A decline in interest expense and rise in core fee revenues
) fourth-quarter 2013 earnings per share of 28 cents. Though the
reported figure was in line with the Zacks Consensus Estimate, it
compared favorably with the 26 cents earned in the year-ago
ASSOC BANC CORP (ASBC): Free Stock Analysis
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For the full year 2013, Associated Banc-Corp recorded earnings
per share of $1.10 versus $1.00 in 2012. Earnings were in line
with the Zacks Consensus Estimate.
Results benefited from growth in net interest income (NII),
partially offset by a decline in non-interest income and higher
operating expenses. Moreover, improvement in asset quality as
well as loans and deposits were the other positives. Further,
while capital ratios declined in the reported quarter,
profitability ratios were mixed bag.
Net income available to shareholders was $47.8 million, up 2.4%
from $46.6 million in the year-ago quarter. Further, for
full-year 2013, net income came in at $188.7 million, increasing
5.4% from $179.0 million in 2012.
Performance in Detail
Associated Banc-Corp's total revenue fell marginally from the
year-ago quarter to $257.4 million. However, it beat the Zacks
Consensus Estimate of $236.0 million.
For 2013, total revenue came in at $1.02 billion, down nearly
1.0% from $1.03 billion in 2012. However, total revenue surpassed
the Zacks Consensus Estimate of $966.0 million.
NII improved 3.6% year over year to $167.2 million. The
improvement was primarily attributable to a decrease in interest
expense. However, net interest margin (NIM) fell 9 basis points
(bps) from the prior-year quarter to 3.23%.
Non-interest income was $75.9 million, down 2.6% from $77.9
million in the prior-year quarter. The decrease was due to a fall
other fee income, partially offset by rise in total core fee
Non-interest expense was $179.5 million, up 1.8% from $176.3
million in the year-ago quarter. This was mainly due to increase
in personnel expense, business development and advertising costs
as well as other expenditures.
The efficiency ratio increased to 73.83% from 73.71% recorded in
the prior-year quarter. A rise in efficiency ratio indicates fall
Asset quality continued to improve in the quarter. Non-accrual
loans declined 26.7% year over year to $185.4 million. Total
nonperforming assets were $203.5 million, declining 29.3% from
the year-ago quarter.
Moreover, ratio of net charge-offs to annualized average loans
came in at 0.25%, down from 0.57% in the year-ago quarter.
Loans and Deposits
Associated Banc-Corp's net loans in the quarter were $15.6
billion, up 3.4% from the prior-year quarter. Further, total
deposits increased 1.9% year over year to $17.3 billion.
Capital and Profitability Ratios
In the reported quarter, Associated Banc-Corp's capital ratios
deteriorated. As of Dec 31, 2013, Tier 1 risk-based capital ratio
was 11.83%, compared with 12.01% as of Dec 31, 2012.
Total risk-based capital ratio came in at 13.09% versus 13.42% at
the end of the prior-year quarter. Tangible common equity ratio
was 8.11%, compared with 8.56% as of Dec 31, 2012.
Profitability metrics were a mixed bag. The return on average
assets was 0.80%, down from 0.83% as of Dec 31, 2012. However,
book value per common share was recorded at $17.40, up from
$16.97 in the year-ago period.
A still low interest rate environment, considerable exposure to
commercial loans and concentration risks arising from limited
geographic diversification will continue to weigh on the top
Nevertheless, we expect loan and deposit growth to continue and
capital ratios to stabilize, given the gradual recovery in the
At present, Associated Banc-Corp has a Zacks Rank #3 (Hold).
Other Midwest Banks
Among other Midwest Banks,
Commerce Bancshares, Inc.
) missed the Zacks Consensus Estimate while
Huntington Bancshares Inc.
First Interstate Bancsystem Inc.
) is scheduled to release earnings results on Jan 29. The
Earnings ESP for the company is 6.52%. This, along with its Zacks
Rank #1 (Strong Buy), indicates that the company will likely
deliver a positive earnings surprise.