Associated Banc-p(ASB) - 2025 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported earnings of $0.80 per share in Q4 and $2.77 per share for the full year, marking the strongest net income in its history [7][8] - Total loans grew by 1% quarter-over-quarter and 5% year-over-year, with C&I loans being a primary growth driver [7][8] - Net interest income (NII) reached a record $310 million in Q4, up 15% for the year, with a net interest margin (NIM) of over 3% for the year [8][10] - The return on average tangible common equity increased to over 15% in Q4 [9] Business Line Data and Key Metrics Changes - C&I loans grew by over $1.2 billion in 2025, with a 2% increase in Q4 alone [7][8] - Core customer deposits increased by nearly $700 million in Q4 and $1 billion for the year, representing a 3.5% growth rate [8][20] - Non-interest income for Q4 was $79 million, down slightly from Q3 but up from the previous year, driven by growth in wealth management and card fees [25] Market Data and Key Metrics Changes - The company is expanding its presence in major metropolitan markets, including Omaha and the Twin Cities, with a focus on organic growth [6][14] - The acquisition of American National Corporation is expected to enhance market share and growth opportunities in these regions [5][6] Company Strategy and Development Direction - The company aims to maintain a focus on organic growth while managing a low-risk profile, with plans for additional investments in 2026 [6][14] - Strategic investments since 2021 have transformed the company's return profile, with a significant increase in C&I loans and a decrease in low-yielding mortgage loans [10][11] - The company plans to increase marketing spend by over 100% in key markets to accelerate household growth [16] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's growth momentum heading into 2026, supported by strong loan pipelines and a disciplined credit approach [7][10] - The economic outlook remains resilient despite higher interest rates, with expectations of continued loan growth and profitability [29][30] Other Important Information - The company has maintained a disciplined approach to credit, with low charge-off rates and improving asset quality [9][30] - Capital ratios increased, with the tangible common equity ratio at 8.29% and the CET1 ratio at 10.49% [28] Q&A Session Summary Question: Can you provide thoughts on non-interest income guidance? - Management indicated that they are still in the approval process for the American National acquisition and will provide updates once more information is available [36][38] Question: What are the expected impacts of investments in 2026? - Management expects a 3% growth in expenses while making strategic investments to support growth in major metropolitan markets [40][41] Question: How is the company managing its loan and deposit growth? - Management noted that the company is seeing significant loan growth and deposit production, particularly in C&I loans, and expects this trend to continue [52][55] Question: What is the outlook for capital management and potential buybacks? - The primary focus remains on organic growth, with capital reserved for growth opportunities rather than buybacks at this time [75][78] Question: Are there any stressed portfolio verticals or geographies? - Currently, there are no significant concerns, and the company is monitoring the economic environment closely [78][80]