Associated Banc-Corp (ASB)

The Take — Still a hold / accumulate-on-weakness. The model hasn't moved; the stock has, and the discount has narrowed to 7%.

Throw out the screen's growth number. GAAP EPS went from $0.72 (2024) to $2.77 (2025), +285% — but 2024 was depressed by the Q4-24 balance-sheet repositioning (securities sold at a loss, $723M of mortgages sold, a $(1.03) Q4 loss), and 2023 by the same playbook (mortgage-sale loss $136M, securities loss $59M, FDIC special assessment). On an adjusted basis EPS went $2.27 → $2.38 → $2.77: +16%, not +282%. The low PEG is an artifact; this is not a growth stock. It is a ~12.5% ROTCE bank — exactly what its five-year adjusted record says (12.5%).

At that return, the stock is modestly cheap. Cost of equity 10.0%, 3% growth: a 12.5% ROTCE justifies 1.35x tangible book = $29.89; the excess-return model, crediting the near-term 13–13.5% run-rate (Q2 adj. ROATCE 13.95%) fading to 12.5%, gives $31.01; the DDM gives $27.94. Today's 1.30x TBV prices in ~11.8% sustained ROTCE — a hair below what the bank has actually earned in every clean year since 2021. Forward return at normalized ROTCE ≈ 10.3% vs a 10.0% hurdle: you're paid, but only a little.

The rate setup leans its way. Management's own disclosure: +100bp ramp → NII +1.9% (≈+$0.12 EPS); −100bp → −1.2%. With the 10Y at ~5.2% and a Fed hiking bias, the NIM (3.17% in Q2, ~3.10% core ex-purchase-accounting) has a tailwind, and the 2023–24 repositioning already flushed the low-yield securities. 2026 guide: NII +19–21%, loans +18–20% (ANC-inclusive). American National ($5.3B assets, $604M all-stock, 30% cost saves, 1.9% TBV dilution, ~2.25-yr earnback) closed 4/1 and converts this month.

But it's not a screaming buy — the tornado says NIM and credit cost are each worth ±$5/share, and both have reasons to wobble: CRE is 24.8% of loans ($9.0B; multifamily 10.7%, office 2.2%), nonaccruals jumped to $150M from $111M with ANC, Q2 NCOs were 26bp vs 7bp in Q1, and C&I is being grown 20%+ — fast growth is where tomorrow's charge-offs are born. CET1 10.47% sits at the low end of the 10–10.75% target, so no buybacks until it rebuilds.

What changed since 10/14: only the price. The stock is up 2.3% ($28.21 → $28.86). There is no company news. Q3 has not been reported, and the date is confirmed for Oct 22 after the close (Street EPS $0.76; Q4 $0.80). No filings or guidance changed, so the inputs (Q2-26 tangible book $22.15, 12.5% normalized ROTCE, 10.04% cost of equity) and the $31.01 base are unchanged. The discount to base narrowed from −9% to −7%. That is still SLIGHTLY CHEAP, but it is now 2 points from FAIR. The Street mean target is $33.91 (range $31–36; 5 Buy / 6 Hold / 0 Sell), above our base but inside our bull case. This refresh adds the "What they do" section with the 6/30 loan mix and a cost-of-equity × growth grid.

Call: Hold; no chasing above ~$30 into the print. Accumulate below ~$26 (≈1.17x TBV, bear-plus), get aggressive under $24.5 (bear). Trim above ~$34 (≈10% over base; bull is $37). Options: after the Oct 22 (after close) print, sell a 25/22.5 bull put spread or cash-secured $25 puts 30–45 DTE — the short strike sits at bear-case value with a 3.3% dividend behind it. If the print shows core NIM ≥3.15% with nonaccruals flat or down, the base drifts toward ~$33 and the stock stays a hold. If NCOs run above 35bp, expect a retest of $26. Watch on the print: core NIM ex-accretion, ANC conversion costs, nonaccrual trend.