8-K: Associated Banc-Corp Reports Record 2025 Earnings

Associated Banc-Corp announced record annual net income available to common equity of $463 million for 2025, driven by strong loan and deposit growth and strategic initiatives.

Summary

• Net income available to common equity for the year ended December 31, 2025, was a record $463 million, or $2.77 diluted EPS, significantly up from $112 million, or $0.72 diluted EPS, in 2024.
• For the fourth quarter of 2025, net income available to common equity was $134 million, or $0.80 diluted EPS, compared to a loss of $164 million, or $1.03 diluted EPS, in Q4 2024.
• Total period end loans reached $31.2 billion, a 5% increase compared to 2024.
• Total period end deposits were $35.6 billion, up 3% from 2024.
• Core customer deposits stood at $29.6 billion, representing a 3% increase over 2024.
• Net interest income achieved a record $1.2 billion for FY 2025, a 15% increase from 2024.
• Net interest margin for FY 2025 was 3.03%, an increase of 25 basis points from the prior year.
• Noninterest income for FY 2025 was $286 million, an increase of $296 million from the prior year, primarily due to nonrecurring items in 2024.
• Noninterest expense for FY 2025 was $856 million, a 5% increase from 2024.
• Provision for credit losses was $54 million for FY 2025 and $7 million for Q4 2025.
• The CET1 capital ratio was strong at 10.49% as of December 31, 2025.
• Return on average equity was 9.95% for FY 2025 and 11.09% for Q4 2025.
• Return on average tangible common equity was 13.63% for FY 2025 and 15.04% for Q4 2025.

Sentiment

Score: 8

Explanation: The filing reports record annual net income, strong growth across key financial metrics (loans, deposits, net interest income, net interest margin), and improved credit quality. Management expresses confidence in future growth and strategic execution, including a significant acquisition.

Positives

• Achieved record annual net income available to common equity of $463 million in 2025.
• Diluted GAAP earnings per common share increased significantly to $2.77 for FY 2025 from $0.72 in FY 2024.
• Total period end loans grew 5% year-over-year to $31.2 billion, with C&I loans up 11.6% year-over-year.
• Total period end deposits increased 3% year-over-year to $35.6 billion, with core customer deposits up 3.5% year-over-year.
• Reported record net interest income of $1.2 billion, a 15% increase from 2024.
• Net interest margin expanded by 25 basis points year-over-year to 3.03%.
• Credit quality improved with nonaccrual loans decreasing 19% from Q4 2024 to $100 million.
• Net charge offs decreased 81% from Q4 2024 to $2 million.
• Maintained a strong CET1 capital ratio of 10.49%, exceeding Basel III well-capitalized regulatory benchmarks.
• Strategic plan milestones were achieved, including bolstered key leadership, expanded commercial presence, and enhanced consumer value proposition.
• Accelerating growth in major metro markets like Milwaukee and Chicago for deposits and Commercial & Industrial loans.
• Expected organic metro market consumer & business checking household growth to accelerate in 2026 and 2027.

Negatives

• Consumer lending average balances decreased $362 million for full year 2025 compared to 2024.
• Interest-bearing demand deposits decreased $171 million from Q4 2024 to Q4 2025.
• Brokered CDs decreased $481 million from Q4 2024 to Q4 2025.
• Other long-term funding decreased $243 million from Q4 2024 to Q4 2025.
• Accruing loans 30-89 days past due increased 19% from Q3 2025 to $58.3 million in Q4 2025.

Risks

• The ability or anticipated timing to complete the proposed transaction involving Associated Banc-Corp and American National Bank.
• The ability to integrate the two businesses successfully and in a timely manner, if at all.
• The possibility that the anticipated benefits of the transaction are not realized when expected or at all.
• The possibility that the transaction may be more expensive to complete than anticipated.
• Other risk factors as identified in the Company's most recent Form 10-K and subsequent Form 10-Qs and other SEC filings.

Future Outlook

For 2026, total loans are expected to grow 5% to 6%, with Commercial & Industrial loans projected to increase 9% to 10%. Total deposits and core customer deposits are both anticipated to grow 5% to 6%. Net interest income is forecast to rise 5.5% to 6.5%, while noninterest income is expected to increase 4% to 5%. Noninterest expense is projected to grow 3%, and the effective tax rate is estimated to be between 19% and 21%. The CET1 capital ratio is expected to remain strong at 10% to 10.75%. The company aims to maintain securities + cash / total assets at 22% to 24% in 2026 and will adjust provision for credit losses based on changes in risk grades, economic conditions, and loan volumes.

Management Comments

• "2025 was a pivotal year for Associated Bank. We achieved several key milestones of our strategic plan, proved we can win in key growth markets, drove high-quality, relationship loan and deposit growth, and posted the strongest bottom line in company history." President and CEO Andy Harmening.
• "We enter 2026 with a stronger growth profile, enhanced profitability, stronger capital generation and consistently solid credit results. We have the talent, the product set and the value proposition to build on our momentum organically going forward." President and CEO Andy Harmening.
• "We're also excited to welcome American National Bank colleagues, customers and communities to the Associated family later this year. We look forward to providing additional updates on Associated's growth journey throughout the year." President and CEO Andy Harmening.

Industry Context

Associated Banc-Corp's strong performance, marked by record net income and robust loan and deposit growth, positions it favorably within the regional banking sector. The focus on expanding commercial presence and enhancing consumer value proposition, particularly in key metro markets like Milwaukee and Chicago, aligns with broader industry trends of banks seeking to deepen customer relationships and capture market share in growing urban centers. The successful execution of strategic initiatives and improved credit quality metrics suggest effective navigation of the current economic landscape, potentially outperforming some peers facing tighter margins and increased credit concerns.

Management Changes

Stakeholder Impact

• Shareholders: Positive impact due to record earnings, strong financial performance, increased EPS, and positive future outlook.
• Employees: Potential integration challenges and opportunities related to the American National Bank acquisition.
• Customers: Enhanced value proposition and expanded commercial presence, particularly in major metro markets.
• Communities: Expansion into new markets (Twin Cities, Kansas City, Omaha, Dallas) and integration of American National Bank.

Next Steps

• Welcome American National Bank colleagues, customers, and communities to the Associated family later in 2026.
• Provide additional updates on Associated's growth journey throughout 2026.
• Expected legal close of American National Corporation transaction in Q2 2026.
• Expected conversion of systems & branches for American National Corporation in Q3 2026.
• Continue RM investment and sustained growth in Chicago and Milwaukee.
• Increase marketing acquisition spend in Twin Cities & Omaha in 2026 (>100% increase across all markets).
• Increase Commercial & Business Relationship Managers by 10% in 2026 (+11 FTE).
• Target securities + cash / total assets of 22% to 24% in 2026.

Key Dates

Recommendation

The company delivered record annual net income and significantly improved EPS, demonstrating strong operational execution and profitability. Key financial metrics like loan and deposit growth, net interest income, and net interest margin all showed robust positive trends. Credit quality improved, and capital ratios remain strong. The positive outlook for 2026, coupled with strategic market expansion and the American National Bank acquisition, positions the company for continued growth and enhanced shareholder value. The substantial turnaround from the prior year's loss quarter further underscores the positive momentum.

Keywords

Banking, Financial Services, Regional Bank, Commercial Lending, Deposits, Net Interest Income, Net Interest Margin, EPS, Capital Ratios, Credit Quality, American National Bank Acquisition, Wisconsin, Illinois, Minnesota, Missouri