Associated Banc Corp (ASBC), Firstmerit Corp (FMER): The Best Little Reality Show You’ll Never See

Why hasn’t anyone done a reality show about newly minted fracking millionaires and how they deal with their newfound wealth.  The working title could be What the Frack?!. In North Dakota alone possible new stars of a fracking millionaire show are being created at a rate of a dozen a week.

But there is another unheralded region that is experiencing its own fracking wealth creation from… sand. And these millionaires, like the shale rich, need help with their sand riches.

Whither the sand dollars?

Yes, the area along the Minnesota-Wisconsin border is full of the sand that fracking requires. And it’s making millionaires from former farmers.

Regional banks benefit from being these little lost millionaires’ new wealth managers. Cornell University economist David Kay found that Pennsylvania landowners with fracking profits spent 55% of the proceeds on savings and investment; and so will the Cheeseheads and Minnesotans (to a much lesser extent with fewer mines) save and invest their sand dollars.

Phil Davies, senior writer for the Fedgazette of the Federal Reserve Bank of Minneapolis, wrote,

Besides jobs, sand mining has created a “wealth effect” in rural communities—lucrative payments to landowners who sell or lease their land to mining companies. Spending by sand millionaires—along with purchases of goods and services by mining companies, mining-related businesses and their workers—percolates through local economies, benefiting enterprises with little connection to mining.

There aren’t many publicly traded banks to play in the Wisconsin sandbox. Two of the biggest as of 2008 were either bought out by private equity like Marshall & Isley or Anchor BanCorp Wisconsin. Last big man standing is Associated Banc Corp (NASDAQ:ASBC). It has a $2.54 billion market cap and is trading at a 17.71 trailing P/E with a 2.10% yield. It earns the lowest corporate governance risk rating of 1 (the best).

This bank holding company primarily does business in Wisconsin, Minnesota, and Illinois. Its Consumer Banking division offers Private Client Service wealth management services the sand rich need: estate planning, investment management, personal trusts, and so on. The company has many branches in towns and counties listed as hot spots for sand mines in Wisconsin and Minnesota. It also has Commercial Banking and Risk Management divisions.

As of the 2012 annual report, the company had $23 billion in assets, $15 billion in loans, and $17 billion in deposits. Its profit margin is 19.27% and its operating margin is 32.81%.