Associated Banc-Corp Reports First Quarter 2020 Earnings of $0.27 Per Common Share, or $0.28 Per Common Share Excluding $2 million in Acquisition Related Costs(1) - Associated Banc (NYSE:ASB)

GREEN BAY, Wis., April 23, 2020 /PRNewswire/ -- Associated Banc-Corp ASB ("Associated" or "Company") today reported net income available to common equity ("earnings") of $42 million, or $0.27 per common share for the quarter ended March 31, 2020. Excluding acquisition related costs, the Company reported earnings of $43 million, or $0.28 per common share. These amounts compare to net income available to common equity of $83 million, or $0.50 per common share for the quarter ended March 31, 2019.

"The past two months have been one of the most extraordinary periods in this country's history. The coronavirus pandemic has presented many challenges, both personal and economic, and we at Associated Bank are committed to helping our customers and communities through this difficult time," said President and CEO Philip B. Flynn. "We have taken action to help our colleagues and customers stay safe and we have contributed to relief efforts in our communities. Associated Bank has strong capital and liquidity and we will continue to help our customers through our COVID-19 Relief Program, which includes suspension of certain fees and loan payment deferrals, and through participation in federal initiatives like the Paycheck Protection Program. Standing together with our customers and communities, we will make it through this turbulent period, and we will be part of the economic recovery that will surely follow."

FIRST QUARTER 2020 SUMMARY (all comparisons to the first quarter of 2019)

Average loans of $23.3 billion were up 1%, or $0.2 billion; period end loans were $24.4 billion
Average deposits of $24.3 billion were down 1%, or $0.3 billion; period end deposits were $25.7 billion
Net interest income of $203 million decreased $13 million, or 6%
Net interest margin of 2.84% declined 6 basis points from 2.90%
Provision for credit losses was $53 million compared to $6 million
Noninterest income of $98 million increased 8%, or $7 million
Noninterest expense of $192 million, up $1 million
Pre-tax pre-provision income of $109 million decreased 5%, or $6 million1
Tangible book value per share was $14.64, up 3%

¹This is a non-GAAP financial measure. Management believes these measures are meaningful because they reflect adjustments commonly made by management, investors, regulators, and analysts to evaluate the adequacy of earnings per common share, provide greater understanding of ongoing operations and enhance comparability of results with prior periods. See page 8 of the attached tables for a reconciliation of GAAP financial measures to non-GAAP financial measures which exclude acquisition and restructuring related costs.

Loans
First quarter 2020 average loans of $23.3 billion were up 1%, or $205 million from the same period last year, and were up 2%, or $525 million from fourth quarter 2019. The increase from the fourth quarter was driven in part by the First Staunton acquisition which closed in February and by customers drawing on lines of credit in March in response to the pandemic. With respect to first quarter average balances by loan category:

Commercial real estate lending increased $212 million from the same period last year and $135 million from the fourth quarter 2019 to $5.3 billion. The change was largely due to increased construction loans and funded term debt.
Commercial and business lending was essentially flat compared to the same period last year and increased $172 million from the fourth quarter 2019 to $8.4 billion. The increase from the fourth quarter was driven by power & utilities and general commercial lending.
Consumer lending was $9.6 billion, down $10 million from the first quarter 2019 and up $219 million from the fourth quarter 2019.

First quarter 2020 period-end loans of $24.4 billion were up 5%, or $1.2 billion from the same period last year, and were up 7%, or $1.5 billion from fourth quarter 2019. Similar to the changes in average balances, the period-end increases were driven by the First Staunton acquisition and pandemic response. With respect to first quarter period- end balances by loan category:

Commercial and business lending increased $939 million from the same period last year, and $1.2 billion from the fourth quarter 2019 to $9.5 billion.
Commercial real estate lending increased $500 million from the same period last year, and $367 million from the fourth quarter 2019 to $5.6 billion. The change was largely due to increased construction loans and funded term debt.
Consumer lending was $9.3 billion, down $221 million from first quarter 2019 and down $16 million from the fourth quarter 2019.

On April 3, the Company began accepting loan applications under the Small Business Administration's Paycheck Protection Program. This initiative was created through the Coronavirus Aid, Relief, and Economic Security Act and is intended to support small business with loans to cover payroll and other employee expenses for companies impacted by the pandemic. As of April 21, the Company had funded over 3,600 loans for nearly $900 million under this program.

Deposits
First quarter 2020 average deposits of $24.3 billion were down $264 million, or 1% from the same period last year and were up $189 million compared to the fourth quarter. The decrease from the first quarter of 2019 reflects the Company's balance sheet repositioning strategy of selling lower-yielding securities and reducing certain higher-cost, non-core customer funding from time deposits, network transaction deposits and money market accounts in 2019. The increase from the fourth quarter was driven by the First Staunton acquisition and by customers building cash in March in response to the pandemic.

With respect to first quarter 2020 average balances by deposit category:

Savings increased $770 million from the same period last year and increased $155 million from the fourth quarter to $2.9 billion.
Interest-bearing demand deposits increased $568 million from the same period last year and increased $169 million from the fourth quarter to $5.3 billion.
Noninterest-bearing demand deposits increased $524 million from the same period last year and increased $36 million from the fourth quarter to $5.5 billion.
Time deposits decreased $486 million from the same period last year and decreased $111 million from the fourth quarter to $2.6 billion.
Network transaction deposits decreased $791 million from the same period last year and decreased $5 million from the fourth quarter to $1.4 billion.
Money market deposits decreased $850 million from the same period last year and decreased $56 million from the fourth quarter to $6.5 billion.

First quarter 2020 period-end deposits of $25.7 billion were up $129 million, or 1% from the same period last year and were up $1.9 billion compared to the fourth quarter. Core funding made up 58% of deposit balances as of March 31, 2020.

With respect to first quarter 2020 period-end balances by deposit category:

Savings increased $817 million from the same period last year and increased $298 million from the fourth quarter to $3.0 billion.
Noninterest-bearing demand deposits increased $773 million from the same period last year and increased $657 million from the fourth quarter to $6.1 billion.
Interest-bearing demand deposits increased $944 million from the same period last year and increased $840 million from the fourth quarter to $6.2 billion.
Time deposits decreased $1.1 billion from the same period last year and increased $11 million from the fourth quarter to $2.6 billion.
Money market deposits decreased $1.3 billion from the same period last year and increased $77 million from the fourth quarter to $7.7 billion.
Network transaction deposits (included in money market and interest-bearing deposits) decreased $472 million from the same period last year and increased $396 million from the fourth quarter to $1.7 billion.

Net Interest Income and Net Interest Margin
First quarter 2020 net interest income of $203 million was down 6%, or $13 million, and the net interest margin decreased 6 basis points to 2.84% from the same period last year. First quarter 2020 net interest income increased 1%, or $3 million, and the net interest margin increased 1 basis point from the fourth quarter of 2019. The increases in net interest income and net interest margin from the fourth quarter are due to reductions in the Company's deposit pricing and elevated LIBOR - Fed Funds spread in the first quarter.

The average yield on total earning assets for the first quarter of 2020 decreased 44 basis points from the same period last year to 3.67% and decreased 11 basis points from the prior quarter.
The average cost of total interest-bearing liabilities for the first quarter of 2020 decreased 45 basis points from the same period last year to 1.06% and decreased 17 basis points from the prior quarter.
The net free funds benefit decreased seven basis points in the first quarter of 2020 compared to the same period last year and decreased five basis points from the prior quarter.

Noninterest Income
First quarter of 2020 total noninterest income of $98 million increased $7 million from the same period last year and increased $5 million from the prior quarter.

With respect to first quarter 2020 noninterest income line items:

Net mortgage banking income was $6 million for the first quarter. Gross mortgage banking income was $15 million, partially offset by $9 million of mortgage servicing rights impairment.
Capital markets income was up $5 million from same period last year driven by interest rate swap fees, and was flat with the previous quarter.
Gains on sales of investment securities were up $4 million compared to the same period last year and up $6 million from the fourth quarter.

Noninterest Expense
First quarter 2020 total noninterest expense of $192 million increased $1 million compared to the same period last year and decreased $11 million from the prior quarter.

With respect to first quarter 2020 noninterest expense line items:

Personnel expense decreased $6 million from both the same period last year and from the prior quarter.
Technology expense increased $2 million from the same period last year but decreased $2 million from the prior quarter.
Occupancy expense was essentially flat from the same period last year and increased $1 million from the prior quarter.
The Company's FDIC assessment increased $2 million from both the same period last year and from the prior quarter.

Taxes
The first quarter 2020 effective tax rate was 18% compared to 21% in the same period last year and 19% in the prior quarter.

Credit
The first quarter 2020 provision for loan losses was $53 million, up from $6 million in the same period last year and up from zero in the prior quarter. As a result of implementing the Current Expected Credit Loss accounting standard, the Company incurred an after-tax charge of $98 million which decreased the opening equity balance as of January 1, 2020.

With respect to first quarter 2020 credit quality:

Potential problem loans of $234 million were down $7 million, or 3%, from the same period last year but up $73 million, or 45%, from the prior quarter.
Nonaccrual loans of $137 million were down $19 million from the same period last year and up $18 million from the prior quarter. The nonaccrual loans to total loans ratio was 0.56% in the first quarter, down from 0.67% in the same period last year and up from 0.52% in the prior quarter.
Net charge offs of $17 million were up $10 million from the same period last year and up $3 million from the prior quarter.
The allowance for credit losses on loans (ACLL) of $394 million was up $133 million compared to the same period last year and up $171 million from the prior quarter. The adoption of CECL resulted in an increase of $131 million to ACLL. The ACLL to total loans ratio was 1.62% in the first quarter, up from 1.13% in the same period last year, and 0.98% in the prior quarter.

Capital
The Company's capital position remains strong, with a CET1 capital ratio of 9.4% at March 31, 2020. The Company's capital ratios continue to be in excess of the Basel III "well-capitalized" regulatory benchmarks on a fully phased in basis.

During the first ten weeks of 2020, the Company repurchased over four million shares, or $71 million, of common stock at an average price of $16.71 per share. On March 13th, 2020, the Company suspended its share repurchases in order to have additional capital available to support its customers and for additional security given anticipated continued economic volatility.

FIRST QUARTER 2020 EARNINGS RELEASE CONFERENCE CALL
The Company will host a conference call for investors and analysts at 4:00 p.m. Central Time (CT) today, April 23, 2020. Interested parties can access the live webcast of the call through the Investor Relations section of the Company's website, http://investor.associatedbank.com. Parties may also dial into the call at 877-407-8037 (domestic) or 201-689-8037 (international) and request the Associated Banc-Corp first quarter 2020 earnings call. The first quarter 2020 financial tables with an accompanying slide presentation will be available on the Company's website just prior to the call. An audio archive of the webcast will be available on the Company's website approximately fifteen minutes after the call is over.

ABOUT ASSOCIATED BANC-CORP
Associated Banc-Corp ASB has total assets of $34 billion and is one of the top 50 publicly traded U.S. bank holding companies. Headquartered in Green Bay, Wisconsin, Associated is a leading Midwest banking franchise, offering a full range of financial products and services from more than 240 banking locations serving more than 120 communities throughout Wisconsin, Illinois and Minnesota, and commercial financial services in Indiana, Michigan, Missouri, Ohio and Texas. Associated Bank, N.A. is an Equal Housing Lender, Equal Opportunity Lender and Member FDIC. More information about Associated Banc-Corp is available at www.associatedbank.com.

FORWARD-LOOKING STATEMENTS
Statements made in this document which are not purely historical are forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995. This includes any statements regarding management's plans, objectives, or goals for future operations, products or services, and forecasts of its revenues, earnings, or other measures of performance. Such forward-looking statements may be identified by the use of words such as "believe," "expect," "anticipate," "plan," "estimate," "should," "will," "intend," "target," "outlook," or similar expressions. Forward- looking statements are based on current management expectations and, by their nature, are subject to risks and uncertainties. Actual results may differ materially from those contained in the forward-looking statements. Factors which may cause actual results to differ materially from those contained in such forward-looking statements include those identified in the Company's most recent Form 10-K and subsequent SEC filings. Such factors are incorporated herein by reference.

NON-GAAP FINANCIAL MEASURES
This press release and related materials may contain references to measures which are not defined in generally accepted accounting principles ("GAAP"). Information concerning these non-GAAP financial measures can be found in the financial tables. Management believes these measures are meaningful because they reflect adjustments commonly made by management, investors, regulators, and analysts to evaluate the adequacy of earnings per common share, provide a greater understanding of ongoing operations and enhance comparability of results with prior periods.

Investor Contact:
Brian Mathena, Senior Vice President, Director of Investor Relations
920-491-7059

Media Contact:
Jennifer Kaminski, Vice President, Public Relations Senior Manager
920-491-7576

SOURCE Associated Banc-Corp

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