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Associated Banc-Corp (ASBC) 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.
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Getting Associated Banc-Corp back in shape required painful writedowns, fresh capital, lending discipline, cultural adjustments, new growth tactics, more transparency — and a leader to put it all together. Enter Phillip Flynn.
March 1
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
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,
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
Associated has not made a bank acquisition since 2007.
