Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☑			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended: September 30, 2023

☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
			For the transition period from             to

Commission file number: 001-31343

Associated Banc-Corp

(Exact name of registrant as specified in its charter)

Wisconsin									39-1098068
(State or other jurisdiction of incorporation or organization)									(I.R.S. Employer Identification No.)

433 Main Street
Green Bay,			Wisconsin						54301
(Address of principal executive offices)									(Zip Code)

(920) 491-7500

(Registrant’s telephone number, including area code)

(not applicable)

(Former name, former address and former fiscal year, if changed since last report)

Securities Registered Pursuant to Section 12(b) of the Act:

Title of each class			Trading symbol(s)			Name of each exchange on which registered
Common stock, par value $0.01 per share			ASB			New York Stock Exchange
Depositary Shrs, each representing 1/40th intrst in a shr of 5.875% Non-Cum. Perp Pref Stock, Srs E			ASB PrE			New York Stock Exchange
Depositary Shrs, each representing 1/40th intrst in a shr of 5.625% Non-Cum. Perp Pref Stock, Srs F			ASB PrF			New York Stock Exchange
6.625% Fixed-Rate Reset Subordinated Notes due 2033			ASBA			New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes  ☑        No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes  ☑        No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☑

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes  ☐        No  ☑

APPLICABLE ONLY TO CORPORATE ISSUERS:

The number of shares outstanding of registrant’s common stock, par value $0.01 per share, at October 23, 2023 was 150,939,712.

1

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ASSOCIATED BANC-CORP
Table of Contents

						Page
PART I. Financial Information
			Item 1. Financial Statements (Unaudited):			5
			Consolidated Balance Sheets			5
			Consolidated Statements of Income			6
			Consolidated Statements of Comprehensive Income			7
			Consolidated Statements of Changes in Stockholders’ Equity			8
			Consolidated Statements of Cash Flows			10
			Notes to Consolidated Financial Statements			12
			Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			49
			Item 3. Quantitative and Qualitative Disclosures About Market Risk			73
			Item 4. Controls and Procedures			74
PART II. Other Information
			Item 1. Legal Proceedings			75
			Item 1A. Risk Factors			75
			Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			75
			Item 5. Other Information			75
			Item 6. Exhibits			76
			Signatures			77

2

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ASSOCIATED BANC-CORP
Commonly Used Terms
The following listing provides a reference of common acronyms, abbreviations, and other defined terms used throughout the document:

ACLL			Allowance for Credit Losses on Loans
AFS			Available for Sale
ALCO			Asset / Liability Committee
ASU			Accounting Standards Update
the Bank			Associated Bank, National Association
Basel III			International framework established by the Basel Committee on Banking Supervision for the regulation of capital and liquidity
bp			basis point(s)
BTFP			Bank Term Funding Program
Call Report			Consolidated Reports of Condition and Income
CDs			Certificates of Deposit
CDIs			Core Deposit Intangibles
CECL			Current Expected Credit Losses
CET1			Common Equity Tier 1
CFPB			Consumer Financial Protection Bureau
Corporation / our			Associated Banc-Corp collectively with all of its subsidiaries and affiliates
CRA			Community Reinvestment Act
CRE			Commercial Real Estate
EAR			Earnings at Risk
Exchange Act			Securities Exchange Act of 1934, as amended
FASB			Financial Accounting Standards Board
FDIC			Federal Deposit Insurance Corporation
Federal Reserve			Board of Governors of the Federal Reserve System
FFELP			Federal Family Education Loan Program
FHLB			Federal Home Loan Bank
FHLMC			Federal Home Loan Mortgage Corporation
FICO			Fair Isaac Corporation, provider of a broad-based risk score to aid in credit decisions
FNMA			Federal National Mortgage Association
FTEs			Full-time equivalent employees
FTP			Funds Transfer Pricing
GAAP			Generally Accepted Accounting Principles
GNMA			Government National Mortgage Association
GSEs			Government-Sponsored Enterprises
HTM			Held to Maturity
LOCOM			Lower of Cost or Market
LTV			Loan-to-Value
Moody's			Moody’s Investors Service
MSRs			Mortgage Servicing Rights
MVE			Market Value of Equity
NAV			Measured at fair value using Net Asset Value per share (or its equivalent) as a practical expedient
Net Free Funds			Noninterest-bearing sources of funds
NPAs			Nonperforming Assets
OCI			Other Comprehensive Income
OREO			Other Real Estate Owned

3

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Parent Company			Associated Banc-Corp individually
RAP			Retirement Account Plan - the Corporation's noncontributory defined benefit retirement plan
Repurchase Agreements			Securities sold under agreements to repurchase
Restricted Stock Awards			Restricted common stock and restricted common stock units to certain key employees
Retirement Eligible Colleagues			Colleagues whose retirement meets the early retirement or normal retirement definitions under the applicable equity compensation plan
ROCET1			Return on Common Equity Tier 1
SBA			Small Business Administration
SEC			U.S. Securities and Exchange Commission
Series E Preferred Stock			The Corporation's 5.875% Non-Cumulative Perpetual Preferred Stock, Series E, liquidation preference $1,000 per share
Series F Preferred Stock			The Corporation's 5.625% Non-Cumulative Perpetual Preferred Stock, Series F, liquidation preference $1,000 per share
SOFR			Secured Overnight Finance Rate
TDRs			Troubled Debt Restructurings
YTD			Year-to-Date

4

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Table of Contents

PART I - FINANCIAL INFORMATION
ITEM 1.			Financial Statements:

ASSOCIATED BANC-CORP

Consolidated Balance Sheets

			Sep 30, 2023			Dec 31, 2022
(In thousands, except share and per share data)			(Unaudited)			(Audited)
Assets
Cash and due from banks			$	388,694		$	436,952
Interest-bearing deposits in other financial institutions			323,130			156,693
Federal funds sold and securities purchased under agreements to resell			965			27,810
AFS investment securities, at fair value			3,491,679			2,742,025
HTM investment securities, net, at amortized cost			3,900,415			3,960,398
Equity securities			35,937			25,216
FHLB and Federal Reserve Bank stocks, at cost			268,698			295,496
Residential loans held for sale			54,790			20,383
Loans			30,193,187			28,799,569
Allowance for loan losses			(345,795)			(312,720)
Loans, net			29,847,392			28,486,849
Tax credit and other investments			256,905			276,773
Premises and equipment, net			373,017			376,906
Bank and corporate owned life insurance			679,775			676,530
Goodwill			1,104,992			1,104,992
Other intangible assets, net			42,674			49,282
Mortgage servicing rights, net			89,131			77,351
Interest receivable			171,119			144,449
Other assets			608,068			547,621
Total assets			$	41,637,381		$	39,405,727
Liabilities and stockholders' equity
Noninterest-bearing demand deposits			$	6,422,994		$	7,760,811
Interest-bearing deposits			25,700,332			21,875,343
Total deposits			32,123,326			29,636,154
Federal funds purchased and securities sold under agreements to repurchase			451,644			585,139
Commercial paper			—			20,798
FHLB advances			3,733,041			4,319,861
Other long-term funding			529,459			248,071
Allowance for unfunded commitments			34,776			38,776
Accrued expenses and other liabilities			637,491			541,438
Total liabilities			$	37,509,738		$	35,390,237
Stockholders’ equity
Preferred equity			$	194,112		$	194,112
Common equity
Common stock			$	1,752		$	1,752
Surplus			1,711,454			1,712,733
Retained earnings			3,074,014			2,904,882
Accumulated other comprehensive (loss)			(339,140)			(272,799)
Treasury stock, at cost			(514,549)			(525,190)
Total common equity			3,933,531			3,821,378
Total stockholders’ equity			4,127,643			4,015,490
Total liabilities and stockholders’ equity			$	41,637,381		$	39,405,727
Preferred shares authorized (par value $1.00 per share)			750,000			750,000
Preferred shares issued and outstanding			200,000			200,000
Common shares authorized (par value $0.01 per share)			250,000,000			250,000,000
Common shares issued			175,216,409			175,216,409
Common shares outstanding			150,951,209			150,444,019

Numbers may not sum due to rounding.

See accompanying notes to consolidated financial statements.

5

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Table of Contents

Item 1. Financial Statements Continued:

ASSOCIATED BANC-CORP

Consolidated Statements of Income (Unaudited)

			Three Months Ended Sep 30,						Nine Months Ended Sep 30,
(In thousands, except per share data)			2023			2022			2023			2022
Interest income
Interest and fees on loans			$	447,912		$	275,666		$	1,262,538		$	643,239
Interest and dividends on investment securities
Taxable			38,210			19,221			104,197			54,009
Tax-exempt			15,941			16,538			47,960			49,025
Other interest			6,575			3,284			17,990			7,696
Total interest income			508,637			314,708			1,432,685			753,969
Interest expense
Interest on deposits			193,131			26,000			464,749			37,590
Interest on federal funds purchased and securities sold under agreements to repurchase			3,100			756			8,504			1,200
Interest on other short-term funding			—			1			1			2
Interest on FHLB advances			48,143			20,792			147,365			38,663
Interest on long-term funding			10,019			2,722			25,895			8,182
Total interest expense			254,394			50,270			646,514			85,637
Net interest income			254,244			264,439			786,171			668,332
Provision for credit losses			21,943			16,998			62,014			13,006
Net interest income after provision for credit losses			232,301			247,440			724,157			655,326
Noninterest income
Wealth management fees			20,828			19,984			61,499			63,719
Service charges and deposit account fees			12,864			15,029			38,230			48,392
Card-based fees			11,510			11,479			33,492			32,847
Other fee-based revenue			4,509			4,487			13,249			12,613
Capital markets, net			5,368			7,675			15,544			24,331
Mortgage banking, net			6,501			2,098			17,814			16,635
Bank and corporate owned life insurance			2,047			1,827			6,882			8,004
Asset gains, net			625			18			590			1,883
Investment securities gains (losses), net			(11)			5,664			55			5,676
Other			2,339			2,527			6,841			6,613
Total noninterest income			66,579			70,788			194,195			220,713
Noninterest expense
Personnel			117,159			118,243			347,669			335,720
Technology			26,172			22,694			73,990			65,401
Occupancy			14,125			13,717			42,775			43,948
Business development and advertising			7,100			6,778			20,054			17,388
Equipment			5,016			4,921			14,921			14,841
Legal and professional			4,461			4,159			13,149			14,118
Loan and foreclosure costs			2,049			1,631			4,822			5,121
FDIC assessment			9,150			5,800			25,575			16,300
Other intangible amortization			2,203			2,203			6,608			6,608
Other			8,771			15,645			24,726			31,057
Total noninterest expense			196,205			195,791			574,291			550,503
Income before income taxes			102,674			122,438			344,061			325,536
Income tax expense			19,426			26,163			70,299			68,176
Net income			83,248			96,275			273,762			257,360
Preferred stock dividends			2,875			2,875			8,625			8,625
Net income available to common equity			$	80,373		$	93,400		$	265,137		$	248,735
Earnings per common share
Basic			$	0.53		$	0.62		$	1.76		$	1.66
Diluted			$	0.53		$	0.62		$	1.75		$	1.65
Average common shares outstanding
Basic			150,035			149,321			149,929			149,063
Diluted			151,014			150,262			150,971			150,205

Numbers may not sum due to rounding.

See accompanying notes to consolidated financial statements.

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Table of Contents

Item 1. Financial Statements Continued:

ASSOCIATED BANC-CORP

Consolidated Statements of Comprehensive Income (Unaudited)

			Three Months Ended Sep 30,						Nine Months Ended Sep 30,
($ in thousands)			2023			2022			2023			2022
Net income			$	83,248		$	96,275		$	273,762		$	257,360
Other comprehensive (loss), net of tax
AFS investment securities
Net unrealized (losses)			(56,924)			(100,092)			(69,512)			(268,413)
Unrealized (losses) on AFS securities transferred to HTM securities			—			—			—			(67,604)
Amortization of net unrealized losses on AFS securities transferred to HTM securities			2,327			2,888			6,883			7,269
Reclassification adjustment for net (gains) realized in net income			—			—			—			(12)
Income tax benefit			13,928			24,810			15,879			83,906
Other comprehensive (loss) on AFS securities			(40,669)			(72,394)			(46,751)			(244,854)
Cash flow hedge derivatives
Net unrealized (losses)			(13,592)			—			(33,976)			—
Reclassification adjustment for net losses realized in net income			4,516			—			9,097			—
Income tax benefit			2,315			—			5,488			—
Other comprehensive (loss) on cash flow hedge derivatives			(6,762)			—			(19,391)			—
Defined benefit pension and postretirement obligations
Amortization of prior service cost			(81)			(82)			(244)			(244)
Amortization of actuarial (gain) loss			(7)			347			15			494
Income tax benefit (expense)			23			(474)			31			(470)
Other comprehensive (loss) on pension and postretirement obligations			(66)			(209)			(198)			(221)
Total other comprehensive (loss)			(47,497)			(72,603)			(66,340)			(245,074)
Comprehensive income			$	35,751		$	23,672		$	207,422		$	12,286

Numbers may not sum due to rounding.

See accompanying notes to consolidated financial statements.

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Table of Contents

Item 1. Financial Statements Continued:    

ASSOCIATED BANC-CORP

Consolidated Statements of Changes in Stockholders’ Equity (Unaudited)

(In thousands, except per share data)			Preferred Equity			Common Stock			Surplus			Retained Earnings			Accumulated Other Comprehensive  (Loss)			Treasury Stock			Total
Balance, December 31, 2022			$	194,112		$	1,752		$	1,712,733		$	2,904,882		$	(272,799)		$	(525,190)		$	4,015,490
Comprehensive income:
Net income			—			—			—			103,360			—			—			103,360
Other comprehensive income			—			—			—			—			39,211			—			39,211
Comprehensive income																					142,571
Common stock issued:
Stock-based compensation plans, net			—			—			(12,612)			—			—			14,379			1,766
Purchase of treasury stock, stock-based compensation plans			—			—			—			—			—			(5,362)			(5,362)
Cash dividends:
Common stock, $0.21 per share			—			—			—			(32,013)			—			—			(32,013)
Preferred stock(a)			—			—			—			(2,875)			—			—			(2,875)
Stock-based compensation expense, net			—			—			6,086			—			—			—			6,086
Balance, March 31, 2023			$	194,112		$	1,752		$	1,706,206		$	2,973,354		$	(233,588)		$	(516,173)		$	4,125,663
Comprehensive income:
Net income			—			—			—			87,154			—			—			87,154
Other comprehensive (loss)			—			—			—			—			(58,054)			—			(58,054)
Comprehensive income																					29,100
Common stock issued:
Stock-based compensation plans, net			—			—			(1,677)			—			—			1,770			93
Purchase of treasury stock, stock-based compensation plans			—			—			—			—			—			(884)			(884)
Cash dividends:
Common stock, $0.21 per share			—			—			—			(31,996)			—			—			(31,996)
Preferred stock(a)			—			—			—			(2,875)			—			—			(2,875)
Stock-based compensation expense, net			—			—			3,773			—			—			—			3,773
Balance, June 30, 2023			$	194,112		$	1,752		$	1,708,303		$	3,025,637		$	(291,642)		$	(515,287)		$	4,122,874
Comprehensive income:
Net income			—			—			—			83,248			—			—			83,248
Other comprehensive (loss)			—			—			—			—			(47,497)			—			(47,497)
Comprehensive income																					35,751
Common stock issued:
Stock-based compensation plans, net			—			—			(497)			—			—			999			503
Purchase of treasury stock, stock-based compensation plans			—			—			—			—			—			(261)			(261)
Cash dividends:
Common stock, $0.21 per share			—			—			—			(31,996)			—			—			(31,996)
Preferred stock(a)			—			—			—			(2,875)			—			—			(2,875)
Stock-based compensation expense, net			—			—			3,648			—			—			—			3,648
Balance, September 30, 2023			$	194,112		$	1,752		$	1,711,454		$	3,074,014		$	(339,140)		$	(514,549)		$	4,127,643

Numbers may not sum due to rounding.

(a) Series E, $0.3671875 per share; and Series F, $0.3515625 per share.

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Table of Contents

(In thousands, except per share data)			Preferred Equity			Common Stock			Surplus			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Treasury Stock			Total
Balance, December 31, 2021			$	193,195		$	1,752		$	1,713,851		$	2,672,601		$	(10,317)		$	(546,229)		$	4,024,853
Change in accounting principle(a)			—			—			—			1,713			—			—			1,713
Total stockholders' equity at beginning of period, as adjusted			193,195			1,752			1,713,851			2,674,314			(10,317)			(546,229)			4,026,566
Comprehensive (loss):
Net income			—			—			—			74,262			—			—			74,262
Other comprehensive (loss)			—			—			—			—			(126,708)			—			(126,708)
Comprehensive (loss)																					(52,445)
Common stock issued:
Stock-based compensation plans, net			—			—			(11,911)			—			—			18,565			6,654
Purchase of treasury stock, stock-based compensation plans			—			—			—			—			—			(5,193)			(5,193)
Cash dividends:
Common stock, $0.20 per share			—			—			—			(30,583)			—			—			(30,583)
Preferred stock(b)			—			—			—			(2,875)			—			—			(2,875)
Stock-based compensation expense, net			—			—			6,164			—			—			—			6,164
Balance, March 31, 2022			$	193,195		$	1,752		$	1,708,104		$	2,715,118		$	(137,024)		$	(532,858)		$	3,948,287
Comprehensive income:
Net income			—			—			—			86,824			—			—			86,824
Other comprehensive (loss)			—			—			—			—			(45,764)			—			(45,764)
Comprehensive income																					41,060
Common stock issued:
Stock-based compensation plans, net			—			—			(1,771)			—			—			1,910			139
Purchase of treasury stock, stock-based compensation plans			—			—			—			—			—			(884)			(884)
Cash dividends:
Common stock, $0.20 per share			—			—			—			(30,331)			—			—			(30,331)
Preferred stock(b)			—			—			—			(2,875)			—			—			(2,875)
Stock-based compensation expense, net			—			—			3,986			—			—			—			3,986
Balance, June 30, 2022			$	193,195		$	1,752		$	1,710,319		$	2,768,736		$	(182,788)		$	(531,832)		$	3,959,382
Comprehensive income:
Net income			—			—			—			96,275			—			—			96,275
Other comprehensive (loss)			—			—			—			—			(72,603)			—			(72,603)
Comprehensive income																					23,672
Common stock issued:
Stock-based compensation plans, net			—			—			(3,274)			—			—			4,540			1,266
Purchase of treasury stock, stock-based compensation plans			—			—			—			—			—			(181)			(181)
Cash dividends:
Common stock, $0.20 per share			—			—			—			(30,342)			—			—			(30,342)
Preferred stock(b)			—			—			—			(2,875)			—			—			(2,875)
Stock-based compensation expense, net			—			—			3,030			—			—			—			3,030
Other			916			—			—			(916)			—			—			—
Balance, September 30, 2022			$	194,112		$	1,752		$	1,710,075		$	2,830,877		$	(255,391)		$	(527,473)		$	3,953,952

Numbers may not sum due to rounding.

(a) MSRs at December 31, 2021 were carried at LOCOM. On January 1, 2022, the Corporation made the irrevocable election to account for MSRs at fair value.

(b) Series E, $0.3671875 per share; and Series F, $0.3515625 per share.

See accompanying notes to consolidated financial statements.

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Table of Contents

Item 1. Financial Statements Continued:

ASSOCIATED BANC-CORP

Consolidated Statements of Cash Flows (Unaudited)

			Nine Months Ended Sep 30,
($ in thousands)			2023			2022
Cash flows from operating activities
Net income			$	273,762		$	257,360
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for credit losses			62,014			13,006
Depreciation and amortization			34,703			33,743
Change in MSRs valuation			(14,658)			(22,348)
Amortization of other intangible assets			6,608			6,608
Amortization and accretion on earning assets, funding, and other, net			27,394			13,280
Net amortization of tax credit investments			25,830			25,916
(Gains) on sales of investment securities, net			—			(260)
Asset (gains), net			(590)			(1,883)
Loss on mortgage banking activities, net			2,154			5,712
Mortgage loans originated and acquired for sale			(283,469)			(535,694)
Proceeds from sales of mortgage loans held for sale			254,619			620,352
Changes in certain assets and liabilities:
(Increase) in interest receivable			(26,670)			(35,254)
Increase in interest payable			69,461			1,795
(Decrease) in expense payable			(22,632)			(17,994)
Increase in net derivative position			3,721			320,972
Net change in other assets and other liabilities			(34,137)			37,018
Net cash provided by operating activities			378,110			722,330
Cash flows from investing activities
Net (increase) in loans			(1,436,901)			(3,595,331)
Purchases of:
AFS securities			(1,109,501)			(510,301)
HTM securities			(41,524)			(245,826)
FHLB and Federal Reserve Bank stocks and equity securities			(114,985)			(112,157)
Proceeds from:
Sales of AFS securities			—			1,061
Sale of FHLB and Federal Reserve Bank stocks and equity securities			131,272			259
Prepayments, calls, and maturities of AFS securities			288,313			392,275
Prepayments, calls, and maturities of HTM securities			101,847			153,163
Sales, prepayments, calls, and maturities of other assets			20,224			31,732
Premises, equipment, and software, net of disposals			(43,541)			(45,441)
Net change in tax credit and alternative investments			(19,615)			(50,386)
Net cash (used in) investing activities			(2,224,411)			(3,980,951)
Cash flows from financing activities
Net increase in deposits			2,487,225			732,347
Net (decrease) in short-term funding			(154,292)			(69,902)
Net increase (decrease) in short-term FHLB advances			(580,000)			2,583,000
Repayment of long-term FHLB advances			(568)			(413,523)
Proceeds from long-term FHLB advances			1,369			1,356
Proceeds from issuance of long-term funding			292,740			—
(Repayment) proceeds of finance lease principal			(64)			327
Proceeds from issuance of common stock for stock-based compensation plans			2,362			8,059
Purchase of treasury stock, stock-based compensation plans			(6,507)			(6,259)
Cash dividends on common stock			(96,005)			(91,256)
Cash dividends on preferred stock			(8,625)			(8,625)
Net cash provided by financing activities			1,937,635			2,735,525
Net increase (decrease) in cash and cash equivalents			91,334			(523,096)
Cash and cash equivalents at beginning of period			621,455			1,025,515
Cash and cash equivalents at end of period(a)			$	712,789		$	502,419

Numbers may not sum due to rounding.

(a) No restricted cash due to the Federal Reserve reducing the required reserve ratio to zero.

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ASSOCIATED BANC-CORP

Consolidated Statements of Cash Flows (Unaudited)

			Nine Months Ended Sep 30,
($ in thousands)			2023			2022
Supplemental disclosures of cash flow information
Cash paid for interest			$	576,221		$	83,337
Cash paid for income and franchise taxes			68,382			6,087
Loans and bank premises transferred to OREO			5,917			5,052
Capitalized mortgage servicing rights			2,477			6,316
Loans transferred into held for sale from portfolio, net			6,833			1,789
Transfer of AFS securities to HTM securities			—			1,621,990
Unsettled trades to purchase securities			—			4,130
Write-up of equity securities without readily determinable fair values			—			5,690
Fair value adjustments on hedged long-term FHLB advances and subordinated debt			18,652			14,703
Fair value adjustments on foreign currency exchange forwards			3,308			10,610
Fair value adjustment on cash flow hedges			(19,391)			—

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Item 1. Financial Statements Continued:

ASSOCIATED BANC-CORP

Notes to Consolidated Financial Statements

These interim consolidated financial statements have been prepared according to the rules and regulations of the SEC and, therefore, certain information and footnote disclosures normally presented in accordance with GAAP have been omitted or abbreviated. The information contained on the consolidated financial statements and footnotes in Associated Banc-Corp's 2022 Annual Report on Form 10-K should be referred to in connection with the reading of these unaudited interim consolidated financial statements.

Note 1 Basis of Presentation

In the opinion of management, the accompanying unaudited consolidated financial statements contain all adjustments necessary to present fairly the financial position, results of operations and comprehensive income, changes in stockholders’ equity, and cash flows of the Corporation and Parent Company for the periods presented, and all such adjustments are of a normal recurring nature. The consolidated financial statements include the accounts of all subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year.

In preparing the consolidated financial statements, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the balance sheet and revenues and expenses for the period. Actual results could differ significantly from those estimates. Estimates that are particularly susceptible to significant change include the determination of the ACLL. Management has evaluated subsequent events for potential recognition or disclosure.

Within the tables presented, certain columns and rows may not sum due to the use of rounded numbers for disclosure purposes.

Note 2 Summary of Significant Accounting Policies

The accounting and reporting policies of the Corporation conform to U.S. GAAP and to general practice within the financial services industry. A discussion of these policies can be found in Note 1 Summary of Significant Accounting Policies included in the Corporation’s 2022 Annual Report on Form 10-K.

New Accounting Pronouncements Adopted

Standard			Description			Date of adoption			Effect on financial statements
ASU 2022-02 Financial Instruments-Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures			The FASB issued these amendments to eliminate accounting guidance for TDRs by creditors in Subtopic 310-40, Receivables-Troubled Debt Restructurings by Creditors, while enhancing disclosure requirements for certain loan refinancings and restructurings by creditors when a borrower is experiencing financial difficulty, and to require that an entity disclose current-period gross writeoffs by year of origination for financing receivables and net investments in leases within the scope of Subtopic 326-20, Financial Instruments-Credit Losses-Measured at Amortized Cost. The amendments in this Update are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, and should be applied prospectively, except as provided in the next sentence. For the transition method related to the recognition and measurement of TDRs, an entity has the option to apply a modified retrospective transition method, resulting in a cumulative-effect adjustment to retained earnings in the period of adoption. Early adoption is permitted if an entity has adopted the amendments in Update 2016-03, including adoption in an interim period.			1st Quarter 2023			Adoption of this amendment did not have a material impact on the Corporation's results of operation, financial position or liquidity, but resulted in additional disclosure requirements related to gross charge offs by vintage year and the removal of TDR disclosures, replaced by additional disclosures on the types of modifications of loans to borrowers experiencing financial difficulties. The Corporation has adopted this update prospectively.

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Future Accounting Pronouncements

The expected impact of applicable material accounting pronouncements recently issued or proposed but not yet required to be adopted are discussed in the table below. To the extent that the adoption of new accounting standards materially affects the Corporation's financial condition, results of operations, liquidity or disclosures, the impacts are discussed in the applicable sections of this financial review.

Standard			Description			Date of anticipated adoption			Effect on financial statements
ASU 2023-02 Investments-Equity Method and Joint Ventures (Topic 323): Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method			The amendments in this update permit reporting entities to elect to account for their tax equity investments, regardless of the tax credit program from which the income tax credits are received, using the proportional amortization method if certain conditions are met. A reporting entity may make an accounting policy election to apply the proportional amortization method on a tax-credit-program-by-tax-credit-program basis rather than electing to apply the proportional amortization method at the reporting entity level or to individual investments. The amendments in this update also remove certain guidance for Qualified Affordable Housing Project investments and require the application of the delayed equity contribution guidance to all tax equity investments. The amendments in this update are effective for fiscal years beginning after December 15, 2023, and must be applied on either a modified retrospective or a retrospective basis. Early adoption is permitted in any interim period, however if adopted in an interim period the entity shall adopt the amendments in this update as of the beginning of the fiscal year that includes the interim period.			1st Quarter 2024			The Corporation is currently evaluating the impact on its results of operation, financial position, liquidity, and disclosures.

Note 3 Earnings Per Common Share

Earnings per common share are calculated utilizing the two-class method. Basic earnings per common share are calculated by dividing the sum of distributed earnings to common shareholders and undistributed earnings allocated to common shareholders by the weighted average number of common shares outstanding. Diluted earnings per common share are calculated by dividing the sum of distributed earnings to common shareholders and undistributed earnings allocated to common shareholders by the weighted average number of common shares outstanding adjusted for the dilutive effect of common stock awards (outstanding stock options and unvested restricted stock awards). Presented below are the calculations for basic and diluted earnings per common share:

			Three Months Ended Sep 30,									Nine Months Ended Sep 30,
($ in thousands, except per share data)			2023						2022						2023			2022
Net income			$	83,248					$	96,275					$	273,762		$	257,360
Preferred stock dividends			(2,875)						(2,875)						(8,625)			(8,625)
Net income available to common equity			$	80,373					$	93,400					$	265,137		$	248,735
Common shareholder dividends			(31,806)						(30,149)						(95,417)			(90,647)
Unvested share-based payment awards			(190)						(194)						(588)			(609)
Undistributed earnings			$	48,377					$	63,057					$	169,132		$	157,479
Undistributed earnings allocated to common shareholders			$	48,090					$	62,648					$	168,136		$	156,454
Undistributed earnings allocated to unvested share-based payment awards			287						409						996			1,025
Undistributed earnings			$	48,377					$	63,057					$	169,132		$	157,479
Basic
Distributed earnings to common shareholders			$	31,806					$	30,149					$	95,417		$	90,647
Undistributed earnings allocated to common shareholders			48,090						62,648						168,136			156,454
Total common shareholders earnings, basic			$	79,896					$	92,796					$	263,553		$	247,102
Diluted
Distributed earnings to common shareholders			$	31,806					$	30,149					$	95,417		$	90,647
Undistributed earnings allocated to common shareholders			48,090						62,648						168,136			156,454
Total common shareholders earnings, diluted			$	79,896					$	92,796					$	263,553		$	247,102
Weighted average common shares outstanding			150,035						149,321						149,929			149,063
Effect of dilutive common stock awards			980						942						1,042			1,141
Diluted weighted average common shares outstanding			151,014						150,262						150,971			150,205
Basic earnings per common share			$	0.53					$	0.62					$	1.76		$	1.66
Diluted earnings per common share			$	0.53					$	0.62					$	1.75		$	1.65

Approximately 4 million and 3 million anti-dilutive common stock shares were excluded from the earnings per common share calculation for the three months ended September 30, 2023 and 2022, respectively, and approximately 3 million anti-dilutive

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common stock shares were excluded from the earnings per common share calculation for both the nine months ended September 30, 2023 and 2022.

Note 4 Stock-Based Compensation

The fair values of stock options and restricted stock awards are amortized as compensation expense on a straight-line basis over the vesting period of the grants. For colleagues who meet the definition of retirement eligible under the 2017 Incentive Compensation Plan and the 2020 Incentive Compensation Plan, expenses related to stock options and restricted stock awards are fully recognized on the date the colleague meets the definition of normal or early retirement. Compensation expense recognized is included in personnel expense on the consolidated statements of income.

A summary of the Corporation’s stock option activity for the nine months ended September 30, 2023 is presented below:

Stock Options			Shares(a)			Weighted Average Exercise Price			Weighted Average Remaining Contractual Term			Aggregate Intrinsic Value(a)
Outstanding at December 31, 2022			3,994			$	21.06		5.11 years			$	10,525
Exercised			61			17.04
Forfeited or expired			10			23.45
Outstanding at September 30, 2023			3,923			$	21.12		4.41 years			$	107
Options Exercisable at September 30, 2023			3,709			$	21.30		4.29 years			$	81

(a) In thousands

Intrinsic value represents the amount by which the fair market value of the underlying stock exceeds the exercise price of the stock option. For the nine months ended September 30, 2023, the intrinsic value of stock options exercised was approximately $272,000, compared to $3 million for the nine months ended September 30, 2022. For the nine months ended September 30, 2023, the total fair value of stock options vested was approximately $955,000 compared to $2 million for the nine months ended September 30, 2022.

The Corporation recognized compensation expense for the vesting of stock options of approximately $265,000 for the nine months ended September 30, 2023, compared to approximately $587,000 for the nine months ended September 30, 2022. At September 30, 2023, the Corporation had approximately $113,000 of unrecognized compensation expense related to stock options that is expected to be recognized over the remaining requisite service periods that extend predominately through the first quarter of 2024.

The Corporation also has issued time-based and performance-based restricted stock awards under the 2017 Incentive Compensation Plan and subsequent 2020 Incentive Compensation Plan. Performance awards are based on performance goals determined by the Compensation and Benefits Committee of the Corporation's Board of Directors, with vesting ranging from a minimum of 0% to a maximum of 150% of the target award. Performance awards are valued utilizing a Monte Carlo simulation model to estimate fair value of the awards at the grant date.

The following table summarizes information about the Corporation’s restricted stock awards activity for the nine months ended September 30, 2023:

Restricted Stock			Shares(a)			Weighted Average Grant Date Fair Value
Outstanding at December 31, 2022			2,303			$	20.81
Granted			830			22.47
Vested			771			21.01
Forfeited			35			22.10
Outstanding at September 30, 2023			2,327			$	21.32

(a) In thousands

The Corporation amortizes the expense related to restricted stock awards as compensation expense over the vesting period specified in the grant's award agreement. Performance-based restricted stock awards granted during 2022 and 2023 will cliff-vest after the three year performance period has ended. Service-based restricted stock awards granted during 2022 and 2023 will generally vest ratably over a period of four years. Expense for restricted stock awards of $14 million was recorded for the nine months ended September 30, 2023, compared to $13 million for the nine months ended September 30, 2022. Included in compensation expense for the first nine months of 2023 was $3 million of expense for the accelerated vesting of restricted stock awards granted to retirement eligible colleagues. The Corporation had $23 million of unrecognized compensation costs related to restricted stock awards at September 30, 2023 that are expected to be recognized over the remaining requisite service periods that extend predominately through the first quarter of 2027.

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The Corporation has the ability to issue shares from treasury or new shares upon the exercise of stock options or the granting of restricted stock awards. The Board of Directors has authorized management to repurchase shares of the Corporation’s common stock, to be made available for issuance in connection with the Corporation’s employee incentive plans and for other corporate purposes. The repurchase of shares, if any, will be based on market and investment opportunities, capital levels, growth prospects, and regulatory constraints. Such repurchases may occur from time to time in open market purchases, block transactions, private transactions, accelerated share repurchase programs, or similar facilities.

Note 5 Investment Securities

Investment securities are designated as AFS, HTM, or equity on the consolidated balance sheets at the time of purchase. The amortized cost and fair values of AFS and HTM securities at September 30, 2023 were as follows:

($ in thousands)			Amortized Cost			Gross Unrealized Gains			Gross Unrealized (Losses)			Fair Value
AFS investment securities
U.S. Treasury securities			$	124,555		$	—		$	(15,531)		$	109,024
Agency securities			15,000			—			(1,410)			13,590
Obligations of state and political subdivisions (municipal securities)			226,808			—			(16,492)			210,317
Residential mortgage-related securities:
FNMA/FHLMC			1,678,641			115			(241,997)			1,436,759
GNMA			1,416,569			—			(31,898)			1,384,670
Commercial mortgage-related securities:
FNMA/FHLMC			18,779			—			(2,625)			16,154
GNMA			188,667			—			(12,193)			176,474
Asset backed securities:
FFELP			140,881			83			(2,450)			138,514
SBA			3,299			9			(46)			3,261
Other debt securities			3,000			—			(85)			2,915
Total AFS investment securities			$	3,816,198		$	207		$	(324,727)		$	3,491,679
HTM investment securities
U.S. Treasury securities			$	999		$	—		$	(51)		$	948
Obligations of state and political subdivisions (municipal securities)			1,700,162			12			(279,659)			1,420,516
Residential mortgage-related securities:
FNMA/FHLMC			956,107			28,038			(220,577)			763,567
GNMA			50,489			15			(5,192)			45,312
Private-label			349,410			10,228			(85,120)			274,518
Commercial mortgage-related securities:
FNMA/FHLMC			782,291			13,329			(206,522)			589,097
GNMA			61,025			421			(9,506)			51,940
Total HTM investment securities			$	3,900,483		$	52,043		$	(806,627)		$	3,145,898

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The amortized cost and fair values of AFS and HTM securities at December 31, 2022 were as follows:

($ in thousands)			Amortized Cost			Gross Unrealized Gains			Gross Unrealized (Losses)			Fair Value
AFS investment securities
U.S. Treasury securities			$	124,441		$	—		$	(15,063)		$	109,378
Agency securities			15,000			—			(1,468)			13,532
Obligations of state and political subdivisions (municipal securities)			235,693			96			(5,074)			230,714
Residential mortgage-related securities:
FNMA/FHLMC			1,820,642			404			(216,436)			1,604,610
GNMA			502,537			314			(5,255)			497,596
Commercial mortgage-related securities:
FNMA/FHLMC			19,038			—			(1,896)			17,142
GNMA			115,031			—			(4,569)			110,462
Asset backed securities:
FFELP			157,138			—			(5,947)			151,191
SBA			4,512			15			(51)			4,477
Other debt securities			3,000			—			(78)			2,922
Total AFS investment securities			$	2,997,032		$	830		$	(255,837)		$	2,742,025
HTM investment securities
U.S. Treasury securities			$	999		$	—		$	(62)		$	936
Obligations of state and political subdivisions (municipal securities)			1,732,351			1,994			(182,697)			1,551,647
Residential mortgage-related securities:
FNMA/FHLMC			961,231			31,301			(175,760)			816,771
GNMA			52,979			85			(3,436)			49,628
Private-label			364,728			11,697			(72,920)			303,505
Commercial mortgage-related securities:
FNMA/FHLMC			778,796			15,324			(178,281)			615,839
GNMA			69,369			577			(7,254)			62,691
Total HTM investment securities			$	3,960,451		$	60,978		$	(620,411)		$	3,401,018

Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. The expected maturities of AFS and HTM securities at September 30, 2023, are shown below:

			AFS						HTM
($ in thousands)			Amortized Cost			Fair Value			Amortized Cost			Fair Value
Due in one year or less			$	7,436		$	7,368		$	16,715		$	16,673
Due after one year through five years			190,843			170,918			47,774			46,115
Due after five years through ten years			136,473			125,923			155,329			144,145
Due after ten years			34,611			31,636			1,481,344			1,214,531
Total debt securities			369,363			335,846			1,701,161			1,421,464
Residential mortgage-related securities:
FNMA/FHLMC			1,678,641			1,436,759			956,107			763,567
GNMA			1,416,569			1,384,670			50,489			45,312
Private-label			—			—			349,410			274,518
Commercial mortgage-related securities:
FNMA/FHLMC			18,779			16,154			782,291			589,097
GNMA			188,667			176,474			61,025			51,940
Asset backed securities:
FFELP			140,881			138,514			—			—
SBA			3,299			3,261			—			—
Total investment securities			$	3,816,198		$	3,491,679		$	3,900,483		$	3,145,898
Ratio of fair value to amortized cost						91.5		%				80.7		%

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On a quarterly basis, the Corporation refreshes the credit quality of each HTM security. The following table summarizes the credit quality indicators of HTM securities at amortized cost at September 30, 2023:

($ in thousands)			AAA			AA			A												Not Rated			Total
U.S. Treasury securities			$	999		$	—		$	—											$	—		$	999
Obligations of state and political subdivisions (municipal securities)			769,052			923,707			6,248												1,156			1,700,162
Residential mortgage-related securities:
FNMA/FHLMC			956,107			—			—												—			956,107
GNMA			50,489			—			—												—			50,489
Private-label			349,410			—			—												—			349,410
Commercial mortgage-related securities:
FNMA/FHLMC			782,291			—			—												—			782,291
GNMA			61,025			—			—												—			61,025
Total HTM securities			$	2,969,372		$	923,707		$	6,248											$	1,156		$	3,900,483

The following table summarizes the credit quality indicators of HTM securities at amortized cost at December 31, 2022:

($ in thousands)			AAA			AA			A												Not Rated			Total
U.S. Treasury securities			$	999		$	—		$	—											$	—		$	999
Obligations of state and political subdivisions (municipal securities)			806,529			917,059			7,604												1,158			1,732,351
Residential mortgage-related securities:
FNMA/FHLMC			961,231			—			—												—			961,231
GNMA			52,979			—			—												—			52,979
Private-label			364,728			—			—												—			364,728
Commercial mortgage-related securities:
FNMA/FHLMC			778,796			—			—												—			778,796
GNMA			69,369			—			—												—			69,369
Total HTM securities			$	3,034,630		$	917,059		$	7,604											$	1,158		$	3,960,451

The following table summarizes gross realized gains and losses on AFS securities, net write-up of equity securities, and proceeds from the sale of AFS investment securities for the three and nine months ended September 30, 2023 and 2022:

			Three Months Ended Sep 30,						Nine Months Ended Sep 30,
($ in thousands)			2023			2022			2023			2022
Gross realized gains on AFS securities			$	—		$	—		$	—		$	21
Gross realized (losses) on AFS securities			—			—			—			(8)
Gain on sale and net write-up (down) of equity securities			(11)			5,664			55			5,664
Investment securities gains (losses), net			$	(11)		$	5,664		$	55		$	5,676
Proceeds from sales of AFS investment securities			$	—		$	—		$	—		$	1,061

During the third quarter of 2022, the Corporation sold its Visa Class B restricted shares obtained in the acquisition of First Staunton, which were carried at a zero-cost basis. The remaining shares, which are carried at fair value, were subsequently written up to reflect the new observable price resulting from that sale.

Investment securities with a carrying value of $1.6 billion and $2.3 billion at September 30, 2023 and December 31, 2022, respectively, were pledged as required to secure certain deposits or for other purposes.

Accrued interest receivable on HTM securities totaled $16 million and $19 million at September 30, 2023 and December 31, 2022, respectively. Accrued interest receivable on AFS securities totaled $14 million and $9 million at September 30, 2023 and December 31, 2022, respectively. Accrued interest receivable on both HTM and AFS securities is included in interest receivable on the consolidated balance sheets. There was no interest income reversed for investments going into nonaccrual at both September 30, 2023 and December 31, 2022.

A security is considered past due once it is 30 days past due under the terms of the agreement. At both September 30, 2023 and December 31, 2022, the Corporation had no past due HTM securities.

The allowance for credit losses on HTM securities was approximately $67,000 at September 30, 2023 and approximately $54,000 at December 31, 2022, attributable entirely to the Corporation's municipal securities, included in HTM investment securities, net, at amortized cost on the consolidated balance sheets. The Corporation also holds U.S. Treasury, municipal, and mortgage-related securities issued by the U.S. government or a GSE which are backed by the full faith and credit of the U.S. government and private-label residential mortgage-related securities that have credit enhancement which covers the first 15% of losses and, as a result, no allowance for credit losses has been recorded related to these securities.

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The following represents gross unrealized losses and the related fair value of AFS and HTM securities, aggregated by investment category and length of time individual securities have been in a continuous unrealized loss position, at September 30, 2023:

			Less than 12 months									12 months or more									Total
($ in thousands)			Number of Securities			Unrealized (Losses)			Fair Value			Number of Securities			Unrealized (Losses)			Fair Value			Unrealized (Losses)			Fair Value
AFS investment securities
U.S. Treasury securities			—			$	—		$	—		7			$	(15,531)		$	109,024		$	(15,531)		$	109,024
Agency securities			—			—			—			1			(1,410)			13,590			(1,410)			13,590
Obligations of state and political subdivisions (municipal securities)			229			(6,575)			108,953			182			(9,916)			100,413			(16,492)			209,367
Residential mortgage-related securities:
FNMA/FHLMC			20			(1,390)			24,258			107			(240,606)			1,394,562			(241,997)			1,418,820
GNMA			75			(27,131)			1,271,478			17			(4,767)			61,087			(31,898)			1,332,565
Commercial mortgage-related securities:
FNMA/FHLMC			—			—			—			1			(2,625)			16,154			(2,625)			16,154
GNMA			9			(5,848)			100,659			33			(6,345)			75,815			(12,193)			176,474
Asset backed securities:
FFELP			—			—			—			14			(2,450)			129,503			(2,450)			129,503
SBA			2			(1)			620			7			(46)			1,525			(46)			2,144
Other debt securities			1			(21)			979			2			(63)			1,937			(85)			2,915
Total			336			$	(40,967)		$	1,506,947		371			$	(283,760)		$	1,903,609		$	(324,727)		$	3,410,556
HTM investment securities
U.S. Treasury securities			—			$	—		$	—		1			$	(51)		$	948		$	(51)		$	948
Obligations of state and political subdivisions (municipal securities)			586			(48,660)			663,360			567			(230,998)			743,274			(279,659)			1,406,634
Residential mortgage-related securities:
FNMA/FHLMC			31			(2,239)			37,996			92			(218,338)			725,539			(220,577)			763,535
GNMA			8			(466)			11,058			78			(4,726)			34,253			(5,192)			45,312
Private-label			—			—			—			18			(85,120)			274,518			(85,120)			274,518
Commercial mortgage-related securities:
FNMA/FHLMC			2			(2,746)			24,130			43			(203,776)			564,968			(206,522)			589,097
GNMA			—			—			—			13			(9,506)			51,940			(9,506)			51,940
Total			627			$	(54,112)		$	736,544		812			$	(752,515)		$	2,395,440		$	(806,627)		$	3,131,984

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For comparative purposes, the following represents gross unrealized losses and the related fair value of AFS and HTM securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position, at December 31, 2022:

			Less than 12 months									12 months or more									Total
($ in thousands)			Number of Securities			Unrealized (Losses)			Fair Value			Number of Securities			Unrealized (Losses)			Fair Value			Unrealized (Losses)			Fair Value
AFS investment securities
U.S. Treasury securities			—			$	—		$	—		7			$	(15,063)		$	109,378		$	(15,063)		$	109,378
Agency securities			—			—			—			1			(1,468)			13,532			(1,468)			13,532
Obligations of state and political subdivisions (municipal securities)			358			(5,066)			201,260			4			(8)			1,916			(5,074)			203,176
Residential mortgage-related securities:
FNMA/FHLMC			24			(31,266)			260,986			84			(185,170)			1,321,420			(216,436)			1,582,406
GNMA			23			(4,415)			220,276			2			(840)			11,096			(5,255)			231,372
Commercial mortgage-related securities:
FNMA/FHLMC			1			(1,896)			17,142			—			—			—			(1,896)			17,142
GNMA			33			(3,920)			101,036			4			(649)			9,426			(4,569)			110,462
Asset backed securities:
FFELP			3			(1,668)			44,304			12			(4,278)			106,887			(5,947)			151,191
SBA			2			(1)			417			6			(50)			2,057			(51)			2,474
Other debt securities			2			(30)			1,970			1			(49)			951			(78)			2,922
Total			446			$	(48,263)		$	847,391		121			$	(207,575)		$	1,576,665		$	(255,837)		$	2,424,055
HTM investment securities
U.S. Treasury securities			1			$	(62)		$	936		—			$	—		$	—		$	(62)		$	936
Obligations of state and political subdivisions (municipal securities)			771			(96,282)			1,079,216			156			(86,415)			231,022			(182,697)			1,310,238
Residential mortgage-related securities:
FNMA/FHLMC			79			(18,925)			143,201			22			(156,836)			671,570			(175,760)			814,770
GNMA			81			(3,436)			44,476			—			—			—			(3,436)			44,476
Private-label			3			(9,509)			58,733			15			(63,411)			244,772			(72,920)			303,505
Commercial mortgage-related securities:
FNMA/FHLMC			4			(3,814)			20,338			39			(174,467)			576,911			(178,281)			597,249
GNMA			8			(2,528)			34,612			6			(4,726)			28,080			(7,254)			62,691
Total			947			$	(134,556)		$	1,381,511		238			$	(485,855)		$	1,752,354		$	(620,411)		$	3,133,865

The Corporation reviews the AFS investment securities portfolio on a quarterly basis to monitor its credit exposure. A determination as to whether a security’s decline in fair value is the result of credit risk takes into consideration numerous factors and the relative significance of any single factor can vary by security. Some factors the Corporation may consider in this impairment analysis include the extent to which the security has been in an unrealized loss position, the change in security rating, financial condition and near-term prospects of the issuer, as well as the security and industry specific economic conditions.

Based on the Corporation’s evaluation, management does not believe any unrealized losses at September 30, 2023 represent credit deterioration as these unrealized losses are primarily attributable to changes in interest rates and the current market conditions. The Corporation does not intend to sell, nor does it believe that it will be required to sell, the securities in an unrealized loss position before recovery of their amortized cost basis.

FHLB and Federal Reserve Bank stocks: The Corporation is required to maintain Federal Reserve Bank stock and FHLB stock as a member bank of both the Federal Reserve System and the FHLB, and in amounts as required by these institutions. These equity securities are “restricted” in that they can only be sold back to the respective institutions or another member institution at par. Therefore, they are less liquid than other marketable equity securities and their fair value is equal to amortized cost. The Corporation had FHLB stock of $182 million and $209 million at September 30, 2023 and December 31, 2022, respectively. The Corporation had Federal Reserve Bank stock of $87 million at both September 30, 2023 and December 31, 2022. Accrued interest receivable on FHLB stock totaled $3 million at both September 30, 2023 and December 31, 2022. There was approximately $958,000 of accrued interest receivable on Federal Reserve Bank Stock at September 30, 2023 and none at December 31, 2022. Accrued interest receivable on both FHLB stock and Federal Reserve Bank stock is included in interest receivable on the consolidated balance sheets.

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Equity Securities

Equity securities with readily determinable fair values: The Corporation's portfolio of equity securities with readily determinable fair values is primarily comprised of CRA Qualified Investment mutual funds and other mutual funds. The Corporation had equity securities with readily determinable fair values of $7 million at September 30, 2023 and $6 million at December 31, 2022.

Equity securities without readily determinable fair values: The Corporation's portfolio of equity securities without readily determinable fair values, which primarily consists of Visa Class B restricted shares and an investment in a private SBA loan fund, was carried at $29 million and $19 million at September 30, 2023 and December 31, 2022, respectively.

Note 6 Loans

The period end loan composition was as follows:

($ in thousands)			Sep 30, 2023			Dec 31, 2022
Commercial and industrial			$	10,099,068		$	9,759,454
Commercial real estate — owner occupied			1,054,969			991,722
Commercial and business lending			11,154,037			10,751,176
Commercial real estate — investor			5,218,980			5,080,344
Real estate construction			2,130,719			2,155,222
Commercial real estate lending			7,349,699			7,235,565
Total commercial			18,503,736			17,986,742
Residential mortgage			8,782,645			8,511,550
Auto finance			2,007,164			1,382,073
Home equity			623,650			624,353
Other consumer			275,993			294,851
Total consumer			11,689,451			10,812,828
Total loans			$	30,193,187		$	28,799,569

Accrued interest receivable on loans totaled $136 million at September 30, 2023, and $113 million at December 31, 2022, and is included in interest receivable on the consolidated balance sheets. Interest accrued but not received is reversed against interest income when a loan is placed on nonaccrual. The amount of accrued interest reversed was approximately $347,000 and $1 million for the three and nine months ended September 30, 2023, respectively, and approximately $189,000 and $328,000 for the three and nine months ended September 30, 2022, respectively.

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The following table presents loans by credit quality indicator by origination year at September 30, 2023:

									Term Loans Amortized Cost Basis by Origination Year(a)
($ in thousands)			Rev Loans Converted to Term(a)			Rev Loans Amortized Cost Basis			YTD 2023			2022			2021			2020			2019			Prior			Total
Commercial and industrial:
Risk rating:
Pass			$	477		$	2,065,717		$	1,775,767		$	2,516,155		$	1,427,787		$	549,748		$	481,866		$	895,313		$	9,712,353
Special mention			39			26,400			39			39,694			8,731			3,667			—			26,136			104,666
Potential problem			829			72,533			311			51,502			57,611			20,222			4,434			623			207,237
Nonaccrual			14,756			—			13,945			20,299			18,898			21,617			—			53			74,812
Commercial and industrial			$	16,101		$	2,164,649		$	1,790,062		$	2,627,650		$	1,513,027		$	595,254		$	486,300		$	922,126		$	10,099,068
Commercial real estate - owner occupied:
Risk rating:
Pass			$	—		$	17,557		$	133,133		$	182,517		$	196,057		$	104,786		$	142,602		$	229,321		$	1,005,973
Special mention			—			421			—			2,000			7,666			2,446			4,737			—			17,269
Potential problem			—			—			748			1,177			3,334			1,205			1,807			19,520			27,792
Nonaccrual			—			—			—			1,568			2,260			—			—			108			3,936
Commercial real estate - owner occupied			$	—		$	17,978		$	133,882		$	187,262		$	209,317		$	108,436		$	149,146		$	248,950		$	1,054,969
Commercial and business lending:
Risk rating:
Pass			$	477		$	2,083,273		$	1,908,900		$	2,698,672		$	1,623,845		$	654,533		$	624,468		$	1,124,635		$	10,718,325
Special mention			39			26,821			39			41,694			16,396			6,112			4,737			26,136			121,935
Potential problem			829			72,533			1,060			52,679			60,945			21,427			6,242			20,143			235,029
Nonaccrual			14,756			—			13,945			21,868			21,158			21,617			—			161			78,748
Commercial and business lending			$	16,101		$	2,182,627		$	1,923,943		$	2,814,912		$	1,722,344		$	703,689		$	635,446		$	1,171,075		$	11,154,037
Commercial real estate - investor:
Risk rating:
Pass			$	—		$	157,976		$	500,154		$	1,278,072		$	1,181,060		$	687,373		$	459,677		$	634,704		$	4,899,015
Special mention			—			—			9,400			54,103			26,330			—			64,801			5,608			160,243
Potential problem			—			—			6,425			5,842			4,771			69,079			10,903			51,820			148,840
Nonaccrual			—			—			—			—			—			—			—			10,882			10,882
Commercial real estate - investor			$	—		$	157,976		$	515,979		$	1,338,016		$	1,212,162		$	756,452		$	535,381		$	703,014		$	5,218,980
Real estate construction:
Risk rating:
Pass			$	—		$	27,872		$	251,100		$	1,008,428		$	716,123		$	91,982		$	11,970		$	23,141		$	2,130,617
Nonaccrual			—			—			—			—			—			—			—			103			103
Real estate construction			$	—		$	27,872		$	251,100		$	1,008,428		$	716,123		$	91,982		$	11,970		$	23,244		$	2,130,719
Commercial real estate lending:
Risk rating:
Pass			$	—		$	185,848		$	751,254		$	2,286,500		$	1,897,183		$	779,355		$	471,646		$	657,845		$	7,029,632
Special mention			—			—			9,400			54,103			26,330			—			64,801			5,608			160,243
Potential problem			—			—			6,425			5,842			4,771			69,079			10,903			51,820			148,840
Nonaccrual			—			—			—			—			—			—			—			10,985			10,985
Commercial real estate lending			$	—		$	185,848		$	767,080		$	2,346,445		$	1,928,284		$	848,434		$	547,351		$	726,258		$	7,349,699
Total commercial:
Risk rating:
Pass			$	477		$	2,269,121		$	2,660,154		$	4,985,172		$	3,521,028		$	1,433,889		$	1,096,114		$	1,782,480		$	17,747,957
Special mention			39			26,821			9,439			95,797			42,727			6,112			69,538			31,744			282,178
Potential problem			829			72,533			7,485			58,521			65,716			90,506			17,144			71,963			383,869
Nonaccrual			14,756			—			13,945			21,868			21,158			21,617			—			11,146			89,732
Total commercial			$	16,101		$	2,368,474		$	2,691,023		$	5,161,357		$	3,650,628		$	1,552,123		$	1,182,797		$	1,897,334		$	18,503,736

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									Term Loans Amortized Cost Basis by Origination Year(a)
($ in thousands)			Rev Loans Converted to Term(a)			Rev Loans Amortized Cost Basis			YTD 2023			2022			2021			2020			2019			Prior			Total
Residential mortgage:
Risk rating:
Pass			$	—		$	—		$	294,499		$	1,725,855		$	2,176,722		$	1,585,071		$	757,087		$	2,176,012		$	8,715,245
Potential problem			—			—			—			80			—			77			347			744			1,247
Nonaccrual			—			—			142			3,098			7,003			7,506			6,742			41,662			66,153
Residential mortgage			$	—		$	—		$	294,640		$	1,729,032		$	2,183,725		$	1,592,654		$	764,176		$	2,218,418		$	8,782,645
Auto finance:
Risk rating:
Pass			$	—		$	—		$	885,528		$	1,031,283		$	82,447		$	204		$	614		$	202		$	2,000,278
Special mention			—			—			601			1,436			316			—			—			—			2,353
Nonaccrual			—			—			452			3,551			527			—			4			—			4,533
Auto finance			$	—		$	—		$	886,581		$	1,036,271		$	83,289		$	204		$	617		$	202		$	2,007,164
Home equity:
Risk rating:
Pass			$	7,318		$	514,431		$	4,986		$	35,751		$	1,671		$	1,450		$	4,703		$	51,693		$	614,685
Special mention			343			102			—			40			73			—			55			542			811
Potential problem			11			—			—			—			—			—			45			192			236
Nonaccrual			832			67			—			68			105			99			373			7,205			7,917
Home equity			$	8,504		$	514,599		$	4,986		$	35,859		$	1,849		$	1,549		$	5,175		$	59,631		$	623,650
Other consumer:
Risk rating:
Pass			$	99		$	193,494		$	5,521		$	3,933		$	2,772		$	1,234		$	514		$	67,749		$	275,217
Special mention			17			520			—			—			16			14			2			2			553
Nonaccrual			81			66			11			1			8			73			11			52			222
Other consumer			$	197		$	194,079		$	5,532		$	3,934		$	2,797		$	1,321		$	527		$	67,803		$	275,993
Total consumer:
Risk rating:
Pass			$	7,417		$	707,925		$	1,190,534		$	2,796,822		$	2,263,612		$	1,587,959		$	762,917		$	2,295,656		$	11,605,425
Special mention			360			621			601			1,476			405			14			57			543			3,717
Potential problem			11			—			—			80			—			77			392			935			1,483
Nonaccrual			913			133			604			6,718			7,644			7,679			7,129			48,919			78,826
Total consumer			$	8,701		$	708,679		$	1,191,739		$	2,805,096		$	2,271,661		$	1,595,728		$	770,495		$	2,346,054		$	11,689,451
Total loans:
Risk rating:
Pass			$	7,894		$	2,977,046		$	3,850,688		$	7,781,993		$	5,784,640		$	3,021,848		$	1,859,031		$	4,078,136		$	29,353,382
Special mention			398			27,442			10,039			97,273			43,132			6,126			69,595			32,288			285,895
Potential problem			841			72,533			7,485			58,600			65,716			90,583			17,536			72,899			385,352
Nonaccrual			15,669			133			14,549			28,585			28,801			29,295			7,129			60,065			168,558
Total loans			$	24,802		$	3,077,153		$	3,882,762		$	7,966,452		$	5,922,289		$	3,147,851		$	1,953,292		$	4,243,388		$	30,193,187

(a) Revolving loans converted to term loans are those converted during the reporting period and are also reported in their year of origination.

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The following table presents loans by credit quality indicator by origination year at December 31, 2022:

									Term Loans Amortized Cost Basis by Origination Year(a)
($ in thousands)			Rev Loans Converted to Term(a)			Rev Loans Amortized Cost Basis			2022			2021			2020			2019			2018			Prior			Total
Commercial and industrial:
Risk rating:
Pass			$	1,423		$	1,938,777		$	3,245,546		$	2,367,008		$	567,833		$	573,120		$	330,642		$	432,906		$	9,455,833
Special mention			—			93,209			3,411			23,607			—			—			19			32,497			152,744
Potential problem			447			24,549			41,400			4,193			21,887			38,169			218			6,133			136,549
Nonaccrual			3,926			—			5,210			—			9,119			—			—			—			14,329
Commercial and industrial			$	5,796		$	2,056,535		$	3,295,567		$	2,394,809		$	598,839		$	611,289		$	330,879		$	471,535		$	9,759,454
Commercial real estate - owner occupied:
Risk rating:
Pass			$	—		$	12,447		$	211,645		$	225,627		$	163,965		$	160,370		$	73,487		$	97,420		$	944,961
Special mention			—			—			—			—			1,136			1,491			9,713			—			12,339
Potential problem			—			1,325			1,238			11,141			5,523			10,769			370			4,055			34,422
Commercial real estate - owner occupied			$	—		$	13,772		$	212,883		$	236,769		$	170,624		$	172,630		$	83,570		$	101,475		$	991,722
Commercial and business lending:
Risk rating:
Pass			$	1,423		$	1,951,224		$	3,457,191		$	2,592,636		$	731,798		$	733,490		$	404,129		$	530,326		$	10,400,794
Special mention			—			93,209			3,411			23,607			1,136			1,491			9,732			32,497			165,083
Potential problem			447			25,874			42,638			15,335			27,410			48,938			589			10,188			170,971
Nonaccrual			3,926			—			5,210			—			9,119			—			—			—			14,329
Commercial and business lending			$	5,796		$	2,070,307		$