In public notices published last week in Milwaukee and Green Bay newspapers, Associated Banc-Corp ASB announced its plan of branch consolidation. The move follows the company’s announcement of a deal to acquire Milwaukee, WI–based Bank Mutual Corporation BKMU for $482 million.
Why Branch Consolidation?
Associated Banc-Corp will be closing a total of 36 branches that are presumed to be too close to another branch. This was first reported by American City Business Journal.
As part of transaction announced in July, Associated Banc-Corp was supposed to acquire 58 Bank Mutual branches. Nonetheless, as 28 of these are now believed to be near other branches, they are being consolidated. The remaining eight branches to be consolidated are part of Associated Banc-Corp’s network.
The all-stock deal, expected to be completed by first-quarter 2018, is anticipated to result in cost savings, driven by branch and operational synergies. Further, the transaction is projected to improve Associated Banc-Corp’s efficiency ratio by more than 1%.
The pre-tax merger and integration costs are expected to be $40 million. Also, Associated Banc-Corp expects the deal to be accretive to its earnings per share by nearly 2% in 2019, excluding one-time charges.
Since the announcement of the deal, shares of Associated Banc-Corp have plunged 10.5%, perhaps over concerns related to earnings dilution in 2018. Also, it compares unfavorably with the industry’s decline of 5.6% over the same time frame.
Zacks Rank & Key Picks
Currently, Associated Banc-Corp carries a Zacks Rank #3 (Hold).
A couple of better-ranked stocks in the same industry are Commerce Bancshares, Inc. CBSH and Old National Bancorp ONB. Both these stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Commerce Bancshares has risen 3.5% over the past 60 days, for 2017. Further, share price of the company has increased 10% over the past year.
Old National Bancorp’s Zacks Consensus Estimate for the current year has improved nearly 1% over the past 60 days. In addition, over the past year, shares of the company have jumped 18.3%.
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Commerce Bancshares, Inc. (CBSH) : Free Stock Analysis Report
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Bank Mutual Corporation (BKMU) : Free Stock Analysis Report
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