Business Context and Reporting Period
This Form 8-K Current Report is filed by Associated Banc-Corp for the period ending December 21, 2017. The filing addresses material events triggered by the passage of the Tax Cuts and Jobs Act of 2017 by the U.S. Congress on December 20, 2017.
Key Financial Metrics and Material Changes
The filing does not provide standard revenue, profit, or cash flow metrics for the period. Instead, it details specific financial impacts and contingencies related to the new tax legislation:
- Deferred Tax Asset Valuation Allowance: The Company expects to record a valuation allowance in the range of $14 million to $16 million in the quarter the Act becomes law. The exact amount is currently uncertain.
- One-Time Bonus Expense: The Company anticipates a cost of approximately $1 million for one-time cash bonuses of $500 to hourly, non-commissioned employees. This is expected to be recorded in the fourth quarter of 2017.
- Wage Increase Impact: The Company intends to raise the minimum hourly wage from $10 to $15, effective January 2018. This is projected to increase the compensation expense run rate by approximately $2 million in 2018.
Guidance, Outlook, and Risks
Management commentary indicates that the financial impacts described above are contingent upon the final passage and content of the Tax Cuts and Jobs Act. The Company expects the President to sign the Act into law on or before January 3, 2018.
- Outlook: The valuation allowance and employee compensation changes are forward-looking estimates subject to the final legislative text.
- Risks: Actual results may differ materially from estimates due to changes in the timing of the Act's final passage or changes to its provisions. The filing references risks detailed in the Company's most recent Form 10-K.
Investor Verification Checklist
- Verify the final signed text of the Tax Cuts and Jobs Act to confirm the necessity and exact amount of the $14 million to $16 million valuation allowance.
- Monitor the fourth quarter 2017 earnings release for the actual recording of the $1 million bonus expense.
- Confirm the effective date and scope of the minimum wage increase to $15 per hour in January 2018.
- Review the impact of the Bank Mutual acquisition on the projected $2 million annualized wage increase cost.