Associated Banc-p(US:ASB)2025-10-23 22:02Financial Data and Key Metrics Changes - The company reported earnings of $0.73 per share for Q3 2025, with net interest income reaching a record $305 million, up 16% compared to Q3 2024 [7][8][9] - Total loans grew by 1% quarter-over-quarter and 3% year-over-year, with a 5.5% growth when adjusting for a loan sale completed in January [7][8] - The CET1 capital ratio increased by 30 basis points year-to-date, with an additional 13 basis points added in Q3 [5][21] Business Line Data and Key Metrics Changes - C&I loans grew by nearly $300 million in Q3 and by almost $1 billion year-to-date, leading the loan growth [8][12] - Core customer deposits increased by over $600 million in Q3, up 2% from Q2 and over 4% or $1.2 billion compared to the same period last year [8][13] - Non-interest income for Q3 was $81 million, a 21% increase from the prior quarter, driven by capital markets revenue and wealth fees [9][19] Market Data and Key Metrics Changes - The company experienced strong seasonal deposit inflows, with core customer deposits enabling a reduction in wholesale funding [8][13] - The overall wholesale funding sources decreased by 2% versus Q2 [13] Company Strategy and Development Direction - The company is focused on organic growth, enhancing customer relationships, and improving profitability through a strategic remix of its balance sheet [4][6][10] - Plans to take market share in commercial lending and deposit acquisition by hiring talented relationship managers in underpenetrated metro markets [10][14] - The company aims to continue reducing reliance on wholesale funding by growing low-cost core customer deposits [14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's growth strategy despite macroeconomic uncertainties, indicating strong momentum heading into 2026 [6][7] - The company expects to maintain a stable net interest margin and continue to grow net interest income by 14% to 15% in 2025, assuming further Fed rate cuts [17][66] Other Important Information - The company reported flat delinquencies and non-accruals at 34 basis points of total loans, indicating stable asset quality [9][24] - The allowance for credit losses increased by $3 million to $415 million, reflecting growth in commercial and business lending [22] Q&A Session Summary Question: C&I growth and future expectations - Management expects C&I growth to accelerate as more relationship managers come off non-compete agreements, with production up 12% and pipeline up 31% [32] Question: Fee income expectations - Management noted that Q3 fee income included a one-time asset gain, and while Q4 may see a decline, underlying capital markets and commercial production trends remain positive [34] Question: Return on average tangible common equity - Management indicated that the return on average tangible common equity is expected to continue improving, with a target of 15% in the near future [35] Question: Deposit costs and competition - Management clarified that the increase in deposit costs was due to seasonal factors and higher-end pricing accounts, not necessarily increased competition [41] Question: Future hiring plans - Management remains open to hiring quality relationship managers year-round, with no specific target but will be opportunistic based on market conditions [45][47] Question: Loan growth headwinds - Management acknowledged that while residential real estate is a headwind for balances, the purposeful runoff is beneficial, and they expect to offset it with increased commercial lending [52] Question: Margin outlook with potential rate cuts - Management believes that the margin will remain stable or slightly improve due to remixing strategies, despite potential fluctuations from market behaviors [64][66]