Associated Banc Q2 Earnings Call Highlights
Key Points
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- Associated Banc reported improved second-quarter results, with adjusted EPS of $0.73 and strong loan growth driven by the American National acquisition plus organic commercial lending gains. Organic C loan growth hit the bank’s full-year target by the end of June.
- The American National integration remains on schedule, with systems and branch conversion expected in October and cost savings now projected at about 30% of the acquired expense base. Management said the deal should deepen its commercial presence and add new product capabilities.
- Profitability and credit quality stayed solid, as net interest income rose to $370 million, margin expanded to 3.17%, and delinquencies fell. The bank said asset quality remains strong and kept its 2026 outlook for robust loan and deposit growth.
Associated Banc (NYSE:ASB) reported higher second-quarter earnings on an adjusted basis as the Green Bay, Wisconsin-based bank incorporated the acquisition of American National Corporation and continued to post organic growth in commercial lending and customer deposits.
President and CEO Andy Harmening said the bank remains focused on “sustainable, profitable organic growth,” particularly in commercial banking. He said Associated Banc had already reached its full-year target for organic commercial and industrial loan growth by the end of June, after adding more than $600 million in C balances during the second quarter.
The company reported GAAP earnings per share of $0.63 for the quarter, or $0.73 after adjusting for $24 million of non-recurring costs related to the American National acquisition. Total loans increased 15% from the prior quarter, reflecting the addition of nearly $4 billion in American National loan balances. Excluding the acquisition, organic loans grew 3%, or $940 million, during the quarter.
Harmening said organic C loans increased by $644 million in the quarter and nearly $1.2 billion, or 10%, through the first half of the year. He said that effectively met the bank’s original full-year target within six months.
American National Integration Remains on Track
Associated Banc closed the American National transaction during the quarter and incorporated its balance sheet as of April 1. Harmening said the company has assessed purchase accounting impacts, identified cost savings and remains on track for systems and branch conversion in October.
The company said expected cost savings have increased from 25% of American National’s expense base to about 30%. Management said the expected tangible book value earn-back period remains at 2.25 years, despite non-recurring merger expenses coming in slightly above initial expectations and fair value marks being affected by changes in interest rates.
Harmening said American National’s businesses and team have performed as expected. He said the transaction positions Associated Banc to deepen relationships in markets including Omaha and the Twin Cities, while adding products such as wealth management, capital markets, consumer banking capabilities, health savings accounts and upgraded digital banking tools after conversion.
Deposits Rise With Acquisition, Organic Growth Improves Year Over Year
Total deposits and core customer deposits both increased 12% in the second quarter, largely due to the addition of more than $4 billion in American National deposit balances. Excluding those balances, total deposits declined 1% from the prior quarter, which management attributed to normal second-quarter seasonality.
Harmening highlighted stronger year-over-year organic deposit growth. From June 30, 2025, to June 30, 2026, organic core customer deposits increased 6%, which he described as the strongest June-to-June growth the bank has seen in five years. He also said primary checking households grew 2.4% on an annualized basis year to date, the strongest pace since the bank began tracking the metric more than a decade ago.
The bank pointed to investments in digital banking, marketing, product enhancements and a mass affluent program as contributors to consumer deposit growth. In commercial banking, Harmening said treasury management and health savings account businesses are both growing at double-digit rates year over year.
Management also discussed a new deposit-focused homeowners association and title company vertical. Harmening said the necessary technology upgrades were completed around June and that the business has already begun bringing in deposits. He said the vertical could reach $200 million to $300 million in deposits by the end of 2027.
Net Interest Income and Margin Expand
Chief Financial Officer Derek Meyer said second-quarter net interest income was $370 million, up $63 million from the prior quarter and $70 million from the year-ago period, following the American National acquisition. Net interest margin increased 14 basis points to 3.17%.
Meyer said purchase accounting accretion and deferred loan cost and fee adjustments contributed six basis points to the quarter’s margin. He also noted that Associated Banc repositioned American National’s securities portfolio, selling a portfolio with a book value of approximately $1 billion and reinvesting the same amount at a yield of about 4.6%.
Meyer said deposit pricing was “the unsung hero of the quarter,” noting that deposit costs at legacy Associated Banc improved modestly in the second quarter despite seasonal pressure on funding. Harmening said the bank expects net interest margin expansion in both the third and fourth quarters, supported by loan remixing, deposit trends and the securities repositioning.
For 2026, Associated Banc now expects net interest income to grow 19% to 21% compared with Associated’s standalone 2025 results.
Expenses Increase With Deal Costs
Total non-interest income was $80 million in the second quarter, up $5 million from the prior quarter and $13 million from the year-ago quarter. Meyer said the increase reflected the American National acquisition as well as growth in legacy wealth management and capital markets businesses.
Total non-interest expense was $272 million, up $53 million from the prior quarter. The figure included $24 million in non-recurring acquisition-related costs. Meyer said most non-recurring expenses year to date have been recorded in personnel and legal and professional categories. Adjusted for non-recurring expenses, the efficiency ratio declined to 52.9%.
Associated Banc now expects 2026 non-interest expense to grow 20% to 21% compared with Associated’s standalone 2025 results, including non-recurring acquisition costs. During the question-and-answer session, Meyer said the company remains largely on track with its original core expense plan, aside from deferred compensation expense, which he said is offset by fee income for earnings-per-share purposes.
Credit Trends Remain Solid
Chief Credit Officer Pat Ahern said asset quality remained solid in the quarter. The allowance for credit losses increased by $69 million to $494 million, with the increase driven by loan growth and normal credit movements. The allowance ratio rose two basis points from the prior quarter to 1.36% of total loans.
Total delinquencies decreased by $28 million from the prior quarter to $60 million. Criticized loans increased by $290 million, largely due to the addition of American National, but remained generally consistent as a percentage of total loans. Non-accrual loans rose $39 million to $150 million, with about half of the increase coming from the American National portfolio as Associated Banc aligned certain credits with its risk-rating philosophy.
Net charge-offs were $23 million, including $7 million related to American National. Ahern said charge-offs from Associated Banc equated to approximately 18 basis points for the quarter and 13 basis points year to date, in line with historical trends.
Ahern said the company has completed reviews of the vast majority of American National’s credit portfolio and is not seeing surprises relative to due diligence. Harmening added that the bank feels “extremely well reserved” across the combined portfolio.
Associated Banc maintained its outlook for 2026 C loan growth of 20% to 22% and now expects total loan growth of 18% to 20% compared with Associated’s standalone results at the end of 2025. It also continues to expect total deposit growth of 17% to 19% and core customer deposit growth of 19% to 21% on the same basis.
About Associated Banc (NYSE:ASB)
Associated Banc-Corp, through its primary subsidiary Associated Bank, N.A., is a regional financial services company headquartered in Green Bay, Wisconsin. The bank operates more than 200 branches across the Midwest, offering community-focused banking solutions for individuals, small businesses and commercial clients. Its emphasis on personalized service and regional decision-making supports long-standing customer relationships.
On the consumer side, Associated Bank provides checking and savings accounts, residential mortgages, home equity lines of credit, auto financing and credit card products.
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