GREEN BAY, Wis.--(BUSINESS WIRE)--Aug. 10, 2005--Associated
Banc-Corp (NASDAQ:ASBC) today issued a correction to its 2005 second
quarter earnings release dated July 21, 2005. The correction relates
to the company's derivative accounting under Financial Accounting
Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities" ("FAS 133").
In connection with the ongoing finalization of Associated's Form
10-Q for the quarter ended June 30, 2005, and subsequent to the July
21, 2005 press release, Associated in consultation with KPMG LLP,
Associated's long-standing independent registered public accounting
firm, determined that its hedge accounting treatment previously
applied to certain derivative instruments, needed to be changed under
the requirements of FAS 133. While this change affects previous period
financial statements, Associated concluded that a restatement of its
historical financial statements was not required as the correction was
not material to any of the prior periods presented.
This change affects the company's unaudited financial statements
for the three and six month periods ended June 30, 2005. For 2005,
this determination resulted in a cumulative non-cash adjustment, which
reduced previously reported net income by approximately $4.0 million,
or a $0.03 decrease to both the previously reported basic and diluted
earnings per share. Therefore, Associated's revised net income was $74
million for the second quarter of 2005 and $151.5 million for the six
months ended June 30, 2005. For second quarter 2005, basic and diluted
earnings per share were both $0.57, while on a year-to-date basis,
basic earnings per share were $1.17 and diluted earnings per share
were $1.16.
Like other financial institutions, Associated has used derivatives
for several years as a risk management tool. As a risk management
practice, derivatives help insulate quarter-to-quarter financial
performance from the effects of interest rate volatility. The
correction arises from Associated's and KPMG's most recent quarterly
review of its derivative accounting treatment under the requirements
of FAS 133, which is a complex set of accounting rules relating to
derivative transactions. Almost all of the underlying derivative
instruments that are the subject of the correction were originated
before or during 2001, the year FAS 133 became effective. The
cumulative adjustment to net income for the quarter ended June 30,
2005 gives effect to a reduction of net income of less than 0.4
percent of Associated's total net income from Jan. 1, 2001 through
June 30, 2005.
"With regard to the corrective entry made for the second quarter,
it is important to note that the issue relates to matters of
documentation and complex technical interpretation, rather than how
those hedges were created or managed," Associated President and CEO
Beideman said. "In fact, we believe that over time the economic impact
of the limited number of long-term swaps will normalize and create a
neutral impact on interest rate volatility, which is the intent of
these strategies. We are confident this correction does not detract
from our core strengths nor our progress toward achieving our
strategic priorities."
Associated is comfortable with its statements regarding 2005
earnings contained in its July 21, 2005 press release, assuming the
analysts' earnings consensus is reduced three cents in light of
today's correction.
The table below sets forth the primary changes from the previously
announced financial results. These changes will be reflected in
Associated's Form 10-Q for the second quarter of 2005, which will be
filed on or before Aug. 15, 2005, and are reflected in the complete
revised July 21, 2005 press release available at
www.AssociatedBank.com.
Associated Banc-Corp
(In thousands except per share data) (Unaudited)
For the Three For the Six
Months Ended Months Ended
June 30, 2005June 30, 2005
-------------------------- --------------------------
July 21, July 21,
2005 2005
Press Press
Release Revised Change Release Revised Change
-------- -------- -------- -------- -------- --------
Other
noninterest
income $6,367 $(355) $(6,722) $15,181 $8,459 $(6,722)
Total
noninterest
income 68,426 61,704 (6,722) 139,799 133,077 (6,722)
Income before
income taxes 115,095 108,373 (6,722) 228,807 222,085 (6,722)
Income tax
expense 37,059 34,358 (2,701) 73,301 70,600 (2,701)
Net income 78,036 74,015 (4,021) 155,506 151,485 (4,021)
Basic earnings
per share $0.60 $0.57 ($0.03) $1.20 $1.17 ($0.03)
Diluted
earnings per
share $0.60 $0.57 ($0.03) $1.19 $1.16 ($0.03)
At June 30, 2005
------------------------------------
July 21,
2005 Press
Release Revised Change
------------ ------------ ----------
Period End
Balances:
Loans $14,054,345 $14,054,506 $161
Other assets 543,948 541,729 (2,219)
Assets 20,755,772 20,753,714 (2,058)
Long-term
funding 3,690,453 3,685,078 (5,375)
Retained
earnings 938,309 934,287 (4,022)
Accumulated
other
comprehensive
income 22,269 29,608 7,339
Total
stockholders'
equity 2,015,118 2,018,435 3,317
Associated's Form 10-Q for the quarter ended June 30, 2005 will
include additional information regarding Associated's accounting for
derivatives.
Associated Banc-Corp, headquartered in Green Bay, Wis., is a
diversified multibank holding company with total assets of $21
billion. Associated has more than 300 banking offices serving more
than 170 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 to be filed on Form 10-K.
CONTACT: Associated Banc-Corp
Investors:
Joe Selner, 920-491-7120
or
Media:
Cindy Moon-Mogush, 920-327-5682
or
Jon Drayna, 920-491-7006
SOURCE: Associated Banc-Corp