GREEN BAY, Wis., Oct. 20, 2016 /PRNewswire/ -- Associated
Banc-Corp (NYSE: ASB) today reported net income available to common equity of $52 million, or
$0.34 per common share, for the quarter ended September 30,
2016. This compares to net income available to common equity of $47 million, or
$0.31 per common share, for both the quarters ended June 30, 2016 and
September 30, 2015.
"In the third quarter, we reached record deposit levels. We saw significant seasonal deposit inflows and we are particularly
pleased with double-digit year over year growth in demand deposits. Average loans continued to grow and we remain on track to
meet our 2016 loan guidance. Mortgage banking activity and record capital markets revenues drove noninterest income higher in the
third quarter, which more than offset seasonally lower insurance commissions and additional loan loss provisions," said President
and CEO Philip B. Flynn.
THIRD QUARTER SUMMARY
- Average loans of $20.1 billion increased $411 million, or 2%
from the second quarter
- Total commercial lending grew 10% year over year
- Average deposits of $21.4 billion increased $1.1 billion, or 5%
from the second quarter
- Noninterest-bearing demand deposits grew 13% year over year
- Net interest income of $179 million was up $2 million, or 1%
from the second quarter
- Net interest income grew 5% year over year
- Net interest margin of 2.77%, down from 2.81% in the second quarter
- Net interest margin was down 5 basis points year over year
- Provision for credit losses of $21 million was up $7 million
from the second quarter
- Noninterest income of $95 million was up $13 million, or 16%
from the second quarter
- Noninterest expense of $175 million was up $1 million, or 1%
from the second quarter
- Return on average common equity Tier 1 (CET1) was 10.5%, up from 9.9% in the second quarter
- Total dividends per common share of $0.11 were up 10% from the year ago quarter
- Capital ratios remain strong with a CET1 ratio of 9.3% at quarter end, compared to 9.2% at prior quarter end
THIRD QUARTER RESULTS
Loans
Third quarter average loans of $20.1 billion increased $411
million, or 2% from the second quarter, and have increased $1.6 billion, or 9% from the year
ago quarter.
With respect to third quarter average balances,
- Commercial real estate lending grew $202 million, or 4% from the second quarter to
$4.9 billion. Commercial real estate lending has increased $595
million, or 14% from the year ago quarter.
- Consumer lending grew $106 million, net of $239 million of
portfolio loan sales, or 1% from the second quarter to $7.6 billion, and has increased
$517 million, or 7% from the year ago quarter.
- Commercial and business lending grew $103 million, or 1% from the second quarter to
$7.6 billion, with growth driven by mortgage warehouse and power and utilities. Commercial and
business lending has increased $488 million, or 7% from the year ago quarter.
Deposits
Third quarter average deposits of $21.4 billion increased $1.1
billion, or 5% from the second quarter, and have increased $1.1 billion, or 5% from the year
ago quarter.
With respect to third quarter average balances,
- Interest-bearing demand deposits grew $511 million, or 14% from the second quarter to
$4.2 billion, and have grown $952 million, or 30% from the year ago
quarter.
- Noninterest-bearing demand deposits grew $192 million, or 4% from the second quarter to
$5.2 billion, and have grown $588 million, or 13% from the year ago
quarter.
- Savings and time deposits increased modestly from the second quarter. Savings deposits have grown $91 million, or 7% from the year ago quarter. Time deposits have decreased $71
million, or 4% from the year ago quarter.
- Money market deposits grew $396 million, or 5% from the second quarter to $9.1 billion, but have decreased $449 million, or 5% from the year ago quarter
as we continue to optimize our funding costs.
Net Interest Income and Net Interest Margin
Third quarter net interest income of $179 million was up $2
million, or 1% from the second quarter, and was up $8 million, or 5% from the year ago
quarter. Third quarter net interest margin of 2.77% was 5 basis points lower than the year ago quarter.
- Interest and fees on loans increased $4 million, or 3% from the second quarter. The total
loan yield of 3.35% was unchanged from the second quarter.
- Interest expense on deposits increased $1 million, or 12% from the second quarter. Total
deposits costs, including the benefit of free funds, were essentially unchanged from the second quarter.
- The yields on investment securities declined from the second quarter, and accounted for the majority of the margin
compression.
Noninterest Income
Third quarter total noninterest income of $95 million was up $13
million, or 16% from the second quarter, and was up $15 million, or 19% from the year ago
quarter.
- Mortgage banking income increased $14 million to $18 million
for the quarter. The Company benefitted from higher volumes of mortgage loans originated for sale during the quarter, and
recorded a $2 million positive fair value mark on its loan pipeline at quarter end. Portfolio
loan sales generated $9 million of gross gains during the quarter.
- Capital market fees increased $3 million to $7 million for the
quarter on higher derivative and syndication activity.
- Fee-based revenue decreased $2 million from the second quarter due to seasonally lower
insurance commissions. All other fee-based revenue categories were higher in the third quarter, including service charges on
deposit accounts, trust service fees, card-based and other nondeposit fees, and brokerage and annuity commissions.
- All other noninterest income categories, collectively, decreased $2 million from the second
quarter, primarily attributable to lower investment securities gains. The Company did not engage in further restructuring of
its investment portfolio during the third quarter.
Noninterest Expense
Third quarter total noninterest expense of $175 million was up $1
million, or 1% from the second quarter, and was up $4 million, or 2% from the year ago
quarter.
- Personnel expense increased $2 million from the second quarter and included $1 million of severance.
- Occupancy expense increased from the second quarter, due to a $2 million lease termination
charge related to planned consolidation of office space in Chicago.
- All other noninterest expense categories, collectively, decreased $3 million from the prior
quarter primarily related to lower business development and advertising expense.
Taxes
Third quarter income tax expense was $24 million with an effective tax rate of 31%, compared to
$21 million and 30% in the second quarter, and $22 million and 30% in
the year ago quarter.
Credit
The provision for credit losses was $21 million in the third quarter, up $7 million from the prior quarter, with the increase primarily attributable to the Company's oil and gas
portfolio.
- Nonaccrual loans of $290 million were up $7 million from the
second quarter. The nonaccrual loans to total loans ratio was 1.46% in the third quarter, compared to 1.43% in the prior
quarter.
- Net charge offs of $18 million were down $2 million from the
second quarter. Net charge offs in the third quarter were primarily attributable to oil and gas related charge offs of
$22 million, which were partially offset by recoveries in the commercial portfolio.
- Potential problem loans of $441 million were down $16 million
from the second quarter.
- The allowance for loan losses of $270 million was up $2 million
from the second quarter. The allowance for loan losses to total loans was 1.36% in the third quarter, compared to 1.35% in the
second quarter.
- The allowance related to the oil and gas portfolio was $38 million, compared to $42 million at June 30, 2016, and $29 million at
September 30, 2015. The allowance on this portfolio reflects year to date net charge offs of
$53 million. The allowance represented 5.5% of total oil and gas loans at September 30, 2016, compared to 5.6% at June 30, 2016, and 3.8% at September 30, 2015.
Capital
The Company's capital position remains strong, with a common equity Tier 1 ratio of 9.3% at September
30, 2016. The Company's capital ratios continue to be in excess of the Basel III "well-capitalized" regulatory
benchmarks on a fully phased in basis.
THIRD QUARTER 2016 EARNINGS RELEASE CONFERENCE CALL
The Company will host a conference call for investors and analysts at 4:00 p.m. Central Time
(CT) today, October 20, 2016. Interested parties can access the live webcast of the call
through the Investor Relations section of the Company's website, http://investor.associatedbank.com. Parties may also dial into the call at 877-407-8037 (domestic) or
201-689-8037 (international) and request the Associated Banc-Corp third quarter 2016 earnings call. The third quarter 2016
financial tables and an accompanying slide presentation will be available on the Company's website just prior to the call. An
audio archive of the webcast will be available on the Company's website approximately fifteen minutes after the call is over.
ABOUT ASSOCIATED BANC-CORP
Associated Banc-Corp (NYSE: ASB) has total assets of $29 billion and is one of the top 50
publicly traded U.S. bank holding companies. Headquartered in Green Bay, Wisconsin,
Associated is a leading Midwest banking franchise, offering a full range of financial products and services from over 200 banking
locations serving more than 100 communities throughout Wisconsin, Illinois and Minnesota, and commercial financial services in Indiana, Michigan, Missouri, Ohio, and Texas. Associated Bank, N.A. is an Equal Housing Lender, Equal
Opportunity Lender and Member FDIC. More information about Associated Banc-Corp is available at www.associatedbank.com.
FORWARD LOOKING STATEMENTS
Statements made in this document which are not purely historical are forward-looking statements, as defined in the Private
Securities Litigation Reform Act of 1995. This includes any statements regarding management's plans, objectives, or goals for
future operations, products or services, and forecasts of its revenues, earnings, or other measures of performance. Such
forward-looking statements may be identified by the use of words such as "believe," "expect," "anticipate," "plan," "estimate,"
"should," "will," "intend," "outlook," or similar expressions. Forward-looking statements are based on current management
expectations and, by their nature, are subject to risks and uncertainties. Actual results may differ materially from those
contained in the forward-looking statements. Factors which may cause actual results to differ materially from those
contained in such forward-looking statements include those identified in the Company's most recent Form 10-K and subsequent SEC
filings. Such factors are incorporated herein by reference.
NON-GAAP FINANCIAL MEASURES
This press release contains references to measures which are not defined in generally accepted accounting principles
("GAAP"). Information concerning these non-GAAP financial measures can be found in the financial tables.
Investor Contact:
Teresa Gutierrez, Senior Vice President, Director of Investor
Relations
920-491-7059
Media Contact:
Jennifer Kaminski, Vice President, Manager of Public Relations
920-491-7576
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SOURCE Associated Banc-Corp