Associated Banc-Corp’s ASB first-quarter 2019 adjusted earnings of 50 cents per share came in line with the Zacks Consensus Estimate. The figure compares favorably with the prior-year quarter’s earnings of 40 cents. Earnings excluded acquisition-related costs in connection to the Bank Mutual deal.
Results benefited primarily from an improvement in revenues and lower expenses. The company witnessed growth in loans and deposits and stable provisions.
Net income available to common shareholders (GAAP basis) was $82.9 million, up 23%year over year.
Revenues Improve, Expenses Down
Net revenues were $306.7 million, up 2% year over year. However, the figure lagged the Zacks Consensus Estimate of $312.9 million.
Net interest income was $215.5 million, reflecting an increase of 3% from the year-ago quarter.
Net interest margin (NIM) was 2.90%, down 2 basis points (bps).
Non-interest income totaled $91.2 million, up1% year over year. Higher insurance commissions and fees, bank and corporate owned life insurance, and other income drove the rise.
Non-interest expenses were $191.7 million, down 10% from the year-ago period. The decline was mainly attributable to significant fall in acquisition-related costs and FDIC assessment expenses.
Efficiency ratio (fully tax-equivalent basis) decreased to 61.83% from 69.60% in the prior-year quarter. Fall in efficiency ratio indicates higher profitability.
As of Mar 31, 2019, net loans were $23.1 billion, up 1% on a sequential basis. Total deposits increased 3% from the prior quarter to $25.5 billion.
Credit Quality Improves
As of Mar 31, 2019, total non-performing assets were $167.8 million, down 28% year over year. Further, total non-accrual loans were $155.6 million, down 25% year over year. Moreover, the ratio of net charge-offs to annualized average loans was 0.13% in the reported quarter, down 4 bps.
Further, the company reported provision for credit losses of $6 million, stable year over year.
Strong Capital & Profitability Ratios
As of Mar 31, 2019, Tier 1 risk-based capital ratio was 11.35%, up from 11.19% as of Mar 31, 2018. In addition, common equity Tier 1 capital ratio was 10.29%compared with10.59% at the end of the prior-year quarter.
Annualized return on average assets at the end of the reported quarter was 1.05%, up from 0.88%. Moreover, return on average tangible common equity was 14.52% compared with 11.99% in the year-ago quarter.
During the reported quarter, Associated Banc-Corp repurchased nearly 1.3 million shares for $30 million.
Associated Banc-Corp expects to achieve 3-6% average loan growth. Also, it expects to maintain its loan to deposit ratio under 100%, with some seasonality.
Further, the company expects a stable to slight lower net interest margin, based on assumption of no Fed rate hike.
It anticipates non-interest income between $360 million and $375 million.
The company projects non-interest expenses to be approximately $800 million. Adjusted efficiency ratio is expected to improve roughly 100 bps.
Further, it forecasts the effective tax rate to be in the range of 21-23%.
Associated Banc-Corp is well positioned to benefit from higher interest rates and rise in loan demand. Further, the company’s inorganic growth strategy will support profitability. However, higher expenses are likely to hurt bottom-line growth to some extent. Moreover, the company's increased dependence on commercial loans remains a key near-term concern.
Associated Banc-Corp Price, Consensus and EPS Surprise
Associated Banc-Corp Price, Consensus and EPS Surprise | Associated Banc-Corp Quote
Associated Banc-Corp currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Banks
Commerce Bancshares, Inc.’s CBSH first-quarter 2019 earnings per share of 85 cents lagged the Zacks Consensus Estimate of 91 cents. Also, the figure compares unfavorably with the prior-year quarter’s earnings of 88 cents.
Washington Federal’s WAFD second-quarter fiscal 2019 (ended Mar 31) earnings came in at 63 cents per share, surpassing the Zacks Consensus Estimate of 61 cents. The figure also reflects year-over-year growth of 10.5%.
Hancock Whitney Corporation’s HWC first-quarter 2019 operating earnings per share of $1 surpassed the Zacks Consensus Estimate of 98 cents. Further, the reported figure comes in 11.1% higher than the year-ago tally.
Zacks' Top 10 Stocks for 2019
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-holds for the year?
Who wouldn't? Our annual Top 10s have beaten the market with amazing regularity. In 2018, while the market dropped -5.2%, the portfolio scored well into double-digits overall with individual stocks rising as high as +61.5%. And from 2012-2017, while the market boomed +126.3, Zacks' Top 10s reached an even more sensational +181.9%.
See Latest Stocks Today >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Commerce Bancshares, Inc. (CBSH) : Free Stock Analysis Report
Associated Banc-Corp (ASB) : Free Stock Analysis Report
Washington Federal, Inc. (WAFD) : Free Stock Analysis Report
Hancock Whitney Corporation (HWC) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research