Associated 2nd Quarter Earnings Per Diluted Share up 12 Percent.Business Editors GREEN BAY, Wis adv. 1. Certainly; really; indeed. v. t. 1. To think; to suppose; to imagine; - used chiefly in the first person sing. present tense, I wis. See the Note under Ywis. .--(BUSINESS WIRE)--July 17, 2003 Associated Banc-Corp Associated Banc-Corp is a bank holding company headquartered in Green Bay, Wisconsin. As of early 2007, it had $20.8 billion in assets and was the 41st largest bank holding company in the United States.[1] The company has over 5101 employees. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :ASBC ASBC American Society of Brewing Chemists (St. Paul, MN) ASBC American Small Business Coalition ASBC Air and Space Basic Course (USAF) ASBC Archaeological Society of British Columbia ) earned $.76 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share in the quarter that ended June June: see month. 30, 2003, a 12 percent increase from $.68 per diluted share for the same period in 2002. Net income was $56.7 million, compared to $52.3 million for the comparable quarter of 2002. Return on average assets was 1.51 percent in the second quarter 2003 compared to 1.47 percent in the second quarter of 2002. Return on average equity was 17.37 percent compared to 16.79 percent in the year-earlier quarter. For the six months ended June 30, 2003, diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of were $1.53, up 12 percent from $1.37 per diluted share in the same period in 2002. Return on average assets was 1.55 percent and return on average equity was 17.86 percent, compared to 1.51 percent and 17.58 percent, respectively, for the six months ended June 30, 2002. "Associated is pleased to have delivered such positive results in the second quarter," Associated President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. Paul Paul, 1901–64, king of the Hellenes (1947–64), brother and successor of George II. He married (1938) Princess Frederika of Brunswick. During Paul's reign Greece followed a pro-Western policy, and the Cyprus question was temporarily resolved. Beideman said. "While lower interest rates have put pressure on our net interest margin, they have also contributed to high levels of mortgage production and sales activity, which contributed significantly to our financial results," he said. Net interest income was $127 million for the second quarter, compared to $126 million in the year-earlier period, and $127 million for the previous quarter. The net interest margin for second quarter 2003 was 3.79 percent, down from 3.96 percent a year ago and 3.87 percent for first quarter 2003. For the first six months of 2003, net interest income was $255 million, up 5 percent compared to $243 million for the same period of 2002. Net interest margin was 3.83 percent for the first six months of 2003, compared to 3.94 percent for the same period in 2002. Total loans at the end of the second quarter 2003 were $10.4 billion, an increase of $505 million or 5 percent compared to a year earlier. The growth occurred in commercial loans, up $557 million, or 9 percent, while consumer and residential real estate loans were relatively unchanged compared to a year ago. Total loans, again led by commercial loan growth, were up 4 percent on an annualized annualized Of or relating to a variable that has been mathematically converted to a yearly rate. Inflation and interest rates are generally annualized since it is on this basis that these two variables are ordinarily stated and compared. basis since March 31, 2003. Total deposits were $9.5 billion at June 30, 2003, up 5 percent, or $427 million, compared to a year ago. Transaction deposit accounts (demand, savings, interest-bearing Adj. 1. interest-bearing - of financial obligations on which interest is paid demand and money market accounts) were $6.2 billion, up 13 percent over June 30, 2002. Time deposits were $3.3 billion at June 30, 2003, compared to $3.5 billion last year, tempered by the prolonged pro·long tr.v. pro·longed, pro·long·ing, pro·longs 1. To lengthen in duration; protract. 2. To lengthen in extent. lower interest rate environment and customer preference to keep funds liquid. Since March 31, 2003, total deposits were up 17 percent on an annualized basis. The provision for loan losses was $12.1 million for the second quarter of 2003, compared to $12.0 million for the same quarter last year, and $13.0 million for the first quarter in 2003. For the first six months of 2003, the provision for loan losses was $25.1 million, compared to $23.3 million for the same period last year. The ratio of the allowance for loan losses was 1.66 percent of total loans at June 30, 2003, and at March 31, 2003, but up from 1.50 percent at June 30, 2002. Net chargeoffs for the second quarter of 2003 were $10.1 million, compared to net chargeoffs of $7.6 million for second quarter 2002 and $5.1 million for the first quarter 2003. For the six months that ended June 30, 2003, annualized net chargeoffs were 0.29 percent of average loans, compared to 0.31 percent for the same period last year. Nonperforming loans were $117 million as of June 30, 2003, up from $94.7 million as of March 31, 2003, and $87.3 million a year ago. The increase in nonperforming loans from the first quarter of 2003 is principally related to two customers, one in the construction industry and one in the hospitality industry. "Most of our commercial customers are managing effectively in the current enviroment and we are working with them as they plan for the future. We believe any significant improvement in asset quality depends on sustained economic improvement," Beideman said. Noninterest income grew to $70.2 million for the second quarter, compared to $49.9 million in the same period of 2002. The continued strong activity in the mortgage and mortgage refinancing Refinancing An extension and/or increase in amount of existing debt. market generated $1.2 billion of mortgages for sale into the secondary market for the second quarter of 2003, similar to the $1.1 billion in first quarter 2003, and up significantly from $0.4 billion in the second quarter of 2002. Mortgage banking revenue of $28.8 million in the second quarter of 2003 was nearly three times that of the year-earlier period. In comparison to the first quarter of 2003, noninterest income was up $5.0 million, with $2.7 million of the increase in mortgage banking income, as well as increased insurance revenue attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk primarily to our previously announced acquisition of CFG CFG Configuration (File Name Extension) CFG Control Flow Graph CFG Context-Free Grammar CFG Club for Growth CFG Cienfuegos, Cuba (city/airport code) CFG Critical Friends Groups Insurance Services, Inc. as of April 1, 2003. Noninterest expense for the second quarter 2003 grew by approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $12.7 million, or 14 percent, compared to the second quarter of 2002, with $9.1 million of the increase coming from higher mortgage servicing Mortgage servicing The collection of monthly payments and penalties, record keeping, payment of insurance and taxes, and possible settlement of default , involved with a mortgage loan. rights expense. While the strong mortgage refinance Refinance 1. When a business or person revises their payment schedule for repaying debt. 2. Replacing an older loan with a new loan offering better terms. Notes: When a business refinances they typically extend the maturity date. activity benefited mortgage banking income in the second quarter, it increased the prepayment speeds Prepayment speed Also called speed, the estimated rate at which mortgagors pay off their loans ahead of schedule, critical in assessing the value of mortgage pass-through securities. of Associated's mortgage portfolio serviced for others, a key factor behind the valuation of mortgage servicing rights. Mortgage servicing rights expense included an $8.5 million addition to the valuation allowance compared to a $.8 million addition in the second quarter of 2002. The mortgage servicing asset at June 30, 2003, represents 0.51 percent of the total $5.5 billion residential mortgage portfolio serviced for others. Compared to first quarter 2003, noninterest expense was up $5.8 million, with $3.0 million of the increase in personnel expense, directly attributable to the addition of CFG personnel, as well as a $1.4 million increase in mortgage servicing rights expense. "Although our first half results are encouraging, our 2003 goal of 10 percent earnings per share growth was predicated on an improving economy, moderate interest rate increases, and increased confidence among consumers and businesses. While economic stimulus stimulus /stim·u·lus/ (stim´u-lus) pl. stim´uli [L.] any agent, act, or influence which produces functional or trophic reaction in a receptor or an irritable tissue. from Washington Washington, town, England Washington, town (1991 pop. 48,856), Sunderland metropolitan district, NE England. Washington was designated one of the new towns in 1964 to alleviate overpopulation in the Tyneside-Wearside area. and recent stock market strength are helpful, a sustained economic recovery may take some time to materialize ma·te·ri·al·ize v. ma·te·ri·al·ized, ma·te·ri·al·iz·ing, ma·te·ri·al·iz·es v.tr. 1. To cause to become real or actual: By building the house, we materialized a dream. . The continuation continuation - continuation passing style of lower rates will put pressure on our margin, but mortgage banking should remain strong for the rest of the year. We remain cautiously cau·tious adj. 1. Showing or practicing caution; careful. 2. Tentative or restrained; guarded: felt a cautious optimism that the offer would be accepted. optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op about our financial performance in 2003," Beideman said. The company repurchased 476,000 shares of its common stock during the second quarter of 2003 at an average cost of $36.12 per share. Associated repurchased 1.2 million shares in the first six months of 2003 at an average cost of $34.66 per share. Associated Banc-Corp, headquartered in Green Bay, Wis., is a diversified diversified (di·verˑ·s multibank holding company Noun 1. multibank holding company - a bank holding company owning several banks bank holding company - a holding company owning or controlling one or more banks with total assets of $15.2 billion. Associated has more than 200 banking offices serving more than 150 communities in Wisconsin Wisconsin, state, United States Wisconsin (wĭskŏn`sən, –sĭn), upper midwestern state of the United States. It is bounded by Lake Superior and the Upper Peninsula of Michigan, from which it is divided by the Menominee , Illinois Illinois, river, United States Illinois, river, 273 mi (439 km) long, formed by the confluence of the Des Plaines and Kankakee rivers, NE Ill., and flowing SW to the Mississippi at Grafton, Ill. It is an important commercial and recreational waterway. , and Minnesota Minnesota, state, United States Minnesota (mĭn'ĭsō`tə), upper midwestern state of the United States. It is bordered by Lake Superior and Wisconsin (E), Iowa (S), South Dakota and North Dakota (W), and the Canadian provinces . 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 which are not purely historical are forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. , as defined in the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. This includes any statements regarding descriptions of 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 Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. . Tables follow.
Consolidated Balance Sheets (Unaudited)
Associated Banc-Corp
June 30, December 31, % June 30, %
(in thousands) 2003 2002 Change 2002 Change
----------------------------------------------------------------------
Assets
Cash and due from
banks $393,882 $430,691 (8.5%) $346,708 13.6%
Interest-bearing
deposits in other
financial
institutions 13,456 5,502 144.6% 11,853 13.5%
Federal funds sold
and securities
purchased
under agreements
to resell 14,550 8,820 65.0% 51,275 (71.6%)
Securities
available for
sale, at fair
value 3,374,834 3,362,669 0.4% 3,424,127 (1.4%)
Loans held for
sale 392,563 305,836 28.4% 123,520 217.8%
Loans 10,387,364 10,303,225 0.8% 9,882,669 5.1%
Allowance for loan
losses (172,440) (162,541) 6.1% (148,733) 15.9%
------------ ------------ ------------
Loans, net 10,214,924 10,140,684 0.7% 9,733,936 4.9%
Premises and
equipment 131,436 132,713 (1.0%) 134,766 (2.5%)
Goodwill 224,388 212,112 5.8% 212,112 5.8%
Other intangible
assets 50,556 41,565 21.6% 47,239 7.0%
Other assets 408,227 402,683 1.4% 391,457 4.3%
------------ ------------ ------------
Total assets $15,218,816 $15,043,275 1.2% $14,476,993 5.1%
============ ============ ============
Liabilities and Stockholders' Equity
Noninterest-
bearing deposits $1,833,703 $1,773,699 3.4% $1,566,487 17.1%
Interest-bearing
deposits,
excluding
Brokered CDs 7,456,729 7,117,503 4.8% 7,225,789 3.2%
Brokered CDs 163,028 233,650 (30.2%) 233,968 (30.3%)
------------ ------------ ------------
Total deposits 9,453,460 9,124,852 3.6% 9,026,244 4.7%
Short-term
borrowings 2,079,371 2,389,607 (13.0%) 2,301,853 (9.7%)
Long-term debt 2,012,968 1,906,845 5.6% 1,513,131 33.0%
Company-obligated
mandatorily
redeemable
preferred
securities 191,549 190,111 0.8% 174,636 9.7%
Accrued expenses
and other
liabilities 163,222 159,677 2.2% 185,560 (12.0%)
------------ ------------ ------------
Total
liabilities 13,900,570 13,771,092 0.9% 13,201,424 5.3%
Stockholders'
Equity
Preferred stock - - -
Common stock 743 755 (1.6%) 767 (3.1%)
Surplus 606,660 643,956 (5.8%) 682,519 (11.1%)
Retained
earnings 664,280 607,944 9.3% 552,554 20.2%
Accumulated
other
comprehensive
income 65,822 60,313 9.1% 72,171 (8.8%)
Treasury stock
and other (19,259) (40,785)(52.8%) (32,442)(40.6%)
------------ ------------ ------------
Total
stockholders'
equity 1,318,246 1,272,183 3.6% 1,275,569 3.3%
------------ ------------ ------------
Total
liabilities
and
stockholders'
equity $15,218,816 $15,043,275 1.2% $14,476,993 5.1%
============ ============ ============
Consolidated Statements of Income (Unaudited)
Associated Banc-Corp
For The Three For The Six
Months Ended, Months Ended,
June 30, June 30,
------------------- -------------------
(in thousands,
except per share % %
amount 2003 2002 Change 2003 2002 Change
---------------------------------------------------------------------
Interest Income
Interest and
fees on loans $147,785 $158,321 (6.7%)$296,281 $309,670 (4.3%)
Interest and
dividends on
investment
securities
and deposits
with other
financial
institutions
Taxable 25,923 33,372 (22.3%) 52,720 66,231 (20.4%)
Tax-exempt 9,942 9,988 (0.5%) 19,997 19,968 0.1%
Interest on
federal funds
sold and
securities
purchased under
agreements to
resell 54 176 (69.3%) 89 294 (69.7%)
--------- --------- --------- ---------
Total
interest
income 183,704 201,857 (9.0%) 369,087 396,163 (6.8%)
Interest Expense
Interest on
deposits 31,558 45,560 (30.7%) 63,548 93,789 (32.2%)
Interest on
short-term
borrowings 8,442 13,840 (39.0%) 17,009 27,495 (38.1%)
Interest on long-
term debt and
capital
securities 16,509 16,689 (1.1%) 33,881 31,684 6.9%
--------- --------- --------- ---------
Total
interest
expense 56,509 76,089 (25.7%) 114,438 152,968 (25.2%)
--------- --------- --------- ---------
Net Interest
Income 127,195 125,768 1.1% 254,649 243,195 4.7%
Provision for
loan losses 12,132 12,003 1.1% 25,092 23,254 7.9%
--------- --------- --------- ---------
Net interest
income after
provision for
loan losses 115,063 113,765 1.1% 229,557 219,941 4.4%
Noninterest
Income
Trust service
fees 7,796 7,722 1.0% 14,426 15,093 (4.4%)
Service charges
on deposit
accounts 12,462 11,733 6.2% 24,273 21,613 12.3%
Mortgage banking 28,845 9,637 199.3% 54,948 22,241 147.1%
Credit card and
other nondeposit
fees 5,192 7,094 (26.8%) 12,588 13,166 (4.4%)
Retail
commissions 7,407 5,885 25.9% 10,710 10,501 2.0%
Bank owned life
insurance
income 3,450 3,469 (0.5%) 6,841 6,739 1.5%
Asset sale gains
(losses), net (790) 41 N/M (668) 372 N/M
Investment
securities
gains, net 1,027 - N/M 701 - N/M
Other 4,771 4,322 10.4% 11,550 7,578 52.4%
--------- --------- --------- ---------
Total
noninterest
income 70,160 49,903 40.6% 135,369 97,303 39.1%
Noninterest
Expense
Personnel
expense 53,245 48,764 9.2% 103,480 93,758 10.4%
Occupancy 7,151 6,650 7.5% 14,266 12,787 11.6%
Equipment 3,190 3,727 (14.4%) 6,434 7,217 (10.8%)
Data processing 5,602 5,304 5.6% 11,220 10,107 11.0%
Business
development and
advertising 3,553 3,126 13.7% 6,916 6,572 5.2%
Stationery and
supplies 1,634 1,786 (8.5%) 3,313 3,830 (13.5%)
FDIC expense 359 402 (10.7%) 725 774 (6.3%)
Mortgage
servicing
rights expense 13,021 3,874 236.1% 24,619 6,771 263.6%
Other intangible
amortization 870 634 37.2% 1,220 1,098 11.1%
Loan expense 950 3,534 (73.1%) 4,298 6,313 (31.9%)
Other 14,344 13,386 7.2% 25,585 24,376 5.0%
--------- --------- --------- ---------
Total
noninterest
expense 103,919 91,187 14.0% 202,076 173,603 16.4%
--------- --------- --------- ---------
Income before
income taxes 81,304 72,481 12.2% 162,850 143,641 13.4%
Income tax
expense 24,635 20,137 22.3% 48,188 39,835 21.0%
--------- --------- --------- ---------
Net Income $56,669 $52,344 8.3%$114,662 $103,806 10.5%
========= ========= ========= =========
Earnings Per
Share:
Basic $0.77 $0.69 11.6% $1.55 $1.39 11.5%
Diluted $0.76 $0.68 11.8% $1.53 $1.37 11.7%
Average Shares
Outstanding:
Basic 73,959 75,922 (2.6%) 74,104 74,540 (0.6%)
Diluted 74,683 77,041 (3.1%) 74,777 75,510 (1.0%)
N/M - Not meaningful.
Selected Quarterly Information
Associated Banc- Corp
----------------------------------------------------------------------
(in thousands,
except per share
data) YTD 2003 YTD 2002 2nd Qtr 2003 1st Qtr 2003
----------------------------------------------------------------------
Summary of
Operations
Net interest
income 254,649 243,195 127,195 127,454
Provision for loan
losses 25,092 23,254 12,132 12,960
Net interest
income after
provision for
loan losses 229,557 219,941 115,063 114,494
Asset sale gains
(losses), net (668) 372 (790) 122
Investment
securities gains
(losses), net 701 - 1,027 (326)
Noninterest income
(excluding
securities &
asset gains) 135,336 96,931 69,923 65,413
Noninterest
expense 202,076 173,603 103,919 98,157
Income taxes 48,188 39,835 24,635 23,553
Net income 114,662 103,806 56,669 57,993
Taxable equivalent
adjustment 12,508 12,100 6,231 6,277
----------------------------------------------------------------------
Per Common Share
Data (1)
Net income:
Basic $1.55 $1.39 $0.77 $0.78
Diluted 1.53 1.37 0.76 0.77
Dividends 0.65 0.59 0.34 0.31
Market Value:
High $38.41 $38.25 $38.41 $35.22
Low 32.15 30.37 32.15 32.33
Close 36.61 37.71 36.61 32.33
Book value 17.88 16.84 17.88 17.41
----------------------------------------------------------------------
Performance Ratios
(annualized)
Net interest
margin (FTE) 3.83% 3.94% 3.79% 3.87%
Return on average
assets 1.55 1.51 1.51 1.58
Return on average
equity 17.86 17.58 17.37 18.36
Efficiency ratio (2) 50.21 49.29 51.10 49.29
Effective tax rate 29.59 27.73 30.30 28.88
Dividend payout
ratio (basic) 41.94 42.58 44.16 39.74
----------------------------------------------------------------------
Average Balances
Assets $14,942,330 $13,907,262 $15,016,497 $14,867,339
Earning assets 13,914,288 12,934,385 13,991,615 13,836,102
Interest-bearing
liabilities 11,914,412 11,163,244 11,941,877 11,886,642
Loans 10,661,386 9,655,626 10,743,430 10,578,430
Deposits 9,011,930 8,883,742 9,121,204 8,901,441
Stockholders'
equity 1,294,804 1,191,063 1,308,505 1,280,950
Stockholders'
equity / assets 8.67% 8.56% 8.71% 8.62%
----------------------------------------------------------------------
At Period End
Assets $15,218,816 $15,089,166
Loans 10,387,364 10,275,469
Allowance for loan
losses 172,440 170,391
Deposits 9,453,460 9,060,234
Stockholders'
equity 1,318,246 1,285,866
Stockholders'
equity / assets 8.66% 8.52%
Shares
outstanding, end
of period 73,736 73,870
----------------------------------------------------------------------
Selected Quarterly Information
Associated Banc-Corp
---------------------------------------------------------
(in thousands,
except per share
data) 4th Qtr 2002 3rd Qtr 2002 2nd Qtr 2002
---------------------------------------------------------
Summary of
Operations
Net interest
income 129,713 128,358 125,768
Provision for loan
losses 14,614 12,831 12,003
Net interest
income after
provision for
loan losses 115,099 115,527 113,765
Asset sale gains
(losses), net (373) 658 41
Investment
securities gains
(losses), net (801) 374 -
Noninterest income
(excluding
securities &
asset gains) 65,523 57,624 49,862
Noninterest
expense 102,763 98,183 91,187
Income taxes 23,244 22,528 20,137
Net income 53,441 53,472 52,344
Taxable equivalent
adjustment 5,981 5,991 6,037
---------------------------------------------------------
Per Common Share
Data (1)
Net income:
Basic $0.72 $0.71 $0.69
Diluted 0.71 0.70 0.68
Dividends 0.31 0.31 0.31
Market Value:
High $34.21 $36.96 $38.25
Low 27.20 30.64 33.63
Close 33.94 31.73 37.71
Book value 17.13 17.03 16.84
---------------------------------------------------------
Performance Ratios
(annualized)
Net interest
margin (FTE) 3.87% 3.96% 3.96%
Return on average
assets 1.42 1.47 1.47
Return on average
equity 16.62 16.73 16.79
Efficiency ratio (2) 51.07 51.14 50.19
Effective tax rate 30.31 29.64 27.78
Dividend payout
ratio (basic) 43.06 43.66 44.93
---------------------------------------------------------
Average Balances
Assets $14,901,747 $14,460,358 $14,273,232
Earning assets 13,870,491 13,427,986 13,248,590
Interest-bearing
liabilities 11,792,552 11,459,673 11,400,302
Loans 10,559,154 10,128,826 9,902,462
Deposits 8,934,668 8,947,047 9,081,434
Stockholders'
equity 1,275,914 1,268,355 1,250,748
Stockholders'
equity / assets 8.56% 8.77% 8.76%
---------------------------------------------------------
At Period End
Assets $15,043,275 $15,044,702 $14,476,993
Loans 10,303,225 10,086,510 9,882,669
Allowance for loan
losses 162,541 155,288 148,733
Deposits 9,124,852 8,947,353 9,026,244
Stockholders'
equity 1,272,183 1,270,691 1,275,569
Stockholders'
equity / assets 8.46% 8.45% 8.81%
Shares
outstanding, end
of period 74,281 74,598 75,746
---------------------------------------------------------
(1) Per share data adjusted retroactively for stock splits and stock
dividends.
(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.
Financial Summary and Comparison
Associated Banc-Corp
Three months ended Six months ended
June 30, June 30,
----------------------- -----------------------
(in thousands, except % %
per share) 2003 2002 Change 2003 2002 Change
--------------------- ----------------------- -----------------------
Allowance for Loan
Losses
Beginning balance $170,391 $144,350 18.0% $162,541 $128,204 26.8%
Balance related to
acquisitions - - - - 11,985 N/M
Provision for loan
losses 12,132 12,003 1.1% 25,092 23,254 7.9%
Charge offs (11,537) (8,802)31.1% (17,291) (16,787) 3.0%
Recoveries 1,454 1,182 23.0% 2,098 2,077 1.0%
------------------ ------------------
Net charge offs (10,083) (7,620)32.3% (15,193) (14,710) 3.3%
------------------ ------------------
Ending Balance $172,440 $148,733 15.9% $172,440 $148,733 15.9%
================== ==================
----------------------------------------------------------------------
2nd Qtr 1st Qtr % 4th Qtr 3rd Qtr 2nd Qtr
Credit Quality 2003 2003 Change 2002 2002 2002
-------------------------------------------------
Nonaccrual loans $110,820 $90,384 22.6% $94,132 $93,250 $82,474
Loans 90 or more days
past due and still
accruing (1) 6,311 3,425 84.3% 3,912 5,981 4,683
Restructured loans 46 844 (94.5%) 1,258 1,110 115
----------------- ------------------------
Total
nonperforming
loans 117,177 94,653 23.8% 99,302 100,341 87,272
Other real estate
owned 14,707 12,949 13.6% 11,448 3,331 2,610
----------------- ------------------------
Total
nonperforming
assets 131,884 107,602 22.6% 110,750 103,672 89,882
================= ========================
Net charge offs 10,083 5,110 97.3% 7,361 6,276 7,620
Allowance for loan
losses / loans 1.66% 1.66% 1.58% 1.54% 1.50%
Allowance for loan
losses /
nonperforming loans 147.16 180.02 163.68 154.76 170.42
Nonperforming loans
/ total loans 1.13 0.92 0.96 0.99 0.88
Nonperforming assets
/ total assets 0.87 0.71 0.74 0.69 0.62
Net charge offs /
average loans
(annualized) 0.38 0.20 0.28 0.25 0.31
Year-to-date net
charge offs /
average loans 0.29 0.20 0.28 0.29 0.31
----------------------------------------------------------------------
Period End Loan
Composition June 30, Dec 31, % June 30, %
2003 2002 Change 2002 Change
------------------------------- -----------------
Commercial,
financial &
agricultural $2,312,143 $2,213,986 4.4% $2,127,665 8.7%
Real estate -
construction 975,415 910,581 7.1% 821,658 18.7%
Commercial real
estate 3,255,918 3,128,826 4.1% 3,037,284 7.2%
Lease financing 38,666 38,352 0.8% 38,212 1.2%
------------------------ -----------
Commercial 6,582,142 6,291,745 4.6% 6,024,819 9.3%
Residential mortgage 2,202,690 2,430,746 (9.4%) 2,364,373 (6.8%)
Home equity 895,952 864,631 3.6% 777,347 15.3%
------------------------ -----------
Residential real
estate 3,098,642 3,295,377 (6.0%) 3,141,720 (1.4%)
Consumer 706,580 716,103 (1.3%) 716,130 (1.3%)
------------------------ -----------
Total loans $10,387,364 $10,303,225 0.8% $9,882,669 5.1%
======================== ===========
----------------------------------------------------------------------
Period End Deposit
Composition
June 30, Dec 31, % June 30, %
2003 2002 Change 2002 Change
----------------------------- ------------------
Demand $1,833,703 $1,773,699 3.4% $1,566,487 17.1%
Savings 942,027 895,855 5.2% 912,019 3.3%
Interest-bearing
demand 1,797,065 1,468,193 22.4% 1,113,342 61.4%
Money market 1,598,317 1,754,313 (8.9%) 1,888,165 (15.4%)
Brokered CDs 163,028 233,650 (30.2%) 233,968 (30.3%)
Other time deposits 3,119,320 2,999,142 4.0% 3,312,263 (5.8%)
---------------------- -----------
Total deposits $9,453,460 $9,124,852 3.6% $9,026,244 4.7%
====================== ===========
----------------------------------------------------------------------
N/M = Not Meaningful
(1) Does not include guaranteed student loans. Guaranteed student
loans 90+ days past due and still accruing totaled $16.0 million
as of June 30, 2003.
Net Interest Income Analysis - Taxable Equivalent Basis
Associated Banc-Corp
Six months ended Six months ended
June 30, 2003 June 30, 2002
------------------------- --------------------------
Average Interest Average Average Interest Average
Balance Income/ Yield/ Balance Income/ Yield/
Expense Rate Expense Rate
-------------------------- -------------------------
Earning assets:
Loans: (1)(2)(3)
Commercial $6,399,244 $166,188 5.17% $5,720,820 $171,459 5.96%
Residential
real
estate 3,551,134 104,600 5.92 3,234,762 110,397 6.85
Consumer 711,008 26,003 7.37 700,044 28,393 8.17
--------------------- ---------------------
Total
loans 10,661,386 296,791 5.56 9,655,626 310,249 6.42
Investments
and other 3,252,902 84,804 5.22 3,278,759 98,014 5.98
--------------------- ---------------------
Total earning
assets 13,914,288 381,595 5.48 12,934,385 408,263 6.31
Other assets,
net 1,028,042 972,877
------------ ------------
Total assets $14,942,330 $13,907,262
============ ============
Interest-bearing
liabilities:
Savings
deposits $927,413 $2,884 0.63% $864,914 $3,329 0.78%
Interest-
bearing
demand
deposits 1,591,942 6,925 0.88 983,399 3,427 0.70
Money market
deposits 1,668,467 8,264 1.00 1,950,679 13,466 1.39
Time deposits,
excluding
Brokered CDs 3,032,656 43,614 2.90 3,403,593 70,393 4.17
--------------------- ---------------------
Total
interest-
bearing
deposits,
excluding
Brokered
CDs 7,220,478 61,687 1.72 7,202,585 90,615 2.54
Brokered CDs 203,484 1,861 1.84 307,796 3,174 2.08
--------------------- ---------------------
Total
interest-
bearing
deposits 7,423,962 63,548 1.73 7,510,381 93,789 2.52
Wholesale
funding 4,490,450 50,890 2.26 3,652,863 59,179 3.22
--------------------- ---------------------
Total interest-
bearing
liabilities 11,914,412 114,438 1.93 11,163,244 152,968 2.75
Noninterest-
bearing
demand 1,587,968 1,373,361
Other
liabilities 145,146 179,594
Stockholders'
equity 1,294,804 1,191,063
------------ ------------
Total liabilities
and
stockholders'
equity $14,942,330 $13,907,262
============ ============
--------- ---------
Net interest
income and rate
spread (1) $267,157 3.55% $255,295 3.56%
========= =========
Net interest
margin (1) 3.83% 3.94%
Taxable
equivalent
adjustment $12,508 $12,100
========= =========
----------------------------------------------------------------------
Three months ended Three months ended
June 30, 2003 June 30, 2002
-------------------------- -------------------------
Average Interest Average Average Interest Average
Balance Income/ Yield/ Balance Income/ Yield /
Expense Rate Expense Rate
-------------------------- -------------------------
Earning assets:
Loans: (1)(2)(3)
Commercial $6,470,954 $83,333 5.10% $5,968,167 $89,365 5.93%
Residential
real
estate 3,564,125 51,778 5.81 3,217,681 54,540 6.78
Consumer 708,351 12,940 7.32 716,614 14,690 8.22
--------------------- ---------------------
Total
loans 10,743,430 148,051 5.48 9,902,462 158,595 6.37
Investments
and other 3,248,185 41,884 5.16 3,346,128 49,299 5.89
--------------------- ---------------------
Total earning
assets 13,991,615 189,935 5.41 13,248,590 207,894 6.25
Other assets,
net 1,024,882 1,024,642
------------ ------------
Total assets $15,016,497 $14,273,232
============ ============
Interest-bearing
liabilities:
Savings
deposits $945,048 $1,431 0.61% $900,471 $1,769 0.79%
Interest-
bearing
demand
deposits 1,696,412 3,812 0.90 1,038,413 1,927 0.74
Money market
deposits 1,632,710 3,999 0.98 1,992,669 6,751 1.36
Time deposits,
excluding
Brokered CDs 3,052,513 21,549 2.83 3,411,891 33,580 3.95
--------------------- ---------------------
Total
interest-
bearing
deposits,
excluding
Brokered
CDs 7,326,683 30,791 1.69 7,343,444 44,027 2.40
Brokered CDs 174,748 767 1.76 289,676 1,533 2.12
--------------------- ---------------------
Total
interest-
bearing
deposits 7,501,431 31,558 1.69 7,633,120 45,560 2.39
Wholesale
funding 4,440,446 24,951 2.23 3,767,182 30,529 3.21
--------------------- ---------------------
Total interest-
bearing
liabilities 11,941,877 56,509 1.89 11,400,302 76,089 2.66
Noninterest-
bearing
demand 1,619,773 1,448,314
Other
liabilities 146,342 173,868
Stockholders'
equity 1,308,505 1,250,748
------------ ------------
Total liabilities
and
stockholders'
equity $15,016,497 $14,273,232
============ ============
--------- ---------
Net interest
income and rate
spread (1) $133,426 3.52% $131,805 3.59%
========= =========
Net interest
margin (1) 3.79% 3.96%
Taxable
equivalent
adjustment $6,231 $6,037
========= =========
----------------------------------------------------------------------
(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.
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