Associated Eyeing In-Market Deals, CEO Says

Associated Banc-Corp (ASBC) in Green Bay, Wis., is eyeing acquisitions of community banks, but its chief executive says it has little interest in failed banks and would only consider deals within its existing markets.

Phil Flynn, Associated's president and CEO, told investors and analysts at a conference in New York Tuesday that while its first priorities for deploying capital are to grow the company organically and to increase its dividend, it is also ready to start doing deals again. The $22 billion-asset company has not made a whole-bank acquisition in more than five years.

Like many bankers interested in acquisitions, Flynn said that sellers' asking prices are too high for his liking, though he expects them to come down as small banks struggle to comply with new rules that will require them to hold more capital against mortgage and construction-related assets.

"I'm a firm believer that the macro environment is going to drive significant consolidation across the industry over the next few years," Flynn said at the conference hosted by Barclays. Community banks in particular, he added, are going to have a more difficult time maintaining regulatory capital ratios "because they do a lot of oddball mortgages, they do a lot of construction loans, and they are going to [need] a lot more capital under the new rules. We should be able to be a beneficiary of that."

Flynn noted that Associated has not been a player in any Federal Deposit Insurance Corp.-assisted deals and said "I'm not sure we ever will be." He added that the bank, which has 250 branches in Wisconsin, Illinois and Minnesota and is the largest bank based in its home state, will only look at fill-in acquisitions that would boost market share within its footprint.

"There's a lot of small banks in Wisconsin," he said.