Vastly improved credit quality combined with respectable loan growth propelled Associated Banc-Corp to its most profitable quarter since Philip Flynn took over as chief executive two years ago.
The Green Bay, Wis., company said after markets closed Thursday that it earned $39.8 million in the fourth quarter, up 17% from the prior quarter and nearly six times its net income from the same quarter in 2010. Earnings per share rose from four cents in the fourth quarter of 2010 to 23 cents last quarter, in line with estimates of analysts polled by Thomson Reuters.
For the full year, the $22 billion-asset Associated earned $115 million, or 66 cents per share, compared with a loss of $30 million in 2010.
Cleaning up the bank's loan portfolio has been among Flynn's top priorities and the results were evident in the fourth quarter. Nonaccrual loans fell 38% from the fourth quarter of 2010, to $357 million, while net chargeoffs were down 79%, to $23 million. With credit metrics improving, Associated set aside just $1 million for problem loans in the quarter, compared to $63 million in the fourth quarter of 2010.
The company also reported year-over-year and quarter-over-quarter growth in most major loan segments as it continued to capitalize on disruption stemming from the acquisition of rival M&I Bank by BMO Harris Bank. At Dec. 31, Associated had total loans of $14 billion, a 4% increase from three months earlier and 11% jump from the same period a year earlier.
The company also reported a slight increase in noninterest income despite the impact of new caps on interchange fees from debit transactions. Though card-based fees declined by 26% from the prior quarter, overall fee income rose 3%, to nearly $74 million, from three months earlier.
Overall noninterest expenses rose 8% from the prior quarter, to nearly $175 million, but that figure is likely to decline somewhat in the coming quarters as the company closes underperforming branches.
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