Working Every Angle

Philip Flynn was never very receptive to job pitches. The Los Angeles native had spent his entire 30-year career climbing the ranks at Union Bank in California. He'd been approached by others, but as the $84 billion-asset company's L.A.-based chief operating officer-and the highest-ranking American at its parent company, UnionBanCal-he held out hope that he could become CEO of the bank he grew up with.

That changed in 2008, when Union's majority owner, Japan's Mitsubishi UFJ Financial Group, took UnionBanCal private. The parent company had regularly rotated in Japanese expats as CEO when it owned 65 percent of UnionBanCal. It seemed fair to conclude full ownership would do little to change this practice.

So when a headhunter called in mid-2009 to gauge Flynn's interest in the top spot at struggling Associated Banc-Corp in Green Bay, Wisc., he agreed to a meeting on his way home from a trip to New York. By December, Flynn was cashing in the sun and glitz of L.A. for an overcoat and an appetite for bratwurst in the land of Packer-loving cheeseheads.

There were plenty of good reasons for Flynn, 54, to turn the board down flat, none of which concerned weather or culture. Associated had spent decades nurturing a reputation as a relatively safe, profitable bet in an industry prone to cycles, but at the top of the most recent cycle, it reached for growth. Now, losses on commercial real estate and construction loans were mounting, capital was dwindling and the company was strategically adrift.

The sitting CEO, Paul Beideman, had been asked to retire ahead of schedule, while COO Lisa Binder had left unexpectedly a few months earlier. The lending process was frozen by fear and indecision, with the credit side of the house having clamped down on underwriting, and frontline lenders alternatively feeling hesitant to make new commitments, or frustrated that they couldn't.

Morale was at an all-time low, and many had begun to doubt that the $22 billion-asset Associated could survive the crisis as an independent company. At the very least, it would take aggressive writedowns and capital raising and the hard work of instilling big-bank disciplines in an organization that never had them before.

It should have been a tough sell to someone who was in a comfortable job at a much larger institution where he was, by all accounts, universally admired. But Flynn had long aspired to run a successful regional bank of his own, and after reviewing the loan book at Associated, he was confident this was his chance.

Under Flynn, Associated has now reported six consecutive quarters of profit, each one better than the last. Consensus estimates peg this year's earnings at 92 cents a share, which would represent a 40 percent increase from 2011.

Nonaccruals fell 38 percent last year to the lowest levels since before Flynn arrived, and nonperformers were 3.29 percent of loans at the end of 2011, compared with about 9.5 percent two years earlier. Net chargeoffs, meanwhile, had fallen to $23 million in the fourth quarter, down 69 percent from a year earlier and 25 percent from the quarter before.

More than cleaning up bad credits, Flynn's credibility as a successful outsider-and as someone who had worked through some serious credit issues at Union a decade earlier-gave confidence to an organization badly shaken by its recent woes.

"He had that experience-been there, done that-and could help us get out of trouble and positioned for the future," Judith Docter, Associated's chief human resources officer, and a 20-year company veteran, recalls thinking.

"Oftentimes, you have CEOs who are very good visionaries, but can't implement the vision," Docter adds. "Phil is the full package. He understands banking, and has expertise and experience on the operational aspects."