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Associated Banc-Corp (ASB) Q3 2020 Earnings Call Transcript

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Associated Banc-Corp (NYSE: ASB)
Q3 2020 Earnings Call
Oct 22, 2020, 5:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good afternoon, everyone and welcome to Associated Banc-Corp Third Quarter 2020 Earnings Conference Call. My name is Diego and I will be your operator today. [Operator Instructions] We will be conducting a question-and-answer session at the end of this conference. Copies of the slides that will be referenced during today's call are available on the company's website at investor.associatedbank.com. [Operator Instructions]

As outlined on Slide 1, during the course of the discussions today, management may make statements that constitute, projections, expectations, beliefs, or similar forward-looking statements. Associated actual results could differ materially from the results anticipated or projected in any forward-looking statement. Additional detailed information concerning the important factors that could cause Associated's actual results to differ materially from the information discussed today is readily available on the SEC website in the Risk Factors section of Associated's most recent Form 10-K and subsequent SEC filing. These factors are incorporated herein by reference.

For a reconciliation of the non-GAAP financial measures to the GAAP financial measures mentioned in this conference call, please refer to Pages 21 and 22 of the slide presentation and to Pages 10 and 11 of the press release financial tables. Following today's presentation, instructions will be given for the question-and-answer session.

At this time, I would like to turn the conference over to Philip Flynn, President and CEO for opening remarks. Please go ahead, sir.

Philip B. Flynn -- President and Chief Executive Officer

Thank you, and welcome to our third quarter 2020 earnings call. Joining me today are Chris Niles, our Chief Financial Officer; and Patty Ahern, our Chief Credit Officer. Goes without saying that this has been a challenging and unusual year, we pivoted in March in response to pandemic and have been retooling our delivery channel since to best meet our customers' needs. We deployed ourselves to seamlessly interact through virtual channels and have seen an accelerating shift to mobile and online banking. With a likely very low interest rate environment facing us for an extended period, it became critical to respond in areas we can control.

Let's start with the actions we took during the third quarter. On Slide 2, we have detailed our optimization efforts and the restructuring of our securities and real estate lending subsidiaries. During the third quarter, we announced the sale and planned consolidation of 22 of our branches. We also announced the strategic streamlining of several corporate managerial and back-office functions. As a result of these actions, we incurred $16 million of pre-tax charges in Q3, but we expect these changes to drive a $40 million per year reduction and our run rate expenses as we move into this quarter and 2021.

We also deployed about half of our excess liquidity position to repay $950 million of FHLB advances. This prepayment resulted in a $45 million Q3 pre-tax expense; however, we expect this to improve annualized net interest income by $20 million beginning in Q4 2020, continuing through '21, with diminishing but continuing savings through '22 and into '23. Finally, we were able to unlock capital losses through the restructuring of our securities and real estate lending subsidiaries and this resulted in a $49 million after-tax benefit during the quarter.

Turning to Slide 3, we've highlighted the impact of our Q3 initiatives on our pre-tax pre-provision income, adjusting for the $60 million of restructuring and prepayment costs, third quarter PTPP would have been $90 million.

On Slide 4, we've provided a walk forward of EPS, which breaks down the various initiatives executed during the quarter. You'll notice when tax effected, the one-time costs of our efficiency initiatives were more than covered by the tax benefits we realized from the reorganization of our subsidiaries. If you were to exclude both the restructuring charges and the tax benefits from our EPS for the third quarter, the adjusted $0.24 result is within $0.02 of our reported GAAP EPS of $0.26. So in effect, the items largely offset each other. The actions this quarter were net additive to our tangible book value.

Turning to Slide 5, average loan balance trends are shown. Total average loans came in at $25 billion, down slightly from the prior quarter's average. Commercial real estate grew $312 million driven by the continuing funding of construction loans and at September 30, we still had $1.9 billion of unfunded commercial real estate commitments. Commercial and business lending on the other hand, declined by $271 million on average, as our general commercial customers, largely use their increased excess liquidity balances to pay down open lines of credit.

Turning to Slide 6, we highlight changes in the end of period loan balances. Period end loans were up $171 million or 1% for the quarter, driven again by strong growth in commercial real estate lending, which was up $298 million. Mortgage activity remains strong, which was reflected in our elevated mortgage warehouse lending balances at quarter end.

Power and utilities lending along with commercial real estate construction and investor loans have continued to grow throughout 2020. I'll also call out, oil and gas which declined nearly $100 million during Q3 and now represents only 1.3% of our total loan portfolio. Consumer lending balances came down during the quarter, driven by refinancing activity and our decision to sell $70 million of pre-payments susceptible mortgages.

Now let me provide an update on our deferral programs. On Slide 7, you can see our commercial deferrals have continued to steadily decline. As of October 19, we have approximately $227 million of active commercial loan deferrals, down 73% from June. Our commercial deferrals have largely rolled off their additional 90-day terms and the remaining deferrals are primarily related to COVID impacted portfolios.

Commercial real estate loan deferrals were $182 million of that $227 million and are primarily related to hotel and retail borrowers. Commercial and business lending deferrals have declined to just $45 million at October 19 and they now comprised less than 1% of the commercial and business loan book. Taken together the $227 million of active commercial and commercial real estate deferrals on October 19 makeup about 1.4% of our total commercial loans outstanding.

Our consumer related COVID relief efforts are highlighted on Slide 8. In the beginning of the pandemic, we granted deferrals to virtual -- virtually any customers, who asked for assistance. The deferrals granted were for six months, so the bulk of those deferrals began to expire during September. At October 19, we had $269 million of active deferrals down 63% from June. These loans now represent approximately 3% of outstanding consumer loan balances.

It's important to note, however, that of the remaining $269 million of active deferrals, $263 million of that is still on their first deferral period. The bulk of those deferrals will expire during the balance of October and we expect most will not require additional assistance. So of those loans that have come off deferral in the consumer book, at this point only $6 million have asked for additional assistance. Among consumers whose deferrals have ended, 97% are current or less than 30 days past due, the trends we're seeing is deferrals roll-off continue to be positive and we feel confident many of these borrowers will go back to their pre-COVID performance.

On Slide 9, we've provided an allowance update. We utilized the Moody's September 2020 baseline forecast for our CECL forward-looking assumptions. The baseline forecast assumes additional stimulus, continuing low rates, and a COVID vaccines that becomes widely available in Q2 of '21. For Q3 of '20, our net allowance build was only $13 million, down from $35 million in the prior quarter.

I'll direct you to the top right chart, where we illustrate the ACLL trend during 2020. You can see our net reserve build is tapered off throughout the year. This reflects the overall stability of our loan portfolio and our real-time outlook for all our credit exposures at quarter end.

As you can see from the lower table on this page, during Q3, we actually released reserves in four lending categories and added reserves in three. The largest net build within our commercial real estate investor portfolio, where we added to our reserves related to shopping malls and other retailer exposures. Reserves on our oil and gas portfolio declined $33 million, as we continue to manage that portfolio down. As of September 30, our total allowance was $442 million and covered 1.8% of total loans.

Credit metrics represented on Slide 10. As a reminder, these metrics reflect our real-time risk rating and credit evaluations with the expectation that substantially all the active deferral activity will come to some conclusion or remediation this quarter. Potential problem loans decreased $14 million, primarily driven by the migration of COVID affected loans to non-accrual. Overall, non-accrual loans increased $60 million driven primarily by the migration of two commercial real estate, mall oriented REITs, and our only sand fracking company into non-accrual.

Loans included in our key COVID commercial exposures, made up 37% of non-accrual loans at the end of Q3. This inflow was partially offset by non-accrual, oil and gas loans, which declined $42 million due to charge offs, note sales, and pay-offs. Charge-offs for the quarter were $30 million, outside of oil and gas, net charge-offs were again less than $10 million for the quarter. Reserves on the remaining oil and gas book remain over 15%.

Turning to Slide 11, average deposits were $26.8 billion, up nearly $700 million or 3% over the second quarter. Average deposit growth again came from low cost savings and check-in accounts this quarter. Liquidity remains high and our deposit mix continues to improve. Low cost deposits accounted for nearly 63% of our balances at the end of the third quarter.

Turning to Slide 12, third quarter net interest income was $182 million with the net interest margin of 2.31%. We previously guided, the net interest margin would bottom out during Q3 and begin to pick up in Q4. And as we expected, margin hit bottom in July and August and then rebounded up to 2.35% in September. Asset yield stabilized during the third quarter, while our liability cost trended downwards. We continue to expect to see margin expansion further into Q4 and into '21.

We expect spreads to widen on our LIBOR-based commercial loans, as we continue to implement new LIBOR floors, into our new and renewing loans. This will happen over time or in conjunction with other repricing or credit actions including the anticipated migration to SOFR and other indices later in '21.

On the liability side, our time deposit levels have both been declining and repricing lower. When CDs renew or rollover today, they're generally repricing from approximately 1.2% to below 15 basis points. We expect this repricing to provide margin that's going into '21. Additionally, we will see a full quarter impact during Q4 from the prepayment of our FHLB advances and we expect this will provide a $5 million benefit to net interest margin in the fourth quarter and about a $20 million improvement in '21.

Turning to Slide 14, second quarter non-interest income came in at $76 million. Non-interest income was lower in Q3 than Q2; however, this was driven by the large gain from the sale of associated benefits in risk consulting in Q2 and of course, the lack of revenue from ABRC going forward. Service charges and deposit account fees came in at $14 million, an increase of nearly $3 million quarter-over-quarter, card-based fees increased 15% from the second quarter, up to $10 million. So the combination of COVID relief winding down as well as more normalized economic activity is driving these fee lines.

Our mortgage banking activity remained strong this quarter with nearly $600 million of mortgages sold to the agencies, generating $13 million in net fee revenue. After $17 million of MSR impairment in the first half of the year, impairment for the third quarter was just over $1 million. We expect positive fee trends heading into Q4.

On Slide 14, we highlight our expenses. The third quarter came in at $228 million, including $60 million of restructuring costs previously mentioned. Core expenses continue to trend lower largely driven by the reduction of expense following the sale of ABRC. We expect the expense initiatives executed in Q3 to provide further savings as we move into 2021. And as you can see from the lower right chart, on an adjusted or run rate basis, our expenses to average assets ratio is already trending below 2%.

As shown on Slide 15, our regulatory capital levels remain strong. At the end of Q3, our regulatory capital levels were at or above where we ended the year for 2019 and our tangible common equity ratio increased 25 basis points to 7.5%. Tangible book value per share also increased to $16.37 per share, up from $16.21 in the prior quarter, reflecting the net additive benefit to shareholders of the actions we took during the quarter.

On Slide 16, we're updating select items for the remainder of 2020 and reiterating our expense guidance for 2021. We expect a net interest margin of 2.5% or slightly higher in the fourth quarter, we expect fee revenue to continue on a positive trend through the end of 2020. Expenses for Q4 are expected to come in at $175 million including about $3 million of remaining restructuring costs. We reiterate our full year 2021 expenses are expected to be approximately $685 million. The full year 2020 tax rate will be in the low to mid-single digits and we expect the full year '21 tax rate to be between 15% and 17%.

Thank you. With that, we'd be happy to answer your questions.

Questions and Answers:

Operator

Thank you. Ladies and gentlemen, at this time, we will conduct our question-and-answer session. [Operator Instructions] Our first question comes from Michael Young with Truist Securities. Please state your question.

Michael Young -- Truist Securities -- Analyst

Hey. Thanks for taking the question. Wanted to ask about loan growth. You mentioned commercial construction pipeline with, I think you said $1.9 billion yet to be funded, so it sounds like that's a pretty nice tailwind or potential bridge to return to stronger loan growth. Is that the right way to think about that or there are some other offsets that we should be thinking of in terms of the other commercial categories?

Philip B. Flynn -- President and Chief Executive Officer

Yeah. Thanks, Michael. So yes, certainly commercial real estate as you've seen throughout the year will continue to provide loan growth based upon the backlog we have and there is some amount of new business being done in that area as well. Our specialty areas, our utilities, the mortgage warehouse business continue to show good growth and we expect certainly the power and utilities area to keep growing mortgage warehouse will depend upon refinance activity. The mortgage business still has some tailwind and we may choose to retain some of our mortgage production going forward.

General commercial lending, probably somewhat slow. We don't have great visibility into that line item into next year yet, but we expect to have more information on that, as we get through the fourth quarter and get to the January call. So there are certain areas that continue to show good growth. There are areas that continue to have the backlog like CRE that will fund up, but general activity in the commercial lending space needs to show some more growth going forward. We will see what happens as we go along.

Michael Young -- Truist Securities -- Analyst

Okay. And just maybe on a core basis, as we're thinking about the margin for next year, is really kind of loan growth, the main driving factor to upside from kind of what you've already talked about in terms of just the funding costs coming down.

Philip B. Flynn -- President and Chief Executive Officer

So we expect our liabilities to continue to grind lower. We took the actions on the FHLB prepayment, which is a significant improvement to NII next year. We are getting these traction on imposing floors on our LIBOR-based loans, which is the bulk of our loans. We'll continue to work on that. So the combination of grinding liability cost down, the FHLB prepayment, LIBOR floors, and then transitioning to new indices should provide stable to growing NIM as we look forward, but we'll have better guidance for you in January on that.

Michael Young -- Truist Securities -- Analyst

Okay. And if I could just sneak in one last one, just on the commercial deferrals. I understand, obviously, both come down a good bit, but I guess are there some that have been modified, is there a large portion that's maybe paying interest only or some other modification that's been made that's maybe not captured in that deferral number?

Philip B. Flynn -- President and Chief Executive Officer

Yeah. So we're down to 1.4% of the total commercial and commercial book that have requested some additional deferral. Pat, do you have a little more color on that for Michael?

Patrick E. Ahern -- Executive Vice President and Chief Credit Officer

Yeah. I would say, in the commercial book, it's really case-by-case, how we're looking at those. There is definitely a mix, where we've got clients that have moved to maybe an interest-only. We have some hotel -- hotel industry obviously is going to need some more time, so those modifications are a little more customized to kind of bridge them for at least the next year plus, so there is a lot of nuances that kind of go with each credit from that standpoint.

Michael Young -- Truist Securities -- Analyst

Is there an amount that's just been modified, I mean would it be -- would it closely match kind of an initial $800 million or is it more like $600 million, I don't know if there's any way to kind of ballpark that?

Philip B. Flynn -- President and Chief Executive Officer

Well, the modified loans, Pat, correct me if I'm wrong, are included in the $227 million that you see, Michael.

Patrick E. Ahern -- Executive Vice President and Chief Credit Officer

The bulk of both have rolled off and don't need any further assistance or modification.

Michael Young -- Truist Securities -- Analyst

Okay. So they're fully captured. Thank you. Appreciate it.

Philip B. Flynn -- President and Chief Executive Officer

Yeah.

Operator

Our next question comes from Scott Siefers with Piper Sandler. Please state your question.

Scott Siefers -- Piper Sandler -- Analyst

Good afternoon, guys. Thanks for taking my question. First one, hopefully, it's a pretty basic one, I'm just -- given all the moving parts, I just want to make sure I understand sort of what you guys think the run rate cost base is in the third quarter. So I'm just trying to square, I was on Slide 14 with the commentary in the tax. So if we just take the $109 million and the $69 million that would give us somewhere around $178 million in core expenses, so you have the $50 million of restructuring costs, which I think is the FHLB as well as the real estate, where exactly did the $10 million of severance cost, where do you -- where do we see those, is that?

Philip B. Flynn -- President and Chief Executive Officer

That $10 million is embedded in that $109 million, so you can take it out of there too, Scott.

Scott Siefers -- Piper Sandler -- Analyst

Yeah. Okay, perfect. So then, we're talking about a core number of somewhere like $167 million range, is that a fair -- fair approximation.

Patrick E. Ahern -- Executive Vice President and Chief Credit Officer

For that quarter, yes.

Scott Siefers -- Piper Sandler -- Analyst

Yeah. Okay, perfect. Yes. Sorry for a kind of basic one there, just trying to get through all the moving part. All right. Perfect and then...

Philip B. Flynn -- President and Chief Executive Officer

That's OK. You thought they were all moving parts, really?

Scott Siefers -- Piper Sandler -- Analyst

Yeah. And then, more -- more just a top-level one on how the credit cycle kind of plays out. It seems like every 90 days, we start to push out the time till we see more accelerated loss migration, I guess with the benefit of at least a bit more clarity vis-a-vis, say 90 days ago, Phil, maybe how are you thinking about when we should expect losses to begin to accelerate it at some point in 2021, is that like a mid or even later 2021 event or how are you guys preparing for the things?

Philip B. Flynn -- President and Chief Executive Officer

It's always hard to tell, you can see that our reserve build is moderating to being pretty flattish at this point.

Scott Siefers -- Piper Sandler -- Analyst

Yeah.

Philip B. Flynn -- President and Chief Executive Officer

I think so much depends on, is there more stimulus, what's the economy look like as we get into next year. But there is a -- from here, there is probably putting aside, oil and gas, but from here, you're probably a couple three quarters out before you kind of push this lump of troubled credits through the pipeline and see what comes out. So I think there is -- I think, there is a lag to go. And of course, you saw in our oil and gas that we've done, I think a good job of winding that down and getting that behind us. So we still have the fall redetermination period to come. We're about a third of the way through that without any issues, but we're still holding significant reserves in the event that we have some additional troubled credits there.

Scott Siefers -- Piper Sandler -- Analyst

Okay, perfect. All right. Well, thank you guys very much. I appreciate it.

Philip B. Flynn -- President and Chief Executive Officer

Yeah.

Operator

Thank you. Our next question comes from Terry McEvoy with Stephens. Please state your question.

Terry McEvoy -- Stephens -- Analyst

Hi. Good afternoon, guys. On your capital slide, you typically prioritized your usage for excess capital, I didn't see it this quarter. I was wondering if you could kind of run through how you're thinking about excess capital, specifically the buyback, just given where the share price is relative to tangible book value?

Philip B. Flynn -- President and Chief Executive Officer

Sure. So that -- leaving out the chart caused a question. We haven't changed our level of priorities, but it is more than fair to say when we're trading at a discount to book, which frankly, we don't understand why we are given all of our actions and given our outlook, but when we're trading at that type of level, share buybacks certainly become interesting to us. It's probably still a little bit early, but as we get into next year, Terry, clearly, as we sit with growing capital and depending on where we're trading at, share buybacks become a great interest.

Terry McEvoy -- Stephens -- Analyst

Thanks. And then just as a follow-up to $1 billion plus of retail and shopping centers, how much of that is just what I'll call typical -- your typical mall, which may have been struggling pre-COVID and we just haven't seen charge-offs at all, just for the whole bank. What are your thoughts there in terms of when the deferrals run out, what's the most susceptible, is it that traditional mall and if so, how big is the portfolio and do you have any kind of stats, average LTV or something like that to give us some color on the portfolio.

Philip B. Flynn -- President and Chief Executive Officer

Sure. Pat, do you want to give some color on the mall-based.

Patrick E. Ahern -- Executive Vice President and Chief Credit Officer

Sure. In general, the stuff that we're seeing that continues to struggle is all going to be in closed mall kind of space, where you just with the social distancing etc., people are struggling to get into. Our -- majority of our retailers are in that, what I'd call neighborhood, strip center mall, net lease space, and those have all seen rent collections come back almost to normal levels 85% to 90%, a lot of those have come off deferral, so we feel pretty good about them. There is still a handful that we're dealing with.

And then in terms of we really only have a handful, one or two maybe other enclosed mall exposures to public REIT that have been so far those remaining ones have been performing well other than the two Phil mentioned earlier with the non-accrual. So right now, we feel pretty -- we've a pretty good trajectory on the retail client base.

Terry McEvoy -- Stephens -- Analyst

Thank you, Pat. And thank you, Phil as well.

Philip B. Flynn -- President and Chief Executive Officer

Thanks.

Operator

[Operator Instructions] Our next question comes from Jon Arfstrom with RBC Capital Markets. Please state your question.

Jon Arfstrom -- RBC Capital Markets -- Analyst

Hey. Thanks. Good afternoon.

Philip B. Flynn -- President and Chief Executive Officer

Hi, Jon.

Jon Arfstrom -- RBC Capital Markets -- Analyst

Hey. Can you talk a little bit about the timing of the expense reductions for the branch optimization project, we should roll that in.

Philip B. Flynn -- President and Chief Executive Officer

Sure. So deconsolidations internal will be done this quarter the sales in Peoria and of two branches in Southwest Wisconsin will complete this quarter -- we expect them to complete this quarter. And the remaining one branch, we're selling to a third party that will close sometime in the first quarter. So you should expect to see everything clean, starting January 1 with a very minor exception of one branch.

Jon Arfstrom -- RBC Capital Markets -- Analyst

Okay. And so the message is similar to your commentary on net interest income with the $5 million, you're saying that it could be as simple as just putting an extra $10 million -- taking $10 million out of expenses for Q1, is that fair?

Philip B. Flynn -- President and Chief Executive Officer

Well, Chris, what's the -- I think we have all the charges through in the fourth quarter, right?

Christopher J. Del Moral-Niles -- Executive Vice President and Chief Financial Officer

Correct. Yes. So, you said 2021 should be a clean from January 1. So, Jon, I think you're thinking about it the right way.

Jon Arfstrom -- RBC Capital Markets -- Analyst

Okay. Okay. Good. Thank you for that. Any comments on the service charge rebound, the magnitude of what you expect or is that just, I know there's a bit of a bounce back, but any commentary there?

Philip B. Flynn -- President and Chief Executive Officer

Yeah. So we expect to see continued growth there. As you know, at the start of the pandemic, we gave quite a bit of relief to customers that is now completely rolled off as we get into Q4, and rightly or wrongly economic activity has picked up, particularly in the Wisconsin footprint and so we're seeing more activity there as well. So our guidance that we expect to see fee income continuing to grow into the fourth quarter is based on those factors.

Jon Arfstrom -- RBC Capital Markets -- Analyst

Okay. And then one more, maybe not an easy question, but you've had some really good deposit growth last few quarters and do you all think about how much of this might be permanent versus temporary if things return to normal?

Philip B. Flynn -- President and Chief Executive Officer

Chris, you have a view on that -- you want to express.

Christopher J. Del Moral-Niles -- Executive Vice President and Chief Financial Officer

Yeah. So, Jon, I think if you'd asked a couple of quarters ago, certainly we would've said, we saw it all surge, as we sit here moving into October and the balances of state through the entire third quarter, they're staying as we just said, as we move into the fourth quarter, we're starting to feel new balances are a lot stickier, which is part of the reason we were comfortable repaying the $950 million of Federal Home Loan Bank advances because we think, a good portion of this is sticky and the dollars that we're still continuing to see come in, we think will continue to be sticky as we move forward. So as we sit here today, it feels a lot stickier than we would have expected it and it feels like we have room to move things around.

Jon Arfstrom -- RBC Capital Markets -- Analyst

Okay. All right. Thanks for the help, guys.

Operator

Our next question comes from Chris McGratty with KBW. Please state your question.

Kelly Motta -- KBW -- Analyst

Hi. This is actually Kelly Motta in for Chris. Thanks for taking my question. I guess you've talked a lot about what you've done on the funding side with prepaying that of each healthy borrowings and you're still repricing to these lower. Just wondering if you could give us color on reinvestment yields of securities and how long new loan yields compared to what you have on the book right now?

Patrick E. Ahern -- Executive Vice President and Chief Credit Officer

Yeah. Chris, you want to handle that?

Christopher J. Del Moral-Niles -- Executive Vice President and Chief Financial Officer

Sure. So on the reinvestment Securities, I think one thing to keep in mind is we're not aggressively growing the balances. And so what you're seeing is essentially a relatively stable level to what you'll see reported for the third quarter averages, and not a lot of net movement because of incremental significant investment activity. So I don't expect to see the continuing drift downward because there just isn't a lot of net new that we're expecting to put into that portfolio.

On the commercial loans, I think we've showed the trends on the slides. And again, we started to highlight monthly spend, so if you take a look at the slide, Page 12, you'll note that commercial loan yields actually bottomed in June and after the commercial and business lending, and we've been working with our lines of business on spread and floors in order to sort of balance that back up a few basis points and hold that line above 250, on the commercial book, and as a whole over the last several quarters and that seems is on successfully, and that reflects the activity we're doing on new.

You can also see that commercial real estate has held steady and again what we're holding in portfolio is holding steady on the residential book as well, so I think those month-to-month trend line give you a good indication of sort of where the new volume is coming in.

Kelly Motta -- KBW -- Analyst

Great. Thank you. And then last question for me. On tax rate with, potentially tax rates going up again and from Washington, is there any differences on how we should think about it or is kind of looking at it. What happened in 2018, so kind of a valid proxy. Thank you.

Philip B. Flynn -- President and Chief Executive Officer

Well, your guess on what happens is as good as ours, but our best guess right now is that we've got tax rates in that 15% to 17%-ish range, but that can all change.

Kelly Motta -- KBW -- Analyst

All right. Thank you.

Philip B. Flynn -- President and Chief Executive Officer

Yeah.

Operator

Ladies and gentlemen, there are no further questions at this time. I will turn it back to Philip Flynn for closing remarks. Thank you. 0

Philip B. Flynn -- President and Chief Executive Officer

Thanks. Well, everybody, please stay safe. Thanks for joining us today. We look forward to talking to you again in January. And as always if you have any questions, give us a call and thanks as always for your interest in Associated.

Operator

[Operator Closing Remarks]

Duration: 37 minutes

Call participants:

Philip B. Flynn -- President and Chief Executive Officer

Patrick E. Ahern -- Executive Vice President and Chief Credit Officer

Christopher J. Del Moral-Niles -- Executive Vice President and Chief Financial Officer

Michael Young -- Truist Securities -- Analyst

Scott Siefers -- Piper Sandler -- Analyst

Terry McEvoy -- Stephens -- Analyst

Jon Arfstrom -- RBC Capital Markets -- Analyst

Kelly Motta -- KBW -- Analyst

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