Associated Banc-Corp Reports Strong Q3 Earnings

Associated Banc-corp ((ASB)) has held its Q3 earnings call. Read on for the main highlights of the call.

The recent earnings call for Associated Banc-Corp was filled with optimism as the company reported strong financial performance. The sentiment during the call was largely positive, driven by record net interest income, significant growth in commercial and industrial (C&I) loans, and improved capital generation. Despite some challenges, such as expected increases in commercial real estate (CRE) lending payoffs and flat delinquency rates, the company remains well-positioned for continued growth.

Record Net Interest Income

Associated Banc-Corp achieved a record net interest income of $305 million in the third quarter, marking a 16% increase compared to the same period in 2024. This impressive growth underscores the bank’s ability to effectively manage its interest-earning assets and liabilities, contributing to its overall financial strength.

Growth in C&I Loans

The bank reported a substantial increase in high-quality C&I loans, adding nearly $1 billion year-to-date, with $300 million added in the third quarter alone. This growth reflects the bank’s strategic focus on expanding its commercial lending portfolio, which is a key driver of its revenue.

Increase in Core Deposits

In the third quarter, Associated Banc-Corp added over $600 million in core deposits, representing a 2% increase from the previous quarter and a 4% increase from the same period last year. This growth in deposits enhances the bank’s liquidity position and supports its lending activities.

Improved Capital Generation

The bank improved its capital generation by adding 13 basis points of CET1 capital in the third quarter, resulting in a total year-to-date increase of 30 basis points. This improvement strengthens the bank’s capital base and provides a buffer against potential economic uncertainties.

Strong Noninterest Income

Noninterest income saw a significant rise, increasing by 21% in the third quarter. This growth was driven by gains in capital markets revenue, wealth fees, and a one-time asset gain, highlighting the bank’s diversified income streams.

Positive Operating Leverage

Associated Banc-Corp achieved positive operating leverage, with its efficiency ratio decreasing for the third consecutive quarter to below 55%. This improvement indicates the bank’s effective cost management and operational efficiency.

CRE Lending Uncertainty

The bank anticipates elevated CRE payoff activity in the coming quarters as interest rates continue to fall. This uncertainty poses a challenge, but the bank remains vigilant in managing its CRE portfolio.

Moderate Deposit Cost Increase

Interest-bearing liabilities saw a slight increase of 1 basis point to 3.03%, while total interest-bearing deposit costs remained flat compared to the previous quarter. This stability in deposit costs is a positive sign amid a changing interest rate environment.

Flat Delinquencies and Nonaccruals

Total delinquencies remained flat at $52 million, with nonaccrual balances slightly decreasing. While these figures remain a focus, the bank’s disciplined credit management continues to mitigate potential risks.

Forward-Looking Guidance

Looking ahead, Associated Banc-Corp is poised for continued momentum into 2026, supported by strategic growth investments and disciplined credit management. The bank’s robust performance in the third quarter, including a return on average tangible common equity of over 14%, positions it well to navigate potential macroeconomic uncertainties.

In summary, the earnings call for Associated Banc-Corp painted a picture of a company on a strong growth trajectory. With record net interest income, significant loan and deposit growth, and improved capital generation, the bank is well-equipped to face future challenges. Despite some uncertainties in the CRE lending space, the overall sentiment remains positive, with the bank strategically positioned for continued success.