We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Associated Banc-Corp (ASB) Q2 Earnings In Line, NII Declines
Read MoreHide Full Article
Associated Banc-Corp’s (ASB - Free Report) second-quarter 2024 adjusted earnings of 52 cents per share met the Zacks Consensus Estimate. However, the bottom line compared unfavorably with the prior-year quarter’s earnings of 56 cents per share.
Results benefited from a higher loan balance. However, a decline in net interest income (NII), non-interest income, and an increase in expenses and provisions were headwinds.
Net income available to common shareholders (GAAP basis) was $113 million, up 34.5% from the year-ago quarter. This included the $2 million FDIC special assessment adjustment and a one-time tax benefit of $33 million. Our estimate for the metric was $77.8 million.
Revenues Decline, Expenses Rise
Total revenues were $321.8 million, down marginally year over year. The top line also missed the Zacks Consensus Estimate of $331.2 million.
NII was $256.6 million, down marginally. The net interest margin was 2.75%, down 5 basis points (bps) year over year. We had expected NII and net interest yield to be $261.6 million and 2.82%, respectively.
Non-interest income was $65.2 million, down marginally. The fall was largely due to lower service charges and deposit account fees, mortgage banking and net asset losses. Our estimate for non-interest income was $64.5 million.
Non-interest expenses increased 2.7% to $195.9 million. These included the FDIC special assessment adjustment of $2 million. Our estimate for non-interest expenses was $198 million. Adjusted non-interest expenses were $198 million.
The adjusted FTE efficiency ratio was 60.85%, up from 56.96% in the prior-year quarter. A rise in the efficiency ratio indicates a deterioration in profitability.
As of Jun 30, 2024, total loans were $29.6 billion, up marginally from the prior quarter. However, total deposits declined 3% to $32.7 billion.
Credit Quality Worsens
In the reported quarter, the company recorded a provision for credit losses of $23 million, rising 4.5% from the prior-year quarter. Our estimate for the metric was $25.5 million.
As of Jun 30, 2024, total non-performing assets were $163.4 million, rising 17.4%. Total non-accrual loans were $154.4 million, up 17.6%.
Net charge-offs were $21.1 million, up substantially from $11.2 million in the prior year quarter.
Capital Ratios Improve
As of Jun 30, 2024, the Tier 1 risk-based capital ratio was 10.27%, up from 10.07% recorded in the corresponding period of 2023. The common equity Tier 1 capital ratio was 9.68%, up from 9.48%.
2024 Outlook
Management expects loan growth to be at the lower end of 6-8%.
Total core customer deposits are estimated to rise at the lower end of 3-5%.
NII is projected to increase 1-3%.
After adjusting to exclude the impact of non-recurring items related to the balance sheet repositioning announced in the fourth quarter of 2023, total non-interest income is expected to grow 1% or decrease 1%.
After adjusting to exclude the impact of the FDIC special assessment charges and adjustments, total non-interest expenses are anticipated to rise 2-3%.
The effective tax rate is expected to be 19-21%.
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 and provisions are likely to hurt profits in the near term.
Associated Banc-Corp Price, Consensus and EPS Surprise
Prosperity Bancshares Inc.’s (PB - Free Report) second-quarter 2024 adjusted EPS of $1.22 beat the Zacks Consensus Estimate of $1.20. Moreover, the bottom line compared favorably with adjusted earnings of $1.21 in the prior-year quarter.
PB’s results benefited from lower provisions and an increase in NII. Further, a rise in deposits and loans was another positive. Nevertheless, a fall in adjusted non-interest income and rising expenses were major headwinds.
East West Bancorp, Inc.’s (EWBC - Free Report) second-quarter 2024 adjusted EPS of $2.07 surpassed the Zacks Consensus Estimate of $1.97. However, the bottom line declined 5.9% from the prior-year quarter.
The results were primarily aided by an increase in adjusted non-interest income. Also, deposit and loan balances increased sequentially in the quarter. However, lower NII and higher adjusted non-interest expenses and provisions were the undermining factors for EWBC.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Associated Banc-Corp (ASB) Q2 Earnings In Line, NII Declines
Associated Banc-Corp’s (ASB - Free Report) second-quarter 2024 adjusted earnings of 52 cents per share met the Zacks Consensus Estimate. However, the bottom line compared unfavorably with the prior-year quarter’s earnings of 56 cents per share.
Results benefited from a higher loan balance. However, a decline in net interest income (NII), non-interest income, and an increase in expenses and provisions were headwinds.
Net income available to common shareholders (GAAP basis) was $113 million, up 34.5% from the year-ago quarter. This included the $2 million FDIC special assessment adjustment and a one-time tax benefit of $33 million. Our estimate for the metric was $77.8 million.
Revenues Decline, Expenses Rise
Total revenues were $321.8 million, down marginally year over year. The top line also missed the Zacks Consensus Estimate of $331.2 million.
NII was $256.6 million, down marginally. The net interest margin was 2.75%, down 5 basis points (bps) year over year. We had expected NII and net interest yield to be $261.6 million and 2.82%, respectively.
Non-interest income was $65.2 million, down marginally. The fall was largely due to lower service charges and deposit account fees, mortgage banking and net asset losses. Our estimate for non-interest income was $64.5 million.
Non-interest expenses increased 2.7% to $195.9 million. These included the FDIC special assessment adjustment of $2 million. Our estimate for non-interest expenses was $198 million. Adjusted non-interest expenses were $198 million.
The adjusted FTE efficiency ratio was 60.85%, up from 56.96% in the prior-year quarter. A rise in the efficiency ratio indicates a deterioration in profitability.
As of Jun 30, 2024, total loans were $29.6 billion, up marginally from the prior quarter. However, total deposits declined 3% to $32.7 billion.
Credit Quality Worsens
In the reported quarter, the company recorded a provision for credit losses of $23 million, rising 4.5% from the prior-year quarter. Our estimate for the metric was $25.5 million.
As of Jun 30, 2024, total non-performing assets were $163.4 million, rising 17.4%. Total non-accrual loans were $154.4 million, up 17.6%.
Net charge-offs were $21.1 million, up substantially from $11.2 million in the prior year quarter.
Capital Ratios Improve
As of Jun 30, 2024, the Tier 1 risk-based capital ratio was 10.27%, up from 10.07% recorded in the corresponding period of 2023. The common equity Tier 1 capital ratio was 9.68%, up from 9.48%.
2024 Outlook
Management expects loan growth to be at the lower end of 6-8%.
Total core customer deposits are estimated to rise at the lower end of 3-5%.
NII is projected to increase 1-3%.
After adjusting to exclude the impact of non-recurring items related to the balance sheet repositioning announced in the fourth quarter of 2023, total non-interest income is expected to grow 1% or decrease 1%.
After adjusting to exclude the impact of the FDIC special assessment charges and adjustments, total non-interest expenses are anticipated to rise 2-3%.
The effective tax rate is expected to be 19-21%.
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 and provisions are likely to hurt profits in the near term.
Associated Banc-Corp Price, Consensus and EPS Surprise
Associated Banc-Corp price-consensus-eps-surprise-chart | Associated Banc-Corp Quote
ASB 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
Prosperity Bancshares Inc.’s (PB - Free Report) second-quarter 2024 adjusted EPS of $1.22 beat the Zacks Consensus Estimate of $1.20. Moreover, the bottom line compared favorably with adjusted earnings of $1.21 in the prior-year quarter.
PB’s results benefited from lower provisions and an increase in NII. Further, a rise in deposits and loans was another positive. Nevertheless, a fall in adjusted non-interest income and rising expenses were major headwinds.
East West Bancorp, Inc.’s (EWBC - Free Report) second-quarter 2024 adjusted EPS of $2.07 surpassed the Zacks Consensus Estimate of $1.97. However, the bottom line declined 5.9% from the prior-year quarter.
The results were primarily aided by an increase in adjusted non-interest income. Also, deposit and loan balances increased sequentially in the quarter. However, lower NII and higher adjusted non-interest expenses and provisions were the undermining factors for EWBC.