Associated Banc-Corp in Green Bay, Wis., on Thursday reported a sharp increase in profits on a mix of higher fee income and lower credit costs.

The $28.5 billion-asset company earned $54.8 million, or 28% more than a year earlier. Earnings per share were 34 cents, or two cents more than an estimate of analysts polled by Bloomberg.

Strong growth in noninterest income drove the quarterly results. Fee-based revenue climbed 11%, to $92.3 million, due to a higher volume of hedging transactions and loan syndication activity.

Noninterest income is expected to decline in the coming year, CEO Phillip Flynn said during a conference call with analysts. Mortgage banking fees, in particular, are projected to fall as Associated plans to keep more mortgages on its books in the months ahead.

Net interest income rose 5% to $180 million. The company slashed its provision for credit losses by 25%, to $15 million, as it continues to work through problems with energy borrowers. The net interest margin declined two basis points to 2.80%.

Total loans grew 7% to $19.7 billion, boosted in part by an increase in commercial real estate lending.

Cost control also lifted profits. Noninterest expenses rose 2% to $178.9 million as salary-related costs offset drop-offs in advertising, occupancy and foreclosure-related costs.

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Kristin Broughton

Kristin Broughton

Kristin Broughton is a reporter for American Banker, where she writes about the business of national and regional banking.