Associated BancCorp Earnings 2019-09-30

ASB 10Q Quarterly Report

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

Balance Sheet	Income Statement	Cash Flow

Document

Table of Contents

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: September 30, 2019



☐	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 6.125% Non-Cum. Perp Pref Stock, Srs C	ASB PrC	New York Stock Exchange
Depositary Shrs, each representing 1/40th intrst in a shr of 5.375% Non-Cum. Perp Pref Stock, Srs D	ASB PrD	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

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.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extendeBNPransition 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 October 25, 2019 was 159,341,912.



ASSOCIATED BANC-CORP
Table of Contents



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



ABS	Asset-Backed Securities
ALCO	Asset / Liability Committee
ASC	Accounting Standards Codification
ASU	Accounting Standards Update
the Bank	Associated Bank, National Association
Bank Mutual	Bank Mutual Corporation
Basel III	International framework established by the Basel Committee on Banking Supervision for the regulation of capital and liquidity
bp	basis point(s)
CD	Certificate of Deposit
CDI	Core Deposit Intangibles
CECL	Current Expected Credit Losses
CET1	Common Equity Tier 1
CMBS	Commercial Mortgage-Backed Securities
CMO	Collateralized Mortgage Obligations
Corporation	Associated Banc-Corp collectively with all of its subsidiaries and affiliates
CRA	Community Reinvestment Act
EAR	Earnings at Risk
FASB	Financial Accounting Standards Board
FDIC	Federal Deposit Insurance Corporation
FFELP	Federal Family Education Loan Program
FHLB	Federal Home Loan Bank
FHLMC	Federal Home Loan Mortgage Corporation
First Staunton	First Staunton Bancshares, Incorporated
FNMA	Federal National Mortgage Association
FTP	Funds Transfer Pricing
GAAP	Generally Accepted Accounting Principles
GNMA	Government National Mortgage Association
GSEs	Government-Sponsored Enterprises
Huntington	The Huntington National Bank, a subsidiary of Huntington Bancshares Incorporated
ISDA	International Swaps and Derivatives Association, Inc.
LIBOR	London Interbank Offered Rate
LTV	Loan-to-Value
MBS	Mortgage-Backed Securities
MSR	Mortgage Servicing Rights
MVE	Market Value of Equity
NII	Net Interest Income
NPAs	Nonperforming Assets
OCC	Office of the Comptroller of the Currency
OCI	Other Comprehensive Income
OREO	Other Real Estate Owned
Parent Company	Associated Banc-Corp individually
RAP	Retirement Account Plan - the Corporation's noncontributory defined benefit retirement plan
restricted stock awards	Restricted common stock and restricted common stock units to certain key employees
S&P	Standard & Poor's
SEC	U.S. Securities and Exchange Commission
Tax Act	U.S. Tax Cuts and Jobs Act of 2017

Table of Contents

PART I - FINANCIAL INFORMATION

ITEM 1.
Financial Statements:

ASSOCIATED BANC-CORP

Consolidated Balance Sheets



	September 30, 2019			December 31, 2018
(In Thousands, except share and per share data)	(Unaudited)			(Audited)
Assets
Cash and due from banks	$	523,435		$	507,187
Interest-bearing deposits in other financial institutions	236,010			221,226
Federal funds sold and securities purchased under agreements to resell	100			148,285
Investment securities held to maturity, at amortized cost^(a)	2,200,419			2,740,511
Investment securities available for sale, at fair value^(a)	3,436,289			3,946,941
Equity securities	15,096			1,568
Federal Home Loan Bank and Federal Reserve Bank stocks, at cost	207,443			250,534
Residential loans held for sale	137,655			64,321
Commercial loans held for sale	11,597			14,943
Loans	22,754,710			22,940,429
Allowance for loan losses	(214,425		)	(238,023		)
Loans, net	22,540,285			22,702,406
Bank and corporate owned life insurance	670,739			663,203
Investment in unconsolidated subsidiaries	256,220			161,181
Premises and equipment, net	436,268			363,225
Goodwill	1,176,230			1,169,023
Mortgage servicing rights, net	68,168			68,193
Other intangible assets, net	91,089			75,836
Other assets^(b)	589,420			516,538
Total assets	$	32,596,460		$	33,615,122
Liabilities and Stockholders' Equity
Noninterest-bearing demand deposits	$	5,503,223		$	5,698,530
Interest-bearing deposits	18,919,339			19,198,863
Total deposits	24,422,562			24,897,393
Federal funds purchased and securities sold under agreements to repurchase	78,028			111,651
Commercial paper	30,416			45,423
FHLB advances	2,877,727			3,574,371
Other long-term funding	796,799			795,611
Accrued expenses and other liabilities^(b)	470,073			409,787
Total liabilities	28,675,605			29,834,235
Stockholders’ Equity
Preferred equity	256,716			256,716
Common equity
Common stock	1,752			1,752
Surplus	1,713,971			1,712,615
Retained earnings	2,341,158			2,181,414
Accumulated other comprehensive income (loss)	(36,953		)	(124,972		)
Treasury stock, at cost	(355,791		)	(246,638		)
Total common equity	3,664,139			3,524,171
Total stockholders’ equity	3,920,855			3,780,888
Total liabilities and stockholders’ equity	$	32,596,460		$	33,615,122
Preferred shares issued	264,458			264,458
Preferred shares authorized (par value $1.00 per share)	750,000			750,000
Common shares issued	175,216,409			175,216,409
Common shares authorized (par value $0.01 per share)	250,000,000			250,000,000
Treasury shares of common stock	15,925,525			10,775,938

Numbers may not sum due to rounding.

(a) As permitted by ASU 2019-04, which was adopted during the third quarter of 2019, the Corporation made a one-time election to transfer municipal securities with a book value of $692 million from held to maturity to available for sale.

(b) During the third quarter of 2019, the Corporation made a change in accounting policy to offset derivative assets and liabilities and cash collateral with the same counterparty where it has a legally enforceable master netting agreement in place. The change had no impact on either earnings or equity. The Corporation believes that this change is a preferable method of accounting as it provides a better reflection of the assets and liabilities on the face of the consolidated balance sheets. Adoption of this change was voluntary and has been adopted retrospectively with all prior periods presented herein revised.

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 September 30,					Nine Months Ended September 30,
(In Thousands, except per share data)	2019		2018			2019		2018
Interest income
Interest and fees on loans	$	248,579	$	249,649		$	768,216	$	716,329
Interest and dividends on investment securities
Taxable	23,485		29,895			79,248		90,622
Tax-exempt	14,491		11,883			42,950		31,883
Other interest	4,865		4,036			13,086		9,366
Total interest income	291,420		295,464			903,500		848,201
Interest expense
Interest on deposits	61,585		50,116			191,408		121,959
Interest on federal funds purchased and securities sold under agreements to repurchase	145		504			1,058		1,564
Interest on other short-term funding	33		38			121		150
Interest on FHLB advances	15,896		19,318			53,194		53,720
Interest on long-term funding	7,396		6,095			22,188		15,183
Total interest expense	85,054		76,072			267,969		192,576
Net interest income	206,365		219,392			635,532		655,625
Provision for credit losses	2,000		(5,000		)	16,000		(1,000		)
Net interest income after provision for credit losses	204,365		224,392			619,532		656,625
Noninterest income
Insurance commissions and fees	20,954		21,636			69,403		68,279
Wealth management fees^(a)	21,015		21,224			61,885		62,198
Service charges on deposit account fees	16,561		16,904			47,102		49,714
Card-based fees	10,456		9,783			29,848		29,341
Other fee-based revenue	5,085		4,307			14,246		12,559
Capital markets, net	4,300		5,099			12,215		15,189
Mortgage banking, net	10,940		4,012			25,118		16,640
Bank and corporate owned life insurance	4,337		3,540			11,482		10,705
Asset gains (losses), net^(b)	877		(1,037		)	2,316		1,353
Investment securities gains (losses), net	3,788		30			5,931		(1,985		)
Other	2,537		2,802			8,344		7,529
Total noninterest income	100,850		88,300			287,890		271,522
Noninterest expense
Personnel	123,170		124,476			366,449		366,141
Technology	20,572		17,563			59,698		54,730
Occupancy	15,164		14,519			45,466		44,947
Business development and advertising	7,991		8,213			21,284		21,973
Equipment	6,335		5,838			17,580		17,347
Legal and professional	5,724		5,476			14,342		17,173
Loan and foreclosure costs	1,638		2,439			5,599		5,844
FDIC assessment	4,000		7,750			12,250		24,250
Other intangible amortization	2,686		2,233			7,237		5,926
Acquisition related costs^(c)	1,629		2,271			5,995		29,983
Other	12,021		13,634			34,479

Closing Price ($)	Shares Out (MM)	Market Cap ($MM)
$19.27	164	$3,158

10-Q	2019-09-30	Quarter: 2019-09-30
10-Q	2019-06-30	Quarter: 2019-06-30
10-Q	2019-03-31	Quarter: 2019-03-31
10-K	2018-12-31	Annual: 2018-12-31
10-Q	2018-09-30	Quarter: 2018-09-30
10-Q	2018-06-30	Quarter: 2018-06-30
10-Q	2018-03-31	Quarter: 2018-03-31
10-K	2017-12-31	Annual: 2017-12-31
10-Q	2017-09-30	Quarter: 2017-09-30
10-Q	2017-06-30	Quarter: 2017-06-30
10-Q	2017-03-31	Quarter: 2017-03-31
10-K	2016-12-31	Annual: 2016-12-31
10-Q	2016-09-30	Quarter: 2016-09-30
10-Q	2016-06-30	Quarter: 2016-06-30
10-Q	2016-03-31	Quarter: 2016-03-31
10-K	2015-12-31	Annual: 2015-12-31
10-Q	2015-09-30	Quarter: 2015-09-30
10-Q	2015-06-30	Quarter: 2015-06-30
10-Q	2015-03-31	Quarter: 2015-03-31
10-K	2014-12-31	Annual: 2014-12-31
10-Q	2014-09-30	Quarter: 2014-09-30
10-Q	2014-06-30	Quarter: 2014-06-30
10-Q	2014-03-31	Quarter: 2014-03-31
10-K	2013-12-31	Annual: 2013-12-31

8-K	2019-11-12
8-K	2019-11-06
8-K	2019-11-04
8-K	2019-10-24
8-K	2019-09-06
8-K	2019-07-30
8-K	2019-07-25
8-K	2019-04-30
8-K	2019-04-30
8-K	2019-04-25
8-K	2019-02-13
8-K	2019-02-04	Amend Bylaw, Exhibits
8-K	2019-01-24
8-K	2019-01-24
8-K	2018-12-10	Regulation FD, Other Events, Exhibits
8-K	2018-11-02
8-K	2018-10-23	Amend Bylaw, Exhibits
8-K	2018-10-18
8-K	2018-09-21	Shareholder Rights, Amend Bylaw, Other Events, Exhibits
8-K	2018-09-18	Other Events, Exhibits
8-K	2018-09-12
8-K	2018-07-31
8-K	2018-07-19
8-K	2018-05-07
8-K	2018-05-02
8-K	2018-04-24
8-K	2018-04-19
8-K	2018-02-07
8-K	2018-02-01	M&A, Officers, Other Events, Exhibits
8-K	2018-01-25

BBT	BB&T	35,700
STT	State Street	18,434
SHG	Shinhan Financial Group	15,244
CBU	Community Bank System	3,147
WAFD	Washington Federal	2,809
TCBK	Trico Bancshares	1,066
RBB	RBB Bancorp	647
CIVB	Civista Bancshares	320
ATLO	AMES National	253
BBD	Bank Bradesco	0

EX-18	asb09302019ex18.htm
EX-31.1	asb09302019ex311.htm
EX-31.2	asb09302019ex312.htm
EX-32	asb09302019ex32.htm



		Page
PART I. Financial Information

	Item 1. Financial Statements (Unaudited):	4

	Consolidated Balance Sheets	4

	Consolidated Statements of Income	5

	Consolidated Statements of Comprehensive Income	6

	Consolidated Statements of Changes in Stockholders’ Equity	7

	Consolidated Statements of Cash Flows	10

	Notes to Consolidated Financial Statements	12

	Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	59

	Item 3. Quantitative and Qualitative Disclosures About Market Risk	84

	Item 4. Controls and Procedures	84

PART II. Other Information

	Item 1. Legal Proceedings	85

	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	85

	Item 6. Exhibits	86

	Signatures	87