Associated Banc (NYSE:ASB) management emphasized “strong organic growth momentum” and record-setting profitability in 2025 while outlining a strategy to accelerate growth in 2026 through targeted investments and the pending acquisition of American National Corporation. Executives highlighted record net interest income, continued balance sheet remixing toward relationship-driven commercial lending, and what they described as solid credit performance.
2025 results and fourth-quarter highlights
President and CEO Andy Harmening said 2025 marked a “pivotal year,” following the completion in March of “all major investments from phase two” of the company’s strategic plan. Harmening cited organic customer gains, balance sheet changes, and improved profitability as key outcomes.
On the funding side, management reported core customer deposits rose by nearly $700 million versus the third quarter and nearly $1 billion year-over-year. Harmening noted that period-end core customer deposits increased 3.5% year-over-year, while average core customer deposits were up 5% in the fourth quarter versus the same period in 2024.
Net interest income (NII) reached $310 million in the fourth quarter, which management said was a company record and represented a $5 million sequential increase and a $40 million increase from the prior year period. Harmening said the company set a record for NII in each of the last three quarters of 2025, and NII was up 15% for the year.
Non-interest income was $79 million in the fourth quarter, following $81 million in the third quarter. Management highlighted growth in capital markets, wealth management fees, and card-based fees, and said adjusted total non-interest income increased 9% versus 2024.
Non-interest expense totaled $219 million in the fourth quarter, up $3 million from the prior quarter. Harmening reiterated that generating positive operating leverage remains a key objective.
Strategic direction: organic growth and the American National deal
Harmening said the bank is “growing and remixing” its balance sheet by expanding relationship-based C&I lending while reducing low-yielding residential mortgage balances. He stated that the concentration of mortgage loans has been reduced by more than 10 percentage points since 2020, and C&I loans have grown more than 50% since 2020.
In December, the company announced an agreement to acquire American National Corporation. Harmening described the transaction as financially attractive and positioned it as a way to expand organic growth opportunities, including entering the Omaha market with a “number two market deposit share” and strengthening the company’s position in the Twin Cities. Management said the companies are a “natural cultural fit” and expressed optimism about integrating later in 2026.
During the Q&A, management said it was “hopeful” the deal would close in the second quarter and be integrated in the third quarter. Harmening said the bank’s initial payback period estimate was “two and a quarter years,” and management indicated it had not yet projected potential upside growth beyond initial expectations.
2026 outlook: growth targets and planned investments
Management provided several standalone 2026 targets that exclude any impact from the American National acquisition. Harmening said the company expects total loan growth of 5% to 6% in 2026, with C&I loan growth of 9% to 10%. He attributed confidence to strong pipelines and the roll-off of remaining non-compete agreements, noting that the company’s December 2025 pipeline was 43% higher than December 2024.
For deposits, management projected core customer deposit growth of 5% to 6% in 2026 (excluding the acquisition). Harmening said the company is “bullish” on deposit growth, citing household growth, increased acquisition marketing, and momentum in commercial deposit gathering.
Harmening also outlined planned 2026 investments to “double down” in growth markets, including the Twin Cities, Omaha, Kansas City, and Dallas. The company said it will increase acquisition-focused marketing spend in the Twin Cities and Omaha by more than 100% combined and raise total marketing acquisition spend across all markets by 25%.
On the commercial side, Associated plans another wave of relationship manager (RM) hiring:
- Approximately five additional RMs in the Twin Cities
- Two additional RMs in Kansas City
- Four additional RMs in Dallas
Harmening said this would represent about a 10% increase in overall RMs bank-wide and is expected to support approximately $1.2 billion of relationship C&I growth in 2026.
Margin, revenue, and expense expectations
Chief Financial Officer Derek Meyer said earning asset yields declined in the fourth quarter, with yields in the largely floating-rate commercial and CRE books down 27 basis points and 24 basis points, respectively. Total interest-bearing deposit costs fell 17 basis points sequentially and were down 49 basis points from the prior year period. Net interest margin increased 2 basis points in the quarter to 3.06%.
For 2026, Meyer guided to NII growth of 5.5% to 6.5%, assuming two Federal Reserve rate cuts and excluding the acquisition. He also said the company has taken steps to position itself more neutrally to rate changes, including maintaining receive-fixed swaps of approximately $2.45 billion and building a $3.1 billion fixed-rate auto portfolio. Meyer said that in a down 100 basis point ramp scenario, the impact to NII would be less than 1% as of the fourth quarter.
Meyer guided to non-interest income growth of 4% to 5% in 2026, excluding the acquisition, and said the company expects to drive fee income higher over time even though some categories, such as capital markets, can be “lumpy.” In response to an analyst question, management said capital markets performance “feels very strong and it’s repeatable,” while also noting a preference to see a “more durable pattern” before embedding more aggressive assumptions into forecasts.
On expenses, Meyer said the fourth-quarter increase was primarily due to higher equipment expense, variable compensation, and severance, partially offset by lower FDIC assessment expense and reduced personnel expense. The efficiency ratio was 55% in the fourth quarter. For 2026, management expects total non-interest expense growth of 3%, excluding the acquisition, and said it intends to fund investments with cost reductions elsewhere.
Regarding capital, Meyer said capital ratios increased again in the fourth quarter, including a tangible common equity ratio of 8.29% and a CET1 ratio of 10.49%. Tangible book value per share rose above $22, up $0.65 sequentially and $2.30 year-over-year. Asked about the potential for share repurchases, Harmening said the company’s top priority is organic growth and execution on the pending acquisition, with capital generation providing future optionality.
Credit quality remains a focus
Chief Credit Officer Pat Ahern said the allowance for credit losses increased $5 million in the fourth quarter to $419 million, primarily reflecting commercial and business lending growth and normal movement within risk-rating categories. The ACL ratio was 1.35% at quarter-end.
Ahern described fourth-quarter credit performance as solid. Delinquencies rose slightly versus the third quarter to $61 million but were down $19 million year-over-year. Criticized loans declined $165 million sequentially, and non-accrual loans decreased to $100 million. Net charge-offs were $2 million in the quarter, or 3 basis points, and 12 basis points for the full year. The company recorded a $7 million provision in the quarter.
In response to a question on areas of stress, management said there were no portfolio verticals or geographies that “stick out” as a concern at present, while noting continued monitoring of economic factors and elevated interest rates. Management also viewed CRE paydowns during the quarter as a positive signal tied to projects moving to permanent financing.
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.
