C&I lending rises nearly 16% at Associated Banc-Corp

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Loans and insurance revenue rose at Associated Banc-Corp in Green Bay, Wis., in the first quarter, but rising deposit costs crimped its net interest margin.

Net income for the $34 billion-asset Associated was $83 million in the first quarter, a 23% increase from a year earlier. Still, earnings per share of 50 cents fell a penny short of the mean estimate of analysts tracked by FactSet Research Systems.

“We were pleased with our commercial and business lending results in the quarter as we had solid growth in our general commercial line and across most of our specialty lending verticals," President and CEO Philip B. Flynn said in a press release Thursday. "We expect continued growth in our C&I portfolio and anticipate that our commercial real estate book will begin to ramp up in the second half of the year."

The bank’s acquisition of 32 Wisconsin branches from Huntington Bancshares should help Associated manage its funding costs, Flynn said. That deal, scheduled to be completed in June, would bring as many as $134 million in loans and $850 million in deposits.

Net interest income increased 3% to $216 million, while the net interest margin narrowed 2 basis points to 2.90%, a result of rising deposit costs.

Average loans rose 5% to $23.1 billion. Commercial-and-industrial lending was a particular bright spot, rising 15.6% to $7.5 billion. Total commercial loans grew 6% to $13.5 billion, while total consumer loans rose 3% to $9.6 billion.

Noninterest income increased 1% to $91 million. While insurance revenue grew 12% to $25.5 million, thanks to Associated's acquisitions of Diversified Insurance Solutions and Anderson Insurance, service charges and mortgage banking revenues fell over that same time.

Total deposits grew 4% to $24.6 billion.

The provision for credit losses was $6 million in the quarter. Associated did not have a provision for loan losses in the year-ago quarter. Net charge-offs totaled $7.4 million, down 20% in the same period.

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