Associated Banc-Corp (ASBC) has made significant strides in its bid to become more efficient, but Chief Executive Philip Flynn admits it has much more work to do.
The Green Bay, Wis., company has already shuttered more than 30 branches in the past year and it is in the process of rolling out image-enabled automated teller machines in an effort to further reduce branch visits. Those moves helped the $23 billion-asset Associated lower its efficiency ratio to 68.52% in the first quarter, from 72.08% just three months earlier.
Still, Associated's efficiency ratio remains on the high side for regional banks and Flynn told analysts this week that lowering it is a top priority.
"Sometimes, we look around our company and we feel like, gee, we have so much work to do to make this place more efficient," Flynn said on a conference call discussing the bank's first-quarter results.
Among the initiatives it is working on is automating its commercial loan underwriting, a process Flynn described as "very manual." It is also planning a "major upgrade" of its mobile banking service and continuing to evaluate ways to improve branch efficiency in response to the continued decline in foot traffic.
"We have a lot of process reengineering to do at the bank, which gives us a lot of opportunity to make this place better," he said.
Aided by strong loan growth and improved credit quality, Associated on Thursday reported a profit of $46 million in the first quarter, up nearly 12% from the same period last year.
Loans climbed nearly 9% year over year, as double-digit growth in commercial and commercial real estate loans offset dips in home equity and consumer loans. The company, which suffered steep loan losses following the real estate crash, also saw a continued decline in problem loans. Nonaccrual loans fell 31% year over year, to $225 million, and net chargeoffs fell 33%, to $14 million.
Associated is growing its loan book at a faster clip than many of its rivals, but given the fierce competition for loans these days, maintaining that pace could be a challenge. Associated is flush with capital, and on the call with analysts Flynn indicated that he would use some of it to make acquisitions.
"Absent really significant loan growth, we're still going to end up at the end of the year with a lot of capital," Flynn said. "Over the long haul, it's highly likely that we will need to look for accretive acquisition opportunities…in order to fully deploy that capital and get an appropriate return on it."
Flynn did not elaborate on the bank's acquisition strategy, but late last year he told investors and analysts that he was primarily interested in in-market deals and would unlikely consider buying a failed bank.
Associated has not made a bank acquisition since 2007.