Trending Stock: Associated Banc-Corp (NYSE: ASB)
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GREEN BAY, Wis., January 18, 2019 – Shares of Associated Banc-Corp (NYSE: ASB) gained 0.14% to $21.09. The stock traded total volume of 20.857K shares lower than the average volume of 1.01M shares.
Associated Banc-Corp (ASB) reported net income available to common equity (“earnings”) of $80.0M, or $0.49 per common share for the quarter ended September 30, 2019. These amounts compare to net income available to common equity of $84.0M, or $0.48 per common share for the quarter ended September 30, 2018. Earnings for the first nine months of 2019 were $1.48 per common share compared to $1.38 per common share in the same period last year.
Loans:
Third quarter 2019 average loans of $23.30B were up $278.0M, or 1%, from the year ago quarter, but declined $102.0M from the second quarter.
With respect to third quarter 2019 average balances by loan category:
- Commercial and business lending increased $564.0M from the year ago quarter but decreased $119.0M from the second quarter to $8.50B. General commercial lending drove the increase from the year ago quarter while planned de-risking of the oil & gas portfolio contributed to the decrease from the second quarter.
- Consumer lending decreased $22.0M from the year ago quarter and decreased $9.0M from the second quarter to $9.60B.
- Commercial real estate lending decreased $264.0M from the year ago quarter to $5.20B. However, CRE increased $26.0M from the second quarter as strong production continued to outpace paydown activity.
Investments:
Third quarter 2019 average investment securities of $6.00B were purposefully decreased by $968.0M, or 14% from the year ago quarter, and decreased by $516.0M from the second quarter as the Company used its investment portfolio as a source of funds during the third quarter, seeking to reposition its balance sheet for a declining rate environment.
- Taxable securities decreased $1.30B from the year ago quarter and decreased $491.0M from the second quarter as lower yielding, primarily mortgage backed securities were sold.
- Tax-exempt securities increased $291.0M from the year ago quarter but decreased $25.0M from the second quarter.
Deposits:
Third quarter 2019 average deposits of $25.20B were up $505.0M or 2% from the year ago quarter and were up $120.0M compared to the second quarter. Deposit inflows from the Huntington branch acquisition that closed in June were used to pay down network transaction deposits and other higher-cost funding.
With respect to third quarter 2019 average balances by deposit category:
- Savings increased $716.0M from the year ago quarter and increased $299.0M from the second quarter to $2.60B.
- Interest-bearing demand deposits increased $464.0M from the year ago quarter and increased $468.0M from the second quarter to $5.50B.
- Time deposits increased $129.0M from the year ago quarter but decreased $437.0M from the second quarter to $3.10B.
- Noninterest-bearing demand deposits increased $14.0M from the year ago quarter and increased $235.0M from the second quarter to $5.30B.
- Network transaction deposits decreased $205.0M from the year ago quarter and decreased $260.0M from the second quarter to $1.80B.
- Money market deposits decreased $613.0M from the year ago quarter and decreased $185.0M from the second quarter to $6.90B.
Net Interest Income and Net Interest Margin:
Third quarter 2019 net interest income of $206.0M was down 6%, or $13.0M, and the net interest margin decreased 11 basis points to 2.81% from the year ago quarter. Third quarter 2019 net interest income decreased 3%, or $7.0M, and the net interest margin decreased six basis points from the prior quarter. The decreases were driven by compression in LIBOR rates outpacing reductions in funding costs. The net interest margin for the first nine months of 2019 was 2.86%.
Noninterest Income:
Third quarter 2019 total noninterest income of $101.0M increased $13.0M from the year ago quarter and increased $5.0M from the prior quarter.
With respect to third quarter 2019 noninterest income line items:
- Net mortgage banking income was up $7.0M from the year ago quarter and was up $1.0M from the previous quarter, driven by increased settlements including the sale of approximately $240.0M of loans from our portfolio.
- Gains on sales of investment securities were up $4.0M from the year ago quarter and up $3.0M from the second quarter, reflecting our deleveraging strategy.
- Insurance commissions and fees were down $1.0M from the year ago quarter and were down $2.0M from the previous quarter due to seasonally lower contingency fees in the third quarter.
Noninterest Expense:
Third quarter 2019 total noninterest expense of $201.0M decreased 2%, or $3.0M from the year ago quarter, but increased $3.0M from the prior quarter. The year ago quarter included $2.0M of acquisition related costs while the current quarter and prior quarter included $2.0M and $4.0M of acquisition related costs, respectively.
With respect to third quarter 2019 noninterest expense line items:
- Personnel expense decreased $1.0M from the year ago quarter, but was essentially unchanged from the prior quarter despite the addition of personnel from the Huntington branch acquisition.
- Occupancy expense increased $1.0M from the year ago quarter and the prior quarter due primarily to the acquisition of Huntington branches.
- Technology expense increased $3.0M from the year ago quarter, but was relatively unchanged from the prior quarter as the company continued to make investments to enhance its online and mobile product offerings.
- The Company’s FDIC assessment decreased $4.0M from the year ago quarter with the removal of the FDIC surcharge and decreased from the prior quarter.
Credit:
The third quarter 2019 provision for credit losses was $2.0M, up from negative $5.0M in the year ago quarter but down from $8.0M in the prior quarter.
With respect to third quarter 2019 credit quality:
- Potential problem loans of $133.0M were down $103.0M, or 44%, from the year ago quarter and down $33.0M, or 20%, from the prior quarter.
- Nonaccrual loans of $129.0M were down $25.0M from the year ago quarter and down $38.0M from the prior quarter. The nonaccrual loans to total loans ratio was 0.57% in the third quarter, compared to 0.67% in the year ago quarter and 0.72% in the prior quarter.
- Other real estate owned (OREO) of $20.0M was down $6.0M from the year ago quarter, which was elevated due to pending Bank Mutual branch dispositions, and up $1.0M from the prior quarter.
- Net charge offs of $20.0M were up $8.0M from the year ago quarter and up $7.0M from the prior quarter reflecting continued de-risking of the oil & gas portfolio.
- The allowance for loan losses of $214.0M was down $22.0M from the year ago quarter and was down $19.0M from the prior quarter. The allowance for loan losses to total loans ratio was 0.94% in the third quarter, down from 1.03% in the year ago quarter, and 1.00% in the prior quarter.
ASB has the market capitalization of $3.40B and its EPS growth ratio for the past five years was 10.40%. The return on assets ratio of the Company was 1.00% while its return on investment ratio stands at 18.20%. Price to sales ratio was 2.81 while 75.30% of the stock was owned by institutional investors.
