ASSOCIATED BANC-CORP — Regulatory Filings 2003

Jun 27, 2003

11-K 1 form11kabc123102.htm FORM 11-K ASSOCIATED BANC-CORP 12-31-02 Associated Banc-Corp 11-K 12-31-02 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 11-K (X) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2002 OR ( ) TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED) For the transition period from to ----------- ----------- Commission file number 0-5519 (Associated Banc-Corp) A. Full title of the plan and the address of the plan, if different from that of the issuer named below: ASSOCIATED BANC-CORP PROFIT SHARING & 401(k) PLAN B. Name of issuer of the securities held pursuant to the plan and the address of its principal executive officer: ASSOCIATED BANC-CORP 1200 Hansen Road Green Bay, Wisconsin 54304 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Associated Banc-Corp Retirement Program Committee has duly caused this Annual Report to be signed on its behalf by the undersigned hereunto duly authorized. ASSOCIATED BANC-CORP PROFIT SHARING & 401(k) PLAN /s/ James A. Noffke ------------------------------------ James A. Noffke, Chairman Retirement Program Committee ASSOCIATED BANC-CORP PROFIT SHARING & 401(k) PLAN Financial Statements and Schedule December 31, 2002 and 2001 (With Independent Auditors' Report Thereon) ASSOCIATED BANC-CORP PROFIT SHARING & 401(k) PLAN TABLE OF CONTENTS Page(s) ------------------------------------------------------------------------------- Independent Auditors' Report 1 Statements of Net Assets Available for Plan Benefits, December 31, 2002 and 2001 2 Statements of Changes in Net Assets Available for Plan Benefits, Years Ended December 31, 2002 and 2001 3 Notes to Financial Statements 4-11 Schedule H, line 4i - Schedule of Assets (Held at End of Year), December 31, 2002 12-13 Independent Auditors' Report The Plan Administrator Associated Banc-Corp Profit Sharing & 401(k) Plan: We have audited the accompanying statements of net assets available for plan benefits of the Associated Banc-Corp Profit Sharing & 401(k) Plan (Plan) as of December 31, 2002 and 2001, and the related statements of changes in net assets available for plan benefits for each of the years in the two year period ended December 31, 2002. These financial statements are the responsibility of the Plan's administrator. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by the Plan administrator, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for plan benefits of the Plan as of December 31, 2002 and 2001, and the changes in net assets available for plan benefits for each of the years in the two year period ended December 31, 2002, in conformity with accounting principles generally accepted in the United States of America. Our audits were performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental Schedule H, line 4i - Schedule of Assets (Held at End of Year) is presented for the purpose of additional analysis and is not a required part of the basic financial statements, but is supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. The supplemental schedule is the responsibility of the Plan's administrator. The supplemental schedule has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. /s/KPMG LLP Chicago, Illinois June 5, 2003 ASSOCIATED BANC-CORP PROFIT SHARING & 401(k) PLAN Statements of Net Assets Available for Plan Benefits December 31, 2002 and 2001 2002 2001 -------------------------------------------------------------------------------- Assets: Investments, at fair value: Common/collective trust funds $102,889,136 $117,985,785 Common stocks 99,954,166 98,594,263 Mutual funds 21,829,208 14,600,367 Loans to participants 986,811 1,008,842 -------------------------------------------------------------------------------- Total Investments 225,659,321 232,189,257 Cash and cash equivalents 88,999 147,948 Accrued interest and dividends receivable 25 137 Cash surrender value of life insurance 230,088 246,586 Employer contribution receivable 10,837,143 9,591,312 Other, net 0 28 -------------------------------------------------------------------------------- Net assets available for plan benefits $236,815,576 $242,175,268 ================================================================================ See accompanying notes to financial statements. ASSOCIATED BANC-CORP PROFIT SHARING & 401(k) PLAN Notes to Financial Statements December 31, 2002 and 2001 Statements of Changes in Net Assets Available for Plan Benefits Years Ended December 31, 2002 and 2001 2002 2001 -------------------------------------------------------------------------------- Additions: Investment Income (loss): Appreciation (depreciation) in fair value of investments $(14,087,363) $ 5,420,876 Interest and dividends 3,829,023 3,765,186 -------------------------------------------------------------------------------- Total investment income (loss) (10,258,340) 9,186,062 Participant contributions 8,082,512 7,108,065 Employer contributions 10,837,143 9,591,312 Rollover contributions 1,526,769 738,340 Other 152 0 -------------------------------------------------------------------------------- Total additions 10,188,236 26,623,779 Deductions: Distribution to participants 14,859,492 26,877,762 Insurance premiums 29,448 33,770 Other 0 769 Administrative expenses 658,988 626,159 -------------------------------------------------------------------------------- Total deductions 15,547,928 27,538,460 Net decrease in net assets available for plan benefits (5,359,692) (914,681) Net assets available for plan benefits: Beginning of year 242,175,268 243,089,949 -------------------------------------------------------------------------------- End of year $236,815,576 $242,175,268 -------------------------------------------------------------------------------- See accompanying notes to financial statements. ASSOCIATED BANC-CORP PROFIT SHARING & 401(k) PLAN Notes to Financial Statements December 31, 2002 and 2001 (1) Description of the Plan The following brief description of the Associated Banc-Corp Profit Sharing & 401(k) Plan (Plan) is provided for general information. The Plan contains both profit sharing provisions and 401(k) provisions. Participants should refer to the summary plan description for a more complete description of the Plan's provisions. Background Associated Banc-Corp (Company) has established the Associated Banc-Corp Profit Sharing & 401(k) Plan, a defined contribution plan. The profit sharing provisions of the Plan provide for discretionary employer contributions. The 401(k) provisions of the Plan provide for employee contributions complying with the provisions of Internal Revenue Code (Code) Section 401(k) as well as discretionary employer matching contributions. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). Participants Employees of the Company and its subsidiaries that have adopted the Plan are eligible to participate in the profit sharing provisions and in the discretionary employer 401(k) contribution provisions of the Plan on January 1 of the year in which 1,000 hours of service are completed. Employees are eligible to participate in the employee 401(k) contribution portion of the Plan upon completion of 30 days employment if they are reasonably expected to complete 1,000 hours of service annually. Otherwise, employees are eligible to participate in the Plan immediately after completing 1,000 hours of service in a Plan year. Contributions In conjunction with the 401(k) provisions of the Plan, participants can elect to contribute an amount between 1% and the limitations ($11,000 for 2002) of Section 402(g) of the Code of their compensation in multiples of 1% to the Plan by means of regular payroll deductions. Participants who have attained age 50 are eligible to make catch-up contributions in accordance with, and subject to the limitations ($1,000 for 2002) of, Code section 414(v). Participants are also allowed to contribute amounts qualifying as rollover contributions under Section 402(c)(4) of the Code. The Plan provides for a discretionary Company Matching contribution equal to a percentage of compensation to match all or part of the employee contribution for plan participants who have met the service requirements. The Plan provides for discretionary Company contributions under the profit sharing provision of the Plan. Such contributions are allocated to each participant's account based upon total participant's compensation, as defined by the Plan for the year. ASSOCIATED BANC-CORP PROFIT SHARING & 401(k) PLAN Notes to Financial Statements December 31, 2002 and 2001 Vesting Participants are 100% vested at all times in their benefits under the 401(k) portion of the Plan. The following is a schedule of vesting in the Company's discretionary profit sharing contribution: --------------------------------------------------------------------------- Years of Service Vested Percentage --------------------------------------------------------------------------- Less than three 0% Three but less than four 50% Four but less than five 75% Five or more 100% --------------------------------------------------------------------------- Forfeitures Upon termination, the non-vested portion of Company contributions and the earnings thereon become subject to forfeiture. Forfeitures were approximately $346,500 and $627,000 in 2002 and 2001, respectively. These forfeitures were allocated to remaining active participants based on compensation. Under certain circumstances, the forfeited portion of a participant's account will be restored if the participant is re-employed by the Company. Investment of Plan Assets Participants have the right to direct that investments be made in the Balanced Lifestage Fund, Growth Lifestage Fund, Money Market Fund, Intermediate Term Bond Fund, Common Stock Fund, Foreign Equity Fund, Emerging Growth Fund, Equity Income Fund, Associated Banc-Corp Common Stock Fund, Berger Small Cap Value Fund, Dodge & Cox Stock Fund, Invesco Dynamics Fund Investor, Janus Overseas Fund, RS Diversified Growth Fund, Vanguard 500 Index Fund, Weitz Value Fund or a combination of funds. Plan assets are held in trust with a subsidiary of the Company (trustee). The following is a brief description of each fund: Balanced Lifestage Fund - The fund is designed to put equal emphasis on the pursuit of capital growth through investments in stocks, along with the stability and income generation provided by fixed income securities. Approximately one-half the portfolio will consist of investment grade bonds with the remaining one-half consisting of a diversified mix of stocks, with an emphasis on large company stocks but including small and foreign stocks. Growth Lifestage Fund - The fund is designed to achieve growth of capital through investment in a broadly diversified portfolio of common stocks. The portfolio will emphasize large capitalization stocks, but will also include mid-cap, small-cap, and foreign stocks. ASSOCIATED BANC-CORP PROFIT SHARING & 401(k) PLAN Notes to Financial Statements December 31, 2002 and 2001 Money Market Fund - The fund is designed to provide safety of principal. Actual investments made by the trustee are into the Associated Trust Company, N.A. Cash Management Fund. Intermediate Term Bond Fund - The fund is designed to earn a competitive total return through diversified investment in high-quality fixed income securities issued by the United States Government, federal agencies, and public corporations, as well as mortgage-backed and asset-backed issues and certificates of deposit. Common Stock Fund - The fund is designed to achieve long-term growth through investment in large cap companies with good growth prospects. The majority of the assets in this portfolio are included in the S&P 500 Index. Foreign Equity Fund - The fund is designed to provide exposure to investment opportunities outside the United States. The fund invests primarily in attractively valued foreign common stocks. Emerging Growth Fund - The fund is designed to maximize long-term stock returns by diversifying stock ownership into numerous industries. The fund invests in equities issued by small capitalization, fast growing companies. Equity Income Fund - The fund is designed to pursue growth of capital while providing above average dividend yield. The fund invests in common stocks believed to be undervalued. Associated Banc-Corp Common Stock Fund - The fund is designed to share in the performance of Associated Banc-Corp. The fund invests in Associated Banc-Corp common stock and cash equivalents. Berger Small Cap Value Fund - The fund invests primarily in common stocks of small companies the Advisor believes are undervalued. Dodge & Cox Stock Fund - The fund is designed to pursue long-term growth of principal and income. Fund intends to remain fully invested in equities with at least 65% of assets in common stocks. Invesco Dynamics Fund Investor - The fund is designed to pursue capital appreciation. The fund invests primarily in common stocks of domestic companies. Janus Overseas Fund - The fund is designed to achieve long-term growth by investing in a diversified portfolio of primarily foreign stocks. The fund seeks fast growing companies in fast growing industries. RS Diversified Growth Fund - The fund is designed to achieve long-term capital growth. The fund invests primarily in common and preferred stocks and warrants. ASSOCIATED BANC-CORP PROFIT SHARING & 401(k) PLAN Notes to Financial Statements December 31, 2002 and 2001 Vanguard 500 Index Fund - The fund seeks to track the S&P 500 Index as closely as possible by investing in each of the Index 500 stocks according to each stock's weighting in the Index. Weitz Value Fund - The fund is designed to achieve capital appreciation by investing primarily in equity securities. The advisor seeks securities trading at prices lower than their intrinsic values. Participants can elect to invest in one of the aforementioned funds or in 1% increments in two or more funds. Participants can change the allocation of the Plan accounts on a daily basis. Participant Loans A participant in the Plan can receive a loan for emergency conditions which result from medical expenses in the participant's immediate family, establishing or preserving the home in which the participant resides, or for the purpose of providing an education for the participant, spouse, and children of the participant. Loans are limited to the lesser of (1) $50,000, reduced by the excess of the highest outstanding balance of loans from the Plan during the one-year period ending on the day before the date on which such loan was made over the outstanding balance of loans from the Plan on the date on which such loan was made or (2) 50% of the vested benefit of the participant's account balance. A participant may not request a loan for less than $1,000. Valuation of Plan Assets Plan assets are valued daily. Under a daily valued plan, participants can verify account balances daily utilizing the VRU (Voice Response Unit) or Internet access, contributions are allocated to participant accounts upon receipt, and income and changes in asset values are immediately updated. Distributions Distributions are made in the form of lump-sum payments or payments over a period in monthly, quarterly, semi-annual or annual installments. Distributions must begin no later than 60 days after the close of the plan year in which the later of the participant's attainment of age 65 or the termination date occurs, unless the participant elects to delay commencement of the distribution until the April 1 following the attainment of age 70 1/2. Participants may withdraw amounts for any reason upon reaching age 59 1/2. Earnings are credited to a participant's account through the date of distribution. ASSOCIATED BANC-CORP PROFIT SHARING & 401(k) PLAN Notes to Financial Statements December 31, 2002 and 2001 Termination of Plan While the Company has not expressed any intent to terminate the Plan, it is free to do so at any time subject to the provisions of ERISA. In the event of termination, participants become fully vested to the extent of the balance in their account, including investment income through the termination date. (2) Summary of Significant Accounting Policies Basis of Presentation The accompanying financial statements have been prepared on the accrual basis of accounting and present the net assets available for plan benefits and changes in those net assets in accordance with accounting principles generally accepted in the United States of America. The significant accounting policies of the Plan are as follows: Investments and Income Recognition Investment securities are valued at quoted market prices. The investments in units of the collective trust funds are valued at the amount at which shares in the funds can be withdrawn, which approximates fair value. Securities for which no quoted market price is available are valued at estimated fair value. Short-term investments are stated at cost plus accrued interest, which approximates fair value. Participant loans are valued at cost. Plan assets are held with the trustee. Purchases and sales of securities are recorded on a trade-date basis. Realized gains and losses on the sale of investments are determined through the use of specific identification. The Plan's funds record interest income on the accrual basis and dividends on the ex-dividend date. The Plan's investments are exposed to various risks, such as interest rate, market and credit risks. Due to the level of risk associated with certain investments and the level of uncertainty related to changes in the values of investments, it is at least reasonably possible that changes in risks in the near term could materially affect participant account balances and the amounts reported in the financial statements of the Plan. Payment of Benefits Benefits are recorded when paid. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires plan administrator estimates and assumptions that affect the reported amounts of assets available for benefits and plan benefit ASSOCIATED BANC-CORP PROFIT SHARING & 401(k) PLAN Notes to Financial Statements December 31, 2002 and 2001 obligations and disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates. (3) Investments The fair value of investments that represent 5% or more of the Plan's net assets at December 31 are presented in the following table: 2002 2001 ----------------------------------------------------------------------------------------- Associated Banc-Corp Common Stock Fund $99,954,166 $98,594,263 Associated Trust Company, N.A. Balanced Lifestage Fund 30,559,377 0 Associated Trust Company, N.A. Growth Lifestage Fund 26,933,587 0 Associated Trust Company, N.A. Cash Management Fund 21,455,946 18,906,063 Associated Trust Company, N.A. Intermediate Term Bond Fund 16,353,788 12,828,771 Associated Trust Company, N.A. Diversified Stock Fund 0 40,917,044 Associated Trust Company, N.A. Balanced Fund 0 35,645,549 ----------------------------------------------------------------------------------------- During 2002 and 2001, the Plan's investments, including gains and losses on investments purchased and sold, as well as held during the year, (depreciated) appreciated in value by $(14,087,363) and $5,420,876 respectively, as follows: 2002 2001 ---- ---- Associated Banc-Corp Common Stock $ 5,290,604 $ 15,415,012 Common Trust Funds (13,373,750) (8,445,979) Mutual Funds (6,004,217) (1,548,157) ------------- ------------ Total $(14,087,363) $ 5,420,876 ============= ============= (4) Transactions with Related Parties The Associated Banc-Corp Common Stock Fund at December 31, 2002 and 2001 included 2,906,742 shares and 2,758,480 shares, respectively, of common stock of the Company with fair values of $98,654,813 and $97,346,759, respectively. Dividend income from Company stock totaled $3,543,612 and $3,623,043 in 2002 and 2001, respectively. Associated Trust Company, N.A. performs asset management and participant recordkeeping for the Plan. Asset management and recordkeeping fees totaled $658,988 and $626,159 in 2002 and 2001, respectively. ASSOCIATED BANC-CORP PROFIT SHARING & 401(k) PLAN Notes to Financial Statements December 31, 2002 and 2001 The Plan invests in various Associated Trust Company, N.A. common/collective trust funds. As of December 31, 2002 and 2001, $102,889,136 and $117,985,785, respectively, were invested in Associated Trust Company, N.A. common/collective trust funds. (5) Benefits Payable The following is a reconciliation of net assets available for benefits per the financial statements at December 31, 2002 and 2001 to Form 5500: 2002 2001 Net assets available for benefits per the financial statements $236,815,576 $242,175,268 Amounts allocated to withdrawing participants (584,305) (1,153,829) ----------------------------- Net Assets available for benefits per the Form 5500 $236,231,271 $241,021,439 ============================= The following is a reconciliation of benefits paid to participants per the financial statements for the years ended December 31, 2002 and 2001 to Form 5500: 2002 2001 Benefits paid to participants per the financial statements $ 14,859,492 $ 26,877,762 Add: Amounts allocated to withdrawing participants at December 31, 2002 and 2001, respectively 584,305 1,153,829 Less: Amounts allocated to withdrawing participants at December 31, 2001 and 2000, respectively (1,153,829) (1,848,406) Benefits paid to participants per Form 5500 $ 14,289,968 $ 26,183,185 ============================== (6) Income Taxes The Plan administrator has received a favorable tax determination letter, dated July 18, 2002, from the Internal Revenue Service indicating that the Plan qualifies under the provisions of Section 401(a) of the Code, and the related trust is, therefore, exempt from tax under Section 501(a). Therefore, a provision for income taxes has not been included in the Plan's financial statements. In the opinion of the Plan Administrator, the Plan and its underlying trust have operated within the terms of the Plan and remain qualified under the applicable provisions of the Code. Participants in the Plan are not subject to federal income taxes until they receive a distribution from the Plan. ASSOCIATED BANC-CORP PROFIT SHARING & 401(k) PLAN Notes to Financial Statements December 31, 2002 and 2001 (7) Subsequent Events On January 2, 2003, certain net assets of Signal Financial Corporation 401(k) Profit Sharing Plan totaling $21,818,108 were merged into the Plan. ASSOCIATED BANC-CORP PROFIT SHARING & 401(k) PLAN Schedule H, line 4i - Schedule of Assets (Held at End of Year) December 31, 2002 ----------------------------------------------------------------------------------------------- Description of investment, including maturity date, Identity of issue, borrower, rate of interest, collateral par, Current Lessor, or similar party or maturity value Value ----------------------------------------------------------------------------------------------- * Associated Trust Company, N.A. 38,813 units $ 4,006,490 Common Stock Fund * Associated Trust Company, N.A. 121,481 units 1,730,793 Emerging Growth Fund * Associated Trust Company, N.A. Growth 2,810,430 units 26,933,587 Lifestage Fund * Associated Trust Company, N.A. Balanced 3,031,691 units 30,559,377 Lifestage Fund * Associated Trust Company, N.A. Equity 14,207 units 714,303 Income Fund * Associated Trust Company, N.A. Cash 17,543,415 units 21,455,946 Management Fund * Associated Trust Company, N.A. Foreign 35,975 units 1,134,852 Equity Fund * Associated Trust Company, N.A. 695,659 units 16,353,788 Intermediate Term Bond Fund ----------------------------------------------------------------------------------------------- Total Common Trust Funds $102,889,136 * Associated Banc-Corp Common Stock Fund 2,504,586 units $ 99,954,166 ----------------------------------------------------------------------------------------------- Total Common Stocks $ 99,954,166 Berger Small Cap Value Fund 178,109 shares $ 4,062,668 Dodge & Cox Stock Fund 55,425 shares 4,880,193 Invesco Dynamics Fund Investor 127,699 shares 1,361,272 ASSOCIATED BANC-CORP PROFIT SHARING & 401(k) PLAN Schedule H, line 4i - Schedule of Assets (Held at End of Year) December 31, 2002 ----------------------------------------------------------------------------------------------- Description of investment, including maturity date, Identity of issue, borrower, rate of interest, collateral par, Current Lessor, or similar party or maturity value Value ----------------------------------------------------------------------------------------------- Janus Overseas Fund 72,335 shares 1,105,995 RS Diversified Growth Fund 125,344 shares 1,774,865 Vanguard Index 500 Fund, Inv. Shares 75,543 shares 6,130,291 Weitz Value Fund 90,040 shares 2,513,924 ----------------------------------------------------------------------------------------------- Total Mutual Funds $ 21,829,208 ----------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------- Loans to Participants (127 participant loans with interest rates ranging from 4.25% to 10.50% and maturity dates ranging from January 24, 2003 to June 30, 2017) $ 986,811 ----------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------- Total Investments and Loans $225,659,321 Cash Surrender Value: Penn Mutual Life Insurance Co. $ 127,152 The Guardian Insurance and Annuity Co. 21,241 General American Life Ins. Co. 81,695 ----------------------------------------------------------------------------------------------- Total Cash Surrender Value $ 230,088 ----------------------------------------------------------------------------------------------- * Denotes a party-in-interest See accompanying independent auditors' report. CONSENT OF INDEPENDENT AUDITORS The Board of Directors Associated Banc-Corp: We consent to incorporation by reference in the registration statement on Form S-8 of Associated Banc-Corp of our report dated June 5, 2003 relating to the statements of net assets available for plan benefits of the Associated Banc-Corp Profit Sharing & 401(k) Plan as of December 31, 2002 and 2001, and the related statements of changes in net assets available for plan benefits for each of the years in the two year period ended December 31, 2002, and the Schedule H, line 4i - Schedule of Assets (Held at End of Year) as of December 31, 2002, which report appears in the December 31, 2002 annual report on Form 11-K of the Associated Banc-Corp Profit Sharing & 401(k) Plan. /s/ KPMG LLP Chicago, Illinois June 23, 2003