Third-quarter profits jump 21% for Associated Banc-Corp

Third-quarter earnings jumped 21% for Associated Banc-Corp as lending increased and the bank allocated less money to loan-loss reserves.

The Green Bay-based parent company of Associated Bank generated net income of $62.7 million, or 41 cents per share, compared with $51.6 million, or 34 cents, in the third quarter of 2016.

Earnings per share topped by 5 cents the average estimate of 16 Wall Street analysts polled by Yahoo Finance.

It was the best single quarter for the bank in about nine years, Philip B. Flynn, president and chief executive officer of Associated, told industry analysts during a conference call Thursday.

"This quarter's results were driven by growing interest income, improving credit dynamics and efficiency gains," Flynn said. "We recorded our highest quarterly earnings and return on capital since 2008."

Associated, whose assets topped the $30 billion milestone for the first time, noted its deposit growth, in addition to its earnings. A bank's assets consist mostly of its loans.

"Associated increased its deposit market share across its footprint and grew deposits by 10% in our Wisconsin market," Flynn said in the company's earnings statement. "Customer deposits and funding, excluding network deposits, increased by a net 8% from the prior year and funded all of our year-over-year growth."

The company said loans in the third quarter were up 5% from the same time a year ago.

Associated added $5 million to loan-loss reserves in the quarter, compared with a $21 million allocation to reserves for potential bad loans in the third period of 2016. Adding money to loan-loss reserves cuts directly into a bank's profits.

Flynn said the company has worked on providing a top customer experience while controlling expenses.

"We remain on track to deliver less than 1% expense growth year over year," he said.

Associated, which is the largest bank headquartered in Wisconsin, is in the process of acquiring Brown Deer-based Bank Mutual Corp., the state's third-biggest bank.

"We have filed our merger applications with our regulators and we anticipate we'll receive regulatory approvals to allow us to close the transaction in the first quarter of 2018," Flynn said.