On Jul 5, 2013, we reiterated our long-term Neutral
), based on impressive loan and deposit growth, along with
improving asset quality and sound capital deployment activity.
However, higher expenses and considerable exposure to commercial
loans keep us apprehensive.
Associated's focus on its organic growth strategy has resulted in
an increase in deposits as well as net interest income (NII) over
the past several quarters. Further, the company continues to
build capital, leading to a better financial position that will
aid in fulfilling higher capital requirements. Moreover,
meaningful capital deployment and consistently improving credit
quality are the positives for Associated.
Nevertheless, increased non-interest expenses and significant
exposure to commercial loans remain major causes of concern for
the company. In addition, Associated's profitability remains
subject to stringent regulations. Another issue that plagues the
company is its limited exposure to markets.
Associated's first-quarter 2013 earnings marginally surpassed the
Zacks Consensus Estimate. Lower operating expenses, partly offset
by a reduction in top-line drove the results. The company is
scheduled to announce second-quarter results on Jul 18.
The Zacks Consensus Estimate for the quarter is pegged at 25
cents per share. The Zacks Earnings ESP (Read: Zacks Earnings
ESP: A Better Method) for Associated is +4.00% for the second
quarter. This, along with its Zacks Rank #3 (Hold), makes it
likely for the company to report a positive earnings surprise.
Other Stocks to Consider
Better performing Midwest banks include
Old Second Bancorp Inc.
First Interstate Bancsystem Inc.
Tower Financial Corporation
). All these stocks carry a Zacks Rank #1 (Strong Buy).
ASSOC BANC CORP (ASBC): Free Stock Analysis
FIRST INTST MT (FIBK): Free Stock Analysis
OLD SECOND BCP (OSBC): Free Stock Analysis
TOWER FINANCIAL (TOFC): Free Stock Analysis
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