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Increased Foreclosure and OREO Costs

Associated Banc-Corp in Green Bay, Wis., reported a net loss to common shareholders of $161.2 million for the year ended Dec. 31, 2009 compared to $165.2 million a year earlier.

The bank recorded credit-related charges of $405.1 million in the fourth quarter of 2009 comprised of a $394.8 million provision for loan losses and a $10.3 million increase in the reserve for losses on unfunded commitments.

Fourth-quarter credit-related charges were up significantly from $95.4 million for the third quarter of 2009 and $65 million for the fourth quarter of 2008. The credit charges taken during the quarter reflect the growth in delinquencies, nonperforming loans and charge-offs across the company’s loan portfolios and the recognition of further declines in underlying collateral values.

During the quarter, deterioration of the commercial real estate portfolio followed trends in the sector including elevated commercial vacancy rates, borrower bankruptcies and downward pressure on real estate values. Total noninterest expense for the quarter was $159 million, up $17.9 million from $141.1 million in the third quarter of 2009, and up $10.2 million from $148.8 million in the fourth quarter of 2008.

The increase over the third quarter of 2009 was primarily due to a $10.3 million increase in the reserve for unfunded commitments, increased spending for legal and professional fees, and increased foreclosure/OREO (other real estate-owned) costs due to the increased levels of foreclosure and problem credits, in aggregate representing an increase of $5.2 million over similar expenses in the third quarter of 2009.

Green Bankshares Inc., Greeneville, Tenn., the holding company for GreenBank reported a net operating loss for 2009 was $18.3 million vs. net income of $5.5 million for the year ended Dec. 31, 2008.

Nonperforming assets totaled $132.7 million at Dec. 31, 2009 vs. $125 million at Sept. 30, 2009.

Stan Puckett, chairman and CEO, said although the economic climate in which the company operates remains under considerable pressure, the bank is pleased to see stabilization in several areas of our business as 2009 came to an end.

“While NPAs remain elevated, we believe that the credit cycle crested in 2009 and credit costs now have begun to moderate, as seen by lower net loan charge-offs and OREO costs,” said Mr. Puckett.

“Also, lower funding costs have continued to drive improvements in net interest income and net interest margin. Although we are cautiously optimistic about these positive developments, we will continue to work aggressively to identify and address problem loans in 2010 and build on the trends that are now emerging in our business."

Republic Bancorp Inc., Louisville, reported net income of $3.8 million for the fourth quarter of 2009, a $3.2 million increase over the fourth quarter of 2008. For the year ended Dec. 31, the company achieved net income of $42.1 million, a 25%, increase over the same period in 2008.

For the year, total secondary market mortgage originations more than doubled to $556 million from $235 million in 2008. In addition, Republic incurred no impairment charges during the fourth quarter of 2009, while during the fourth quarter of 2008 the company incurred a $1.2 million impairment charge for its mortgage servicing rights and a $6.9 million impairment charge associated with its small private label security portfolio.

“Although the company’s nonperforming loans and charge-offs remained substantially better than peer averages, we continued to increase our general loss reserves through higher loan loss provisioning during the fourth quarter in cautious recognition of the current economic environment,” said Steve Trager, Republic’s president and chief executive officer.

“Unemployment at modern high levels continued to negatively impact borrowers’ abilities to pay across all loan types. As a result, the core banking provision for loan losses rose from $2.1 million during the fourth quarter of 2008 to $6.5 million during the fourth quarter of 2009, raising the company’s allowance for loan losses as a percent of total loans to 1.01% at yearend.”