Zacks Investment Ideas feature highlights: Fifth Third Bank and Associated Banc-Corp

For Immediate Release

Chicago, IL – June 14, 2018 – Today, Zacks Investment Ideas feature highlights Features: Fifth Third Bank FITB and Associated Banc-Corp ASB.

Regional Banks Get Tailwind from Congress & the Fed

As the markets digest the results of the summit yesterday between President Trump and Kim Jong Un, the basic reaction seems to be, well…no reaction. As we await the result of a 2-day meeting of the Federal Reserve this afternoon, the major indexes are all essentially unchanged.

The CBOE Volatility Index (VIX) remains near historical lows at 12%, suggesting investors are expecting little to no market response to the Fed announcement. It is basically considered a foregone conclusion that they will raise short-term interest rates 25 Basis points.

Investors will watch the language in the announcement for clues about a change in the Fed’s inflation target and whether there will be 3 or 4 rate hikes in 2018, though the markets seem comfortable with even the more hawkish Fed stance, as the economy is humming along just fine even as rates normalize from the very low levels of the past decade.

Higher U.S. rates are largely seen as restrictive to U.S. business as they raise borrowing costs and put the brakes on expansion, but one specific business actually benefits, and it’s the same industry that recently got a boost from the relaxation of some of the more onerous aspects of Dodd-Frank legislation – the Banking Sector.

Small and medium sized-banks generally benefit the most from rising rates as they tend to have a much bigger portion or their business in traditional deposit and loan business than the bulge-bracket banks – whose businesses are also spread across investment banking, brokerage and trading.

Mid-sized regional banks also got the most relief as the Dodd-Frank threshold for stress-testing to determine systemic risk was raised from banks with $50B in assets to banks with $100M. The threshold will be raised to banks with up to $250B in assets. These banks will no longer qualify as Strategically Important Financial Institutions (SIFIs), and will avoid costly and inconvenient compliance reporting.

Fifth Third Bank with $142B in assets stands to directly benefit from the reduced regulation and rising rates. Analyst expectations for earnings at Fifth Third have been rising, with 13 upward revisions in the past 60 days. Now expected to earn $2.48/share in 2018, FITB is a Zacks Rank #1 (Strong Buy).

In its most recent quarterly report, Fifth Third reported a relatively flat portfolio of loans and leases, but improving credit quality with declining charge-offs and non-performing assets at 0.36% and 0.55% respectively and a comfortable level of Reserve coverage of 1.24%  which equals a Reserve to Non-Performing Loans (RNP) ratio of 252%.

Associated Banc-Corp is a regional bank holding company with diverse operations primarily in the Midwest. ASB services over a million customer accounts in 8 states and has grown loan volume by an average of 10% over the past four years while keeping Loan to Deposit Ratio under 100%.

An increasing portfolio of loans and deposits and increasing margins have fueled earnings growth at ASB which has posted eight consecutive earnings beats.  The Zacks Consensus Estimate for 2018 now stands at $1.96/share – an increase of 29% over 2017. Associated Banc-Corp is a Zacks Rank #1 (Strong Buy).

In addition to strong organic growth, ASB is poised to benefit from rising rates, a strong dollar and regulation reform and is among the strongest regional banks in the U.S.

The Hottest Tech Mega-Trend of All

Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.

See Zacks' 3 Best Stocks to Play This Trend >>

Follow us on Twitter:  https://twitter.com/ZacksResearch

Join us on Facebook:  https://www.facebook.com/ZacksInvestmentResearch

Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.

Media Contact

Zacks Investment Research

800-767-3771 ext. 9339

support@zacks.com

https://www.zacks.com/performance

Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Fifth Third Bancorp (FITB) : Free Stock Analysis Report
 
Associated Banc-Corp (ASB) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research