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Associated BancCorp Reports Operating Results (10-Q)

August 06, 2009 | About:

Associated BancCorp (ASBC) filed Quarterly Report for the period ended 2009-06-30.

Associated Banc-Corp is a diversified multibank holding company. The company has banking offices serving communities in Wi. Il. and Min. The company offers a full range of traditional banking services such as: Business banking Trust asset management and investment services Retail banking Private banking Credit and debit cards Personal loans Full-service discount and online investment brokerage Personal trust Employee benefit plan investment management Insurance Leasing Correspondent banking Cash management services International banking. Associated BancCorp has a market cap of $1.52 billion; its shares were traded at around $11.9 with a P/E ratio of 20.8 and P/S ratio of 1. The dividend yield of Associated BancCorp stocks is 1.7%. Associated BancCorp had an annual average earning growth of 5.6% over the past 10 years.

Highlight of Business Operations:

The contribution from the wealth management segment to consolidated net income (as defined and disclosed in Note 15, Segment Reporting, of the notes to consolidated financial statements) was approximately 17% and 7%, respectively, for the comparable first half periods in 2009 and 2008. Wealth management segment revenues were down $5.4 million (10%) and expenses were up $0.7 million (2%) between the comparable six-month periods of 2009 and 2008. Wealth segment assets (which consist predominantly of cash equivalents, investments, customer receivables, goodwill and intangibles) were up $0.7 million (1%) between June 30, 2009 and June 30, 2008, predominantly due to higher cash and cash equivalents, partially offset by lower customer receivables. The major components of wealth management revenues are trust fees, insurance fees and commissions, and brokerage

Net income for the six months ended June 30, 2009, totaled $25.4 million, or $0.08 for both basic and diluted earnings per common share. Comparatively, net income for the six months ended June 30, 2008, totaled $113.8 million, or $0.89 for both basic and diluted earnings per common share. For the first half of 2009, the annualized return on average assets was 0.21% and the annualized return on average equity was 1.76%, compared to 1.05% and 9.67%, respectively, for the comparable period in 2008. The net interest margin for the first six months of 2009 was 3.49% compared to 3.61% for the first six months of 2008.

Net interest income on a taxable equivalent basis for the six months ended June 30, 2009, was $381.1 million, an increase of $29.3 million or 8.3% versus the comparable period last year. As indicated in Tables 2 and 3, the increase in taxable equivalent net interest income was attributable to favorable volume variances (as changes in the balances and mix of earning assets and interest-bearing liabilities added $45.5 million to taxable equivalent net interest income), partially offset by unfavorable rate variances (as the impact of changes in the interest rate environment and product pricing reduced taxable equivalent net interest income by $16.2 million).

Year-over-year changes in the average balance sheet were impacted by the preferred stock issuance of $525 million in the fourth quarter of 2008 and the levering of the balance sheet through the investment in mortgage-related securities. Average earning assets were $21.9 billion for the first six months of 2009, an increase of $2.4 billion or 12.2% from the comparable period last year, with average securities and short-term investments up $2.0 billion (primarily mortgage-related securities) and average loans up $0.4 billion. The growth in average loans was comprised of increases in retail loans (up $352 million, primarily home equity) and residential mortgages (up $337 million), while commercial loans decreased (down $329 million).

Average interest-bearing liabilities of $18.3 billion for the first six months of 2009 were $1.5 billion or 8.9% higher than the first six months of 2008. On average, interest-bearing deposits grew $1.6 billion (primarily attributable to $1.0 billion higher network transaction deposits and $0.3 billion higher brokered CDs), while noninterest-bearing demand deposits (a principal component of net free funds) were up $0.4 billion. Average wholesale funding balances decreased $0.1 billion between the comparable six-month periods, with short-term borrowing lower by $0.4 billion and long-term funding higher by $0.3 billion. As a percentage of total average interest-bearing liabilities, wholesale funding declined from 33.5% for the first half of 2008 to 30.0% for the first half of 2009.

Read the The complete ReportASBC is in the portfolios of David Dreman of Dreman Value Management.

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