On Jan 2, 2014, we reaffirmed our long-term recommendation on
) at Neutral. The company marginally outpaced third-quarter 2013
We expect it to benefit from its organic growth strategy,
efficient capital deployment activities and strong balance sheet
in the upcoming quarters. However, stringent regulatory landscape
and concentration risks arising from limited geographic
diversification remain matters of concern.
Why This Stance?
Associated Banc-Corp's third-quarter 2013 earnings of 27 cents
per share beat the Zacks Consensus Estimate and the year-ago
earnings of 26 cents. Results reflected growth in net interest
income and lower operating expenses, partially offset by a fall
in non-interest income.
Associated Banc-Corp's increase in net interest income, loans and
deposits over the past several quarters infuses strength into its
organic growth strategy. Further, the company's bottom line is
expected to benefit from the continued improvement in asset
quality. Moreover, the recent 12.5% hike in its quarterly
dividend and its share repurchase program drives investors'
attention towards the stock.
However, Associated Banc-Corp's margins are expected to be hit by
its mounting non-interest expenses. Further, as the company
operates in only 3 states - Wisconsin, Illinois and Minnesota,
concentration risk is a major threat to its financial
Additionally, over the last 60 days, the Zacks Consensus Estimate
for 2013 and 2014 remained stable at $1.09 per share and $1.06
per share, respectively. However, Associated Banc-Corp currently
carries a Zacks Rank #4 (Sell).
Other Stocks to Consider
Some better-ranked Midwest banks include
First Interstate Bancsystem Inc.
Mainsource Financial Group
First Financial Bancorp.
). First Interstate Bancsystem and Mainsource Financial carry a
Zacks Rank #1 (Strong Buy) while First Financial holds a Zacks
Rank #2 (Buy).
ASSOC BANC CORP (ASBC): Free Stock Analysis
FIRST FIN BC-OH (FFBC): Free Stock Analysis
FIRST INTST MT (FIBK): Free Stock Analysis
MAINSOURCE FINL (MSFG): Free Stock Analysis
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