Associated Banc-Corp Stock Gains on Q2 Earnings Beat, NII View Raised

Shares of Associated Banc-Corp ASB gained 2.9% in after-hours trading yesterday following the announcement of better-than-expected quarterly performance. Its second-quarter 2025 earnings of 65 cents per share outpaced the Zacks Consensus Estimate of 62 cents. However, the bottom line compared unfavorably with 74 cents earned in the prior-year quarter.Results benefited from an increase in net interest income (NII) and non-interest income. A rise in loans and lower provisions acted as tailwinds. However, higher expenses and a fall in deposit balance were the undermining factors.Net income available to common shareholders was $108.4 million, down 4% from the year-ago quarter. Our estimate for the metric was $101.9 million.ASB’s Revenues Rise, Expenses UpTotal revenues (FTE basis) for the quarter were $371.2 million, jumping 14% year over year. Also, the top line beat the Zacks Consensus Estimate of $362.8 million. NII was $300 million, up 17%. The net interest margin was 3.04%, up 29 basis points (bps) year over year. The increase was driven by a fall in the average cost of total interest-bearing liabilities. We had expected NII and net interest yield to be $291.3 million and 3.01%, respectively.The non-interest income was $67 million, up 3%. Our estimate for adjusted non-interest income was $66.8 million.Non-interest expenses increased 7% to $209.4 million. Our estimate for non-interest expenses was $209.2 million.The FTE efficiency ratio was 55.81%, down from 59.51% in the prior-year quarter. A fall in the efficiency ratio indicates an improvement in profitability.Associated Banc-Corp’s Loans Rise, Deposits FallAs of June 30, 2025, total loans were $30.6 billion, up 1% from the prior quarter. Our estimate for total loans was $30.8 billion.Total deposits declined 3% to $34.1 billion. Our estimate for total deposits was $34.4 billion.Associated Banc-Corp’s Credit Quality ImprovesIn the reported quarter, the company recorded a provision for credit losses of $18 million, down 22% from the prior-year quarter. Our estimate for the metric was $16.3 million.As of June 30, 2025, total non-performing assets were $148.2 million, down 9%. Total non-accrual loans were $113 million, falling 27%.Net charge-offs were $12.8 million, plunging 39% from the prior-year quarter.Associated Banc-Corp’s Capital Ratios ImproveAs of June 30, 2025, the Tier 1 risk-based capital ratio was 10.77%, up from 10.27% recorded in the corresponding period of 2024. The common equity Tier 1 capital ratio was 10.20%, up from 9.68%.Associated Banc-Corp’s Outlook for 2025Management expects loans to grow at the rate of 5-6%.Total core customer deposits are estimated to rise in the range of 4-5%, while total deposits are projected to increase 1-3%.NII is now projected to grow in the 14-15% range, up from prior guidance of an increase in the range of 12-13%. After adjusting to exclude the impact of non-recurring items related to the balance sheet repositioning announced in the fourth quarter of 2024, total non-interest income is expected to rise in the 1-2% range, a change from the previous outlook of being stable or growing 1%.After adjusting to exclude the impact of the loss on prepayments of FHLB advances, total non-interest expenses are now projected to rise 4-5%. Previously, the company anticipated a 3-4% increase in the metric.The effective tax rate is expected to be 19-21%.Our Take on ASBAssociated Banc-Corp’s business restructuring efforts are likely to keep supporting financials. The company has a solid balance sheet position, making it well-positioned for growth. However, mounting expenses and a challenging operating backdrop are headwinds. Associated Banc-Corp Price, Consensus and EPS Surprise Associated Banc-Corp price-consensus-eps-surprise-chart | Associated Banc-Corp QuoteASB currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Performance of Associated Banc-Corp’s PeersProsperity Bancshares Inc.’s PB second-quarter 2025 adjusted earnings per share of $1.42 beat the Zacks Consensus Estimate of $1.40. Moreover, the bottom line compared favorably with adjusted EPS of $1.22 in the prior-year quarter.Results benefited from an increase in NII, adjusted non-interest income, alongside lower provisions and expenses. Also, a higher loan balance was another positive. However, a lower deposit balance was a negative for PB.BankUnited, Inc.’s BKU second-quarter 2025 earnings of 91 cents per share surpassed the Zacks Consensus Estimate of 79 cents. The bottom line compared favorably with 72 cents in the prior-year quarter.BKU’s results benefited from growth in NII and non-interest income alongside a decline in provisions. A rise in deposits was another positive. However, higher expenses and a fall in loan balance were the undermining factors.#1 Semiconductor Stock to Buy (Not NVDA)The incredible demand for data is fueling the market's next digital gold rush. 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