GREEN BAY, Wis.--(BUSINESS WIRE)--April 17, 2003--Associated
Banc-Corp (NASDAQ:ASBC) earned $.77 per diluted share in the quarter
that ended March 31, 2003, a 10 percent increase from $.70 per diluted
share for the same period in 2002.
Return on average assets was 1.58 percent in the first quarter
compared to 1.54 percent in the first quarter of 2002. Return on
average equity was 18.36 percent compared to 18.46 percent in the year
earlier quarter.
Net interest income increased to $127 million in the first
quarter, up 8.5 percent from $117 million in the year-earlier period.
The company's net interest margin was 3.87 percent, down from 3.91
percent a year ago but unchanged from the previous quarter.
Total loans at the end of the first quarter 2003 were $10.3
billion, an increase of 5.3 percent compared to one year earlier. The
growth occurred primarily in commercial loans, up $456 million, or 7.7
percent, and home equity loans, up $163 million, or 23.5 percent,
while residential mortgage loans decreased $94 million, or 3.9 percent
between the comparable first quarters. Since year-end 2002, commercial
loans increased $87 million, or 5.6 percent annualized, and
residential mortgage loans were down $106 million. The trend in
residential mortgage loans reflects customers' continued preference
for fixed rate loans in this low rate environment. Associated sells
the majority of its fixed rate mortgage loans into the secondary
market but continues to service these loans.
Transaction deposit accounts (demand, savings, interest-bearing
demand and money market accounts) were $5.8 billion, up 8.0 percent
over first quarter of last year. Time deposits were $3.3 billion at
March 31, 2002, compared to $3.8 billion last year, impacted by the
lower interest rate environment and scheduled maturities. Total
deposits were relatively unchanged at $9.1 billion for the first
quarter of 2003 compared to $9.2 billion a year ago and $9.1 billion
at year-end 2002.
The provision for loan losses was $13.0 million for first quarter
2003, compared to $14.6 million for the fourth quarter last year, and
$11.3 million for the comparable quarter in 2002. The ratio of the
allowance for loan losses was 1.66 percent of total loans at March 31,
2003, compared to 1.58 percent and 1.48 percent at Dec. 31 and March
31, 2002, respectively.
Associated's credit quality showed modest improvement in the first
quarter compared to Dec 31, 2002. Net chargeoffs for the first quarter
of 2003 of $5.1 million, or 0.20 percent of average loans
(annualized), were lower than net charge-offs of $7.4 million and $7.1
million in the fourth quarter of 2002 and the year-earlier quarter,
respectively. Nonperforming loans were $94.7 million as of March 31,
2003, down from $99.3 million as of Dec. 31, 2002, but up from $71.7
million a year ago. Other real estate owned, which reflects property
acquired by the bank due to default, was $12.9 million at March 31,
2003, bringing total nonperforming assets to 0.71 percent of total
assets. The company expects asset quality to show improvement as the
economy improves. However, many of the company's commercial customers
continue to be challenged in the current economic environment.
Noninterest income grew to $65.2 million for the first quarter,
compared to $47.4 million in the same period in 2002. Noninterest
income in first quarter 2002 includes only one month's contribution
from Signal Financial Corp., acquired on February 28, 2002. The
continued strong activity in the mortgage and mortgage refinancing
market generated $1.1 billion of mortgages for sale into the secondary
market, up from $0.7 billion in the first quarter of 2002. Mortgage
banking revenue of $26.1 million in the first quarter of 2003 was more
than double that of the year-earlier period. Trust service fee income
and retail commissions, together, declined $2.1 million as a result of
continued weak stock market performance and investor uncertainty.
Income in other areas posted strong gains. Service fee income from
deposit accounts increased 19.5 percent year-over-year to $11.8
million, while credit card and other nondeposit fees increased 21.8
percent to $7.4 million.
Noninterest income for the first quarter of 2003 benefited from a
credit card merchant processing sale and services agreement signed in
March, 2003. The agreement resulted in $3.4 million of income in the
first quarter of 2003, and calls for revenue sharing on new and
existing merchant business over the life of the agreement.
As part of its continuing effort to provide a more complete range
of financial services to its customers, Associated acquired CFG
Insurance Services, Inc., one of the largest insurance agencies in the
Twin Cities of Minnesota, on April 1, 2003. CFG has more than 2,500
business insurance clients in the Twin Cities, and complements
Associated's existing insurance agency, Associated Insurance
Management Group, Inc. When combined, the agency is expected to rank
among the top 60 insurance agencies in the United States. The
acquisition of CFG will further leverage Associated's banking
opportunities in Minnesota, and eventually throughout Associated's
markets, and will help diversify Associated's revenue stream.
Noninterest expenses remain a focus and were well controlled in
the first quarter of 2003. Expenses in first quarter 2002 include only
one month from Signal compared to a full quarter in 2003.
Noninterest expense grew by approximately $15.7 million, or 19.1
percent, compared to the first quarter of 2002, with more than half of
the increase coming from higher mortgage servicing rights expense.
While the strong mortgage refinance activity benefited mortgage
banking income in the first quarter, it increased the prepayment
speeds of Associated's mortgage portfolio serviced for others, a key
factor behind the valuation of mortgage servicing rights. Mortgage
servicing rights expense increased by $8.7 million between the
comparable quarters, which includes a $7.3 million addition to the
valuation allowance. The mortgage servicing asset at March 31, 2003,
represents 0.54 percent of the total $5.4 billion residential mortgage
portfolio serviced for others.
During the first quarter of 2003, Associated repurchased 716,500
shares of common stock, with approximately 1.4 million shares
remaining under existing board repurchase authorizations.
"We are pleased that the ongoing execution of our strategies
continues to produce strong results. Priorities for 2003 are to
sustain our customer focus and leverage our operating structure to
provide continuing value to our shareholders," Associated Banc-Corp
Chairman, President and CEO Robert C. Gallagher said.
"Although our first quarter results are encouraging, our 2003 goal
of 10 percent earnings per share growth is predicated on an improving
economy, economic stimulus from Washington, moderate interest rate
increases, and increased confidence among consumers and businesses.
While we continue to look forward to these developments, expected
improvements in the economy may take some time to materialize. We
remain cautiously optimistic about our financial performance in 2003,"
Gallagher said.
Yesterday, Associated announced that its Board of Directors named
Paul S. Beideman president and chief executive officer of the
corporation, replacing Gallagher, 64, who is stepping down as
president and CEO. Gallagher will remain chairman of the Board.
Beideman, 53, comes to Associated from Philadelphia, where he most
recently served as chairman of Mellon Financial Corp.'s Mid-Atlantic
Region. He has 32 years of banking experience, the last 13 in senior
executive positions with Mellon. He was a member of Mellon's Senior
Management Committee, and his background includes extensive experience
in consumer and commercial banking. In addition, he has a wide range
of experience in marketing, systems and operations, product
development, and wealth management.
Associated will hold its Annual Shareholders' Meeting at 11 a.m.
CDT on April 23rd, at the Meyer Theatre in Green Bay. The event will
be webcast live. To view the webcast, see the information at
www.associatedbank.com/AboutAssociated/InvestorRelations/.
Associated Banc-Corp, headquartered in Green Bay, Wis., is a
diversified multibank holding company with total assets of $15.1
billion. Associated has more than 200 banking offices serving more
than 150 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 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
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.
Tables follow.
----------------------------------------------------------------------
Consolidated Balance Sheets (Unaudited)
Associated Banc-CorpMarch 31, December 31, % March 31, %
(in thousands) 2003 2002 Change 2002 Change
----------------------------------------------------------------------
Assets
Cash and due from
banks $401,012$430,691 (6.9%) $326,946 22.7%
Interest-bearing
deposits in other
financial
institutions 13,640 5,502 147.9% 6,028 126.3%
Federal funds sold
and securities
purchased
under agreements
to resell 27,815 8,820 215.4% 76,140 (63.5%)
Securities
available for
sale, at fair
value 3,379,000 3,362,669 0.5% 3,364,411 0.4%
Loans held for
sale 374,053 305,836 22.3% 149,945 149.5%
Loans 10,275,469 10,303,225 (0.3%) 9,757,584 5.3%
Allowance for loan
losses (170,391) (162,541) 4.8% (144,350) 18.0%
------------ ------------ ------------
Loans, net 10,105,078 10,140,684 (0.4%) 9,613,234 5.1%
Premises and
equipment 132,234 132,713 (0.4%) 135,821 (2.6%)
Goodwill 212,112 212,112 0.0% 212,112 0.0%
Other intangible
assets 38,251 41,565 (8.0%) 47,667 (19.8%)
Other assets 405,971 402,683 0.8% 395,847 2.6%
------------ ------------ ------------
Total assets $15,089,166$15,043,275 0.3% $14,328,151 5.3%
============ ============ ============
Liabilities and Stockholders' Equity
Noninterest-
bearing deposits $1,692,979$1,773,699 (4.6%) $1,437,798 17.7%
Interest-bearing
deposits,
excluding Brokered
CDs 7,158,605 7,117,503 0.6% 7,439,710 (3.8%)
Brokered CDs 208,650 233,650 (10.7%) 315,184 (33.8%)
------------ ------------ ------------
Total deposits 9,060,234 9,124,852 (0.7%) 9,192,692 (1.4%)
Short-term
borrowings 2,422,631 2,389,607 1.4% 2,230,505 8.6%
Long-term debt 1,954,715 1,906,845 2.5% 1,477,855 32.3%
Company-obligated
mandatorily
redeemable
preferred
securities 188,263 190,111 (1.0%) 11,000 N/M
Accrued expenses
and other
liabilities 177,457 159,677 11.1% 185,117 (4.1%)
------------ ------------ ------------
Total
liabilities 13,803,300 13,771,092 0.2% 13,097,169 5.4%
Stockholders' Equity
Preferred stock - - -
Common stock 748 755 (0.9%) 698 7.2%
Surplus 621,616 643,956 (3.5%) 421,570 47.5%
Retained
earnings 637,781 607,944 4.9% 786,246 (18.9%)
Accumulated other
comprehensive
income 56,302 60,313 (6.7%) 48,966 15.0%
Treasury stock,
at cost (30,581) (40,785)(25.0%) (26,498) 15.4%
------------ ------------ ------------
Total stockholders'
equity 1,285,866 1,272,183 1.1% 1,230,982 4.5%
------------ ------------ ------------
Total liabilities
and stockholders'
equity $15,089,166$15,043,275 0.3% $14,328,151 5.3%
============ ============ ============
N/M - Not meaningful.
---------------------------------------------------------------------
Consolidated Statements of Income (Unaudited)
Associated Banc-Corp
For The Three
Months Ended,
March 31,
-------------------
(in thousands, except per share amounts) 2003 2002 % Change
---------------------------------------------------------------------
Interest Income
Interest and fees on loans $148,496$151,349 (1.9%)
Interest and dividends on investment securities
and deposits with other financial
institutions
Taxable 26,797 32,859 (18.4%)
Tax-exempt 10,055 9,980 0.8%
Interest on federal funds sold and
securities
purchased under agreements to resell 35 118 (70.3%)
--------- ---------
Total interest income 185,383 194,306 (4.6%)
Interest Expense
Interest on deposits 31,990 48,229 (33.7%)
Interest on short-term borrowings 8,567 13,655 (37.3%)
Interest on long-term debt and capital
securities 17,372 14,995 15.9%
--------- ---------
Total interest expense 57,929 76,879 (24.6%)
--------- ---------
Net Interest Income 127,454 117,427 8.5%
Provision for loan losses 12,960 11,251 15.2%
--------- ---------
Net interest income after provision for
loan losses 114,494 106,176 7.8%
Noninterest Income
Trust service fees 6,630 7,371 (10.1%)
Service charges on deposit accounts 11,811 9,880 19.5%
Mortgage banking 26,103 12,604 107.1%
Credit card and other nondeposit fees 7,396 6,072 21.8%
Retail commissions 3,303 4,616 (28.4%)
Bank owned life insurance income 3,391 3,270 3.7%
Asset sale gains, net 122 331 (63.1%)
Investment securities gains (losses),
net (326) - N/M
Other 6,779 3,256 108.2%
--------- ---------
Total noninterest income 65,209 47,400 37.6%
Noninterest Expense
Personnel expense 50,235 44,994 11.6%
Occupancy 7,115 6,137 15.9%
Equipment 3,244 3,490 (7.0%)
Data processing 5,618 4,803 17.0%
Business development and advertising 3,363 3,446 (2.4%)
Stationery and supplies 1,679 2,044 (17.9%)
FDIC expense 366 372 (1.6%)
Mortgage servicing rights expense 11,598 2,897 300.3%
Other intangible amortization 350 464 (24.6%)
Loan expense 3,348 2,779 20.5%
Other 11,241 10,990 2.3%
--------- ---------
Total noninterest expense 98,157 82,416 19.1%
--------- ---------
Income before income taxes 81,546 71,160 14.6%
Income tax expense 23,553 19,698 19.6%
--------- ---------
Net Income $57,993$51,462 12.7%
========= =========
Earnings Per Share:
Basic $0.78$0.70 11.4%
Diluted $0.77$0.70 10.0%
Average Shares Outstanding:
Basic 74,252 73,142 1.5%
Diluted 74,974 74,042 1.3%
N/M - Not meaningful.
----------------------------------------------------------------------
Selected Quarterly Information
Associated Banc-Corp
----------------------------------------------------------------------
(in thousands, except per share 1st Qtr 4th Qtr 3rd Qtr
data) 2003 2002 2002
----------------------------------------------------------------------
Summary of Operations
Interest income $185,383$196,178$199,765
Interest expense 57,929 66,465 71,407
Net interest income 127,454 129,713 128,358
Provision for loan losses 12,960 14,614 12,831
Net interest income after
provision for loan losses 114,494 115,099 115,527
Asset sale gains (losses), net 122 (373) 658
Investment securities gains
(losses), net (326) (801) 374
Noninterest income (excluding
securities & asset gains) 65,413 65,523 57,624
Noninterest expense 98,157 102,763 98,183
Income taxes 23,553 23,244 22,528
Net income 57,993 53,441 53,472
Taxable equivalent adjustment 6,277 5,981 5,991
----------------------------------------------------------------------
Per Common Share Data (1)
Net income:
Basic $0.78$0.72$0.71
Diluted 0.77 0.71 0.70
Dividends 0.31 0.31 0.31
Market Value:
High $35.22$34.21$36.96
Low 32.33 27.20 30.64
Close 32.33 33.94 31.73
Book value 17.41 17.13 17.03
----------------------------------------------------------------------
Performance Ratios (annualized)
Net interest margin (FTE) 3.87% 3.87% 3.96%
Return on average assets 1.58 1.42 1.47
Return on average equity 18.36 16.62 16.73
Return on tangible average equity
(2) 22.19 20.11 20.28
Efficiency ratio (3) 49.29 51.07 51.14
Effective tax rate 28.88 30.31 29.64
Dividend payout ratio (basic) 39.74 43.06 43.66
----------------------------------------------------------------------
Average Balances
Assets $14,867,339$14,901,747$14,460,358
Earning assets 13,836,102 13,870,491 13,427,986
Interest-bearing liabilities 11,886,642 11,792,552 11,459,673
Loans 10,578,430 10,559,154 10,128,826
Deposits 8,901,441 8,934,668 8,947,047
Stockholders' equity 1,280,950 1,275,914 1,268,355
Stockholders' equity / assets 8.62% 8.56% 8.77%
----------------------------------------------------------------------
At Period End
Assets $15,089,166$15,043,275$15,044,702
Loans 10,275,469 10,303,225 10,086,510
Allowance for loan losses 170,391 162,541 155,288
Deposits 9,060,234 9,124,852 8,947,353
Stockholders' equity 1,285,866 1,272,183 1,270,691
Stockholders' equity / assets 8.52% 8.46% 8.45%
Goodwill and core deposit
intangibles 221,004 221,354 221,963
Shares outstanding, end of period 73,870 74,281 74,598
----------------------------------------------------------------------
Credit Quality
Nonaccrual loans $90,384$94,132$93,250
Loans 90 or more days past due
and still accruing (4) 3,425 3,912 5,981
Restructured loans 844 1,258 1,110
------------ ------------ ------------
Total nonperforming loans 94,653 99,302 100,341
Other real estate owned 12,949 11,448 3,331
------------ ------------ ------------
Total nonperforming assets 107,602 110,750 103,672
============ ============ ============
Net charge-offs 5,110 7,361 6,276
Allowance for loan losses / loans 1.66% 1.58% 1.54%
Allowance for loan losses /
nonperforming loans 180.02 163.68 154.76
Nonperforming loans / total loans 0.92 0.96 0.99
Nonperforming assets / total
assets 0.71 0.74 0.69
Net charge-offs / average loans
(annualized) 0.20 0.28 0.25
Year-to-date net charge-offs /
average loans 0.20 0.28 0.29
----------------------------------------------------------------------
(in thousands, except per share 2nd Qtr 1st Qtr
data) 2002 2002
----------------------------------------------------------------------
Summary of Operations
Interest income $201,857$194,306
Interest expense 76,089 76,879
Net interest income 125,768 117,427
Provision for loan losses 12,003 11,251
Net interest income after
provision for loan losses 113,765 106,176
Asset sale gains (losses), net 41 331
Investment securities gains
(losses), net - -
Noninterest income (excluding
securities & asset gains) 49,862 47,069
Noninterest expense 91,187 82,416
Income taxes 20,137 19,698
Net income 52,344 51,462
Taxable equivalent adjustment 6,037 6,063
----------------------------------------------------------------------
Per Common Share Data (1)
Net income:
Basic $0.69$0.70
Diluted 0.68 0.70
Dividends 0.31 0.28
Market Value:
High $38.25$35.29
Low 33.63 30.37
Close 37.71 34.57
Book value 16.84 16.23
----------------------------------------------------------------------
Performance Ratios (annualized)
Net interest margin (FTE) 3.96% 3.91%
Return on average assets 1.47 1.54
Return on average equity 16.79 18.46
Return on tangible average equity
(2) 20.42 21.12
Efficiency ratio (3) 50.19 48.32
Effective tax rate 27.78 27.68
Dividend payout ratio (basic) 44.93 40.26
----------------------------------------------------------------------
Average Balances
Assets $14,273,232$13,538,602
Earning assets 13,248,590 12,616,040
Interest-bearing liabilities 11,400,302 10,923,561
Loans 9,902,462 9,405,417
Deposits 9,081,434 8,683,879
Stockholders' equity 1,250,748 1,130,714
Stockholders' equity / assets 8.76% 8.35%
----------------------------------------------------------------------
At Period End
Assets $14,476,993$14,328,151
Loans 9,882,669 9,757,584
Allowance for loan losses 148,733 144,350
Deposits 9,026,244 9,192,692
Stockholders' equity 1,275,569 1,230,982
Stockholders' equity / assets 8.81% 8.59%
Goodwill and core deposit
intangibles 222,539 223,173
Shares outstanding, end of period 75,746 75,849
----------------------------------------------------------------------
Credit Quality
Nonaccrual loans $82,474$63,626
Loans 90 or more days past due
and still accruing (4) 4,683 4,991
Restructured loans 115 3,097
------------ -------------
Total nonperforming loans 87,272 71,714
Other real estate owned 2,610 2,782
------------ -------------
Total nonperforming assets 89,882 74,496
============ =============
Net charge-offs 7,620 7,090
Allowance for loan losses / loans 1.50% 1.48%
Allowance for loan losses /
nonperforming loans 170.42 201.29
Nonperforming loans / total loans 0.88 0.73
Nonperforming assets / total
assets 0.62 0.52
Net charge-offs / average loans
(annualized) 0.31 0.31
Year-to-date net charge-offs /
average loans 0.31 0.31
----------------------------------------------------------------------
(1) Per share data adjusted retroactively for stock splits and
stock dividends.
(2) Return on tangible average equity = Net income divided by
average stockholders' equity excluding goodwill and core deposit
intangible assets.
(3) 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.
(4) Does not include guaranteed student loans. Guaranteed student
loans 90+ days past due and still accruing totaled $17.4 million
as of March 31, 2003.
----------------------------------------------------------------------
Financial Summary and Comparison
Associated Banc-Corp Three months ended
March 31,
------------------------------
(in thousands, except per share data) 2003 2002 % Change
------------------------------------- --------------------------------
Allowance for Loan Losses
Beginning balance $162,541$128,204 26.8%
Balance related to acquisitions - 11,985 N/M
Provision for loan losses 12,960 11,251 15.2%
Charge-offs (5,754) (7,985) (27.9%)
Recoveries 644 895 (28.0%)
-----------------------
Net charge-offs (5,110) (7,090) (27.9%)
-----------------------
Ending Balance $170,391$144,350 18.0%
=======================
----------------------------------------------------------------------
Performance Ratios (annualized)
Return on average assets 1.58% 1.54% 4 bp
Return on average equity 18.36 18.46 (10) bp
Return on tangible average equity (1) 22.19 21.12 107 bp
Efficiency ratio (2) 49.29 48.32 97 bp
Effective tax rate 28.88 27.68 120 bp
Dividend payout ratio (basic) 39.74 40.26 (52) bp
----------------------------------------------------------------------
Average Yield and Rate
Loans 5.65% 6.47% (82) bp
Investments and other 5.27% 6.07% (80) bp
Total earning assets 5.56% 6.37% (81) bp
Interest-bearing deposits, excluding bp
brokered CDs 1.76% 2.68% (92)
Brokered CDs 1.91% 2.04% (13) bp
Wholesale funding 2.28% 3.24% (96) bp
Total interest-bearing liabilities 1.96% 2.84% (88) bp
Net interest margin 3.87% 3.91% (4) bp
----------------------------------------------------------------------
Period End Loan Composition March 31,
-----------------------
2003 2002
------------------------------
Commercial, financial & agricultural $2,238,657$2,162,954 3.5%
Real estate - construction 912,510 801,467 13.9%
Commercial real estate 3,188,907 2,920,865 9.2%
Lease financing 38,712 37,211 4.0%
-----------------------
Commercial 6,378,786 5,922,497 7.7%
Residential mortgage 2,325,032 2,418,822 (3.9%)
Home equity 858,928 695,519 23.5%
-----------------------
Residential real estate 3,183,960 3,114,341 2.2%
Consumer 712,723 720,746 (1.1%)
-----------------------
Total loans $10,275,469$9,757,584 5.3%
=======================
------------------------------------- ------------------------------
Period End Deposit Composition March 31,
-----------------------
2003 2002
------------------------------
Demand $1,692,979$1,437,798 17.7%
Savings 935,740 883,794 5.9%
Interest-bearing demand 1,540,757 989,519 55.7%
Money market 1,658,735 2,084,671 (20.4%)
Brokered CDs 208,650 315,184 (33.8%)
Other time deposits 3,023,373 3,481,726 (13.2%)
-----------------------
Total deposits $9,060,234$9,192,692 (1.4%)
=======================
------------------------------------- --------------------------------
(1) Return on tangible average equity = Net income divided by
average stockholders' equity less goodwill and core deposit
intangible assets.
(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.
N/M = Not Meaningful
bp = basis points
CONTACT: Investors:
Associated Banc-Corp
Joe Selner, 920/491-7120
or
Media:
Associated Banc-Corp
Jon Drayna, 920/491-7006
SOURCE: Associated Banc-Corp