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-- Net income available to common shareholders of $8.7 million for the third quarter
-- Provision for loan losses of $95.4 million down from $155.0 million for the second quarter of 2009
-- Total deposits of $16.4 billion at September 30, 2009 compared to $14.2 billion at September 30, 2008
-- Total noninterest expenses of $141.1 million down $28.9 million from $170.0 million for the second quarter of 2009
-- Tangible common equity ratio of 6.64% compared to 6.09% at June 30, 2009
Associated Banc-Corp (NASDAQ: ASBC | Quote | Chart | News | PowerRating) today reported third quarter 2009 net income available to common shareholders of $8.7 million, or $0.07 per common share, after a $7.3 million dividend to preferred shareholders. This compares to a net loss to common shareholders of $24.7 million, or $0.19 per common share for the second quarter of 2009, and to net income of $37.8 million, or $0.30 per common share, for the third quarter of 2008.
Net interest income for the quarter was $179.2 million compared to $179.1 million for the second quarter of 2009 and $166.5 million for the third quarter of 2008. The company's net interest margin was 3.50% at September 30, 2009, up 10 basis points from 3.40% at June 30, 2009 and up 2 basis points from 3.48% at September 30, 2008. The quarterly improvement in net interest margin was due to a continued decline in the cost of funds and a shift in deposit balances from higher cost time deposits to lower cost transaction accounts, which was partially offset by lower levels of earning assets.
The provision for loan losses for the quarter was $95.4 million compared to $155.0 million for the second quarter of 2009 and $55.0 million for the same period one year ago. Net charge offs for the quarter were $90.0 million compared to $61.1 million for the second quarter of 2009 and $38.4 million for the third quarter of 2008. The increase in the level of net charge offs for the third quarter was significantly impacted by a $25 million charge off of a previously disclosed financial institution credit. Nonperforming loans were $885.8 million at September 30, 2009 compared to $733.4 million at June 30, 2009 and $452.2 million at March 31, 2009. Credit quality deterioration slowed during the third quarter as evidenced by the slower pace of growth in both potential problem loans and nonperforming loans. In addition, loans 30-89 days past due totaled $175.5 million, 16% lower than the prior quarter. This level for loans 30-89 days past due is the lowest the company has seen since the fourth quarter of 2007.
"The lower quarterly loan loss provision is the result of moderation in the pace of credit quality deterioration," said Associated Chairman and CEO Paul S. Beideman. "Although credit quality deterioration has slowed and past due levels have improved, we believe that loan loss provisions and charge offs will continue to be elevated as the impact of the weak economy and stress on our customers continues."
Loans were $14.8 billion at September 30, 2009, down 3.6% from $15.3 billion at June 30, 2009, primarily due to the continued decline in the company's commercial loan balances. Deposits were $16.4 billion at September 30, 2009, up 0.8% from $16.3 billion at June 30, 2009 and up 15.4% from $14.2 billion a year ago. All deposit categories experienced significant year-over-year growth, with the exception of small declines in time and savings deposits.
Mortgage loans originated for sale during the third quarter declined to $638 million compared to the record high level of $1.3 billion for the second quarter of 2009 and $218 million for the third quarter of 2008. For the third quarter of 2009, the Company experienced a net mortgage banking loss of $0.9 million, compared to net mortgage banking income of $28.3 million for the second quarter of 2009 and $3.6 million for the third quarter of 2008. Third quarter mortgage banking results included a $4.7 million valuation charge related to mortgage servicing rights compared to a $9.6 million valuation recovery in the second quarter of 2009.
Core fee-based revenue was $66.5 million for the third quarter compared to $64.9 million for the second quarter of 2009 and $71.1 million for the third quarter of 2008. The reduction in revenue between the comparable third quarter periods was primarily the result of continued lower levels of consumer fee-based activity and lower asset management revenue due to year-over-year equity market declines.
Total noninterest expense for the third quarter was $141.1 million, down $28.9 million from $170.0 million in the second quarter 2009. Expenses were driven lower in all categories. Most notably, personnel expense decreased $7.7 million, legal and professional fees decreased $2.2 million, and business development and advertising costs decreased $1.0 million. In addition, FDIC insurance expense decreased $9.6 million from the second quarter, which included a one-time special assessment of $11.3 million. Foreclosure/OREO expenses also decreased $4.9 million due to lower levels of property write-downs during the quarter. The efficiency ratio for the third quarter of 2009 was 54.14% compared to 58.65% for the second quarter of 2009 and 52.18% for the same period one year ago.
For the nine months ended September 30, 2009, net income available to common shareholders was $19.4 million, or $0.15 per common share, compared to $151.6 million, or $1.18 per common share, for the nine months ended September 30, 2008.
Associated Banc-Corp (NASDAQ: ASBC | Quote | Chart | News | PowerRating) will host a conference call for investors and analysts at 3 p.m. Central Time (CT) Thursday, October 22, 2009. The toll-free dial-in number for the live call is 877-941-4774. The number for international callers is 480-629-9760. Participants should ask the operator for the Associated Banc-Corp third quarter 2009 earnings call, or for call ID number 4170464. A replay of the call will be available starting at 6 p.m. CT on October 22, 2009 through 12:00 midnight CT on November 22, 2009 by calling 800-406-7325 (toll-free) domestically or 303-590-3030 internationally. The call ID number (replay pin number), 4170464, is required to access the replay.
Associated Banc-Corp, headquartered in Green Bay, Wis., is a diversified bank holding company with total assets of $23 billion. Associated has approximately 300 banking offices serving an estimated 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.
Consolidated Balance Sheets (Unaudited)
Associated Banc-Corp
September 30, December 31, Sept09 vs Dec08 September 30, Sept09 vs Sept08
(in thousands) 2009 2008 % Change 2008 % Change
Assets
Cash and due from banks $ 430,381 $ 533,338 (19.3 %) $ 623,132 (30.9 %)
Interest-bearing deposits in other financial institutions 13,145 12,649 3.9 % 12,288 7.0 %
Federal funds sold and securities purchased under agreements to 17,000 24,741 (31.3 %) 60,655 (72.0 %)
resell
Investment securities available for sale, at fair value 5,651,076 5,143,414 9.9 % 3,435,625 64.5 %
Federal Home Loan Bank and Federal Reserve Bank stocks, at cost 181,316 206,003 (12.0 %) 181,192 0.1 %
Loans held for sale 78,740 87,084 (9.6 %) 40,912 92.5 %
Loans 14,765,597 16,283,908 (9.3 %) 16,272,487 (9.3 %)
Allowance for loan losses (412,530 ) (265,378 ) 55.4 % (246,189 ) 67.6 %
Loans, net 14,353,067 16,018,530 (10.4 %) 16,026,298 (10.4 %)
Premises and equipment, net 185,544 190,942 (2.8 %) 188,817 (1.7 %)
Goodwill 929,168 929,168 0.0 % 929,168 0.0 %
Other intangible assets, net 91,506 80,165 14.1 % 90,138 1.5 %
Other assets 950,584 966,033 (1.6 %) 899,169 5.7 %
Total assets $ 22,881,527 $ 24,192,067 (5.4 %) $ 22,487,394 1.8 %
Liabilities and Stockholders' Equity
Noninterest-bearing deposits $ 2,984,486 $ 2,814,079 6.1 % $ 2,545,779 17.2 %
Interest-bearing deposits, excluding Brokered CDs 12,808,533 11,551,181 10.9 % 11,120,281 15.2 %
Brokered CDs 653,090 789,536 (17.3 %) 579,607 12.7 %
Total deposits 16,446,109 15,154,796 8.5 % 14,245,667 15.4 %
Short-term borrowings 1,517,594 3,703,936 (59.0 %) 4,106,015 (63.0 %)
Long-term funding 1,761,506 1,861,647 (5.4 %) 1,561,722 12.8 %
Accrued expenses and other liabilities 231,659 595,185 (61.1 %) 209,743 10.4 %
Total liabilities 19,956,868 21,315,564 (6.4 %) 20,123,147 (0.8 %)
Stockholders' Equity
Preferred equity 510,315 508,008 0.5 % - N/M
Common stock 1,284 1,281 0.2 % 1,280 0.3 %
Surplus 1,080,720 1,073,218 0.7 % 1,051,976 2.7 %
Retained earnings 1,268,507 1,293,941 (2.0 %) 1,321,323 (4.0 %)
Accumulated other comprehensive income (loss) 64,919 55 N/M (10,332 ) N/M
Treasury stock (1,086 ) - N/M - N/M
Total stockholders' equity 2,924,659 2,876,503 1.7 % 2,364,247 23.7 %
Total liabilities and stockholders' equity $ 22,881,527 $ 24,192,067 (5.4 %) $ 22,487,394 1.8 %
N/M = Not meaningful.
Consolidated Statements of Income (Unaudited)
Associated Banc-Corp
For The Three Months Ended For The Nine Months Ended,
September 30, Quarter September 30, Year-to-Date
(in thousands, except per share amounts) 2009 2008 % Change 2009 2008 % Change
Interest Income
Interest and fees on loans $ 183,264 $ 229,001 (20.0 %) $ 579,641 $ 721,781 (19.7 %)
Interest and dividends on investment securities and deposits in
other financial institutions:
Taxable 46,873 32,209 45.5 % 144,464 95,439 51.4 %
Tax-exempt 8,498 9,887 (14.0 %) 26,811 29,922 (10.4 %)
Interest on federal funds sold and securities purchased under 16 279 (94.3 %) 130 698 (81.4 %)
agreements to resell
Total interest income 238,651 271,376 (12.1 %) 751,046 847,840 (11.4 %)
Interest Expense
Interest on deposits 37,811 61,743 (38.8 %) 129,403 206,904 (37.5 %)
Interest on short-term borrowings 2,895 23,958 (87.9 %) 13,137 76,494 (82.8 %)
Interest on long-term funding 18,709 19,158 (2.3 %) 60,854 60,076 1.3 %
Total interest expense 59,415 104,859 (43.3 %) 203,394 343,474 (40.8 %)
Net Interest Income 179,236 166,517 7.6 % 547,652 504,366 8.6 %
Provision for loan losses 95,410 55,011 73.4 % 355,856 137,014 159.7 %
Net interest income after provision for loan losses 83,826 111,506 (24.8 %) 191,796 367,352 (47.8 %)
Noninterest Income
Trust service fees 9,057 10,020 (9.6 %) 26,103 30,172 (13.5 %)
Service charges on deposit accounts 30,829 33,609 (8.3 %) 87,705 87,422 0.3 %
Card-based and other nondeposit fees 11,586 12,517 (7.4 %) 33,618 36,243 (7.2 %)
Retail commissions 15,041 14,928 0.8 % 45,382 47,047 (3.5 %)
Mortgage banking, net (909 ) 3,571 (125.5 %) 31,655 15,911 99.0 %
Treasury management fees, net 226 1,935 (88.3 %) 5,245 7,423 (29.3 %)
Bank owned life insurance income 3,789 5,235 (27.6 %) 12,722 15,093 (15.7 %)
Asset sale gains (losses), net (126 ) 573 (122.0 %) (2,520 ) (614 ) 310.4 %
Investment securities gains (losses), net (42 ) (13,585 ) N/M 9,169 (17,243 ) N/M
Other 5,858 6,520 (10.2 %) 17,148 23,122 (25.8 %)
Total noninterest income 75,309 75,323 (0.0 %) 266,227 244,576 8.9 %
Noninterest Expense
Personnel expense 73,501 78,395 (6.2 %) 231,770 232,104 (0.1 %)
Occupancy 11,949 12,037 (0.7 %) 37,171 37,327 (0.4 %)
Equipment 4,575 5,088 (10.1 %) 13,834 14,338 (3.5 %)
Data processing 7,442 7,634 (2.5 %) 23,165 23,005 0.7 %
Business development and advertising 3,910 5,175 (24.4 %) 13,590 15,353 (11.5 %)
Other intangible amortization 1,386 1,568 (11.6 %) 4,157 4,705 (11.6 %)
Legal and professional fees 3,349 3,538 (5.3 %) 13,176 9,255 42.4 %
Foreclosure/OREO expense 8,688 2,427 258.0 % 27,277 6,969 291.4 %
FDIC expense 8,451 791 N/M 32,316 1,594 N/M
Other 17,860 19,924 (10.4 %) 55,950 64,060 (12.7 %)
Total noninterest expense 141,111 136,577 3.3 % 452,406 408,710 10.7 %
Income before income taxes 18,024 50,252 (64.1 %) 5,617 203,218 (97.2 %)
Income tax expense (benefit) 2,030 12,483 (83.7 %) (35,761 ) 51,625 (169.3 %)
Net income 15,994 37,769 (57.7 %) $ 41,378 $ 151,593 (72.7 %)
Preferred stock dividends and discount 7,342 - N/M 21,994 - N/M
Net income available to common equity $ 8,652 $ 37,769 (77.1 %) $ 19,384 $ 151,593 (87.2 %)
Earnings Per Common Share:
Basic $ 0.07 $ 0.30 (76.7 %) $ 0.15 $ 1.19 (87.4 %)
Diluted $ 0.07 $ 0.30 (76.7 %) $ 0.15 $ 1.18 (87.3 %)
Average Common Shares Outstanding:
Basic 127,863 127,553 0.2 % 127,855 127,428 0.3 %
Diluted 127,863 127,622 0.2 % 127,859 127,799 0.0 %
N/M = Not meaningful.
Consolidated Statements of Income (Unaudited) - Quarterly Trend Associated Banc-Corp (in thousands, except per share amounts) 3Q09 2Q09 1Q09 4Q08 3Q08 Interest Income Interest and fees on loans $ 183,264 $ 194,352 $ 202,025 $ 230,872 $ 229,001 Interest and dividends on investment securities and deposits in other financial institutions: Taxable 46,873 46,688 50,903 38,032 32,209 Tax-exempt 8,498 8,819 9,494 9,811 9,887 Interest on federal funds sold and securities purchased under 16 51 63 154 279 agreements to resell Total interest income 238,651 249,910 262,485 278,869 271,376 Interest Expense Interest on deposits 37,811 44,993 46,599 56,402 61,743 Interest on short-term borrowings 2,895 5,088 5,154 10,090 23,958 Interest on long-term funding 18,709 20,691 21,454 20,595 19,158 Total interest expense 59,415 70,772 73,207 87,087 104,859 Net Interest Income 179,236 179,138 189,278 191,782 166,517 Provision for loan losses 95,410 155,022 105,424 65,044 55,011 Net interest income after provision for loan losses 83,826 24,116 83,854 126,738 111,506 Noninterest Income Trust service fees 9,057 8,569 8,477 8,248 10,020 Service charges on deposit accounts 30,829 29,671 27,205 30,946 33,609 Card-based and other nondeposit fees 11,586 11,858 10,174 12,297 12,517 Retail commissions 15,041 14,829 15,512 15,541 14,928 Total core fee-based revenue 66,513 64,927 61,368 67,032 71,074 Mortgage banking, net (909 ) 28,297 4,267 (1,227 ) 3,571 Treasury management fees, net 226 2,393 2,626 (33 ) 1,935 Bank owned life insurance income 3,789 3,161 5,772 4,711 5,235 Asset sale gains (losses), net (126 ) (1,287 ) (1,107 ) (1,054 ) 573 Investment securities gains (losses), net (42 ) (1,385 ) 10,596 (35,298 ) (13,585 ) Other 5,858 5,835 5,455 6,943 6,520 Total noninterest income 75,309 101,941 88,977 41,074 75,323 Noninterest Expense Personnel expense 73,501 81,171 77,098 77,374 78,395 Occupancy 11,949 12,341 12,881 13,134 12,037 Equipment 4,575 4,670 4,589 4,785 5,088 Data processing 7,442 8,126 7,597 7,446 7,634 Business development and advertising 3,910 4,943 4,737 6,047 5,175 Other intangible amortization 1,386 1,385 1,386 1,564 1,568 Legal and professional fees 3,349 5,586 4,241 5,311 3,538 Foreclosure/OREO expense 8,688 13,576 5,013 6,716 2,427 FDIC expense 8,451 18,090 5,775 930 791 Other 17,860 20,143 17,947 25,443 19,924 Total noninterest expense 141,111 170,031 141,264 148,750 136,577 Income (loss) before income taxes 18,024 (43,974 ) 31,567 19,062 50,252 Income tax expense (benefit) 2,030 (26,633 ) (11,158 ) 2,203 12,483 Net income (loss) 15,994 (17,341 ) 42,725 16,859 37,769 Preferred stock dividends and discount 7,342 7,331 7,321 3,250 - Net income (loss) available to common equity $ 8,652 $ (24,672 ) $ 35,404 $ 13,609 $ 37,769 Earnings (Loss) Per Common Share: Basic $ 0.07 $ (0.19 ) $ 0.28 $ 0.11 $ 0.30 Diluted $ 0.07 $ (0.19 ) $ 0.28 $ 0.11 $ 0.30 Average Common Shares Outstanding: Basic 127,863 127,861 127,839 127,717 127,553 Diluted 127,863 127,861 127,845 127,810 127,622
Selected Quarterly Information Associated Banc-Corp (in thousands, except per share and full time equivalent employee YTD 2009 YTD 2008 3rd Qtr 2009 2nd Qtr 2009 1st Qtr 2009 4th Qtr 2008 3rd Qtr 2008 data) Summary of Operations Net interest income $ 547,652 $ 504,366 $ 179,236 $ 179,138 $ 189,278 $ 191,782 $ 166,517 Provision for loan losses 355,856 137,014 95,410 155,022 105,424 65,044 55,011 Asset sale gains (losses), net (2,520 ) (614 ) (126 ) (1,287 ) (1,107 ) (1,054 ) 573 Investment securities gains (losses), net 9,169 (17,243 ) (42 ) (1,385 ) 10,596 (35,298 ) (13,585 ) Noninterest income (excluding securities & asset gains) 259,578 262,433 75,477 104,613 79,488 77,426 88,335 Noninterest expense 452,406 408,710 141,111 170,031 141,264 148,750 136,577 Income (loss) before income taxes 5,617 203,218 18,024 (43,974 ) 31,567 19,062 50,252 Income tax expense (benefit) (35,761 ) 51,625 2,030 (26,633 ) (11,158 ) 2,203 12,483 Net income (loss) 41,378 151,593 15,994 (17,341 ) 42,725 16,859 37,769 Net income (loss) available to common equity 19,384 151,593 8,652 (24,672 ) 35,404 13,609 37,769 Taxable equivalent adjustment 18,632 20,809 5,938 6,150 6,544 6,902 6,899 Per Common Share Data Net income (loss): Basic $ 0.15 $ 1.19 $ 0.07 $ (0.19 ) $ 0.28 $ 0.11 $ 0.30 Diluted 0.15 1.18 0.07 (0.19 ) 0.28 0.11 0.30 Dividends 0.42 0.95 0.05 0.05 0.32 0.32 0.32 Market Value: High $ 21.39 $ 29.23 $ 12.67 $ 19.00 $ 21.39 $ 24.21 $ 25.92 Low 9.21 14.85 9.21 12.50 10.60 15.72 14.85 Close 11.42 19.95 11.42 12.50 15.45 20.93 19.95 Book value 18.88 18.52 18.88 18.49 18.68 18.54 18.52 Tangible book value 11.38 10.96 11.38 10.97 11.15 10.99 10.96 Performance Ratios (annualized) Earning assets yield 4.75 % 5.90 % 4.62 % 4.70 % 4.94 % 5.57 % 5.58 % Interest-bearing liabilities rate 1.51 2.71 1.36 1.57 1.61 2.00 2.44 Net interest margin 3.50 3.57 3.50 3.40 3.59 3.88 3.48 Return on average assets 0.23 0.93 0.27 (0.29 ) 0.71 0.30 0.68 Return on average equity 1.90 8.57 2.19 (2.40 ) 5.98 2.58 6.38 Return on average tangible common equity (1) 1.81 14.52 2.39 (6.88 ) 10.05 3.83 10.83 Efficiency ratio (2) 54.78 51.89 54.14 58.65 51.31 53.87 52.18 Effective tax rate (benefit) (636.66 ) 25.40 11.26 (60.57 ) (35.35 ) 11.56 24.84 Dividend payout ratio (3) 280.00 79.83 71.43 N/M 114.29 290.91 106.67 Average Balances Assets $ 23,891,164 $ 21,833,664 $ 23,362,954 $ 24,064,567 $ 24,255,783 $ 22,646,421 $ 22,072,948 Earning assets 21,619,838 19,639,329 21,063,016 21,847,267 21,959,077 20,436,483 19,884,434 Interest-bearing liabilities 17,994,706 16,904,447 17,412,341 18,125,389 18,457,879 17,363,481 17,107,551 Loans 15,929,440 16,011,627 15,248,895 16,122,063 16,430,347 16,285,881 16,203,717 Deposits 15,808,077 13,616,134 16,264,181 16,100,686 15,045,976 14,395,626 13,710,297 Wholesale funding 5,006,918 5,707,467 4,067,830 4,876,970 6,098,266 5,496,248 5,876,051 Common stockholders' equity 2,395,478 2,363,033 2,394,410 2,400,664 2,391,325 2,376,639 2,353,606 Stockholders' equity 2,904,521 2,363,033 2,904,210 2,909,700 2,899,603 2,602,917 2,353,606 Common stockholders' equity / assets 10.03 % 10.82 % 10.25 % 9.98 % 9.86 % 10.49 % 10.66 % Stockholders' equity / assets 12.16 % 10.82 % 12.43 % 12.09 % 11.95 % 11.49 % 10.66 % At Period End Assets $ 22,881,527 $ 24,013,567 $ 24,349,725 $ 24,192,067 $ 22,487,394 Loans 14,765,597 15,310,107 15,917,952 16,283,908 16,272,487 Allowance for loan losses 412,530 407,167 313,228 265,378 246,189 Goodwill 929,168 929,168 929,168 929,168 929,168 Mortgage servicing rights at fair value, net 61,066 59,762 39,754 45,568 53,977 Other intangible assets 30,440 31,826 33,211 34,597 36,161 Deposits 16,446,109 16,320,391 15,873,189 15,154,796 14,245,667 Wholesale funding 3,279,100 4,474,542 5,326,734 5,565,583 5,667,737 Stockholders' equity 2,924,659 2,873,768 2,897,169 2,876,503 2,364,247 Stockholders' equity / assets 12.78 % 11.97 % 11.90 % 11.89 % 10.51 % Tangible common equity / tangible assets (4) 6.64 % 6.09 % 6.10 % 6.05 % 6.50 % Tangible equity / tangible assets (5) 8.96 % 8.30 % 8.27 % 8.23 % 6.50 % Shares outstanding, end of period 127,864 127,861 127,860 127,762 127,646 Selected trend information Average full time equivalent employees 5,004 5,116 5,143 5,109 5,141 Trust assets under management, at market value $ 5,200,000 $ 5,000,000 $ 4,800,000 $ 5,100,000 $ 5,600,000 Mortgage loans originated for sale during period 638,229 1,335,175 1,079,732 247,465 217,993 Mortgage portfolio serviced for others 7,473,000 6,904,000 6,582,000 6,606,000 6,596,000 Mortgage servicing rights, net / Portfolio serviced for others 0.82 % 0.87 % 0.60 % 0.69 % 0.82 % 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.
Financial Summary and Comparison
Associated Banc-Corp Three months ended Nine months ended
September 30, September 30,
(in thousands) 2009 2008 % Change 2009 2008 % Change
Allowance for Loan Losses
Beginning balance $ 407,167 $ 229,605 77.3 % $ 265,378 $ 200,570 32.3 %
Provision for loan losses 95,410 55,011 73.4 % 355,856 137,014 159.7 %
Charge offs (92,340 ) (40,344 ) 128.9 % (215,839 ) (98,076 ) 120.1 %
Recoveries 2,293 1,917 19.6 % 7,135 6,681 6.8 %
Net charge offs (90,047 ) (38,427 ) 134.3 % (208,704 ) (91,395 ) 128.4 %
Ending balance $ 412,530 $ 246,189 67.6 % $ 412,530 $ 246,189 67.6 %
Credit Quality Sep09 vs Jun09 Sep09 vs Sep08
Sept 30, 2009 Jun 30, 2009 % Change Mar 31, 2009 Dec 31, 2008 Sept 30, 2008 % Change
Nonaccrual loans $ 845,320 $ 700,514 20.7 % $ 433,246 $ 326,857 $ 290,039 191.5 %
Loans 90 or more days past due and still accruing 23,174 19,785 17.1 % 16,002 13,811 14,631 58.4 %
Restructured loans 17,256 13,089 31.8 % 2,927 - - N/M
Total nonperforming loans 885,750 733,388 20.8 % 452,175 340,668 304,670 190.7 %
Other real estate owned (OREO) 60,010 51,633 16.2 % 54,883 48,710 46,473 29.1 %
Total nonperforming assets $ 945,760 $ 785,021 20.5 % $ 507,058 $ 389,378 $ 351,143 169.3 %
Provision for loan losses 95,410 155,022 (38.5 %) 105,424 65,044 55,011 73.4 %
Net charge offs 90,047 61,083 47.4 % 57,574 45,855 38,427 134.3 %
Allowance for loan losses / loans 2.79 % 2.66 % 1.97 % 1.63 % 1.51 %
Allowance for loan losses / nonperforming loans 46.57 55.52 69.27 77.90 80.81
Nonperforming loans / total loans 6.00 4.79 2.84 2.09 1.87
Nonperforming assets / total loans plus OREO 6.38 5.11 3.17 2.38 2.15
Nonperforming assets / total assets 4.13 3.27 2.08 1.61 1.56
Net charge offs / average loans (annualized) 2.34 1.52 1.42 1.12 0.94
Year-to-date net charge offs / average loans 1.75 1.47 1.42 0.85 0.76
Nonperforming loans by type:
Commercial, financial & agricultural $ 209,843 $ 187,943 11.7 % $ 102,257 $ 104,664 $ 85,995 144.0 %
Commercial real estate 213,736 165,929 28.8 % 100,838 62,423 52,875 304.2 %
Real estate - construction 301,844 264,402 14.2 % 152,008 90,048 98,205 207.4 %
Lease financing 18,814 1,929 N/M 1,707 187 83 N/M
Total commercial 744,237 620,203 20.0 % 356,810 257,322 237,158 213.8 %
Home equity 45,905 38,474 19.3 % 35,224 31,035 25,372 80.9 %
Installment 7,387 7,545 (2.1 %) 6,755 7,155 6,035 22.4 %
Total retail 53,292 46,019 15.8 % 41,979 38,190 31,407 69.7 %
Residential mortgage 88,221 67,166 31.3 % 53,386 45,156 36,105 144.3 %
Total nonperforming loans $ 885,750 $ 733,388 20.8 % $ 452,175 $ 340,668 $ 304,670 190.7 %
Loans past due 30-89 days $ 175,492 $ 209,323 (16.2 %) $ 245,854 $ 190,112 $ 191,514 (8.4 %)
Potential problem loans $ 1,573,903 $ 1,426,171 10.4 % $ 1,016,551 $ 937,802 $ 765,641 105.6 %
Period End Loan Composition Sep09 vs Jun09 Sep09 vs Sep08
Sept 30, 2009 Jun 30, 2009 % Change Mar 31, 2009 Dec 31, 2008 Sept 30, 2008 % Change
Commercial, financial & agricultural $ 3,613,457 $ 3,904,925 (7.5 %) $ 4,160,274 $ 4,388,691 $ 4,343,208 (16.8 %)
Commercial real estate 3,902,340 3,737,749 4.4 % 3,575,301 3,566,551 3,534,791 10.4 %
Real estate - construction 1,611,857 1,963,919 (17.9 %) 2,228,090 2,260,888 2,363,116 (31.8 %)
Lease financing 102,130 110,262 (7.4 %) 116,100 122,113 125,907 (18.9 %)
Total commercial 9,229,784 9,716,855 (5.0 %) 10,079,765 10,338,243 10,367,022 (11.0 %)
Home equity 2,591,262 2,656,747 (2.5 %) 2,784,248 2,883,317 2,892,952 (10.4 %)
Installment 885,970 844,065 5.0 % 853,214 827,303 842,741 5.1 %
Total retail 3,477,232 3,500,812 (0.7 %) 3,637,462 3,710,620 3,735,693 (6.9 %)
Residential mortgage 2,058,581 2,092,440 (1.6 %) 2,200,725 2,235,045 2,169,772 (5.1 %)
Total loans $ 14,765,597 $ 15,310,107 (3.6 %) $ 15,917,952 $ 16,283,908 $ 16,272,487 (9.3 %)
Period End Deposit Composition Sep09 vs Jun09 Sep09 vs Sep08
Sept 30, 2009 Jun 30, 2009 % Change Mar 31, 2009 Dec 31, 2008 Sept 30, 2008 % Change
Demand $ 2,984,486 $ 2,846,570 4.8 % $ 2,818,088 $ 2,814,079 $ 2,545,779 17.2 %
Savings 871,539 898,527 (3.0 %) 895,310 841,129 888,731 (1.9 %)
Interest-bearing demand 2,395,429 2,242,800 6.8 % 1,796,724 1,796,405 1,667,640 43.6 %
Money market 5,724,418 5,410,498 5.8 % 5,410,095 4,926,088 4,608,686 24.2 %
Brokered CDs 653,090 930,582 (29.8 %) 922,491 789,536 579,607 12.7 %
Other time deposits 3,817,147 3,991,414 (4.4 %) 4,030,481 3,987,559 3,955,224 (3.5 %)
Total deposits $ 16,446,109 $ 16,320,391 0.8 % $ 15,873,189 $ 15,154,796 $ 14,245,667 15.4 %
Network transaction deposits included above in
interest-bearing demand and money market $ 1,767,271 $ 1,605,722 10.1 % $ 1,759,656 $ 1,530,675 $ 1,356,616 30.3 %
Customer repo sweeps (a) $ 242,575 $ 269,809 (10.1 %) $ 333,706 $ 505,788 $ 657,032 (63.1 %)
(a) Included within short-term borrowings.
N/M - Not meaningful.
Net Interest Income Analysis - Taxable Equivalent Basis
Associated Banc-Corp Nine months ended September 30, 2009 Nine months ended September 30, 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 $ 9,887,868 $ 334,930 4.53 % $ 10,405,893 $ 455,899 5.85 %
Residential mortgage 2,457,663 98,159 5.33 2,193,992 97,776 5.95
Retail 3,583,909 149,098 5.56 3,411,742 170,962 6.69
Total loans 15,929,440 582,187 4.88 16,011,627 724,637 6.04
Investments and other 5,690,398 187,491 4.39 3,627,702 144,012 5.29
Total earning assets 21,619,838 769,678 4.75 19,639,329 868,649 5.90
Other assets, net 2,271,326 2,194,335
Total assets $ 23,891,164 $ 21,833,664
Interest-bearing liabilities:
Savings deposits $ 884,098 $ 1,034 0.16 % $ 894,389 $ 3,118 0.47 %
Interest-bearing demand deposits 2,002,929 3,164 0.21 1,791,808 13,131 0.98
Money market deposits 5,300,646 34,516 0.87 4,010,968 61,577 2.05
Time deposits, excluding Brokered CDs 3,951,577 82,275 2.78 3,959,126 115,830 3.91
Total interest-bearing deposits, excluding Brokered CDs 12,139,250 120,989 1.33 10,656,291 193,656 2.43
Brokered CDs 848,538 8,414 1.33 540,689 13,248 3.27
Total interest-bearing deposits 12,987,788 129,403 1.33 11,196,980 206,904 2.47
Wholesale funding 5,006,918 73,991 1.97 5,707,467 136,570 3.20
Total interest-bearing liabilities 17,994,706 203,394 1.51 16,904,447 343,474 2.71
Noninterest-bearing demand deposits 2,820,289 2,419,154
Other liabilities 171,648 147,030
Stockholders' equity 2,904,521 2,363,033
Total liabilities and stockholders' equity $ 23,891,164 $ 21,833,664
Net interest income and rate spread (1) $ 566,284 3.24 % $ 525,175 3.19 %
Net interest margin (1) 3.50 % 3.57 %
Taxable equivalent adjustment $ 18,632 $ 20,809
Three months ended September 30, 2009 Three months ended September 30, 2008
Average Interest Average Average Interest Average
Balance Income / Expense Yield / Rate Balance Income / Expense Yield / Rate
Earning assets:
Loans: (1) (2) (3)
Commercial $ 9,503,565 $ 106,506 4.45 % $ 10,393,313 $ 141,040 5.40 %
Residential mortgage 2,270,025 29,928 5.26 2,151,163 31,452 5.84
Retail 3,475,305 47,670 5.46 3,659,241 57,477 6.26
Total loans 15,248,895 184,104 4.80 16,203,717 229,969 5.65
Investments and other 5,814,121 60,485 4.16 3,680,717 48,306 5.25
Total earning assets 21,063,016 244,589 4.62 19,884,434 278,275 5.58
Other assets, net 2,299,938 2,188,514
Total assets $ 23,362,954 $ 22,072,948
Interest-bearing liabilities:
Savings deposits $ 887,176 $ 353 0.16 % $ 911,216 $ 1,027 0.45 %
Interest-bearing demand deposits 2,330,976 1,298 0.22 1,771,091 3,366 0.76
Money market deposits 5,540,272 10,538 0.75 4,191,771 19,577 1.86
Time deposits, excluding Brokered CDs 3,847,942 23,998 2.47 3,941,384 34,860 3.52
Total interest-bearing deposits, excluding Brokered CDs 12,606,366 36,187 1.14 10,815,462 58,830 2.16
Brokered CDs 738,145 1,624 0.87 416,038 2,913 2.79
Total interest-bearing deposits 13,344,511 37,811 1.12 11,231,500 61,743 2.19
Wholesale funding 4,067,830 21,604 2.11 5,876,051 43,116 2.92
Total interest-bearing liabilities 17,412,341 59,415 1.36 17,107,551 104,859 2.44
Noninterest-bearing demand deposits 2,919,670 2,478,797
Other liabilities 126,733 132,994
Stockholders' equity 2,904,210 2,353,606
Total liabilities and stockholders' equity $ 23,362,954 $ 22,072,948
Net interest income and rate spread (1) $ 185,174 3.26 % $ 173,416 3.14 %
Net interest margin (1) 3.50 % 3.48 %
Taxable equivalent adjustment $ 5,938 $ 6,899
(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.
SOURCE: Associated Banc-Corp
Associated Banc-Corp Investors: Joseph B. Selner, Chief Financial Officer, 920-491-7120 Media: Janet L. Ford, SVP Public Relations Director, 414-704-1211 janet.ford@associatedbank.com
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