Shares of Associated Banc-Corp(NYSE: ASB) fell as much as 8% early Friday, then tempered its losses to trade down 3.4% as of 2:30 p.m. ET after the regional bank announced mixed quarterly results relative to Wall Street's expectations.
On today's evolving banking environment, solid growth in deposits
For its fiscal second quarter ended Sept. 30, Associated's revenue declined 4.2% year over year, to $320.8 million, missing analysts' consensus models for revenue closer to $325 million. On the bottom line, that translated to generally accepted accounting principles (GAAP) earnings of $80.4 million, or $0.53 per share, slightly beating estimates calling for earnings of $0.52 per share.
Associated CEO Andy Harmening lauded improvements in customer acquisition, retention, and satisfaction scores, which helped increase core customer deposits by over $500 million while lowering reliance on noncustomer funding sources. He added, "While we fell well-positioned today, we recognize that the banking environment continues to evolve, and we look forward to sharing more details about the second phase of our strategic plan later this quarter."
On moderating expected loan growth
Looking ahead to the remainder of the fiscal year, however, Associated Bank also lowered its outlook to call for total loan growth of 5% to 6% (down from 6% to 8% previously) while reiterating its guidance for core customer deposit compression of 3%. The company also reduced its outlook for total net income growth of 5% to 7% (down from 6% to 8% previously).
In the end, this was a reasonably solid quarter from the leading regional bank stock, overshadowed by slight relative weakness on the loan side of its business. Associated Bank shares are simply responding in kind with today's modest drop.
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