Associated Banc-Corp Reports First Quarter 2019 Earnings of $0.50 Per Common Share

Earnings per share up 25% from the prior year

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Apr 25, 2019, 16:15 ET

GREEN BAY, Wis., April 25, 2019 /PRNewswire/ -- Associated Banc-Corp (NYSE: ASB) ("Associated" or "Company") today reported net income available to common equity ("earnings") of $83 million, or $0.50 per common share for the quarter ended March 31, 2019. These amounts compare to net income available to common equity of $67 million, or $0.40 per common share for the quarter ended March 31, 2018.

"We were pleased with our commercial and business lending results in the quarter as we had solid growth in our general commercial line and across most of our specialty lending verticals. This growth, coupled with effective cost controls and improving fee income, helped drive a 25% increase in earnings per share compared to the first quarter of 2018," said President and CEO Philip B. Flynn. "We remain optimistic for the remainder of 2019. We expect continued growth in our C&I portfolio and anticipate that our commercial real estate book will begin to ramp up in the second half of the year. Additionally, we believe the Huntington Bank branch acquisition, which is scheduled to close in June, will help us manage our funding costs this year."

FIRST QUARTER 2019 SUMMARY (all comparisons to the first quarter of 2018)

Average loans of $23.1 billion were up 5%, or $1.0 billion
Average deposits of $24.6 billion were up 4%, or $0.9 billion
Net interest income of $216 million increased $6 million, or 3%
Net interest margin of 2.90% declined 2 basis points from 2.92%
Provision for credit losses was $6 million, up from zero
Noninterest income of $91 million increased 1%, or $1 million
Noninterest expense of $192 million was down 10%, or $21 million
Income before income taxes was up 25%, or $22 million
During the quarter, the Company repurchased over 1 million shares, or $30 million, of common stock
Total dividends paid per common share were $0.17, up 13%
Return on average common equity Tier 1 increased to 13.6% from 11.4%

Loans

First quarter 2019 average loans of $23.1 billion were up $1.0 billion, or 5%, from the year ago quarter, and were up $299 million from the fourth quarter of 2018 as growth in commercial and business lending outpaced run-off in the commercial real estate portfolio.

With respect to first quarter 2019 average balances by loan category:

Commercial and business lending increased $1.1 billion from the year ago quarter and increased $357 million from the fourth quarter of 2018 to $8.4 billion. General commercial lending and power & utilities specialized lending drove the increase from the year ago quarter.
Consumer lending increased $244 million from the year ago quarter and increased $34 million from the fourth quarter of 2018 to $9.6 billion.
Commercial real estate lending decreased $282 million from the year ago quarter and decreased $92 million from the fourth quarter of 2018 to $5.1 billion as paydown activity continued to be elevated.
The Company has over $500 million in construction commitments that are expected to fund over the course of the year.

Deposits

First quarter 2019 average deposits of $24.6 billion were up $905 million, or 4% from the year ago quarter and were up $326 million compared to the fourth quarter of 2018. First quarter period end deposits were $25.5 billion, up $636 million from the end of the fourth quarter.

With respect to first quarter 2019 average balances by deposit category:

Time deposits increased $407 million from the year ago quarter and increased $61 million from the fourth quarter of 2018 to $3.1 billion.
Savings increased $376 million from the year ago quarter and increased $104 million from the fourth quarter of 2018 to $2.1 billion.
Interest-bearing demand deposits increased $236 million from the year ago quarter, but decreased $98 million from the fourth quarter of 2018 to $4.7 billion.
Money market deposits increased $173 million from the year ago quarter and increased $299 million from the fourth quarter of 2018 to $7.4 billion.
Noninterest-bearing demand deposits decreased $102 million from the year ago quarter and decreased $384 million from the fourth quarter of 2018 to $5.0 billion as the company experienced its typical seasonal outflow of deposits.
Network transaction deposits decreased $184 million from the year ago quarter, but increased $344 million from the fourth quarter of 2018 to $2.2 billion.

Net Interest Income and Net Interest Margin

First quarter 2019 net interest income of $216 million was up 3%, or $6 million, while the net interest margin decreased 2 basis points to 2.90% from the year ago quarter. First quarter 2019 net interest income decreased 4%, or $8 million, and the net interest margin decreased 12 basis points from the prior quarter, primarily due to reduced prepayments.

The average yield on total commercial loans for the first quarter of 2019 increased 64 basis points to 4.98% from the year ago quarter, but decreased 9 basis points from the prior quarter.
The average cost of total interest-bearing deposits for the first quarter of 2019 increased 57 basis points to 1.30% from the year ago quarter and increased 16 basis points from the prior quarter.
The net free funds benefit, which is the net margin increase from noninterest-bearing deposits, increased 12 basis points in the first quarter of 2019 compared to the year ago quarter and was unchanged from the prior quarter.

Noninterest Income

First quarter 2019 total noninterest income of $91 million increased $1 million from the year ago quarter and increased $7 million from the prior quarter.

With respect to first quarter 2019 noninterest income line items:

Insurance revenues were up $3 million from the year ago quarter, driven by the acquisitions of Diversified Insurance Solutions and Anderson Insurance, and were up $4 million compared to the previous quarter due to seasonally higher property and casualty revenues.
Service charges and deposit account fees were down $1 million from both the year ago quarter and the previous quarter.
Mortgage banking revenues were down $2 million from the year ago quarter, but were up $1 million from the previous quarter.

Noninterest Expense

First quarter 2019 total noninterest expense of $192 million decreased 10%, or $21 million from the year ago quarter and decreased $1 million from the prior quarter. The year ago quarter included $21 million of Bank Mutual acquisition related costs.

With respect to first quarter 2019 noninterest expense line items:

Personnel expense increased $2 million from the year ago quarter, and increased $4 million from the prior quarter due primarily to seasonal increases in stock-based compensation expense.
Occupancy expense increased $1 million from the year ago quarter and increased $2 million from the prior quarter due to higher snow removal expense.
Technology expense increased $1 million from the year ago quarter and the prior quarter as the company continued to make investments to enhance its online and mobile product offerings.
With the removal of the FDIC surcharge, the Company's FDIC assessment decreased $5 million from the year ago quarter and $2 million from the prior quarter.

Taxes

The first quarter 2019 effective tax rate was 21% compared to 20% in the year ago quarter and 22% in the prior quarter.

Credit

The first quarter 2019 provision for credit losses was $6 million, up from zero in the year ago quarter and up from $1 million in the prior quarter. With respect to first quarter 2019 credit quality:

Potential problem loans of $241 million were down $41 million from the year ago quarter and were down $9 million from the prior quarter.
Nonaccrual loans of $156 million were down $53 million from the year ago quarter, primarily due to improvements in commercial credits. While nonaccrual loans were up $28 million from the prior quarter, primarily due to migration in commercial credits, they remained flat with third quarter 2018 levels. The nonaccrual loans to total loans ratio was 0.67% in the first quarter, compared to 0.91% in the year ago quarter and 0.56% in the prior quarter.
Net charge offs of $7 million were down $2 million from the year ago quarter and up $7 million from the prior quarter.
The allowance for loan losses of $235 million was down $22 million from the year ago quarter and was down $3 million from the prior quarter. The allowance for loan losses to total loans ratio was 1.02% in the first quarter of 2019, compared to 1.13% in the year ago quarter, and 1.04% in the prior quarter.

Capital

The Company's capital position remains strong, with a CET1 capital ratio of 10.3% at March 31, 2019. The Company's capital ratios continue to be in excess of the Basel III "well-capitalized" regulatory benchmarks on a fully phased in basis.

During the quarter, the Company repurchased over 1 million shares, or $30 million, of common stock at an average price of $22.93 per share.

FIRST QUARTER 2019 EARNINGS RELEASE CONFERENCE CALL

The Company will host a conference call for investors and analysts at 4:00 p.m. Central Time (CT) today, April 25, 2019. 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 first quarter 2019 earnings call. The first quarter 2019 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 nearly $34 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 230 banking locations serving more than 110 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.

Investor Contact:
Robb Timme, Senior Vice President, Director of Investor Relations
920-491-7059

Media Contact:
Jennifer Kaminski, Vice President, Public Relations Senior Manager
920-491-7576

SOURCE Associated Banc-Corp