EX-99.1 2 c55465exv99w1.htm EX-99.1 exv99w1
     
(ASSOCIATED BANC-CORP LOGO)
  NEWS RELEASE
For more information:
Investors: Joseph B. Selner, Chief Financial Officer, 920-491-7120
Media: Janet L. Ford, SVP Public Relations Director, 414-207-5070
Associated Reports Fourth Quarter and Year-End Results
  •   Net loss to common shareholders of $161.2 million for the year ended December 31, 2009 compared to net income of $165.2 million for the year ended December 31, 2008
 
  •   Net loss to common shareholders of $180.6 million for the fourth quarter compared to net income of $13.6 million for the fourth quarter of 2008
 
  •   Fourth quarter credit-related charges of $405.1 million, comprised of:
  -   Provision for loan losses of $394.8 million, with net charge offs of $233.8 million
 
  -   Increase in reserve for unfunded commitments of $10.3 million
  •   Decrease in the quarterly cash dividend from $0.05 to $0.01 per share     
GREEN BAY, Wis. — January 11, 2010 — Associated Banc-Corp (NASDAQ: ASBC) today reported a net loss to common shareholders of $161.2 million, or $1.26 per common share, for the year ended December 31, 2009. This compares to net income of $165.2 million, or $1.29 per common share, for the year ended December 31, 2008.
Net loss to common shareholders was $180.6 million, or $1.41 per common share, for the fourth quarter of 2009 compared to net income of $13.6 million, or $0.11 per common share, for the fourth quarter of 2008.
Commenting on the Company’s results, Philip B. Flynn, President and CEO said, “Given the persistent challenging operating conditions in the banking industry, my priority during my first several weeks as CEO of Associated was to ensure that reserves and capital are at levels we believe are appropriate to manage through the downturn and to position Associated to take advantage of opportunities as they arise. We are working diligently to respond to these conditions by aggressively identifying and addressing current challenges and the impact on our loan portfolio. The dividend reduction and the significant addition to the allowance that we have announced today are important parts of addressing these priorities. Our Board of Directors and management team are committed to creating value for Associated’s shareholders. We believe that getting out in front of our credit issues will put us on a path to accomplish this. I am confident that our strong market positions, business mix and management team will drive strong results as we emerge from the credit cycle.”
CREDIT QUALITY
In response to credit quality deterioration during the fourth quarter, the Company took additional steps late in the quarter to perform a more extensive review of criticized loans, with a particular focus on the construction and commercial real estate sectors. This review assessed loan performance, underlying project characteristics, collateral valuations, and the strength of borrower support in order to provide greater insight into existing and emerging credit issues.
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ASSOCIATED REPORTS YEAR-END RESULTS   PAGE 2               
The Company recorded credit-related charges of $405.1 million in the fourth quarter of 2009, comprised of a $394.8 million provision for loan losses and a $10.3 million increase in the reserve for losses on unfunded commitments. Fourth quarter credit-related charges were up significantly from $95.4 million for the third quarter of 2009 and $65.0 million for the fourth quarter of 2008. The credit charges taken during the quarter reflect the growth in delinquencies, nonperforming loans and charge offs across the Company’s loan portfolios and the recognition of further declines in underlying collateral values. During the quarter, deterioration of the commercial real estate portfolio followed trends in the sector including elevated commercial vacancy rates, borrower bankruptcies and downward pressure on real estate values. The current macroeconomic environment continues to put pressure on other business sectors represented in our portfolio, but not to the degree seen in the commercial real estate sector.
Net charge offs for the quarter were $233.8 million ($165.2 million related to commercial real estate and construction) compared to $90.0 million for the third quarter of 2009 and $45.9 million for the fourth quarter of 2008. Total nonperforming loans were $1.122 billion ($720.8 million related to commercial real estate and construction) at December 31, 2009, compared to $885.8 million at September 30, 2009 and $340.7 million at December 31, 2008. Potential problem loans at December 31, 2009 of $1.596 billion ($989.2 million related to commercial real estate and construction) compares to $1.574 billion at September 30, 2009 and $937.8 million at December 31, 2008.
As a result of the increased loan loss provision and the decline in the balance of the Company’s loan portfolio, the allowance for loan losses rose to $573.5 million or 4.06% of total loans at December 31, 2009, compared to 2.79% at September 30, 2009 and 1.63% at December 31, 2008.
LOANS AND DEPOSITS
At December 31, 2009, the Company’s loan portfolio was $14.1 billion, down 4.3% from $14.8 billion at the end of the third quarter of 2009, and down 13.2% from $16.3 billion a year ago, as declines were experienced in all segments of the portfolio.
Total deposits were $16.7 billion at December 31, 2009, up 1.7% from $16.4 billion at September 30, 2009 and up 10.4% from $15.2 billion at December 31, 2008. Growth in both interest bearing and non-interest bearing demand and money market accounts was strong, up a combined $1.1 billion for the quarter and up $2.6 billion for the year ended December 31, 2009. The growth was offset by decreases in both brokered CD and time deposits, which were down a combined $0.8 billion for the quarter and down $1.1 billion for the year.
NET INTEREST INCOME AND NET INTEREST MARGIN
Net interest income for the fourth quarter was $178.4 million compared to $179.2 million for the third quarter of 2009 and $191.8 million for the fourth quarter of 2008. The Company’s net interest margin was 3.59% for the fourth quarter ended December 31, 2009, up 9 basis points compared to 3.50% for the third quarter of 2009 and down 29 basis points from 3.88% for the fourth quarter of 2008. The quarterly improvement in net interest margin was due to the continued decline in cost of deposits (18 basis points), reflecting the continued shift of deposit balances from higher cost time deposits to lower cost transaction accounts and higher investment portfolio yields (11 basis points) offset by lower loan yields (8 basis points). The reduction in loan yields is primarily due to the continued effect of the low interest rate environment and higher nonaccrual loan balances during the quarter.
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ASSOCIATED REPORTS YEAR-END RESULTS   PAGE 3               
NON-INTEREST INCOME AND EXPENSE
Non-interest income for the fourth quarter of 2009 was $84.7 million, up $9.4 million compared to $75.3 million for the third quarter of 2009 and up $43.6 million from $41.1 million for the fourth quarter of 2008. The increase over the third quarter of 2009 was primarily due to the increase in mortgage banking income of $10.1 million discussed below. The increase over the fourth quarter of 2008 was primarily due to an increase in mortgage banking income of $10.4 million and the fact that the fourth quarter of 2008 included an other-than-temporary valuation loss on investments of $35.3 million.
Core fee-based revenue was $66.8 million for the fourth quarter of 2009 as compared to $66.5 million for the third quarter of 2009 and $67.0 million for the fourth quarter of 2008.
Mortgage loans originated for sale during the fourth quarter of 2009 were $671.3 million compared to $638.2 million for the third quarter of 2009. For the year ended December 31, 2009, mortgage loans originated for sale were a record $3.7 billion compared to $1.4 billion for 2008. Net mortgage banking income totaled $9.2 million for the fourth quarter of 2009, up $10.1 million from a third quarter 2009 net loss of $0.9 million and up $10.4 million from a $1.2 million loss in the fourth quarter of 2008. Fourth quarter 2009 mortgage banking results included a $0.7 million valuation recovery related to mortgage servicing rights, compared to a valuation charge of $4.7 million in the third quarter of 2009 and a $7.2 million valuation charge in the fourth quarter of 2008.
Total noninterest expense for the fourth quarter of 2009 was $159.0 million, up $17.9 million from $141.1 million in the third quarter of 2009, and up $10.2 million from $148.8 million in the fourth quarter of 2008. The increase over the third quarter of 2009 was primarily due to a $10.3 million increase in the reserve for unfunded commitments, increased spending for legal and professional fees, and increased foreclosure/OREO costs due to the increased levels of foreclosure and problem credits, in aggregate representing an increase of $5.2 million over similar expenses in the third quarter of 2009. The efficiency ratio for 2009 was 55.73%, compared to 52.41% for 2008.
CASH DIVIDEND
At its January 8, 2010 meeting, the Board of Directors approved a quarterly cash dividend of $0.01 per common share. The quarterly cash dividend will be paid on February 17, 2010 to shareholders of record on February 8, 2010.
ABOUT ASSOCIATED BANC-CORP
Associated Banc-Corp, headquartered in Green Bay, Wis., is a diversified bank holding company with total assets of $23 billion. Associated has 291 banking offices serving approximately 160 communities in Wisconsin, Illinois, and Minnesota. The Company offers a full range of traditional banking services and a variety of other financial products and services. More information about Associated Banc-Corp is available at www.associatedbank.com.
Statements made in this document that are not purely historical are forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995. This includes any statements regarding management’s plans, objectives, or goals for future operations, products or services, and forecasts of its revenues, earnings, or other measures of performance. Forward-looking statements are based on current management expectations and, by their nature, are subject to risks and uncertainties. These statements may be identified by the use of words such as “believe,” “expect,” “anticipate,” “plan,” “estimate,” “should,” “will,” “intend,” or similar expressions. Outcomes related to such statements are subject to numerous risk factors and uncertainties including those listed in the Company’s Annual Report filed on Form 10-K as updated by Form 10-Q for the three months ended September 30, 2009.
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Consolidated Balance Sheets (Unaudited)
Associated Banc-Corp
                         
    December 31,     December 31,     Dec09 vs Dec08  
(in thousands)   2009     2008     % Change  
 
Assets
                        
Cash and due from banks
   $ 770,816     $ 533,338       44.5 %
Interest-bearing deposits in other financial institutions
     26,091       12,649       106.3 %
Federal funds sold and securities purchased under agreements to resell
     23,785       24,741       (3.9 %)
Investment securities available for sale, at fair value
     5,835,533       5,143,414       13.5 %
Federal Home Loan Bank and Federal Reserve Bank stocks, at cost
     181,316       206,003       (12.0 %)
Loans held for sale
     81,238       87,084       (6.7 %)
Loans
     14,128,625       16,283,908       (13.2 %)
Allowance for loan losses
     (573,533 )     (265,378 )     116.1 %
 
                    
Loans, net
     13,555,092       16,018,530       (15.4 %)
Premises and equipment, net
     186,564       190,942       (2.3 %)
Goodwill
     929,168       929,168       0.0 %
Other intangible assets, net
     92,807       80,165       15.8 %
Other assets
     1,191,732       966,033       23.4 %
 
                    
Total assets
   $ 22,874,142     $ 24,192,067       (5.4 %)
 
                    
 
                        
Liabilities and Stockholders’ Equity
                        
Noninterest-bearing deposits
   $ 3,274,973     $ 2,814,079       16.4 %
Interest-bearing deposits, excluding Brokered CDs
     13,311,672       11,551,181       15.2 %
Brokered CDs
     141,968       789,536       (82.0 %)
 
                    
Total deposits
     16,728,613       15,154,796       10.4 %
Short-term borrowings
     1,226,853       3,703,936       (66.9 %)
Long-term funding
     1,953,998       1,861,647       5.0 %
Accrued expenses and other liabilities
     226,070       595,185       (62.0 %)
 
                    
Total liabilities
     20,135,534       21,315,564       (5.5 %)
Stockholders’ Equity
                        
Preferred equity
     511,107       508,008       0.6 %
Common stock
     1,284       1,281       0.2 %
Surplus
     1,082,335       1,073,218       0.8 %
Retained earnings
     1,081,156       1,293,941       (16.4 %)
Accumulated other comprehensive income
     63,432       55       N/M  
Treasury stock
     (706 )     —       N/M  
 
                    
Total stockholders’ equity
     2,738,608       2,876,503       (4.8 %)
 
                    
Total liabilities and stockholders’ equity
   $ 22,874,142     $ 24,192,067       (5.4 %)
 
                    
N/M = Not meaningful.

 

 

Consolidated Statements of Income (Unaudited)
Associated Banc-Corp
                                                 
    For The Three Months Ended             For The Year Ended,        
    December 31,     Quarter     December 31,     Year-to-Date  
(in thousands, except per share amounts)   2009     2008     % Change     2009     2008     % Change  
 
Interest Income
                                                
Interest and fees on loans
   $ 172,624     $ 230,872       (25.2 %)   $ 752,265     $ 952,653       (21.0 %)
Interest and dividends on investment securities and deposits in other financial institutions:
                                                
Taxable
     48,567       38,032       27.7 %     193,031       133,471       44.6 %
Tax-exempt
     8,987       9,811       (8.4 %)     35,798       39,733       (9.9 %)
Interest on federal funds sold and securities purchased under agreements to resell
     32       154       (79.2 %)     162       852       (81.0 %)
 
                                        
Total interest income
     230,210       278,869       (17.4 %)     981,256       1,126,709       (12.9 %)
Interest Expense
                                                
Interest on deposits
     31,471       56,402       (44.2 %)     160,874       263,306       (38.9 %)
Interest on short-term borrowings
     3,062       10,090       (69.7 %)     16,199       86,584       (81.3 %)
Interest on long-term funding
     17,324       20,595       (15.9 %)     78,178       80,671       (3.1 %)
 
                                        
Total interest expense
     51,857       87,087       (40.5 %)     255,251       430,561       (40.7 %)
 
                                        
Net Interest Income
     178,353       191,782       (7.0 %)     726,005       696,148       4.3 %
Provision for loan losses
     394,789       65,044       507.0 %     750,645       202,058       271.5 %
 
                                        
Net interest income (loss) after provision for loan losses
     (216,436 )     126,738       (270.8 %)     (24,640 )     494,090       (105.0 %)
Noninterest Income
                                                
Trust service fees
     9,906       8,248       20.1 %     36,009       38,420       (6.3 %)
Service charges on deposit accounts
     29,213       30,946       (5.6 %)     116,918       118,368       (1.2 %)
Card-based and other nondeposit fees
     12,359       12,297       0.5 %     45,977       48,540       (5.3 %)
Retail commissions
     15,296       15,541       (1.6 %)     60,678       62,588       (3.1 %)
Mortgage banking, net
     9,227       (1,227 )     (852.0 %)     40,882       14,684       178.4 %
Capital market fees, net
     291       (33 )     (981.8 %)     5,536       7,390       (25.1 %)
Bank owned life insurance income
     3,310       4,711       (29.7 %)     16,032       19,804       (19.0 %)
Asset sale (losses), net
     (1,551 )     (1,054 )     47.2 %     (4,071 )     (1,668 )     144.1 %
Investment securities gains (losses), net
     (395 )     (35,298 )     N/M       8,774       (52,541 )     N/M  
Other
     7,078       6,943       1.9 %     24,226       30,065       (19.4 %)
 
                                        
Total noninterest income
     84,734       41,074       106.3 %     350,961       285,650       22.9 %
Noninterest Expense
                                                
Personnel expense
     72,620       77,374       (6.1 %)     304,390       309,478       (1.6 %)
Occupancy
     12,170       13,134       (7.3 %)     49,341       50,461       (2.2 %)
Equipment
     4,551       4,785       (4.9 %)     18,385       19,123       (3.9 %)
Data processing
     7,728       7,446       3.8 %     30,893       30,451       1.5 %
Business development and advertising
     4,443       6,047       (26.5 %)     18,033       21,400       (15.7 %)
Other intangible amortization
     1,386       1,564       (11.4 %)     5,543       6,269       (11.6 %)
Legal and professional fees
     6,386       5,311       20.2 %     19,562       14,566       34.3 %
Foreclosure/OREO expense
     10,852       6,716       61.6 %     38,129       13,685       178.6 %
FDIC expense
     9,618       930       N/M       41,934       2,524       N/M  
Other
     29,260       25,443       15.0 %     85,210       89,503       (4.8 %)
 
                                        
Total noninterest expense
     159,014       148,750       6.9 %     611,420       557,460       9.7 %
 
                                        
Income (Loss) before income taxes
     (290,716 )     19,062       N/M       (285,099 )     222,280       N/M  
Income tax expense (benefit)
     (117,479 )     2,203       N/M       (153,240 )     53,828       N/M  
 
                                        
Net income (loss)
     (173,237 )     16,859       N/M       (131,859 )     168,452       (178.3 %)
Preferred stock dividends and discount
     7,354       3,250       126.3 %     29,348       3,250       N/M  
 
                                        
Net income (loss) available to common equity
   $ (180,591 )   $ 13,609       N/M     $ (161,207 )   $ 165,202       (197.6 %)
 
                                        
 
                                                
Earnings (Loss) Per Common Share:
                                                
Basic
   $ (1.41 )   $ 0.11       N/M     $ (1.26 )   $ 1.29       (197.7 %)
Diluted
   $ (1.41 )   $ 0.11       N/M     $ (1.26 )   $ 1.29       (197.7 %)
 
                                                
Average Common Shares Outstanding:
                                                
Basic
     127,869       127,717       0.1 %     127,858       127,501       0.3 %
Diluted
     127,869       127,810       0.0 %     127,858       127,775       0.1 %
N/M = Not meaningful.

 

 

Consolidated Statements of Income (Unaudited) — Quarterly Trend
Associated Banc-Corp
                                         
(in thousands, except per share amounts)   4Q09     3Q09     2Q09     1Q09     4Q08  
 
Interest Income
                                        
Interest and fees on loans
   $ 172,624     $ 183,264     $ 194,352     $ 202,025     $ 230,872  
Interest and dividends on investment securities and deposits in other financial institutions:
                                        
Taxable
     48,567       46,873       46,688       50,903       38,032  
Tax-exempt
     8,987       8,498       8,819       9,494       9,811  
Interest on federal funds sold and securities purchased under agreements to resell
     32       16       51       63       154  
 
                              
Total interest income
     230,210       238,651       249,910       262,485       278,869  
Interest Expense
                                        
Interest on deposits
     31,471       37,811       44,993       46,599       56,402  
Interest on short-term borrowings
     3,062       2,895       5,088       5,154       10,090  
Interest on long-term funding
     17,324       18,709       20,691       21,454       20,595  
 
                              
Total interest expense
     51,857       59,415       70,772       73,207       87,087  
 
                              
Net Interest Income
     178,353       179,236       179,138       189,278       191,782  
Provision for loan losses
     394,789       95,410       155,022       105,424       65,044  
 
                              
Net interest income (loss) after provision for loan losses
     (216,436 )     83,826       24,116       83,854       126,738  
Noninterest Income
                                        
Trust service fees
     9,906       9,057       8,569       8,477       8,248  
Service charges on deposit accounts
     29,213       30,829       29,671       27,205       30,946  
Card-based and other nondeposit fees
     12,359       11,586       11,858       10,174       12,297  
Retail commissions
     15,296       15,041       14,829       15,512       15,541  
 
                              
Total core fee-based revenue
     66,774       66,513       64,927       61,368       67,032  
 
                                        
Mortgage banking, net
     9,227       (909 )     28,297       4,267       (1,227 )
Capital market fees, net
     291       226       2,393       2,626       (33 )
Bank owned life insurance income
     3,310       3,789       3,161       5,772       4,711  
Asset sale (losses), net
     (1,551 )     (126 )     (1,287 )     (1,107 )     (1,054 )
Investment securities gains (losses), net
     (395 )     (42 )     (1,385 )     10,596       (35,298 )
Other
     7,078       5,858       5,835       5,455       6,943  
 
                              
Total noninterest income
     84,734       75,309       101,941       88,977       41,074  
Noninterest Expense
                                        
Personnel expense
     72,620       73,501       81,171       77,098       77,374  
Occupancy
     12,170       11,949       12,341       12,881       13,134  
Equipment
     4,551       4,575       4,670       4,589       4,785  
Data processing
     7,728       7,442       8,126       7,597       7,446  
Business development and advertising
     4,443       3,910       4,943       4,737       6,047  
Other intangible amortization
     1,386       1,386       1,385       1,386       1,564  
Legal and professional fees
     6,386       3,349       5,586       4,241       5,311  
Foreclosure/OREO expense
     10,852       8,688       13,576       5,013       6,716  
FDIC expense
     9,618       8,451       18,090       5,775       930  
Other
     29,260       17,860       20,143       17,947       25,443  
 
                              
Total noninterest expense
     159,014       141,111       170,031       141,264       148,750  
 
                              
Income (Loss) before income taxes
     (290,716 )     18,024       (43,974 )     31,567       19,062  
Income tax expense (benefit)
     (117,479 )     2,030       (26,633 )     (11,158 )     2,203  
 
                              
Net income (loss)
     (173,237 )     15,994       (17,341 )     42,725       16,859  
Preferred stock dividends and discount
     7,354       7,342       7,331       7,321       3,250  
 
                              
Net income (loss) available to common equity
   $ (180,591 )   $ 8,652     $ (24,672 )   $ 35,404     $ 13,609  
 
                              
 
                                        
Earnings (Loss) Per Common Share:
                                        
Basic
   $ (1.41 )   $ 0.07     $ (0.19 )   $ 0.28     $ 0.11  
Diluted
   $ (1.41 )   $ 0.07     $ (0.19 )   $ 0.28     $ 0.11  
 
                                        
Average Common Shares Outstanding:
                                        
Basic
     127,869       127,863       127,861       127,839       127,717  
Diluted
     127,869       127,863       127,861       127,845       127,810  

 

 

Selected Quarterly Information
Associated Banc-Corp
                                                         
(in thousands, except per share and full time                            
equivalent employee data)   YTD 2009   YTD 2008   4th Qtr 2009   3rd Qtr 2009   2nd Qtr 2009   1st Qtr 2009   4th Qtr 2008
 
Summary of Operations
                                                        
Net interest income
   $ 726,005     $ 696,148     $ 178,353     $ 179,236     $ 179,138     $ 189,278     $ 191,782  
Provision for loan losses
     750,645       202,058       394,789       95,410       155,022       105,424       65,044  
Asset sale gains (losses), net
     (4,071 )     (1,668 )     (1,551 )     (126 )     (1,287 )     (1,107 )     (1,054 )
Investment securities gains (losses), net
     8,774       (52,541 )     (395 )     (42 )     (1,385 )     10,596       (35,298 )
Noninterest income (excluding securities & asset gains)
     346,258       339,859       86,680       75,477       104,613       79,488       77,426  
Noninterest expense
     611,420       557,460       159,014       141,111       170,031       141,264       148,750  
Income (loss) before income taxes
     (285,099 )     222,280       (290,716 )     18,024       (43,974 )     31,567       19,062  
Income tax expense (benefit)
     (153,240 )     53,828       (117,479 )     2,030       (26,633 )     (11,158 )     2,203  
Net income (loss)
     (131,859 )     168,452       (173,237 )     15,994       (17,341 )     42,725       16,859  
Net income (loss) available to common equity
     (161,207 )     165,202       (180,591 )     8,652       (24,672 )     35,404       13,609  
Taxable equivalent adjustment
     24,820       27,711       6,188       5,938       6,150       6,544       6,902  
 
Per Common Share Data
                                                        
Net income (loss):
                                                        
Basic
   $ (1.26 )   $ 1.29     $ (1.41 )   $ 0.07     $ (0.19 )   $ 0.28     $ 0.11  
Diluted
     (1.26 )     1.29       (1.41 )     0.07       (0.19 )     0.28       0.11  
Dividends
     0.47       1.27       0.05       0.05       0.05       0.32       0.32  
Market Value:
                                                        
High
   $ 21.39     $ 29.23     $ 13.00     $ 12.67     $ 19.00     $ 21.39     $ 24.21  
Low
     9.21       14.85       10.37       9.21       12.50       10.60       15.72  
Close
     11.01       20.93       11.01       11.42       12.50       15.45       20.93  
Book value
     17.42       18.54       17.42       18.88       18.49       18.68       18.54  
Tangible book value
     9.93       10.99       9.93       11.38       10.97       11.15       10.99  
 
Performance Ratios (annualized)
                                                        
Earning assets yield
     4.72 %     5.82 %     4.59 %     4.62 %     4.70 %     4.94 %     5.57 %
Interest-bearing liabilities rate
     1.45       2.53       1.24       1.36       1.57       1.61       2.00  
Net interest margin
     3.52       3.65       3.59       3.50       3.40       3.59       3.88  
Return on average assets
     (0.56 )     0.76       (3.02 )     0.27       (0.29 )     0.71       0.30  
Return on average equity
     (4.54 )     6.95       (23.72 )     2.19       (2.40 )     5.98       2.58  
Return on average tangible common equity (1)
     (11.25 )     11.81       (50.16 )     2.39       (6.88 )     10.05       3.83  
Efficiency ratio (2)
     55.73       52.41       58.63       54.14       58.65       51.31       53.87  
Effective tax rate (benefit)
     (53.75 )     24.22       (40.41 )     11.26       (60.57 )     (35.35 )     11.56  
Dividend payout ratio (3)
     N/M       97.69       N/M       71.43       N/M       114.29       290.91  
 
Average Balances
                                                        
Assets
   $ 23,609,471     $ 22,037,963     $ 22,773,576     $ 23,362,954     $ 24,064,567     $ 24,255,783     $ 22,646,421  
Earning assets
     21,337,382       19,839,706       20,499,225       21,063,016       21,847,267       21,959,077       20,436,483  
Interest-bearing liabilities
     17,659,282       17,019,832       16,663,947       17,412,341       18,125,389       18,457,879       17,363,481  
Loans
     15,595,636       16,080,565       14,605,107       15,248,895       16,122,063       16,430,347       16,285,881  
Deposits
     15,959,046       13,812,072       16,407,034       16,264,181       16,100,686       15,045,976       14,395,626  
Wholesale funding
     4,584,909       5,654,373       3,332,642       4,067,830       4,876,970       6,098,266       5,496,248  
Common stockholders’ equity
     2,393,475       2,366,453       2,387,534       2,394,410       2,400,664       2,391,325       2,376,639  
Stockholders’ equity
     2,902,911       2,423,332       2,898,132       2,904,210       2,909,700       2,899,603       2,602,917  
Common stockholders’ equity/assets
     10.14 %     10.74 %     10.48 %     10.25 %     9.98 %     9.86 %     10.49 %
Stockholders’ equity / assets
     12.30 %     11.00 %     12.73 %     12.43 %     12.09 %     11.95 %     11.49 %
 
At Period End
                                                        
Assets
                   $ 22,874,142     $ 22,881,527     $ 24,013,567     $ 24,349,725     $ 24,192,067  
Loans
                     14,128,625       14,765,597       15,310,107       15,917,952       16,283,908  
Allowance for loan losses
                     573,533       412,530       407,167       313,228       265,378  
Goodwill
                     929,168       929,168       929,168       929,168       929,168  
Mortgage servicing rights, net
                     63,753       61,066       59,762       39,754       45,568  
Other intangible assets
                     29,054       30,440       31,826       33,211       34,597  
Deposits
                     16,728,613       16,446,109       16,320,391       15,873,189       15,154,796  
Wholesale funding
                     3,180,851       3,279,100       4,474,542       5,326,734       5,565,583  
Stockholders’ equity
                     2,738,608       2,924,659       2,873,768       2,897,169       2,876,503  
Stockholders’ equity / assets
                     11.97 %     12.78 %     11.97 %     11.90 %     11.89 %
Tangible common equity / tangible assets (4)
                     5.79 %     6.64 %     6.09 %     6.10 %     6.05 %
Tangible equity/tangible assets (5)
                     8.12 %     8.96 %     8.30 %     8.27 %     8.23 %
Tier 1 risk-based capital ratio
                     12.52 %     13.14 %     12.45 %     11.93 %     11.91 %
Tier 1 leverage ratio
                     8.76 %     9.35 %     9.06 %     9.06 %     9.75 %
Total risk-based capital ratio
                     14.24 %     14.83 %     14.35 %     13.79 %     13.76 %
Shares outstanding, end of period
                     127,876       127,864       127,861       127,860       127,762  
 
Selected trend information
                                                        
Average full time equivalent employees
                     4,802       5,004       5,116       5,143       5,109  
Trust assets under management, at market value
                   $ 5,300,000     $ 5,200,000     $ 5,000,000     $ 4,800,000     $ 5,100,000  
Mortgage loans originated for sale during period
                     671,305       638,229       1,335,175       1,079,732       247,465  
Mortgage portfolio serviced for others
                     7,667,000       7,473,000       6,904,000       6,582,000       6,606,000  
Mortgage servicing rights, net / Portfolio serviced for others
                     0.83 %     0.82 %     0.87 %     0.60 %     0.69 %
 
N/M = Not meaningful.
 
(1)   Return on average tangible common equity = Net income available to common equity divided by average common equity excluding average goodwill and other intangible assets. This is a non-GAAP financial measure.
 
(2)   Efficiency ratio = Noninterest expense divided by sum of taxable equivalent net interest income plus noninterest income, excluding investment securities gains, net, and asset sales gains, net.
 
    This is a non-GAAP financial measure.
 
(3)   Ratio is based upon basic earnings per common share.
 
(4)   Tangible common equity to tangible assets = Common stockholders’ equity excluding goodwill and other intangible assets divided by assets excluding goodwill and other intangible assets.
 
    This is a non-GAAP financial measure.
 
(5)   Tangible equity to tangible assets = Stockholders’ equity excluding goodwill and other intangible assets divided by assets excluding goodwill and other intangible assets.
 
    This is a non-GAAP financial measure.

 

 

Selected Asset Quality Information
Associated Banc-Corp
                                                 
    Three months ended   Year ended
    December 31,   December 31,
(in thousands)   2009   2008   % Change   2009   2008   % Change
         
Allowance for Loan Losses
                                                
Beginning balance
   $ 412,530     $ 246,189       67.6 %   $ 265,378     $ 200,570       32.3 %
Provision for loan losses
     394,789       65,044       507.0 %     750,645       202,058       271.5 %
Charge offs
     (236,367 )     (47,750 )     395.0 %     (452,206 )     (145,826 )     210.1 %
Recoveries
     2,581       1,895       36.2 %     9,716       8,576       13.3 %
                         
Net charge offs
     (233,786 )     (45,855 )     409.8 %     (442,490 )     (137,250 )     222.4 %
                         
Ending balance
   $ 573,533     $ 265,378       116.1 %   $ 573,533     $ 265,378       116.1 %
                         
                                                         
                    Dec09 vs Sep09                           Dec09 vs Dec08
Net Charge Offs   Dec 31, 2009   Sept 30, 2009   %Change   Jun 30, 2009   Mar 31, 2009   Dec 31, 2008   %Change
         
Commercial, financial & agricultural
   $ 42,940     $ 57,480       (25.3 %)   $ 19,367     $ 35,890     $ 15,457       177.8 %
Commercial real estate
     40,550       4,449       811.4 %     8,382       2,858       3,435       1080.5 %
Real estate — construction
     124,659       12,837       871.1 %     16,249       3,452       17,698       604.4 %
Lease financing
     261       319       (18.2 %)     988       2       202       29.2 %
                         
Total commercial
     208,410       75,085       177.6 %     44,986       42,202       36,792       466.5 %
Home equity
     16,503       11,202       47.3 %     10,343       10,742       5,958       177.0 %
Installment
     2,099       2,433       (13.7 %)     2,321       1,986       2,009       4.5 %
                         
Total retail
     18,602       13,635       36.4 %     12,664       12,728       7,967       133.5 %
Residential mortgage
     6,774       1,327       410.5 %     3,433       2,644       1,096       518.1 %
                         
Total net charge offs
   $ 233,786     $ 90,047       159.6 %   $ 61,083     $ 57,574     $ 45,855       409.8 %
                         
                                         
Net Charge Offs to Average Loans   Dec 31, 2009   Sept 30, 2009   Jun 30, 2009   Mar 31, 2009   Dec 31, 2008
         
Commercial, financial & agricultural
     4.90 %     6.11 %     1.91 %     3.41 %     1.43 %
Commercial real estate
     4.12 %     0.45 %     0.92 %     0.32 %     0.39 %
Real estate — construction
     31.85 %     2.85 %     3.07 %     0.62 %     2.99 %
Lease financing
     1.05 %     1.19 %     3.49 %     0.01 %     0.65 %
         
Total commercial
     9.15 %     3.13 %     1.82 %     1.67 %     1.42 %
Home equity
     2.54 %     1.70 %     1.52 %     1.53 %     0.82 %
Installment
     0.94 %     1.13 %     1.10 %     0.94 %     0.96 %
         
Total retail
     2.13 %     1.56 %     1.42 %     1.39 %     0.85 %
Residential mortgage
     1.27 %     0.23 %     0.53 %     0.43 %     0.20 %
         
Total net charge offs
     6.35 %     2.34 %     1.52 %     1.42 %     1.12 %
         
                                                         
                    Dec09 vs Sep09                           Dec09 vs Dec08
Credit Quality   Dec 31, 2009   Sept 30, 2009   % Change   Jun 30, 2009   Mar 31, 2009   Dec 31, 2008   % Change
         
Nonaccrual loans
   $ 1,077,799     $ 845,320       27.5 %   $ 700,514     $ 433,246     $ 326,857       229.7 %
Loans 90 or more days past due and still accruing
     24,981       23,174       7.8 %     19,785       16,002       13,811       80.9 %
Restructured loans
     19,037       17,256       10.3 %     13,089       2,927       —       N/M  
                         
Total nonperforming loans
     1,121,817       885,750       26.7 %     733,388       452,175       340,668       229.3 %
Other real estate owned (OREO)
     68,441       60,010       14.0 %     51,633       54,883       48,710       40.5 %
                         
Total nonperforming assets
   $ 1,190,258     $ 945,760       25.9 %   $ 785,021     $ 507,058     $ 389,378       205.7 %
                         
Provision for loan losses
     394,789       95,410       313.8 %     155,022       105,424       65,044       507.0 %
Net charge offs
     233,786       90,047       159.6 %     61,083       57,574       45,855       409.8 %
 
                                                        
Allowance for loan losses / loans
     4.06 %     2.79 %             2.66 %     1.97 %     1.63 %        
Allowance for loan losses / nonperforming loans
     51.13       46.57               55.52       69.27       77.90          
Nonperforming loans / total loans
     7.94       6.00               4.79       2.84       2.09          
Nonperforming assets / total loans plus OREO
     8.38       6.38               5.11       3.17       2.38          
Nonperforming assets / total assets
     5.20       4.13               3.27       2.08       1.61          
Net charge offs / average loans (annualized)
     6.35       2.34               1.52       1.42       1.12          
Year-to-date net charge offs / average loans
     2.84       1.75               1.47       1.42       0.85          
 
                                                        
Nonperforming loans by type:
                                                        
Commercial, financial & agricultural
   $ 234,418     $ 209,843       11.7 %   $ 187,943     $ 102,257     $ 104,664       124.0 %
Commercial real estate
     307,478       213,736       43.9 %     165,929       100,838       62,423       392.6 %
Real estate — construction
     413,360       301,844       36.9 %     264,402       152,008       90,048       359.0 %
Lease financing
     19,506       18,814       3.7 %     1,929       1,707       187       N/M  
                         
Total commercial
     974,762       744,237       31.0 %     620,203       356,810       257,322       278.8 %
Home equity
     44,257       45,905       (3.6 %)     38,474       35,224       31,035       42.6 %
Installment
     7,577       7,387       2.6 %     7,545       6,755       7,155       5.9 %
                         
Total retail
     51,834       53,292       (2.7 %)     46,019       41,979       38,190       35.7 %
Residential mortgage
     95,221       88,221       7.9 %     67,166       53,386       45,156       110.9 %
                         
Total nonperforming loans
   $ 1,121,817     $ 885,750       26.7 %   $ 733,388     $ 452,175     $ 340,668       229.3 %
                         
 
                                                        
Loans past due 30-89 days
   $ 240,755     $ 175,492       37.2 %   $ 209,323     $ 245,854     $ 190,112       26.6 %
                                                         
                    Dec09 vs Sep09                           Dec09 vs Dec08
Potential Problem Loans   Dec 31, 2009   Sept 30, 2009   % Change   Jun 30, 2009   Mar 31, 2009   Dec 31, 2008   % Change
         
Commercial, financial & agricultural
   $ 563,836     $ 481,034       17.2 %   $ 428,550     $ 365,069     $ 363,285       55.2 %
Commercial real estate
     598,137       588,013       1.7 %     462,103       280,479       243,617       145.5 %
Real estate — construction
     391,105       462,029       (15.4 %)     481,467       347,968       312,144       25.3 %
Lease financing
     8,367       9,572       (12.6 %)     24,934       2,938       1,713       388.4 %
                         
Total commercial
     1,561,445       1,540,648       1.3 %     1,397,054       996,454       920,759       69.6 %
Home equity
     13,400       15,933       (15.9 %)     13,626       5,935       8,900       50.6 %
Installment
     1,524       1,908       (20.1 %)     1,043       1,132       889       71.4 %
                         
Total retail
     14,924       17,841       (16.3 %)     14,669       7,067       9,789       52.5 %
Residential mortgage
     19,150       15,414       24.2 %     14,448       13,030       7,254       164.0 %
                         
Total potential problem loans
   $ 1,595,519     $ 1,573,903       1.4 %   $ 1,426,171     $ 1,016,551     $ 937,802       70.1 %
                         
N/M — Not meaningful.

 

 

Net Interest Income Analysis — Taxable Equivalent Basis
Associated Banc-Corp
                                                 
    Year ended December 31, 2009     Year ended December 31, 2008  
    Average     Interest     Average     Average     Interest     Average  
(in thousands)   Balance     Income / Expense     Yield / Rate     Balance     Income / Expense     Yield / Rate  
         
Earning assets:
                                                
Loans: (1) (2) (3)
                                                
Commercial
   $ 9,673,513     $ 435,054       4.50 %   $ 10,387,727     $ 600,079       5.78 %
Residential mortgage
     2,369,719       125,475       5.29       2,200,145       129,077       5.87  
Retail
     3,552,404       195,078       5.49       3,492,693       227,368       6.51  
                         
Total loans
     15,595,636       755,607       4.84       16,080,565       956,524       5.95  
Investments and other
     5,741,746       250,469       4.36       3,759,141       197,896       5.26  
                         
Total earning assets
     21,337,382       1,006,076       4.72       19,839,706       1,154,420       5.82  
 
                                            
Other assets, net
     2,272,089                       2,198,257                  
Total assets
   $ 23,609,471                     $ 22,037,963                  
 
                                            
 
                                                
Interest-bearing liabilities:
                                                
Savings deposits
   $ 880,544     $ 1,379       0.16 %   $ 890,811     $ 4,021       0.45 %
Interest-bearing demand deposits
     2,154,745       4,794       0.22       1,752,991       15,061       0.86  
Money market deposits
     5,390,782       42,978       0.80       4,231,678       79,057       1.87  
Time deposits, excluding Brokered CDs
     3,880,878       102,490       2.64       3,957,174       148,294       3.75  
                         
Total interest-bearing deposits, excluding Brokered CDs
     12,306,949       151,641       1.23       10,832,654       246,433       2.27  
Brokered CDs
     767,424       9,233       1.20       532,805       16,873       3.17  
                         
Total interest-bearing deposits
     13,074,373       160,874       1.23       11,365,459       263,306       2.32  
Wholesale funding
     4,584,909       94,377       2.06       5,654,373       167,255       2.96  
                         
Total interest-bearing liabilities
     17,659,282       255,251       1.45       17,019,832       430,561       2.53  
Noninterest-bearing demand deposits
     2,884,673                       2,446,613                  
Other liabilities
     162,605                       148,186                  
Stockholders’ equity
     2,902,911                       2,423,332                  
 
                                            
Total liabilities and stockholders’ equity
   $ 23,609,471                     $ 22,037,963                  
 
                                            
 
                                            
Net interest income and rate spread (1)
           $ 750,825       3.27 %           $ 723,859       3.29 %
 
                                            
Net interest margin (1)
                     3.52 %                     3.65 %
Taxable equivalent adjustment
           $ 24,820                     $ 27,711          
 
                                            
                                                 
    Three months ended December 31, 2009     Three months ended December 31, 2008  
    Average     Interest     Average     Average     Interest     Average  
    Balance     Income / Expense     Yield / Rate     Balance     Income / Expense     Yield / Rate  
         
Earning assets:
                                                
Loans: (1) (2) (3)
                                                
Commercial
   $ 9,037,436     $ 100,124       4.40 %   $ 10,333,624     $ 144,181       5.55 %
Residential mortgage
     2,108,755       27,316       5.17       2,218,470       31,300       5.63  
Retail
     3,458,916       45,980       5.29       3,733,787       56,406       6.02  
                         
Total loans
     14,605,107       173,420       4.72       16,285,881       231,887       5.67  
Investments and other
     5,894,118       62,978       4.27       4,150,602       53,884       5.19  
                         
Total earning assets
     20,499,225       236,398       4.59       20,436,483       285,771       5.57  
Other assets, net
     2,274,351                       2,209,938                  
 
                                            
Total assets
   $ 22,773,576                     $ 22,646,421                  
 
                                            
 
Interest-bearing liabilities:
                                                
Savings deposits
   $ 869,996     $ 344       0.16 %   $ 880,155     $ 903       0.41 %
Interest-bearing demand deposits
     2,605,242       1,630       0.25       1,637,383       1,930       0.47  
Money market deposits
     5,658,251       8,463       0.59       4,889,011       17,480       1.42  
Time deposits, excluding Brokered CDs
     3,671,087       20,215       2.18       3,951,360       32,464       3.27  
                         
Total interest-bearing deposits, excluding Brokered CDs
     12,804,576       30,652       0.95       11,357,909       52,777       1.85  
Brokered CDs
     526,729       819       0.62       509,324       3,625       2.83  
                         
Total interest-bearing deposits
     13,331,305       31,471       0.94       11,867,233       56,402       1.89  
Wholesale funding
     3,332,642       20,386       2.43       5,496,248       30,685       2.22  
                         
Total interest-bearing liabilities
     16,663,947       51,857       1.24       17,363,481       87,087       2.00  
Noninterest-bearing demand deposits
     3,075,729                       2,528,393                  
Other liabilities
     135,768                       151,630                  
Stockholders’ equity
     2,898,132                       2,602,917                  
 
                                            
Total liabilities and stockholders’ equity
   $ 22,773,576                     $ 22,646,421                  
 
                                            
 
                                            
Net interest income and rate spread (1)
           $ 184,541       3.35 %           $ 198,684       3.57 %
 
                                            
Net interest margin (1)
                     3.59 %                     3.88 %
Taxable equivalent adjustment
           $ 6,188                     $ 6,902          
 
                                            
 
(1)   The yield on tax exempt loans and securities is computed on a taxable equivalent basis using a tax rate of 35% for all periods presented and is net of the effects of certain disallowed interest deductions.
 
(2)   Nonaccrual loans and loans held for sale have been included in the average balances.
 
(3)   Interest income includes net loan fees.

 

 

Net Interest Income Analysis — Taxable Equivalent Basis
Associated Banc-Corp
                                                 
    Three months ended December 31, 2009     Three months ended September 30, 2009  
    Average     Interest     Average     Average     Interest     Average  
(in thousands)   Balance     Income / Expense     Yield / Rate     Balance     Income / Expense     Yield / Rate  
         
Earning assets:
                                                
Loans: (1) (2) (3)
                                                
Commercial
   $ 9,037,436     $ 100,124       4.40 %   $ 9,503,565     $ 106,506       4.45 %
Residential mortgage
     2,108,755       27,316       5.17       2,270,025       29,928       5.26  
Retail
     3,458,916       45,980       5.29       3,475,305       47,670       5.46  
                         
Total loans
     14,605,107       173,420       4.72       15,248,895       184,104       4.80  
Investments and other
     5,894,118       62,978       4.27       5,814,121       60,485       4.16  
                         
Total earning assets
     20,499,225       236,398       4.59       21,063,016       244,589       4.62  
Other assets, net
     2,274,351                       2,299,938                  
 
                                            
Total assets
   $ 22,773,576                     $ 23,362,954                  
 
                                            
 
                                                
Interest-bearing liabilities:
                                                
Savings deposits
   $ 869,996     $ 344       0.16 %   $ 887,176     $ 353       0.16 %
Interest-bearing demand deposits
     2,605,242       1,630       0.25       2,330,976       1,298       0.22  
Money market deposits
     5,658,251       8,463       0.59       5,540,272       10,538       0.75  
Time deposits, excluding Brokered CDs
     3,671,087       20,215       2.18       3,847,942       23,998       2.47  
                         
Total interest-bearing deposits, excluding Brokered CDs
     12,804,576       30,652       0.95       12,606,366       36,187       1.14  
Brokered CDs
     526,729       819       0.62       738,145       1,624       0.87  
                         
Total interest-bearing deposits
     13,331,305       31,471       0.94       13,344,511       37,811       1.12  
Wholesale funding
     3,332,642       20,386       2.43       4,067,830       21,604       2.11  
                         
Total interest-bearing liabilities
     16,663,947       51,857       1.24       17,412,341       59,415       1.36  
Noninterest-bearing demand deposits
     3,075,729                       2,919,670                  
Other liabilities
     135,768                       126,733                  
Stockholders’ equity
     2,898,132                       2,904,210                  
 
                                            
Total liabilities and stockholders’ equity
   $ 22,773,576                     $ 23,362,954                  
 
                                            
 
                                            
Net interest income and rate spread (1)
           $ 184,541       3.35 %           $ 185,174       3.26 %
 
                                            
Net interest margin (1)
                     3.59 %                     3.50 %
Taxable equivalent adjustment
           $ 6,188                     $ 5,938          
 
                                            
 
(1)   The yield on tax exempt loans and securities is computed on a taxable equivalent basis using a tax rate of 35% for all periods presented and is net of the effects of certain disallowed interest deductions.
 
(2)   Nonaccrual loans and loans held for sale have been included in the average balances.
 
(3)   Interest income includes net loan fees.
Financial Summary and Comparison
Associated Banc-Corp
                                                         
                    Dec09 vs Sep09                           Dec09 vs Dec08
Period End Loan Composition   Dec 31, 2009   Sept 30, 2009   % Change   Jun 30, 2009   Mar 31, 2009   Dec 31, 2008   % Change
         
Commercial, financial & agricultural
   $ 3,450,632     $ 3,613,457       (4.5 %)   $ 3,904,925     $ 4,160,274     $ 4,388,691       (21.4 %)
Commercial real estate
     3,817,066       3,902,340       (2.2 %)     3,737,749       3,575,301       3,566,551       7.0 %
Real estate — construction
     1,397,493       1,611,857       (13.3 %)     1,963,919       2,228,090       2,260,888       (38.2 %)
Lease financing
     95,851       102,130       (6.1 %)     110,262       116,100       122,113       (21.5 %)
                         
Total commercial
     8,761,042       9,229,784       (5.1 %)     9,716,855       10,079,765       10,338,243       (15.3 %)
Home equity
     2,546,167       2,591,262       (1.7 %)     2,656,747       2,784,248       2,883,317       (11.7 %)
Installment
     873,568       885,970       (1.4 %)     844,065       853,214       827,303       5.6 %
                         
Total retail
     3,419,735       3,477,232       (1.7 %)     3,500,812       3,637,462       3,710,620       (7.8 %)
Residential mortgage
     1,947,848       2,058,581       (5.4 %)     2,092,440       2,200,725       2,235,045       (12.8 %)
                         
Total loans
   $ 14,128,625     $ 14,765,597       (4.3 %)   $ 15,310,107     $ 15,917,952     $ 16,283,908       (13.2 %)
                         
                                                         
                    Dec09 vs Sep09                           Dec09 vs Dec08
Period End Deposit Composition   Dec 31, 2009   Sept 30, 2009   % Change   Jun 30, 2009   Mar 31, 2009   Dec 31, 2008   % Change
         
Demand
   $ 3,274,973     $ 2,984,486       9.7 %   $ 2,846,570     $ 2,818,088     $ 2,814,079       16.4 %
Savings
     845,509       871,539       (3.0 %)     898,527       895,310       841,129       0.5 %
Interest-bearing demand
     3,099,358       2,395,429       29.4 %     2,242,800       1,796,724       1,796,405       72.5 %
Money market
     5,806,661       5,724,418       1.4 %     5,410,498       5,410,095       4,926,088       17.9 %
Brokered CDs
     141,968       653,090       (78.3 %)     930,582       922,491       789,536       (82.0 %)
Other time deposits
     3,560,144       3,817,147       (6.7 %)     3,991,414       4,030,481       3,987,559       (10.7 %)
                         
Total deposits
   $ 16,728,613     $ 16,446,109       1.7 %   $ 16,320,391     $ 15,873,189     $ 15,154,796       10.4 %
                         
 
                                                        
Network transaction deposits included above in interest-bearing demand and money market
   $ 1,926,539     $ 1,767,271       9.0 %   $ 1,605,722     $ 1,759,656     $ 1,530,675       25.9 %
Customer repo sweeps (a)
   $ 195,858     $ 242,575       (19.3 %)   $ 269,809     $ 333,706     $ 505,788       (61.3 %)
 
(a)   Included within short-term borrowings.