D.A. Davidson & Co. Reports on Associated Banc-Corp 'Exceptionally Strong Quarter'

In a report published Monday, D.A. Davidson & Co. analyst Stephen Geyen maintained a Neutral rating on

and raised the price target from $19.00 to $19.50 following first quarter results. Associated Banc-Corp reported net income of $44 million, or $0.27 per share, for the first quarter beating 1Q13 EPS by $0.02 but below consensus estimate of $0.29. Average loans grew 3 percent from the fourth quarter to $416 million and average commercial loans grew to a record of $420 million. The company repurchased approximately 2.3 million shares for $39 million in the first quarter. D.A. Davidson & Co. reported that this was an “exceptionally strong quarter” and suggests improvement in business confidence and the recovery pace. Geyen forecasts a seven percent growth in average earnings yielding interest income growth of 4.5% in 2014. The analyst noted improvement in the efficiency ratio due to lower FTEs, branch optimization and investment in technology services. Geyen commented, “We are impressed with Associated Banks' RAROC system that allows the RMs to holistically look at each relationship in order to drive EPS growth. Investment in corporate services over the last few years and a very low cost of funds is driving a very competitive pricing model versus the larger banks, while still meeting management's return on capital goals.” Shares of Associated Banc-Corp closed at $17.39 on Thursday and is currently up 2.185% at $17.77.