ASB — 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): Achieved a record $305 million, up 16% year-over-year.
• Total Loans: Grew by 1% quarter-over-quarter and 3% year-over-year; adjusted for a loan sale, growth was 5.5%.
• Core Deposits: Increased by $628 million (2%) from Q2 and up 4% ($1.2 billion) year-over-year.
• Return on Average Tangible Common Equity (ROTCE): Improved to over 14%, a 250 basis point increase from Q3 2024.
• Credit Quality: Nonaccruals at 34 basis points of total loans; net charge-offs stable at 17 basis points.

2. Strategic Updates and Business Highlights

• Focused on organic growth, achieving net household growth each quarter in 2025, with the strongest year for organic checking household growth since tracking began.
• Significant growth in Commercial & Industrial (C&I) loans, with nearly $1 billion added year-to-date.
• Continued efforts to remix the balance sheet by reducing low-yielding residential mortgages while increasing core deposits.
• Investment in talent acquisition, particularly in underpenetrated metro markets, is expected to drive future growth.

3. Forward Guidance and Outlook

• Anticipated loan growth of 5% to 6% for the year, with a strong pipeline for C&I loans.
• Expecting net interest income growth of 14% to 15% in 2025, assuming two additional Federal Reserve rate cuts.
• Core customer deposit growth expected to be at the lower end of the 4% to 5% range for the year.
• Confidence in maintaining a CET1 ratio within 10% to 10.5% for 2025.

4. Bad News, Challenges, or Points of Concern

• Credit Quality Monitoring: While delinquencies remain flat, there is ongoing concern regarding macroeconomic risks, including inflation and labor market changes.
• Residential Real Estate: Continued runoff in residential mortgages is seen as a headwind, with potential for impact if rates decrease significantly.
• Commercial Real Estate (CRE): Elevated payoff activity expected, creating uncertainty in short-term growth.
• Deposit Costs: Slight increase in deposit costs noted in Q3, raising concerns about competitive pressures and potential impacts on margins.

5. Notable Q&A Insights

• C&I Growth: Management expects continued strong growth in C&I loans as noncompete agreements expire, with a robust pipeline indicating further acceleration.
• Fee Income: Q3 included a one-time asset gain, leading to expectations of a decline in fee income in Q4, though underlying capital markets and commercial production remain strong.
• Expense Management: Personnel expenses are expected to remain stable, with a focus on managing costs while driving growth.
• Market Positioning: Management remains open to opportunistic hiring and market expansion, emphasizing organic growth but not ruling out M&A if suitable opportunities arise.

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.