Navigating Contradictions: Insights from the 2025 Q2 Earnings Call on Deposit Growth and Pricing Strategy

Loan and Deposit Growth:
- Associated Banc-Corp reported total loans grew by 1% quarter-over-quarter and 3% versus Q2 of 2024, with C&I loans increasing by $700 million in the first half of 2025.
- Core customer deposits were up 4.3% year-over-year, with a focus on attracting and deepening customer relationships through a best-in-class value proposition.
- This growth was driven by a strategic plan emphasizing loan growth and remixing the asset base, replacing lower-yielding residential mortgages with higher-yielding C&I loans, and strengthening the depositary base.

Net Interest Income and Margin Expansion:
- The company achieved the highest-ever net interest income of $300 million, a 17% increase year-over-year, and a net interest margin of 3.04%.
- This was supported by a strategic shift in asset composition, with increased C&I balances and a reduction in residential mortgage balances, along with a focus on lowering interest-bearing liability costs.

Credit Quality and Capital Strength:
- Nonaccrual loans were down 16%, while the CET1 capital ratio increased to 10.2%, rising 9 basis points quarter-over-quarter.
- The company maintained capital strength through disciplined credit management and strategic balance sheet positioning, enabling them to add capital while supporting balance sheet growth.

Operating Leverage and Efficiency:
- The efficiency ratio dipped below 56%, the lowest since early 2023, with expenses decreasing to $209 million in Q2.
- This was achieved through deliberate investments in people and strategies that support growth plans, alongside efforts to drive positive operating leverage and manage expenses effectively.