ASB 8-K
Associated Banc-Corp (ASB)
8-K
2020-07-23
For: 2020-07-23
View Original
Added on
April 06, 2026
UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 | |
FORM | |
CURRENT REPORT | |
Pursuant to Section 13 OR 15(d) of the Securities Exchange Act of 1934 | |
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): | |
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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter). | |
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☐ | 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. |
Item 2.02 Results of Operations and Financial Condition. |
On July 23, 2020, Associated Banc-Corp announced its earnings for the quarter ended June 30, 2020. A copy of the registrant’s press release containing this information and the slide presentation discussed on the conference call for investors and analysts on July 23, 2020, are being furnished as Exhibit 99.1 and Exhibit 99.2, respectively, to this Report on Form 8-K and are incorporated herein by reference. The information furnished pursuant to this Item 2.02, including Exhibit 99.1 and Exhibit 99.2, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities under that Section and shall not be deemed to be incorporated by reference into any filing of the registrant under the Securities Act of 1933 or the Exchange Act. |
Item 9.01 Financial Statements and Exhibits. |
(d) Exhibits. |
The following exhibits are furnished as part of this Report on Form 8-K: |
SIGNATURES | ||
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. | ||
Associated Banc-Corp | ||
(Registrant) | ||
Date: July 23, 2020 | By: /s/ Christopher J. Del Moral-Niles | |
Christopher J. Del Moral-Niles | ||
Chief Financial Officer | ||
Exhibit 99.1
 | NEWS RELEASE Investor Contact: Brian Mathena, Senior Vice President, Director of Investor Relations 920-491-7059 Media Contact: Jennifer Kaminski, Vice President, Public Relations Senior Manager 920-491-7576 |
Associated Banc-Corp Reports Second Quarter 2020 Earnings of $0.94 Per Common Share
Including the Gain on Sale of Associated Benefits and Risk Consulting
GREEN BAY, Wis. -- July 23, 2020 -- Associated Banc-Corp (NYSE: ASB) ("Associated" or "Company") today reported net income available to common equity ("earnings") of $145 million, or $0.94 per common share, for the quarter ended June 30, 2020. Second quarter earnings, excluding the net gain on the sale of Associated Benefits and Risk Consulting ("ABRC"), were $0.26 per common share1. These amounts compare to net income available to common equity of $42 million, or $0.27 per common share for the quarter ended March 31, 2020. Year to date earnings were $1.20 per common share, or $0.53 per common share1 excluding the net gain on sale of ABRC, compared to $0.99 per common share in the same period last year.
"We have successfully supported our customers during this turbulent quarter" said President and CEO Philip B. Flynn. "We have provided over $1 billion of PPP funding, deferred and modified loans, waived fees to provide relief, and helped to distribute nearly half a billion of other stimulus support to our customer base. We have been a pillar of strength to our customers and communities through this period of time."
"During this quarter, we closed the strategic sale of ABRC which bolstered our CET1 and tangible capital levels. Further, we issued $100 million of preferred stock which also enhanced our risk weighted and total capital levels. We have also grown checking and savings balances to record levels in the Company's history. Taking these actions together, we have positioned ourselves with ample capital and liquidity to continue to support our customers."
SECOND QUARTER 2020 SUMMARY (all comparisons to the first quarter of 2020)
• | Average loans of $25.2 billion were up 8%, or $1.9 billion |
• | Average deposits of $26.1 billion were up 8%, or $1.9 billion |
• | Net interest income of $190 million decreased $13 million, or 6% |
• | Net interest margin of 2.49% declined 35 basis points from 2.84% |
• | Provision for credit losses was $61 million up $8 million, or 15% |
• | Noninterest income of $254 million driven by $157 million of net asset gains |
• | Noninterest expense of $183 million decreased $9 million, or 5% |
• | Income before taxes of $200 million increased $144 million |
• | Pre-tax pre-provision income1 of $261 million up $152 million |
• | Tangible book value per share was $16.21, up 11% |
1This is a non-GAAP financial measure. Management believes these measures are meaningful because they reflect adjustments commonly made by management, investors, regulators, and analysts to evaluate the adequacy of earnings per common share, provide greater understanding of ongoing operations and enhance comparability of results with prior periods. See page 10 of the attached tables for a reconciliation of GAAP financial measures to non-GAAP financial measures.
Loans
Second quarter 2020 average loans of $25.2 billion were up 8%, or $1.9 billion from the first quarter 2020 and were up 8%, or $1.8 billion from the same period last year. The increases were largely driven by PPP loans, commercial line draws, and CRE loans. With respect to second quarter average balances by loan category:
• | Commercial and business lending increased $1.7 billion from the first quarter 2020 and increased $1.4 billion compared to the same period last year to $10.0 billion. The increase was driven by approximately $850 million of PPP loans plus line draws on other commercial loans. |
• | Commercial real estate lending increased $391 million from the first quarter 2020 and $589 million from the same period last year to $5.7 billion. The change was largely due to the funding of existing commitments and slowing payoffs. |
• | Consumer lending was $9.4 billion, down $170 million from the first quarter 2020 and down $173 million from the same period last year. This was predominantly driven by the sale of a $188 million mortgage portfolio during the second quarter 2020. |
Deposits
Second quarter 2020 average deposits of $26.1 billion were up $1.9 billion, or 8%, compared to the first quarter 2020 and were up $1.1 billion from the same period last year. The increases in balances are due to customers holding proceeds from PPP loans and other government stimulus programs in their deposit accounts, along with higher savings rates in general.
With respect to second quarter 2020 average balances by deposit category:
• | Noninterest-bearing demand deposits increased $1.4 billion from the first quarter and $1.8 billion from the same period last year to $6.9 billion. |
• | Savings increased $391 million from the first quarter and $940 million from the same period last year to $3.3 billion. |
• | Interest-bearing demand deposits increased $138 million from the first quarter and $461 million from the same period last year to $5.4 billion. |
• | Network transaction deposits increased $111 million from the first quarter but decreased $480 million from the same period last year to $1.5 billion. |
• | Money market deposits decreased $42 million from the first quarter and decreased $622 million from the same period last year to $6.5 billion. |
• | Time deposits decreased $166 million from the first quarter and decreased $1.1 billion from the same period last year to $2.5 billion. |
Net Interest Income and Net Interest Margin
Second quarter 2020 net interest income of $190 million was down 6%, or $13 million, and the net interest margin decreased 35 basis points from the first quarter of 2020. Second quarter 2020 net interest income decreased 11%, or $24 million, and the net interest margin decreased 39 basis points from the same period last year to 2.49%. The decreases in net interest income and net interest margin from the first quarter are due to reductions in the Fed Funds rate and increased liquidity during the second quarter.
• | The average yield on total earning assets for the second quarter of 2020 decreased 73 basis points from the prior quarter and decreased 116 basis points from the same period last year to 2.94%. |
• | The average cost of total interest-bearing liabilities for the second quarter of 2020 decreased 46 basis points from the prior quarter and decreased 94 basis points from the same period last year to 0.60%. |
• | The net free funds benefit for the second quarter of 2020 decreased eight basis points from the prior quarter and decreased 17 basis points compared to the same period last year. |
Noninterest Income
Second quarter of 2020 total noninterest income of $254 million increased $156 million from the prior quarter and increased $159 million from the same period last year.
With respect to second quarter 2020 noninterest income line items:
• | Net mortgage banking income was $12 million for the second quarter, up $6 million from the previous quarter and up $3 million from the same period last year. Gross mortgage banking income was $20 million, partially offset by $8 million of mortgage servicing rights impairment. |
• | Capital markets income was down $1 million from the previous quarter and up $2 million from the same period last year. |
• | Asset gains (losses), net were $157 million for the second quarter. This included the $163 million net gain on sale of ABRC offset by other asset write-downs of $6 million. |
Noninterest Expense
Second quarter 2020 total noninterest expense of $183 million decreased $9 million from the prior quarter and decreased $14 million compared to the same period last year.
With respect to second quarter 2020 noninterest expense line items:
• | Personnel expense decreased $3 million from the prior quarter and $12 million from the same period last year. |
• | Technology expense was flat from the prior quarter but increased $1 million from the same period last year. |
• | Occupancy expense decreased $2 million from the prior quarter but was up $1 million from the same period last year. |
• | Business development and advertising expense was down $2 million from the prior quarter and was down $3 million from the same period last year. |
Taxes
The second quarter 2020 effective tax rate was 26% compared to 18% in both the prior quarter and the same period last year. The higher effective tax rate for the second quarter was driven by the one-time gain on the sale of ABRC.
Credit
The second quarter 2020 provision for credit losses was $61 million, up from $53 million in the prior quarter and up from $8 million in the same period last year, driven by increased charge offs and further reserve builds.
With respect to second quarter 2020 credit quality:
• | Potential problem loans of $307 million were up $73 million, or 31%, from the prior quarter and up $141 million, or 85%, from the same period last year. The increase was driven by general C&I loans and CRE loans in COVID-19 affected industries. |
• | Nonaccrual loans of $172 million were up $35 million from the prior quarter and up $5 million from the same period last year. The nonaccrual loans to total loans ratio was 0.69% in the second quarter, up from 0.56% in the prior quarter and down from 0.72% in the same period last year. |
• | Net charge offs of $26 million were up $9 million from the prior quarter and up $13 million from the same period last year. |
• | The allowance for credit losses on loans (ACLL) of $429 million was up $35 million from the prior quarter and up $173 million compared to the same period last year. The ACLL to total loans ratio was 1.73% in the second quarter, up from 1.62% in the prior quarter and 1.10% in the same period last year. |
Capital
The Company’s capital position remains strong, with a CET1 capital ratio of 10.3% at June 30, 2020. The Company’s capital ratios continue to be in excess of the Basel III “well-capitalized” regulatory benchmarks on a fully phased in basis.
SECOND QUARTER 2020 EARNINGS RELEASE CONFERENCE CALL
The Company will host a conference call for investors and analysts at 4:00 p.m. Central Time (CT) today, July 23, 2020. Interested parties can access the live webcast of the call through the Investor Relations section of the Company's website, http://investor.associatedbank.com. Parties may also dial into the call at 877-407-8037 (domestic) or 201-689-8037 (international) and request the Associated Banc-Corp second quarter 2020 earnings call. The second quarter 2020 financial tables with an accompanying slide presentation will be available on the Company's website just prior to the call. An audio archive of the webcast will be available on the Company's website approximately fifteen minutes after the call is over.
ABOUT ASSOCIATED BANC-CORP
Associated Banc-Corp (NYSE: ASB) has total assets of $36 billion and is one of the top 50 publicly traded U.S. bank holding companies. Headquartered in Green Bay, Wisconsin, Associated is a leading Midwest banking franchise, offering a full range of financial products and services from more than 240 banking locations serving more than 120 communities throughout Wisconsin, Illinois and Minnesota, and commercial financial services in Indiana, Michigan, Missouri, Ohio and Texas. Associated Bank, N.A. is an Equal Housing Lender, Equal Opportunity Lender and Member FDIC. More information about Associated Banc-Corp is available at www.associatedbank.com.
FORWARD-LOOKING STATEMENTS
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 management’s plans, objectives, or goals for future operations, products or services, and forecasts of its revenues, earnings, or other measures of performance. Such forward-looking statements may be identified by the use of words such as “believe,” “expect,” “anticipate,” “plan,” “estimate,” “should,” “will,” “intend,” "target," “outlook,” or similar expressions. Forward-looking statements are based on current management expectations and, by their nature, are subject to risks and uncertainties. Actual results may differ materially from those contained in the forward-looking statements. Factors which may cause actual results to differ materially from those contained in such forward-looking statements include those identified in the Company’s most recent Form 10-K and subsequent SEC filings. Such factors are incorporated herein by reference.
NON-GAAP FINANCIAL MEASURES
This press release and related materials may contain references to measures which are not defined in generally accepted accounting principles (“GAAP”). Information concerning these non-GAAP financial measures can be found in the financial tables. Management believes these measures are meaningful because they reflect adjustments commonly made by management, investors, regulators, and analysts to evaluate the adequacy of earnings per common share, provide a greater understanding of ongoing operations and enhance comparability of results with prior periods.
# # #
Associated Banc-Corp Consolidated Balance Sheets (Unaudited) | |||||||||||||||||||||
($ in thousands) | Jun 30, 2020 | Mar 31, 2020 | Seql Qtr $ Change | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Comp Qtr $ Change | ||||||||||||||
Assets | |||||||||||||||||||||
Cash and due from banks | $ | 443,500 | $ | 480,337 | $ | (36,837 | ) | $ | 373,380 | $ | 523,435 | $ | 382,985 | $ | 60,515 | ||||||
Interest-bearing deposits in other financial institutions | 1,569,006 | 176,440 | 1,392,566 | 207,624 | 236,010 | 172,708 | 1,396,298 | ||||||||||||||
Federal funds sold and securities purchased under agreements to resell | 185 | 22,455 | (22,270 | ) | 7,740 | 100 | 1,385 | (1,200 | ) | ||||||||||||
Investment securities held to maturity, net, at amortized cost(a) | 2,077,225 | 2,149,373 | (72,148 | ) | 2,205,083 | 2,200,419 | 2,806,064 | (728,839 | ) | ||||||||||||
Investment securities available for sale, at fair value | 3,149,773 | 2,928,787 | 220,986 | 3,262,586 | 3,436,289 | 3,283,456 | (133,683 | ) | |||||||||||||
Equity securities | 15,091 | 15,063 | 28 | 15,090 | 15,096 | 15,066 | 25 | ||||||||||||||
Federal Home Loan Bank and Federal Reserve Bank stocks, at cost | 206,281 | 222,922 | (16,641 | ) | 227,347 | 207,443 | 202,758 | 3,523 | |||||||||||||
Residential loans held for sale | 196,673 | 366,330 | (169,657 | ) | 136,280 | 137,655 | 129,303 | 67,370 | |||||||||||||
Commercial loans held for sale | 3,565 | — | 3,565 | 15,000 | 11,597 | 11,000 | (7,435 | ) | |||||||||||||
Loans | 24,832,671 | 24,365,633 | 467,038 | 22,821,440 | 22,754,710 | 23,249,967 | 1,582,704 | ||||||||||||||
Allowance for loan losses(b) | (363,803 | ) | (337,793 | ) | (26,010 | ) | (201,371 | ) | (214,425 | ) | (233,659 | ) | (130,144 | ) | |||||||
Loans, net | 24,468,868 | 24,027,841 | 441,027 | 22,620,068 | 22,540,285 | 23,016,308 | 1,452,560 | ||||||||||||||
Bank and corporate owned life insurance | 676,196 | 674,026 | 2,170 | 671,948 | 670,739 | 668,638 | 7,558 | ||||||||||||||
Tax credit and other investments | 303,132 | 315,909 | (12,777 | ) | 279,969 | 256,220 | 222,812 | 80,320 | |||||||||||||
Premises and equipment, net | 434,042 | 438,469 | (4,427 | ) | 435,284 | 436,268 | 432,058 | 1,984 | |||||||||||||
Goodwill | 1,107,902 | 1,191,388 | (83,486 | ) | 1,176,230 | 1,176,230 | 1,176,019 | (68,117 | ) | ||||||||||||
Mortgage servicing rights, net | 49,403 | 58,289 | (8,886 | ) | 67,306 | 68,168 | 66,175 | (16,772 | ) | ||||||||||||
Other intangible assets, net | 72,759 | 92,723 | (19,964 | ) | 88,301 | 91,089 | 93,915 | (21,156 | ) | ||||||||||||
Interest receivable | 87,097 | 92,377 | (5,280 | ) | 91,196 | 96,315 | 110,528 | (23,431 | ) | ||||||||||||
Other assets | 640,765 | 655,328 | (14,563 | ) | 506,046 | 493,105 | 455,688 | 185,077 | |||||||||||||
Total assets | $ | 35,501,464 | $ | 33,908,056 | $ | 1,593,408 | $ | 32,386,478 | $ | 32,596,460 | $ | 33,246,869 | $ | 2,254,595 | |||||||
Liabilities and stockholders’ equity | |||||||||||||||||||||
Noninterest-bearing demand deposits | $ | 7,573,942 | $ | 6,107,386 | $ | 1,466,556 | $ | 5,450,709 | $ | 5,503,223 | $ | 5,354,987 | $ | 2,218,955 | |||||||
Interest-bearing deposits | 18,977,502 | 19,554,194 | (576,692 | ) | 18,328,355 | 18,919,339 | 19,919,235 | (941,733 | ) | ||||||||||||
Total deposits | 26,551,444 | 25,661,580 | 889,864 | 23,779,064 | 24,422,562 | 25,274,222 | 1,277,222 | ||||||||||||||
Federal funds purchased and securities sold under agreements to repurchase | 142,293 | 133,007 | 9,286 | 433,097 | 78,028 | 83,195 | 59,098 | ||||||||||||||
Commercial paper | 39,535 | 33,647 | 5,888 | 32,016 | 30,416 | 28,787 | 10,748 | ||||||||||||||
PPPLF | 1,009,760 | — | 1,009,760 | — | — | — | 1,009,760 | ||||||||||||||
FHLB advances | 2,657,016 | 3,214,194 | (557,178 | ) | 3,180,967 | 2,877,727 | 2,742,941 | (85,925 | ) | ||||||||||||
Other long-term funding | 548,937 | 549,644 | (707 | ) | 549,343 | 796,799 | 796,403 | (247,466 | ) | ||||||||||||
Allowance for unfunded commitments(b) | 64,776 | 56,276 | 8,500 | 21,907 | 22,907 | 21,907 | 42,869 | ||||||||||||||
Accrued expenses and other liabilities(b) | 463,245 | 469,236 | (5,991 | ) | 467,961 | 447,166 | 399,619 | 63,626 | |||||||||||||
Total liabilities | 31,477,007 | 30,117,584 | 1,359,423 | 28,464,355 | 28,675,605 | 29,347,075 | 2,129,932 | ||||||||||||||
Stockholders’ equity | |||||||||||||||||||||
Preferred equity | 353,846 | 256,716 | 97,130 | 256,716 | 256,716 | 256,716 | 97,130 | ||||||||||||||
Common equity(b) | 3,670,612 | 3,533,755 | 136,857 | 3,665,407 | 3,664,139 | 3,643,077 | 27,535 | ||||||||||||||
Total stockholders’ equity | 4,024,457 | 3,790,471 | 233,986 | 3,922,124 | 3,920,855 | 3,899,794 | 124,663 | ||||||||||||||
Total liabilities and stockholders’ equity | $ | 35,501,464 | $ | 33,908,056 | $ | 1,593,408 | $ | 32,386,478 | $ | 32,596,460 | $ | 33,246,869 | $ | 2,254,595 | |||||||
Numbers may not sum due to rounding.
(a) Beginning in 2020, the investment securities held to maturity are reported net of the related allowance for credit losses. Prior periods were unadjusted due to the modified retrospective application of ASU 2016-13.
(b) At January 1, 2020, the adoption of ASU 2016-13 resulted in an increase to the allowance for loan losses of $112 million and an increase to the allowance for unfunded commitments of $19 million for a total increase to the allowance for credit losses on loans of $131 million. A corresponding after tax decrease to common equity of $98 million was recorded along with a deferred tax asset of $33 million resulting in a decrease to accrued expenses and other liabilities. Prior periods were unadjusted due to the modified retrospective application of ASU 2016-13.
Page 1
Associated Banc-Corp Consolidated Statements of Income (Unaudited) | |||||||||||||||||||||||||||||
($ in thousands, except per share data) | Comp Qtr | YTD | YTD | Comp YTD | |||||||||||||||||||||||||
2Q20 | 2Q19 | $ Change | % Change | Jun 2020 | Jun 2019 | $ Change | % Change | ||||||||||||||||||||||
Interest income | |||||||||||||||||||||||||||||
Interest and fees on loans | $ | 191,895 | $ | 260,784 | $ | (68,889 | ) | (26 | )% | $ | 416,681 | $ | 519,637 | $ | (102,956 | ) | (20 | )% | |||||||||||
Interest and dividends on investment securities | |||||||||||||||||||||||||||||
Taxable | 16,103 | 26,710 | (10,607 | ) | (40 | )% | 36,375 | 55,764 | (19,389 | ) | (35 | )% | |||||||||||||||||
Tax-exempt | 14,616 | 14,643 | (27 | ) | — | % | 29,498 | 28,459 | 1,039 | 4 | % | ||||||||||||||||||
Other interest | 2,231 | 3,995 | (1,764 | ) | (44 | )% | 5,535 | 8,221 | (2,686 | ) | (33 | )% | |||||||||||||||||
Total interest income | 224,845 | 306,133 | (81,288 | ) | (27 | )% | 488,090 | 612,081 | (123,991 | ) | (20 | )% | |||||||||||||||||
Interest expense | |||||||||||||||||||||||||||||
Interest on deposits | 13,178 | 67,050 | (53,872 | ) | (80 | )% | 49,844 | 129,823 | (79,979 | ) | (62 | )% | |||||||||||||||||
Interest on federal funds purchased and securities sold under agreements to repurchase | 51 | 286 | (235 | ) | (82 | )% | 420 | 913 | (493 | ) | (54 | )% | |||||||||||||||||
Interest on other short-term funding | 683 | 37 | 646 | N/M | 721 | 88 | 633 | N/M | |||||||||||||||||||||
Interest on FHLB advances | 15,470 | 17,744 | (2,274 | ) | (13 | )% | 33,096 | 37,298 | (4,202 | ) | (11 | )% | |||||||||||||||||
Interest on long-term funding | 5,591 | 7,396 | (1,805 | ) | (24 | )% | 11,195 | 14,792 | (3,597 | ) | (24 | )% | |||||||||||||||||
Total interest expense | 34,973 | 92,513 | (57,540 | ) | (62 | )% | 95,276 | 182,914 | (87,638 | ) | (48 | )% | |||||||||||||||||
Net interest income | 189,872 | 213,619 | (23,747 | ) | (11 | )% | 392,814 | 429,167 | (36,353 | ) | (8 | )% | |||||||||||||||||
Provision for credit losses | 61,000 | 8,000 | 53,000 | N/M | 114,001 | 14,000 | 100,001 | N/M | |||||||||||||||||||||
Net interest income after provision for credit losses | 128,872 | 205,619 | (76,747 | ) | (37 | )% | 278,813 | 415,167 | (136,354 | ) | (33 | )% | |||||||||||||||||
Noninterest income | |||||||||||||||||||||||||||||
Insurance commissions and fees | 22,430 | 22,985 | (555 | ) | (2 | )% | 45,038 | 48,449 | (3,411 | ) | (7 | )% | |||||||||||||||||
Wealth management fees(a) | 20,916 | 20,691 | 225 | 1 | % | 41,732 | 40,870 | 862 | 2 | % | |||||||||||||||||||
Service charges and deposit account fees | 11,484 | 15,426 | (3,942 | ) | (26 | )% | 26,706 | 30,542 | (3,836 | ) | (13 | )% | |||||||||||||||||
Card-based fees | 8,893 | 10,131 | (1,238 | ) | (12 | )% | 18,490 | 19,392 | (902 | ) | (5 | )% | |||||||||||||||||
Other fee-based revenue | 4,774 | 5,178 | (404 | ) | (8 | )% | 9,272 | 9,161 | 111 | 1 | % | ||||||||||||||||||
Capital markets, net | 6,910 | 4,726 | 2,184 | 46 | % | 14,845 | 7,916 | 6,929 | 88 | % | |||||||||||||||||||
Mortgage banking, net | 12,263 | 9,466 | 2,797 | 30 | % | 18,407 | 14,178 | 4,229 | 30 | % | |||||||||||||||||||
Bank and corporate owned life insurance | 3,625 | 3,352 | 273 | 8 | % | 6,719 | 7,144 | (425 | ) | (6 | )% | ||||||||||||||||||
Asset gains (losses), net(b) | 157,361 | 871 | 156,490 | N/M | 157,284 | 1,438 | 155,846 | N/M | |||||||||||||||||||||
Investment securities gains (losses), net | 3,096 | 463 | 2,633 | N/M | 9,214 | 2,143 | 7,071 | N/M | |||||||||||||||||||||
Other | 2,737 | 2,547 | 190 | 7 | % | 5,090 | 5,807 | (717 | ) | (12 | )% | ||||||||||||||||||
Total noninterest income | 254,490 | 95,837 | 158,653 | 166 | % | 352,796 | 187,040 | 165,756 | 89 | % | |||||||||||||||||||
Noninterest expense | |||||||||||||||||||||||||||||
Personnel | 111,350 | 123,228 | (11,878 | ) | (10 | )% | 225,551 | 243,279 | (17,728 | ) | (7 | )% | |||||||||||||||||
Technology | 21,174 | 20,114 | 1,060 | 5 | % | 41,973 | 39,126 | 2,847 | 7 | % | |||||||||||||||||||
Occupancy | 14,464 | 13,830 | 634 | 5 | % | 30,532 | 30,302 | 230 | 1 | % | |||||||||||||||||||
Business development and advertising | 3,556 | 6,658 | (3,102 | ) | (47 | )% | 9,382 | 13,293 | (3,911 | ) | (29 | )% | |||||||||||||||||
Equipment | 5,312 | 5,577 | (265 | ) | (5 | )% | 10,751 | 11,245 | (494 | ) | (4 | )% | |||||||||||||||||
Legal and professional | 5,058 | 4,668 | 390 | 8 | % | 10,217 | 8,619 | 1,598 | 19 | % | |||||||||||||||||||
Loan and foreclosure costs | 3,605 | 1,814 | 1,791 | 99 | % | 6,725 | 3,961 | 2,764 | 70 | % | |||||||||||||||||||
FDIC assessment | 5,250 | 4,500 | 750 | 17 | % | 10,750 | 8,250 | 2,500 | 30 | % | |||||||||||||||||||
Other intangible amortization | 2,872 | 2,324 | 548 | 24 | % | 5,686 | 4,551 | 1,135 | 25 | % | |||||||||||||||||||
Acquisition related costs(c) | 518 | 3,734 | (3,216 | ) | (86 | )% | 2,238 | 4,366 | (2,128 | ) | (49 | )% | |||||||||||||||||
Other | 10,249 | 11,331 | (1,082 | ) | (10 | )% | 21,791 | 22,459 | (668 | ) | (3 | )% | |||||||||||||||||
Total noninterest expense | 183,407 | 197,779 | (14,372 | ) | (7 | )% | 375,598 | 389,450 | (13,852 | ) | (4 | )% | |||||||||||||||||
Income before income taxes | 199,955 | 103,678 | 96,277 | 93 | % | 256,012 | 212,756 | 43,256 | 20 | % | |||||||||||||||||||
Income tax expense | 51,238 | 19,017 | 32,221 | 169 | % | 61,457 | 41,409 | 20,048 | 48 | % | |||||||||||||||||||
Net income | 148,718 | 84,661 | 64,057 | 76 | % | 194,555 | 171,347 | 23,208 | 14 | % | |||||||||||||||||||
Preferred stock dividends | 4,144 | 3,801 | 343 | 9 | % | 7,945 | 7,601 | 344 | 5 | % | |||||||||||||||||||
Net income available to common equity | $ | 144,573 | $ | 80,860 | $ | 63,713 | 79 | % | $ | 186,611 | $ | 163,746 | $ | 22,865 | 14 | % | |||||||||||||
Earnings per common share | |||||||||||||||||||||||||||||
Basic | $ | 0.94 | $ | 0.49 | $ | 0.45 | 92 | % | $ | 1.21 | $ | 1.00 | $ | 0.21 | 21 | % | |||||||||||||
Diluted | $ | 0.94 | $ | 0.49 | $ | 0.45 | 92 | % | $ | 1.20 | $ | 0.99 | $ | 0.21 | 21 | % | |||||||||||||
Average common shares outstanding | |||||||||||||||||||||||||||||
Basic | 152,393 | 162,180 | (9,787 | ) | (6 | )% | 153,547 | 163,049 | (9,502 | ) | (6 | )% | |||||||||||||||||
Diluted | 153,150 | 163,672 | (10,522 | ) | (6 | )% | 154,360 | 164,518 | (10,158 | ) | (6 | )% | |||||||||||||||||
N/M = Not meaningful
Numbers may not sum due to rounding.
(a) Includes trust, asset management, brokerage, and annuity fees.
(b) 2Q20 and YTD 2020 include a gain of $163 million from the sale of Associated Benefits & Risk Consulting. 2Q19 and YTD 2019 include less than $1 million of Huntington related asset losses.
(c) | Includes Huntington branch and First Staunton acquisition related costs only. |
Page 2
Associated Banc-Corp Consolidated Statements of Income (Unaudited) - Quarterly Trend | |||||||||||||||||||||||||||||||||
($ in thousands, except per share data) | Seql Qtr | Comp Qtr | |||||||||||||||||||||||||||||||
2Q20 | 1Q20 | $ Change | % Change | 4Q19 | 3Q19 | 2Q19 | $ Change | % Change | |||||||||||||||||||||||||
Interest income | |||||||||||||||||||||||||||||||||
Interest and fees on loans | $ | 191,895 | $ | 224,786 | $ | (32,891 | ) | (15 | )% | $ | 229,883 | $ | 248,579 | $ | 260,784 | $ | (68,889 | ) | (26 | )% | |||||||||||||
Interest and dividends on investment securities | |||||||||||||||||||||||||||||||||
Taxable | 16,103 | 20,272 | (4,169 | ) | (21 | )% | 21,056 | 23,485 | 26,710 | (10,607 | ) | (40 | )% | ||||||||||||||||||||
Tax-exempt | 14,616 | 14,882 | (266 | ) | (2 | )% | 14,615 | 14,491 | 14,643 | (27 | ) | — | % | ||||||||||||||||||||
Other interest | 2,231 | 3,304 | (1,073 | ) | (32 | )% | 3,556 | 4,865 | 3,995 | (1,764 | ) | (44 | )% | ||||||||||||||||||||
Total interest income | 224,845 | 263,244 | (38,399 | ) | (15 | )% | 269,110 | 291,420 | 306,133 | (81,288 | ) | (27 | )% | ||||||||||||||||||||
Interest expense | |||||||||||||||||||||||||||||||||
Interest on deposits | 13,178 | 36,666 | (23,488 | ) | (64 | )% | 45,877 | 61,585 | 67,050 | (53,872 | ) | (80 | )% | ||||||||||||||||||||
Interest on federal funds purchased and securities sold under agreements to repurchase | 51 | 368 | (317 | ) | (86 | )% | 521 | 145 | 286 | (235 | ) | (82 | )% | ||||||||||||||||||||
Interest on other short-term funding | 683 | 39 | 644 | N/M | 28 | 33 | 37 | 646 | N/M | ||||||||||||||||||||||||
Interest on FHLB advances | 15,470 | 17,626 | (2,156 | ) | (12 | )% | 16,623 | 15,896 | 17,744 | (2,274 | ) | (13 | )% | ||||||||||||||||||||
Interest on long-term funding | 5,591 | 5,604 | (13 | ) | — | % | 5,918 | 7,396 | 7,396 | (1,805 | ) | (24 | )% | ||||||||||||||||||||
Total interest expense | 34,973 | 60,303 | (25,330 | ) | (42 | )% | 68,967 | 85,054 | 92,513 | (57,540 | ) | (62 | )% | ||||||||||||||||||||
Net interest income | 189,872 | 202,942 | (13,070 | ) | (6 | )% | 200,142 | 206,365 | 213,619 | (23,747 | ) | (11 | )% | ||||||||||||||||||||
Provision for credit losses | 61,000 | 53,001 | 7,999 | 15 | % | — | 2,000 | 8,000 | 53,000 | N/M | |||||||||||||||||||||||
Net interest income after provision for credit losses | 128,872 | 149,941 | (21,069 | ) | (14 | )% | 200,142 | 204,365 | 205,619 | (76,747 | ) | (37 | )% | ||||||||||||||||||||
Noninterest income | |||||||||||||||||||||||||||||||||
Insurance commissions and fees | 22,430 | 22,608 | (178 | ) | (1 | )% | 19,701 | 20,954 | 22,985 | (555 | ) | (2 | )% | ||||||||||||||||||||
Wealth management fees(a) | 20,916 | 20,816 | 100 | — | % | 21,582 | 21,015 | 20,691 | 225 | 1 | % | ||||||||||||||||||||||
Service charges and deposit account fees | 11,484 | 15,222 | (3,738 | ) | (25 | )% | 16,032 | 16,561 | 15,426 | (3,942 | ) | (26 | )% | ||||||||||||||||||||
Card-based fees | 8,893 | 9,597 | (704 | ) | (7 | )% | 9,906 | 10,456 | 10,131 | (1,238 | ) | (12 | )% | ||||||||||||||||||||
Other fee-based revenue | 4,774 | 4,497 | 277 | 6 | % | 4,696 | 5,085 | 5,178 | (404 | ) | (8 | )% | |||||||||||||||||||||
Capital markets, net | 6,910 | 7,935 | (1,025 | ) | (13 | )% | 7,647 | 4,300 | 4,726 | 2,184 | 46 | % | |||||||||||||||||||||
Mortgage banking, net | 12,263 | 6,143 | 6,120 | 100 | % | 6,760 | 10,940 | 9,466 | 2,797 | 30 | % | ||||||||||||||||||||||
Bank and corporate owned life insurance | 3,625 | 3,094 | 531 | 17 | % | 3,364 | 4,337 | 3,352 | 273 | 8 | % | ||||||||||||||||||||||
Asset gains (losses), net(b) | 157,361 | (77 | ) | 157,438 | N/M | 398 | 877 | 871 | 156,490 | N/M | |||||||||||||||||||||||
Investment securities gains (losses), net | 3,096 | 6,118 | (3,022 | ) | (49 | )% | 26 | 3,788 | 463 | 2,633 | N/M | ||||||||||||||||||||||
Other | 2,737 | 2,352 | 385 | 16 | % | 2,822 | 2,537 | 2,547 | 190 | 7 | % | ||||||||||||||||||||||
Total noninterest income | 254,490 | 98,306 | 156,184 | 159 | % | 92,934 | 100,850 | 95,837 | 158,653 | 166 | % | ||||||||||||||||||||||
Noninterest expense | |||||||||||||||||||||||||||||||||
Personnel | 111,350 | 114,200 | (2,850 | ) | (2 | )% | 120,614 | 123,170 | 123,228 | (11,878 | ) | (10 | )% | ||||||||||||||||||||
Technology | 21,174 | 20,799 | 375 | 2 | % | 22,731 | 20,572 | 20,114 | 1,060 | 5 | % | ||||||||||||||||||||||
Occupancy | 14,464 | 16,069 | (1,605 | ) | (10 | )% | 16,933 | 15,164 | 13,830 | 634 | 5 | % | |||||||||||||||||||||
Business development and advertising | 3,556 | 5,826 | (2,270 | ) | (39 | )% | 8,316 | 7,991 | 6,658 | (3,102 | ) | (47 | )% | ||||||||||||||||||||
Equipment | 5,312 | 5,439 | (127 | ) | (2 | )% | 5,970 | 6,335 | 5,577 | (265 | ) | (5 | )% | ||||||||||||||||||||
Legal and professional | 5,058 | 5,160 | (102 | ) | (2 | )% | 5,559 | 5,724 | 4,668 | 390 | 8 | % | |||||||||||||||||||||
Loan and foreclosure costs | 3,605 | 3,120 | 485 | 16 | % | 3,262 | 1,638 | 1,814 | 1,791 | 99 | % | ||||||||||||||||||||||
FDIC assessment | 5,250 | 5,500 | (250 | ) | (5 | )% | 4,000 | 4,000 | 4,500 | 750 | 17 | % | |||||||||||||||||||||
Other intangible amortization | 2,872 | 2,814 | 58 | 2 | % | 2,712 | 2,686 | 2,324 | 548 | 24 | % | ||||||||||||||||||||||
Acquisition related costs(c) | 518 | 1,721 | (1,203 | ) | (70 | )% | 1,325 | 1,629 | 3,734 | (3,216 | ) | (86 | )% | ||||||||||||||||||||
Other | 10,249 | 11,543 | (1,294 | ) | (11 | )% | 12,187 | 12,021 | 11,331 | (1,082 | ) | (10 | )% | ||||||||||||||||||||
Total noninterest expense | 183,407 | 192,191 | (8,784 | ) | (5 | )% | 203,609 | 200,930 | 197,779 | (14,372 | ) | (7 | )% | ||||||||||||||||||||
Income before income taxes | 199,955 | 56,056 | 143,899 | N/M | 89,467 | 104,286 | 103,678 | 96,277 | 93 | % | |||||||||||||||||||||||
Income tax expense | 51,238 | 10,219 | 41,019 | N/M | 17,364 | 20,947 | 19,017 | 32,221 | 169 | % | |||||||||||||||||||||||
Net income | 148,718 | 45,838 | 102,880 | N/M | 72,103 | 83,339 | 84,661 | 64,057 | 76 | % | |||||||||||||||||||||||
Preferred stock dividends | 4,144 | 3,801 | 343 | 9 | % | 3,801 | 3,801 | 3,801 | 343 | 9 | % | ||||||||||||||||||||||
Net income available to common equity | $ | 144,573 | $ | 42,037 | $ | 102,536 | N/M | $ | 68,303 | $ | 79,539 | $ | 80,860 | $ | 63,713 | 79 | % | ||||||||||||||||
Earnings per common share | |||||||||||||||||||||||||||||||||
Basic | $ | 0.94 | $ | 0.27 | $ | 0.67 | N/M | $ | 0.43 | $ | 0.50 | $ | 0.49 | $ | 0.45 | 92 | % | ||||||||||||||||
Diluted | $ | 0.94 | $ | 0.27 | $ | 0.67 | N/M | $ | 0.43 | $ | 0.49 | $ | 0.49 | $ | 0.45 | 92 | % | ||||||||||||||||
Average common shares outstanding | |||||||||||||||||||||||||||||||||
Basic | 152,393 | 154,701 | (2,308 | ) | (1 | )% | 156,994 | 159,126 | 162,180 | (9,787 | ) | (6 | )% | ||||||||||||||||||||
Diluted | 153,150 | 155,619 | (2,469 | ) | (2 | )% | 158,472 | 160,382 | 163,672 | (10,522 | ) | (6 | )% | ||||||||||||||||||||
N/M = Not meaningful
Numbers may not sum due to rounding.
(a) Includes trust, asset management, brokerage, and annuity fees.
(b) | 2Q20 includes a gain of $163 million from the sale of Associated Benefits & Risk Consulting. 2Q19 includes less than $1 million of Huntington related asset losses. |
(c) Includes Huntington branch and First Staunton acquisition related costs only.
Page 3
Associated Banc-Corp Selected Quarterly Information | |||||||||||||||||||||
($ in millions except per share data and COVID-19 loan modifications; shares repurchased and outstanding in thousands) | YTD Jun 2020 | YTD Jun 2019 | 2Q20 | 1Q20 | 4Q19 | 3Q19 | 2Q19 | ||||||||||||||
Per common share data | |||||||||||||||||||||
Dividends | $ | 0.36 | $ | 0.34 | $ | 0.18 | $ | 0.18 | $ | 0.18 | $ | 0.17 | $ | 0.17 | |||||||
Market value: | |||||||||||||||||||||
High | 21.94 | 23.67 | 17.03 | 21.94 | 22.51 | 21.67 | 23.15 | ||||||||||||||
Low | 10.85 | 19.77 | 11.48 | 10.85 | 18.96 | 18.64 | 19.81 | ||||||||||||||
Close | 13.68 | 21.14 | 13.68 | 12.79 | 22.04 | 20.25 | 21.14 | ||||||||||||||
Book value | 23.89 | 22.40 | 23.89 | 22.99 | 23.32 | 23.00 | 22.40 | ||||||||||||||
Tangible book value / share | 16.21 | 14.59 | 16.21 | 14.64 | 15.28 | 15.05 | 14.59 | ||||||||||||||
Performance ratios (annualized) | |||||||||||||||||||||
Return on average assets | 1.16 | % | 1.03 | % | 1.72 | % | 0.57 | % | 0.89 | % | 1.00 | % | 1.02 | % | |||||||
Noninterest expense / average assets | 2.24 | % | 2.35 | % | 2.12 | % | 2.37 | % | 2.51 | % | 2.40 | % | 2.37 | % | |||||||
Effective tax rate | 24.01 | % | 19.46 | % | 25.62 | % | 18.23 | % | 19.41 | % | 20.09 | % | 18.34 | % | |||||||
Dividend payout ratio(a) | 29.75 | % | 34.00 | % | 19.15 | % | 66.67 | % | 41.86 | % | 34.00 | % | 34.69 | % | |||||||
Net interest margin | 2.66 | % | 2.89 | % | 2.49 | % | 2.84 | % | 2.83 | % | 2.81 | % | 2.88 | % | |||||||
Selected trend information | |||||||||||||||||||||
Average full time equivalent employees(b) | 4,666 | 4,663 | 4,701 | 4,631 | 4,696 | 4,782 | 4,666 | ||||||||||||||
Branch count | 249 | 249 | 248 | 248 | 247 | ||||||||||||||||
Assets under management, at market value(c) | $ | 11,755 | $ | 10,454 | $ | 12,104 | $ | 11,604 | $ | 11,475 | |||||||||||
Mortgage loans originated for sale during period | $ | 861 | $ | 459 | $ | 550 | $ | 310 | $ | 267 | $ | 365 | $ | 297 | |||||||
Mortgage loan settlements during period(d) | $ | 1,022 | $ | 432 | $ | 725 | $ | 297 | $ | 268 | $ | 617 | $ | 272 | |||||||
Mortgage portfolio loans transferred to held for sale during period | $ | 200 | $ | — | $ | — | $ | 200 | $ | — | $ | 243 | $ | — | |||||||
Mortgage portfolio serviced for others | $ | 8,454 | $ | 8,549 | $ | 8,489 | $ | 8,692 | $ | 8,509 | |||||||||||
Mortgage servicing rights, net / mortgage portfolio serviced for others | 0.58 | % | 0.68 | % | 0.79 | % | 0.78 | % | 0.78 | % | |||||||||||
Shares repurchased during period(e) | 4,264 | 3,063 | — | 4,264 | 2,256 | 2,892 | 1,754 | ||||||||||||||
Shares outstanding, end of period | 153,616 | 162,662 | 153,616 | 153,690 | 157,171 | 159,291 | 162,662 | ||||||||||||||
Payment Protection Program fees, net | |||||||||||||||||||||
Total fees established | $ | 27 | N/A | $ | 27 | N/A | N/A | N/A | N/A | ||||||||||||
Fees recognized | (3 | ) | N/A | (3 | ) | N/A | N/A | N/A | N/A | ||||||||||||
Remaining Payment Protection Program fee balance | $ | 24 | N/A | $ | 24 | N/A | N/A | N/A | N/A | ||||||||||||
Completed loan deferrals and modifications under COVID-19 relief program ($ in thousands) | |||||||||||||||||||||
Commercial and industrial | $ | 45,415 | $ | 345 | N/A | N/A | N/A | ||||||||||||||
Commercial real estate—owner occupied | 138,267 | — | N/A | N/A | N/A | ||||||||||||||||
Commercial and business lending | 183,682 | 345 | N/A | N/A | N/A | ||||||||||||||||
Commercial real estate—investor | 606,058 | 595 | N/A | N/A | N/A | ||||||||||||||||
Real estate construction | 32,214 | — | N/A | N/A | N/A | ||||||||||||||||
Commercial real estate lending | 638,272 | 595 | N/A | N/A | N/A | ||||||||||||||||
Total commercial | 821,955 | 940 | N/A | N/A | N/A | ||||||||||||||||
Residential mortgage | 692,307 | 428 | N/A | N/A | N/A | ||||||||||||||||
Home equity | 30,554 | — | N/A | N/A | N/A | ||||||||||||||||
Other consumer | 2,060 | — | N/A | N/A | N/A | ||||||||||||||||
Total consumer | 724,921 | 428 | N/A | N/A | N/A | ||||||||||||||||
Total COVID-19 loan modifications | $ | 1,546,876 | $ | 1,368 | N/A | N/A | N/A | ||||||||||||||
Selected quarterly ratios | |||||||||||||||||||||
Loans / deposits | 93.53 | % | 94.95 | % | 95.97 | % | 93.17 | % | 91.99 | % | |||||||||||
Stockholders’ equity / assets | 11.34 | % | 11.18 | % | 12.11 | % | 12.03 | % | 11.73 | % | |||||||||||
Risk-based capital(f)(g) | |||||||||||||||||||||
Total risk-weighted assets | $ | 25,865 | $ | 25,866 | $ | 24,296 | $ | 24,313 | $ | 24,466 | |||||||||||
Common equity Tier 1 | $ | 2,651 | $ | 2,421 | $ | 2,481 | $ | 2,482 | $ | 2,481 | |||||||||||
Common equity Tier 1 capital ratio | 10.25 | % | 9.36 | % | 10.21 | % | 10.21 | % | 10.14 | % | |||||||||||
Tier 1 capital ratio | 11.62 | % | 10.35 | % | 11.26 | % | 11.26 | % | 11.19 | % | |||||||||||
Total capital ratio | 13.83 | % | 12.56 | % | 13.21 | % | 13.26 | % | 13.25 | % | |||||||||||
Tier 1 leverage ratio | 9.08 | % | 8.50 | % | 8.83 | % | 8.57 | % | 8.49 | % | |||||||||||
Mortgage banking, net | |||||||||||||||||||||
Mortgage servicing fees, net(h) | $ | 1 | $ | 6 | $ | (1 | ) | $ | 2 | $ | 2 | $ | 2 | $ | 3 | ||||||
Gains (losses) and fair value adjustments on loans held for sale | 31 | 9 | 21 | 10 | 5 | 4 | 7 | ||||||||||||||
Fair value adjustment on portfolio loans transferred to held for sale | 3 | — | — | 3 | — | 4 | — | ||||||||||||||
Mortgage servicing rights (impairment) recovery | (17 | ) | — | (8 | ) | (9 | ) | — | — | — | |||||||||||
Mortgage banking, net | $ | 18 | $ | 14 | $ | 12 | $ | 6 | $ | 7 | $ | 11 | $ | 9 | |||||||
Numbers may not sum due to rounding.
(a) | Ratio is based upon basic earnings per common share. |
(b) | Average full time equivalent employees without overtime. |
(c) | Excludes assets held in brokerage accounts. |
(d) | During the third quarter of 2019, the Corporation sold approximately $240 million of portfolio mortgages that were transferred during the period, resulting in increased settlements. |
(e) | Does not include repurchases related to tax withholding on equity compensation. |
(f) | The Federal Reserve establishes regulatory capital requirements, including well-capitalized standards for the Corporation. The regulatory capital requirements effective for the Corporation follow Basel III, subject to certain transition provisions. |
(g) | June 30, 2020 data is estimated. |
(h) | Includes mortgage origination and servicing fees, net of mortgage servicing rights amortization. |
Page 4
Associated Banc-Corp Selected Asset Quality Information | |||||||||||||||||||||
($ in thousands) | Jun 30, 2020 | Mar 31, 2020 | Seql Qtr % Change | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Comp Qtr % Change | ||||||||||||||
Allowance for loan losses | |||||||||||||||||||||
Balance at beginning of period | $ | 337,793 | $ | 201,371 | 68 | % | $ | 214,425 | $ | 233,659 | $ | 235,081 | 44 | % | |||||||
Cumulative effect of ASU 2016-13 adoption (CECL) | N/A | 112,457 | N/A | N/A | N/A | ||||||||||||||||
January 1, 2020 | N/A | 313,828 | N/A | N/A | N/A | ||||||||||||||||
Provision for loan losses | 52,500 | 37,500 | 40 | % | 1,000 | 1,000 | 12,000 | N/M | |||||||||||||
Allowance for PCD loans for bank acquisition | N/A | 3,504 | N/A | N/A | N/A | ||||||||||||||||
Charge offs | (28,351 | ) | (19,308 | ) | 47 | % | (16,752 | ) | (26,313 | ) | (15,761 | ) | 80 | % | |||||||
Recoveries | 1,861 | 2,268 | (18 | )% | 2,699 | 6,079 | 2,339 | (20 | )% | ||||||||||||
Net charge offs | (26,490 | ) | (17,040 | ) | 55 | % | (14,054 | ) | (20,234 | ) | (13,421 | ) | 97 | % | |||||||
Balance at end of period | $ | 363,803 | $ | 337,793 | 8 | % | $ | 201,371 | $ | 214,425 | $ | 233,659 | 56 | % | |||||||
Allowance for unfunded commitments | |||||||||||||||||||||
Balance at beginning of period | $ | 56,276 | $ | 21,907 | 157 | % | $ | 22,907 | $ | 21,907 | $ | 25,836 | 118 | % | |||||||
Cumulative effect of ASU 2016-13 adoption (CECL) | N/A | 18,690 | N/A | N/A | N/A | ||||||||||||||||
January 1, 2020 | N/A | 40,597 | N/A | N/A | N/A | ||||||||||||||||
Provision for unfunded commitments | 8,500 | 15,500 | (45 | )% | (1,000 | ) | 1,000 | (4,000 | ) | N/M | |||||||||||
Amount recorded at acquisition | — | 179 | (100 | )% | — | — | 70 | (100 | )% | ||||||||||||
Balance at end of period | $ | 64,776 | $ | 56,276 | 15 | % | $ | 21,907 | $ | 22,907 | $ | 21,907 | 196 | % | |||||||
Allowance for credit losses on loans (ACLL)(a) | $ | 428,579 | $ | 394,069 | 9 | % | $ | 223,278 | $ | 237,331 | $ | 255,566 | 68 | % | |||||||
Provision for credit losses on loans(b) | $ | 61,000 | $ | 53,000 | 15 | % | $ | — | $ | 2,000 | $ | 8,000 | N/M | ||||||||
($ in thousands) | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | ||||||||||||||||
Net (charge offs) recoveries | |||||||||||||||||||||
PPP Loans | $ | — | $ | — | N/M | $ | — | $ | — | $ | — | N/M | |||||||||
Commercial and industrial | (24,919 | ) | (15,049 | ) | 66 | % | (11,917 | ) | (19,918 | ) | (12,177 | ) | 105 | % | |||||||
Commercial real estate—owner occupied | 1 | — | N/M | — | 1,483 | (104 | ) | (101 | )% | ||||||||||||
Commercial and business lending | (24,919 | ) | (15,048 | ) | 66 | % | (11,917 | ) | (18,435 | ) | (12,281 | ) | 103 | % | |||||||
Commercial real estate—investor | 28 | — | N/M | — | (3 | ) | 3 | N/M | |||||||||||||
Real estate construction | (3 | ) | 11 | (127 | )% | 72 | 20 | 151 | (102 | )% | |||||||||||
Commercial real estate lending | 25 | 11 | 127 | % | 72 | 17 | 153 | (84 | )% | ||||||||||||
Total commercial | (24,893 | ) | (15,037 | ) | 66 | % | (11,845 | ) | (18,418 | ) | (12,127 | ) | 105 | % | |||||||
Residential mortgage | (215 | ) | (912 | ) | (76 | )% | (1,415 | ) | (393 | ) | (365 | ) | (41 | )% | |||||||
Home equity | (303 | ) | 71 | N/M | 480 | (275 | ) | 239 | N/M | ||||||||||||
Other consumer | (1,078 | ) | (1,162 | ) | (7 | )% | (1,274 | ) | (1,148 | ) | (1,169 | ) | (8 | )% | |||||||
Total consumer | (1,596 | ) | (2,003 | ) | (20 | )% | (2,208 | ) | (1,816 | ) | (1,294 | ) | 23 | % | |||||||
Total net (charge offs) recoveries | $ | (26,490 | ) | $ | (17,040 | ) | 55 | % | $ | (14,054 | ) | $ | (20,234 | ) | $ | (13,421 | ) | 97 | % | ||
(In basis points) | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | ||||||||||||||||
Net charge offs to average loans (annualized) | |||||||||||||||||||||
PPP Loans | — | — | — | — | — | ||||||||||||||||
Commercial and industrial | (121 | ) | (81 | ) | (65 | ) | (104 | ) | (64 | ) | |||||||||||
Commercial real estate—owner occupied | — | — | — | 63 | (4 | ) | |||||||||||||||
Commercial and business lending | (100 | ) | (72 | ) | (58 | ) | (86 | ) | (57 | ) | |||||||||||
Commercial real estate—investor | — | — | — | — | — | ||||||||||||||||
Real estate construction | — | — | 2 | 1 | 5 | ||||||||||||||||
Commercial real estate lending | — | — | 1 | — | 1 | ||||||||||||||||
Total commercial | (64 | ) | (44 | ) | (35 | ) | (53 | ) | (35 | ) | |||||||||||
Residential mortgage | (1 | ) | (4 | ) | (7 | ) | (2 | ) | (2 | ) | |||||||||||
Home equity | (15 | ) | 3 | 22 | (12 | ) | 11 | ||||||||||||||
Other consumer | (128 | ) | (134 | ) | (145 | ) | (129 | ) | (132 | ) | |||||||||||
Total consumer | (7 | ) | (8 | ) | (9 | ) | (8 | ) | (5 | ) | |||||||||||
Total net charge offs | (42 | ) | (29 | ) | (24 | ) | (35 | ) | (23 | ) | |||||||||||
($ in thousands) | Jun 30, 2020 | Mar 31, 2020 | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | ||||||||||||||||
Credit Quality | |||||||||||||||||||||
Nonaccrual loans | $ | 171,607 | $ | 136,717 | 26 | % | $ | 118,380 | $ | 128,939 | $ | 166,707 | 3 | % | |||||||
Other real estate owned (OREO) | 20,264 | 22,530 | (10 | )% | 21,101 | 19,625 | 18,355 | 10 | % | ||||||||||||
Other nonperforming assets | 909 | 6,004 | (85 | )% | 6,004 | 6,004 | — | N/M | |||||||||||||
Total nonperforming assets | $ | 192,780 | $ | 165,251 | 17 | % | $ | 145,485 | $ | 154,568 | $ | 185,062 | 4 | % | |||||||
Loans 90 or more days past due and still accruing | $ | 1,466 | $ | 2,255 | (35 | )% | $ | 2,259 | $ | 1,986 | $ | 2,088 | (30 | )% | |||||||
Allowance for loan losses to loans | N/A | N/A | 0.88 | % | 0.94 | % | 1.00 | % | |||||||||||||
Allowance for credit losses to loans | 1.73 | % | 1.62 | % | 0.98 | % | 1.04 | % | 1.10 | % | |||||||||||
Allowance for loan losses to nonaccrual loans | N/A | N/A | 170.10 | % | 166.30 | % | 140.16 | % | |||||||||||||
Allowance for credit losses to nonaccrual loans | 249.74 | % | 288.24 | % | 188.61 | % | 184.07 | % | 153.30 | % | |||||||||||
Nonaccrual loans to total loans | 0.69 | % | 0.56 | % | 0.52 | % | 0.57 | % | 0.72 | % | |||||||||||
Nonperforming assets to total loans plus OREO | 0.78 | % | 0.68 | % | 0.64 | % | 0.68 | % | 0.80 | % | |||||||||||
Nonperforming assets to total assets | 0.54 | % | 0.49 | % | 0.45 | % | 0.47 | % | 0.56 | % | |||||||||||
Year-to-date net charge offs to year-to-date average loans (annualized) | 0.36 | % | 0.29 | % | 0.24 | % | 0.24 | % | 0.18 | % | |||||||||||
(a) | Excludes approximately $61,000 of allowance for held to maturity investment securities |
(b) | March 31, 2020 excludes less than $1,000 of provision for held to maturity investment securities |
Page 5
Associated Banc-Corp Selected Asset Quality Information (continued) | |||||||||||||||||||||
(In thousands) | Jun 30, 2020 | Mar 31, 2020 | Seql Qtr % Change | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Comp Qtr % Change | ||||||||||||||
Nonaccrual loans | |||||||||||||||||||||
Commercial and industrial | $ | 80,239 | $ | 58,854 | 36 | % | $ | 46,312 | $ | 56,536 | $ | 84,151 | (5 | )% | |||||||
Commercial real estate—owner occupied | 1,932 | 1,838 | 5 | % | 67 | 68 | 571 | N/M | |||||||||||||
Commercial and business lending | 82,171 | 60,692 | 35 | % | 46,380 | 56,604 | 84,722 | (3 | )% | ||||||||||||
Commercial real estate—investor | 11,172 | 1,091 | N/M | 4,409 | 4,800 | 1,485 | N/M | ||||||||||||||
Real estate construction | 503 | 486 | 3 | % | 493 | 542 | 427 | 18 | % | ||||||||||||
Commercial real estate lending | 11,675 | 1,577 | N/M | 4,902 | 5,342 | 1,912 | N/M | ||||||||||||||
Total commercial | 93,846 | 62,269 | 51 | % | 51,282 | 61,946 | 86,634 | 8 | % | ||||||||||||
Residential mortgage | 66,656 | 64,855 | 3 | % | 57,844 | 57,056 | 68,166 | (2 | )% | ||||||||||||
Home equity | 10,829 | 9,378 | 15 | % | 9,104 | 9,828 | 11,835 | (9 | )% | ||||||||||||
Other consumer | 276 | 215 | 28 | % | 152 | 109 | 72 | N/M | |||||||||||||
Total consumer | 77,761 | 74,448 | 4 | % | 67,099 | 66,993 | 80,073 | (3 | )% | ||||||||||||
Total nonaccrual loans | $ | 171,607 | $ | 136,717 | 26 | % | $ | 118,380 | $ | 128,939 | $ | 166,707 | 3 | % | |||||||
Jun 30, 2020 | Mar 31, 2020 | Seql Qtr % Change | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Comp Qtr % Change | |||||||||||||||
Restructured loans (accruing)(a) | |||||||||||||||||||||
Commercial and industrial | $ | 16,321 | $ | 16,056 | 2 | % | $ | 16,678 | $ | 15,398 | $ | 16,850 | (3 | )% | |||||||
Commercial real estate—owner occupied | 1,441 | 2,091 | (31 | )% | 1,676 | 1,912 | 1,970 | (27 | )% | ||||||||||||
Commercial and business lending | 17,762 | 18,146 | (2 | )% | 18,353 | 17,311 | 18,820 | (6 | )% | ||||||||||||
Commercial real estate—investor | 114 | 281 | (59 | )% | 293 | 304 | 315 | (64 | )% | ||||||||||||
Real estate construction | 313 | 339 | (8 | )% | 298 | 227 | 232 | 35 | % | ||||||||||||
Commercial real estate lending | 427 | 620 | (31 | )% | 591 | 531 | 547 | (22 | )% | ||||||||||||
Total commercial | 18,189 | 18,767 | (3 | )% | 18,944 | 17,842 | 19,367 | (6 | )% | ||||||||||||
Residential mortgage | 4,178 | 4,654 | (10 | )% | 3,955 | 3,228 | 17,645 | (76 | )% | ||||||||||||
Home equity | 1,717 | 1,719 | — | % | 1,896 | 2,017 | 7,247 | (76 | )% | ||||||||||||
Other consumer | 1,219 | 1,245 | (2 | )% | 1,246 | 1,243 | 1,222 | — | % | ||||||||||||
Total consumer | 7,114 | 7,618 | (7 | )% | 7,097 | 6,487 | 26,114 | (73 | )% | ||||||||||||
Total restructured loans (accruing) | $ | 25,303 | $ | 26,384 | (4 | )% | $ | 26,041 | $ | 24,329 | $ | 45,481 | (44 | )% | |||||||
Nonaccrual restructured loans (included in nonaccrual loans) | $ | 25,362 | $ | 24,204 | 5 | % | $ | 22,494 | $ | 16,293 | $ | 24,332 | 4 | % | |||||||
Jun 30, 2020 | Mar 31, 2020 | Seql Qtr % Change | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Comp Qtr % Change | |||||||||||||||
Accruing Loans 30-89 Days Past Due | |||||||||||||||||||||
Commercial and industrial | $ | 716 | $ | 976 | (27 | )% | $ | 821 | $ | 426 | $ | 4,909 | (85 | )% | |||||||
Commercial real estate—owner occupied | 199 | 51 | N/M | 1,369 | 2,646 | 2,018 | (90 | )% | |||||||||||||
Commercial and business lending | 916 | 1,027 | (11 | )% | 2,190 | 3,073 | 6,926 | (87 | )% | ||||||||||||
Commercial real estate—investor | 13,874 | 14,462 | (4 | )% | 1,812 | 636 | 1,382 | N/M | |||||||||||||
Real estate construction | 385 | 179 | 115 | % | 97 | 595 | 151 | 155 | % | ||||||||||||
Commercial real estate lending | 14,260 | 14,641 | (3 | )% | 1,909 | 1,232 | 1,532 | N/M | |||||||||||||
Total commercial | 15,175 | 15,668 | (3 | )% | 4,099 | 4,304 | 8,459 | 79 | % | ||||||||||||
Residential mortgage | 3,023 | 10,102 | (70 | )% | 9,274 | 8,063 | 9,756 | (69 | )% | ||||||||||||
Home equity | 3,108 | 7,001 | (56 | )% | 5,647 | 4,798 | 5,827 | (47 | )% | ||||||||||||
Other consumer | 1,482 | 1,777 | (17 | )% | 2,083 | 2,203 | 1,838 | (19 | )% | ||||||||||||
Total consumer | 7,613 | 18,879 | (60 | )% | 17,005 | 15,063 | 17,422 | (56 | )% | ||||||||||||
Total accruing loans 30-89 days past due | $ | 22,788 | $ | 34,547 | (34 | )% | $ | 21,104 | $ | 19,367 | $ | 25,881 | (12 | )% | |||||||
Jun 30, 2020 | Mar 31, 2020 | Seql Qtr % Change | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Comp Qtr % Change | |||||||||||||||
Potential Problem Loans | |||||||||||||||||||||
Commercial and industrial | $ | 195,432 | $ | 149,747 | 31 | % | $ | 110,308 | $ | 59,427 | $ | 58,658 | N/M | ||||||||
Commercial real estate—owner occupied | 15,919 | 15,802 | 1 | % | 19,889 | 22,624 | 24,237 | (34 | )% | ||||||||||||
Commercial and business lending | 211,350 | 165,550 | 28 | % | 130,197 | 82,051 | 82,895 | 155 | % | ||||||||||||
Commercial real estate—investor | 88,237 | 61,030 | 45 | % | 29,449 | 49,353 | 77,766 | 13 | % | ||||||||||||
Real estate construction | 2,170 | 1,753 | 24 | % | — | 544 | 3,166 | (31 | )% | ||||||||||||
Commercial real estate lending | 90,407 | 62,783 | 44 | % | 29,449 | 49,897 | 80,932 | 12 | % | ||||||||||||
Total commercial | 301,758 | 228,333 | 32 | % | 159,646 | 131,948 | 163,828 | 84 | % | ||||||||||||
Residential mortgage | 3,157 | 3,322 | (5 | )% | 1,451 | 1,242 | 1,983 | 59 | % | ||||||||||||
Home equity | 1,921 | 2,238 | (14 | )% | — | — | 32 | N/M | |||||||||||||
Total consumer | 5,078 | 5,559 | (9 | )% | 1,451 | 1,242 | 2,014 | 152 | % | ||||||||||||
Total potential problem loans | $ | 306,836 | $ | 233,892 | 31 | % | $ | 161,097 | $ | 133,189 | $ | 165,842 | 85 | % | |||||||
N/M = Not meaningful
N/A = Not applicable
Numbers may not sum due to rounding.
(a) Does not include any restructured loans related to COVID-19 in accordance with regulatory guidance
Page 6
Associated Banc-Corp Net Interest Income Analysis - Fully Tax-Equivalent Basis - Sequential and Comparable Quarter | ||||||||||||||||||||||||||
Three Months Ended | ||||||||||||||||||||||||||
June 30, 2020 | March 31, 2020 | June 30, 2019 | ||||||||||||||||||||||||
($ in thousands) | Average Balance | Interest Income /Expense | Average Yield /Rate | Average Balance | Interest Income /Expense | Average Yield /Rate | Average Balance | Interest Income /Expense | Average Yield /Rate | |||||||||||||||||
Assets | ||||||||||||||||||||||||||
Earning assets | ||||||||||||||||||||||||||
Loans (a) (b) (c) | ||||||||||||||||||||||||||
Commercial PPP lending | $ | 848,761 | $ | 4,841 | 2.29 | % | $ | — | $ | — | — | % | $ | — | $ | — | — | % | ||||||||
Commercial and business lending | 9,192,910 | 64,097 | 2.80 | % | 8,380,113 | 80,217 | 3.85 | % | 8,621,609 | 103,029 | 4.79 | % | ||||||||||||||
Commercial real estate lending | 5,720,262 | 46,057 | 3.24 | % | 5,329,568 | 57,499 | 4.34 | % | 5,130,954 | 66,522 | 5.19 | % | ||||||||||||||
Total commercial | 15,761,933 | 114,995 | 2.93 | % | 13,709,681 | 137,716 | 4.04 | % | 13,752,563 | 169,551 | 4.94 | % | ||||||||||||||
Residential mortgage | 8,271,757 | 62,860 | 3.04 | % | 8,404,351 | 69,961 | 3.33 | % | 8,378,082 | 72,692 | 3.47 | % | ||||||||||||||
Retail | 1,157,116 | 14,368 | 4.98 | % | 1,194,586 | 17,473 | 5.86 | % | 1,223,726 | 19,095 | 6.25 | % | ||||||||||||||
Total loans | 25,190,806 | 192,223 | 3.06 | % | 23,308,618 | 225,149 | 3.88 | % | 23,354,371 | 261,338 | 4.48 | % | ||||||||||||||
Investment securities | ||||||||||||||||||||||||||
Taxable | 3,129,113 | 16,103 | 2.06 | % | 3,460,224 | 20,272 | 2.34 | % | 4,523,260 | 26,710 | 2.36 | % | ||||||||||||||
Tax-exempt(a) | 1,922,392 | 18,270 | 3.80 | % | 1,974,247 | 18,603 | 3.77 | % | 1,943,485 | 18,304 | 3.77 | % | ||||||||||||||
Other short-term investments | 1,016,976 | 2,231 | 0.88 | % | 473,604 | 3,304 | 2.81 | % | 479,590 | 3,995 | 3.34 | % | ||||||||||||||
Investments and other | 6,068,481 | 36,604 | 2.41 | % | 5,908,075 | 42,179 | 2.86 | % | 6,946,335 | 49,009 | 2.82 | % | ||||||||||||||
Total earning assets | 31,259,287 | $ | 228,826 | 2.94 | % | 29,216,693 | $ | 267,329 | 3.67 | % | 30,300,707 | $ | 310,347 | 4.10 | % | |||||||||||
Other assets, net | 3,586,656 | 3,360,311 | 3,138,111 | |||||||||||||||||||||||
Total assets | $ | 34,845,943 | $ | 32,577,005 | $ | 33,438,818 | ||||||||||||||||||||
Liabilities and stockholders' equity | ||||||||||||||||||||||||||
Interest-bearing liabilities | ||||||||||||||||||||||||||
Interest-bearing deposits | ||||||||||||||||||||||||||
Savings | $ | 3,260,040 | $ | 429 | 0.05 | % | $ | 2,868,840 | $ | 1,800 | 0.25 | % | $ | 2,319,556 | $ | 1,686 | 0.29 | % | ||||||||
Interest-bearing demand | 5,445,267 | 1,442 | 0.11 | % | 5,307,230 | 8,755 | 0.66 | % | 4,984,511 | 15,309 | 1.23 | % | ||||||||||||||
Money market | 6,496,841 | 1,902 | 0.12 | % | 6,538,658 | 10,806 | 0.66 | % | 7,118,594 | 20,883 | 1.18 | % | ||||||||||||||
Network transaction deposits | 1,544,737 | 539 | 0.14 | % | 1,434,128 | 4,601 | 1.29 | % | 2,024,604 | 12,456 | 2.47 | % | ||||||||||||||
Time deposits | 2,469,899 | 8,866 | 1.44 | % | 2,636,231 | 10,703 | 1.63 | % | 3,544,317 | 16,717 | 1.89 | % | ||||||||||||||
Total interest-bearing deposits | 19,216,785 | 13,178 | 0.28 | % | 18,785,088 | 36,666 | 0.79 | % | 19,991,581 | 67,050 | 1.35 | % | ||||||||||||||
Federal funds purchased and securities sold under agreements to repurchase | 204,548 | 51 | 0.10 | % | 194,406 | 368 | 0.76 | % | 115,694 | 286 | 0.99 | % | ||||||||||||||
Commercial Paper | 37,526 | 7 | 0.08 | % | 34,282 | 28 | 0.33 | % | 30,612 | 37 | 0.49 | % | ||||||||||||||
PPPLF | 774,500 | 676 | 0.35 | % | — | — | — | % | — | — | — | % | ||||||||||||||
Other short-term funding | — | — | — | % | 16,997 | 11 | 0.25 | % | — | — | — | % | ||||||||||||||
FHLB advances | 2,810,867 | 15,470 | 2.21 | % | 3,231,999 | 17,626 | 2.19 | % | 3,171,353 | 17,744 | 2.24 | % | ||||||||||||||
Long-term funding | 548,757 | 5,591 | 4.08 | % | 549,465 | 5,604 | 4.08 | % | 796,169 | 7,396 | 3.72 | % | ||||||||||||||
Total short and long-term funding | 4,376,199 | 21,795 | 2.00 | % | 4,027,149 | 23,637 | 2.36 | % | 4,113,829 | 25,463 | 2.48 | % | ||||||||||||||
Total interest-bearing liabilities | 23,592,983 | $ | 34,973 | 0.60 | % | 22,812,237 | $ | 60,303 | 1.06 | % | 24,105,410 | $ | 92,513 | 1.54 | % | |||||||||||
Noninterest-bearing demand deposits | 6,926,401 | 5,506,861 | 5,089,928 | |||||||||||||||||||||||
Other liabilities | 480,041 | 416,107 | 390,585 | |||||||||||||||||||||||
Stockholders’ equity | 3,846,517 | 3,841,800 | 3,852,894 | |||||||||||||||||||||||
Total liabilities and stockholders’ equity | $ | 34,845,943 | $ | 32,577,005 | $ | 33,438,818 | ||||||||||||||||||||
Interest rate spread | 2.34 | % | 2.61 | % | 2.56 | % | ||||||||||||||||||||
Net free funds | 0.15 | % | 0.23 | % | 0.32 | % | ||||||||||||||||||||
Fully tax-equivalent net interest income and net interest margin ("NIM") | $ | 193,853 | 2.49 | % | $ | 207,026 | 2.84 | % | $ | 217,834 | 2.88 | % | ||||||||||||||
Fully tax-equivalent adjustment | 3,981 | 4,084 | 4,215 | |||||||||||||||||||||||
Net interest income | $ | 189,872 | $ | 202,942 | $ | 213,619 | ||||||||||||||||||||
Numbers may not sum due to rounding.
(a) | The yield on tax-exempt loans and securities is computed on a fully tax-equivalent basis using a tax rate of 21% and is net of the effects of certain disallowed interest deductions. |
(b) | Nonaccrual loans and loans held for sale have been included in the average balances. |
(c) | Interest income includes amortization of net deferred loan origination costs and net accreted purchase loan discount. |
Page 7
Associated Banc-Corp Net Interest Income Analysis - Fully Tax-Equivalent Basis - Year Over Year | ||||||||||||||||||||||
Six Months Ended June 30, | ||||||||||||||||||||||
2020 | 2019 | |||||||||||||||||||||
($ in thousands) | Average Balance | Interest Income /Expense | Average Yield / Rate | Average Balance | Interest Income /Expense | Average Yield / Rate | ||||||||||||||||
Assets | ||||||||||||||||||||||
Earning assets | ||||||||||||||||||||||
Loans (a) (b) (c) | ||||||||||||||||||||||
Commercial PPP lending | $ | 424,380 | $ | 4,841 | 2.29 | % | $ | — | $ | — | — | % | ||||||||||
Commercial and business lending | 8,786,511 | 144,314 | 3.30 | % | 8,499,564 | 203,327 | 4.82 | % | ||||||||||||||
Commercial real estate lending | 5,524,915 | 103,556 | 3.77 | % | 5,124,476 | 132,034 | 5.19 | % | ||||||||||||||
Total commercial | 14,735,807 | 252,711 | 3.45 | % | 13,624,040 | 335,361 | 4.96 | % | ||||||||||||||
Residential mortgage | 8,338,054 | 132,821 | 3.19 | % | 8,372,299 | 146,673 | 3.50 | % | ||||||||||||||
Retail | 1,175,851 | 31,841 | 5.43 | % | 1,233,297 | 38,450 | 6.25 | % | ||||||||||||||
Total loans | 24,249,712 | 417,372 | 3.45 | % | 23,229,636 | 520,485 | 4.51 | % | ||||||||||||||
Investment securities | ||||||||||||||||||||||
Taxable | 3,294,669 | 36,375 | 2.21 | % | 4,749,307 | 55,764 | 2.35 | % | ||||||||||||||
Tax-exempt (a) | 1,948,320 | 36,873 | 3.79 | % | 1,894,689 | 35,573 | 3.76 | % | ||||||||||||||
Other short-term investments | 745,290 | 5,535 | 1.49 | % | 474,050 | 8,221 | 3.49 | % | ||||||||||||||
Investments and other | 5,988,278 | 78,783 | 2.63 | % | 7,118,047 | 99,558 | 2.80 | % | ||||||||||||||
Total earning assets | 30,237,990 | $ | 496,155 | 3.29 | % | 30,347,682 | $ | 620,043 | 4.11 | % | ||||||||||||
Other assets, net(d) | 3,473,484 | 3,083,709 | ||||||||||||||||||||
Total assets | $ | 33,711,474 | $ | 33,431,391 | ||||||||||||||||||
Liabilities and stockholders' equity | ||||||||||||||||||||||
Interest-bearing liabilities | ||||||||||||||||||||||
Interest-bearing deposits | ||||||||||||||||||||||
Savings | $ | 3,064,440 | $ | 2,228 | 0.15 | % | $ | 2,209,804 | $ | 2,836 | 0.26 | % | ||||||||||
Interest-bearing demand | 5,376,249 | 10,197 | 0.38 | % | 4,862,763 | 29,229 | 1.21 | % | ||||||||||||||
Money market | 6,517,749 | 12,708 | 0.39 | % | 7,252,639 | 41,669 | 1.16 | % | ||||||||||||||
Network transaction deposits | 1,489,433 | 5,141 | 0.69 | % | 2,124,262 | 26,082 | 2.48 | % | ||||||||||||||
Time deposits | 2,553,065 | 19,569 | 1.54 | % | 3,334,305 | 30,007 | 1.82 | % | ||||||||||||||
Total interest-bearing deposits | 19,000,936 | 49,844 | 0.53 | % | 19,783,773 | 129,823 | 1.32 | % | ||||||||||||||
Federal funds purchased and securities sold under agreements to repurchase | 199,477 | 420 | 0.42 | % | 146,357 | 913 | 1.26 | % | ||||||||||||||
Commercial Paper | 35,904 | 35 | 0.20 | % | 36,096 | 88 | 0.49 | % | ||||||||||||||
PPPLF | 387,250 | 676 | 0.35 | % | — | — | — | % | ||||||||||||||
Other short-term funding | 8,498 | 11 | 0.25 | % | — | — | — | % | ||||||||||||||
FHLB advances | 3,021,433 | 33,096 | 2.20 | % | 3,404,213 | 37,298 | 2.21 | % | ||||||||||||||
Long-term funding | 549,111 | 11,195 | 4.08 | % | 795,964 | 14,792 | 3.72 | % | ||||||||||||||
Total short and long-term funding | 4,201,674 | 45,432 | 2.17 | % | 4,382,630 | 53,091 | 2.44 | % | ||||||||||||||
Total interest-bearing liabilities | 23,202,610 | $ | 95,276 | 0.83 | % | 24,166,403 | $ | 182,914 | 1.53 | % | ||||||||||||
Noninterest-bearing demand deposits | 6,216,631 | 5,036,537 | ||||||||||||||||||||
Other liabilities(d) | 448,074 | 394,334 | ||||||||||||||||||||
Stockholders’ equity | 3,844,158 | 3,834,116 | ||||||||||||||||||||
Total liabilities and stockholders’ equity | $ | 33,711,474 | $ | 33,431,391 | ||||||||||||||||||
Interest rate spread | 2.46 | % | 2.58 | % | ||||||||||||||||||
Net free funds | 0.20 | % | 0.31 | % | ||||||||||||||||||
Fully tax-equivalent net interest income and net interest margin ("NIM") | $ | 400,879 | 2.66 | % | $ | 437,128 | 2.89 | % | ||||||||||||||
Fully tax-equivalent adjustment | 8,066 | 7,962 | ||||||||||||||||||||
Net interest income | $ | 392,814 | $ | 429,167 | ||||||||||||||||||
Numbers may not sum due to rounding.
(a) | The yield on tax-exempt loans and securities is computed on a fully tax-equivalent basis using a tax rate of 21% and is net of the effects of certain disallowed interest deductions. |
(b) | Nonaccrual loans and loans held for sale have been included in the average balances. |
(c) | Interest income includes amortization of net deferred loan origination costs and net accreted purchase loan discount. |
(d) 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. Adoption of this change was voluntary and has been adopted retrospectively with all prior periods presented herein restated.
Page 8
Associated Banc-Corp Loan and Deposit Composition | ||||||||||||||||||||||||||
($ in thousands) | ||||||||||||||||||||||||||
Period end loan composition | Jun 30, 2020 | Mar 31, 2020 | Seql Qtr % Change | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Comp Qtr % Change | |||||||||||||||||||
PPP Loans | $ | 1,012,033 | $ | — | N/M | $ | — | $ | — | $ | — | N/M | ||||||||||||||
Commercial and industrial | 7,968,709 | 8,517,974 | (6 | )% | 7,354,594 | 7,495,623 | 7,579,384 | 5 | % | |||||||||||||||||
Commercial real estate—owner occupied | 914,385 | 940,687 | (3 | )% | 911,265 | 915,524 | 942,811 | (3 | )% | |||||||||||||||||
Commercial and business lending | 9,895,127 | 9,458,661 | 5 | % | 8,265,858 | 8,411,147 | 8,522,194 | 16 | % | |||||||||||||||||
Commercial real estate—investor | 4,174,125 | 4,038,036 | 3 | % | 3,794,517 | 3,803,277 | 3,779,201 | 10 | % | |||||||||||||||||
Real estate construction | 1,708,189 | 1,544,858 | 11 | % | 1,420,900 | 1,356,508 | 1,394,815 | 22 | % | |||||||||||||||||
Commercial real estate lending | 5,882,314 | 5,582,894 | 5 | % | 5,215,417 | 5,159,784 | 5,174,016 | 14 | % | |||||||||||||||||
Total commercial | 15,777,441 | 15,041,555 | 5 | % | 13,481,275 | 13,570,932 | 13,696,210 | 15 | % | |||||||||||||||||
Residential mortgage | 7,933,518 | 8,132,417 | (2 | )% | 8,136,980 | 7,954,801 | 8,277,479 | (4 | )% | |||||||||||||||||
Home equity | 795,671 | 844,901 | (6 | )% | 852,025 | 879,642 | 916,213 | (13 | )% | |||||||||||||||||
Other consumer | 326,040 | 346,761 | (6 | )% | 351,159 | 349,335 | 360,065 | (9 | )% | |||||||||||||||||
Total consumer | 9,055,230 | 9,324,079 | (3 | )% | 9,340,164 | 9,183,778 | 9,553,757 | (5 | )% | |||||||||||||||||
Total loans | $ | 24,832,671 | $ | 24,365,633 | 2 | % | $ | 22,821,440 | $ | 22,754,710 | $ | 23,249,967 | 7 | % | ||||||||||||
Period end deposit and customer funding composition | Jun 30, 2020 | Mar 31, 2020 | Seql Qtr % Change | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Comp Qtr % Change | |||||||||||||||||||
Noninterest-bearing demand | $ | 7,573,942 | $ | 6,107,386 | 24 | % | $ | 5,450,709 | $ | 5,503,223 | $ | 5,354,987 | 41 | % | ||||||||||||
Savings | 3,394,930 | 3,033,039 | 12 | % | 2,735,036 | 2,643,950 | 2,591,173 | 31 | % | |||||||||||||||||
Interest-bearing demand | 5,847,349 | 6,170,071 | (5 | )% | 5,329,717 | 5,434,955 | 6,269,035 | (7 | )% | |||||||||||||||||
Money market | 7,486,319 | 7,717,739 | (3 | )% | 7,640,798 | 7,930,676 | 7,691,775 | (3 | )% | |||||||||||||||||
Brokered CDs | 4,225 | 65,000 | (94 | )% | 5,964 | 16,266 | 77,543 | (95 | )% | |||||||||||||||||
Other time | 2,244,680 | 2,568,345 | (13 | )% | 2,616,839 | 2,893,493 | 3,289,709 | (32 | )% | |||||||||||||||||
Total deposits | 26,551,444 | 25,661,580 | 3 | % | 23,779,064 | 24,422,562 | 25,274,222 | 5 | % | |||||||||||||||||
Customer funding(a) | 178,398 | 142,174 | 25 | % | 103,113 | 108,369 | 104,973 | 70 | % | |||||||||||||||||
Total deposits and customer funding | $ | 26,729,842 | $ | 25,803,754 | 4 | % | $ | 23,882,177 | $ | 24,530,932 | $ | 25,379,195 | 5 | % | ||||||||||||
Network transaction deposits(b) | $ | 1,496,958 | $ | 1,731,996 | (14 | )% | $ | 1,336,286 | $ | 1,527,910 | $ | 1,805,141 | (17 | )% | ||||||||||||
Net deposits and customer funding (Total deposits and customer funding, excluding Brokered CDs and network transaction deposits) | $ | 25,228,660 | $ | 24,006,758 | 5 | % | $ | 22,539,927 | $ | 22,986,756 | $ | 23,496,510 | 7 | % | ||||||||||||
Quarter average loan composition | Jun 30, 2020 | Mar 31, 2020 | Seql Qtr % Change | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Comp Qtr % Change | |||||||||||||||||||
PPP Loans | $ | 848,761 | $ | — | N/M | $ | — | $ | — | $ | — | N/M | ||||||||||||||
Commercial and industrial | $ | 8,263,270 | $ | 7,455,528 | 11 | % | $ | 7,291,592 | $ | 7,574,448 | $ | 7,688,462 | 7 | % | ||||||||||||
Commercial real estate—owner occupied | 929,640 | 924,585 | 1 | % | 916,484 | 927,820 | 933,146 | — | % | |||||||||||||||||
Commercial and business lending | 10,041,671 | 8,380,113 | 20 | % | 8,208,076 | 8,502,268 | 8,621,609 | 16 | % | |||||||||||||||||
Commercial real estate—investor | 4,113,895 | 3,857,277 | 7 | % | 3,806,168 | 3,768,377 | 3,806,828 | 8 | % | |||||||||||||||||
Real estate construction | 1,606,367 | 1,472,292 | 9 | % | 1,388,857 | 1,388,653 | 1,324,126 | 21 | % | |||||||||||||||||
Commercial real estate lending | 5,720,262 | 5,329,568 | 7 | % | 5,195,025 | 5,157,031 | 5,130,954 | 11 | % | |||||||||||||||||
Total commercial | 15,761,933 | 13,709,681 | 15 | % | 13,403,101 | 13,659,299 | 13,752,563 | 15 | % | |||||||||||||||||
Residential mortgage | 8,271,757 | 8,404,351 | (2 | )% | 8,167,795 | 8,337,230 | 8,378,082 | (1 | )% | |||||||||||||||||
Home equity | 819,680 | 845,422 | (3 | )% | 864,144 | 901,291 | 869,248 | (6 | )% | |||||||||||||||||
Other consumer | 337,436 | 349,164 | (3 | )% | 348,295 | 354,249 | 354,478 | (5 | )% | |||||||||||||||||
Total consumer | 9,428,873 | 9,598,937 | (2 | )% | 9,380,233 | 9,592,770 | 9,601,809 | (2 | )% | |||||||||||||||||
Total loans(c) | $ | 25,190,806 | $ | 23,308,618 | 8 | % | $ | 22,783,334 | $ | 23,252,068 | $ | 23,354,371 | 8 | % | ||||||||||||
Quarter average deposit composition | Jun 30, 2020 | Mar 31, 2020 | Seql Qtr % Change | Dec 31, 2019 | Sep 30, 2019 | Jun 30, 2019 | Comp Qtr % Change | |||||||||||||||||||
Noninterest-bearing demand | $ | 6,926,401 | $ | 5,506,861 | 26 | % | $ | 5,470,496 | $ | 5,324,481 | $ | 5,089,928 | 36 | % | ||||||||||||
Savings | 3,260,040 | 2,868,840 | 14 | % | 2,714,191 | 2,618,188 | 2,319,556 | 41 | % | |||||||||||||||||
Interest-bearing demand | 5,445,267 | 5,307,230 | 3 | % | 5,138,116 | 5,452,674 | 4,984,511 | 9 | % | |||||||||||||||||
Money market | 6,496,841 | 6,538,658 | (1 | )% | 6,594,681 | 6,933,230 | 7,118,594 | (9 | )% | |||||||||||||||||
Network transaction deposits | 1,544,737 | 1,434,128 | 8 | % | 1,438,908 | 1,764,961 | 2,024,604 | (24 | )% | |||||||||||||||||
Time deposits | 2,469,899 | 2,636,231 | (6 | )% | 2,746,978 | 3,107,670 | 3,544,317 | (30 | )% | |||||||||||||||||
Total deposits | $ | 26,143,186 | $ | 24,291,949 | 8 | % | $ | 24,103,371 | $ | 25,201,203 | $ | 25,081,509 | 4 | % | ||||||||||||
N/M = Not meaningful
Numbers may not sum due to rounding.
(a) | Includes repurchase agreements and commercial paper. |
(b) | Included above in interest-bearing demand and money market. |
(c) | Nonaccrual loans and loans held for sale have been included in the average balances. |
Page 9
Associated Banc-Corp Non-GAAP Financial Measures Reconciliation | ||||||||||||||||||||||||
($ in millions, except per share data) | YTD Jun 2020 | YTD Jun 2019 | 2Q20 | 1Q20 | 4Q19 | 3Q19 | 2Q19 | |||||||||||||||||
Tangible common equity reconciliation(a) | ||||||||||||||||||||||||
Common equity | $ | 3,671 | $ | 3,534 | $ | 3,665 | $ | 3,664 | $ | 3,643 | ||||||||||||||
Goodwill and other intangible assets, net | (1,181 | ) | (1,284 | ) | (1,265 | ) | (1,267 | ) | (1,270 | ) | ||||||||||||||
Tangible common equity | $ | 2,490 | $ | 2,250 | $ | 2,401 | $ | 2,397 | $ | 2,373 | ||||||||||||||
Tangible assets reconciliation(a) | ||||||||||||||||||||||||
Total assets | $ | 35,501 | $ | 33,908 | $ | 32,386 | $ | 32,596 | $ | 33,247 | ||||||||||||||
Goodwill and other intangible assets, net | (1,181 | ) | (1,284 | ) | (1,265 | ) | (1,267 | ) | (1,270 | ) | ||||||||||||||
Tangible assets | $ | 34,321 | $ | 32,624 | $ | 31,122 | $ | 31,329 | $ | 31,977 | ||||||||||||||
Average tangible common equity and average common equity tier 1 reconciliation(a) | ||||||||||||||||||||||||
Common equity | $ | 3,576 | $ | 3,577 | $ | 3,566 | $ | 3,585 | $ | 3,658 | $ | 3,647 | $ | 3,596 | ||||||||||
Goodwill and other intangible assets, net | (1,277 | ) | (1,246 | ) | (1,281 | ) | (1,272 | ) | (1,266 | ) | (1,269 | ) | (1,247 | ) | ||||||||||
Tangible common equity | 2,299 | 2,332 | 2,285 | 2,313 | 2,392 | 2,378 | 2,349 | |||||||||||||||||
Modified CECL transitional amount | 109 | N/A | 115 | 101 | N/A | N/A | N/A | |||||||||||||||||
Accumulated other comprehensive loss (income) | 9 | 99 | 8 | 10 | 37 | 42 | 82 | |||||||||||||||||
Deferred tax assets (liabilities), net | 46 | 46 | 45 | 47 | 48 | 49 | 46 | |||||||||||||||||
Average common equity Tier 1 | $ | 2,462 | $ | 2,476 | $ | 2,453 | $ | 2,471 | $ | 2,476 | $ | 2,469 | $ | 2,477 | ||||||||||
Average tangible assets reconciliation(a) | ||||||||||||||||||||||||
Total assets | $ | 33,711 | $ | 33,427 | $ | 34,846 | $ | 32,577 | $ | 32,182 | $ | 33,154 | $ | 33,439 | ||||||||||
Goodwill and other intangible assets, net | (1,277 | ) | (1,246 | ) | (1,281 | ) | (1,272 | ) | (1,266 | ) | (1,269 | ) | (1,247 | ) | ||||||||||
Tangible assets | $ | 32,435 | $ | 32,182 | $ | 33,565 | $ | 31,305 | $ | 30,916 | $ | 31,885 | $ | 32,192 | ||||||||||
Selected trend information(b) | ||||||||||||||||||||||||
Insurance commissions and fees | $ | 45 | $ | 48 | $ | 22 | $ | 23 | $ | 20 | $ | 21 | $ | 23 | ||||||||||
Wealth management fees(c) | 42 | 41 | 21 | 21 | 22 | 21 | 21 | |||||||||||||||||
Service charges and deposit account fees | 27 | 31 | 11 | 15 | 16 | 17 | 15 | |||||||||||||||||
Card-based fees | 18 | 19 | 9 | 10 | 10 | 10 | 10 | |||||||||||||||||
Other fee-based revenue | 9 | 9 | 5 | 4 | 5 | 5 | 5 | |||||||||||||||||
Fee-based revenue | 141 | 148 | 68 | 73 | 72 | 74 | 74 | |||||||||||||||||
Other | 212 | 39 | 186 | 26 | 21 | 27 | 21 | |||||||||||||||||
Total noninterest income | $ | 353 | $ | 187 | $ | 254 | $ | 98 | $ | 93 | $ | 101 | $ | 96 | ||||||||||
Pre-tax pre-provision income(d) | ||||||||||||||||||||||||
Income before income taxes | $ | 256 | $ | 213 | $ | 200 | $ | 56 | $ | 89 | $ | 104 | $ | 104 | ||||||||||
Provision for credit losses | 114 | 14 | 61 | 53 | — | 2 | 8 | |||||||||||||||||
Pre-tax pre-provision income | $ | 370 | $ | 227 | $ | 261 | $ | 109 | $ | 89 | $ | 106 | $ | 112 | ||||||||||
Selected equity and performance ratios(a)(e) | ||||||||||||||||||||||||
Tangible common equity / tangible assets | 7.25 | % | 6.90 | % | 7.71 | % | 7.65 | % | 7.42 | % | ||||||||||||||
Return on average equity | 10.18 | % | 9.01 | % | 15.55 | % | 4.80 | % | 7.31 | % | 8.47 | % | 8.81 | % | ||||||||||
Return on average tangible common equity | 16.32 | % | 14.16 | % | 25.45 | % | 7.31 | % | 11.33 | % | 13.27 | % | 13.81 | % | ||||||||||
Return on average common equity Tier 1 | 15.24 | % | 13.33 | % | 23.71 | % | 6.84 | % | 10.94 | % | 12.78 | % | 13.09 | % | ||||||||||
Return on average tangible assets | 1.21 | % | 1.07 | % | 1.78 | % | 0.59 | % | 0.93 | % | 1.04 | % | 1.05 | % | ||||||||||
Efficiency ratio reconciliation(f) | ||||||||||||||||||||||||
Federal Reserve efficiency ratio | 54.26 | % | 63.01 | % | 43.49 | % | 70.37 | % | 69.14 | % | 66.55 | % | 62.71 | % | ||||||||||
Fully tax-equivalent adjustment | (0.59 | )% | (0.81 | )% | (0.39 | )% | (0.96 | )% | (0.91 | )% | (0.90 | )% | (0.84 | )% | ||||||||||
Other intangible amortization | (0.77 | )% | (0.74 | )% | (0.65 | )% | (0.95 | )% | (0.93 | )% | (0.89 | )% | (0.75 | )% | ||||||||||
Fully tax-equivalent efficiency ratio | 52.91 | % | 61.48 | % | 42.46 | % | 68.47 | % | 67.32 | % | 64.78 | % | 61.13 | % | ||||||||||
Acquisition related costs adjustment | (0.30 | )% | (0.71 | )% | (0.12 | )% | (0.58 | )% | (0.45 | )% | (0.53 | )% | (1.21 | )% | ||||||||||
Provision for unfunded commitments adjustment | (3.22 | )% | 0.40 | % | (1.91 | )% | (5.18 | )% | 0.34 | % | (0.33 | )% | 1.28 | % | ||||||||||
Asset gains (losses), net adjustment | 13.23 | % | 0.14 | % | 22.10 | % | (0.02 | )% | 0.09 | % | 0.18 | % | 0.17 | % | ||||||||||
Adjusted efficiency ratio | 62.62 | % | 61.31 | % | 62.53 | % | 62.70 | % | 67.30 | % | 64.11 | % | 61.36 | % | ||||||||||
Acquisition Related Costs & Gain on Sale of ABRC | YTD 2020 | YTD 2020 per share data(g) | 2Q 2020 | 2Q 2020 per share data(g) | 1Q 2020 | 1Q 2020 per share data(g) | ||||||||||||||||||
GAAP earnings | $ | 187 | $ | 1.20 | $ | 145 | $ | 0.94 | $ | 42 | $ | 0.27 | ||||||||||||
Acquisition related costs, net of tax | 2 | 0.01 | — | — | 1 | 0.01 | ||||||||||||||||||
Earnings, excluding acquisition related costs(d) | $ | 188 | $ | 1.21 | $ | 145 | $ | 0.94 | $ | 43 | $ | 0.28 | ||||||||||||
GAAP earnings | $ | 187 | $ | 1.20 | $ | 145 | $ | 0.94 | $ | 42 | $ | 0.27 | ||||||||||||
Gain on sale of ABRC, net of tax | 104 | 0.67 | 104 | 0.68 | — | — | ||||||||||||||||||
Earnings, excluding gain on sale of ABRC(d) | $ | 82 | $ | 0.53 | $ | 40 | $ | 0.26 | $ | 42 | $ | 0.27 | ||||||||||||
Numbers may not sum due to rounding.
(a) | The ratio tangible common equity to tangible assets excludes goodwill and other intangible assets, net. This financial measure has been included as it is considered to be a critical metric with which to analyze and evaluate financial condition and capital strength. |
(b) | These financial measures have been included as they provide meaningful supplemental information to assess trends in the Corporation’s results of operations. |
(c) | Includes trust, asset management, brokerage, and annuity fees. |
(d) | Management believes these measures are meaningful because they reflect adjustments commonly made by management, investors, regulators, and analysts to evaluate the adequacy of earnings per common share and provide greater understanding of ongoing operations and enhanced comparability of results with prior periods. |
(e) | These capital measurements are used by management, regulators, investors, and analysts to assess, monitor and compare the quality and composition of our capital with the capital of other financial services companies. |
(f) | The efficiency ratio as defined by the Federal Reserve guidance is noninterest expense (which includes the provision for unfunded commitments) divided by the sum of net interest income plus noninterest income, excluding investment securities gains / losses, net. The fully tax-equivalent efficiency ratio is noninterest expense (which includes the provision for unfunded commitments), excluding other intangible amortization, divided by the sum of fully tax-equivalent net interest income plus noninterest income, excluding investment securities gains / losses, net. The adjusted efficiency ratio is noninterest expense, which excludes the provision for unfunded commitments, other intangible amortization, and acquisition related costs, divided by the sum of fully tax-equivalent net interest income plus noninterest income, excluding investment securities gains (losses), net, acquisition related costs, and asset gains (losses), net. Management believes the adjusted efficiency ratio is a meaningful measure as it enhances the comparability of net interest income arising from taxable and tax-exempt sources and provides a better measure as to how the Corporation is managing its expenses by adjusting for acquisition related costs, provision for unfunded commitments, and asset gains (losses), net. |
(g) | Diluted earnings and per share data presented after-tax. |
Page 10
Exhibit 99.2 SECOND QUARTER 2020 EARNINGS PRESENTATION July 23, 2020
FORWARD-LOOKING STATEMENTS Important note regarding forward-looking statements: Statements made in this presentation 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 management’s plans, objectives, or goals for future operations, products or services, and forecasts of its revenues, earnings, or other measures of performance. Such forward-looking statements may be identified by the use of words such as “believe,” “expect,” “anticipate,” “plan,” “estimate,” “should,” “will,” “intend,” "target," “outlook” or similar expressions. Forward-looking statements are based on current management expectations and, by their nature, are subject to risks and uncertainties. Actual results may differ materially from those contained in the forward-looking statements. Factors which may cause actual results to differ materially from those contained in such forward-looking statements include those identified in the Company’s most recent Form 10-K and subsequent SEC filings, and such factors are incorporated herein by reference. Trademarks: All trademarks, service marks, and trade names referenced in this material are official trademarks and the property of their respective owners. Presentation: Within the charts and tables presented, certain segments, columns and rows may not sum to totals shown due to rounding. Non-GAAP Measures: This presentation includes certain non-GAAP financial measures. These non-GAAP measures are provided in addition to, and not as substitutes for, measures of our financial performance determined in accordance with GAAP. Our calculation of these non-GAAP measures may not be comparable to similarly titled measures of other companies due to potential differences between companies in the method of calculation. As a result, the use of these non-GAAP measures has limitations and should not be considered superior to, in isolation from, or as a substitute for, related GAAP measures. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures can be found at the end of this presentation. 1
SECOND QUARTER 2020 UPDATE Associated remains well prepared to face the challenges ahead Associated Banc-Corp Reports Second Quarter 2020 Earnings of $0.94 Per Common Share Including the Gain on Sale of Associated Benefits and Risk Consulting ▪ We continue to support our ▪ 2Q20 net charge offs of $26 customers with our balance sheet million; year to date NCOs were 36 bps of avg total loans ▪ Total loans increased $467 million ▪ 6% EOP reserve on COVID-19 Supported Sound Credit affected loan portfolio Customers1 ▪ Total deposits increased $890 Position million ▪ 19% EOP reserve on oil and gas ▪ Granted fee waivers and loan ▪ Well reserved with ACLL to loan deferrals ratio of 1.73% (1.80% excl. PPP) EOP 2Q 2020 ▪ Loan-to-deposit ratio of 94% ▪ Share repurchases suspended (90% excluding PPP) EOP 2Q for the year 2020 ▪ Capital measures improved from ▪ Low-cost deposits accounted for the first quarter driven by the sale of Associated Benefits and Risk Substantial 61% of total deposits EOP 2Q Well 2020 Consulting (ABRC) Liquidity Capitalized ▪ Dividend payout ratio of 33.18% Ample liquidity available from ▪ for last 12 months funding sources ▪ Tangible book value per share ▪ Cost of interest bearing deposits increased 11%1 to $16.21 decreased to 25 bps in June 2020 12Q 2020 end of period (EOP) balances compared to 1Q 2020 EOP balances. 2
LOAN TRENDS PPP loans, funding of CRE commitments and unusually high line draws on commercial lines drove increases Average Quarterly Loans Average Loan Growth (1Q20 to 2Q20) ($ in billions) ($ in millions) $25.2 $23.4 $23.3 $22.8 $23.3 PPP $849 Mortgage warehouse $364 $10.0 $8.6 $8.5 $8.2 $8.4 General commercial $287 CRE investor $257 CRE construction $134 $5.1 $5.2 $5.2 $5.3 $5.7 REIT $121 Power & utilities $70 $(30) Oil & gas $8.4 $8.3 $8.2 $8.4 $8.3 $(37) Home equity & other consumer $(133) $1.2 $1.3 $1.2 $1.2 $1.2 Residential mortgage 2Q 2019 3Q 2019 4Q 2019 1Q 2020 2Q 2020 Commercial & business Commercial real estate Residential mortgage Home equity & other consumer lending 3
END OF PERIOD LOAN TRENDS $1 billion of PPP loans offset by repayment of commercial lines EOP Loan Change1 1Q20 to 2Q20 ($ in millions) Total loans +$467 million (+2%) . Commercial and Business Lending +$436 million (+5%) PPP $1,012 – PPP loans were the main driver for growth CRE construction $163 – General commercial balances declined as customers paid down lines drawn during March CRE investor $136 ▪ Commercial Real Estate Lending +$299 million (+5%) Mortgage warehouse $112 – Pipeline of commitments continues to fund as balances have grown each quarter since 3Q Power & utilities $15 2019 Oil & gas ▪ Total Consumer -$269 million (-3%) $(35) – The decline in residential mortgages is largely $(70) Home equity & other driven by loan refinances consumer – Home equity and consumer continued a $(108) REIT downward trend $(199) Residential mortgage $(559) General commercial 1 Excludes loans held for sale. 4
LOAN PORTFOLIO OVERVIEW We continue to monitor our COVID affected loan portfolios ($ in millions as of 6/30/2020) Key COVID June 30, Coml. Loan % of Total Deferred % of Total Nonaccrual % of Total 2020 Exposures Loans Loans Loans Loans Loans PPP Loans$ 1,012 $ - - $ - - $ - - Commercial and industrial 7,969 926 3.7% 45 0.2% 80 0.3% CRE - owner occupied 914 129 0.5% 138 0.6% 2 0.0% Commercial and business lending 9,895 1,055 4.2% 184 0.7% 82 0.3% CRE - investor 4,174 995 4.0% 606 2.4% 11 0.0% CRE - construction 1,708 144 0.6% 32 0.1% 1 0.0% Commercial real estate lending 5,882 1,138 4.6% 638 2.6% 12 0.0% Total commercial 15,777 2,193 8.8% 822 3.3% 94 0.4% Residential mortgage 7,934 - 0.0% 692 2.8% 67 0.3% Home equity 796 - 0.0% 31 0.1% 11 0.0% Other consumer 326 - 0.0% 2 0.0% 0 0.0% Total consumer 9,055 - 0.0% 725 2.9% 78 0.3% Total Loans$ 24,833 $ 2,193 8.8%$ 1,547 6.2%$ 172 0.7% . 35% of borrowers included in Key COVID Commercial Loan Exposures1 received a loan modification . 19% of borrowers included in Key COVID Commercial Loan Exposures1 received a PPP loan . 4% of borrowers included in Key COVID Commercial Loan Exposures1 received both . Less than 70 bps of loans are in non-accrual 1 Excluding Oil & Gas customers which have not received loan deferrals. 5
KEY COVID COMMERCIAL LOAN EXPOSURES1 Key COVID commercial loan exposures are spread across multiple industries without large concentrations ($ in millions) % of total C&BL Utilization CRE Utilization Total loans Retailers/Shopping Centers2 Retailers$ 97.9 45%$ 664.1 89%$ 762.0 3.07% Retail REITs 251.9 56% 146.7 100% 398.6 1.86% Subtotal 349.8 52% 810.8 90% 1,160.6 4.64% Oil & Gas Oil & Gas 431.7 71% - 0% 431.7 1.74% Subtotal 431.7 71% - 0% 431.7 1.74% Hotels, Amusement & Related Hotels 0.2 23% 224.4 77% 224.6 0.90% Parking Lots and Garages 22.6 61% 69.5 87% 92.1 0.37% Casinos 29.3 100% - 0% 29.3 0.12% Recreation & Entertainment 26.3 41% 6.9 99% 33.3 0.13% Movie Theaters 23.6 70% - 0% 23.6 0.10% Subtotal 102.0 62% 300.9 79% 402.9 1.62% Restaurants Full-Service 72.4 82% 12.9 100% 85.2 0.34% Limited-Service & Other 21.0 92% 13.8 97% 34.8 0.14% Subtotal 93.4 84% 26.7 98% 120.0 0.48% Transportation & Other Transportation Services 52.2 80% - 0% 52.2 0.21% Fracking Sand Mining 25.8 75% - 0% 25.8 0.10% Subtotal 78.1 78% - 0% 78.1 0.31% Total$ 1,054.9 64%$ 1,138.3 87%$ 2,193.3 8.83% 1 As of 6/30/2020. 2 C&BL excludes grocers, convenience stores, vehicle dealers, auto parts and tire dealers, direct and mail order retailers, and building material dealers; CRE excludes properties primarily anchored by grocers, self-storage facilities, and vehicle dealers. 6
COMMERCIAL COVID-19 RELIEF Commercial deferral requests have slowed during the quarter Loan Deferrals & Modifications1 Deferred and Modified Loans Trend ($ in billions) Loan Deferrals . Commercial Real Estate $0.8 – $561 million (66 loans) Corporate CRE – $78 million (140 loans) Regional/Business $0.7 $0.2 Banking $0.2 ▪ Commercial & Business Lending – $128 million (74 loans) Corporate Banking – $56 million (286 loans) Business Banking $0.3 $0.6 $0.5 $0.1 $0.2 April 20 May 20 June 20 CRE C&BL 1 Includes completed modifications as of June 30, 2020. 7
CONSUMER COVID-19 RELIEF Consumer deferral requests have dropped off during the quarter Loan Deferrals & Modifications1 Deferred and Modified Loans Trend Loan Deferrals ($ in billions) ▪ $725 million (2,840 loans) of residential mortgage and consumer loans2 Fee Waivers $0.7 $0.7 ▪ Our COVID-19 Relief Program has refunded or waived $0.4 approximately $1.7 million in fees for consumers and small businesses through June 30th April 20 May 20 June 20 800 700 Loan deferrals five day3 rolling 600 average 500 400 300 200 Loan DeferralsLoan 100 0 04/10/20 04/15/20 04/20/20 04/24/20 04/30/20 05/05/20 05/11/20 05/15/20 05/20/20 05/26/20 05/29/20 06/05/20 06/10/20 06/15/20 06/22/20 06/25/20 06/30/20 07/06/20 07/10/20 07/15/20 1 Includes completed modifications as of June 30, 2020. 2 We have also completed deferrals on $427 million of loans in our mortgage portfolio serviced for others, representing approximately 5% of that portfolio. 8 3 Business days.
DEFERRAL TRENDS We continue to monitor and work with customers on their deferred loans Many customers that participated in payment relief are moving back toward normally scheduled payment structures . Consumer – 27% of Customers have made at least one payment post modification . Small Business had 12 deferrals that ended in June totaling $2.5M – 10 of those are expected to resume payments ($2.2M) – 2 have requested an extension ($0.3M) . Corporate Banking had 22 deferrals that ended in June totaling $43.6M – 21 of those are expected to resume payments ($32.4M) . CRE had 11 deferrals that ended in June totaling $115.8M – 5 of those are expected to resume payments ($55.9M) – 6 have requested extensions ($59.9M) and all are either hotel or retail properties . Discussions with customers on upcoming deferral expirations indicate most will resume making payments 9
ALLOWANCE UPDATE Second quarter ACLL2 covered 1.73% of total loans, an increase of 11 bps from the first quarter Second Quarter ACLL Loan Allowance Walkforward ($ in millions) ▪ Allowance for credit losses on loans (ACLL) increased $35 million, or 9%, at the end of 2Q 2020 from 1Q 2020 ▪ Assumptions based on Moody's Baseline scenarios As of 6/30/2020 ACLL2 ACLL2 / Loans Key COVID Coml. Exp.$ 136 6.21% Non-COVID Portfolio$ 293 1.35% ($ in millions) Day 1 Net 1Q Net 2Q 6/30/20 ACLL1 CECL Reserve ACLL2 Reserve ACLL2 ACLL2 / Loan Category 12/31/19 Adoption2 Build2 3/31/20 Build2 06/30/2020 Loans C&BL - excl. Oil & Gas$ 100,594 $ (8,390) $ 29,571 $ 121,775 $ 326 $ 122,101 1.44% C&BL Oil & Gas 13,226 55,460 8,880 77,567 6,025 83,592 19.36% PPP Loans - - - - 808 808 0.08% CRE - Investor 41,044 2,287 (785) 42,546 16,524 59,070 1.42% CRE - Construction 32,447 25,814 7,428 65,688 10,585 76,273 4.47% Residential Mortgage 16,960 33,215 (6,227) 43,947 (121) 43,826 0.55% Other Consumer 19,008 22,760 777 42,546 363 42,909 3.83% Total$ 223,278 $ 131,147 $ 39,643 $ 394,069 $ 34,510 $ 428,579 1.73% Total (excluding PPP Loans)$ 223,278 $ 131,147 $ 39,643 $ 394,069 $ 33,702 $ 427,770 1.80% ($ in thousands) 1 Includes ALLL and the allowance for unfunded commitments. 10 2 Includes funded and unfunded reserve for loans, excludes reserve for HTM securities.
CREDIT QUALITY – QUARTERLY TRENDS Reserve builds on key commercial exposures and oil and gas while credit metrics remain fairly stable Potential Problem Loans1 Nonaccrual Loans1 ($ in millions) ($ in millions) $307 $167 $172 $234 $63 $137 $129 $118 $50 $166 $161 $67 $63 $29 $4 $133 $36 $23 $32 $43 $244 $161 $167 $104 $93 $95 $109 $121 $101 $118 2Q 2019 3Q 2019 4Q 2019 1Q 2020 2Q 2020 2Q 2019 3Q 2019 4Q 2019 1Q 2020 2Q 2020 Oil and gas All other loans Oil and gas All other loans Net Charge Offs1 ACLL2 to Total Loans / Oil and Gas Loans1 ($ in millions) 19.36% 16.63% $26 $20 $17 $13 $14 $9 $25 3.87% 3.83% $10 $21 $10 2.69% 1.62% 1.73% $8 1.10% 1.04% 0.98% $4 $4 $2 2Q 2019 3Q 20193 4Q 2019 1Q 2020 2Q 2020 2Q 2019 3Q 2019 4Q 2019 1Q 2020 2Q 2020 Oil and gas All other loans Oil and gas ACLL / Oil and gas Loans ACLL / loans 1 At period end. 11 2 ACLL figure does not include ~$61,000 for HTM securities in 2Q20. 3 3Q 2019 included a net recovery of $1 million for all other loans.
DEPOSIT PORTFOLIO TRENDS Low-cost deposits continue to grow while reducing high-cost non-core funding Average Quarterly Deposits EOP Funding Change 1Q20 to 2Q20 ($ in billions) ($ in millions) $1,467 $26.1 Noninterest-bearing demand $25.1 $25.2 $24.1 $24.3 Savings $362 $5.1 $5.3 $6.9 Money Market $114 $5.5 $5.5 $(235) Network transaction deposits $(384) Time deposits $5.0 $5.5 $5.4 $5.1 $5.3 $(433) Interest-bearing demand $2.3 $2.6 $2.7 $2.9 $3.3 EOP Low-cost Deposit Mix Trend $7.1 61% $6.9 55% 56% 58% $6.6 $6.5 $6.5 52% 24% 29% 21% 23% 23% $3.5 $3.1 $2.7 $2.6 $2.5 21% 21% 21% 23% 20% $2.0 $1.8 $1.4 $1.4 $1.5 10% 11% 12% 12% 13% 2Q 2019 3Q 2019 4Q 2019 1Q 2020 2Q 2020 2Q 2019 3Q 2019 4Q 2019 1Q 2020 2Q 2020 Noninterest-bearing demand Savings Time deposits Interest-bearing demand Money market Network transaction deposits 12
NET INTEREST INCOME AND YIELD TRENDS Fed Funds rate cuts and increased liquidity have pressured year to date NIM down to 2.66% Net Interest Income and Net Interest Margin Average Yields ($ in millions) 4.41% 4.42% 2.88% 4.20% 2.81% 2.83% 2.84% 3.65% 4.05% 3.87% 3.65% 3.14% 2.49% 2.99% 3.07% 3.38% 3.37% 3.24% $214 3.04% 3.01% 2.94% $206 $203 $200 2.76% $190 2.52% 1.17% 1.18% 0.86% 0.61% 0.60% 0.57% 0.90% 0.91% 0.57% 0.30% 0.28% 0.25% 2Q 2019 3Q 2019 4Q 2019 1Q 2020 2Q 2020 Jan 20 Feb 20 Mar 20 Apr 20 May 20 Jun 20 Total interest-bearing Net interest income Net interest margin Commercial real estate loans liabilities Commercial and business Total interest- lending loans bearing deposits Total residential mortgage loans 13
NONINTEREST INCOME TRENDS Mortgage banking grew during the second quarter despite partially offsetting MSR impairment Noninterest Income Trend Gross Mortgage Banking Income ($ in millions) ($ in millions) $20 $15 $(8) $254 $11 $9 $101 $7 $(9) $96 $98 $93 $9 $11 $12 $7 $6 2Q 2019 3Q 2019 4Q 2019 1Q 2020 2Q 2020 $36 $41 $40 $35 $42 Mortgage banking, net MSR Impairment Capital Markets, Net ($ in millions) $15 $17 $16 $15 $11 $8 $8 $7 $21 $21 $22 $21 $21 $5 $4 $23 $21 $20 $23 $22 2Q 2019 3Q 2019 4Q 2019 1Q 2020 2Q 2020 2Q 2019 3Q 2019 4Q 2019 1Q 2020 2Q 2020 Insurance commissions Service charges and deposit Wealth management account fees Asset gains (losses), net Other 14
ASSET GAINS AND LOSSES Asset Gains of $157 million including the sale of ABRC Asset Gains (Losses) Walkforward ABRC Transaction Terms ($ in millions) Buyer $266 million¹ Purchase — 3x multiple of LTM revenue² Price — 18x multiple of LTM net income² Consideration 100% cash $163 million (net of transaction Net Gain expenses) Closing Closed 6/30/2020 1 Paid at closing and subject to customary adjustments. 15 2 Reflects pro forma revenue and net income of transferred entity as of LTM ended 3/31/2020.
CUSTOMER ACTIVITY UPDATE Customer activity is showing positive trends Debit and Credit Card Monthly Branch Activity1 Active Mobile Users3 Purchases2 Branch activity has ticked Customers are beginning to Active mobile users have back up but shifted to drive- use their cards again resulting increased 15% since January through; ~30% of transactions in debit and credit card are occurring in the lobby transactions increasing 23% in during June compared to June from April ~65% pre-COVID $510 $495 $456 $443 $432 $413 274 901 266 855 818 797 253 735 245 247 666 238 Jan Feb Mar Apr May Jun Jan Feb Mar Apr May Jun Jan Feb Mar Apr May Jun 2020 2020 2020 2020 2020 2020 2020 2020 2020 2020 2020 2020 2020 2020 2020 2020 2020 2020 DR Card CR Card 1 Monthly branch transactions displayed in thousands. 2 Debit and credit card spend displayed in millions. 16 3 Active mobile users represented as a 90 day average, displayed in thousands.
EXPENSE TRENDS Expense discipline remains a focus as the second quarter continues downward trend Noninterest Expense Business Development and Advertising ($ in millions) ($ in millions) $201 $204 $198 $8 $2 $192 $8 $4 $1 $183 $7 $2 $6 $1 $4 $71 $76 $82 $76 $72 2Q 2019 3Q 2019 4Q 2019 1Q 2020 2Q 2020 $1 $4 $2 Noninterest Expense2 / Average Assets 2.51% 2.37% 2.40% 2.37% $122 $123 $117 $114 $109 2.12% 2.31% 2.39% 2.45% 2.35% 2.09% 2Q 2019 3Q 2019 4Q 2019 1Q 2020 2Q 2020 2Q 2019 3Q 2019 4Q 2019 1Q 2020 2Q 2020 Adjusted personnel expense1 Other Adjusted noninterest Noninterest expense / Severance / Frontline Pay Acquisition related costs expense3 / average assets average assets 1 A non-GAAP financial measure, adjusted personnel expense excludes restructuring related costs and frontline pay. Please refer to the appendix for a reconciliation of personnel expense to adjusted personnel expense. 2 Annualized 17 3 A non-GAAP financial measure, adjusted noninterest expense excludes acquisition and restructuring related costs. Please refer to the appendix for a reconciliation of noninterest expense to adjusted noninterest expense.
STRONG CAPITAL POSITION Capital ratios improved during the second quarter bolstered by the sale of ABRC Highlights Capital Ratio Walkdowns ▪ Expect CET1 ratio to grow over balance of 2020 ▪ Regulatory capital ratios not expected to be impacted by PPP ▪ ABRC sale improved the TCE ratio2 by 27 bps Common Equity Tier 1 Ratio1 Regulatory Capital Ratios 13.84% 12.56% 11.62% 10.25% 10.35% 9.36% Tangible Common Equity Ratio2 Common Equity Tier 1 Tier 1 Capital Total Capital Capital 1Q 2020 2Q 2020 1 CET1 CECL adoption impact includes modified transition amount. 2 Tangible common equity / tangible assets. This is a non-GAAP financial measure. See Appendix for a reconciliation of non-GAAP financial measures to 18 GAAP financial measures.
2020 UPDATED OUTLOOK We are refining our guidance for the remainder of 2020 ▪ Expect loan to deposit ratio to be ▪ We expect a quarterly expense approximately 90%, excluding run rate of approximately $175M PPP for the rest of the year due to the $15M quarterly reduction of ▪ Target investments / total assets expenses from the sale of ABRC ratio of 15%, excluding PPP Balance Sheet Expense ▪ Full-year effective tax rate ▪ We expect PPP loans to pay expected to be 18% or less Management down mostly in Q4 and early Management 2021 ▪ Full year margin of 2.55% to 2.60% ▪ Mortgage banking expected to ▪ Expect capital to build over the remain elevated in Q3 balance of the year ▪ Service charges returning to ▪ Share repurchase program will normal levels over the second Capital & remain suspended until economic Fee half of the year Credit conditions improve and stabilize Businesses ▪ No insurance revenue in the Management Based on our current second half of the year due to ▪ assumptions, we expect loan loss sale of ABRC provision to be less in the second half of the year than the first half 19
APPENDIX
TOTAL LOANS OUTSTANDING BALANCES AS OF JUNE 30, 2020 Well diversified $24.8 billion loan portfolio ($ in millions) % of Total % of Total 06/30/20201 Loans 06/30/20201 Loans C&BL (by NAICS2) CRE (by property type code) Wholesale/Manufacturing$ 1,907 7.7% Multi-Family$ 1,841 7.4% Utilities 1,603 6.5% Office/Mixed 1,256 5.1% Finance and Insurance 1,387 5.6% Retail 981 4.0% Real Estate (includes REITs) 1,296 5.2% Industrial 934 3.8% Mining3 499 2.0% Single Family Construction 388 1.6% Construction 437 1.8% Hotel/Motel 224 0.9% Health Care and Social Assistance4 412 1.7% Land 107 0.4% Retail Trade 392 1.6% Farm Land 17 0.1% Professional, Scientific, and Tech. Serv. 342 1.4% Mobile Home Parks 16 0.1% Rental and Leasing Services 255 1.0% Other 118 0.5% Transportation and Warehousing 216 0.9% Total CRE$ 5,882 23.7% Waste Management 198 0.8% Accommodation and Food Services 176 0.7% Consumer Information 145 0.6% Residential Mortgage$ 7,934 31.9% Financial Investments & Related Activities 101 0.4% Home Equity 796 3.2% Management of Companies & Enterprises 86 0.3% Student Loans 124 0.5% Arts, Entertainment, and Recreation 72 0.3% Credit Cards 106 0.4% Educational Services 58 0.2% Other Consumer 96 0.4% Public Administration 28 0.1% Total Consumer$ 9,055 36.5% Agriculture, Forestry, Fishing and Hunting 8 0.0% Other 278 1.1% Total C&BL$ 9,895 39.8% Total Loans$ 24,833 100.0% 1 All values as of period end. 2 North American Industry Classification System. 3 Includes $432 million of oil and gas loans and one $26 million fracking sand mining company loan. 4 Includes $48 million of assisted living and continued care retirement communities. 21
LOAN STRATIFICATION OUTSTANDINGS AS OF JUNE 30, 2020 C&BL by Geography Total Loans1 CRE by Geography $9.9 billion $5.9 billion Minnesota 8% Illinois Illinois Minnesota Illinois 17% 10% 16% 25% 3 Minnesota Wisconsin Texas Other 10% 2 25% 8% Midwest Wisconsin Wisconsin 23% Other 29% Other 2 25% Midwest Midwest 2 10% 13% Other Texas Other Other 33% 8% 18% 16% Texas 5% C&BL by Industry Oil and Gas Lending4 CRE by Property Type $9.9 billion $432 million $5.9 billion Power & Utilities South Texas 16% & Eagle Retail Ford 17% 14% East Texas North Office / Mixed Manufacturing & Real Estate 13% Louisiana Use Wholesale Trade Arkansas Permian 21% 19% 16% Oil & Gas 29% Multi-Family 5% 31% Rockies Finance & 10% Industrial Insurance Marcellus 16% 14% Bakken Utica 2% Appalachia 11% Gulf Shallow Other 1-4 Family 2% 6% Construction Other Mid- 1 Hotel / Motel 5% Excludes $326 million Other consumer portfolio. (Onshore Continent 2 (primarily 4% Other Midwest includes Missouri, Indiana, Ohio, Michigan and Iowa. Lower 48) 22 3Principally reflects the oil and gas portfolio. 9% OK & KS) 4Chart based on commitments of $609 million. 7%
RECONCILIATION AND DEFINITIONS OF NON-GAAP ITEMS ($ IN MILLIONS) Adjusted Noninterest Expense Reconcilation1 2Q19 3Q19 4Q19 1Q20 2Q20 Noninterest expense $198 $201 $204 $192 $183 Acquisition related costs 4 2 1 2 1 Severance / Frontline pay 1 0 4 0 2 Adjusted noninterest expense $193 $199 $199 $190 $181 Adjusted Personnel Expense Reconcilation1 2Q19 3Q19 4Q19 1Q20 2Q20 Personnel expense $123 $123 $121 $114 $111 Severance / Frontline pay 1 0 4 0 2 Adjusted personnel expense $122 $123 $117 $114 $109 Tangible Common Equity and Tangible Assets Reconciliation2 1Q20 2Q20 Common equity $3,534 $3,671 Goodwill and other intangible assets, net (1,284) (1,181) Tangible common equity $2,250 $2,490 Total assets $33,908 $35,501 Goodwill and other intangible assets, net (1,284) (1,181) Tangible assets $32,624 $34,321 1 This is a non-GAAP financial measure. Management believes these measures are meaningful because they reflect adjustments commonly made by management, investors, regulators, and analysts to evaluate the adequacy of earnings per common share, provide greater understanding of ongoing operations and enhance comparability of results with prior periods. 2 The ratio tangible common equity to tangible assets excludes goodwill and other intangible assets, net. This financial measure has been included as it is 23 considered to be a critical metric with which to analyze and evaluate financial condition and capital strength.