Associated Banc-Corp Worth Watching As It Prudently Manages Growth

Summary

• Associated Banc-Corp had a good fourth quarter, with revenue and pre-provision profits coming in above expectations on strong earning asset yield improvement.
• Net interest margin has likely peaked, and deposit costs are a definitely watch item, but Associated seems well-placed for strong pre-provision growth in 2023.
• The growth outlook for 2024 is more uncertain, but I like management's plan to target further commercial lending growth in Chicago and Minneapolis and focus more on client experience/satisfaction.
• Associated isn't wildly undervalued but does offer upside toward the high-$20s as it delivers on growth and sentiment improves.

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Writing about Associated Banc-Corp (NYSE:ASB) back in October, I said that while I saw value in this underfollowed, growing Upper Midwest bank, sentiment was likely to be a headwind a while longer. And so it has

Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.