ASB-PF — Associated Banc-Corp

Summary of Associated Banc-Corp's Q3 2025 Earnings Call

1. Key Financial Results and Metrics

• Earnings Per Share (EPS): Reported at $0.73.
• Net Interest Income (NII): Achieved a record $305 million, up 16% year-over-year and slightly higher than the previous quarter.
• Total Loans: Grew by 1% quarter-over-quarter and 3% year-over-year; C&I loans increased by nearly $300 million in Q3, totaling nearly $1 billion year-to-date.
• Core Deposits: Increased by $628 million in Q3, up 4% year-over-year.
• Return on Average Tangible Common Equity (ROTCE): Improved to over 14%, a 250 basis point increase from Q3 2024.
• Capital Ratios: CET1 ratio increased to 10.33%, up 13 basis points from Q2 2025.

2. Strategic Updates and Business Highlights

• Customer Growth: Continued organic growth in checking households, with the strongest year for organic growth since tracking began a decade ago.
• Balance Sheet Remixing: Focused on growing high-quality C&I loans while reducing low-yielding residential mortgages.
• Investment in Talent: Hiring of relationship managers (RMs) in underpenetrated metro markets is yielding positive results, with expectations for continued C&I loan growth as noncompete agreements expire.
• Noninterest Income: Increased to $81 million, driven by capital markets revenue and a one-time asset gain.

3. Forward Guidance and Outlook

• Loan Growth: Expected total bank loan growth of 5% to 6% for the year, with strong pipelines for C&I lending.
• NII Growth: Forecasted to grow between 14% and 15% in 2025, assuming two additional Fed rate cuts.
• Core Deposit Growth: Projected to be at the lower end of the 4% to 5% range for 2025.
• Expense Management: Anticipated 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: While delinquencies remained flat, there was a slight increase in criticized loans. The bank is closely monitoring macroeconomic risks, including inflation and interest rate sensitivity.
• Deposit Costs: Increased slightly in Q3 due to seasonal factors and higher-end pricing accounts, indicating potential competitive pressures.
• Residential Real Estate: Continued runoff in residential mortgages is seen as a headwind for total loan growth, with expectations for elevated CRE payoffs as rates decline.

5. Notable Q&A Insights

• C&I Growth: Management expects C&I growth to accelerate as more RMs come off noncompete agreements, with a strong production pipeline.
• Fee Income: The impressive Q3 fee income is not expected to repeat at the same level in Q4 due to a one-time asset gain, but underlying trends in capital markets remain positive.
• Margin Outlook: Stability in net interest margin is anticipated despite potential rate cuts, with a focus on maintaining asset sensitivity.
• Hiring Strategy: The bank remains open to opportunistic hires of high-quality RMs throughout the year, without a fixed plan for increasing headcount.

Overall, Associated Banc-Corp reported strong financial results in Q3 2025, with a focus on strategic growth and profitability, while also navigating challenges related to credit quality and competitive pressures in the deposit market. The outlook remains optimistic, with expectations for continued loan growth and profitability enhancements.