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Associated Banc-Corp (ASB) Q1 Earnings Beat, Revenues Down Y/Y
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Associated Banc-Corp’s (ASB - Free Report) first-quarter 2021 earnings of 58 cents per share surpassed the Zacks Consensus Estimate of 43 cents. Further, the bottom line increased significantly from the 27 cents earned in the prior-year quarter.
Results benefited from decline in expenses and provision benefits, partly offset by lower revenue and loan balance. Further, rise in deposit balance and improving capital ratios were tailwinds.
Net income available to common shareholders was $89.1 million, significantly up from the year-ago quarter’s $42 million.
Revenues Decline, Expenses Drop, Deposits Improve
Net revenues came in at $271.2 million, down 10% year on year. The top line, however, beat the Zacks Consensus Estimate of $264.3 million.
Net interest income was $175.9 million, down 13% from the year-earlier period. Net interest margin (NIM) was 2.39%, down 45 basis points (bps).
Non-interest income declined 3% from the prior-year quarter to $95.3 million. Decrease in service charges and deposit account fees, bank and corporate owned life insurance, insurance commissions and fees were the primary reasons behind the fall.
Non-interest expenses declined 9% year over year to $175.3 million. This fall was due to a decline in almost all cost components, except for occupancy, legal and professional costs, and equipment costs.
Efficiency ratio (on a fully tax-equivalent basis) was 63.96%, down from the 68.47% seen in the prior-year quarter. A fall in efficiency ratio indicates an improvement in profitability.
As of Mar 31, 2021, net loans were $23.8 billion, down 1.1% from the previous-quarter end. However, total deposits rose 4.5% on a sequential basis to $27.7 billion.
Credit Quality: Mixed Bag
Provisions for credit losses were a benefit of $23 million against the provision of $53 million recorded in the prior-year quarter. As of Mar 31, 2021, the ratio of net charge-offs to annual average loans was 0.08%, down 21 bps from the year-ago quarter.
Yet, as of Mar 31, 2020, total non-performing assets were $187.9 million, up 14% year over year. Further, total non-accrual loans came in at $163.3 million, jumping 19%.
Capital & Profitability Ratios Improve
As of Mar 31, 2021, Tier 1 risk-based capital ratio was 12.14%, up from the 10.35% recorded in the corresponding period of 2020. In addition, common equity Tier 1 capital ratio was 10.76% compared with 9.36% as of Mar 31, 2020.
At the end of the January-March quarter, annualized return on average assets was 1.14%, up from the 0.57% recorded in the prior-year period.Moreover, return on average tangible common equity was 14.03% compared with the year-ago quarter’s 7.31%.
2021 Outlook
NIM is projected at 2.45-2.55%.
Non-interest income is estimated to be $310-$330 million.
Management expects commercial loan growth of 2-4%, driven by a 4-6% increase in commercial real estate loans, and a 1-2% increase in commercial and business lending outstandings, excluding paycheck protection program (PPP) loans.
Expenses are expected to be roughly $690-$695 million.
The company predicts provisions to be nominal.
Annual tax rate is expected to be 19-21%, assuming no change in the corporate tax rate.
Our Take
Associated Banc-Corp’s branch consolidation and other restructuring efforts are likely to keep supporting financials in the quarters ahead. Also, the company has a solid balance-sheet position, which makes it well poised for growth. Nevertheless, margin pressure due to lower rates and weak loan demand are major concerns.
Associated BancCorp Price, Consensus and EPS Surprise
Zions Bancorporation’s (ZION - Free Report) first-quarter 2021 net earnings per share of $1.90 topped the Zacks Consensus Estimate of $1.15. Also, the bottom line marked a significant improvement from the 4 cents earned in the year-ago quarter.
BOK Financial’s (BOKF - Free Report) earnings per share of $2.10 handily surpassed the Zacks Consensus Estimate of $1.92. Further, the bottom line compared favorably with the prior-year quarter’s 88 cents.
First Horizon National Corporation’s (FHN - Free Report) adjusted earnings per share of 51 cents beat the Zacks Consensus Estimate of 37 cents. In addition, the bottom line showed significant improvement from the prior-year quarter’s 5 cents.
Zacks Top 10 Stocks for 2021
In addition to the stocks discussed above, would you like to know about our 10 best buy-and-hold tickers for the entirety of 2021?
Last year's 2020 Zacks Top 10 Stocks portfolio returned gains as high as +386.8%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
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Associated Banc-Corp (ASB) Q1 Earnings Beat, Revenues Down Y/Y
Associated Banc-Corp’s (ASB - Free Report) first-quarter 2021 earnings of 58 cents per share surpassed the Zacks Consensus Estimate of 43 cents. Further, the bottom line increased significantly from the 27 cents earned in the prior-year quarter.
Results benefited from decline in expenses and provision benefits, partly offset by lower revenue and loan balance. Further, rise in deposit balance and improving capital ratios were tailwinds.
Net income available to common shareholders was $89.1 million, significantly up from the year-ago quarter’s $42 million.
Revenues Decline, Expenses Drop, Deposits Improve
Net revenues came in at $271.2 million, down 10% year on year. The top line, however, beat the Zacks Consensus Estimate of $264.3 million.
Net interest income was $175.9 million, down 13% from the year-earlier period. Net interest margin (NIM) was 2.39%, down 45 basis points (bps).
Non-interest income declined 3% from the prior-year quarter to $95.3 million. Decrease in service charges and deposit account fees, bank and corporate owned life insurance, insurance commissions and fees were the primary reasons behind the fall.
Non-interest expenses declined 9% year over year to $175.3 million. This fall was due to a decline in almost all cost components, except for occupancy, legal and professional costs, and equipment costs.
Efficiency ratio (on a fully tax-equivalent basis) was 63.96%, down from the 68.47% seen in the prior-year quarter. A fall in efficiency ratio indicates an improvement in profitability.
As of Mar 31, 2021, net loans were $23.8 billion, down 1.1% from the previous-quarter end. However, total deposits rose 4.5% on a sequential basis to $27.7 billion.
Credit Quality: Mixed Bag
Provisions for credit losses were a benefit of $23 million against the provision of $53 million recorded in the prior-year quarter. As of Mar 31, 2021, the ratio of net charge-offs to annual average loans was 0.08%, down 21 bps from the year-ago quarter.
Yet, as of Mar 31, 2020, total non-performing assets were $187.9 million, up 14% year over year. Further, total non-accrual loans came in at $163.3 million, jumping 19%.
Capital & Profitability Ratios Improve
As of Mar 31, 2021, Tier 1 risk-based capital ratio was 12.14%, up from the 10.35% recorded in the corresponding period of 2020. In addition, common equity Tier 1 capital ratio was 10.76% compared with 9.36% as of Mar 31, 2020.
At the end of the January-March quarter, annualized return on average assets was 1.14%, up from the 0.57% recorded in the prior-year period.Moreover, return on average tangible common equity was 14.03% compared with the year-ago quarter’s 7.31%.
2021 Outlook
NIM is projected at 2.45-2.55%.
Non-interest income is estimated to be $310-$330 million.
Management expects commercial loan growth of 2-4%, driven by a 4-6% increase in commercial real estate loans, and a 1-2% increase in commercial and business lending outstandings, excluding paycheck protection program (PPP) loans.
Expenses are expected to be roughly $690-$695 million.
The company predicts provisions to be nominal.
Annual tax rate is expected to be 19-21%, assuming no change in the corporate tax rate.
Our Take
Associated Banc-Corp’s branch consolidation and other restructuring efforts are likely to keep supporting financials in the quarters ahead. Also, the company has a solid balance-sheet position, which makes it well poised for growth. Nevertheless, margin pressure due to lower rates and weak loan demand are major concerns.
Associated BancCorp Price, Consensus and EPS Surprise
Associated BancCorp price-consensus-eps-surprise-chart | Associated BancCorp Quote
Associated Banc-Corp currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Finance Stocks
Zions Bancorporation’s (ZION - Free Report) first-quarter 2021 net earnings per share of $1.90 topped the Zacks Consensus Estimate of $1.15. Also, the bottom line marked a significant improvement from the 4 cents earned in the year-ago quarter.
BOK Financial’s (BOKF - Free Report) earnings per share of $2.10 handily surpassed the Zacks Consensus Estimate of $1.92. Further, the bottom line compared favorably with the prior-year quarter’s 88 cents.
First Horizon National Corporation’s (FHN - Free Report) adjusted earnings per share of 51 cents beat the Zacks Consensus Estimate of 37 cents. In addition, the bottom line showed significant improvement from the prior-year quarter’s 5 cents.
Zacks Top 10 Stocks for 2021
In addition to the stocks discussed above, would you like to know about our 10 best buy-and-hold tickers for the entirety of 2021?
Last year's 2020 Zacks Top 10 Stocks portfolio returned gains as high as +386.8%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
AccessZacks Top 10 Stocks for 2021 today >>