Associated Banc-Corp reported net income to common shareholders of $45 million, or $0.30 per common share, for the first quarter ended March 31, 2015.
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This compares to net income to common shareholders of $44 million, or $0.27 per common share, for the quarter ended March 31, 2014.
Average loans of $17.8 billion increased $428 million, or 2% from the fourth quarter, and have increased $1.7 billion, or 10% from the year ago quarter. Total commercial loans grew $309 million on average from the fourth quarter and are up $1.1 billion from the prior year. Commercial and business lending average balances grew $272 million, or 4% on a linked-quarter basis.
Commercial real estate lending average balances grew $37 million, or 1% from the fourth quarter. Total average consumer loans were up $119 million compared to the prior quarter as the growth in residential mortgage average balances of $174 million was partially offset by continued, but slower, run off in home equity and installment loans.
Average deposits of $19.1 billion for the first quarter were up $523 million, or 3% compared to the fourth quarter and have increased $2.1 billion, or 12%, from the year ago quarter. Money market average balances increased $444 million, or 5% from the fourth quarter, and were up $1.5 billion, or 21% from the year ago quarter.
Average checking balances have increased four consecutive quarters and were up slightly from the fourth quarter. Average time deposits increased $45 million during the quarter marking a reversal of recent trends.
First quarter net interest income of $168 million was up $3 million, or 2% from the year ago quarter, but down $7 million from the fourth quarter. First quarter interest recoveries and prepayments were down $2 million relative to the fourth quarter. In addition, long-term funding costs increased $2 million from the fourth quarter.
Lastly, the day count difference between the first and fourth quarters resulted in expected lower net interest income of approximately $2 million.
First quarter net interest margin was 2.89%, a decrease of 15 basis points from the 3.04% reported in the fourth quarter. The first quarter yield on earning assets declined 12 basis points from the prior quarter. The majority of this decline is attributed to continued loan yield compression.
In addition, lower interest recoveries and prepayments accounted for 3 basis points of the decline in earning asset yields. The majority of the 4 basis point, quarter over quarter increase in total funding costs is related to the full effect of the carrying cost of the company's $500 million debt issued in November 2014.
Noninterest income for the first quarter was $80 million, up $10 million or 15% from the fourth quarter, and up $7 million or 9% from the year ago quarter. The Ahmann & Martin Co. acquisition closed during the first quarter and largely contributed to a $9 million increase in insurance commissions from the fourth quarter.
Mortgage banking income increased $4 million from the prior quarter. First quarter net asset gains of $1 million were down $3 million from the prior quarter.
Total noninterest expense for the quarter ended March 31, 2015 was $174 million, up $2 million or 1% from the fourth quarter. Personnel expense increased $3 million from the fourth quarter, largely attributed to the Ahmann & Martin Co. acquisition which added approximately 120 colleagues. Occupancy expenses increased by $3 million from the previous quarter, primarily related to a lease termination charge, as we further consolidated office space in Chicago.
Business development and advertising expenses declined $3 million from the previous quarter, predominantly related to seasonal advertising during the fourth quarter.
First quarter income taxes were $22 million with an effective tax rate of 32%, compared to $21 million with an effective tax rate of 31% in the year ago period.
Net charge offs of $6 million for the first quarter were up $1 million from the fourth quarter, and were up slightly from the year ago quarter. Potential problem loans of $219 million increased $28 million from the prior quarter. The first quarter provision for credit losses was essentially flat from the prior quarter at $5 million.
The company's allowance for loan losses was $265 million, equal to 1.48% of loans and reflects a coverage ratio of 152% of nonaccrual loans at March 31, 2015.
Nonaccrual loans of $174 million were down 2% compared to both the fourth quarter and the year ago quarter. The ratio of nonaccrual loans to total loans was down from the previous quarter and stands at 0.97%.
During the first quarter, the company repurchased $30 million of common stock in several open market transactions.
The company's capital position remains strong, with a Tier 1 common equity ratio of 9.39% at March 31, 2015. ■