On Thursday, Piper Sandler adjusted its price target for shares of Associated Banc-Corp (NYSE:NYSE:ASB), lifting it to $28.00 from the previous $26.00 while maintaining a Neutral rating.
The firm made the adjustment following Associated Banc-Corp's announcement of a balance sheet repositioning. The company disclosed that it had sold approximately $1.3 billion of securities and entered into an agreement to sell around $0.7 billion in mortgage loans, with the latter transaction expected to close in the first quarter of 2025.
The balance sheet restructuring is said to increase Associated Banc-Corp's funding capacity by reducing Federal Home Loan Bank (FHLB) advances and enhancing asset yields. Moreover, the company plans to invest about $1.5 billion into new investment securities. These moves are anticipated to result in a net loss for the company in the fourth quarter of 2024.
Despite the expected short-term loss, the analyst from Piper Sandler believes that the recent capital raise and the latest financial maneuvers should have a positive effect on the company's operating earnings per share (EPS) for 2025 and 2026. The analyst estimates that there will be a five-year earnback period for the anticipated loss in the fourth quarter of 2024.
The repositioning actions come on the heels of a capital raise conducted by Associated Banc-Corp last month. The company's strategic decisions are aimed at strengthening its financial standing and improving returns for shareholders in the coming years. The analyst's revised figures are based on the combined impact of the capital raise and the recent balance sheet changes, which are expected to be accretive to future earnings.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.