(Adds details, analyst’s comments)
By Sweta Singh
BANGALORE, April 17 (Reuters) - Associated Banc-Corp ASBC.O, a U.S. Midwest banking company, reported quarterly profit above Wall Street estimates, helped by higher net interest income and lower interest expenses, even as provision for loan losses soared.
The Green Bay, Wisconsin-based company reported first-quarter net income of $66.5 million, or 52 cents a share, compared with $73.4 million, or 57 cents a share, in the year-ago period.
Analysts on average had expected earnings of 48 cents a share, excluding items, according to Reuters Estimates.
The company benefited from solid loan growth, expense control and stability in net interest margins in the quarter, analyst Terry McEvoy of Oppenheimer Co & Inc said by phone.
Net interest margin should remain stable for the rest of 2008, McEvoy said.
The company’s net interest margin, a measure of a bank’s profitability, slid 4 basis points to 3.58 percent, in the quarter.
Provision for loan losses jumped to $23.0 million from $5.1 million, while net interest income rose $6.1 million to $165.1 million in the quarter.
Loans saw an annualized growth of 11 percent to $15.7 billion, with commercial loan growing 14 percent and home equity loan growing 6 percent.
McEvoy sees an annual growth of 6 percent to 8 percent in the company’s commercial and home equity loans put together.
Continued growth in net interest income should be good enough to offset provisioning for loan losses for the company to be stable in terms of earnings, McEvoy said.
But net interest income is expected to grow modestly given the slowing economy, hence one can not be sure of the earnings in the quarters to come, McEvoy added. Associated Banc-Corp, which competes with Marshall & Ilsley Corp MI.N, U.S. Bancorp (USB.N) and TCF Financial TCB.N, said total interest expense fell 15 percent to $131.8 million.
Shares of the company closed up 2 percent at $27.65 on Nasdaq. (Reporting by Sweta Singh; Editing by Deepak Kannan, Gopakumar Warrier)