ASB-PE — Associated Banc-Corp

Summary of Associated Banc-Corp Q3 2025 Earnings Call

1. Key Financial Results and Metrics

• Earnings Per Share (EPS): Reported at $0.73.
• Net Interest Income (NII): Reached a record $305 million, up 16% year-over-year.
• Total Loans: Grew by 1% quarter-over-quarter and 3% year-over-year, with a notable 5.5% growth when adjusting for a loan sale.
• Core Deposits: Increased by $628 million (2% from Q2) and up 4% year-over-year, totaling $1.2 billion.
• Return on Average Tangible Common Equity (ROTCE): Improved to over 14%, a 250 basis point increase from the previous year.
• Credit Quality: Nonaccruals at 34 basis points of total loans, with net charge-offs flat at 17 basis points.

2. Strategic Updates and Business Highlights

• Customer Growth: Achieved net household growth each quarter in 2025, marking the strongest year for organic checking household growth in a decade.
• C&I Loan Growth: Nearly $1 billion added year-to-date, with $300 million growth in Q3 alone, driven by new relationship managers (RMs) and expiring noncompete agreements.
• Balance Sheet Remix: Focused on shifting from low-yield residential mortgages to higher-quality commercial and industrial (C&I) loans.
• Investment in Talent: Continued hiring of talented RMs in underpenetrated markets, with a focus on organic growth.

3. Forward Guidance and Outlook

• Loan Growth Expectation: Anticipate total bank loan growth of 5% to 6% for the year.
• NII Growth Forecast: Expected to grow by 14% to 15% in 2025, assuming two additional Fed rate cuts.
• Core Deposit Growth: Now expected to be at the lower end of the 4% to 5% range for the year, with confidence in attracting low-cost deposits.
• Expense Management: Projected noninterest expense growth of 5% to 6% in 2025, with a focus on maintaining positive operating leverage.

4. Bad News, Challenges, or Points of Concern

• Credit Quality Monitoring: While overall asset quality remains stable, there are concerns regarding potential impacts from macroeconomic uncertainties, including inflation and labor market shifts.
• CRE Payoff Activity: Elevated payoffs in commercial real estate (CRE) could impact loan growth, though production in construction lending has increased.
• Deposit Costs: Slight increase in deposit costs noted, raising concerns about competitive pressures in the deposit market.

5. Notable Q&A Insights

• C&I Growth Acceleration: Management expects C&I growth to continue accelerating as more RMs come off noncompete agreements, with strong pipelines indicating robust future production.
• Fee Income Expectations: Acknowledged that Q3 fee income included a one-time asset gain, leading to expectations of a decline in Q4; however, underlying capital markets and commercial production trends remain positive.
• Asset Sensitivity: Management indicated a cautious approach to interest rate sensitivity, with expectations for stability in margins despite potential rate cuts.
• Market Expansion: While focusing on organic growth, management remains open to opportunistic hiring and potential market expansions, particularly in new regions.

Overall, Associated Banc-Corp demonstrated strong financial performance in Q3 2025, with a focus on strategic growth initiatives and maintaining credit quality amidst macroeconomic uncertainties. The outlook remains positive, with expectations for continued loan growth and profitability, although challenges in deposit costs and CRE payoffs are being monitored closely.