Press Release Details

Associated Banc-Corp Reports First Quarter 2011 Earnings

04/21/2011

Net Income to Shareholders of $15.4 Million, or $0.09 per Share

GREEN BAY, Wis., April 21, 2011 /PRNewswire/ -- Associated Banc-Corp (NASDAQ: ASBC) today reported net income to common shareholders of $15.4 million, or $0.09 per common share, for the quarter ended March 31, 2011. This compares to net income to common shareholders of $6.6 million, or $0.04 per common share, for the quarter ended December 31, 2010.

HIGHLIGHTS

  • Pre-tax income improved $25.0 million and net income improved $8.8 million over prior quarter
  • Credit quality metrics improved for the fifth consecutive quarter  
    • Nonaccrual loans declined $86 million, or 15% from the prior quarter
    • Loans 30-89 days past due down 12% from December 31, 2010
    • Potential problem loans down 5.4% from prior quarter
    • Net charge-offs were $53 million, down from $108 million the prior quarter
  • Net interest margin expanded for the second consecutive quarter, increasing 19 basis points to 3.32%
  • Capital ratios remain very strong with a Tier 1 common ratio of 12.65%
  • Transferred $61 million of non-core consumer finance installment loans to held for sale, resulting in a $10 million charge-off in the quarter; sale is anticipated to close in the second quarter of 2011
  • Subsequent to quarter end, $262.5 million, or half, of Troubled Asset Relief Program (TARP) Preferred Stock  was repurchased

"We are pleased to report our fifth consecutive quarter of improving profitability. We realized significant improvements in our credit quality metrics and our results are progressing as planned," said Philip B. Flynn, President and Chief Executive Officer.  "While generating new loan growth in a slow economy continues to be a challenge, we continue to see improving core lending activity and look forward to more positive results in the periods to come."

Key Credit Metrics

Nonaccrual loans declined to $488 million at March 31, 2011, down 15% from $574 million at December 31, 2010. Previous quarterly improvements in nonaccrual loans were largely driven by bulk loan sales; however, the improvement in nonaccrual loans this quarter was driven by organic portfolio improvements, including a lower level of inflows to nonaccrual and problem loan categories.

Other key credit metrics also continued to improve during the quarter. Loans 30-89 days past due totaled $106 million at March 31, 2011, down 12% from $120 million at December 31, 2010. Potential problem loans continued to decline to $912 million at March 31, 2011, down $52 million, or 5.4% from $964 million at December 31, 2010.

Net charge-offs were $53 million for the quarter, down 51% from $108 million during the fourth quarter of 2010. Commercial loan charge-offs declined by $64 million. Consumer loan charge-offs which increased $9 million, includes a $10 million write-off related to the transfer of $61 million of non-core consumer finance installment loans to held for sale during the quarter.

The provision for loan losses was $31 million for the first quarter of 2011, down from $63 million for the prior quarter. The Company's allowance for loan losses was $454 million, or 3.59% of total loans, at March 31, 2011. This compares to an allowance for loan losses of $477 million, or 3.78%, of total loans at December 31, 2010. The allowance's coverage of nonaccrual loans improved to 93% at the end of the first quarter of 2011, compared to 83% at the end of the fourth quarter of 2010.

Net Interest Income

Net interest income increased $2.9 million, to $153.7 million, up 2% from the fourth quarter of 2010.  The increase was primarily driven by growth in mortgage loan interest income, lower deposit costs, lower wholesale funding costs, and increased income from investments.  These improvements were partially offset by lower interest income on commercial real estate loans and consumer loans.

During the quarter, the Company continued to realize the benefits of the deposit and investment strategies we began to implement in the fourth quarter of 2010.

Net interest margin for the quarter ended March 31, 2011, was 3.32%, up 19 basis points from 3.13% for the fourth quarter of 2010.  While we expect the margin earned from banking activities will continue to trend higher as the Company grows loans and further optimizes its funding mix and deposit pricing; recent holding company financing, which partially funded our TARP repayment, will more than offset this benefit going forward.   Although the net effect of the financed repayment of TARP will be accretive to earnings per share, net interest income and margin will be negatively impacted in future quarters.

Loans and Deposits

Total loans were $12.7 billion at March 31, 2011, up 1%, from $12.6 billion at December 31, 2010, and average loans grew at an annualized rate of 2.8%.

For the first quarter, the residential mortgage segment of the portfolio grew 8% to $2.5 billion, and the home equity segment of the portfolio was up 2% to $2.6 billion from the prior quarter. The increases in the residential mortgage and home equity segment of the portfolio for the quarter were offset by declines in most other loan categories as we continued to rebalance our risk appetite. Commercial mortgage and construction portfolios totaled $3.9 billion at the end of the quarter, down 4% on annualized basis, from the prior period as we continued to pare our exposures. In contrast, our average C&I lending book, excluding the impact of loan sales and resolutions, expanded on a consecutive quarter basis.

Total interest bearing liabilities declined $569 million, or 4%, as the Company continued to optimize its funding base.  Wholesale funding, network and brokered deposits continued to be managed downward, while customer term and sweep repurchase balances continued to grow. At March 31, 2011, all of the Company's repurchase liabilities totaling $1.9 billion were with customers.

Noninterest Income and Expense

Noninterest income for the quarter ended March 31, 2011, was $72 million, down $13 million compared to $85 million for the fourth quarter of 2010, primarily due to weaker mortgage banking income. Core fee-based revenue of $61 million for the quarter ended March 31, 2011, compared to $60 million for the quarter ended December 31, 2010, as increases in retail commission and trust fees exceeded a $1 million decrease in deposit-related fees.

Mortgage loans originated for sale were $290 million for the quarter ended March 31, 2011, down from $630 million the prior quarter, as a generally higher interest rate environment resulted in lower refinancing activity during the quarter.  Net mortgage banking income for the quarter totaled $2 million, down 86% from $13 million for the fourth quarter of 2010.  First quarter mortgage banking results included a $0.2 million valuation charge related to mortgage servicing rights compared to a $3 million valuation recovery for the fourth quarter of 2010.

Total noninterest expense for the quarter ended March 31, 2011, was $164 million, down $3 million, or 2%, from $167 million for the quarter ended December 31, 2010.  The decrease in total noninterest expense over the prior quarter was primarily due to declines in foreclosure/OREO and FDIC expenses.  These declines were partially offset by an increase in personnel and occupancy expenses.

The Company reported income tax expense of $8 million for the first quarter of 2011. This compares to an $8 million tax benefit for the prior quarter, which included a $5 million benefit related to the resolution of certain tax matters, which occurred during the quarter.  

"We are pleased with the progress we have made and continue to be highly positive about the future of our company. Our pro forma capital ratios following the notes offering and partial repurchase of the TARP preferred stock continue to exceed the requirements of our regulators and standards for well-capitalized banks. This strong capital position provides us with flexibility as we continue to execute our strategic plans for growth," said Flynn. "We remain confident we will achieve our goal of repaying all of the TARP funds in 2011 and will do so in the most shareholder-friendly manner possible."

FIRST QUARTER 2011 EARNINGS RELEASE CONFERENCE CALL

The Company will host a conference call for investors and analysts at 4:00 p.m. Central Time (CT) today, April 21, 2011. Interested parties can listen to the call live on the internet through the investor relations section of the company's website, www.associatedbank.com/investor, or by dialing 877-348-9354. 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 253-237-1160. Participants should ask the operator for the Associated Banc-Corp first quarter 2011 earnings call, or conference ID number 53318660.

An audio archive of the webcast will be available on the company's website for one month following the call. A replay of the call will be available starting at 7:00 p.m. CT on April 21, 2011 through 11:00 p.m. CT on May 20, 2011 by dialing 800-642-1687 and entering the conference ID number 53318660. The replay number for international callers is 706-645-9291.  

ABOUT ASSOCIATED BANC-CORP

Associated Banc-Corp (NASDAQ: ASBC) is one of the top 50 financial services holding companies operating in the United States. At December 31, 2010, Associated had total assets of $22 billion.  Headquartered in Green Bay, Wis., Associated has approximately 280 banking locations serving more than 150 communities in Wisconsin, Illinois and Minnesota. The company offers a full range of banking services and other financial products and services. More information about Associated Banc-Corp is available at www.associatedbank.com.

FORWARD LOOKING STATEMENTS

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 most recent Annual Report filed on Form 10-K as updated by the Company's most recent Form 10-Q.


Consolidated Balance Sheets (Unaudited)

Associated Banc-Corp



March 31,


December 31,


Seql Qtr


September 30,


June 30,


March 31,


Comp Qtr

(in thousands)


2011


2010


$ Change


2010


2010


2010


$ Change

Assets















Cash and due from banks


$      299,040


$        319,487


$    (20,447)


$       316,914


$      324,952


$      284,882


$       14,158

Interest-bearing deposits in other















financial institutions


498,094


546,125


(48,031)


1,717,853


2,210,946


1,998,528


(1,500,434)

Federal funds sold and securities purchased















under agreements to resell


2,015


2,550


(535)


503,950


13,515


19,220


(17,205)

Securities available for sale, at fair value


5,883,541


6,101,341


(217,800)


5,291,336


5,322,177


5,267,372


616,169

Federal Home Loan Bank and Federal















  Reserve Bank stocks, at cost


191,017


190,968


49


190,918


190,870


184,811


6,206

Loans held for sale


85,493


144,808


(59,315)


274,666


321,060


274,003


(188,510)

Loans


12,655,322


12,616,735


38,587


12,372,393


12,601,916


13,299,321


(643,999)

Allowance for loan losses


(454,461)


(476,813)


22,352


(522,018)


(567,912)


(575,573)


121,112

   Loans, net


12,200,861


12,139,922


60,939


11,850,375


12,034,004


12,723,748


(522,887)

Premises and equipment, net


186,329


190,533


(4,204)


181,236


181,231


183,401


2,928

Goodwill


929,168


929,168


-


929,168


929,168


929,168


-

Other intangible assets, net


85,200


88,044


(2,844)


84,824


92,176


91,991


(6,791)

Other assets


1,112,807


1,132,650


(19,843)


1,184,046


1,139,960


1,150,512


(37,705)

   Total assets


$ 21,473,565


$   21,785,596


$  (312,031)


$  22,525,286


$ 22,760,059


$ 23,107,636


(1,634,071)
















Liabilities and Stockholders' Equity















Noninterest-bearing deposits


$   3,285,604


$     3,684,965


$  (399,361)


$    3,054,121


$   2,932,599


$   3,023,247


262,357

Interest-bearing deposits, excl Brokered CDs


10,413,994


11,097,788


(683,794)


13,308,530


13,465,974


13,731,421


(3,317,427)

Brokered CDs


324,045


442,640


(118,595)


442,209


571,626


742,119


(418,074)

   Total deposits


14,023,643


15,225,393


(1,201,750)


16,804,860


16,970,199


17,496,787


(3,473,144)

Short-term borrowings


2,547,805


1,747,382


800,423


539,263


513,406


575,564


1,972,241

Long-term funding


1,484,177


1,413,605


70,572


1,713,671


1,843,691


1,643,979


(159,802)

Accrued expenses and other liabilities


223,226


240,425


(17,199)


266,643


246,636


210,797


12,429

   Total liabilities


18,278,851


18,626,805


(347,954)


19,324,437


19,573,932


19,927,127


(1,648,276)

Stockholders' Equity















 Preferred equity


515,238


514,388


850


513,550


512,724


511,910


3,328

 Common stock


1,744


1,739


5


1,738


1,737


1,737


7

 Surplus


1,576,903


1,573,372


3,531


1,569,963


1,567,315


1,564,536


12,367

 Retained earnings


1,055,344


1,041,666


13,678


1,036,800


1,032,065


1,044,501


10,843

 Accumulated other comprehensive income


45,731


27,626


18,105


78,798


73,173


59,744


(14,013)

 Treasury stock


(246)


-


(246)


-


(887)


(1,919)


1,673

   Total stockholders' equity


3,194,714


3,158,791


35,923


3,200,849


3,186,127


3,180,509


14,205

    Total liabilities and stockholders' equity


$ 21,473,565


$   21,785,596


$  (312,031)


$  22,525,286


$ 22,760,059


$ 23,107,636


$ (1,634,071)



Consolidated Statements of Income (Unaudited)

Associated Banc-Corp



For The Three Months Ended






March 31,


Quarter

(in thousands, except per share amounts)


2011


2010


$ Change

% Change

Interest Income








Interest and fees on loans


$ 142,771


$ 159,291


$ (16,520)

(10.4%)

Interest and dividends on investment securities:








 Taxable


34,652


46,168


(11,516)

(24.9%)

 Tax-exempt


7,713


8,708


(995)

(11.4%)

Other interest and dividends


1,458


1,773


(315)

(17.8%)

   Total interest income


186,594


215,940


(29,346)

(13.6%)

Interest Expense








Interest on deposits


18,249


28,745


(10,496)

(36.5%)

Interest on short-term borrowings


3,579


2,026


1,553

76.7%

Interest on long-term funding


11,043


15,947


(4,904)

(30.8%)

   Total interest expense


32,871


46,718


(13,847)

(29.6%)

Net Interest Income


153,723


169,222


(15,499)

(9.2%)

Provision for loan losses


31,000


165,345


(134,345)

(81.3%)

Net interest income after provision for








loan losses


122,723


3,877


118,846

N/M

Noninterest Income








Trust service fees


9,831


9,356


475

5.1%

Service charges on deposit accounts


19,064


26,059


(6,995)

(26.8%)

Card-based and other nondeposit fees


15,598


13,812


1,786

12.9%

Retail commissions


16,381


15,817


564

3.6%

 Total core fee-based revenue


60,874


65,044


(4,170)

(6.4%)









Mortgage banking, net


1,845


5,407


(3,562)

(65.9%)

Capital market fees, net


2,378


130


2,248

N/M

Bank owned life insurance income


3,586


3,256


330

10.1%

Asset sale losses, net


(1,986)


(1,641)


(345)

21.0%

Investment securities gains (losses), net


(22)


23,581


(23,603)

(100.1%)

Other


5,507


2,261


3,246

143.6%

   Total noninterest income


72,182


98,038


(25,856)

(26.4%)

Noninterest Expense








Personnel expense


88,930


79,355


9,575

12.1%

Occupancy


15,275


13,175


2,100

15.9%

Equipment


4,767


4,385


382

8.7%

Data processing


7,534


7,299


235

3.2%

Business development and advertising


4,943


4,445


498

11.2%

Other intangible amortization


1,178


1,253


(75)

(6.0%)

Legal and professional fees


4,482


2,795


1,687

60.4%

Losses other than loans


6,297


1,979


4,318

218.2%

Foreclosure/OREO expense


6,061


7,729


(1,668)

(21.6%)

FDIC expense


8,244


11,829


(3,585)

(30.3%)

Other


16,465


17,615


(1,150)

(6.5%)

   Total noninterest expense


164,176


151,859


12,317

8.1%

Income (Loss) before income taxes


30,729


(49,944)


80,673

N/M

Income tax expense (benefit)


7,876


(23,555)


31,431

N/M

Net income (loss)


22,853


(26,389)


49,242

N/M

Preferred stock dividends and discount


7,413


7,365


48

0.7%

Net income (loss) available to common equity


$   15,440


$ (33,754)


$  49,194

N/M









Earnings (Loss) Per Common Share:








 Basic


$       0.09


$     (0.20)


$      0.29

N/M

 Diluted


$       0.09


$     (0.20)


$      0.29

N/M









Average Common Shares Outstanding:








 Basic


173,213


165,842


7,371

4.4%

 Diluted


173,217


165,842


7,375

4.4%









N/M - Not meaningful.



Consolidated Statements of Income (Unaudited) - Quarterly Trend

Associated Banc-Corp






Sequential Qtr


Comparable Qtr

(in thousands, except per share amounts)


1Q11


4Q10


$ Change

% Change


3Q10


2Q10


1Q10


$ Change

% Change

Interest Income

















Interest and fees on loans


$ 142,771


$ 146,444


$ (3,673)

(2.5%)


$ 148,937


$ 153,815


$ 159,291


$ (16,520)

(10.4%)

Interest and dividends on investment securities:

















 Taxable


34,652


32,420


2,232

6.9%


36,151


40,292


46,168


(11,516)

(24.9%)

 Tax-exempt


7,713


8,150


(437)

(5.4%)


8,499


8,558


8,708


(995)

(11.4%)

Other interest and dividends


1,458


2,078


(620)

(29.8%)


2,629


2,213


1,773


(315)

(17.8%)

   Total interest income


186,594


189,092


(2,498)

(1.3%)


196,216


204,878


215,940


(29,346)

(13.6%)

Interest Expense

















Interest on deposits


18,249


23,039


(4,790)

(20.8%)


25,879


28,360


28,745


(10,496)

(36.5%)

Interest on short-term borrowings


3,579


2,288


1,291

56.4%


1,849


1,820


2,026


1,553

76.7%

Interest on long-term funding


11,043


12,905


(1,862)

(14.4%)


14,584


14,905


15,947


(4,904)

(30.8%)

   Total interest expense


32,871


38,232


(5,361)

(14.0%)


42,312


45,085


46,718


(13,847)

(29.6%)

Net Interest Income


153,723


150,860


2,863

1.9%


153,904


159,793


169,222


(15,499)

(9.2%)

Provision for loan losses


31,000


63,000


(32,000)

(50.8%)


64,000


97,665


165,345


(134,345)

(81.3%)

Net interest income after provision for

















loan losses


122,723


87,860


34,863

39.7%


89,904


62,128


3,877


118,846

N/M

Noninterest Income

















Trust service fees


9,831


9,518


313

3.3%


9,462


9,517


9,356


475

5.1%

Service charges on deposit accounts


19,064


20,390


(1,326)

(6.5%)


23,845


26,446


26,059


(6,995)

(26.8%)

Card-based and other nondeposit fees


15,598


15,842


(244)

(1.5%)


14,906


14,739


13,812


1,786

12.9%

Retail commissions


16,381


14,441


1,940

13.4%


15,276


15,722


15,817


564

3.6%

 Total core fee-based revenue


60,874


60,191


683

1.1%


63,489


66,424


65,044


(4,170)

(6.4%)


















Mortgage banking, net


1,845


13,229


(11,384)

(86.1%)


9,007


5,493


5,407


(3,562)

(65.9%)

Capital market fees, net


2,378


5,187


(2,809)

(54.2%)


891


(136)


130


2,248

N/M

Bank owned life insurance income


3,586


4,509


(923)

(20.5%)


3,756


4,240


3,256


330

10.1%

Asset sale gains (losses), net


(1,986)


514


(2,500)

N/M


(2,354)


1,477


(1,641)


(345)

21.0%

Investment securities gains (losses), net


(22)


(1,883)


1,861

(98.8%)


3,365


(146)


23,581


(23,603)

(100.1%)

Other


5,507


2,950


2,557

86.7%


3,743


3,539


2,261


3,246

143.6%

   Total noninterest income


72,182


84,697


(12,515)

(14.8%)


81,897


80,891


98,038


(25,856)

(26.4%)

Noninterest Expense

















Personnel expense


88,930


83,912


5,018

6.0%


80,640


79,342


79,355


9,575

12.1%

Occupancy


15,275


12,899


2,376

18.4%


12,157


11,706


13,175


2,100

15.9%

Equipment


4,767


4,899


(132)

(2.7%)


4,637


4,450


4,385


382

8.7%

Data processing


7,534


7,047


487

6.9%


7,502


7,866


7,299


235

3.2%

Business development and advertising


4,943


4,870


73

1.5%


4,297


4,773


4,445


498

11.2%

Other intangible amortization


1,178


1,206


(28)

(2.3%)


1,206


1,254


1,253


(75)

(6.0%)

Legal and professional fees


4,482


5,353


(871)

(16.3%)


6,774


5,517


2,795


1,687

60.4%

Losses other than loans


6,297


7,470


(1,173)

(15.7%)


2,504


2,840


1,979


4,318

218.2%

Foreclosure/OREO expense


6,061


9,860


(3,799)

(38.5%)


7,349


8,906


7,729


(1,668)

(21.6%)

FDIC expense


8,244


11,095


(2,851)

(25.7%)


11,426


12,027


11,829


(3,585)

(30.3%)

Other


16,465


18,232


(1,767)

(9.7%)


18,088


16,357


17,615


(1,150)

(6.5%)

   Total noninterest expense


164,176


166,843


(2,667)

(1.6%)


156,580


155,038


151,859


12,317

8.1%

Income (loss) before income taxes


30,729


5,714


25,015

N/M


15,221


(12,019)


(49,944)


80,673

N/M

Income tax expense (benefit)


7,876


(8,294)


16,170

N/M


917


(9,240)


(23,555)


31,431

N/M

Net income (loss)


22,853


14,008


8,845

63.1%


14,304


(2,779)


(26,389)


49,242

N/M

Preferred stock dividends and discount


7,413


7,400


13

0.2%


7,389


7,377


7,365


48

0.7%

Net income (loss) available to common equity


$   15,440


$     6,608


$   8,832

133.7%


$     6,915


$ (10,156)


$ (33,754)


$  49,194

N/M


















Earnings (Loss) Per Common Share:

















 Basic


$       0.09


$       0.04


$     0.05

125.0%


$       0.04


$     (0.06)


$     (0.20)


$      0.29

N/M

 Diluted


$       0.09


$       0.04


$     0.05

125.0%


$       0.04


$     (0.06)


$     (0.20)


$      0.29

N/M


















Average Common Shares Outstanding:

















 Basic


173,213


173,068


145

0.1%


172,989


172,921


165,842


7,371

4.4%

 Diluted


173,217


173,072


145

0.1%


172,990


172,921


165,842


7,375

4.4%


















N/M - Not meaningful.



Selected Quarterly Information

Associated Banc-Corp























(in thousands, except per share and full time equivalent employee data)


1st Qtr 2011


4th Qtr 2010


3rd Qtr 2010


2nd Qtr 2010


1st Qtr 2010

Summary of Operations











Net interest income


$      153,723


$      150,860


$      153,904


$      159,793


$      169,222

Provision for loan losses


31,000


63,000


64,000


97,665


165,345

Asset sale gains (losses), net


(1,986)


514


(2,354)


1,477


(1,641)

Investment securities gains (losses), net


(22)


(1,883)


3,365


(146)


23,581

Noninterest income (excluding securities & asset gains)


74,190


86,066


80,886


79,560


76,098

Noninterest expense


164,176


166,843


156,580


155,038


151,859

Income (loss) before income taxes


30,729


5,714


15,221


(12,019)


(49,944)

Income tax expense (benefit)


7,876


(8,294)


917


(9,240)


(23,555)

Net income (loss)


22,853


14,008


14,304


(2,779)


(26,389)

Net income (loss) available to common equity


15,440


6,608


6,915


(10,156)


(33,754)

Taxable equivalent adjustment


5,440


5,721


5,914


5,966


6,034












Per Common Share Data











Net income (loss):











 Basic


$            0.09


$            0.04


$            0.04


$          (0.06)


$          (0.20)

 Diluted


0.09


0.04


0.04


(0.06)


(0.20)

Dividends


0.01


0.01


0.01


0.01


0.01

Market Value:











 High


$          15.36


$          15.49


$          13.90


$          16.10


$          14.54

 Low


13.83


12.57


11.96


12.26


11.48

 Close


14.85


15.15


13.19


12.26


13.76

Book value


15.46


15.28


15.53


15.46


15.44

Tangible book value


9.97


9.77


10.02


9.93


9.90












Performance Ratios (annualized)











Earning assets yield


4.01%


3.89%


3.90%


4.10%


4.24%

Interest-bearing liabilities rate


0.89


0.98


1.03


1.10


1.11

Net interest margin


3.32


3.13


3.08


3.22


3.35

Return on average assets


0.43


0.25


0.25


(0.05)


(0.46)

Return on average equity


2.92


1.74


1.77


(0.35)


(3.40)

Return on average tangible common equity (1)


3.67


1.52


1.58


(2.37)


(8.17)

Efficiency ratio (2)


70.36


68.76


65.05


63.20


60.42

Effective tax rate (benefit)


25.63


(145.13)


6.03


(76.88)


(47.16)

Dividend payout ratio (3)


11.11


25.00


25.02


N/M


N/M












Average Balances











Assets


$ 21,336,858


$ 22,034,041


$ 22,727,208


$ 22,598,695


$ 23,151,767

Earning assets


19,297,866


19,950,784


20,660,498


20,598,637


21,075,408

Interest-bearing liabilities


14,907,465


15,476,002


16,376,904


16,408,718


16,970,884

Loans (4)


12,673,844


12,587,702


12,855,791


13,396,710


13,924,978

Deposits


14,245,614


16,452,473


17,138,105


17,056,193


17,143,924

Wholesale funding


3,883,122


2,311,016


2,326,469


2,343,119


2,837,001

Common stockholders' equity


2,657,956


2,681,813


2,693,735


2,674,097


2,633,680

Stockholders' equity


3,172,636


3,195,657


3,206,742


3,186,295


3,145,074

Common stockholders' equity / assets


12.46%


12.17%


11.85%


11.83%


11.38%

Stockholders' equity / assets


14.87%


14.50%


14.11%


14.10%


13.58%












At Period End











Assets


$ 21,473,565


$ 21,785,596


$ 22,525,286


$ 22,760,059


$ 23,107,636

Loans


12,655,322


12,616,735


12,372,393


12,601,916


13,299,321

Allowance for loan losses


454,461


476,813


522,018


567,912


575,573

Goodwill


929,168


929,168


929,168


929,168


929,168

Mortgage servicing rights, net


62,243


63,909


59,483


65,629


64,190

Other intangible assets


22,957


24,135


25,341


26,547


27,801

Deposits


14,023,643


15,225,393


16,804,860


16,970,199


17,496,787

Wholesale funding


4,031,982


3,160,987


2,252,934


2,357,097


2,219,543

Stockholders' equity


3,194,714


3,158,791


3,200,849


3,186,127


3,180,509

Stockholders' equity / assets


14.88%


14.50%


14.21%


14.00%


13.76%

Tangible common equity / tangible assets (5)


8.42%


8.12%


8.03%


7.88%


7.73%

Tangible equity/tangible assets (6)


10.93%


10.59%


10.41%


10.23%


10.04%

Tier 1 common equity / risk-weighted assets (7)


12.65%


12.26%


12.31%


12.00%


11.43%

Tier 1 leverage ratio


11.65%


11.19%


10.78%


10.80%


10.57%

Tier 1 risk-based capital ratio


18.08%


17.58%


17.68%


17.25%


16.40%

Total risk-based capital ratio


19.56%


19.05%


19.16%


19.02%


18.15%

Shares outstanding, end of period


173,274


173,112


173,019


172,955


172,880












Selected trend information











Average full time equivalent employees


4,929


4,865


4,827


4,766


4,777

Trust assets under management, at market value


$   5,900,000


$   5,700,000


$   5,400,000


$   5,100,000


$   5,500,000

Mortgage loans originated for sale during period


290,013


629,978


727,868


501,965


454,746

Mortgage portfolio serviced for others


7,476,000


7,453,000


7,860,000


7,822,000


7,751,000

Mortgage servicing rights, net / Portfolio serviced for others


0.83%


0.86%


0.76%


0.84%


0.83%












N/M - Not meaningful.

(1) Return on average tangible common equity = Net income available to common equity divided by average common equity excluding average goodwill and other intangible assets. This is a non-GAAP financial measure.

(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.  This is a non-GAAP financial measure.

(3) Ratio is based upon basic earnings per common share.

(4) Loans held for sale have been included in the average balances.

(5) Tangible common equity to tangible assets = Common stockholders' equity excluding goodwill and other intangible assets divided by assets excluding goodwill and other intangible assets.  This is a non-GAAP financial measure.

(6) Tangible equity to tangible assets = Stockholders' equity excluding goodwill and other intangible assets divided by assets excluding goodwill and other intangible assets. This is a non-GAAP financial measure.

(7) Tier 1 common equity to risk-weighted assets = Tier 1 capital excluding qualifying perpetual preferred stock and qualifying trust preferred securities divided by risk-weighted assets.  This is a non-GAAP financial measure.



Selected Asset Quality Information

Associated Banc-Corp





Mar11 vs Dec10





Mar11 vs Mar10

(in thousands)


Mar 31, 2011

Dec 31, 2010

% Change


Sep 30, 2010

Jun 30, 2010

Mar 31, 2010

% Change

Allowance for Loan Losses










Beginning balance


$     476,813

$     522,018

(8.7%)


$       567,912

$     575,573

$     573,533

(16.9%)

Provision for loan losses


31,000

63,000

(50.8%)


64,000

97,665

165,345

(81.3%)

Charge offs


(65,156)

(118,368)

(45.0%)


(122,327)

(113,170)

(174,627)

(62.7%)

Recoveries


11,804

10,163

16.1%


12,433

7,844

11,322

4.3%

Net charge offs


(53,352)

(108,205)

(50.7%)


(109,894)

(105,326)

(163,305)

(67.3%)

Ending balance


$     454,461

$     476,813

(4.7%)


$       522,018

$     567,912

$     575,573

(21.0%)











Reserve for losses on unfunded commitments


$       17,800

$       17,374

2.5%


$         16,274

$       14,616

$       14,616

21.8%





















Net Charge Offs




Mar11 vs Dec10





Mar11 vs Mar10



Mar 31, 2011

Dec 31, 2010

% Change


Sep 30, 2010

Jun 30, 2010

Mar 31, 2010

% Change

Commercial and industrial


$         4,314

$       27,041

(84.0%)


$           4,274

$         5,557

$       63,699

(93.2%)

Commercial real estate


7,873

20,103

(60.8%)


28,517

37,004

21,328

(63.1%)

Real estate - construction


11,936

31,879

(62.6%)


60,488

46,135

60,186

(80.2%)

Lease financing


28

9,159

(99.7%)


826

297

774

(96.4%)

   Total commercial


24,151

88,182

(72.6%)


94,105

88,993

145,987

(83.5%)

Home equity


14,322

14,541

(1.5%)


10,875

11,213

11,769

21.7%

Installment (1)


12,670

2,369

N/M


1,640

1,887

2,222

N/M

   Total retail


26,992

16,910

59.6%


12,515

13,100

13,991

92.9%

   Residential mortgage


2,209

3,113

(29.0%)


3,274

3,233

3,327

(33.6%)

       Total net charge offs


$       53,352

$     108,205

(50.7%)


$       109,894

$     105,326

$     163,305

(67.3%)











Net Charge Offs to Average Loans (in basis points) *


Mar 31, 2011

Dec 31, 2010



Sep 30, 2010

Jun 30, 2010

Mar 31, 2010


Commercial and industrial


60

364



57

73

795


Commercial real estate


94

231



319

398

230


Real estate - construction


888

1,820



2,598

1,582

1,780


Lease financing


20

5,051



416

141

341


   Total commercial


142

488



498

444

698


Home equity


227

231



175

183

190


Installment


759

131



74

83

98


   Total retail


338

209



148

156

166


   Residential mortgage


35

56



65

65

67


       Total net charge offs


171

341



339

315

476






















Credit Quality




Mar11 vs Dec10





Mar11 vs Mar10



Mar 31, 2011

Dec 31, 2010

% Change


Sept 30, 2010

Jun 30, 2010

Mar 31, 2010

% Change

Nonaccrual loans


$     488,321

$     574,356

(15.0%)


$       727,877

$     975,641

$  1,180,185

(58.6%)

Other real estate owned (OREO)


49,019

44,330

10.6%


53,101

51,223

62,220

(21.2%)

   Total nonperforming assets


$     537,340

$     618,686

(13.1%)


$       780,978

$  1,026,864

$  1,242,405

(56.8%)











Loans 90 or more days past due and still accruing


9,380

3,418

174.4%


26,593

3,207

6,353

47.6%

Restructured loans (accruing)


88,193

79,935

10.3%


62,778

40,865

23,420

276.6%











Allowance for loan losses / loans


3.59%

3.78%



4.22%

4.51%

4.33%


Allowance for loan losses / nonaccrual loans


93.07

83.02



71.72

58.21

48.77


Nonaccrual loans / total loans


3.86

4.55



5.88

7.74

8.87


Nonperforming assets / total loans plus OREO


4.23

4.89



6.29

8.12

9.30


Nonperforming assets / total assets


2.50

2.84



3.47

4.51

5.38


Net charge offs / average loans (annualized)


1.71

3.41



3.39

3.15

4.76


Year-to-date net charge offs / average loans


1.71

3.69



3.78

3.97

4.76












Nonaccrual loans by type:










Commercial and industrial


$       76,780

$       99,845

(23.1%)


$       156,697

$     184,173

$     176,540

(56.5%)

Commercial real estate


186,547

223,927

(16.7%)


275,586

351,883

355,130

(47.5%)

Real estate - construction


84,903

94,929

(10.6%)


132,425

279,710

486,704

(82.6%)

Lease financing


15,270

17,080

(10.6%)


26,922

27,953

29,466

(48.2%)

   Total commercial


363,500

435,781

(16.6%)


591,630

843,719

1,047,840

(65.3%)

Home equity


49,618

51,712

(4.0%)


50,901

41,749

40,550

22.4%

Installment


4,949

10,544

(53.1%)


8,757

6,032

6,055

(18.3%)

   Total retail


54,567

62,256

(12.4%)


59,658

47,781

46,605

17.1%

   Residential mortgage


70,254

76,319

(7.9%)


76,589

84,141

85,740

(18.1%)

       Total nonaccrual loans


$     488,321

$     574,356

(15.0%)


$       727,877

$     975,641

$  1,180,185

(58.6%)





















N/M - Not meaningful.

* Annualized.

(1) Charge offs for the three months ended March 31, 2011, include $10 million related to installment loans transferred to held for sale.



Selected Asset Quality Information (continued)

Associated Banc-Corp





Mar11 vs Dec10





Mar11 vs Mar10

(in thousands)


Mar 31, 2011

Dec 31, 2010

% Change


Sep 30, 2010

Jun 30, 2010

Mar 31, 2010

% Change

Restructured loans (accruing)










Commercial and industrial


$       16,047

$         9,980

60.8%


$            620

$            635

$               -

N/M

Commercial real estate


34,166

15,612

118.8%


23,387

7,820

-

N/M

Real estate - construction


7,859

22,532

(65.1%)


7,076

4,835

763

N/M

Lease financing


-

-

0.0%


-

-

-

N/M

   Total commercial


58,072

48,124

20.7%


31,083

13,290

763

N/M

Home equity


11,630

11,741

(0.9%)


10,269

3,601

6,482

79.4%

Installment


1,149

692

66.0%


793

560

300

283.0%

   Total retail


12,779

12,433

2.8%


11,062

4,161

6,782

88.4%

   Residential mortgage


17,342

19,378

(10.5%)


20,633

23,414

15,875

9.2%

       Total restructured loans (accruing)


$       88,193

$       79,935

10.3%


$       62,778

$       40,865

$       23,420

276.6%











Restructured loans in nonaccrual loans (not included above)


$       49,352

$       35,939

37.3%


$       32,657

$       48,215

$         9,862

400.4%





















Loans Past Due 30-89 Days




Mar11 vs Dec10





Mar11 vs Mar10



Mar 31, 2011

Dec 31, 2010

% Change


Sep 30, 2010

Jun 30, 2010

Mar 31, 2010

% Change

Commercial and industrial


$       36,205

$       33,013

9.7%


$       14,505

$       40,415

$       51,042

(29.1%)

Commercial real estate


40,537

46,486

(12.8%)


56,710

50,721

69,836

(42.0%)

Real estate - construction


3,410

8,016

(57.5%)


12,225

23,368

13,805

(75.3%)

Lease financing


135

132

2.3%


168

628

98

37.8%

   Total commercial


80,287

87,647

(8.4%)


83,608

115,132

134,781

(40.4%)

Home equity


14,808

13,886

6.6%


20,044

15,869

12,919

14.6%

Installment


2,714

9,624

(71.8%)


10,536

6,567

4,794

(43.4%)

   Total retail


17,522

23,510

(25.5%)


30,580

22,436

17,713

(1.1%)

   Residential mortgage


7,940

8,722

(9.0%)


10,065

11,110

12,786

(37.9%)

       Total loans past due 30-89 days


$     105,749

$     119,879

(11.8%)


$     124,253

$     148,678

$     165,280

(36.0%)





















Potential Problem Loans




Mar11 vs Dec10





Mar11 vs Mar10



Mar 31, 2011

Dec 31, 2010

% Change


Sep 30, 2010

Jun 30, 2010

Mar 31, 2010

% Change

Commercial and industrial


$     348,949

$     354,284

(1.5%)


$     373,955

$     482,686

$     505,903

(31.0%)

Commercial real estate


465,376

492,778

(5.6%)


553,126

553,316

565,969

(17.8%)

Real estate - construction


70,824

91,618

(22.7%)


175,817

203,560

262,572

(73.0%)

Lease financing


1,705

2,617

(34.8%)


2,302

6,784

5,158

(66.9%)

   Total commercial


886,854

941,297

(5.8%)


1,105,200

1,246,346

1,339,602

(33.8%)

Home equity


4,737

3,057

55.0%


6,495

7,778

7,446

(36.4%)

Installment


230

703

(67.3%)


692

725

1,103

(79.1%)

   Total retail


4,967

3,760

32.1%


7,187

8,503

8,549

(41.9%)

   Residential mortgage


19,710

18,672

5.6%


19,416

17,304

19,591

0.6%

       Total potential problem loans


$     911,531

$     963,729

(5.4%)


$  1,131,803

$  1,272,153

$  1,367,742

(33.4%)





















N/M - Not meaningful.



Net Interest Income Analysis - Taxable Equivalent Basis









Associated Banc-Corp







Three months ended March 31, 2011


Three months ended March 31, 2010



Average

Interest

Average


Average

Interest

Average

(in thousands)


Balance

Income / Expense

Yield / Rate


Balance

Income / Expense

Yield / Rate










Earning assets:









  Loans: (1) (2) (3)









     Commercial


$   6,907,941

$                76,444

4.48%


$   8,478,259

$                89,895

4.29%

     Residential mortgage


2,527,035

27,147

4.31


2,019,855

25,471

5.06

     Retail


3,238,868

39,992

4.98


3,426,864

44,733

5.27

        Total loans


12,673,844

143,583

4.58


13,924,978

160,099

4.65

     Investment Securities


5,858,293

46,993

3.21


5,725,781

60,102

4.20

     Other short-term investments


765,729

1,458

0.76


1,424,649

1,773

0.50

        Investments and other


6,624,022

48,451

2.93


7,150,430

61,875

3.46

Total earning assets


19,297,866

192,034

4.01


21,075,408

221,974

4.24

  Other assets, net


2,038,992




2,076,359



Total assets


$ 21,336,858




$ 23,151,767












Interest-bearing liabilities:









  Savings deposits


$      917,053

$                     264

0.12%


$      858,440

$                     250

0.12%

  Interest-bearing demand deposits


1,764,439

631

0.15


2,920,510

1,779

0.25

  Money market deposits


5,149,261

4,688

0.37


6,242,934

8,221

0.53

  Time deposits, excluding Brokered CDs


2,815,301

11,616

1.67


3,451,638

17,453

2.05

     Total interest-bearing deposits, excluding Brokered CDs


10,646,054

17,199

0.66


13,473,522

27,703

0.83

  Brokered CDs


378,289

1,050

1.13


660,361

1,042

0.64

     Total interest-bearing deposits


11,024,343

18,249

0.67


14,133,883

28,745

0.82

  Wholesale funding


3,883,122

14,622

1.52


2,837,001

17,973

2.55

Total interest-bearing liabilities


14,907,465

32,871

0.89


16,970,884

46,718

1.11

  Noninterest-bearing demand deposits


3,221,271




3,010,041



  Other liabilities


35,486




25,768



  Stockholders' equity


3,172,636




3,145,074



Total liabilities and stockholders' equity


$ 21,336,858




$ 23,151,767












Net interest income and rate spread (1)



$              159,163

3.12%



$              175,256

3.13%

Net interest margin (1)




3.32%




3.35%

Taxable equivalent adjustment



$                  5,440




$                  6,034




Net Interest Income Analysis - Taxable Equivalent Basis









Associated Banc-Corp











Three months ended March 31, 2011


Three months ended December 31, 2010



Average

Interest

Average


Average

Interest

Average

(in thousands)


Balance

Income / Expense

Yield / Rate


Balance

Income / Expense

Yield / Rate










Earning assets:









  Loans: (1) (2) (3)









     Commercial


$   6,907,941

$                76,444

4.48%


$   7,161,913

$                81,120

4.50%

     Residential mortgage


2,527,035

27,147

4.31


2,214,502

24,887

4.49

     Retail


3,238,868

39,992

4.98


3,211,287

41,267

5.11

        Total loans


12,673,844

143,583

4.58


12,587,702

147,274

4.65

     Investment Securities


5,858,293

46,993

3.21


5,598,564

45,461

3.25

     Other short-term investments


765,729

1,458

0.76


1,764,518

2,078

0.48

        Investments and other


6,624,022

48,451

2.93


7,363,082

47,539

2.58

Total earning assets


19,297,866

192,034

4.01


19,950,784

194,813

3.89

  Other assets, net


2,038,992




2,083,257



Total assets


$ 21,336,858




$ 22,034,041












Interest-bearing liabilities:









  Savings deposits


$      917,053

$                     264

0.12%


$      908,625

$                     319

0.14%

  Interest-bearing demand deposits


1,764,439

631

0.15


2,733,728

1,345

0.20

  Money market deposits


5,149,261

4,688

0.37


6,027,526

7,202

0.47

   Time deposits, excluding Brokered CDs


2,815,301

11,616

1.67


3,057,052

12,986

1.69

      Total interest-bearing deposits, excluding Brokered CDs


10,646,054

17,199

0.66


12,726,931

21,852

0.68

  Brokered CDs


378,289

1,050

1.13


438,055

1,187

1.07

     Total interest-bearing deposits


11,024,343

18,249

0.67


13,164,986

23,039

0.69

  Wholesale funding


3,883,122

14,622

1.52


2,311,016

15,193

2.62

Total interest-bearing liabilities


14,907,465

32,871

0.89


15,476,002

38,232

0.98

  Noninterest-bearing demand deposits


3,221,271




3,287,487



  Other liabilities


35,486




74,895



  Stockholders' equity


3,172,636




3,195,657



Total liabilities and stockholders' equity


$ 21,336,858




$ 22,034,041












Net interest income and rate spread (1)



$              159,163

3.12%



$              156,581

2.91%

Net interest margin (1)




3.32%




3.13%

Taxable equivalent adjustment



$                  5,440




$                  5,721




















(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.



Financial Summary and Comparison

Associated Banc-Corp











Period End Loan Composition




Mar11 vs Dec10





Mar11 vs Mar10



Mar 31, 2011

Dec 31, 2010

% Change


Sept 30, 2010

Jun 30, 2010

Mar 31, 2010

% Change

Commercial and industrial


$   2,972,651

$   3,049,752

(2.5%)


$    2,989,238

$   2,969,662

$   3,099,265

(4.1%)

Commercial real estate - owner occupied


1,027,826

1,049,798

(2.1%)


1,086,258

1,131,687

1,156,318

(11.1%)

Commercial real estate - all other


2,354,655

2,339,415

0.7%


2,408,084

2,445,029

2,542,821

(7.4%)

Real estate - construction


525,236

553,069

(5.0%)


736,387

925,697

1,281,868

(59.0%)

Lease financing


56,458

60,254

(6.3%)


74,690

82,375

87,568

(35.5%)

   Total commercial


6,936,826

7,052,288

(1.6%)


7,294,657

7,554,450

8,167,840

(15.1%)

Home equity


2,576,736

2,523,057

2.1%


2,457,461

2,455,181

2,468,587

4.4%

Installment


605,767

695,383

(12.9%)


721,480

749,588

759,025

(20.2%)

   Total retail


3,182,503

3,218,440

(1.1%)


3,178,941

3,204,769

3,227,612

(1.4%)

   Residential mortgage


2,535,993

2,346,007

8.1%


1,898,795

1,842,697

1,903,869

33.2%

       Total loans


$ 12,655,322

$ 12,616,735

0.3%


$  12,372,393

$ 12,601,916

$ 13,299,321

(4.8%)





















Period End Deposit and Customer Funding Composition




Mar11 vs Dec10





Mar11 vs Mar10



Mar 31, 2011

Dec 31, 2010

% Change


Sept 30, 2010

Jun 30, 2010

Mar 31, 2010

% Change

Demand


$   3,285,604

$   3,684,965

(10.8%)


$    3,054,121

$   2,932,599

$   3,023,247

8.7%

Savings


973,122

887,236

9.7%


902,077

913,146

897,740

8.4%

Interest-bearing demand


1,755,367

1,870,664

(6.2%)


2,921,700

2,745,541

2,939,390

(40.3%)

Money market


4,968,510

5,434,867

(8.6%)


6,312,912

6,554,559

6,522,901

(23.8%)

Brokered CDs


324,045

442,640

(26.8%)


442,209

571,626

742,119

(56.3%)

Other time deposits


2,716,995

2,905,021

(6.5%)


3,171,841

3,252,728

3,371,390

(19.4%)

 Total deposits


14,023,643

15,225,393

(7.9%)


16,804,860

16,970,199

17,496,787

(19.9%)

Customer repo sweeps


1,048,516

563,884

85.9%


209,866

184,043

188,314

N/M

Customer repo term


887,434

-

N/M


-

-

-

N/M

 Total customer funding


1,935,950

563,884

243.3%


209,866

184,043

188,314

N/M

   Total deposits and customer funding


$ 15,959,593

$ 15,789,277

1.1%


$  17,014,726

$ 17,154,242

$ 17,685,101

(9.8%)











Network transaction deposits included above in










 interest-bearing demand and money market


936,688

1,144,134

(18.1%)


1,970,050

$   2,698,204

$   2,641,648

(64.5%)





















N/M - Not meaningful.



Investor Contact:
Janet L. Ford, Investor Relations Director
414-278-1890

SOURCE Associated Banc-Corp