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    ASB
    Earnings call· Jun 2026(Q2 FY26)

    ASSOCIATED BANC-CORP ASB

    Jul 23, 2026 Source

    Executive summary

    Associated Banc-Corp Q2 FY26 — Strong Organic Growth and American National Integration

    Associated Banc-Corp delivered robust organic growth in Q2 FY26, exceeding C&I loan targets and achieving strong core customer deposit growth, while successfully integrating American National Corporation. The company is well-positioned for continued growth and NIM expansion in the second half of the year, driven by increased cost savings from the acquisition and a focus on disciplined execution. Management also signaled a readiness to resume share repurchases.

    Highlights

    5

    • Organic C&I loan growth hit its 9-10% target by June 30, adding over $600 million in Q2.

    • Organic core customer deposit growth was 6% from June 30, 2025, to June 30, 2026, marking the strongest June-to-June growth in 5 years.

    • Net interest income increased by 20% to $370 million versus the prior quarter, following the American National acquisition.

    • Net interest margin expanded by 14 basis points to 3.17% for the quarter.

    • Expected cost saves from the American National acquisition increased from 25% to approximately 30% of the expense base.

    Concerns

    4

    • Nonrecurring merger expenses came in slightly above expectations.

    • Fair value marks were impacted by the shift in interest rates.

    • Total deposits decreased by 1% organically quarter-over-quarter due to typical Q2 seasonality.

    • Nonaccrual balances increased by $39 million to $150 million, with approximately half attributed to the American National portfolio alignment.

    Guidance & targets

    12
    CategoryTargetConfidence
    Cost saves from American National acquisition
    approximately 30%
    high materiality
    High
    Earn back period for American National acquisition
    2.25 years
    high materiality
    High
    Period-end total loan growth
    18% to 20%
    high materiality
    High
    C&I loan growth
    20% to 22%
    high materiality
    High
    Period-end total deposit growth
    17% to 19%
    high materiality
    High
    Period-end core customer deposit growth
    19% to 21%
    high materiality
    High
    Total net interest income growth
    19% to 21%
    high materiality
    High
    Total noninterest income growth
    8% to 10%
    medium materiality
    High
    Noninterest expense growth
    20% to 21%
    high materiality
    High
    Securities plus cash total assets ratio
    22% and 24%
    medium materiality
    High
    Net Interest Margin (NIM) trajectory
    NIM expansion
    high materiality
    High
    HOA and Title Company Deposits
    $200 million to $300 million
    low materiality
    Medium

    Operational metrics

    33
    Adjusted EPS
    $0.73
    Q2 FY26

    Adjusted for nonrecurring costs recognized through the American National acquisition.

    Nonrecurring cost (American National acquisition)
    $24 million
    Q2 FY26

    One-time expenses tied to the American National deal, included in Q2 expenses.

    Organic loan growth (excluding ANB)
    3%
    Q2 FY26

    Excluding the impact of American National.

    Organic C&I growth
    $500 million
    Q1 FY26

    Growth in C&I loans in the first quarter.

    Organic C&I loans (YTD)
    $1.2 billion
    YTD June 30

    Effectively hitting the original 4-year growth target within the first 6 months of the year.

    Organic CRE balances growth
    $251 million
    Q2 FY26

    Production outpaced payoffs in Q2.

    Total deposits growth (excluding ANB)
    -1%QoQ
    Q2 FY26

    Largely driven by typical Q2 seasonality.

    Organic core customer deposit growth
    6%
    June 30, 2025 to June 30, 2026

    Strongest June to June growth in 5 years.

    Organic core customer deposit growth
    4%
    June 30, 2024 to June 30, 2025

    Previous year's growth rate.

    Organic core customer deposit growth
    2%
    June 30, 2023 to June 30, 2024

    Two years prior growth rate.

    Primary checking households growth
    2.4%annualized
    YTD June 30

    Strongest growth rate seen in over a decade.

    Primary checking households growth
    3.6%
    June to June

    Growth in primary checking households.

    Treasury management sales growth
    >20%YoY
    YTD

    Leading indicator to deposit growth.

    HSA business growth
    double digits
    YoY

    N/A

    Yield on auto portfolio
    38increased QoQ
    Q2 FY26

    Reflecting the impact from deferred loan cost and fee adjustments tied to the American National acquisition.

    Investment yields
    5increased QoQ
    Q2 FY26

    Following repositioning of American National Securities portfolio.

    Yield on reinvested securities (ANB)
    4.6%
    Q2 FY26

    Yield on $1 billion of securities from American National's portfolio that were sold and reinvested.

    Yield on total earning assets
    12increased QoQ
    Q2 FY26

    N/A

    Rate on total interest-bearing liabilities
    -1decreased QoQ
    Q2 FY26

    N/A

    Net free funds expansion
    2QoQ
    Q2 FY26

    N/A

    Received fixed swap balances
    $2.45 billion
    Q2 FY26

    Maintained to protect variable-rate loan portfolio.

    NII impact (up 100 bps scenario)
    1.9%
    Q2 FY26

    Represents impact to NII in an up 100 bps interest rate scenario.

    NII impact (down 100 bps scenario)
    1.2%
    Q2 FY26

    Represents impact to NII in a down 100 bps interest rate scenario.

    Total investment security balances
    $10.2 billiongrew QoQ
    Q2 FY26

    Following the acquisition of American National and repositioning of their securities book.

    Securities plus cash total assets ratio
    23.3%
    Q2 FY26

    N/A

    TCE ratio
    8.27%flat QoQ
    Q2 FY26

    Up 21 basis points from Q2 of 2025.

    Tangible book value per share
    $22.15down slightly QoQ
    Q2 FY26

    Up $1.31 relative to Q2 of 2025.

    Total delinquencies
    $60 milliondecreased by $28 million QoQ
    Q2 FY26

    Generally in line with previous levels.

    Total criticized loans
    $290 millionincreased QoQ
    Q2 FY26

    Much of the dollar increase driven by the addition of American National; as a percentage of total loans, largely in line with prior quarters.

    Net charge-offs (excluding ANB)
    $7 million
    Q2 FY26

    Net charge-offs for a handful of credits inherited from American National.

    Net charge-offs (Associated only)
    18
    Q2 FY26

    Aligns with historical trends.

    Net charge-offs (YTD Associated only)
    13
    YTD Q2 FY26

    Aligns with historical trends.

    HOA and Title Company Deposits
    $200 million to $300 million
    leaving 2027

    Expected deposit generation from the newly launched HOA and title company vertical.

    Industry KPIs

    12
    MetricValueDetails
    Loans15%%
    Deposits12%%
    Cet1 ratio10.47%%
    Capital returnsApproved share repurchases
    Fee income lines$80 millionUSD
    Allowance reserves$494 millionUSD
    Net interest income$370 millionUSD
    Net interest margin3.17%%
    Net charge offs npls$23 millionUSD
    Total operating expenses$272 millionUSD
    Provision for credit losses$19 millionUSD
    Efficiency ratio operating leverage52.9%%

    Product announcements

    1
    ProductTypeDetails
    HOA and Title Company Verticallaunch

    Deals & partnerships

    1
    American National CorporationAcquisition of a bank, incorporating its balance sheet, assessing purchase accounting impacts, and identifying cost saves.

    Systems and branch conversion expected in October. The team and businesses have been as advertised, and the acquired portfolio has met due diligence expectations.

    Risks & headwinds

    6
    Nonrecurring merger expensesQ2 FY26

    Slightly above expectations

    Fair value marks impactQ2 FY26

    Impacted by the shift in rates

    Deposit seasonalityQ2 FY26

    Total deposits decreased by 1% organically QoQ

    Mitigation: Expected normal seasonality, offset by strong organic core customer deposit growth year-over-year.

    Elevated payoffs in CREback half of the year

    Expected

    Mitigation: N/A

    Macroeconomic concernsOngoing

    Ongoing inflation pressures, shifting labor markets, tariffs, and effects of elevated interest rates

    Mitigation: Teams remain vigilant in reviewing portfolios and staying in regular contact with customers; diligent monitoring of credit stressors to ensure current underwriting reflects impacts.

    Nonaccrual loans from American National portfolioQ2 FY26

    Approximately half of the $39 million increase in nonaccrual loans

    Mitigation: Due to aligning credits to Associated's credit strategy and philosophies; not indicative of new emerging risks or surprises from due diligence.

    What to watch in Q3 FY26

    5

    American National Integration

    October
    CurrentIntegration ongoing, cost saves increased to 30%.
    TargetSuccessful systems and branch conversion.

    Why it matters

    Critical for realizing full cost synergies and leveraging ANB's capabilities for organic growth.

    Our next major milestone is systems and branch conversion, which we expect to take place in October of this year.

    Q&A highlights

    6

    How to calculate the core expense run rate for 2026, stripping out one-time merger costs, and if the 20.5% growth midpoint is accurate for core.

    Derek Meyer confirmed that taking the full-year midpoint guidance and subtracting the $52.5 million in one-time costs from Slide 5 would yield the full-year core number. He noted that the organic expense growth was on track with original 3% guidance, with deferred compensation being the main difference.

    “I think the full year midpoint guidance that's implied minus the 52.5, gets you our full year number this year.”

    asked by Brandon Rud · answered by Derek Meyer

    2 min read6 chapters

    Detailed Narrative

    01

    American National Integration Progress

    The integration of American National Corporation is proceeding as expected, with systems and branch conversion anticipated in October. The balance sheet has been incorporated, purchase accounting impacts assessed, and cost saves increased from 25% to 30% of American National's expense base, maintaining the 2.25-year earn-back period. The acquired portfolio has met due diligence expectations, with no major surprises, and portfolio reviews are largely complete.

    02

    Sustained Organic Growth Momentum

    The company has maintained strong organic growth momentum, particularly in its commercial business. C&I loan growth reached 10% through June 30, hitting the original 4-year target within six months. This growth is attributed to strategic investments in leadership, increased Relationship Managers (RMs), and expansion into new markets like Kansas City and Dallas, as well as a new franchise banking vertical. These investments are expected to sustain growth into 2027 and beyond.

    03

    Deposit Gathering Engine Development

    Associated Banc-Corp has built a sustainable deposit gathering engine, evidenced by 6% organic core customer deposit growth year-over-year, the strongest in five years. This success is supported by modernized digital banking, enhanced consumer products, a successful mass affluent program, and a sharpened focus on commercial relationships, including double-digit growth in treasury management and HSA businesses. A new HOA and title company vertical, launched in June, is also expected to be a meaningful driver of commercial deposit growth.

    04

    Net Interest Margin Expansion

    The net interest margin increased by 14 basis points to 3.17% in Q2, with management anticipating further expansion in Q3 and Q4. This positive trajectory is driven by the American National acquisition, the strategic repositioning of its securities portfolio, and a favorable remix of the loan portfolio towards higher-yielding commercial loans, alongside disciplined deposit pricing. The company also maintains a relatively neutral interest rate position.

    05

    Asset Quality and Credit Outlook

    Asset quality trends remained solid in Q2, with the ACLL ratio increasing by 2 basis points to 1.36%. While nonaccrual balances increased, approximately half was due to aligning American National's credits with Associated's philosophy, not new emerging risks. Net charge-offs, excluding American National's inherited credits, were in line with historical trends, and the overall portfolio is considered well-reserved. Management remains vigilant in monitoring credit stressors and portfolio performance.

    06

    Strategic Investments and Market Expansion

    The company's growth strategy includes significant investments in talent and market expansion. This involves bolstering leadership teams, increasing Relationship Managers by nearly 50%, and launching new C&I offices in Kansas City and Dallas. Additionally, a new franchise banking vertical has been established, and key leadership hires have been made in the private wealth business, particularly in major metro markets like the Twin Cities, to deepen relationships and capture market share.

    AI-generated summary of the company’s earnings call. Not investment advice.