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July 14 (Reuters) - Associated Banc-Corp ASBC.O, a U.S. Midwest banking company, reported quarterly profit well below Wall Street estimates, weighed down by an eleven-fold increase in provision for bad loans, sending its shares down as much as 14 percent to their lowest levels in more than seven years.
The Green Bay, Wisconsin-based company said second-quarter net income was $47.4 million, or 37 cents a share, compared with $75.8 million, or 59 cents a share, in the year ago period.
Analysts expected earnings of 47 cents a share, excluding items, according to Reuters Estimates.
The increase in provision for loan losses was mainly due to deterioration of collateral values in a number of commercial real estate and other commercial credits, Chief Executive Paul Beideman said.
Provision for loan losses rose to $59.0 million from $5.2 million, offsetting the 10 percent increase in net interest income that was $172.7 million for the quarter.
Associated Banc-Corp, which competes with Marshall & Ilsley Corp MI.N, and TCF Financial TCB.N, said net charge-offs for the quarter were $37 million and nonperforming loans stood at $289 million at the end of June.
Six housing-related commercial credits accounted for $21 million of the quarter’s $37 million in net charge offs.
Net interest margins, a measure of a bank’s profitability, was 3.65 percent, up from 3.53 percent in the year-ago period. Net interest margin benefited from improved loan growth and lower funding costs, the company said.
For the rest of 2008, the company expects nonperforming loans to stabilize at the quarter end levels and net charge offs to continue at levels experienced in the second quarter.
Shares of the company were trading down 12 percent at $15.33, amid an overall tepid market. They touched a low of $14.96 earlier in the session.
The broader 50-member Regional Bank Index .KRX recovered from a life-low of 47.06 and was trading down 9 percent at 47.31. (Reporting by Sweta Singh in Bangalore; Editing by Amitha Rajan)