Associated Banc-Corp Q2 Earnings Beat as NII, Fee Income Improve Y/Y

Results in the reported quarter excluded several non-recurring expenses associated with the acquisition of American National, which was completed in April. After considering those, net income available to common equity was $120.7 million, up 11% year over year. Our estimate for the metric was $136.8 million.

ASB’s Revenues Improve, Expenses Rise

Total revenues (FTE basis) for the quarter were $454.6 million, up from $367 million in the prior-year quarter. The top line outpaced the Zacks Consensus Estimate of $443.7 million.

NII was $370 million, increasing 23% year over year. The net interest margin was 3.17%, up 13 basis points. We had expected NII and net interest yield to be $360.4 million and 3.14%, respectively.

Non-interest income totaled $80.4 million, improving 20% from the prior-year quarter. This reflected increases in wealth management fees, service charges and deposit account fees, card-based fees, other fee-based revenues, capital markets revenues, bank and corporate-owned life insurance, net investment securities gains, and other income. Our estimate for non-interest income was $78.6 million.

Non-interest expenses were $271.9 million, up 30% year over year. The rise reflected an increase in almost all cost components, except for loan and foreclosure costs. Our estimate for non-interest expenses was $244.4 million.

The adjusted efficiency ratio was 52.91%, down from 55.81% in the prior-year quarter. A fall in the efficiency ratio indicates an improvement in profitability.

Associated Banc-Corp’s Loans & Deposits Rise

As of June 30, 2026, total loans were $36.5 billion, up 15% sequentially. The rise was driven by higher commercial and business lending, commercial real estate lending and consumer lending. Our estimate for total loans was $36.3 billion.

Total deposits rose 12% sequentially to $39.9 billion. Our estimate for total deposits was $40.6 billion.

Associated Banc-Corp’s Credit Quality Worsens

In the reported quarter, the company recorded a provision for credit losses of $19.4 million, up 8% from the prior-year quarter. Our estimate for the metric was $18.4 million.

As of June 30, 2026, total non-performing assets were $185.3 million, up 25% year over year. Total non-accrual loans were $150 million, rising 33%. Net charge-offs were $23.2 million, up 81% from the prior-year quarter.

Associated Banc-Corp’s Capital Ratios Improve

As of June 30, 2026, the common equity Tier 1 (CET1) capital ratio was 10.47%, up from 10.20% in the corresponding period of 2025. The Tier 1 capital ratio was 10.94%, up from 10.77%.

ASB’s 2026 View

After including the impact of the acquisition of American National, management expects total period-end loan growth of 18-20% compared with ASB’s standalone results for the year ended Dec. 31, 2025. This is changed from the previous expectation of 17-19% growth.

Period-end total deposit growth is estimated to be 17-19%, while period-end core customer deposit growth is anticipated to be 19-21%.

The company expects NII growth of 19-21%.

Total non-interest income is expected to rise 8-10%.

Including the non-recurring costs incurred in connection with the American National acquisition, non-interest expenses are expected to increase 20-21%.

The annual effective tax rate is expected to be 19-21%.

Our Take on Associated Banc-Corp

In April, ASB completed the previously announced acquisition of American National Corporation, which is expected to improve its deposit mix through low-cost deposits, strengthen its Midwest scale and enhance its liquidity profile. The deal is anticipated to be 2% accretive to the company’s 2027 earnings per share, assuming the execution of cost savings.

In addition to this, continued commercial and industrial loan growth, expanding core customer deposits, steady credit performance and a solid capital position bode well for ASB’s sustained growth. However, rising expenses remain a near-term headwind.

ASB currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Banks

East West Bancorp, Inc.’s EWBC second-quarter 2026 earnings per share of $2.63 beat the Zacks Consensus Estimate of $2.61. The bottom line increased 17.4% from the prior-year quarter.

EWBC’s results were primarily aided by increases in NII and non-interest income, alongside lower provisions. Also, loan and deposit balances increased sequentially in the quarter to record levels. However, higher non-interest expenses acted as a spoilsport.

Commerce Bancshares Inc.’s CBSH second-quarter 2026 earnings of $1.10 per share surpassed the Zacks Consensus Estimate of $1.04. The bottom line reflected a rise of 1% from the prior-year quarter.

CBSH’s results primarily benefited from higher NII and a rise in non-interest income. The sequential rise in loan balances acted as a tailwind. However, higher expenses and provisions hurt CBSH’s results to some extent.

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