SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
--------- EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
--------- EXCHANGE ACT OF 1934
For the transition period from to
Commission File 0-5519
ASSOCIATED BANC-CORP
(Exact Name of Registrant as Specified in Its Charter)
Wisconsin 39-1098068
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) identification No.)
112 North Adams Street, Green Bay, Wisconsin 54301
(Address of principal executive offices)
(414) 433-3166
(Registrant's telephone number, including area code)
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
--------- ---------
APPLICABLE ONLY TO CORPORATE ISSUERS:
The number of shares outstanding of registrant's common stock, par value $0.01
per share, at June 30, 1995, was 15,769,015 shares.
ASSOCIATED BANC-CORP
TABLE OF CONTENTS
PART I. Financial Information
Item 1. Financial Statements:
Consolidated Statements of Financial
Condition - June 30, 1995 and
December 31, 1994
Consolidated Statements of Income -
Three and Six Months Ended
June 30, 1995 and 1994
Consolidated Statements of Cash Flows -
Six Months Ended June 30, 1995 and 1994
Notes to Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations
PART II. Other Information
Item 4. Submission of Matters to a Vote of
Security Holders
Item 6. Exhibits and Reports on Form 8-K
Signatures
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS:
ASSOCIATED BANC-CORP
Consolidated Statements of Financial Condition
(Unaudited)
June 30 December 31
1995 1994
(In Thousands)
ASSETS
Cash and due from banks.............................. $ 162,574 $ 196,385
Interest-bearing deposits in other
financial institutions............................. 600 300
Federal funds sold and securities
purchased under agreements to resell............... 17,182 57,635
Trading account securities........................... --- ---
Investment securities: (Note 3)
Held to maturity (Fair value of
approximately $360,000 and $347,000
at June 30, 1995 and December 31, 1994,
respectively).................................... 360,885 360,972
Available for sale-stated at fair value........... 308,770 305,903
Loans, net of unearned income........................ 2,423,248 2,277,283
Less: Allowance for possible loan losses (Note 4)... (37,874) (36,369)
Loans, net......................................... 2,385,374 2,240,914
Premises and equipment............................... 51,440 52,145
Other assets......................................... 68,405 70,064
--------- ---------
Total assets....................................... $3,355,230 $3,284,318
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Noninterest-bearing deposits......................... $ 498,528 $ 589,313
Interest-bearing deposits............................ 2,224,807 2,074,300
--------- ---------
Total deposits..................................... $2,723,335 2,663,613
Short-term borrowings................................ 304,203 315,979
Accrued expenses and other liabilities............... 28,250 26,278
Long-term borrowings................................. 3,467 3,866
--------- ---------
Total liabilities..................................... $3,059,255 3,009,736
Commitments and contingent liabilities............... --- ---
Stockholders' equity
Preferred stock.................................... --- ---
Common stock (Par value $0.01 per share,
authorized 48,000,000 shares, issued
15,984,963 and 16,033,440 shares,
respectively).................................... 160 128
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS CONTINUED:
ASSOCIATED BANC-CORP
Consolidated Statements of Financial Condition
(Unaudited)
June 30 December 31
1995 1994
(In Thousands)
Surplus............................................ 146,758 147,132
Retained earnings.................................. 148,536 134,182
Net unrealized gains (losses) on securities
available for sale............................... 4,406 (2,817)
Less: Treasury stock (215,948 and 220,244
shares at cost).................................. (3,885) (4,043)
----- -------
Total stockholders' equity......................... 295,975 274,582
------- -------
Total liabilities and stockholders' equity........ $3,355,230 $3,284,318
========= =========
(See accompanying notes to Consolidated Financial Statements.)
ITEM 1. FINANCIAL STATEMENTS CONTINUED:
ASSOCIATED BANC-CORP
Consolidated Statements of Income
(Unaudited)
For the Three Months
Ended June 30
1995 1994
(In Thousands)
INTEREST INCOME
Interest and fees on loans............................... $ 52,877 41,158
Interest and dividends on investment securities:
Taxable................................................ 8,457 7,691
Tax-exempt............................................. 1,528 1,291
Interest on deposits in other financial
institutions........................................... 7 ---
Interest on federal funds sold and securities
purchased under agreements to resell................... 281 437
Interest on trading account securities................... --- ---
------ ------
Total interest income 63,150 50,577
INTEREST EXPENSE
Interest on deposits................................... 24,190 15,944
Interest on short-term borrowings...................... 4,226 2,603
Interest on long-term borrowings....................... 83 100
------ ------
Total interest expense................................ 28,499 18,647
------ ------
NET INTEREST INCOME........................................ 34,651 31,930
Provision for possible loan losses (Note 4)................ 790 672
------ ------
Net interest income after provision for
possible loan losses..................................... 33,861 31,258
------ ------
NONINTEREST INCOME
Trust service fees....................................... 5,361 5,125
Data processing fees..................................... 278 422
Service charges on deposit accounts...................... 2,638 2,787
Investment securities gains, net......................... 102 157
Loan servicing fees...................................... 896 829
Residential real estate loan origination fees............ 188 247
Retail investment income................................. 548 432
Other.................................................... 2,496 2,055
------ ------
Total noninterest income............................... 12,507 12,054
------ ------
NONINTEREST EXPENSE
Salaries and employee benefits........................... 15,186 14,474
Net occupancy expense.................................... 2,371 2,144
Equipment rentals, depreciation and maintenance.......... 1,495 1,438
ITEM 1. FINANCIAL STATEMENTS CONTINUED:
ASSOCIATED BANC-CORP
Consolidated Statements of Income
(Unaudited)
For the Three Months
Ended June 30
1995 1994
(In Thousands)
Data processing expense.................................. $ 1,829 1,842
Stationery and supplies.................................. 736 712
Business development and advertising..................... 737 783
FDIC expense............................................. 1,475 1,340
Legal and professional fees.............................. 223 263
Other.................................................... 5,383 4,849
------ ------
Total noninterest expense.............................. 29,435 27,845
------ ------
Income before income taxes................................. 16,933 15,467
Income tax expense......................................... 6,110 5,511
------ ------
NET INCOME................................................. $ 10,823 $ 9,956
------ ------
Per share (Note 5)
Net income............................................... $ 0.69 $ 0.63
Dividends................................................ $ 0.22 $ 0.22
Weighted average shares outstanding........................ 15,767 15,760
(See accompanying notes to Consolidated Financial Statements.)
ITEM 1. FINANCIAL STATEMENTS CONTINUED:
ASSOCIATED BANC-CORP
Consolidated Statements of Income
(Unaudited)
For the Six Months
Ended June 30
1995 1994
(In Thousands)
INTEREST INCOME
Interest and fees on loans............................... $ 102,812 79,666
Interest and dividends on investment securities:
Taxable................................................ 16,964 15,100
Tax-exempt............................................. 3,017 2,667
Interest on deposits in other financial
institutions........................................... 12 2
Interest on federal funds sold and securities
purchased under agreements to resell................... 720 853
Interest on trading account securities................... --- ---
------- ------
Total interest income 123,525 98,288
INTEREST EXPENSE
Interest on deposits................................... 45,431 31,327
Interest on short-term borrowings...................... 8,854 4,622
Interest on long-term borrowings....................... 171 210
------- ------
Total interest expense................................. 54,456 36,159
------- ------
NET INTEREST INCOME........................................ 69,069 62,129
Provision for possible loan losses (Note 4)................ 1,771 1,397
------- ------
Net interest income after provision for
possible loan losses..................................... 67,298 60,732
------- ------
NONINTEREST INCOME
Trust service fees....................................... 10,857 10,094
Data processing fees..................................... 551 848
Service charges on deposit accounts...................... 5,246 5,487
Investment securities gains, net......................... 123 196
Loan servicing fees...................................... 1,851 1,646
Residential real estate loan origination fees............ 268 756
Retail investment income................................. 998 1,019
Other.................................................... 5,145 5,011
------- ------
Total noninterest income................................. 25,039 25,057
NONINTEREST EXPENSE
Salaries and employee benefits........................... 30,601 29,308
Net occupancy expense.................................... 4,822 4,376
Equipment rentals, depreciation and maintenance.......... 3,056 2,905
Data processing expense.................................. 3,652 3,672
ITEM 1. FINANCIAL STATEMENTS CONTINUED:
ASSOCIATED BANC-CORP
Consolidated Statements of Income
(Unaudited)
For the Six Months
Ended June 30
1995 1994
(In Thousands)
Stationery and supplies.................................. 1,527 1,492
Business development and advertising..................... 1,602 1,452
FDIC expense............................................. 2,944 2,685
Legal and professional fees.............................. 464 743
Other.................................................... 10,449 9,694
------ ------
Total noninterest expense................................ 59,117 56,327
------ ------
Income before income taxes................................. 33,220 29,462
Income tax expense......................................... 11,969 10,095
------ ------
NET INCOME................................................. $ 21,251 19,367
------ ------
Per share (Note 5)
Net income............................................... $ 1.35 1.23
Dividends................................................ $ 0.43 0.42
Weighted average shares outstanding........................ 15,764 15,759
(See accompanying notes to Consolidated Financial Statements.)
ITEM 1. FINANCIAL STATEMENTS CONTINUED:
ASSOCIATED BANC-CORP
Consolidated Statements of Cash Flows
(Unaudited)
Six Months Ended
June 30
1995 1994
(In Thousands)
OPERATING ACTIVITIES
Net income............................................. $ 21,251 $ 19,367
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for possible loan losses................... 1,771 1,397
Depreciation and amortization........................ 3,399 3,129
Amortization of purchased mortgage servicing rights.. 266 164
Amortization of goodwill............................. 1,226 580
Net amortization and accretion of premiums and
discounts.......................................... 558 (80)
Gain on sales of investment securities, net............ (123) (196)
Increase in interest receivable and other assets..... (1,793) (3,135)
Increase (decrease) in interest payable and other
liabilities........................................ (756) 4,319
Amortization of loan fees and costs.................. (801) (790)
Purchases of trading account securities.............. (69) (253)
Proceeds from sales of trading account securities.... 80 263
Net (increase) decrease in mortgage loans
acquired for resale................................ (16,842) 36,679
(Gain) loss on sales of mortgage loans
held for resale.................................... (171) 142
Other, net........................................... (412) (75)
------ ------
Net cash provided by operating activities................ $ 7,584 $61,511
INVESTING ACTIVITIES
Net decrease in federal funds sold and securities
purchased under agreements to resell................. 40,453 41,380
Net increase in interest-bearing deposits in other
financial institutions............................... (300) ---
Purchases of held to maturity securities............... (55,333) (126,283)
Purchases of available for sale securities............. (34,661) ( 69,658)
Proceeds from sales of available for sale
securities........................................... 84 ---
Maturities of held to maturity securities.............. 55,120 146,431
Maturities of available for sale securities............ 43,330 51,513
Net increase in loans.................................. (128,395) (121,488)
Reductions of other real estate........................ 1,050 870
Purchases of premises and equipment, net of disposals.. (2,587) (2,241)
Purchases of mortgage servicing rights................. (593) (925)
------ -------
Net cash used by investing activities.................... $(81,832) $(80,401)
ITEM 1. FINANCIAL STATEMENTS CONTINUED:
ASSOCIATED BANC-CORP
Consolidated Statements of Cash Flows
(Unaudited)
Six Months Ended
June 30
1995 1994
(In Thousands)
FINANCING ACTIVITIES
Net increase (decrease) in deposits.................... 59,722 (55,964)
Net increase (decrease) in short-term borrowings....... (12,204) 67,619
Cash dividends......................................... (6,867) (6,556)
Repayments of long-term borrowings..................... --- (680)
Proceeds from exercise of stock options................ 661 206
Purchase of treasury stock............................. (875) ---
------ ------
Net cash provided by financing activities................ $ 40,437 $ 4,625
------- ------
Net decrease in cash and cash equivalents................ $(33,811) $(14,265)
Cash and cash equivalents beginning of period............ 196,385 157,293
------- -------
Cash and cash equivalents at end of period............... $162,574 $143,028
======= =======
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest............................................. $ 51,426 $ 36,212
Income taxes......................................... 14,991 10,345
Supplemental schedule of noncash investing activities:
Loans transferred to other real estate.............. $ 408 $ 804
Loans made in connection with the disposition of
other real estate................................. 167 172
(See accompanying notes to Consolidated Financial Statements.)
ITEM 1. FINANCIAL STATEMENTS CONTINUED:
ASSOCIATED BANC-CORP
Notes to Consolidated Financial Statements
NOTE 1:
In the opinion of management, the accompanying unaudited consolidated financial
statements contain all adjustments necessary to present fairly Associated
Banc-Corp's financial position, results of its operations and cash flows for
the periods presented. All adjustments necessary to the fair presentation of
the financial statements are of a normal recurring nature. The results of
operations for the interim periods are not necessarily indicative of the
results to be expected for the full year.
NOTE 2:
The consolidated financial statements include the accounts of all subsidiaries.
All material intercompany transactions and balances are eliminated. The
corporation has not changed its accounting and reporting policies from those
stated in the corporation's 1994 Annual Report on Form 10-K.
NOTE 3: INVESTMENT SECURITIES
The amortized cost and fair values of investment securities held to maturity
and securities available for sale for the periods indicated were as follows:
Investment Securities Held to Maturity
-------------------------------------------------------------------------------
(In thousands) June 30, 1995
-------------------------------------------------------------------------------
Amortized Cost Fair Value
-------------------------------------------------------------------------------
U.S treasury and federal agency securities........... $173,269 $171,834
Obligations of states and political subdivisions..... 125,951 126,128
Other securities..................................... 61,665 62,195
-------------------------------------------------------------------------------
Total................................................ $360,885 $360,157
===============================================================================
(In thousands) December 31, 1994
-------------------------------------------------------------------------------
Amortized Cost Fair Value
-------------------------------------------------------------------------------
U.S. treasury and federal agency securities.......... $183,524 $174,398
Obligations of states and political subdivisions..... 117,490 115,253
Other securities..................................... 59,958 57,372
-------------------------------------------------------------------------------
Total................................................ $360,972 $347,023
===============================================================================
Investment Securities Available for Sale
-------------------------------------------------------------------------------
(In thousands) June 30, 1995
-------------------------------------------------------------------------------
Amortized Cost Fair Value
-------------------------------------------------------------------------------
U.S. treasury and federal agency securities.......... $299,035 $300,941
Other securities..................................... 2,724 7,829
-------------------------------------------------------------------------------
Total................................................ $301,759 $308,770
===============================================================================
(In thousands) December 31, 1994
-------------------------------------------------------------------------------
Amortized Cost Fair Value
-------------------------------------------------------------------------------
U.S. treasury and federal agency securities.......... $308,680 $300,461
Other securities..................................... 1,969 5,442
-------------------------------------------------------------------------------
Total................................................ $310,649 $305,903
===============================================================================
NOTE 4: ALLOWANCE FOR POSSIBLE LOAN LOSSES
A summary of the changes in the allowance for possible loan losses for the
periods indicated is as follows:
For the Six For the Year
Months Ended Ended
June 30, December 31,
1995 1994
(In Thousands)
Balance at beginning of period....................... $ 36,369 $ 33,939
Balance related to acquisitions...................... --- 1,675
Provisions charged to operating expense.............. 1,771 2,788
Loan losses net of recoveries........................ (266) (2,033)
------ ------
Balance at end of period............................. $ 37,874 $ 36,369
====== ======
NOTE 5: PER SHARE COMPUTATIONS
Per share computations are computed based on the weighted average number of
common shares outstanding for the three and six months ended June 30, 1995 and
1994. All per share information has been adjusted to reflect the 5 for 4 stock
split effected in the form of a stock dividend paid to shareholders on June 15,
1995.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND THE
RESULTS OF OPERATIONS
The purpose of this discussion is to focus on information about the
corporation's financial condition and results of operations that are not
otherwise apparent from the consolidated financial statements included in this
report. Reference should be made to those statements presented elsewhere in
this report for an understanding of the following discussion and analysis.
All per share information has been adjusted to reflect the 5 for 4 stock split
effected in the form of a stock dividend paid to shareholders on June 15, 1995.
EARNINGS
Earnings for the second quarter of 1995 increased 8.7% over 1994 while earnings
per share were up 9.5% over the same periods. Earnings for the first six
months of 1995 increased 9.7% over the first half of 1994. Earnings per share
for the first six months of 1995 increased 9.8% over 1994.
Net Income
Quarterly Trends
($ in Thousands)
-------------------------------------------------------------------------------
2nd Qtr. 1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr.
1995 1995 1994 1994 1994
-------------------------------------------------------------------------------
Net Income $10,823 $10,428 $10,704 $10,357 $ 9,956
E.P.S. .69 .66 .68 .66 .63
Return on Average
Equity - Quarter 15.03% 15.30% 15.73% 15.35% 15.28%
Return on Average
Equity - Year 15.16% 15.30% 15.31% 15.16% 15.06%
Return on Average
Assets - Quarter 1.33% 1.32% 1.34% 1.36% 1.34%
Return on Average
Assets - Year 1.32% 1.32% 1.34% 1.34% 1.33%
-------------------------------------------------------------------------------
Return on average assets (ROA) for the second quarter of 1995 was 1.33%, down
from 1.34% during the same period last year while ROA for the first half of
1995 declined to 1.32%, compared to 1.33% in the first half of 1994. ROA
declined slightly because second quarter 1995 net income grew at a rate of
8.7%, compared with 1994, while average assets grew at 9.9%, resulting in a 1
basis point decrease in ROA. Year-to-date ROA also declined 1 basis point
because asset growth outpaced earnings growth. Second quarter ROA improved to
1.33% from 1.32% when comparing the second quarter of 1995 to the first quarter
of 1995 because net income increased 3.8% while average assets grew at a 1.5%
pace.
Return on average equity (ROE) for the second quarter was 15.03%, down from
15.28% during the same period last year. ROE decreased during the second
quarter of 1995 compared to 1994 because average equity grew 10.5% while net
income grew at a rate of 8.7%. ROE increased to 15.16% for the first half of
1995 compared to 15.06% for the same period in 1994. Earnings growth of 9.7%
outpaced equity growth of 8.9% combined with a decline of $3.2 million in the
average balance in the equity component for unrealized gains on securities
available for sale resulting in a 10 basis point improvement in year-to-date
ROE. Second quarter ROE decreased when compared with the first quarter of 1995
due primarily to the increase in the average balance of the equity component
for unrealized gains on securities available for sale of $1.9 million. Without
the available for sale equity component, the first half of 1995 ROE would have
been 15.20%, compared with an adjusted ROE of 15.28% in the first half of 1994.
NET INTEREST INCOME
Tax equivalent net interest income in the second quarter of 1995 was $35.6
million, an increase of $214,000 or .6% from the first quarter of 1995. The
increase from the 1995 first quarter was essentially volume related, but was
significantly offset by the changes in rates. Average earning asset volumes
increased $49.5 million or 1.6% while average interest bearing liabilities
increased $56.7 million or 2.3%. Average loans increased by $75.4 million or
3.3% from the first quarter of 1995 to the second quarter. The rate on earning
assets increased 13 basis points while the rate on interest bearing liabilities
increased 27 basis points between the two quarters causing a decline in the
overall interest rate spread.
Tax equivalent net interest income for the six months ended June 30, 1995, was
$71.0 million, reflecting an increase of $6.9 million or 10.8% from the same
period in 1994. The increase was essentially volume related, but was
significantly offset by the change in rates. Average earning assets grew
$293.4 million or 10.7% between the periods. Within the earning asset mix,
average loans grew $272.9 million, average securities grew $48.7 million, and
average fed funds sold declined $28.3 million. Average interest bearing
liabilities increased $261.9 million or 11.9%, of which $216.9 million was due
to interest bearing deposits.
Net Interest Income
Tax Equivalent Basis
($ in Thousands)
-------------------------------------------------------------------------------
2nd Qtr. 1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr.
1995 1995 1994 1994 1994
-------------------------------------------------------------------------------
Interest Income $63,150 $60,375 $58,860 $53,803 $50,577
Tax Equivalent Adjustment 949 968 891 877 953
------ ------ ------ ------ ------
Tax Equivalent Interest Income 64,099 61,343 59,751 54,680 51,530
Interest Expense 28,499 25,957 23,259 20,262 18,647
------ ------ ------ ------ ------
Tax Equivalent Net
Interest Income $35,600 $35,386 $36,492 $34,418 $32,883
-------------------------------------------------------------------------------
The net interest margin in the second quarter of 1995 was 4.67% compared to
4.77% in the first quarter of 1995. The decrease in margin since last quarter
was primarily due to the decline in interest rate spread. Spread declined 14
basis points due to the greater rise in the cost of funds, which was primarily
caused by deposit migration from savings and money market deposits into time
deposits.
Net Interest Margin
Quarterly Trends
(Quarterly Info Only)
-------------------------------------------------------------------------------
2nd Qtr. 1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr.
1995 1995 1994 1994 1994
-------------------------------------------------------------------------------
Yield on Earning Assets 8.41% 8.28% 8.00% 7.70% 7.47%
Cost of Interest
Bearing Liabilities 4.59 4.32 3.91 3.58 3.36
Interest Rate Spread 3.82 3.96 4.09 4.12 4.11
Net Interest Margin 4.67 4.77 4.88 4.85 4.77
Average Earning Assets
to Average Assets 93.66 93.50 93.21 93.39 93.21
Free Funds Ratio 18.47 19.02 20.31 20.23 19.47
-------------------------------------------------------------------------------
The net interest margin for the first half of 1995 was 4.72% compared with
4.72% in 1994. The rate on earning assets increased 97 basis points while the
rate on interest bearing liabilities increased 115 basis points. The positive
change in net interest margin due to the rise in rates was offset by a decline
of 18 basis points in rate spread and a decline in the level of free funds.
Earning Asset and Interest Bearing Liability Volumes
Quarterly Trends
($ in Thousands)
-------------------------------------------------------------------------------
2nd Qtr. 1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr.
1995 1995 1994 1994 1994
-------------------------------------------------------------------------------
Average Loans $2,375,742 $2,300,378 $2,258,683 $2,144,889 $2,091,148
Average Earning Assets 3,055,387 3,005,849 2,964,312 2,817,301 2,767,586
Average Noninterest
Bearing Deposits 454,116 476,984 518,818 475,261 452,767
Average Interest
Bearing Deposits 2,184,141 2,099,330 2,081,248 1,975,756 1,936,636
Average Deposits 2,638,257 2,576,314 2,600,066 2,451,017 2,389,403
Average Interest
Bearing Liabilities 2,490,932 2,434,265 2,362,311 2,247,432 2,228,628
-------------------------------------------------------------------------------
Second quarter 1995 average loans grew 3.3% since the first quarter of 1995
while interest bearing deposits rose 4%, noninterest bearing deposits declined
4.8%, and short-term borrowings declined 8.4%.
LOAN LOSSES
The loan loss provision for the second quarter of 1995 was $790,000, an
increase of $118,000 from the same period in 1994 and $191,000 lower than the
first quarter of 1995.
As of June 30, 1995, the allowance for possible loan losses of $37.9 million
represented 1.56% of total loans, down from 1.61% at March 31, 1995, and 1.64%
at June 30, 1994.
Provision for Possible Loan Losses
Quarterly Trends
($ in Thousands)
-------------------------------------------------------------------------------
2nd Qtr. 1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr.
1995 1995 1994 1994 1994
-------------------------------------------------------------------------------
Provision - Quarter $ 790 $ 981 $ 729 $ 662 $ 672
Provision - Year 1,771 981 2,788 2,059 1,397
Net Charge-offs - Quarter 257 9 670 799 272
Net Charge-offs - Year 266 9 2,033 1,363 564
Allowance at Period End 37,874 37,341 36,369 34,885 34,772
Allowance at Period End Loans 1.56% 1.61% 1.60% 1.59% 1.64%
Net Charge-offs to Average
Loans (Annualized) - Quarter .04% .00% .12% .15% .05%
Net Charge-offs to Average
Loans (Annualized) - Year .02% .00% .10% .09% .05%
-------------------------------------------------------------------------------
Charge-offs for the quarter ending June 30, 1995, of $1.068 million were
reduced by recoveries of $811,000, creating net charge-offs of $257,000. This
activity compares with first quarter 1995 net charge-offs of $9,000 and fourth
quarter 1994 net charge-offs of $670,000. Year-to-date net charge-offs
declined $298,000 when compared with the first half of 1994.
The ratio of year-to-date 1995 annualized net charge-offs to average loans was
.02%, down from .05% in 1994. The ratio is up from .00% when compared with the
first quarter of 1995.
NON-PERFORMING LOANS
Management is committed to an aggressive non-accrual and problem loan
identification philosophy. This philosophy is embodied through the monitoring
and reviewing of credit policies and procedures to ensure that all problem
loans are identified quickly and the risk of loss is minimized.
Non-performing loans are considered a leading indicator of future loan losses.
Non-performing loans are defined as non-accrual loans, loans 90 days or more
past due but still accruing and restructured loans.
Loans are normally placed in non-accrual status when contractually past due 90
days or more as to interest or principal payments. Additionally, whenever
management becomes aware of facts or circumstances that may adversely impact on
the collectibility of principal or interest on loans, it is management's
practice to place such loans on non-accrual status immediately, rather than
delaying such action until the loans become 90 days past due. Previously
accrued and uncollected interest on such loans is reversed and income is
recorded only to the extent that interest payments are subsequently received in
cash and a determination has been made that the principal balance of the loan
is collectible. If collectibility of the principal is in doubt, payments
received are applied to loan principal.
Loans past due 90 days or more but still accruing interest are also included in
non-performing loans. Loans past due 90 days or more but still accruing are
classified as such where the underlying loans are both well-secured (the
collateral value is sufficient to cover principal and accrued interest) and in
the process of collection. Also included in non-performing loans are
"restructured" loans. Restructured loans involve the granting of some
concession to the borrower involving the modification of terms of the loan,
such as changes in payment schedule or interest rate.
Total nonperforming loans at June 30, 1995, were $17.1 million, an increase of
$3.5 million from March 31, 1995. The ratio of nonperforming loans to total
loans at June 30, 1995, was .70% compared to .58% at March 31, 1995, and .97%
at June 30, 1994.
Non-Performing Loans and Other Real Estate
($ in Thousands)
-------------------------------------------------------------------------------
6/30/95 3/31/95 12/31/94 9/30/94 6/30/94
Non-Accrual Loans $15,265 $11,323 $13,111 $15,323 $17,126
Accruing Loans Past Due
90 Days or More 649 1,064 1,247 1,496 920
Restructured Loans 1,158 1,190 1,888 1,721 2,629
------ ------ ------ ------ -----
Total Non-Performing Loans $17,072 $13,577 $16,246 $18,540 $20,675
Non-Performing Loans as a
Percent of Loans .70% .58% .71% .85% .97%
Other Real Estate Owned $ 1,214 $ 1,327 $ 1,571 $ 1,306 $ 2,128
-------------------------------------------------------------------------------
Impaired loans are defined, by SFAS 114 and SFAS 118 adopted in the first
quarter of 1995, as those loans where it is probable that all amounts due
according to contractual terms, including principal and interest, will not be
collected. The corporation has determined that nonaccrual loans meet the
definition. Impaired loans are measured at the fair value of the collateral,
if the loan is collateral dependant, or alternatively at the present value of
expected future cash flows. Interest income on impaired loans is recognized
only at the time that cash is received, unless applied to reduce principal.
At June 30, 1995, the recorded investment in impaired loans totaled $15.3
million. Included in this amount is $10.9 million of impaired loans that do
not require a related allowance for possible loan losses and $4.4 million of
impaired loans for which the related allowance for possible loan losses totaled
$.9 million. The average recorded investment in impaired loans during the six
months ended June, 30, 1995, was approximately $13.2 million. Interest income
recognized on a cash basis on impaired loans during the first six months of
1995 totaled $304,000.
The following table shows, for those loans accounted for on a non-accrual basis
and restructured loans for the six months ended June 30, 1995, the gross
interest that would have been recorded if the loans had been current in
accordance with their original terms and the amount of interest income that was
included in net income for the period.
For the Six
Months Ended
June 30, 1995
($ In Thousands)
Interest income in accordance with original terms $1,033
Interest income recognized 365
-----
Reduction in interest income $ 668
=====
Potential problem loans are loans where there are doubts as to the ability of
the borrower to comply with present repayment terms. The decision of
management to place loans in this category does not necessarily mean that the
corporation expects losses to occur, but that management recognizes that a
higher degree of risk is associated with these performing loans.
Potential Problem Loans
($ in Thousands)
-------------------------------------------------------------------------------
6/30/95 3/31/95 12/31/94 9/30/94 6/30/94
Potential Problem Loans $40,318 $44,061 $51,764 $42,325 $54,282
-------------------------------------------------------------------------------
At June 30, 1995, potential problem loans totaled $40.3 million compared to
$51.8 million at the end of 1994. The loans that have been reported as
potential problem loans are not concentrated in a particular industry, but
rather cover a diverse range of businesses, e.g. communications, wholesale
trade, manufacturing, finance/insurance/real estate, and services. Management
does not presently expect significant losses for credits in this category.
Other real estate owned totaled to $1.2 million at June 30, 1995, compared with
$2.1 million at June 30, 1994.
LOAN CONCENTRATIONS
Loan concentrations are considered to exist when there are amounts loaned to a
multiple number of borrowers engaged in similar activities that would cause
them to be similarly impacted by economic or other conditions. The
corporation's loans are widely diversified by borrower, industry group and
area. At June 30, 1995, no concentrations existed in the corporation's loan
portfolio in excess of 10% of total loans.
Real estate construction loans at June 30, 1995, totaled $120.4 million or only
5% of loans while agricultural loans were 1.1% of total loans.
As of June 30, 1995, the corporation did not have any cross-border outstandings
to borrowers in any foreign country where such outstandings exceeded 1% of
total assets.
NONINTEREST INCOME
Noninterest income increased 3.8% for the three months ended June 30, 1995,
when compared with the same period in 1994, and decreased slightly when
compared to the first quarter of 1995. Noninterest income decreased $18,000 or
.1% during the first six months of 1995 when compared with the same period in
1994.
Trust fees were up 7.6% for the first half of 1995 compared with the same
period in 1994. The increase was the result of growth in new business
development and consistent investment performance, both contributing to growth
in assets under management. Trust fees for the second quarter decreased
$135,000 or 2.5% when compared to the first quarter of 1995, but increased 4.6%
when compared with the second quarter of 1994.
Noninterest Income
Quarterly Trends
($ in Thousands)
-------------------------------------------------------------------------------
2nd Qtr. 1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr.
1995 1995 1994 1994 1994
-------------------------------------------------------------------------------
Trust Servicing Fees $ 5,361 $ 5,496 $ 5,118 $ 5,017 $ 5,125
Data Processing Fees 278 273 394 432 422
Service Charges on
Deposit Accounts 2,638 2,608 2,744 2,802 2,787
Investment Security
Gains, Net 102 21 --- 6 157
Loan Servicing Fees 896 955 876 913 829
Residential Real Estate
Loan Origination Fees 188 80 125 146 247
Retail Investment Income 548 450 335 389 432
Other 2,496 2,649 1,749 1,710 2,055
------ ------ ------ ------ ------
Total $ 12,507 $ 12,532 $ 11,341 $ 11,415 $ 12,054
-------------------------------------------------------------------------------
Data processing fees for the first six months of 1995 were 35% lower than the
same period in 1994 due primarily to fewer correspondent banks using data
processing services.
Service charges on deposits decreased 4.4% for the first half of 1995 compared
with the 1994 first half amount. This followed a 3.4% decrease in service
charges on deposits when comparing the first quarter of 1995 with the
comparable period in 1994. The decrease from the first half of 1994 was
largely due to lower service charges and fees on personal accounts partially
offset by higher service charges on business accounts. Service charges
increased 1.2% when comparing the second quarter of 1995 to the first quarter
of 1995.
Net investment security gains recognized in the second quarter of 1995 were
$102,000 following net security gains of $21,000 in the first quarter of 1995.
Net investment security gains in the first half of 1995 of $123,000 were
$73,000 lower than the first half of 1994.
Loan servicing fees were up 12.5% for the first half of 1995 compared with
1994, following an increase of 16.9% in the first quarter of 1995 compared with
the same period in 1994.
Residential real estate loan origination fees for the first half of 1995 were
down $488,000 from 1994. The majority of the decrease was at the corporation s
residential mortgage company where a decrease of $249,000 was due to the
continued reduction in loan originations during the second half of 1994, which
carried into 1995. During the second quarter of 1995, origination fees
increased $108,000 to $188,000 when compared with the first quarter of 1995.
The increase occurred when interest rates began to decline during the second
quarter of this year.
Retail investment income decreased $21,000 or 2.1% during the first half of
1995 compared to the same period in 1994. Retail investment income for the
second quarter of 1995 increased $98,000 or 21.8% over the first quarter of
1995.
Other noninterest income increased $134,000 in the first half of 1995 compared
with the same period in 1994 following a decline of $307,000 in the first
quarter of 1995 compared with 1994. Other noninterest income decreased
$153,000 when comparing the second quarter of 1995 to the first quarter of
1995. This quarter to quarter decrease resulted from a $350,000 decline in the
amount of insurance recoveries at a subsidiary bank which was partially offset
by an increase in underwriting fee income at the corporation s residential
mortgage company of $99,000 due to higher origination volumes.
Miscellaneous underwriting fees income decreased $138,000 from the first half
of 1994. During the first half of 1995, a subsidiary bank had a $700,000
insurance recovery and a $350,000 insurance recovery from previous lawsuits
while in the first half of 1994 the parent company recognized $1 million in
insurance proceeds on a key-man life insurance policy.
NONINTEREST EXPENSE
Total noninterest expense increased 5.0% for the first half of 1995 when
compared with the same period in 1994 and was .8% lower when comparing the
second quarter of 1995 with the first quarter of 1995.
Salaries and employee benefits were up 4.4% or $1.3 million over the first half
of 1994, with much of the increase due to the branch office acquisitions in
late 1994. Salaries and commissions were up $1.3 million over 1994, an
increase of 5.8%. Deferred compensation expense declined $441,000 during the
same period. Salaries and employee benefits were $229,000 lower during the
second quarter of 1995 than during the first quarter of 1995.
Profit sharing, retirement savings, and pension expenses showed an increase of
$158,000 or 6.6% for the first half of 1995 compared with 1994.
Health insurance expenses increased $145,000 or 12.0% over the first half of
1994 while social security expense was up $131,000 or 8.0%.
Noninterest Expense
Quarterly Trends
($ in Thousands)
------------------------------------------------------------------------------
2nd Qtr. 1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr.
1995 1995 1994 1994 1994
-------------------------------------------------------------------------------
Salaries and Employee
Benefits $15,186 $15,415 $15,383 $14,735 $14,474
Net Occupancy Expense 2,371 2,451 2,223 2,119 2,144
Equipment Rentals,
Depreciation and
Maintenance 1,495 1,561 1,630 1,503 1,438
Data Processing Expense 1,829 1,823 1,947 1,870 1,842
Stationery and Supplies 736 791 728 630 712
Business Development and
Advertising 737 865 660 576 783
FDIC Expense 1,475 1,469 1,415 1,335 1,340
Legal and Professional Fees 223 241 230 391 263
Other 5,383 5,066 5,219 4,897 4,849
------ ------ ------ ------ ------
Total $29,435 $29,682 $29,435 $28,056 $27,845
-------------------------------------------------------------------------------
Net occupancy expense increased 10.2% or $446,000 in the first half of 1995
compared with the same period in 1994. This followed a 9.8% increase in the
first quarter of 1995 over 1994. The increase during the first half of 1995
was primarily a result of the branch office acquisitions.
Equipment rentals and depreciation increased $151,000 in the first half of 1995
compared with the same period in 1994. The increase is primarily due to higher
depreciation expense.
Data processing expense decreased $20,000 during the first half of 1995
compared with the same period in 1994.
Business development and advertising expense was up 10.3% in the first half of
1995 compared to 1994 following a 29.3% increase in the first quarter of 1995
compared with 1994. The first half of 1995 increase over 1994 was primarily at
two of the corporation s larger bank subsidiaries.
Legal and professional fees decreased 37.6% or $279,000 for the first half of
1995 compared with the same period in 1994 primarily at the parent company.
Other noninterest expense increased 7.8% or $755,000 in the first half of 1995
compared with 1994, following a 4.6% increase in the first quarter of 1995
compared with the same period in 1994.
Gains on sale of ORE increased $466,000 in the first half of 1995 compared with
the same period in 1994, which reflected a decrease in other noninterest
expense.
Net gains on loans sold totaled $171,000 in the first half of 1995 compared
with net losses of $142,000 in the same period in 1994. The overall change of
$131,000 created a decrease in other noninterest expense.
Amortization of branch purchase premium intangibles totaled $684,000 in the
first half of 1995 compared with no similar expenses in the same period in
1994.
Repo and foreclosure expense declined $288,000 for the first half of 1995
compared with 1994.
Other miscellaneous expense decreased $285,000 for the first half of 1995
compared with 1994. There also were less significant increases in a variety of
other miscellaneous expense categories.
The efficiency ratio improved to 61.32% for the second quarter of 1995 compared
with 62.18% for the same period last year. The ratio decreased during the
second quarter of 1995 compared with 61.97% for the first quarter of 1995. The
year-to-date efficiency ratio improved to 61.64% for the first half of 1995
compared to 64.07% in the same period in 1994. The improvement for each of the
three comparative periods was primarily due to the tax-equivalent net interest
income growth outpacing recurring noninterest expense growth.
Expense Control
Quarterly Trends
-------------------------------------------------------------------------------
2nd Qtr. 1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr.
1995 1995 1994 1994 1994
-------------------------------------------------------------------------------
Efficiency Ratio
- Quarter 61.32% 61.97% 61.54% 61.22% 62.18%
Efficiency Ratio
- Year 61.64% 61.97% 62.68% 63.09% 64.07%
Expense Ratio
- Quarter 2.23% 2.29% 2.44% 2.36% 2.30%
Expense Ratio
- Year 2.26% 2.29% 2.39% 2.37% 2.37%
-------------------------------------------------------------------------------
The expense ratio improved to 2.23% for the second quarter of 1995 compared to
2.30% and 2.29% at the second quarter of 1994 and the first quarter 1995. The
year-to-date expense ratio for 1995 improved to 2.26%, compared to 2.37% for
the same period in 1994. The improvement between the comparative periods
ratios was due to the growth of average earning assets outpacing the growth of
recurring noninterest expense.
INCOME TAXES
Income tax expense increased 18.6% in the first half of 1995 compared with the
same period in 1994. The first half 1994 effective rate was affected by the $1
million nontaxable life insurance proceeds recognized. Adjusted for the
insurance proceeds, the first half 1994 effective tax rate was 35.5%, compared
to the first half 1995 effective rate of 36.0%. Tax expense in the first half
of 1995 was primarily affected by a higher level of book taxable income and a
lower level of tax-exempt income.
Income Tax Expense
Quarterly Trends
($ in Thousands)
-------------------------------------------------------------------------------
2nd Qtr. 1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr.
1995 1995 1994 1994 1994
-------------------------------------------------------------------------------
Income Before Taxes $16,933 $16,287 $16,778 $16,238 $15,467
====== ====== ====== ====== ======
State Tax Expense $ 1,007 $ 995 $ 1,038 $ 929 $ 937
Federal Tax Expense 5,103 4,864 5,036 4,952 4,574
------ ------ ------ ------ ------
Total Income Tax Expense 6,110 5,859 6,074 5,881 5,511
Effective Tax Rate 36.1% 36.0% 36.2% 36.2% 35.6%
------------------------------------------------------------------------------
BALANCE SHEET
Consolidated assets totaled $3.36 billion as of June 30, 1995, up 11.9% from
one year ago. Loans, net of unearned income, were $2.4 billion as of June 30,
1995, up 14.2% from the $2.1 billion of a year earlier. Total deposits at June
30, 1995, were $2.7 billion, an increase of 14.6% from one year ago.
Total assets at June 30, 1995, increased by $70.9 million from December 31,
1994. The change in assets during the six-month period was affected by a $23.8
million decline in cash and due from banks. Fed funds sold decreased $40.5
million since the end of last year while loans increased $146.0 million.
Investment securities increased $2.8 million during the same period.
Total period-end deposits increased by $59.7 million during the first half of
1995. The change was comprised of a $150.5 million increase in interest
bearing deposits and a $90.8 million decrease in noninterest bearing deposits.
The interest bearing deposits change included a $99.9 million increase in
retail brokered deposits.
End-of-period short-term borrowings decreased $11.8 million since December 31,
1994.
Since the first quarter of 1995, the most significant changes in average
balance sheet composition that provided sources of funds were an $84.8 million
increase in interest-bearing deposits, a $13.9 million decrease in investment
securities, and a decrease in fed funds sold of $12.1 million. Significant
changes in average balance sheet composition that used funds were an $75.4
million increase in loans, a $22.9 million decrease in noninterest bearing
deposits, and a $27.9 million decrease in short-term borrowings.
The ratio of average loans to average deposits during the first half of 1995
was 89.7% compared with 86.7% in the first half of 1994. Year-to-date 1995
average earning assets were 93.6% of average total assets, up slightly from the
year-to-date ratio of 93.5% in 1994.
The most significant changes in the period end balance sheet comparing June 30,
1995, to March 31, 1995, included a $28.4 million increase in cash and due from
banks, a $99.3 million increase in loans, a $20.7 million increase in
noninterest bearing deposits, a $147.6 million increase in interest bearing
deposits, and a $49.9 million decline in short-term borrowings.
LIQUIDITY
Liquidity refers to the ability of the corporation to generate adequate amounts
of cash to meet the corporation's needs for cash. The subsidiary banks and the
parent company of the corporation have different liquidity considerations.
Banking subsidiaries meet their cash flow requirements by having funds
available to satisfy customer credit needs as well as having available funds to
satisfy deposit withdrawal requests. Liquidity at banking subsidiaries is
derived from deposit growth, money market assets, maturing loans, the maturity
of securities, access to other funding sources and markets, and a strong
capital position.
Deposit growth is the primary source of liquidity at the banking subsidiaries.
As a financing activity in the first six months' 1995 Consolidated Statements
of Cash Flows, deposits reflected a net cash inflow of $59.7 million from the
end of 1994.
Within the investing activities cash flows, maturities of securities during the
first half of 1995 totaled $98.5 million. As of June 30, 1995, the securities
portfolio contained $299 million at amortized cost of U.S. treasury and federal
agency securities available for sale, representing 45.1% of the total
securities portfolio. These government securities are highly marketable and
had a market value equal to 100.6% of amortized cost at quarter end.
Additionally, $173.3 million at amortized cost of U.S. Treasury and federal
agency securities that are held to maturity, are available, if necessary, as a
source of liquidity. These securities had a quarter-end market value of $171.8
million or 99.2% of amortized cost.
Money market assets, consisting of federal funds sold and interest-bearing
deposits in other financial institutions, averaged $24.8 million in the first
six months of 1995 compared to $53 million during the same period in 1994.
Being short-term and liquid by nature, money market assets generally provide a
lower yield than other earning assets. The corporation has a strategy of
maintaining a sufficient level of liquidity to accommodate fluctuations in
funding sources and will periodically take advantage of specific opportunities
to temporarily invest excess funds at narrower than normal rate spreads while
still generating additional net interest income. At June 30, 1995, the
corporation had $17.8 million outstanding in short-term money market assets,
serving as an essential source of liquidity. The amount at quarter end
represents .5% of total assets compared to .4% at March 31, 1995.
Within the classification of short-term borrowings at June 30, 1995, federal
funds purchased and securities sold under agreements to repurchase totaled
$236.1 million compared with $302.7 million at March 31, 1995, and $271.3
million at the end of 1994. Federal funds are purchased from a sizeable
network of correspondent banks while securities sold under agreements to
repurchase are obtained from a base of individual, business and public entity
customers.
The aggregate subsidiary liquidity resources were sufficient in the first half
of 1995 to fund the growth in loans and meet other needs for cash when
necessary. As of June 30, 1995, there were no material commitments for capital
expenditures, i.e. to purchase fixed assets.
Deposit growth will continue to be the primary source of bank subsidiary
liquidity on a long-term basis, along with stable earnings, the resulting cash
generated by operating activities and strong capital positions. Shorter-term
liquidity needs will mainly be derived from growth in short-term borrowings,
maturing securities and money market assets, loan maturities and access to
other funding sources.
Liquidity is also necessary at the parent company level. The parent company's
primary sources of funds are dividends and service fees from subsidiaries,
borrowings and proceeds from the issuance of equity. The parent company manages
its liquidity position to provide the funds necessary to pay dividends to
shareholders, service debt, invest in subsidiaries and satisfy other operating
requirements. Dividends received from subsidiaries totaled $11 million in the
first half of 1995 and will continue to be the parent's main source of
long-term liquidity. The dividends from subsidiaries were used to pay cash
dividends to the corporation s shareholders of $6.9 million, to reduce short-
term borrowings by $.5 million, to purchase investment securities of $.8
million, to make a $.5 million capital contribution to a bank subsidiary, and
to purchase treasury stock for $.9 million in the first half of 1995. Payments
of $.4 million of original long-term borrowings were made during the first half
of 1995.
At June 30, 1995, the parent company had $100 million of established lines of
credit with non-affiliated banks, of which $39.2 million was in use. Of the
amount in use, the parent company downstreamed $33.7 million to the
corporation s residential and commercial mortgage banking subsidiaries and
leasing company for their use in funding loans and leases. The parent company
also has access to funds from the issuance of the corporation s commercial
paper, although such funds are also downstreamed to the nonbank subsidiaries.
Commercial paper outstanding at June 30, 1995, totaled $9.4 million.
The parent company's long-term debt to equity ratio at June 30, 1995, was 1.2%,
compared with 1.4% at December 31, 1994.
Management believes that, in the current economic environment, the
corporation's subsidiary and parent company liquidity positions are adequate.
There are no known trends nor any known demands, commitments, events or
uncertainties that will result or are reasonably likely to result in a material
increase or decrease in the corporation s liquidity.
CAPITAL
Stockholders' equity at June 30, 1995, increased 12.1% to $296 million or
$18.77 per share compared with $264.1 million or $16.76 per share one year ago.
Capital continues to be strong, representing 8.82% of total assets as of June
30, 1995. Quarter-end capital includes a positive $4.4 million equity
component compared with a positive $827,000 component at June 30, 1994 related
to unrealized gains/losses on securities available for sale. Without the
equity component, the ratio of June 30, 1995, equity to assets would be 8.71%
compared with adjusted equity of 8.79% one year ago.
Capital
Quarterly Trends
($ in Thousands)
-------------------------------------------------------------------------------
2nd Qtr. 1st Qtr. 4th Qtr. 3rd Qtr. 2nd Qtr.
1995 1995 1994 1994 1994
-------------------------------------------------------------------------------
Stockholders Equity $295,975 $284,315 $274,582 $270,434 $264,133
Average Equity to
Average Assets 8.85% 8.60% 8.49% 8.87% 8.80%
Equity to Assets
- Period End 8.82% 8.81% 8.36% 8.78% 8.81%
Tier 1 Capital to
Risk Weighted Assets
- Period End 10.47% 10.61% 10.35% 11.24% 11.51%
Total Capital to
Risk Weighted Assets
- Period End 11.73% 11.88% 11.62% 12.51% 12.79%
Tier 1 Leverage Ratio
- Period End 8.16% 8.04% 7.89% 8.53% 8.52%
Market Value Per Share
- Period End 30.38 28.90 28.40 28.20 30.00
Book Value Per Share
- Period End 18.77 18.05 17.42 17.15 16.76
Market Value Per Share
to Book Value Per Share 161.9% 160.1% 163.0% 164.4% 179.0%
Dividends Per Share
- This Quarter .22 .22 .22 .22 .22
Dividends Per Share
- Year to Date .43 .22 .85 .63 .42
Earnings Per Share
- This Quarter .69 .66 .68 .66 .63
Earnings Per Share
- Year to Date 1.35 .66 2.57 1.89 1.23
Dividend Payout Ratio
- This Quarter 31.88% 33.33% 32.35% 33.33% 34.92%
Dividend Payout Ratio
- Year to Date 31.85% 33.33% 33.07% 33.33% 34.15%
-------------------------------------------------------------------------------
Net income in the second quarter of 1995 was $10.8 million while dividends paid
to the corporation s shareholders amounted to $3.5 million. Net income for the
first half of 1995 was $21.3 million while dividends paid were $6.9 million.
Equity decreased $214,000 from the effects of stock option and treasury stock
activity during the first half of 1995.
Cash dividends during the second quarter were $.22 per share, the same as the
cash dividends per share for the second quarter of 1994. Cash dividends during
the first half of 1995 were $.43 per share, up 2.4% from the first half of
1994. The year-to-date dividend payout ratio represents 31.9% of 1995 earnings
per share.
The adequacy of the corporation's capital is regularly reviewed to ensure that
sufficient capital is available for current and future needs and is in
compliance with regulatory guidelines. The assessment of overall capital
adequacy depends on a variety of factors, including asset quality, liquidity,
stability of earnings, changing competitive forces, economic conditions in
markets served and strength of management.
As of June 30, 1995, the corporation's tier 1 risk-based capital ratio, total
risk-based capital (tier 1 and tier 2) ratio and tier 1 leverage ratio were
well in excess of regulatory minimums. Management of the corporation expects
to continue to exceed the minimum standards in the future.
Similar capital guidelines are also required of the individual banking
subsidiaries of the corporation. As of June 30, 1995, each banking subsidiary
exceeded the minimum ratios for tier 1 capital, total capital and the tier 1
leverage ratio.
Management actively reviews capital strategies for the corporation and each of
its subsidiaries to ensure that capital levels are appropriate based on the
perceived business risks, future growth opportunities, industry standards and
regulatory requirements.
RECENT DEVELOPMENTS
On July 1, 1995, the corporation completed the cash acquisition of a privately
owned mortgage company in suburban Chicago. The mortgage company acquisition
provided an additional approximately $535 million in mortgage loan servicing.
The acquisition will be accounted for as a purchase.
On August 3, 1995, the corporation acquired GN Bancorp, Chicago, in a stock-
for-stock merger transaction. GN is the parent company of the $130 million
Gladstone-Norwood Trust & Savings Bank, with two offices located in northwest
Chicago. The acquisition will be accounted for as a pooling-of-interests.
ASSOCIATED BANC-CORP
PART II - OTHER INFORMATION
Item 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The corporation held its Annual Meeting of Shareholders on April
26, 1995. Proxies were solicited by corporation management
pursuant to Regulation 14A under the Securities Exchange Act of
1934.
(b) Directors elected at the Annual Meeting were Robert Feitler,
Robert C. Gallagher, and John C. Meng. Directors continuing in
office after the meeting were Harry B. Conlon, Ronald R. Harder,
John S. Holbrook, Jr., William R. Hutchinson, James F. Janz,
William J. Lawson and J. Douglas Quick.
(c) The matters voted upon and the results of the voting were as
follows:
(i) Election of the below-named nominees to the Board of
Directors of the corporation:
For Withheld
All Nominees 10,143,640.5470 28,321.3940
By Nominee:
Feitler 10,114,885.3870 28,755.1600
Gallagher 10,114,648.9140 28,991.6330
Meng 10,115,319.1530 28,321.3940
(ii) Ratification of the selection of KPMG Peat Marwick as
independent certified public accountants for the corporation
for the year ending December 31, 1995.
For Against Abstain
10,041,996.0400 25,166.5690 76,477.9380
(d) Not applicable.
ASSOCIATED BANC-CORP
PART II - OTHER INFORMATION
ITEM 6: Exhibits and Reports on Form 8-K
(a) Exhibits:
(11) Statements re Computation of Per Share Earnings
(b) Reports on Form 8-K:
There were no reports on Form 8-K filed for the six months ended
June 30, 1995.
ASSOCIATED BANC-CORP
EXHIBIT (11)
Statement Re Computation of Per Share Earnings
June 30, 1995 June 30, 1994
As Reported:
Net income $ 21,250,595 $ 19,367,047
Weighted average common shares
outstanding 15,764,344 15,758,851
Net income per share $ 1.35 $ 1.23
Primary:
Net income $ 21,250,595 $ 19,367,047
Weighted average common shares
outstanding 15,764,344 15,758,851
Common stock equivalents 181,936 169,888
Adjusted weighted average common
shares outstanding 15,946,280 15,928,739
Net income per share $ 1.33 $ 1.22
Fully Diluted:
Net income $ 21,250,595 $ 19,367,047
Weighted average common shares
outstanding 15,764,344 15,758,851
Common stock equivalents 200,515 205,770
Adjusted weighted average common
shares outstanding 15,964,859 15,964,621
Net income per share $ 1.33 $ 1.21
Note: The primary and fully diluted numbers are not disclosed in the reported
financials because any dilution that is less than 3% of earnings per common
shares outstanding is not considered to be material.
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: August 11, 1995
/s/ Harry B. Conlon
-----------------------------------
Harry B. Conlon
Chairman & Chief Executive Officer
Date: August 11, 1995
/s/ Joseph B. Selner
-----------------------------------
Joseph B. Selner
Principal Financial Officer
INDEX TO EXHIBITS
Exhibit No.
(11) Computations of Earnings Per Share and Average
Number of Common Shares Outstanding
[ARTICLE] 9
[CIK] 0000007789
[NAME] ASSOCIATED BANC-CORP
[MULTIPLIER] 1,000
<TABLE>
<S> <C>
[PERIOD-TYPE] 6-MOS
[FISCAL-YEAR-END] DEC-31-1995
[PERIOD-START] JAN-01-1995
[PERIOD-END] JUN-30-1995
[CASH] 162,574
[INT-BEARING-DEPOSITS] 600
[FED-FUNDS-SOLD] 17,182
[TRADING-ASSETS] 0
[INVESTMENTS-HELD-FOR-SALE] 308,770
[INVESTMENTS-CARRYING] 360,885
[INVESTMENTS-MARKET] 360,157
[LOANS] 2,423,248
[ALLOWANCE] 37,874
[TOTAL-ASSETS] 3,355,230
[DEPOSITS] 2,723,335
[SHORT-TERM] 304,203
[LIABILITIES-OTHER] 28,250
[LONG-TERM] 3,467
[COMMON] 160
[PREFERRED-MANDATORY] 0
[PREFERRED] 0
[OTHER-SE] 293,815
[TOTAL-LIABILITIES-AND-EQUITY] 3,355,230
[INTEREST-LOAN] 102,812
[INTEREST-INVEST] 19,981
[INTEREST-OTHER] 732
[INTEREST-TOTAL] 123,525
[INTEREST-DEPOSIT] 45,431
[INTEREST-EXPENSE] 54,456
[INTEREST-INCOME-NET] 69,069
[LOAN-LOSSES] 1,771
[SECURITIES-GAINS] 123
[EXPENSE-OTHER] 59,117
[INCOME-PRETAX] 33,220
[INCOME-PRE-EXTRAORDINARY] 33,220
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] 21,251
[EPS-PRIMARY] 1.35
[EPS-DILUTED] 1.35
[YIELD-ACTUAL] 8.35
[LOANS-NON] 15,265
[LOANS-PAST] 649
[LOANS-TROUBLED] 1,158
[LOANS-PROBLEM] 40,318
[ALLOWANCE-OPEN] 36,369
[CHARGE-OFFS] 2,115
[RECOVERIES] 1,849
[ALLOWANCE-CLOSE] 37,874
[ALLOWANCE-DOMESTIC] 37,874
[ALLOWANCE-FOREIGN] 0
[ALLOWANCE-UNALLOCATED] 0
</TABLE>
