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Associated Bank CEO predicts return to profitability
Published July 22, 2010 - BizTimes Daily
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Green Bay-based Associated Banc-Corp. today reported a net loss to common shareholders of $10.2 million, or 6 cents per share, for the second quarter, which was an improvement from a net loss of $24.7 million, or 19 cents per share, for the same period a year ago.
“We continued to make good progress in addressing the company’s credit quality issues during the quarter,” said Philip Flynn, president and chief executive officer of Associated Bank, which is Wisconsin’s second-largest bank. “The company’s capital and liquidity positions remain strong as we continue to aggressively work through our nonperforming assets and position the company for future profitability and growth.”
The company’s provision for loan losses was $98 million for the quarter, down 41 percent from $165 million for the first quarter of 2010 and down 37 percent from $155 million for the second quarter of 2009. The firm’s net charge offs for the quarter were $105 million, down 36 percent from $163 million for the first quarter and up 72 percent from $61 million for the second quarter of 2009.
Associated’s nonperforming loans declined to $1.02 billion, down 16 percent from $1.21 billion in the first quarter.
The bank’s potential problem loans continued to decline to $1.27 billion.
In a conference call with analysts this afternoon, Flynn said. “We’ve taken a lot of action to strengthen our balance sheet … We’ve had significant improvement in our credit quality and a reduction in loan loss and charge-offs.”
Because Associated still has several billion in problem loans and potential problem loans, the bank will likely still continue charge-offs and loan loss provisions at elevated levels for the foreseeable future. However, the bank still believes it will return to profitability in the third or fourth quarters of this year, Flynn said.
“We expect to see positive net earnings in the next two quarters,” he said.
Flynn acknowledged that Associated’s liquidity is “conservative” at the moment - the bank has about $2.5 billion in cash.
“We will redeploy that in the future to fund loan growth, but we believe that liquidity (level) is prudent,” he said.
The bank expects its recent commercial banking hires in Chicago will pay off in the coming months and years because it was able to hire lenders with significant experience and strong ties to the community.
“We hired well known, experienced commercial lenders,” Flynn said. “And we can back them with targeted print advertising and marketing events.”
In a recent BizTimes Milwaukee cover story, Flynn assessed the outlook for the company.
