Executive Summary

EPS $0.30 (+11% YoY), net income to common $45.4M; total revenue (non‑GAAP) $253M as strong fee income offset margin compression; average loans +2.5% QoQ to $17.8B and average deposits +2.8% QoQ to $19.1B .
Net interest margin fell 15 bps QoQ to 2.89% on lower interest recoveries/prepayments (~~$2M), higher long‑term funding costs (+$2M from November 2014 debt), and day‑count (~~$2M) — under the prior 1Q15 NIM guide of ~2.95% from January by ~6 bps, a modest negative surprise .
Credit benign: NCOs/avg loans 0.13%, nonaccrual loans down 1.7% QoQ to $174.3M; allowance 1.48% of loans with 152% coverage, providing a cushion if macro softens .
Noninterest income inflected (up 15% QoQ to $80.1M), led by insurance commissions (+$9M QoQ) after closing the Ahmann & Martin acquisition and better mortgage banking; expenses up modestly on acquisition personnel and a Chicago lease termination .
2015 outlook maintained: high single‑digit average loan growth, modest full‑year NIM compression from 1Q base, mid‑to‑upper single‑digit noninterest income growth, low single‑digit expense growth; O&G E&P exposure ~4% of loans with higher specific reserves and hedged borrowers; shares repurchased $30M in 1Q and Tier 1 CET1 9.39% .

What Went Well and What Went Wrong

What Went Well

“Another quarter of solid results” with continued loan growth, a strong boost in insurance revenues, and benign credit helped performance (CEO Philip B. Flynn) .
Noninterest income up 15% QoQ to $80.1M, driven by insurance commissions (+$9M QoQ) and mortgage banking (+$4.5M QoQ); pretax income rose 2% QoQ to $69.1M .
Capital deployment and strength: $30M repurchase (~1.7M shares at $17.27) and Tier 1 CET1 9.39%; dividend maintained at $0.10 .

What Went Wrong

NIM compressed 15 bps QoQ to 2.89% on lower recoveries/prepayments (~3 bps impact), higher long‑term funding costs from the $500M debt, and day‑count — a headwind to net interest income .
Potential problem loans increased to $218.6M (up 14.8% QoQ), reflecting some pockets of emerging risk even as nonaccruals improved .
Expenses edged up to $174.3M (+$2.5M QoQ) due to acquisition‑related personnel (~+120 colleagues) and a Chicago lease termination in occupancy expense .

Financial Results

Metric	Q1 2014	Q4 2014	Q1 2015
Total Revenue (non‑GAAP, $MM)	$243	$249	$253
Net Interest Income ($MM)	$165.0	$174.7	$167.8
Noninterest Income ($MM)	$73.5	$69.6	$80.1
Diluted EPS ($)	$0.27	$0.31	$0.30
Pretax Income ($MM)	$65.8	$67.5	$69.1
Net Income to Common ($MM)	$44.0	$47.5	$45.4
Net Interest Margin (%)	3.12%	3.04%	2.89%
Efficiency Ratio – FTE (%)	68.86%	69.66%	68.86%

Noninterest income composition ($MM):

Metric	Q1 2014	Q4 2014	Q1 2015
Trust Service Fees	$11.7	$12.5	$12.1
Service Charges	$16.4	$17.0	$15.8
Card‑based & Other Fees	$12.5	$12.0	$12.4
Insurance Commissions	$12.3	$10.6	$19.7
Mortgage Banking (net)	$6.4	$2.9	$7.4

Key Performance Indicators:

KPI	Q1 2014	Q4 2014	Q1 2015
Avg Loans ($MM)	$16,164.6	$17,387.3	$17,815.1
Avg Deposits ($MM)	$16,990.3	$18,532.4	$19,055.2
Loan/Deposit (period‑end, %)	93.90%	93.77%	90.57%
ROA (annualized, %)	0.76%	0.75%	0.71%
ROT1CE (annualized, %)	9.38%	10.35%	10.22%
Tier 1 CET1 Ratio (%)	11.20%	9.74%	9.39%
Nonaccrual Loans ($MM)	$178.0	$177.4	$174.3
NCOs / Avg Loans (annualized, %)	0.14%	0.10%	0.13%
Allowance / Loans (%)	1.63%	1.51%	1.48%

Why results moved:

NIM decline drivers: lower interest recoveries/prepayments (~3 bps impact), higher long‑term funding costs from Nov‑14 $500M debt (~~4 bps of total funding cost move), and day count (~~$2M) .
Fee inflection from insurance commissions (Ahmann & Martin closed in 1Q) and stronger mortgage banking .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Average Loan Growth	FY 2015	High single‑digit growth	High single‑digit growth	Maintained
Net Interest Margin	FY 2015	Modest compression from 1Q base	Modest compression from 1Q base	Maintained
Noninterest Income	FY 2015	Up mid‑to‑upper single digits YoY	Up mid‑to‑upper single digits YoY	Maintained
Noninterest Expense	FY 2015	Up low single digits YoY	Up low single digits YoY	Maintained
Provision for Credit Losses	FY 2015	To increase with loan growth/credit indicators	To increase with loan growth/credit indicators	Maintained
Capital Priorities	FY 2015	Follow stated capital deployment priorities	Follow stated capital deployment priorities	Maintained
Dividend	Quarterly	$0.10	$0.10	Maintained
Q1 2015 NIM vs Guide	1Q 2015	~2.95% guided (Jan)	2.89% actual	Below guide by ~6 bps

Earnings Call Themes & Trends

Topic	Previous Mentions (Q‑2: Q3’14; Q‑1: Q4’14)	Current Period (Q1’15)	Trend
Margin compression	Q3’14: NIM 3.06% (‑2 bps QoQ) as asset yields fell while funding costs flat . Q4’14: NIM 3.04%; long‑term funding costs +5 bps NIM headwind from $500M debt .	NIM 2.89% (‑15 bps QoQ) on lower recoveries, higher long‑term funding cost, day count .	Worsened near‑term; full‑year modest compression reiterated .
Loan growth	Q3’14 avg loans +3% QoQ to $17.1B . Q4’14 continued growth .	Avg loans $17.8B (+2.5% QoQ; +10.2% YoY) .	Positive trajectory maintained.
Noninterest income mix	Q3’14 mortgage banking improved; insurance impacted by reserve . Q4’14 mortgage banking down QoQ; insurance +$3M QoQ .	Noninterest income up 15% QoQ; insurance commissions +$9M QoQ; mortgage banking +$4.5M QoQ .	Improving, with insurance scale from Ahmann & Martin .
Credit quality	Q3’14 PPLs fell 24% QoQ; nonaccruals up slightly . Q4’14 nonaccruals down 4% QoQ; coverage ~150% .	NCOs/avg loans 0.13%; nonaccruals $174.3M (‑1.7% QoQ); allowance/loans 1.48%; coverage 152% .	Stable/benign; watchlist up .
Oil & gas exposure	O&G business focused upstream; stress test adequate reserves (12/31/14 disclosure) .	E&P balances ~$780M (~4% of loans); reserves $27M (3.46% EOP loans); borrowers largely hedged into 2016; redeterminations slated Q2 .	Monitored; reserves increased; pricing risk mitigated by hedges .
Capital deployment	Q3’14: 5M shares repurchased . Q4’14: $100M ASR; Tier 1 CET1 9.74% .	$30M open‑market buybacks; Tier 1 CET1 9.39% .	Ongoing buybacks; ratios remain strong.

Management Commentary

“Continued loan growth, a strong boost in insurance revenues, and a benign credit environment all helped drive this quarter’s performance. We remain focused on our strategies to enhance efficiency and on opportunities for disciplined capital deployment.” — Philip B. Flynn, President & CEO .
2015 outlook: high single‑digit average loan growth; modest NIM compression from 1Q base; noninterest income up mid‑to‑upper single digits; expenses up low single digits; provision to rise with growth/credit indicators .
Oil & gas: exclusively upstream E&P; loans collateralized by reserves; portfolio largely hedged into 2016; reserves increased; redeterminations largely in Q2 .

Q&A Highlights

Note: The internal transcript retrieval encountered a database error; we relied on the company’s 1Q15 slide deck and press release for themes commonly addressed in Q&A. This may omit specific Q&A nuances.

Margin drivers: Management highlighted three discrete 1Q NIM headwinds — lower recoveries/prepayments (~~$2M), higher long‑term funding costs from Nov‑14 debt (+$2M), and day‑count (~~$2M) — framing margin pressure as partially transient .
Oil & gas risk: Portfolio focused on syndicated, reserve‑based E&P lending; borrowers hedged; reserves increased to 3.46% of EOP O&G loans; borrowing base redeterminations expected in Q2 .
Noninterest income trajectory: Insurance revenue uplift from the Ahmann & Martin acquisition and stronger mortgage banking provided diversification to offset margin pressure .
Full‑year 2015 stance: Guidance maintained on growth, margin cadence, expense discipline, and capital deployment priorities .

Estimates Context

S&P Global consensus estimates for Q1 2015 (EPS and revenue) were unavailable due to a data access limit, so we cannot reliably assess beat/miss versus Street for this quarter. Values retrieved from S&P Global were unavailable due to request limits; therefore, no estimate comparison is provided.*

Key Takeaways for Investors

Near‑term: Expect continued margin pressure from competitive loan yields and funding mix; however, fee momentum (insurance/mortgage) can buffer revenue, and benign credit reduces downside volatility .
Watch O&G redeterminations in Q2: Reserve build and borrower hedges suggest manageable risk; monitor potential base‑driven paydowns and any migration into nonaccruals .
Capital deployment continues: Ongoing buybacks ($30M in 1Q) and steady dividend ($0.10) with CET1 9.39% provide support for TSR while maintaining flexibility for growth .
Loan growth intact: Commercial and residential mortgage growth sustained; deposit growth remains healthy, improving loan‑deposit ratio headroom for 2015 .
Guidance steady: Company reaffirmed FY15 trajectory (growth, NIM path, expenses, provision), reducing outlook uncertainty despite 1Q NIM shortfall vs the January guide .
Efficiency stable: FTE efficiency ratio ~68.9% underscores consistent cost discipline amid investment in technology and integration of Ahmann & Martin .

Additional Documents Reviewed

Q1 2015 8‑K earnings press release with financial tables and deck references .
Q1 2015 earnings presentation (Ex. 99.2): O&G update, 2015 outlook, NIM/fee/expense trends .
Prior quarters for trend analysis: Q4 2014 8‑K and presentation ; Q3 2014 8‑K and presentation .
External link to Q1 2015 earnings call transcript (for reference; not parsed here due to tool limits): https://de.marketscreener.com/kurs/aktie/ASSOCIATED-BANC-CORP-19343801/news/Transcript-Associated-Banc-Corp-Q1-2015-Earnings-Call-Apr-16-2015-38411840/
Company IR press release PDF (for corroboration): https://s206.q4cdn.com/162757971/files/doc_financials/2015/q1/Associated-Reports-First-Quarter-Earnings-of-0-30-per-share-20150416-1605.pdf

Notes:

Total revenue is a company‑defined non‑GAAP measure; see definitions in the release .
Regulatory capital ratios reflect Basel III starting 1/1/2015 (prior periods under Basel I) .

ASSOCIATED BANC-CORP (ASB)·Q1 2015 Earnings Summary