8-K: Associated Banc-Corp Posts Strong Q3 Earnings, Record NII

Associated Banc-Corp reported third quarter 2025 net income of $122 million, or $0.73 per common share, driven by strategic growth investments and record net interest income.

Summary

• Net income available to common equity for the third quarter of 2025 was $122 million, or $0.73 per common share, an increase from $108 million ($0.65 per share) in 2Q 2025 and $85 million ($0.56 per share) in 3Q 2024.
• Record net interest income reached $305 million, up 2% from 2Q 2025 and 16% from 3Q 2024.
• Total period-end loans grew to $31.0 billion, a 1% increase from 2Q 2025 and 3% from 3Q 2024, with commercial and industrial (C&I) loans increasing by nearly $300 million.
• Total period-end deposits reached $34.9 billion, up 2% from 2Q 2025 and 4% from 3Q 2024, including over $700 million in deposit growth.
• Core customer deposits increased to $28.9 billion, a 2% rise from the prior quarter and 4% from the same period last year.
• Net interest margin remained stable at 3.04% compared to 2Q 2025, and increased 26 basis points from 3Q 2024.
• Credit quality remained solid, with nonaccrual loans decreasing by $7 million from the prior quarter to $106 million, and the nonaccrual loans to total loans ratio improving to 0.34% from 0.37%.
• The Common Equity Tier 1 (CET1) capital ratio strengthened to 10.33%, an increase of 13 basis points from the prior quarter, exceeding Basel III well-capitalized regulatory benchmarks.
• Return on Average Equity (ROE) was 10.26% and Return on Average Tangible Common Equity (ROATCE) was 14.02% for the quarter.

Sentiment

Score: 8

Explanation: The company reported strong financial results with significant increases in net income, record net interest income, and healthy loan and deposit growth. Positive updates to full-year guidance for noninterest income and effective tax rate, coupled with solid credit quality and capital ratios, indicate a very positive outlook.

Positives

• Net income available to common equity increased significantly to $122 million ($0.73 per share) in 3Q 2025, up 13% sequentially and 43% year-over-year.
• Achieved record net interest income of $305 million, demonstrating strong revenue generation.
• Experienced robust loan growth, particularly in Commercial & Industrial (C&I) lending, which increased by $334 million from the prior quarter to $12.7 billion.
• Delivered strong deposit growth, with total period-end deposits up $734 million (2%) sequentially and core customer deposits up $628 million (2%) sequentially.
• Maintained a stable net interest margin of 3.04%, indicating effective interest rate management.
• Improved credit quality metrics, including a decrease in nonaccrual loans to $106 million and a lower nonaccrual loans to total loans ratio of 0.34%.
• Strengthened capital position with the CET1 capital ratio increasing to 10.33%, well above regulatory minimums.
• Updated 2025 guidance for total noninterest income growth to 5% to 6% (from 1% to 2%) and annual effective tax rate to 18% to 19% (from 19% to 21%), reflecting positive adjustments.
• Total liquidity sources covered 179% of uninsured, uncollateralized deposits as of September 30, 2025.

Negatives

• Total noninterest expense increased by $7 million from the prior quarter to $216 million, primarily due to higher personnel expense ($9 million increase).
• Average yield on total loans remained flat from the prior quarter and decreased 38 basis points from the same period last year to 5.89%.
• The allowance for credit losses on loans (ACLL) to total loans ratio slightly decreased to 1.34% from 1.35% in the prior quarter.

Risks

• Actual results may differ materially from forward-looking statements due to various risks and uncertainties.
• Factors causing actual results to differ are identified in the company's most recent Form 10-K and subsequent Form 10-Qs and other SEC filings.
• Provision for credit losses will continue to be adjusted based on changes to risk grades, economic conditions, loan volumes, and other indications of credit quality.

Future Outlook

Management continues to expect 2025 period-end loan growth of 5% to 6% and total net interest income growth of 14% to 15%. Period-end total deposit growth is projected at 1% to 3%, with core customer deposit growth of 4% to 5%. The company has updated its guidance for total noninterest income growth to 5% to 6% (previously 1% to 2%) and for total noninterest expense growth to 5% to 6% (previously 4% to 5%), both adjusted for specific nonrecurring items. The annual effective tax rate is now expected to be between 18% and 19% (previously 19% to 21%). The CET1 capital ratio target remains 10% to 10.5% in 2025.

Management Comments

• President & CEO Andy Harmening stated, "We've continued to see promising results driven by the strategic growth investments we've made across our company. Here in the third quarter, we posted nearly $300 million in C&I loan growth, over $700 million in deposit growth, and strong revenue results including record-high net interest income. We also delivered solid credit performance and expanded CET1 capital by another 13 basis points."
• Harmening added, "As we look to the remainder of 2025 and into 2026, the Associated Bank franchise has strong momentum that continues to build. Our strategic plan puts us in a favorable position to grow and deepen our customer base, take market share, bolster capital, and improve our return profile—all while maintaining the disciplined approach that helped get us here."

Industry Context

Associated Banc-Corp's strong third-quarter performance, characterized by significant loan and deposit growth, record net interest income, and improved credit quality, indicates effective navigation within a dynamic banking environment. The focus on Commercial & Industrial (C&I) loan expansion and core customer deposit growth aligns with broader industry trends where regional banks are emphasizing relationship-based banking and diversified funding sources to enhance profitability and stability amidst fluctuating interest rates and competitive pressures. The robust capital ratios also position the company favorably compared to peers in a period of increased regulatory scrutiny.

Stakeholder Impact

• Shareholders: Positive impact due to increased earnings per share, strong capital position, and positive future outlook, which could lead to increased shareholder value.
• Customers: Continued growth in loans and deposits suggests an expanding and deepening customer base, indicating strong customer relationships and service offerings.
• Employees: Increased personnel expense suggests ongoing investment in the workforce, potentially indicating job stability or growth opportunities.
• Regulators: Strong capital ratios (CET1 at 10.33%) and adherence to Basel III well-capitalized benchmarks demonstrate regulatory compliance and financial soundness.

Next Steps

• Continue executing the strategic plan to grow and deepen the customer base, take market share, bolster capital, and improve the return profile.
• Adjust provision for credit losses to reflect changes to risk grades, economic conditions, loan volumes, and other indications of credit quality.

Key Dates

Recommendation

Associated Banc-Corp's third-quarter results demonstrate robust financial health and effective strategic execution. The significant increase in net income and record net interest income, coupled with strong loan and deposit growth, are key indicators of operational strength. The improved credit quality metrics and a solid CET1 capital ratio exceeding regulatory benchmarks provide a strong foundation. Furthermore, the upward revision of noninterest income guidance and a more favorable tax rate outlook for 2025 suggest continued positive momentum. These factors collectively point to a company with strong fundamentals and a positive trajectory, making it an attractive investment.

Keywords

Associated Banc-Corp, ASB, Earnings, Financial Results, Banking, Net Interest Income, Loan Growth, Deposit Growth, Credit Quality, Capital Ratios, Regional Bank, Wisconsin