GREEN BAY, Wis., Jan. 19, 2017 /PRNewswire/ -- Associated Banc-Corp (NYSE: ASB) today reported net income available to common equity of $191 million, or $1.26 per common share for the year ended December 31, 2016.  This compares to net income available to common equity of $181 million, or $1.19 per common share for the year ended December 31, 2015. The Company reported earnings of $0.34 per common share for the quarter ended December 31, 2016, compared to $0.27 per common share for the quarter ended December 31, 2015.

"We are pleased to report full year results in line with our guidance. We delivered loan, revenue, and bottom line growth in 2016. We ended the year with over $20 billion of loans, a new high-water mark for us, reflecting 8% annual average loan growth. Our commercial real estate, residential lending, and capital markets businesses, in particular, performed well," said President and CEO Philip B. Flynn. "We grew earnings throughout the year and finished strong driven by higher revenues in the second half of the year. We improved our efficiency ratio for the fifth consecutive year. With another successful year now behind us, we remain committed to delivering quality solutions for our customers and communities."

2016 HIGHLIGHTS  

• Average loans of $19.7 billion grew $1.4 billion, or 8% from a year ago 
  • Total commercial lending accounted for 62% of average loan growth
• Average deposits of $21.0 billion grew $1.1 billion, or 6% from a year ago
  • Noninterest-bearing demand deposits accounted for 51% of average deposit growth
• Net interest income of $707 million increased $31 million, or 5% from last year
• Net interest margin of 2.80% declined from 2.84% in 2015
• Provision for credit losses of $70 million increased $33 million from last year
• Noninterest income of $353 million increased $24 million, or 7% from last year
• Noninterest expense of $703 million increased $4 million, or 1% from last year
• During the year, the Company repurchased $20 million, or approximately 1.2 million shares, of common stock at an average cost of $17.10 per share
• Return on average common equity Tier 1 (CET1) was 9.9%
• Total dividends per common share of $0.45 were up 10% from last year
• Capital ratios remain strong with a CET1 ratio of 9.5% at year end

2016 AND FOURTH QUARTER FINANCIAL RESULTS

Loans

Full year average loans of $19.7 billion were up 8%, or $1.4 billion from 2015.

With respect to full year average balances as compared to 2015: 

• Commercial real estate lending was up 12%, or $502 million to $4.7 billion.
• Consumer lending was up 8%, or $536 million to $7.5 billion.
• Commercial and business lending was up 5%, or $360 million to $7.4 billion.

Fourth quarter average loans of $20.0 billion were down $0.1 billion from the third quarter, and were up 8%, or $1.4 billion from the year ago quarter. 

With respect to fourth quarter average balances:

• Commercial real estate lending was up 1%, or $59 million from the third quarter to $4.9 billion. Commercial real estate lending was up 12%, or $541 million from the year ago quarter.
• Consumer lending was up $36 million from the third quarter to $7.7 billion. Consumer lending was up 5%, or $379 million from the year ago quarter.
• Commercial and business lending was down 2%, or $171 million from the third quarter to $7.4 billion, with the decline primarily driven by seasonally lower line utilization. Commercial and business lending was up 7%, or $515 million from the year ago quarter.

For the year ended December 31, 2016, total loans of $20.0 billion were up 7%, or $1.3 billion from December 31, 2015, and were up 1%, or $0.2 billion from September 30, 2016.

With respect to period end balances:

• Commercial real estate lending was up 14%, or $611 million from the prior year end to $5.0 billion. Commercial real estate lending was up 3%, or $162 million from the prior quarter end.
• Consumer lending was up 6%, or $431 million from the prior year end to $7.6 billion. Consumer lending was up 3%, or $255 million from the prior quarter end.
• Commercial and business lending was up 4%, or $278 million from the prior year end to $7.4 billion. Commercial and business lending was down 3%, or $227 million from the prior quarter end.

Deposits

Full year average deposits of $21.0 billion were up 6%, or $1.1 billion from 2015.

With respect to full year average balances as compared to 2015:

• Interest-bearing demand deposits were up 18%, or $589 million to $3.8 billion.
• Noninterest-bearing demand deposits were up 12%, or $565 million to $5.1 billion.
• Time and savings deposits, combined, were up 1%, or $31 million to $3.0 billion.
• Money market deposits were down 1%, or $82 million to $9.1 billion.

Fourth quarter average deposits of $21.7 billion were up 2%, or $0.3 billion from the third quarter, and were up 5%, or $1.1 billion from the year ago quarter.  

With respect to fourth quarter average balances:

• Noninterest-bearing demand deposits were up 3%, or $132 million from the third quarter to $5.3 billion, and were up 7%, or $326 million from the year ago quarter.
• Money market deposits were up 2%, or $207 million from the third quarter to $9.3 billion, and were down 2%, or $238 million from the year ago quarter.
• Time and savings deposits were up modestly from the third quarter to $3.0 billion. Time and savings deposits, combined, were up 2%, or $49 million from the year ago quarter.
• Interest-bearing demand deposits were down slightly from the third quarter to $4.1 billion, and were up 31%, or $989 million from the year ago quarter.

For the year ended December 31, 2016, total deposits of $21.9 billion were up 4%, or $0.9 billion from December 31, 2015, and were up 1%, or $0.1 billion from September 30, 2016.

With respect to period end balances:

• Interest-bearing demand deposits were up 36%, or $1.2 billion from the prior year end to $4.7 billion, and were up 3%, or $139 million from the prior quarter end.
• Time and savings deposits, combined, were up 5%, or $140 million from the prior year end to $3.0 billion, and were up 2%, or $70 million from the prior quarter end.
• Noninterest-bearing demand deposits were down 3%, or $170 million from the prior year end to $5.4 billion, and were up 1%, or $55 million from the prior quarter end.
• Money market deposits were down 4%, or $332 million to $8.8 billion from the prior year end, and were down 1%, or $123 million from the prior quarter end.

Net Interest Income and Net Interest Margin

Full year net interest income of $707 million was up $31 million, or 5% from 2015. Net interest margin of 2.80% was down 4 basis points from the prior year.

• Interest and fees on loans increased $44 million, or 7% from the prior year. The total loan yield of 3.38% decreased 2 basis points from the prior year.  
• Total interest expense increased $7 million, or 9% from the prior year. The total cost of interest-bearing liabilities of 0.42% increased 2 basis points from the prior year.

Fourth quarter net interest income of $180 million was up $1.5 million, or 1% from the third quarter, and was up $9 million, or 5% from the year ago quarter. Net interest margin of 2.80% was up 3 basis points from the third quarter.

• Interest and fees on loans increased $2 million, or 1% from the third quarter. The total loan yield of 3.40% increased 5 basis points from the prior quarter and accounted for the majority of the margin expansion in the quarter.
• Interest expense on deposits increased $1 million, or 5% from the third quarter. The cost of total interest-bearing deposits increased 1 basis point from the prior quarter.  
• Lower investment income was more than offset by lower cost of short and long-term funding for the fourth quarter, driven by noninterest-bearing deposit growth.  

Noninterest Income

Full year total noninterest income of $353 million was up $24 million, or 7% from 2015.

• Capital market fees of $22 million increased significantly from the prior year on higher customer hedging transactions and higher loan syndication activity.
• Mortgage banking income increased $6 million, or 18% from the prior year primarily attributable to portfolio loan sales.
• Insurance commissions increased $5 million, or 7% from the prior year.
• All other noninterest income categories, collectively, increased $5 million from the prior year.

Fourth quarter total noninterest income of $92 million was down $3 million, or 3% from the third quarter, and was up $9 million, or 11% from the year ago quarter.

• Mortgage banking income decreased $7 million in the fourth quarter, principally related to portfolio sales generating $9 million of gross gains in the prior quarter.
• Investment securities gains increased $3 million in the fourth quarter, and reflected the Company's continued shift away from Agency MBS investments and net reduced investment positions.
• All other noninterest income categories, collectively, increased $1 million from the prior quarter.

Noninterest Expense

Full year noninterest expense of $703 million was up $4 million, or 1% from the prior year.

• Personnel increased $10 million from the prior year, and included severance of $5 million, principally related to the restructuring of the Company's commercial and business lending areas.
• Year over year increases in FDIC expense, legal and professional fees, and business development and advertising were more than offset by decreases in all other expense categories.

Fourth quarter total noninterest expense of $179 million was up $4 million, or 2% from the third quarter, and was up $3 million, or 2% from the year ago quarter.

• Personnel expense increased $4 million from the third quarter, and included severance of $3 million, principally related to the restructuring of the Company's commercial and business lending areas.
• Quarter over quarter decreases in occupancy, foreclosure / OREO expense, and loan expense were offset by increases in all other expense categories.

Taxes

Full year income tax expense was $87 million and was up $6 million from 2015.  The effective tax rate was 30% in 2016 and 2015.

Fourth quarter income tax expense was $24 million with an effective tax rate of 30%, compared to $24 million and 31% in the third quarter, and $16 million and 27% in the year ago quarter.

Credit

Full year provision for credit losses of $70 million was up $33 million from the prior year, principally related to a $35 million increase in net charge offs year over year, primarily related to oil and gas loans.

Fourth quarter provision for credit losses of $15 million was down $6 million from the prior quarter.

• Potential problem loans of $351 million were down $90 million from the prior quarter, and were up $49 million from the prior year quarter.
• Nonaccrual loans of $275 million were down $15 million from the prior quarter, and were up $97 million from the prior year quarter. The nonaccrual loans to total loans ratio was 1.37% in the fourth quarter, compared to 1.46% in the prior quarter, and 0.95% in the prior year quarter.
• Fourth quarter net charge offs of $9 million were down $9 million from the prior quarter. Full year net charge offs of $65 million were up $35 million year over year, primarily related to oil and gas loans.
• The allowance for loan losses of $278 million was up $9 million from the prior quarter, and was up $4 million from the prior year quarter. The allowance for loan losses to total loans ratio was 1.39% in the fourth quarter, compared to 1.36% in the prior quarter, and 1.47% in the prior year quarter.
• The allowance related to the oil and gas portfolio was $38 million at December 31, 2016, compared to $38 million at September 30, 2016, and $42 million at December 31, 2015. Full year charge offs related to the oil and gas portfolio were $59 million. The allowance represented 5.7% of total oil and gas loans at December 31, 2016, compared to 5.5% at September 30, 2016, and 5.6% at December 31, 2015.

Capital

The Company's capital position remains strong, with a CET1 ratio of 9.5% at December 31, 2016.  The Company's capital ratios continue to be in excess of the Basel III "well-capitalized" regulatory benchmarks on a fully phased in basis.

FOURTH QUARTER 2016 EARNINGS RELEASE CONFERENCE CALL

The Company will host a conference call for investors and analysts at 4:00 p.m. Central Time (CT) today, January 19, 2017.  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 fourth quarter 2016 earnings call. The fourth quarter and full year 2016 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 $29 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 over 200 banking locations serving more than 100 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," "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.

Investor Contact:
Teresa Gutierrez, Senior Vice President, Director of Investor Relations   
920-491-7059

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

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SOURCE Associated Banc-Corp