Green Bay, Wis. –– October 15, 2015 –– Associated Banc-Corp (NYSE: ASB) today reported net income
available to common shareholders of $47 million, or $0.31 per common share, for the quarter ended
September 30, 2015. This compares to net income available to common shareholders of $48 million, or $0.31
per common share, for the quarter ended June 30, 2015.
According to the recently released FDIC 2015 U.S. Bank Branch Summary of Deposits Data, Associated was
the fastest growing bank operating in Wisconsin for the year ended June 30, 2015, based on deposit market
“We have enjoyed strong deposit growth over the prior year and remarkable inflows during the third quarter.
We are pleased to have increased our market share in each of the states in our branch footprint. Our
continued focus on the customer experience has allowed us to gain market share in a competitive and
transforming industry,” said President and CEO Philip B. Flynn. “As we anticipated, commercial loan growth
slowed during the third quarter. Overall loan growth was supported by strong production in our residential
lending area and we remain on track to deliver high single digit loan growth for the year.”
Average loans of $18.5 billion are up 8% from a year ago quarter
Average Total Consumer loans grew $231 million, or 3% from the second quarter
Average Total Commercial loans grew $34 million from the second quarter
Average deposits grew to a record $20.3 billion, up 14% from a year ago quarter
Average noninterest-bearing demand deposits grew $283 million, or 7% from the second quarter
Net interest income of $171 million increased $4 million, or 2% from the second quarter
Net interest margin of 2.82% reflects 1 basis point of compression
Noninterest income of $80 million reflects lower mortgage banking revenue and reduced insurance commissions
Noninterest expenses of $171 million decreased $5 million, or 3% from the second quarter
Return on average common equity Tier 1 was 10.2% for the third quarter
Capital ratios remain strong with a common equity Tier 1 ratio of 9.39% at September 30, 2015
THIRD QUARTER 2015 FINANCIAL RESULTS
Average loans of $18.5 billion increased $264 million, or 1% from the second quarter, and have increased $1.3
billion, or 8% from the year ago quarter. Total consumer average loans were up $231 million from the prior
quarter. Residential lending growth of $247 million was the largest contributor for the quarter. Commercial real
estate lending average balances grew $111 million, or 3% from the second quarter. Lower levels of general
commercial lending and mortgage warehouse borrowings contributed to commercial and business lending
average balances declining $78 million, or 1% from the second quarter.
Average deposits of $20.3 billion were up $667 million, or 3% compared to the second quarter and have
increased $2.4 billion, or 14% from the year ago quarter. Money market average balances increased $436
million, or 5% from the second quarter. Total demand deposit average balances increased $231 million, or 3%
from the prior quarter. Savings average balances increased slightly from the second quarter. Time deposits
declined slightly during the quarter.
During the third quarter, the Company used deposit funding to repay over $1 billion of short and long term
advances borrowed from the Federal Home Loan Bank of Chicago.
Net Interest Income and Net Interest Margin
Net interest income of $171 million was up $4 million, or 2% from the second quarter and down $2 million from
the year ago quarter. Third quarter net interest margin was 2.82%, a decrease of 1 basis point from the
second quarter. The third quarter yield on earning assets declined 2 basis points to 3.13% from 3.15% in the
prior quarter. The decline is primarily attributable to yield compression in the investment portfolio. The third
quarter yield on loans of 3.38% was unchanged due to slower commercial growth and less new production
dilution to the margin. Third quarter deposit expense increased 1 basis point to 22 basis points while the
overall cost of funding was unchanged at 40 basis points from the prior quarter.
Noninterest income for the third quarter was $80 million, down $7 million or 8% from the second quarter and
up $5 million or 7% from the year ago quarter. In the third quarter, core fee-based revenues decreased
primarily due to $3 million of seasonally lower insurance commissions. Mortgage banking income also
decreased $3 million from the second quarter, primarily driven by a $5 million net change in the quarter-end
mark-to-market of the residential mortgage pipeline due to interest rate movements. Third quarter net
investment securities gains of $3 million were primarily related to the further restructuring of the Company’s
investment portfolio from Fannie Mae and Freddie Mac mortgage backed securities into Ginnie Mae securities.
Aggregate net asset and investment securities gains were flat quarter over quarter. The significant year over
year noninterest income increase is primarily attributable to a $4 million reserve for remediation of legacy debt
protection products booked in the third quarter of 2014.
Total noninterest expense was $171 million, down $5 million or 3% from the second quarter, and down
modestly from the year ago quarter. In the third quarter, personnel expense decreased $2 million from the
prior quarter primarily due to lower severance expense. Technology expense decreased $2 million from the
second quarter related to the completion of several projects. Several other expense categories including
business development and advertising, foreclosure/OREO expense, loan expense, legal and professional fees,
and occupancy, were also down in the third quarter.
Third quarter income taxes were $22 million, with an effective tax rate of 30%, compared to $22 million and an
effective tax rate of 31% in the prior quarter.
Net charge offs of $8 million were down $1 million from the second quarter, and up $5 million from the year
ago quarter. Potential problem loans increased to $264 million from $200 million in the second quarter, and
increased from $220 million in the prior year period, due to the migration of a small number of credits.
The third quarter provision for credit losses was $8 million, up $3 million from the prior quarter.
Nonaccrual loans of $147 million were down 8% compared to the second quarter, and down 20% from the
year ago quarter. The nonaccrual loans to total loans ratio improved to 0.80% in the third quarter, down from
0.88% in the prior quarter and down from 1.07% in the year ago quarter.
The Company’s allowance for loan losses of $263 million was up $1 million from the second quarter, and down
$4 million from the year ago quarter. The allowance for loan losses to total loans ratio declined modestly to
1.42% in the third quarter.
The Company’s capital position remains strong, with a common equity Tier 1 ratio of 9.39% at September 30,
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 2015 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 15, 2015. Interested parties can listen to the call live on the internet through the investor relations
section of the company's website, http://investor.associatedbank.com or by dialing 877-407-8037. The slide
presentation for the call will be available on the company's website just prior to the call. The number for
international callers is 201-689-8037. Participants should ask the operator for the Associated Banc-Corp third
quarter 2015 earnings call.
An audio archive of the webcast will be available on the company’s website at
http://investor.associatedbank.com approximately fifteen minutes after the call is over.