EX-99.1 2 c11488exv99w1.htm PRESS RELEASE exv99w1
 

(ASSOCIATED BANC-CORP LOGO)

     
News Release   CONTACTS:
Investors:
Joe Selner, Chief Financial Officer
920-491-7120
Media:
Cindy Moon-Mogush, Corporate Communications
920-431-8034
Associated Banc-Corp earns $2.38 per diluted share in 2006, 57 cents in fourth quarter
  •   Net income $316.6 million for 2006
 
  •   Net charge offs 12 basis points of average loans for the year
 
  •   Margin of 3.62% for 2006
 
  •   Deposits up 5% over prior year end
 
  •   Accelerated stock buyback executed in fourth quarter
     GREEN BAY, Wis. — Jan. 18, 2007 — Associated Banc-Corp (NASDAQ: ASBC) earned $0.57 per diluted share in the fourth quarter of 2006, compared to $0.64 in the fourth quarter of 2005. Net income for the fourth quarter of 2006 was $74.5 million, compared to $87.6 million for the fourth quarter of 2005.
     The fourth quarters of both years included certain items that impact comparability between the year-over-year quarters. The fourth quarter of 2006 included a $2.1 million market valuation loss on the transfer of $0.3 billion of residential mortgages to loans held for sale and $1.8 million of severance expense, while the fourth quarter of 2005 included a $5.3 million gain on the sale of $1.5 billion of its mortgage portfolio serviced for others. Excluding these items, as well as asset and investment sales gains (losses) from both quarters, earnings per share were essentially level on a comparable quarter basis.
     Associated earned $2.38 per diluted share in 2006, versus $2.43 in 2005. Net income for 2006 was $316.6 million, versus $320.2 million in 2005.
     “While the operating environment in 2006 was challenging, we made meaningful progress toward improving the quality of earnings and executing our strategic objectives. We reduced wholesale funding by nearly $2 billion, realigned resources to increase focus on markets with more
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ASBC YE 2006 earnings, add one
potential, improved fee income contribution and sustained credit quality. In addition, we aggressively managed expenses while continuing to focus on core deposit growth,” Associated Chairman and CEO Paul S. Beideman said.
     Return on average assets (ROA) and return on average equity (ROE) for 2006 were 1.50 percent and 13.89 percent, respectively. This compares to an ROA of 1.53 percent and an ROE of 15.24 percent in 2005. Return on average tangible equity (which is a non-GAAP measure that excludes the average of goodwill and other intangible assets from average equity) was 23.31 percent for 2006 compared to 23.47 percent in 2005. Book value per share rose to $17.44 as of Dec. 31, 2006, compared to $17.15 a year earlier.
     Deposits at Dec. 31, 2006, were $14.3 billion, up 5 percent over year-end 2005, with growth in noninterest-bearing demand, money market, and time deposits overcoming declines in savings and interest-bearing demand deposits. Average deposits for 2006 were up 9 percent over 2005.
     At Dec. 31, 2006, loans were $14.9 billion (impacted by a $0.3 billion transfer of residential mortgages to loans held for sale in December) compared to loans of $15.2 billion at year-end 2005. Without the transfer, loans were unchanged between year-end 2006 and 2005. Commercial, financial and agricultural loans grew $260 million, or 8 percent, and home equity loans grew $140 million, or 7 percent during 2006. These increases helped offset decreases in residential mortgages and installment loans, while commercial real estate loans were level. Average loan balances in 2006 were up 7 percent compared to 2005. At year-end 2006, the ratio of loans to deposits was 104 percent compared to 112 percent at year-end 2005.
     In 2006 net charge offs were 0.12 percent of average loans compared to net charge offs of 0.09 percent of average loans in 2005. The allowance for loan losses at Dec. 31, 2006, was 1.37 percent of total loans compared to 1.34 percent at Dec. 31, 2005.
     Associated’s net interest income for 2006 was $669.5 million, versus $672.3 million for 2005. Net interest margin was 3.62 percent for 2006, versus 3.64 percent for 2005. The company’s wholesale funding reduction strategy decreased the amount of lower-yielding securities in the investment portfolio and reduced the level of higher-costing wholesale borrowings. This, coupled with growth in average deposits, contributed to the company improving its margin in each of the last three quarters of 2006, despite the unfavorable yield curve.
     Total noninterest income was $295.5 million for 2006, up 2 percent from $291.1 million for 2005. Core fee-based revenues (including trust service fees, service charges on deposit accounts, card-based and other non-deposit fees, and retail commissions) totaled $233.0 million, up 8 percent over $215.8 million for 2005, due to a combination of increased volumes and improved pricing.
     Net mortgage banking income was $14.8 million for 2006, compared to $36.4 million in 2005. The majority of this decrease was attributable to the $2.1 million loss on market valuation associated with the fourth quarter 2006 transfer of $0.3 billion of portfolio loans to loans held for
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ASBC YE 2006 earnings, add two
sale, the $5.3 million gain on the bulk servicing sale in fourth quarter 2005, and less favorable valuation recoveries on the mortgage servicing rights asset in 2006.
     Noninterest expense grew a modest 3 percent between 2006 and 2005, including the full year impact of the acquisition of State Financial.
     The effective tax rate for 2006 was 29.60 percent, versus 31.86 percent for 2005. The decline was primarily due to the resolution of certain multi-jurisdictional tax issues, as well as changes in exposure of uncertain tax positions in 2006, both resulting in the reduction of tax liabilities and income tax expense.
     The company paid dividends of $1.14 per share in 2006, up 8 percent from $1.06 in 2005, making 2006 Associated’s 36th consecutive year of increasing dividends.
     Associated repurchased approximately 8 million shares of its common stock in 2006 at an average cost of $32.83 per share. Associated starts 2007 with an authorization to repurchase approximately 1.4 million additional shares.
     Associated will host a live conference call for investors and analysts at 3 p.m. CST today. The toll-free dial-in number for the live call is 888-694-4769. The number for international callers is 973-582-2757. Participants should ask the operator for the Associated Banc-Corp 2006 earnings call, or for call ID number 8298239. A replay of the call will be available from 6 p.m. CDT today through Feb. 1 by calling 877-519-4471 (toll-free) domestically or 973-341-3080 internationally. The call ID number, 8298239, is required to access the replay.
     Associated Banc-Corp, headquartered in Green Bay, Wis., is a diversified bank holding company with total assets of $21 billion. Associated has more than 315 banking offices serving more than 180 communities in Wisconsin, Illinois, and Minnesota. The company offers a full range of traditional banking services and a variety of other financial products and services. More information about Associated Banc-Corp is available at www.AssociatedBank.com.
     Statements made in this document that are not purely historical are forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995. This includes any statements regarding management’s plans, objectives, or goals for future operations, products or services, and forecasts of its revenues, earnings, or other measures of performance. Forward-looking statements are based on current management expectations and, by their nature, are subject to risks and uncertainties. These statements may be identified by the use of words such as “believe,” “expect,” “anticipate,” “plan,” “estimate,” “should,” “will,” “intend,” or similar expressions. Outcomes related to such statements are subject to numerous risk factors and uncertainties including those listed in the company’s Annual Report to be filed on Form 10-K.
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Six pages of tables follow.

 

 

                         
 
Consolidated Balance Sheets (Unaudited)                  
Associated Banc-Corp                  
    December 31     December 31        
(in thousands)   2006     2005     % Change  
 
Assets
                        
Cash and due from banks
   $ 458,344     $ 460,230       (0.4 %)
Interest-bearing deposits in other financial institutions
     10,505       14,254       (26.3 %)
Federal funds sold and securities purchased under agreements to resell
     13,187       17,811       (26.0 %)
Securities available for sale, at fair value
     3,436,621       4,711,605       (27.1 %)
Loans held for sale
     370,758       57,710       542.5 %
Loans
     14,881,526       15,206,464       (2.1 %)
Allowance for loan losses
     (203,481 )     (203,404 )     0.0 %
 
                    
Loans, net
     14,678,045       15,003,060       (2.2 %)
Premises and equipment, net
     196,007       206,153       (4.9 %)
Goodwill
     871,629       877,680       (0.7 %)
Other intangible assets, net
     109,234       120,358       (9.2 %)
Other assets
     717,054       631,221       13.6 %
 
                    
Total assets
   $ 20,861,384     $ 22,100,082       (5.6 %)
 
                    
 
                        
Liabilities and Stockholders’ Equity
                        
Noninterest-bearing deposits
   $ 2,756,222     $ 2,504,926       10.0 %
Interest-bearing deposits, excluding Brokered CDs
     10,922,274       10,538,856       3.6 %
Brokered CDs
     637,575       529,307       20.5 %
 
                    
Total deposits
     14,316,071       13,573,089       5.5 %
Short-term borrowings
     2,042,685       2,666,307       (23.4 %)
Long-term funding
     2,071,142       3,348,476       (38.1 %)
Accrued expenses and other liabilities
     185,993       187,232       (0.7 %)
 
                    
Total liabilities
     18,615,891       19,775,104       (5.9 %)
Stockholders’ Equity
                        
Preferred stock
     —       —          
Common stock
     1,304       1,357       (3.9 %)
Surplus
     1,120,934       1,301,004       (13.8 %)
Retained earnings
     1,189,658       1,029,247       15.6 %
Accumulated other comprehensive loss
     (16,453 )     (3,938 )     317.8 %
Deferred compensation
     —       (2,081 )     (100.0 %)
Treasury stock
     (49,950 )     (611 )     N/M  
 
                    
Total stockholders’ equity
     2,245,493       2,324,978       (3.4 %)
 
                    
Total liabilities and stockholders’ equity
   $ 20,861,384     $ 22,100,082       (5.6 %)
 
                    
N/M = Not Meaningful.

 

                                                 
 
Consolidated Statements of Income (Unaudited)                          
Associated Banc-Corp                          
    For The Three Months Ended,             For The Year Ended,        
    December 31,             December 31,        
(in thousands, except per share amounts)   2006     2005     % Change     2006     2005     % Change  
 
Interest Income
                                                
Interest and fees on loans
   $ 282,918     $ 252,443       12.1 %   $ 1,106,903     $ 889,374       24.5 %
Interest and dividends on investment securities and deposits in other financial institutions
                                                
Taxable
     29,962       41,486       (27.8 %)     131,952       164,404       (19.7 %)
Tax-exempt
     9,794       10,325       (5.1 %)     39,434       39,310       0.3 %
Interest on federal funds sold and securities purchased under agreements to resell
     292       289       1.0 %     1,090       937       16.3 %
 
                                        
Total interest income
     322,966       304,543       6.0 %     1,279,379       1,094,025       16.9 %
Interest Expense
                                                
Interest on deposits
     98,757       66,934       47.5 %     363,953       213,052       70.8 %
Interest on short-term borrowings
     31,971       26,828       19.2 %     129,791       89,356       45.3 %
Interest on long-term funding
     26,174       35,186       (25.6 %)     116,086       119,362       (2.7 %)
 
                                        
Total interest expense
     156,902       128,948       21.7 %     609,830       421,770       44.6 %
 
                                        
Net Interest Income
     166,064       175,595       (5.4 %)     669,549       672,255       (0.4 %)
Provision for loan losses
     7,068       3,676       92.3 %     19,056       13,019       46.4 %
 
                                        
Net interest income after provision for loan losses
     158,996       171,919       (7.5 %)     650,493       659,236       (1.3 %)
Noninterest Income
                                                
Trust service fees
     9,941       9,055       9.8 %     37,484       35,017       7.0 %
Service charges on deposit accounts
     24,214       23,073       4.9 %     91,593       86,783       5.5 %
Mortgage banking, net
     1,735       12,166       (85.7 %)     14,801       36,395       (59.3 %)
Card-based and other nondeposit fees
     11,267       10,033       12.3 %     42,661       37,439       13.9 %
Retail commissions
     15,053       13,624       10.5 %     61,256       56,604       8.2 %
Bank owned life insurance income
     5,102       3,022       68.8 %     16,155       9,942       62.5 %
Asset sale gains, net
     91       2,766       N/M       304       3,945       N/M  
Investment securities gains (losses), net
     (436 )     1,179       N/M       4,722       4,116       N/M  
Other
     7,568       6,126       23.5 %     26,525       20,845       27.2 %
 
                                        
Total noninterest income
     74,535       81,044       (8.0 %)     295,501       291,086       1.5 %
Noninterest Expense
                                                
Personnel expense
     68,315       68,619       (0.4 %)     283,431       274,941       3.1 %
Occupancy
     10,971       10,287       6.6 %     43,825       38,961       12.5 %
Equipment
     4,300       4,361       (1.4 %)     17,466       16,792       4.0 %
Data processing
     8,033       7,972       0.8 %     31,451       29,534       6.5 %
Business development and advertising
     4,365       4,999       (12.7 %)     16,857       17,661       (4.6 %)
Stationery and supplies
     1,737       1,869       (7.1 %)     7,082       6,956       1.8 %
Other intangible amortization
     1,999       2,418       (17.3 %)     8,903       8,607       3.4 %
Other
     24,678       25,014       (1.3 %)     87,200       87,011       0.2 %
 
                                        
Total noninterest expense
     124,398       125,539       (0.9 %)     496,215       480,463       3.3 %
 
                                        
Income before income taxes
     109,133       127,424       (14.4 %)     449,779       469,859       (4.3 %)
Income tax expense
     34,632       39,783       (12.9 %)     133,134       149,698       (11.1 %)
 
                                        
Net Income
   $ 74,501     $ 87,641       (15.0 %)   $ 316,645     $ 320,161       (1.1 %)
 
                                        
 
                                                
Earnings Per Share:
                                                
Basic
   $ 0.58     $ 0.65       (10.8 %)   $ 2.40     $ 2.45       (2.0 %)
Diluted
   $ 0.57     $ 0.64       (10.9 %)   $ 2.38     $ 2.43       (2.1 %)
Average Shares Outstanding:
                                                
Basic
     129,202       135,684       (4.8 %)     132,006       130,554       1.1 %
Diluted
     130,366       137,005       (4.8 %)     133,132       131,931       0.9 %
N/M — Not meaningful.

 

                                         
 
Consolidated Statements of Income (Unaudited) - Quarterly Trend                              
Associated Banc-Corp                              
 
(in thousands, except per share amounts)   4Q06     3Q06     2Q06     1Q06     4Q05  
 
Interest Income
                                        
Interest and fees on loans
   $ 282,918     $ 284,397     $ 278,573     $ 261,015     $ 252,443  
Interest and dividends on investment securities and deposits with other financial institutions
                                        
Taxable
     29,962       30,225       32,649       39,116       41,486  
Tax-exempt
     9,794       9,691       9,786       10,163       10,325  
Interest on federal funds sold and securities purchased under agreements to resell
     292       260       289       249       289  
 
                              
Total interest income
     322,966       324,573       321,297       310,543       304,543  
Interest Expense
                                        
Interest on deposits
     98,757       99,242       88,076       77,878       66,934  
Interest on short-term borrowings
     31,971       30,450       34,126       33,244       26,828  
Interest on long-term funding
     26,174       26,664       30,696       32,552       35,186  
 
                              
Total interest expense
     156,902       156,356       152,898       143,674       128,948  
 
                              
Net Interest Income
     166,064       168,217       168,399       166,869       175,595  
Provision for loan losses
     7,068       3,837       3,686       4,465       3,676  
 
                              
Net interest income after provision for loan losses
     158,996       164,380       164,713       162,404       171,919  
Noninterest Income
                                        
Trust service fees
     9,941       9,339       9,307       8,897       9,055  
Service charges on deposit accounts
     24,214       23,438       22,982       20,959       23,073  
Mortgage banking, net
     1,735       2,833       5,829       4,404       12,166  
Card-based and other nondeposit fees
     11,267       10,461       11,047       9,886       10,033  
Retail commissions
     15,053       14,360       16,365       15,478       13,624  
Bank owned life insurance income
     5,102       4,390       3,592       3,071       3,022  
Asset sale gains (losses), net
     91       89       354       (230 )     2,766  
Investment securities gains (losses), net
     (436 )     1,164       1,538       2,456       1,179  
Other
     7,568       6,911       6,194       5,852       6,126  
 
                              
Total noninterest income
     74,535       72,985       77,208       70,773       81,044  
Noninterest Expense
                                        
Personnel expense
     68,315       71,321       74,492       69,303       68,619  
Occupancy
     10,971       10,442       10,654       11,758       10,287  
Equipment
     4,300       4,355       4,223       4,588       4,361  
Data processing
     8,033       7,668       7,711       8,039       7,972  
Business development and advertising
     4,365       4,142       4,101       4,249       4,999  
Stationery and supplies
     1,737       1,787       1,784       1,774       1,869  
Other intangible amortization
     1,999       2,280       2,281       2,343       2,418  
Other
     24,678       21,691       19,414       21,417       25,014  
 
                              
Total noninterest expense
     124,398       123,686       124,660       123,471       125,539  
 
                              
Income before income taxes
     109,133       113,679       117,261       109,706       127,424  
Income tax expense
     34,632       36,791       33,712       27,999       39,783  
 
                              
Net Income
   $ 74,501     $ 76,888     $ 83,549     $ 81,707     $ 87,641  
 
                              
 
                                        
Earnings Per Share:
                                        
Basic
   $ 0.58     $ 0.58     $ 0.63     $ 0.60     $ 0.65  
Diluted
   $ 0.57     $ 0.58     $ 0.63     $ 0.60     $ 0.64  
Average Shares Outstanding:
                                        
Basic
     129,202       131,520       132,259       135,114       135,684  
Diluted
     130,366       132,591       133,441       136,404       137,005  

 

                                                         
 
Selected Quarterly Information                                          
Associated Banc-Corp                                          
 
 
(in thousands, except per share & full time
equivalent employee data)		   YTD 2006     YTD 2005     4th Qtr 2006     3rd Qtr 2006     2nd Qtr 2006     1st Qtr 2006     4th Qtr 2005  
 
Summary of Operations
                                                        
Net interest income
     669,549       672,255       166,064       168,217       168,399       166,869       175,595  
Provision for loan losses
     19,056       13,019       7,068       3,837       3,686       4,465       3,676  
Asset sale gains (losses), net
     304       3,945       91       89       354       (230 )     2,766  
Investment securities gains
(losses), net
     4,722       4,116       (436 )     1,164       1,538       2,456       1,179  
Noninterest income (excluding securities & asset gains)
     290,475       283,025       74,880       71,732       75,316       68,547       77,099  
Noninterest expense
     496,215       480,463       124,398       123,686       124,660       123,471       125,539  
Income before income taxes
     449,779       469,859       109,133       113,679       117,261       109,706       127,424  
Income taxes
     133,134       149,698       34,632       36,791       33,712       27,999       39,783  
Net income
     316,645       320,161       74,501       76,888       83,549       81,707       87,641  
Taxable equivalent adjustment
     26,233       25,509       6,568       6,495       6,503       6,667       6,766  
 
                                                        
 
Per Common Share Data (1)
                                                        
Net income:
                                                        
Basic
   $ 2.40     $ 2.45     $ 0.58     $ 0.58     $ 0.63     $ 0.60     $ 0.65  
Diluted
     2.38       2.43       0.57       0.58       0.63       0.60       0.64  
Dividends
     1.14       1.06       0.29       0.29       0.29       0.27       0.27  
Market Value:
                                                        
High
   $ 35.13     $ 34.74     $ 35.13     $ 32.58     $ 34.45     $ 34.83     $ 33.23  
Low
     30.27       29.09       32.13       30.27       30.69       32.75       29.09  
Close
     34.88       32.55       34.88       32.50       31.53       33.98       32.55  
Book value
     17.44       17.15       17.44       17.44       17.20       16.98       17.15  
 
                                                        
 
Performance Ratios (annualized)
                                                        
Earning assets yield
     6.79 %     5.84 %     6.95 %     6.89 %     6.74 %     6.38 %     6.12 %
Interest-bearing liabilities rate
     3.71       2.57       3.93       3.84       3.65       3.37       2.98  
Net interest margin
     3.62       3.64       3.64       3.63       3.59       3.48       3.59  
Return on average assets
     1.50       1.53       1.43       1.46       1.58       1.52       1.58  
Return on average equity
     13.89       15.24       13.19       13.36       14.86       14.16       14.99  
Return on tangible average equity (2)
     23.31       23.47       22.31       22.32       25.18       23.48       22.70  
Efficiency ratio (3)
     50.31       48.99       50.26       50.19       49.82       51.00       48.38  
Effective tax rate
     29.60       31.86       31.73       32.36       28.75       25.52       31.22  
Dividend payout ratio (4)
     47.50       43.27       50.00       50.00       46.03       45.00       41.54  
 
                                                        
 
Average Balances
                                                        
Assets
   $ 21,162,099     $ 20,921,575     $ 20,635,203     $ 20,891,001     $ 21,266,792     $ 21,871,969     $ 22,022,165  
Earning assets
     19,229,849       19,181,630       18,713,784       18,968,584       19,342,628       19,910,420       20,080,758  
Interest-bearing liabilities
     16,434,947       16,410,899       15,765,774       16,070,975       16,717,761       17,204,860       17,090,134  
Loans
     15,370,090       14,347,707       15,233,207       15,404,223       15,515,789       15,327,803       15,154,225  
Deposits
     13,623,703       12,462,981       13,748,444       13,884,404       13,534,725       13,319,664       13,282,910  
Wholesale funding
     5,161,192       6,207,846       4,547,042       4,636,853       5,391,108       6,092,275       6,280,793  
Stockholders’ equity
     2,279,376       2,101,389       2,240,143       2,283,933       2,254,933       2,339,539       2,320,134  
Stockholders’ equity / assets
     10.77 %     10.04 %     10.86 %     10.93 %     10.60 %     10.70 %     10.54 %
 
                                                        
 
At Period End
                                                        
Assets
                   $ 20,861,384     $ 20,926,523     $ 21,128,354     $ 21,518,860     $ 22,100,082  
Loans
                     14,881,526       15,284,608       15,405,630       15,539,187       15,206,464  
Allowance for loan losses
                     203,481       203,442       203,411       203,408       203,404  
Goodwill
                     871,629       871,629       875,727       875,727       877,680  
Mortgage servicing rights, net
                     66,620       67,931       69,282       68,116       68,841  
Other intangible assets, net
                     42,614       44,613       46,893       49,174       51,517  
Deposits
                     14,316,071       14,208,545       13,646,408       13,616,870       13,573,089  
Wholesale funding
                     4,113,827       4,277,636       5,033,961       5,496,039       6,014,783  
Stockholders’ equity
                     2,245,493       2,270,380       2,274,860       2,244,695       2,324,978  
Stockholders’ equity / assets
                     10.76 %     10.85 %     10.77 %     10.43 %     10.52 %
Tangible equity / tangible assets (5)
                     6.67 %     6.77 %     6.69 %     6.41 %     6.59 %
Shares outstanding, end of period
                     128,747       130,216       132,283       132,167       135,602  
Shares repurchased during period
                     1,957       2,000       31       4,030       974  
Average per share cost of shares repurchased during period
                   $ 33.11     $ 31.43     $ —     $ 33.63     $ 30.82  
Year-to-date shares repurchased during period
                     8,018       6,061       4,061       4,030       3,496  
YTD average per share cost of shares repurchased during period
                   $ 32.83     $ 32.74     $ 33.38     $ 33.63     $ 32.43  
 
                                                        
 
Selected trend information
                                                        
Average full time equivalent employees
                     5,084       5,117       5,112       5,147       5,113  
Trust assets under management, at market value
                   $ 5,800,000     $ 5,500,000     $ 5,200,000     $ 5,200,000     $ 5,000,000  
Mortgage loans originated for sale
                     374,427       388,914       359,361       246,724       356,280  
Portfolio serviced for others
                     8,330,000       8,226,000       8,134,000       8,050,000       8,028,000  
Mortgage servicing rights, net / Portfolio serviced for others
                     0.80 %     0.83 %     0.85 %     0.85 %     0.86 %
 
                                                        
 
 
(1)   Per share data adjusted retroactively for stock splits & stock dividends.
 
(2)   Return on tangible average equity = Net income divided by average equity excluding average goodwill & other intangible assets. This is a non-GAAP financial measure.
 
(3)   Efficiency ratio = Noninterest expense divided by sum of taxable equivalent net interest income plus noninterest income, excluding investment securities gains, net, & asset sales gains, net.
 
(4)   Ratio is based upon basic earnings per share.
 
(5)   Tangible equity to tangible assets = Stockholders’ equity excluding goodwill & other intangible assets divided by assets excluding goodwill & other intangible assets. This is a non-GAAP financial measure.

 

 
                                                 
Financial Summary and Comparison                          
Associated Banc-Corp                          
    Three months ended             Year Ended        
    December 31,             December 31,        
         
(in thousands)   2006     2005     % Change     2006     2005     % Change  
         
Allowance for Loan Losses
                                                
Beginning balance
   $ 203,442     $ 190,080       7.0 %   $ 203,404     $ 189,762       7.2 %
Balance related to acquisition
     —       13,283       (100.0 %)     —       13,283       (100.0 %)
Provision for loan losses
     7,068       3,676       92.3 %     19,056       13,019       46.4 %
Charge offs
     (10,574 )     (11,142 )     (5.1 %)     (30,507 )     (27,743 )     10.0 %
Recoveries
     3,545       7,507       (52.8 %)     11,528       15,083       (23.6 %)
                         
Net charge offs
     (7,029 )     (3,635 )     93.4 %     (18,979 )     (12,660 )     49.9 %
                         
Ending Balance
   $ 203,481     $ 203,404       0.0 %   $ 203,481     $ 203,404       0.0 %
                         
 
                                                         
Credit Quality                                                    
                    4Q06 vs 3Q06                             4Q06 vs 4Q05  
    Dec 31, 2006     Sept 30, 2006     % Change     June 30, 2006     March 31, 2006     Dec 31, 2005     % Change  
         
Nonaccrual loans
   $ 136,734     $ 123,743       10.5 %   $ 95,426     $ 102,824     $ 95,313       43.5 %
Loans 90 or more days past due and still accruing
     5,725       4,826       18.6 %     7,591       7,068       3,270       75.1 %
Restructured loans
     26       28       (7.1 %)     29       31       32       (18.8 %)
                         
Total nonperforming loans
     142,485       128,597       10.8 %     103,046       109,923       98,615       44.5 %
Other real estate owned
     14,417       13,866       4.0 %     14,947       11,676       11,336       27.2 %
                         
Total nonperforming assets
     156,902       142,463       10.1 %     117,993       121,599       109,951       42.7 %
                         
Provision for loan losses
     7,068       3,837       84.2 %     3,686       4,465       3,676       92.3 %
Net charge offs
     7,029       3,806       84.7 %     3,683       4,461       3,635       93.4 %
 
                                                        
Allowance for loan losses / loans
     1.37 %     1.33 %             1.32 %     1.31 %     1.34 %        
Allowance for loan losses / nonperforming loans
     142.81       158.20               197.40       185.05       206.26          
Nonperforming loans / total loans
     0.96       0.84               0.67       0.71       0.65          
Nonperforming assets / total assets
     0.75       0.68               0.56       0.57       0.50          
Net charge offs / average loans (annualized)
     0.18       0.10               0.10       0.12       0.10          
Year-to-date net charge offs / average loans
     0.12       0.10               0.11       0.12       0.09          
 
                                                         
Period End Loan Composition                                                    
                    4Q06 vs 3Q06                             4Q06 vs 4Q05  
    Dec 31, 2006     Sept 30, 2006     % Change     June 30, 2006     March 31, 2006     Dec 31, 2005     % Change  
         
Commercial, financial & agricultural
   $ 3,677,573     $ 3,549,216       3.6 %   $ 3,505,819     $ 3,571,835     $ 3,417,343       7.6 %
Real estate — construction
     2,047,124       2,186,810       (6.4 %)     2,122,136       1,981,473       1,783,267       14.8 %
Commercial real estate
     3,789,480       3,755,037       0.9 %     3,872,819       4,024,260       4,064,327       (6.8 %)
Lease financing
     81,814       79,234       3.3 %     74,919       62,600       61,315       33.4 %
                         
Commercial
     9,595,991       9,570,297       0.3 %     9,575,693       9,640,168       9,326,252       2.9 %
Home equity (a)
     2,164,758       2,166,312       (0.1 %)     2,151,858       2,121,601       2,025,055       6.9 %
Installment
     915,747       940,139       (2.6 %)     945,123       957,877       1,003,938       (8.8 %)
                         
Retail
     3,080,505       3,106,451       (0.8 %)     3,096,981       3,079,478       3,028,993       1.7 %
Residential mortgage
     2,205,030       2,607,860       (15.4 %)     2,732,956       2,819,541       2,851,219       (22.7 %)
                         
Total loans
   $ 14,881,526     $ 15,284,608       (2.6 %)   $ 15,405,630     $ 15,539,187     $ 15,206,464       (2.1 %)
                         
 
(a)   Home equity includes home equity lines and residential mortgage junior liens.
 
                                                         
Period End Deposit Composition                                                    
                    4Q06 vs 3Q06                             4Q06 vs 4Q05  
    Dec 31, 2006     Sept 30, 2006     % Change     June 30, 2006     March 31, 2006     Dec 31, 2005     % Change  
         
Demand
   $ 2,756,222     $ 2,534,686       8.7 %   $ 2,276,463     $ 2,319,075     $ 2,504,926       10.0 %
Savings
     890,380       959,650       (7.2 %)     1,031,993       1,074,938       1,079,851       (17.5 %)
Interest-bearing demand
     1,875,879       1,712,833       9.5 %     1,975,364       2,347,104       2,549,782       (26.4 %)
Money market
     3,822,928       3,959,719       (3.5 %)     3,434,288       2,863,174       2,629,933       45.4 %
Brokered CDs
     637,575       630,637       1.1 %     518,354       567,660       529,307       20.5 %
Other time deposits
     4,333,087       4,411,020       (1.8 %)     4,409,946       4,444,919       4,279,290       1.3 %
                         
Total deposits
   $ 14,316,071     $ 14,208,545       0.8 %   $ 13,646,408     $ 13,616,870     $ 13,573,089       5.5 %
                         
 
                                                        
Customer Repo Sweeps (b)
   $ 875,099     $ 895,766       (2.3 %)   $ 885,503     $ 917,380     $ 822,221       6.43 %
 
(b)   Included within short-term borrowings.
 

 

 
                                                 
Net Interest Income Analysis - Taxable Equivalent Basis
Associated Banc-Corp            
    Year ended December 31, 2006     Year ended December 31, 2005  
    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
   $ 9,527,264     $ 707,405       7.43 %   $ 8,574,996     $ 532,116       6.21 %
Residential mortgage
     2,760,454       160,758       5.82       2,875,438       161,095       5.60  
Retail
     3,082,372       241,313       7.83       2,897,273       198,086       6.84  
                         
Total loans
     15,370,090       1,109,476       7.22       14,347,707       891,297       6.21  
Investments and other
     3,859,759       196,136       5.08       4,833,923       228,237       4.72  
                         
Total earning assets
     19,229,849       1,305,612       6.79       19,181,630       1,119,534       5.84  
Other assets, net
     1,932,250                       1,739,945                  
 
                                            
Total assets
   $ 21,162,099                     $ 20,921,575                  
 
                                            
 
                                                
Interest-bearing liabilities:
                                                
Savings deposits
   $ 1,012,966     $ 3,824       0.38 %   $ 1,125,417     $ 3,877       0.34 %
Interest-bearing demand deposits
     1,997,355       34,895       1.75       2,337,462       26,611       1.14  
Money market deposits
     3,324,362       119,506       3.59       2,262,369       45,626       2.02  
Time deposits, excluding Brokered CDs
     4,388,147       177,860       4.05       4,083,500       123,550       3.03  
                         
Total interest-bearing deposits, excluding Brokered CDs
     10,722,830       336,085       3.13       9,808,748       199,664       2.04  
Brokered CDs
     550,925       27,868       5.06       394,305       13,388       3.40  
                         
Total interest-bearing deposits
     11,273,755       363,953       3.23       10,203,053       213,052       2.09  
Wholesale funding
     5,161,192       245,877       4.76       6,207,846       208,718       3.36  
                         
Total interest-bearing liabilities
     16,434,947       609,830       3.71       16,410,899       421,770       2.57  
Noninterest-bearing demand
     2,349,948                       2,259,928                  
Other liabilities
     97,828                       149,359                  
Stockholders’ equity
     2,279,376                       2,101,389                  
 
                                            
Total liabilities and stockholders’ equity
   $ 21,162,099                     $ 20,921,575                  
 
                                            
 
                                            
Net interest income and rate spread (1)
           $ 695,782       3.08 %           $ 697,764       3.27 %
 
                                            
Net interest margin (1)
                     3.62 %                     3.64 %
Taxable equivalent adjustment
           $ 26,233                     $ 25,509          
 
                                            
 
                                                 
    Three months ended December 31, 2006     Three months ended December 31, 2005  
    Average     Interest     Average     Average     Interest     Average  
    Balance     Income / Expense     Yield / Rate     Balance     Income / Expense     Yield / Rate  
         
Earning assets:
                                                
Loans: (1) (2) (3)
                                                
Commercial
   $ 9,505,699     $ 182,086       7.50 %   $ 9,222,512     $ 156,412       6.64 %
Residential mortgage
     2,628,382       38,753       5.87       2,905,463       41,482       5.68  
Retail
     3,099,126       62,771       8.06       3,026,250       55,120       7.25  
                         
Total loans
     15,233,207       283,610       7.33       15,154,225       253,014       6.58  
Investments and other
     3,480,577       45,924       5.27       4,926,533       58,295       4.73  
                         
Total earning assets
     18,713,784       329,534       6.95       20,080,758       311,309       6.12  
Other assets, net
     1,921,419                       1,941,407                  
 
                                            
Total assets
   $ 20,635,203                     $ 22,022,165                  
 
                                            
 
                                                
Interest-bearing liabilities:
                                                
Savings deposits
   $ 940,041     $ 903       0.38 %   $ 1,150,777     $ 800       0.28 %
Interest-bearing demand deposits
     1,729,355       7,945       1.82       2,210,056       7,082       1.27  
Money market deposits
     3,727,175       35,420       3.77       2,623,223       17,121       2.59  
Time deposits, excluding Brokered CDs
     4,356,474       48,243       4.39       4,342,185       37,004       3.38  
                         
Total interest-bearing deposits, excluding Brokered CDs
     10,753,045       92,511       3.41       10,326,241       62,007       2.38  
Brokered CDs
     465,687       6,246       5.32       483,100       4,927       4.05  
                         
Total interest-bearing deposits
     11,218,732       98,757       3.49       10,809,341       66,934       2.46  
Wholesale funding
     4,547,042       58,145       5.02       6,280,793       62,014       3.87  
                         
Total interest-bearing liabilities
     15,765,774       156,902       3.93       17,090,134       128,948       2.98  
Noninterest-bearing demand
     2,529,712                       2,473,569                  
Other liabilities
     99,574                       138,328                  
Stockholders’ equity
     2,240,143                       2,320,134                  
 
                                            
Total liabilities and stockholders’ equity
   $ 20,635,203                     $ 22,022,165                  
 
                                            
 
                                            
Net interest income and rate spread (1)
           $ 172,632       3.02 %           $ 182,361       3.14 %
 
                                            
Net interest margin (1)
                     3.64 %                     3.59 %
Taxable equivalent adjustment
           $ 6,568                     $ 6,766          
 
                                            
 
(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.