ASB — Associated Banc-Corp

Summary of Associated Banc-Corp's Q2 2026 Earnings Call

1. Key Financial Results and Metrics:

• GAAP EPS: Reported at $0.63; adjusted EPS at $0.73 after accounting for $24 million in nonrecurring costs related to the American National acquisition.
• Total Loans: Grew by 15% quarter-over-quarter, boosted by nearly $4 billion from American National. Organic loan growth was 3% ($940 million).
• Deposits: Total deposits increased by 12%, with core customer deposits up 6% year-over-year, marking the strongest growth in five years.
• Net Interest Income: Increased by 20% to $370 million, with a net interest margin of 3.17%, up 14 basis points from the previous quarter.
• Noninterest Income: Rose to $80 million, up $5 million from the prior quarter.
• Noninterest Expenses: Increased to $272 million, including $24 million in one-time acquisition costs.
• Credit Quality: Net charge-offs were $23 million, with $7 million attributed to American National. The allowance for credit losses (ACLL) ratio was 1.36%.

2. Strategic Updates and Business Highlights:

• Organic Growth Focus: The company is targeting 9-10% organic growth in commercial and industrial (C&I) loans, achieving this target in the first half of 2026.
• Acquisition Integration: The integration of American National is on track, with systems and branch conversion expected in October 2026. Cost savings estimates have improved from 25% to 30% of American National's expense base.
• New Initiatives: Expansion of C&I teams in Kansas City and Dallas, along with a new franchise banking vertical, is expected to enhance growth.
• Deposit Growth Strategies: Investments in digital banking and customer acquisition have led to a 2.4% increase in primary checking households.

3. Forward Guidance and Outlook:

• Loan Growth Expectations: Total loan growth is projected at 18-20% for 2026, with C&I loan growth expected at 20-22%.
• Deposit Growth Projections: Anticipated total deposit growth of 17-19% and core customer deposit growth of 19-21% for 2026.
• Net Interest Income Growth: Expected to increase by 19-21% compared to 2025 stand-alone results.

4. Bad News, Challenges, or Points of Concern:

• Seasonality Impact: Total deposits decreased by 1% quarter-over-quarter due to typical seasonal trends, despite strong year-over-year growth.
• Credit Quality Concerns: While overall asset quality remains solid, there was an increase in criticized loans and nonaccrual balances, primarily due to the American National portfolio.
• Market Competition: The competitive lending environment remains a concern, though the company is managing to grow without compromising credit quality.

5. Notable Q&A Insights:

• Expense Guidance Clarification: The expense guidance for 2026 is expected to grow by 20-21%, with adjustments for nonrecurring costs. Analysts sought clarity on quarterly expense run rates.
• Loan Growth Drivers: Management indicated that the higher total loan growth guidance is primarily driven by commercial real estate (CRE) and C&I balances, with expectations of increased paydowns in the second half of the year.
• M&A Appetite: The focus remains on organic growth, with M&A considerations to be revisited post-integration of American National.
• Deposit Seasonality: Management highlighted that the second half of the year typically sees stronger deposit growth, driven by increased economic activity.

Overall, Associated Banc-Corp demonstrated strong financial performance in Q2 2026, with significant loan and deposit growth, while also navigating challenges related to integration and credit quality. The company remains optimistic about its growth trajectory and strategic initiatives moving forward.