ASB-PE — Associated Banc-Corp

Summary of Associated Banc-Corp Q2 2026 Earnings Call

1. Key Financial Results and Metrics

• Earnings: GAAP EPS of $0.63; adjusted EPS of $0.73 after accounting for $24 million in nonrecurring costs from the American National acquisition.
• Loan Growth: Total loans increased by 15% quarter-over-quarter, with organic loan growth of 3% ($940 million). C&I loans specifically grew by $644 million.
• Deposits: Total deposits and core customer deposits both grew by 12% in Q2, largely due to the American National acquisition. Organic core customer deposit growth was 6% year-over-year.
• Net Interest Income: Increased by 20% to $370 million, with a net interest margin of 3.17%, up 14 basis points.
• Noninterest Income: Rose to $80 million, up $5 million from the previous quarter.
• Noninterest Expense: Increased to $272 million, reflecting the acquisition costs, including $24 million in one-time expenses.
• Credit Quality: ACL ratio increased to 1.36%. Net charge-offs were $23 million, with $7 million attributed to American National.

2. Strategic Updates and Business Highlights

• Growth Focus: The company aims for sustainable organic growth, achieving a target of 9-10% organic C&I loan growth for 2026, which has already been met.
• Integration of American National: The acquisition is progressing as planned, with a focus on cost savings and operational integration, including a systems and branch conversion expected in October 2026.
• Hiring and Expansion: Investments in new teams and offices in Kansas City and Dallas are expected to enhance commercial growth.
• Deposit Strategy: Enhanced digital banking and marketing efforts have led to a 2.4% increase in primary checking households, the strongest growth in over a decade.

3. Forward Guidance and Outlook

• Loan Growth: Expecting total loan growth of 18-20% and C&I loan growth of 20-22% for 2026.
• Deposit Growth: Anticipating total deposit growth of 17-19% and core customer deposit growth of 19-21% for the year.
• Net Interest Income: Projected growth of 19-21% for 2026 compared to standalone results from 2025.
• Noninterest Expense: Expected to grow by 20-21% in 2026, influenced by the acquisition costs.

4. Bad News, Challenges, or Points of Concern

• Seasonal Deposit Decline: Total deposits decreased by 1% quarter-over-quarter due to typical seasonal trends, excluding the impact of the acquisition.
• Credit Quality Concerns: While overall credit quality remains solid, there was an increase in criticized loans and nonaccrual balances, primarily due to the American National portfolio.
• Expense Management: Nonrecurring expenses related to the acquisition were higher than anticipated, which could impact future profitability.
• Market Competition: Although the company is experiencing growth, there are concerns about competitive pressures in the lending market, particularly in commercial banking.

5. Notable Q&A Insights

• Expense Guidance Clarification: Management indicated that the expense guidance includes nonrecurring costs and that core expenses would be more stable moving forward.
• Loan Growth Dynamics: The anticipated slowdown in loan growth in the second half of the year is attributed to expected paydowns in commercial real estate.
• M&A Appetite: Management emphasized a focus on organic growth post-acquisition, with potential for M&A discussions after the integration of American National is complete.
• Credit Quality Management: The increase in charge-offs from American National was a strategic decision to align with Associated's credit philosophy, and no surprises were found in the portfolio.

This earnings call reflects a strong performance in Q2 2026, driven by strategic growth initiatives and successful integration of American National, while also highlighting some challenges related to seasonal trends and market competition.