Associated Banc-Corp Q2 FY2025 earnings call

• Leveraged a best-in-class value proposition to achieve the best organic checking household growth seen since tracking began nearly a decade ago. - Driven loan growth with C&I loans, having grown over $700 million in the first half of 2025 and on track to exceed the $1.2 billion C&I loan target for the year, replacing lower-yielding residential loans and boosting profitability. - Q2 net interest income reached $300 million, a record high, with a net interest margin above 3%. - Added 9 basis points to CET1 capital in Q2 and 19 basis points year-to-date, enabling capital accretion while supporting balance sheet growth. - Focused on credit discipline, proactively managing portfolios and communicating with customers amidst the uncertain macro backdrop.

In the second quarter, total loans grew 1% quarter-over-quarter and 3% versus Q2 of 2024. Adjusted for the loan sale completed in January, total loans in Q2 were up nearly 6% versus Q2 of 2024. C&I loans led the growth, with over $700 million in growth in the first half of 2025. Core customer deposits were up 4.3% compared to the same period a year ago. Net interest income for Q2 was $300 million, the strongest in the company's history. Noninterest income was $67 million, up 3% versus Q2 of last year.

• Expect net interest income growth of 14%-15% in 2025, assuming 3 Fed rate cuts. - Noninterest income is expected to grow 1%-2% in 2025 excluding nonrecurring items. - Core deposit growth is expected to be 4%-5% in 2025.

• Macro economic uncertainty that could impact the company's performance. - Potential impact of interest rate changes on net interest margin. - Risks associated with specific portfolio segments like office commercial real estate (CRE), including evolving trends and potential stress in that asset class.

Q: Daniel Tamayo asked about the seasonal decline in deposits and how to achieve the core customer deposit growth guidance for 2025.

A: Andrew John Harmening stated that a significant part is seasonal rebound, and there's a commercial pipeline with $500 million increase in deposits over 12 months and $200 million in the last 90 days, along with household growth trends.

Q: Robert Scott Siefers inquired about margin drivers and deposit pricing strategy.

A: Derek S. Meyer said the asset side, particularly C&I loan growth, has a predictable impact on margin, and Andrew John Harmening mentioned discipline in deposit pricing with good retention and pricing.

Q: Terry McEvoy asked about M&A thoughts and ACL for the C&I portfolio.

A: Andrew John Harmening said M&A would need to be a good strategic, financial, and cultural fit, and the ACL increase for C&I was due to loan growth and normal movement in risk rating categories.

Q: Christopher Thomas O'Connell asked about hiring efforts, forward investments, and ROATCE target.

A: Andrew John Harmening discussed hiring trends with inbound calls and nonsolicitations expiring, forward investment process focusing on swift execution and payback, and expressed confidence in reaching the mid-teen ROATCE target over time with current momentum.