Green Bay-based Associated Banc-Corp Thursday reported its fourth quarter profit increased 78 percent year-over-year, in large part due to its acquisition of Brown Deer-based Bank Mutual Corp.
Associated’s fourth quarter net income was $89 million, or 51 cents per diluted share, up 78 percent from $50 million, or 31 cents per diluted share, in the fourth quarter of 2017.
Average loans increased 10 percent in 2018, to $22.7 billion, which Associated attributed to the Bank Mutual acquisition. And deposits were up 10 percent, to $24.1 billion, partly as a result of the new Bank Mutual customers.
However, asset losses were up $2 million as a result of the acquisition. And personnel costs were up $54 million from 2017 while Associated Bank operated it as an independent entity from the February acquisition until conversion in June. After conversion, some operations were shuttered and some severance and contractual personnel costs contributed to the overall increase. Associated is spending just $1 million more on occupancy expenses than in 2017, following the integration of the branch networks.
Associated Bank is also in the process of acquiring the Wisconsin branches of The Huntington National Bank from Columbus, Ohio-based Huntington Bancshares Inc. That deal is expected to close in the second quarter. Associated’s acquisition-related costs for Bank Mutual and Huntington totaled $29 million in 2018.
The bank also reduced its provision for credit losses to zero in 2018, down from $26 million in 2017, signaling its confidence in its loan portfolio.
“…the credit environment remains benign, contributing to the provision for credit losses of zero in 2018, allowing us to deploy capital through an increased dividend and repurchases of common stock totaling $240 million,” said Philip Flynn, president and chief executive officer of Associated Bank.
Flynn said 2018 was a significant year of accomplishments for Associated Bank, which included the Bank Mutual acquisition.
“We announced the acquisition of the Wisconsin branch operations of The Huntington National Bank, which will further enhance our core franchise, and we look forward to welcoming Huntington’s customers to Associated in the second quarter,” he said. “We are pleased with our 2018 results, which were driven by loan growth and higher fee revenues related to our acquisitions. We benefited from efficiency gains and a benign credit environment. For 2019, we expect modest loan growth, higher fee revenues, and continued efficiency gains to drive increasing returns on capital for our shareholders.”
