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Associated Banc-Corp (ASB) Stock Gains on Q3 Earnings Beat
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Shares of Associated Banc-Corp (ASB - Free Report) gained 4.5% in after-market trading following the release of the company’s third-quarter 2022 results. Earnings of 62 cents per share surpassed the Zacks Consensus Estimate of 58 cents. The bottom line was 11% higher than the prior-year quarter. Our estimate for earnings was 57 cents.
Results were primarily aided by a rise in net interest income (NII). The quarter witnessed an increase in loans and deposit balances. However, a rise in expenses and lower non-interest income hurt the results to some extent.
Net income available to common shareholders was $93.4 million, up 10% from the year-ago quarter.
Revenues Improve, Expenses Rise
Net revenues (FTE basis) were $340.1 million, up 26% year over year. The top line beat the Zacks Consensus Estimate of $319.4 million. Our estimate for FTE revenues was $318.7 million.
NII was $264.4 million, up 44% year over year. Our estimate for NII was $239.2 million. The net interest margin was 3.13%, up 75 basis points (bps) year over year.
Non-interest income dipped 14% year over year to $70.8 million. The fall was due to a decline in almost all fee income components except for card-based fees, other fee-based revenues, net capital markets income, and other income. In the reported quarter, the company recorded a net investment securities gain of $5.7 million. Our estimate for non-interest income was $75.1 million.
Non-interest expenses increased 10% year over year to $195.8 million. The rise was due to an increase in personnel costs, technology costs, business development and advertising expenses, loan and foreclosure costs, FDIC assessment costs, and other expenses. Our estimate for non-interest expenses was $193.4 million.
The adjusted efficiency ratio was 57.36%, down from 65.46% in the prior-year quarter. A fall in the efficiency ratio indicates an improvement in profitability.
As of Sep 30, 2022, total loans were $27.8 billion, up 5% from Jun 30, 2022. Total deposits increased 2% from the prior-quarter end to $29.2 billion.
Credit Quality: Mixed Bag
In the reported quarter, the company recorded a provision for credit losses of $17 million against a provision benefit of $24 million in the prior-year quarter.
As of Sep 30, 2022, total non-performing assets were $133.1 million, down 21% year over year. Total non-accrual loans were $116.4 million, declining 14%.
Capital Ratios Deteriorate, Profitability Ratios Improve
As of Sep 30, 2022, Tier 1 risk-based capital ratio was 10.03%, down from the 11.30% recorded in the corresponding period of 2021. Common equity Tier 1 capital ratio was 9.41%, down from 10.57%.
At the end of the third quarter, annualized return on average assets was 1.02%, up from 1.01% recorded in the prior-year period. Return on average tangible common equity was 14.32%, up from 12.97%.
2022 Outlook
The company expects short-term interest rates to rise 75 bps in November and anticipates a 50-bps increase for this December. Based on the assumptions, management expects NII to exceed $935 million (changed from the prior mentioned $910 million increase).
Total non-interest income is expected to be between $290 million and $300 million.
Management projects auto finance loan growth of $1.3 billion and total commercial loan growth of $1.7 billion.
Non-interest expenses are expected to be $740-$750 million (changed from the prior stated $735-$745 million).
The effective tax rate is expected to be 21%, assuming no change in the corporate tax rate.
The common equity tier 1 ratio is expected to be 9.25-9.75%, and the tangible common equity ratio is estimated to be 7.00-7.25%.
The company expects to adjust provisions to indicate changes to risk grades, economic conditions, loan volumes and other indications of credit quality.
Our Take
Associated Banc-Corp’s business-restructuring efforts are likely to keep supporting financials. The company has a solid balance-sheet position, making it well-poised for growth. However, elevated expenses will likely hurt profits in the near term.
Associated BancCorp Price, Consensus and EPS Surprise
Hancock Whitney Corporation’s (HWC - Free Report) third-quarter 2022 earnings of $1.55 per share were in line with the Zacks Consensus Estimate. The bottom line rose 6.9% from the prior-year quarter’s adjusted earnings of $1.45.
Results benefited from higher net interest income, a rise in loan balance and increasing rates. However, lower non-interest income mainly due to rising mortgage rates was the undermining factor. Higher adjusted expenses and a rise in provisions were other headwinds for HWC.
Washington Federal’s (WAFD - Free Report) fourth-quarter fiscal 2022 (ended Sep 30) earnings of $1.07 per share handily surpassed the Zacks Consensus Estimate of 91 cents. The figure reflects a year-over-year jump of 48.6%.
Results were primarily aided by higher rates, robust deposits and improving loan balances, which drove net interest income. However, an increase in expenses, fall in total other income and higher provisions were the headwinds for WAFD.
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Associated Banc-Corp (ASB) Stock Gains on Q3 Earnings Beat
Shares of Associated Banc-Corp (ASB - Free Report) gained 4.5% in after-market trading following the release of the company’s third-quarter 2022 results. Earnings of 62 cents per share surpassed the Zacks Consensus Estimate of 58 cents. The bottom line was 11% higher than the prior-year quarter. Our estimate for earnings was 57 cents.
Results were primarily aided by a rise in net interest income (NII). The quarter witnessed an increase in loans and deposit balances. However, a rise in expenses and lower non-interest income hurt the results to some extent.
Net income available to common shareholders was $93.4 million, up 10% from the year-ago quarter.
Revenues Improve, Expenses Rise
Net revenues (FTE basis) were $340.1 million, up 26% year over year. The top line beat the Zacks Consensus Estimate of $319.4 million. Our estimate for FTE revenues was $318.7 million.
NII was $264.4 million, up 44% year over year. Our estimate for NII was $239.2 million. The net interest margin was 3.13%, up 75 basis points (bps) year over year.
Non-interest income dipped 14% year over year to $70.8 million. The fall was due to a decline in almost all fee income components except for card-based fees, other fee-based revenues, net capital markets income, and other income. In the reported quarter, the company recorded a net investment securities gain of $5.7 million. Our estimate for non-interest income was $75.1 million.
Non-interest expenses increased 10% year over year to $195.8 million. The rise was due to an increase in personnel costs, technology costs, business development and advertising expenses, loan and foreclosure costs, FDIC assessment costs, and other expenses. Our estimate for non-interest expenses was $193.4 million.
The adjusted efficiency ratio was 57.36%, down from 65.46% in the prior-year quarter. A fall in the efficiency ratio indicates an improvement in profitability.
As of Sep 30, 2022, total loans were $27.8 billion, up 5% from Jun 30, 2022. Total deposits increased 2% from the prior-quarter end to $29.2 billion.
Credit Quality: Mixed Bag
In the reported quarter, the company recorded a provision for credit losses of $17 million against a provision benefit of $24 million in the prior-year quarter.
As of Sep 30, 2022, total non-performing assets were $133.1 million, down 21% year over year. Total non-accrual loans were $116.4 million, declining 14%.
Capital Ratios Deteriorate, Profitability Ratios Improve
As of Sep 30, 2022, Tier 1 risk-based capital ratio was 10.03%, down from the 11.30% recorded in the corresponding period of 2021. Common equity Tier 1 capital ratio was 9.41%, down from 10.57%.
At the end of the third quarter, annualized return on average assets was 1.02%, up from 1.01% recorded in the prior-year period. Return on average tangible common equity was 14.32%, up from 12.97%.
2022 Outlook
The company expects short-term interest rates to rise 75 bps in November and anticipates a 50-bps increase for this December. Based on the assumptions, management expects NII to exceed $935 million (changed from the prior mentioned $910 million increase).
Total non-interest income is expected to be between $290 million and $300 million.
Management projects auto finance loan growth of $1.3 billion and total commercial loan growth of $1.7 billion.
Non-interest expenses are expected to be $740-$750 million (changed from the prior stated $735-$745 million).
The effective tax rate is expected to be 21%, assuming no change in the corporate tax rate.
The common equity tier 1 ratio is expected to be 9.25-9.75%, and the tangible common equity ratio is estimated to be 7.00-7.25%.
The company expects to adjust provisions to indicate changes to risk grades, economic conditions, loan volumes and other indications of credit quality.
Our Take
Associated Banc-Corp’s business-restructuring efforts are likely to keep supporting financials. The company has a solid balance-sheet position, making it well-poised for growth. However, elevated expenses will likely hurt profits in the near term.
Associated BancCorp Price, Consensus and EPS Surprise
Associated BancCorp price-consensus-eps-surprise-chart | Associated BancCorp Quote
Associated Banc-Corp currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Banks
Hancock Whitney Corporation’s (HWC - Free Report) third-quarter 2022 earnings of $1.55 per share were in line with the Zacks Consensus Estimate. The bottom line rose 6.9% from the prior-year quarter’s adjusted earnings of $1.45.
Results benefited from higher net interest income, a rise in loan balance and increasing rates. However, lower non-interest income mainly due to rising mortgage rates was the undermining factor. Higher adjusted expenses and a rise in provisions were other headwinds for HWC.
Washington Federal’s (WAFD - Free Report) fourth-quarter fiscal 2022 (ended Sep 30) earnings of $1.07 per share handily surpassed the Zacks Consensus Estimate of 91 cents. The figure reflects a year-over-year jump of 48.6%.
Results were primarily aided by higher rates, robust deposits and improving loan balances, which drove net interest income. However, an increase in expenses, fall in total other income and higher provisions were the headwinds for WAFD.