ASSOCIATED BANC-CORP [ASB] Filings

10-Q 1 asb-20220331.htm 10-Q asb-20220331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: March 31, 2022


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the transition period from to

Commission file number: 001-31343

Associated Banc-Corp

(Exact name of registrant as specified in its charter)


Wisconsin									39-1098068
(State or other jurisdiction of incorporation or organization)									(I.R.S. Employer Identification No.)


433 Main Street
Green Bay,	Wisconsin	54301
(Address of principal executive offices)		(Zip Code)

(920) 491-7500

(Registrant’s telephone number, including area code)

(not applicable)

(Former name, former address and former fiscal year, if changed since last report)

Securities Registered Pursuant to Section 12(b) of the act:


Title of each class	Trading symbol	Name of each exchange on which registered
Common stock, par value $0.01 per share	ASB	New York Stock Exchange
Depositary Shrs, each representing 1/40th intrst in a shr of 5.875% Non-Cum. Perp Pref Stock, Srs E	ASB PrE	New York Stock Exchange
Depositary Shrs, each representing 1/40th intrst in a shr of 5.625% Non-Cum. Perp Pref Stock, Srs F	ASB PrF	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☑

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☑

APPLICABLE ONLY TO CORPORATE ISSUERS:

The number of shares outstanding of registrant’s common stock, par value $0.01 per share, at April 25, 2022 was 150,043,865.


ASSOCIATED BANC-CORP
Table of Contents


		Page
PART I. Financial Information

	Item 1. Financial Statements (Unaudited):	5

	Consolidated Balance Sheets	5

	Consolidated Statements of Income	6

	Consolidated Statements of Comprehensive Income	7

	Consolidated Statements of Changes in Stockholders’ Equity	8

	Consolidated Statements of Cash Flows	9

	Notes to Consolidated Financial Statements	11

	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	50

	Item 3. Quantitative and Qualitative Disclosures About Market Risk	74

	Item 4. Controls and Procedures	75

PART II. Other Information

	Item 1. Legal Proceedings	76

	Item 1A. Risk Factors	76

	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	77

	Item 6. Exhibits	78

	Signatures	79


ASSOCIATED BANC-CORP
Commonly Used Acronyms and Abbreviations
The following listing provides a reference of common acronyms and abbreviations used throughout the document:





ACLL			Allowance for Credit Losses on Loans

AFS			Available for Sale
ALCO			Asset / Liability Committee
ARRC			Alternative Reference Rate Committee
ASC			Accounting Standards Codification
Associated / Corporation / our / we			Associated Banc-Corp collectively with all of its subsidiaries and affiliates

ASU			Accounting Standards Update
the Bank			Associated Bank, National Association

Basel III			International framework established by the Basel Committee on Banking Supervision for the regulation of capital and liquidity
bp			basis point(s)

CDs			Certificates of Deposit
CDIs			Core Deposit Intangibles
CECL			Current Expected Credit Losses
CET1			Common Equity Tier 1


CFPB			Consumer Financial Protection Bureau
CRA			Community Reinvestment Act
CRE			Commercial Real Estate
Dodd-Frank Act			Dodd-Frank Wall Street Reform and Consumer Protection Act
EAR			Earnings at Risk


Exchange Act			Securities Exchange Act of 1934, as amended
FASB			Financial Accounting Standards Board
FDIC			Federal Deposit Insurance Corporation
Federal Reserve			Board of Governors of the Federal Reserve System
FFELP			Federal Family Education Loan Program
FHLB			Federal Home Loan Bank
FHLMC			Federal Home Loan Mortgage Corporation
FICO			Fair Isaac Corporation, provider of a broad-based risk score to aid in credit decisions
FNMA			Federal National Mortgage Association

FOMC			Federal Open Market Committee
FTEs			Full-time equivalent employees
FTP			Funds Transfer Pricing
GAAP			Generally Accepted Accounting Principles
GNMA			Government National Mortgage Association
GSEs			Government-Sponsored Enterprises
HTM			Held to Maturity




LIBOR			London Interbank Offered Rate
LOCOM			Lower of Cost or Market
LTV			Loan-to-Value


MSRs			Mortgage Servicing Rights
MVE			Market Value of Equity
Net Free Funds			Noninterest-bearing sources of funds
NII			Net Interest Income
NPAs			Nonperforming Assets


OREO			Other Real Estate Owned


Parent Company			Associated Banc-Corp individually
PPP			Paycheck Protection Program
RAP			Retirement Account Plan - the Corporation's noncontributory defined benefit retirement plan
Repurchase Agreements			Securities sold under agreements to repurchase
Restricted Stock Awards			Restricted common stock and restricted common stock units to certain key employees
Retirement Eligible Colleagues			Colleagues whose retirement meets the early retirement or normal retirement definitions under the applicable equity compensation plan
ROCET1			Return on Common Equity Tier 1
Rockefeller			Rockefeller Capital Management
S&P			Standard & Poor's
SBA			Small Business Administration
SEC			U.S. Securities and Exchange Commission
Series C Preferred Stock			The Corporation's 6.125% Non-Cumulative Perpetual Preferred Stock, Series C, liquidation preference $1,000 per share
Series D Preferred Stock			The Corporation's 5.375% Non-Cumulative Perpetual Preferred Stock, Series D, liquidation preference $1,000 per share
Series E Preferred Stock			The Corporation's 5.875% Non-Cumulative Perpetual Preferred Stock, Series E, liquidation preference $1,000 per share
Series F Preferred Stock			The Corporation's 5.625% Non-Cumulative Perpetual Preferred Stock, Series F, liquidation preference $1,000 per share
SOFR			Secured Overnight Finance Rate

TBA			To-Be-Announced
TDRs			Troubled Debt Restructurings
UDAAPs			Unfair, Deceptive, or Abusive Acts or Practices
Whitnell			Whitnell & Co.
YTD			Year-to-Date

Table of Contents


PART I - FINANCIAL INFORMATION

ITEM 1.			Financial Statements:

ASSOCIATED BANC-CORP

Consolidated Balance Sheets


	Mar 31, 2022		Dec 31, 2021
(In Thousands, except share and per share data)	(Unaudited)		(Audited)
Assets
Cash and due from banks	$	334,138	$	343,831
Interest-bearing deposits in other financial institutions	166,929		681,684

Investment securities AFS, at fair value	2,780,803		4,332,015
Investment securities HTM, net, at amortized cost	3,939,855		2,238,947
Equity securities	18,560		18,352
Federal Home Loan Bank and Federal Reserve Bank stocks, at cost	168,281		168,281
Residential loans held for sale	91,582		136,638

Loans	24,531,926		24,224,949
Allowance for loan losses	(279,058)		(280,015)
Loans, net	24,252,867		23,944,934
Tax credit and other investments	284,561		293,733

Premises and equipment, net	387,550		385,173
Bank and corporate owned life insurance	679,538		680,021
Goodwill	1,104,992		1,104,992
Other intangible assets, net	55,890		58,093
Mortgage servicing rights, net(a)	67,015		54,862

Interest receivable	83,120		80,528
Other assets	540,218		582,168
Total assets	$	34,955,900	$	35,104,253
Liabilities and Stockholders' Equity
Noninterest-bearing demand deposits	$	8,315,699	$	8,504,077
Interest-bearing deposits	20,089,710		19,962,353
Total deposits	28,405,409		28,466,430
Federal funds purchased and securities sold under agreements to repurchase	368,768		319,532
Commercial paper	30,593		34,730

FHLB advances	1,537,948		1,621,047
Other long-term funding	249,797		249,324

Allowance for unfunded commitments	38,776		39,776
Accrued expenses and other liabilities	376,322		348,560
Total liabilities	$	31,007,613	$	31,079,399
Stockholders’ Equity
Preferred equity	$	193,195	$	193,195
Common equity
Common stock	$	1,752	$	1,752
Surplus	1,708,104		1,713,851
Retained earnings	2,715,118		2,672,601
Accumulated other comprehensive (loss)	(137,024)		(10,317)
Treasury stock, at cost	(532,858)		(546,229)
Total common equity	3,755,092		3,831,658
Total stockholders’ equity	3,948,287		4,024,853
Total liabilities and stockholders’ equity	$	34,955,900	$	35,104,253
Preferred shares authorized (par value $1.00 per share)	750,000		750,000
Preferred shares issued and outstanding	200,000		200,000
Common shares authorized (par value $0.01 per share)	250,000,000		250,000,000
Common shares issued	175,216,409		175,216,409
Common shares outstanding	150,037,780		149,342,641

Numbers may not sum due to rounding.

(a) MSRs at December 31, 2021 were carried at LOCOM. On January 1, 2022, the Corporation made the irrevocable election to account for MSRs at fair value.

See accompanying notes to consolidated financial statements.

Table of Contents

Item 1. Financial Statements Continued:

ASSOCIATED BANC-CORP

Consolidated Statements of Income (Unaudited)


	Three Months Ended Mar 31,
(In Thousands, except per share data)	2022		2021
Interest income
Interest and fees on loans	$	167,697	$	174,049
Interest and dividends on investment securities
Taxable	16,472		7,014
Tax-exempt	16,108		14,162
Other interest	1,993		1,694
Total interest income	202,270		196,920
Interest expense
Interest on deposits	3,571		5,909
Interest on federal funds purchased and securities sold under agreements to repurchase	38		26
Interest on other short-term funding	1		6
Interest on FHLB advances	8,182		9,493
Interest on long-term funding	2,730		5,585
Total interest expense	14,522		21,018
Net interest income	187,747		175,902
Provision for credit losses	(3,990)		(23,004)
Net interest income after provision for credit losses	191,737		198,906
Noninterest income
Wealth management fees	22,404		22,414
Service charges and deposit account fees	16,856		14,855
Card-based fees	9,926		9,743
Other fee-based revenue	3,766		4,596
Capital markets, net	8,646		8,118
Mortgage banking, net	8,391		23,925
Bank and corporate owned life insurance	2,071		2,702

Asset gains, net	188		4,809
Investment securities gains (losses), net	21		(39)
Gains on sale of branches, net(a)	—		1,002
Other	2,198		3,216
Total noninterest income	74,467		95,343
Noninterest expense
Personnel	104,811		104,026
Technology	21,485		20,740
Occupancy	16,080		16,156
Business development and advertising	4,954		4,395
Equipment	4,960		5,518
Legal and professional	5,087		6,530
Loan and foreclosure costs	2,014		2,220
FDIC assessment	5,100		4,750
Other intangible amortization	2,203		2,236

Other	6,597		8,775
Total noninterest expense	173,292		175,347
Income before income taxes	92,912		118,903
Income tax expense	18,650		24,602
Net income	74,262		94,301
Preferred stock dividends	2,875		5,207
Net income available to common equity	$	71,387	$	89,094
Earnings per common share
Basic	$	0.48	$	0.58
Diluted	$	0.47	$	0.58
Average common shares outstanding
Basic	148,781		152,355
Diluted	150,492		153,688

Numbers may not sum due to rounding.

(a) Includes the deposit premium on the sale of branches net of miscellaneous costs to sell. See Note 2 Acquisitions and Dispositions for additional details on the branch sales.

See accompanying notes to consolidated financial statements.

Table of Contents

Item 1. Financial Statements Continued:

ASSOCIATED BANC-CORP

Consolidated Statements of Comprehensive Income (Unaudited)


	Three Months Ended Mar 31,
($ in Thousands)	2022		2021

Net income	$	74,262	$	94,301
Other comprehensive income (loss), net of tax
Investment securities AFS
Net unrealized (losses)	(103,284)		(23,979)
Unrealized (losses) on AFS securities transferred to HTM securities	(67,604)		—
Amortization of net unrealized losses on AFS securities transferred to HTM securities	1,108		518
Reclassification adjustment for net losses (gains) realized in net income	(21)		39


Income tax benefit	43,098		5,851
Other comprehensive (loss) on AFS securities	(126,702)		(17,571)
Defined benefit pension and postretirement obligations
Amortization of prior service cost	(81)		(37)
Amortization of actuarial loss	74		1,050

Income tax (expense) benefit	2		(253)
Other comprehensive income (loss) on pension and postretirement obligations	(6)		760
Total other comprehensive (loss)	(126,708)		(16,811)
Comprehensive income (loss)	$	(52,445)	$	77,490

Numbers may not sum due to rounding.

See accompanying notes to consolidated financial statements.

Table of Contents

Item 1. Financial Statements Continued:

ASSOCIATED BANC-CORP

Consolidated Statements of Changes in Stockholders’ Equity (Unaudited)


(In Thousands, except per share data)	Preferred Equity		Common Stock		Surplus		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock		Total
Balance, December 31, 2021	$	193,195	$	1,752	$	1,713,851	$	2,672,601	$	(10,317)	$	(546,229)	$	4,024,853
Change in accounting principle(a)	—		—		—		1,713		—		—		1,713
Total shareholder's equity at beginning of period, as adjusted	193,195		1,752		1,713,851		2,674,314		(10,317)		(546,229)		4,026,566
Comprehensive income (loss)
Net income	—		—		—		74,262		—		—		74,262
Other comprehensive (loss)	—		—		—		—		(126,708)		—		(126,708)
Comprehensive (loss)													(52,445)
Common stock issued
Stock-based compensation plans, net	—		—		(11,911)		—		—		18,565		6,654



Purchase of treasury stock, stock-based compensation plans	—		—		—		—		—		(5,193)		(5,193)
Cash dividends
Common stock, $0.20 per share	—		—		—		(30,583)		—		—		(30,583)
Preferred stock(b)	—		—		—		(2,875)		—		—		(2,875)




Stock-based compensation expense, net	—		—		6,164		—		—		—		6,164




Balance, March 31, 2022	$	193,195	$	1,752	$	1,708,104	$	2,715,118	$	(137,024)	$	(532,858)	$	3,948,287

Numbers may not sum due to rounding.

(a) MSRs at December 31, 2021 were carried at LOCOM. On January 1, 2022, the Corporation made the irrevocable election to account for MSRs at fair value.

(b) Series E, $0.3671875 per share; and Series F, $0.3515625 per share.


(In Thousands, except per share data)	Preferred Equity		Common Stock		Surplus		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Treasury Stock		Total
Balance, December 31, 2020	$	353,512	$	1,752	$	1,720,329	$	2,458,920	$	12,618	$	(456,198)	$	4,090,933


Comprehensive income (loss)
Net income	—		—		—		94,301		—		—		94,301
Other comprehensive (loss)	—		—		—		—		(16,811)		—		(16,811)

Comprehensive income													77,490
Common stock issued
Stock-based compensation plans, net	—		—		(16,986)		—		—		27,542		10,556


Purchase of treasury stock, open market purchases	—		—		—		—		—		(17,973)		(17,973)
Purchase of treasury stock, stock-based compensation plans	—		—		—		—		—		(3,593)		(3,593)
Cash dividends
Common stock, $0.18 per share	—		—		—		(27,870)		—		—		(27,870)
Preferred stock(a)	—		—		—		(5,207)		—		—		(5,207)


Stock-based compensation expense, net	—		—		3,444		—		—		—

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