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Associated Banc-Corp (ASB) Beats on Q2 Earnings, Costs Rise
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Associated Banc-Corp’s (ASB - Free Report) second-quarter 2018 earnings of 50 cents per share surpassed the Zacks Consensus Estimate of 48 cents. Also, the figure compares favorably with the prior-year quarter’s earnings of 36 cents. The reported quarter’s earnings included acquisition-related costs in connection with the Bank Mutual deal.
Excluding the acquisition-related costs, adjusted earnings for the quarter were 53 cents per share.
Results benefited primarily from an improvement in revenues and lower provision for credit losses. The company also witnessed growth in loan balances. However, rise in expenses was a headwind.
Net income available to common shareholders (GAAP basis) for the quarter under review was $86.9 million, up from $55.6 million registered in the prior-year quarter.
Revenues Improve, Expenses Increase
Net revenues were $319.2 million, up 20% year over year. Also, the figure surpassed the Zacks Consensus Estimate of $316.6 million.
Net interest income was $226.4 million, reflecting an increase of 23% from the year-ago quarter. Net interest margin (NIM) was 3.02%, up 19 basis points (bps) from the prior-year quarter.
Non-interest income totaled $92.8 million, up 13% year over year. The rise was driven by an increase in almost all income components. Notably, the reported quarter witnessed net asset gains of $2.5 million and net investment securities losses of $2 million.
Non-interest expenses were $211.3 million, increasing 20% from the year-ago period. The rise was primarily due to an increase in all components of expenses except for net foreclosure/OREO expenses, and business development and advertising costs.
Efficiency ratio (fully tax equivalent basis) decreased to 64.45% from 65.21% in the prior-year quarter. Fall in efficiency ratio indicates an improvement in profitability.
As of Jun 30, 2018, net loans were $22.7 billion, up nearly 1% sequentially. Total deposits decreased marginally from the prior-quarter end to $23.8 billion.
Credit Quality Improves
Total non-performing assets declined 3% year over year to $238.7 million. As of Jun 30, 2018, total non-accrual loans were $204.5 million, down 12% year over year. Also, provision for credit losses was $4 million, down 67% from the prior-year quarter.
Further, the ratio of net charge-offs to annualized average loans was 0.15% in the reported quarter, down 10 bps from the year-ago quarter.
Capital & Profitability Ratios Improve
As of Jun 30, 2018, Tier 1 risk-based capital ratio was 11.17%, up from 10.61% as of Jun 30, 2017. Further, total risk-based capital ratio was 13.36%, up from 13.01% at the end of the prior-year quarter.
The annualized return on average assets at the reported quarter end was 1.07%, up from 0.80% in the year-ago quarter. Also, return on average tangible common equity was 14.98% compared with 11.06% in the year-ago quarter.
Our Take
Associated Banc-Corp is well poised to benefit from higher interest rates and rise in loan demand. Also, the acquisition of Diversified Insurance, Bank Mutual and Whitnell are expected to aid its bottom-line growth in the future. However, continuously increasing expenses might hurt profitability.
Associated Banc-Corp Price, Consensus and EPS Surprise
Among other banks, BankUnited, Inc. (BKU - Free Report) is scheduled to report results on Jul 24 while Huntington Bancshares Incorporated (HBAN - Free Report) and Prosperity Bancshares Inc. (PB - Free Report) are slated to report results on Jul 25.
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Associated Banc-Corp (ASB) Beats on Q2 Earnings, Costs Rise
Associated Banc-Corp’s (ASB - Free Report) second-quarter 2018 earnings of 50 cents per share surpassed the Zacks Consensus Estimate of 48 cents. Also, the figure compares favorably with the prior-year quarter’s earnings of 36 cents. The reported quarter’s earnings included acquisition-related costs in connection with the Bank Mutual deal.
Excluding the acquisition-related costs, adjusted earnings for the quarter were 53 cents per share.
Results benefited primarily from an improvement in revenues and lower provision for credit losses. The company also witnessed growth in loan balances. However, rise in expenses was a headwind.
Net income available to common shareholders (GAAP basis) for the quarter under review was $86.9 million, up from $55.6 million registered in the prior-year quarter.
Revenues Improve, Expenses Increase
Net revenues were $319.2 million, up 20% year over year. Also, the figure surpassed the Zacks Consensus Estimate of $316.6 million.
Net interest income was $226.4 million, reflecting an increase of 23% from the year-ago quarter. Net interest margin (NIM) was 3.02%, up 19 basis points (bps) from the prior-year quarter.
Non-interest income totaled $92.8 million, up 13% year over year. The rise was driven by an increase in almost all income components. Notably, the reported quarter witnessed net asset gains of $2.5 million and net investment securities losses of $2 million.
Non-interest expenses were $211.3 million, increasing 20% from the year-ago period. The rise was primarily due to an increase in all components of expenses except for net foreclosure/OREO expenses, and business development and advertising costs.
Efficiency ratio (fully tax equivalent basis) decreased to 64.45% from 65.21% in the prior-year quarter. Fall in efficiency ratio indicates an improvement in profitability.
As of Jun 30, 2018, net loans were $22.7 billion, up nearly 1% sequentially. Total deposits decreased marginally from the prior-quarter end to $23.8 billion.
Credit Quality Improves
Total non-performing assets declined 3% year over year to $238.7 million. As of Jun 30, 2018, total non-accrual loans were $204.5 million, down 12% year over year. Also, provision for credit losses was $4 million, down 67% from the prior-year quarter.
Further, the ratio of net charge-offs to annualized average loans was 0.15% in the reported quarter, down 10 bps from the year-ago quarter.
Capital & Profitability Ratios Improve
As of Jun 30, 2018, Tier 1 risk-based capital ratio was 11.17%, up from 10.61% as of Jun 30, 2017. Further, total risk-based capital ratio was 13.36%, up from 13.01% at the end of the prior-year quarter.
The annualized return on average assets at the reported quarter end was 1.07%, up from 0.80% in the year-ago quarter. Also, return on average tangible common equity was 14.98% compared with 11.06% in the year-ago quarter.
Our Take
Associated Banc-Corp is well poised to benefit from higher interest rates and rise in loan demand. Also, the acquisition of Diversified Insurance, Bank Mutual and Whitnell are expected to aid its bottom-line growth in the future. However, continuously increasing expenses might hurt profitability.
Associated Banc-Corp Price, Consensus and EPS Surprise
Associated Banc-Corp Price, Consensus and EPS Surprise | Associated Banc-Corp Quote
Associated Banc-Corp currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Among other banks, BankUnited, Inc. (BKU - Free Report) is scheduled to report results on Jul 24 while Huntington Bancshares Incorporated (HBAN - Free Report) and Prosperity Bancshares Inc. (PB - Free Report) are slated to report results on Jul 25.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
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