) reported its fourth quarter 2012 earnings of 26 cents per
share, which came in line with the Zacks Consensus Estimate. The
results also compares favorably with the year-ago quarter's
earnings of 23 cents.
ASSOC BANC CORP (ASBC): Free Stock Analysis
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For the full year 2012, Associated recorded earnings per share of
$1.00 compared with 66 cents in 2011. However, the earnings
marginally missed the Zacks Consensus Estimate of $1.02.
Quarterly results displayed improvement on a year-over-year
basis. Increased top line was partially offset by a rise in
operating expenses. Moreover, improved asset quality, and growth
in loan and deposit balances were the positives. However,
deterioration in capital ratios was the headwind.
Net income available to shareholders for the reported quarter
came in at $45.3 million, up 13.8% from $39.8 million in the
year-ago quarter. For 2012, net income stood at $173.8 million,
up 51.3% from $114.9 million in 2011.
Performance in Detail
Associated's total revenue edged up 2.2% year over year to $258.4
million. Moreover, revenue surpassed the Zacks Consensus Estimate
of $243.0 million by 6.3%.
For 2012, total revenue came in at $1.03 billion, rising nearly
1.7% from $1.01 billion in 2011. Moreover, it surpassed the Zacks
Consensus Estimate of $946 million by 9.0%.
Net interest income improved 6.3% year over year to $161.5
million. The hike was mainly attributable to lower total interest
expenses. Also, net interest margin increased 11 basis points
from the prior-year quarter to 3.32%.
Non-interest income stood at $77.9 million, rising 8.9% from
$71.5 million in the prior-year quarter. The increase was
primarily due to higher core fee revenue, net mortgage banking
income, capital market fees and net gains from investment
securities. These positives were partially offset by lower
bank-owned life insurance income and other income.
Non-interest expense was $176.3 million, up 2.3% from $172.3
million in the year-ago quarter. The rise was mainly a result of
higher personnel expense, occupancy costs, equipment costs, data
processing expenditure and legal and professional fees.
However, these were offset by lower business development, loan
expenses, losses other than loans, foreclosure/ other real estate
owned (OREO) costs, Federal Deposit Insurance Corporation (FDIC)
expenses as well as other expenses.
The efficiency ratio increased to 72.08% from 74.67% recorded in
the prior-year quarter. The decline in efficiency ratio indicates
improvement in profitability.
Asset quality displayed mixed bag in the quarter. Non-accrual
loans dipped 9.1% sequentially and 29.1% on a year-over-year to
$252.9 million. Total nonperforming assets stood at $287.8
million, declining 8.4% from last quarter and 27.8% from the
However, ratio of net charge offs to annualized average loans
came in at 0.55% in the reported quarter, up from 0.47% in the
previous quarter but down from 0.64% in the year-ago quarter.
Provision for loan losses increased substantially from the
year-ago quarter to 0.3 million.
Loans and Deposits
Associated's total loans in the reported quarter were $15.4
billion, rising nearly 3.0% from previous quarter and 9.8% from
the prior-year quarter.
Total deposits for the quarter expanded 3.0% sequentially and
12.2% on a year-over-year to $16.9 billion. The increases were
primarily due to the higher levels of noninterest-bearing demand
deposits and interest-bearing deposits.
Profitability and Capital Ratios
Though capital ratios remained strong, there was slight
deterioration. As of Dec 31, 2012, tier 1 risk-based capital
ratio was 11.97%, down from 13.57% as of Sep 30, 2012 and 14.08%
as of Dec 31, 2011.
Total risk-based capital ratio came in at 13.39%, dipping from
15.0% at the end of the prior quarter and 15.53% at the end of
the prior-year quarter. Tangible common equity ratio stood at
8.54%, down from 8.91% as of Sep 30, 2012 and 8.84% as of Dec 30,
Profitability metrics displayed mixed movements. The return on
average assets was 0.83% in the reported quarter compared with
0.84% as of Sep 30, 2012 and 0.75% as of Dec 31, 2011. Book value
per common share was recorded at $16.97, up from $16.82 in the
prior quarter and $16.15 in the year-ago period.
During the reported quarter, Associated bought back 2 million
shares at an aggregate of $30 million.
Associated's decent top-line growth as well as constantly
improving credit quality and strong balance sheet remain quite
impressive. However, rising expenses keep us on the sidelines.
Moreover, we are concerned about the impacts of the prevailing
low interest rate environment, sluggish economic growth and
stringent regulatory landscape on the company's financials in the
Associated currently retains a Zacks Rank #2 (Buy). Some of the
other mid-west banks that are performing well and are worth
Enterprise Financial Services Corp.
First Interstate Bancsystem Inc.
Heartland Financial USA Inc.
). All these companies hold Zacks Rank #1 (Strong Buy).