ASB — Associated Banc-Corp

Summary of Associated Banc-Corp Q4 2025 Earnings Call

1. Key Financial Results and Metrics

• Earnings: Q4 earnings per share (EPS) were $0.80, with a full-year EPS of $2.77.
• Net Interest Income (NII): Q4 NII reached a record $310 million, up 15% year-over-year. The net interest margin (NIM) was 3.06% for Q4.
• Loan Growth: Total loans grew by 1% quarter-over-quarter and 5% year-over-year, primarily driven by a 2% increase in Commercial & Industrial (C&I) loans, which added $1.2 billion for the year.
• Deposits: Core customer deposits increased by nearly $700 million in Q4 and by $1 billion for the year, representing a 3.5% growth rate compared to 2024.
• Credit Quality: Non-accrual loans decreased to 32 basis points of total loans, with net charge-offs at just 3 basis points for Q4 and 12 basis points for the full year.

2. Strategic Updates and Business Highlights

• Strategic Investments: The completion of Phase two of the strategic plan in March 2025 has positioned the company for growth, with a focus on organic customer base expansion and market share gains in major metropolitan areas.
• Acquisition: An agreement to acquire American National Corporation was announced, aimed at enhancing growth prospects in the Omaha market and strengthening the Twin Cities presence.
• Market Focus: Plans for 2026 include significant investments in marketing and hiring in key markets such as the Twin Cities, Omaha, Kansas City, and Dallas to boost organic growth.

3. Forward Guidance and Outlook

• 2026 Expectations: The company anticipates continued organic growth, projecting a 5-6% increase in total loans and core customer deposits, excluding the impact of the American National acquisition.
• NII Growth: Expected to grow by 5.5% to 6.5% in 2026, assuming two Federal Reserve rate cuts.
• C&I Loan Growth: Projected growth of 9-10% in C&I loans for 2026, supported by a strong pipeline and hiring of new relationship managers (RMs).

4. Bad News, Challenges, or Points of Concern

• Residential Mortgage Loans: The ongoing reduction of low-yielding residential mortgage loans continues to be a drag on growth, with expectations for this trend to persist.
• Market Conditions: The company is monitoring macroeconomic factors such as inflation, labor market shifts, and interest rate sensitivity, which could impact credit quality and overall performance.
• Competitive Pressures: Concerns about deposit competition and interest-bearing deposit betas could affect NIM and overall profitability.

5. Notable Q&A Insights

• Integration of American National: Management expressed confidence in the cultural fit and strategic alignment of the acquisition, but specific financial impacts remain to be clarified post-approval.
• Loan and Deposit Growth: The hiring of new RMs is expected to contribute positively to loan and deposit growth, with historical precedents indicating significant growth within the first year of such hires.
• Credit Quality: Management noted no significant stress in credit quality, with a focus on maintaining vigilance over portfolios amid economic uncertainties.

Overall, Associated Banc-Corp demonstrated strong financial performance in 2025, with a clear strategic focus on growth and market expansion, while also acknowledging challenges related to residential mortgages and macroeconomic conditions.