,398,044 | $ | 7,159,941 | 3 | % | $ | 7,109,796 | $ | 6,756,983 | $ | 6,399,693 | 16 | % | ||||||||||||
Commercial real estate—owner occupied | 920,443 | 867,682 | 6 | % | 888,330 | 900,913 | 802,209 | 15 | % | |||||||||||||||||
Commercial and business lending | 8,318,487 | 8,027,622 | 4 | % | 7,998,126 | 7,657,896 | 7,201,902 | 16 | % | |||||||||||||||||
Commercial real estate—investor | 3,751,554 | 3,924,499 | (4 | )% | 3,996,415 | 4,077,671 | 3,315,254 | 13 | % | |||||||||||||||||
Real estate construction | 1,335,031 | 1,416,209 | (6 | )% | 1,487,159 | 1,579,778 | 1,451,684 | (8 | )% | |||||||||||||||||
Commercial real estate lending | 5,086,585 | 5,340,708 | (5 | )% | 5,483,574 | 5,657,449 | 4,766,938 | 7 | % | |||||||||||||||||
Total commercial | 13,405,072 | 13,368,330 | — | % | 13,481,700 | 13,315,345 | 11,968,840 | 12 | % | |||||||||||||||||
Residential mortgage | 8,277,712 | 8,227,649 | 1 | % | 8,207,253 | 8,197,223 | 7,546,534 | 10 | % | |||||||||||||||||
Home equity | 894,473 | 901,275 | (1 | )% | 911,363 | 923,470 | 883,804 | 1 | % | |||||||||||||||||
Other consumer | 363,171 | 369,858 | (2 | )% | 376,470 | 374,453 | 385,813 | (6 | )% | |||||||||||||||||
Total consumer | 9,535,357 | 9,498,782 | — | % | 9,495,086 | 9,495,146 | 8,816,151 | 8 | % | |||||||||||||||||
Total loans | $ | 22,940,429 | $ | 22,867,112 | — | % | $ | 22,976,786 | $ | 22,810,491 | $ | 20,784,991 | 10 | % | ||||||||||||
Purchased credit-impaired loans | $ | 4,852 | $ | 13,133 | (63 | )% | $ | 15,900 | $ | 14,838 | $ | — | N/M | |||||||||||||
Period end deposit and customer funding composition (4) | Dec 31, 2018 | Sep 30, 2018 | Seql Qtr % Change | Jun 30, 2018 | Mar 31, 2018 | Dec 31, 2017 | Comp Qtr % Change | |||||||||||||||||||
Noninterest-bearing demand | $ | 5,698,530 | $ | 5,421,270 | 5 | % | $ | 5,341,361 | $ | 5,458,473 | $ | 5,478,416 | 4 | % | ||||||||||||
Savings | 2,012,841 | 1,937,006 | 4 | % | 1,887,777 | 1,883,638 | 1,524,992 | 32 | % | |||||||||||||||||
Interest-bearing demand | 5,336,952 | 5,096,998 | 5 | % | 4,650,407 | 4,719,566 | 4,603,157 | 16 | % | |||||||||||||||||
Money market | 9,033,669 | 9,087,587 | (1 | )% | 9,208,993 | 9,086,553 | 8,830,328 | 2 | % | |||||||||||||||||
Brokered CDs | 192,234 | 235,711 | (18 | )% | 228,029 | 44,503 | 18,609 | N/M | ||||||||||||||||||
Other time | 2,623,167 | 3,053,041 | (14 | )% | 2,499,747 | 2,632,869 | 2,330,460 | 13 | % | |||||||||||||||||
Total deposits | 24,897,393 | 24,831,612 | — | % | 23,816,314 | 23,825,602 | 22,785,962 | 9 | % | |||||||||||||||||
Customer funding (1) | 137,364 | 184,269 | (25 | )% | 235,804 | 297,289 | 250,332 | (45 | )% | |||||||||||||||||
Total deposits and customer funding | $ | 25,034,757 | $ | 25,015,882 | — | % | $ | 24,052,118 | $ | 24,122,891 | $ | 23,036,294 | 9 | % | ||||||||||||
Network transaction deposits (2) | $ | 2,276,296 | $ | 1,852,863 | 23 | % | $ | 2,094,670 | $ | 2,244,739 | $ | 2,520,968 | (10 | )% | ||||||||||||
Net deposits and customer funding (Total deposits and customer funding, excluding Brokered CDs and network transaction deposits) | $ | 22,566,227 | $ | 22,927,308 | (2 | )% | $ | 21,729,419 | $ | 21,833,649 | $ | 20,496,717 | 10 | % | ||||||||||||
Quarter average loan composition (3) | Dec 31, 2018 | Sep 30, 2018 | Seql Qtr % Change | Jun 30, 2018 | Mar 31, 2018 | Dec 31, 2017 | Comp Qtr % Change | |||||||||||||||||||
Commercial and industrial | $ | 7,166,092 | $ | 7,059,946 | 2 | % | $ | 6,804,311 | $ | 6,449,898 | $ | 6,366,626 | 13 | % | ||||||||||||
Commercial real estate—owner occupied | 853,162 | 878,793 | (3 | )% | 892,746 | 863,723 | 811,758 | 5 | % | |||||||||||||||||
Commercial and business lending | 8,019,254 | 7,938,739 | 1 | % | 7,697,057 | 7,313,621 | 7,178,384 | 12 | % | |||||||||||||||||
Commercial real estate—investor | 3,788,398 | 3,948,922 | (4 | )% | 4,117,675 | 3,866,286 | 3,369,785 | 12 | % | |||||||||||||||||
Real estate construction | 1,421,344 | 1,471,758 | (3 | )% | 1,588,141 | 1,533,143 | 1,504,104 | (6 | )% | |||||||||||||||||
Commercial real estate lending | 5,209,743 | 5,420,680 | (4 | )% | 5,705,817 | 5,399,429 | 4,873,889 | 7 | % | |||||||||||||||||
Total commercial | 13,228,997 | 13,359,419 | (1 | )% | 13,402,874 | 12,713,050 | 12,052,273 | 10 | % | |||||||||||||||||
Residential mortgage | 8,314,421 | 8,333,303 | — | % | 8,310,358 | 8,066,297 | 7,546,288 | 10 | % | |||||||||||||||||
Home equity | 895,412 | 906,364 | (1 | )% | 917,688 | 917,001 | 885,235 | 1 | % | |||||||||||||||||
Other consumer | 365,895 | 374,632 | (2 | )% | 374,508 | 382,180 | 379,820 | (4 | )% | |||||||||||||||||
Total consumer | 9,575,728 | 9,614,298 | — | % | 9,602,555 | 9,365,479 | 8,811,343 | 9 | % | |||||||||||||||||
Total loans | $ | 22,804,725 | $ | 22,973,717 | (1 | )% | $ | 23,005,428 | $ | 22,078,529 | $ | 20,863,616 | 9 | % | ||||||||||||
Quarter average deposit composition (4) | Dec 31, 2018 | Sep 30, 2018 | Seql Qtr % Change | Jun 30, 2018 | Mar 31, 2018 | Dec 31, 2017 | Comp Qtr % Change | |||||||||||||||||||
Noninterest-bearing demand | $ | 5,366,711 | $ | 5,310,977 | 1 | % | $ | 5,131,894 | $ | 5,084,957 | $ | 5,133,977 | 5 | % | ||||||||||||
Savings | 1,995,160 | 1,901,960 | 5 | % | 1,892,808 | 1,722,665 | 1,554,639 | 28 | % | |||||||||||||||||
Interest-bearing demand | 4,837,223 | 4,988,694 | (3 | )% | 4,735,514 | 4,503,974 | 4,168,550 | 16 | % | |||||||||||||||||
Money market | 7,089,449 | 7,546,059 | (6 | )% | 7,190,178 | 7,215,329 | 6,520,052 | 9 | % | |||||||||||||||||
Network transaction deposits | 1,880,595 | 1,969,915 | (5 | )% | 2,130,854 | 2,408,681 | 2,517,737 | (25 | )% | |||||||||||||||||
Time deposits | 3,060,896 | 2,978,314 | 3 | % | 2,565,001 | 2,715,292 | 2,354,828 | 30 | % | |||||||||||||||||
Total deposits | $ | 24,230,034 | $ | 24,695,918 | (2 | )% | $ | 23,646,250 | $ | 23,650,898 | $ | 22,249,783 | 9 | % |
N/M = Not meaningful
Numbers may not sum due to rounding.
(1) | Includes repurchase agreements and commercial paper. |
(2) Included above in interest-bearing demand and money market.
(3) On February 1, 2018, the Corporation acquired Bank Mutual and added $1.9 billion of loans.
(4) On February 1, 2018, the Corporation acquired Bank Mutual and assumed $1.8 billion of deposits.
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Associated Banc-Corp Non-GAAP Financial Measures Reconciliation | ||||||||||||||||||||||||||||||
(In millions, except per share data) | YTD Dec 2018 | YTD Dec 2017 | 4Q18 | 3Q18 | 2Q18 | 1Q18 | 4Q17 | |||||||||||||||||||||||
Tangible common equity reconciliation (1) | ||||||||||||||||||||||||||||||
Common equity | $ | 3,524 | $ | 3,540 | $ | 3,611 | $ | 3,553 | $ | 3,078 | ||||||||||||||||||||
Goodwill and other intangible assets, net | (1,245 | ) | (1,247 | ) | (1,247 | ) | (1,233 | ) | (992 | ) | ||||||||||||||||||||
Tangible common equity | $ | 2,279 | $ | 2,293 | $ | 2,364 | $ | 2,320 | $ | 2,086 | ||||||||||||||||||||
Tangible assets reconciliation (1) | ||||||||||||||||||||||||||||||
Total assets | $ | 33,648 | $ | 33,489 | $ | 33,653 | $ | 33,367 | $ | 30,484 | ||||||||||||||||||||
Goodwill and other intangible assets, net | (1,245 | ) | (1,247 | ) | (1,247 | ) | (1,233 | ) | (992 | ) | ||||||||||||||||||||
Tangible assets | $ | 32,403 | $ | 32,242 | $ | 32,406 | $ | 32,134 | $ | 29,492 | ||||||||||||||||||||
Average tangible common equity and average common equity tier 1 reconciliation(1) | ||||||||||||||||||||||||||||||
Common equity | $ | 3,505 | $ | 3,013 | $ | 3,490 | $ | 3,589 | $ | 3,561 | $ | 3,377 | $ | 3,056 | ||||||||||||||||
Goodwill and other intangible assets, net | (1,209 | ) | (988 | ) | (1,246 | ) | (1,246 | ) | (1,236 | ) | (1,108 | ) | (992 | ) | ||||||||||||||||
Tangible common equity | 2,296 | 2,025 | 2,244 | 2,343 | 2,325 | 2,269 | 2,064 | |||||||||||||||||||||||
Accumulated other comprehensive loss (income) | 117 | 54 | 137 | 125 | 117 | 89 | 62 | |||||||||||||||||||||||
Deferred tax assets (liabilities), net | 42 | 30 | 46 | 45 | 47 | 32 | 29 | |||||||||||||||||||||||
Average common equity Tier 1 | $ | 2,455 | $ | 2,109 | $ | 2,427 | $ | 2,513 | $ | 2,489 | $ | 2,390 | $ | 2,155 | ||||||||||||||||
Selected Trend Information (2) | ||||||||||||||||||||||||||||||
Insurance commissions and fees | $ | 90 | $ | 81 | $ | 21 | $ | 22 | $ | 24 | $ | 23 | $ | 19 | ||||||||||||||||
Service charges and deposit account fees | 66 | 64 | 16 | 17 | 16 | 16 | 16 | |||||||||||||||||||||||
Card-based and loan fees | 57 | 53 | 16 | 14 | 14 | 13 | 14 | |||||||||||||||||||||||
Trust and asset management fees | 54 | 50 | 13 | 14 | 13 | 13 | 13 | |||||||||||||||||||||||
Brokerage and advisory fees | 28 | 20 | 7 | 7 | 7 | 7 | 7 | |||||||||||||||||||||||
Fee-based revenue | 296 | 269 | 74 | 74 | 75 | 73 | 69 | |||||||||||||||||||||||
Other | 60 | 64 | 11 | 14 | 18 | 17 | 16 | |||||||||||||||||||||||
Total noninterest income | $ | 356 | $ | 333 | $ | 84 | $ | 88 | $ | 93 | $ | 90 | $ | 85 | ||||||||||||||||
Selected equity and performance ratios (1) (3) | ||||||||||||||||||||||||||||||
Tangible common equity / tangible assets | 7.03 | % | 7.11 | % | 7.29 | % | 7.22 | % | 7.07 | % | ||||||||||||||||||||
Return on average equity | 9.03 | % | 7.23 | % | 9.42 | % | 9.06 | % | 9.61 | % | 7.96 | % | 6.17 | % | ||||||||||||||||
Return on average tangible common equity | 14.06 | % | 10.86 | % | 15.08 | % | 14.14 | % | 14.98 | % | 11.99 | % | 9.16 | % | ||||||||||||||||
Return on average common equity Tier 1 | 13.15 | % | 10.43 | % | 13.94 | % | 13.18 | % | 14.00 | % | 11.39 | % | 8.77 | % | ||||||||||||||||
Efficiency ratio reconciliation (4) | ||||||||||||||||||||||||||||||
Federal Reserve efficiency ratio | 66.23 | % | 65.97 | % | 62.39 | % | 66.12 | % | 65.77 | % | 70.76 | % | 66.93 | % | ||||||||||||||||
Fully tax-equivalent adjustment | (0.71 | )% | (1.28 | )% | (0.75 | )% | (0.75 | )% | (0.65 | )% | (0.66 | )% | (1.30 | )% | ||||||||||||||||
Other intangible amortization | (0.66 | )% | (0.18 | )% | (0.72 | )% | (0.73 | )% | (0.68 | )% | (0.51 | )% | (0.18 | )% | ||||||||||||||||
Fully tax-equivalent efficiency ratio | 64.87 | % | 64.51 | % | 60.93 | % | 64.66 | % | 64.45 | % | 69.60 | % | 65.45 | % | ||||||||||||||||
Acquisition related costs adjustment | (2.42 | )% | — | % | 0.31 | % | (0.94 | )% | (2.40 | )% | (6.60 | )% | — | % | ||||||||||||||||
Fully tax-equivalent efficiency ratio, excluding acquisition related costs (adjusted efficiency ratio) | 62.45 | % | 64.51 | % | 61.24 | % | 63.72 | % | 62.05 | % | 63.00 | % | 65.45 | % | ||||||||||||||||
Acquisition Related Costs | YTD 2018 | YTD 2018 per share data(6) | 4Q 2018 | 4Q 2018 per share data(6) | 3Q 2018 | 3Q 2018 per share data(6) | 2Q 2018 | 2Q 2018 per share data(6) | 1Q 2018 | 1Q 2018 per share data(6) | ||||||||||||||||||||
GAAP earnings | $ | 323 | $ | 1.89 | $ | 85 | $ | 0.51 | $ | 84 | $ | 0.48 | $ | 87 | $ | 0.50 | $ | 67 | $ | 0.40 | ||||||||||
Change of control and severance | 7 | — | 1 | (1 | ) | 7 | ||||||||||||||||||||||||
Merger advisors and consultants | 5 | — | 1 | — | 4 | |||||||||||||||||||||||||
Facilities and other | 8 | — | 1 | 2 | 5 | |||||||||||||||||||||||||
Contract terminations and conversion costs | 10 | (1 | ) | — | 6 | 5 | ||||||||||||||||||||||||
Asset losses (gains), net | $ | 2 | $ | — | $ | 1 | $ | 1 | $ | — | ||||||||||||||||||||
Total acquisition related costs | $ | 31 | $ | (1 | ) | $ | 3 | $ | 8 | $ | 21 | |||||||||||||||||||
Less additional tax expense | $ | 8 | $ | — | $ | 1 | $ | 2 | $ | 5 | ||||||||||||||||||||
Earnings, excluding acquisition related costs (5) | $ | 346 | $ | 2.03 | $ | 84 | $ | 0.50 | $ | 87 | $ | 0.49 | $ | 93 | $ | 0.53 | $ | 83 | $ | 0.50 |
Numbers may not sum due to rounding.
(1) | 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. |
(2) | These financial measures have been included as they provide meaningful supplemental information to assess trends in the Corporation’s results of operations. |
(3) | 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. |
(4) | 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. |
(5) | 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. |
(6) | Earnings and per share data presented after-tax. |
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