Associated Banc-Corp Q1 Earnings Beat as NII Rises, Provisions Fall

Core Insights - Associated Banc-Corp's (ASB) first-quarter 2025 earnings per share (EPS) were 59 cents, exceeding the Zacks Consensus Estimate of 57 cents and up from 52 cents in the prior-year quarter [1] - The increase in earnings was driven by higher net interest income (NII) and adjusted non-interest income, alongside growth in loans and deposits, while higher expenses posed a challenge [1] Financial Performance - Net income available to common shareholders reached $98.8 million, a 26% increase from the year-ago quarter, surpassing the estimate of $89.5 million [2] - Total revenues for the quarter were $349 million, a 7% year-over-year increase, but fell short of the Zacks Consensus Estimate of $350.7 million [3] - NII was reported at $285.9 million, an 11% increase, with a net interest margin of 2.97%, up 18 basis points year over year [3] - Non-interest income was $58.8 million, down 10%, but adjusted non-interest income, excluding losses from mortgage portfolio sales, rose 2% to $66 million [4] - Non-interest expenses increased by 7% to $210.6 million, exceeding the estimate of $203.5 million [4] Loan and Deposit Growth - As of March 31, 2025, total loans were $30.3 billion, a 2% increase from the prior quarter, while total deposits grew 2% to $35.2 billion [5] Credit Quality - The provision for credit losses was $13 million, down 46% from the prior-year quarter, indicating improved credit quality [6] - Total non-performing assets decreased by 15% to $159 million, with non-accrual loans falling 24% to $134.8 million [6] - Net charge-offs dropped 61% from the prior-year quarter to $8.7 million [6] Capital Ratios - The Tier 1 risk-based capital ratio improved to 10.68%, up from 10.02% in the same period of 2024, while the common equity Tier 1 capital ratio rose to 10.11% from 9.43% [7] Share Repurchase - During the reported quarter, the company repurchased 0.9 million shares [8] Outlook for 2025 - Management anticipates loan growth of 5-6% and core customer deposits to rise by 4-5%, with total deposits projected to increase by 1-2% [9] - NII is expected to grow by 12-13%, while adjusted non-interest income is forecasted to remain stable or grow by 1% [9] - Total non-interest expenses are likely to rise by 3-4%, with an effective tax rate expected between 19-21% [10] Strategic Position - The company's restructuring efforts are expected to support financial performance, with a solid balance sheet positioning it for growth despite rising expenses and a challenging operating environment [11]