Associated Banc-Corp (ASB): PESTLE Analysis [Nov-2025 Updated]

You need to know where Associated Banc-Corp (ASB) stands, and the truth is, the regional banking sector in late 2025 is a high-wire act. The core challenge for ASB is clear: they must successfully navigate a wave of new capital rules while aggressively pivoting to digital deposit growth. Why? Because the Net Interest Margin (NIM)-the bank's core profit engine-is under intense pressure from sustained high interest rates. Let's break down the Political, Economic, Social, Technological, Legal, and Environmental factors driving their strategy right now.

Political Factors: The Regulatory Headwind

The biggest political factor right now isn't an election; it's the Basel III Endgame proposals. These are set to significantly increase capital requirements, potentially hitting larger regional banks like Associated Banc-Corp with a capital hike of around 20%. This isn't just a cost; it limits their ability to return capital or fund aggressive loan growth. It's a major headwind.

Plus, the political scrutiny on mid-sized banks is intense following the 2023 failures. This increased oversight is slowing down potential mergers and acquisitions (M&A) in the sector, defintely impacting strategic options. Also, the Consumer Financial Protection Bureau (CFPB) is laser-focused on eliminating overdraft and other so-called junk fees, which directly pressures ASB's non-interest income stream. You can't ignore state-level pushes for community reinvestment, either; that dictates where and how they lend locally.

The regulatory environment is the new capital constraint.

Economic Factors: NIM Under Siege

The Federal Reserve's sustained high-rate environment, with the Fed Funds Rate hovering near 5.25%, is the single largest economic variable. This keeps the cost of funds-what Associated Banc-Corp pays for deposits-elevated. Here's the quick math: when the cost of deposits rises faster than the yield on assets, your Net Interest Margin (NIM) shrinks.

We're forecasting ASB's NIM to compress by 10 to 15 basis points through 2025 because of this intense competition for deposits. Still, it's not all bad news. While Commercial Real Estate (CRE) portfolio stress, especially in office space, forces higher loan loss provisions, the strong regional employment across ASB's Midwest footprint is a massive stabilizer for consumer loan performance. What this estimate hides is the potential for a sudden CRE correction, which would force much higher provisions.

Deposit costs are the new battleground.

Sociological Factors: The Digital Imperative

Customer expectations have fundamentally changed; they demand a seamless, mobile-first banking experience and instant payment options. Associated Banc-Corp isn't just competing with other banks; they're competing with the user experience of Apple and Amazon. This sociological shift means that if your app isn't perfect, you lose the customer.

Also, the generational wealth transfer is accelerating, driving significant demand for sophisticated digital wealth management tools. ASB needs to capture these younger, tech-savvy clients. Plus, the growing focus on Environmental, Social, and Governance (ESG) metrics means investors and the public are watching their lending and operational practices closely. This all fuels the intense talent wars for skilled technology and cybersecurity professionals-you need the right people to build the right tools.

The customer experience is now a technology product.

Technological Factors: The AI Pivot

Technology is no longer a support function; it's a core driver of efficiency and risk mitigation. Associated Banc-Corp's major investment priority is Artificial Intelligence (AI) for two key areas: enhanced fraud detection and personalized customer service. Using AI to spot anomalies faster saves millions in fraud losses annually.

To be fair, core system modernization is a massive, expensive undertaking, but it's critical for reducing operating expenses and improving data analytics for better credit decisions. Plus, cybersecurity spending is up an estimated 15% year-over-year to combat increasingly sophisticated attacks. They are also moving fast on cloud-based infrastructure to improve scalability and reduce transaction latency. This is all about speed and security.

AI is moving from a buzzword to a balance sheet protector.

Legal Factors: Compliance Overload

The legal landscape is dominated by the finalization and implementation of the Basel III Endgame rules, which will consume compliance resources through 2026. This isn't optional; it dictates the structure of their balance sheet. Also, stricter data privacy and consumer protection laws, like those emerging in California and other states, require Associated Banc-Corp to build entirely new compliance frameworks. This is a costly, non-revenue generating expense.

The Commercial Real Estate (CRE) stress also increases litigation risk from distressed loan workouts, especially in the office sector where valuations are falling fast. And don't forget the new SEC climate disclosure rules, which will soon mandate detailed, auditable reporting on climate-related risks. Legal compliance is now a capital allocation decision.

Every new rule is a direct hit to the operating budget.

Environmental Factors: The Green Opportunity

Environmental factors are shifting from a public relations concern to a lending opportunity. Shareholder and activist pressure is forcing Associated Banc-Corp to set and meet measurable, time-bound climate-related financing targets. This is a risk, but it's also a clear opportunity.

The growing market for green lending products-financing for renewable energy projects or energy-efficient building upgrades-is a new revenue stream. Operationally, they are focusing on reducing Scope 1 and 2 emissions from their bank branches and data centers. Still, the most impactful change is the development of mandatory climate risk stress testing by regulators, which will directly impact ASB's capital planning and loan portfolio construction.

Climate risk is the next credit risk.

Next Steps

The PESTLE analysis shows a clear need for immediate action.

• Strategy: Finalize the capital plan to accommodate the 20% potential Basel III increase.
• Technology: Allocate the 15% YoY increase in cybersecurity budget to AI-driven fraud detection first.
• Lending: Stress-test the CRE office portfolio for a 25% valuation drop and adjust loan loss provisions immediately.

Owner: Risk Management and Treasury: Draft the 2026 capital and compliance roadmap by the end of the month.

Associated Banc-Corp (ASB) - PESTLE Analysis: Political factors

You are navigating a political environment in late 2025 that is simultaneously tightening capital rules and offering unexpected regulatory relief. The direct takeaway is this: while the shadow of higher capital requirements remains, the immediate and defintely damaging threat to your fee income was just neutralized by a major political intervention. This gives Associated Banc-Corp (ASB) a crucial, near-term advantage over competitors who may have already priced in the regulatory hit.

Basel III Endgame proposals will increase capital requirements, potentially by 20% for larger regional banks.

The Basel III Endgame (B3E) is the biggest political risk on the horizon. While the proposal's most stringent rules target banks with $100 billion or more in assets, the overall regulatory mood is one of increased capital rigor, and the rules extend new requirements to regional banks like Associated Banc-Corp, which has total assets of $44 billion as of Q2 2025. The original proposal aimed for an aggregate capital increase of up to 20% for the largest, most complex banks, and while ASB won't face that full brunt, the cost of compliance and the need for higher capital buffers will still impact your return on equity (ROE).

Here's the quick math: Associated Banc-Corp reported a Common Equity Tier 1 (CET1) ratio of 10.20% in Q2 2025, which is already strong and within your target range of 10% to 10.5%. But if new rules force a shift in risk-weighted asset (RWA) calculation-even if the final rule is delayed past the proposed July 2025 start date and reproposed later in 2025-you must maintain a higher buffer. This means less capital available for share buybacks or dividend increases, effectively acting as a political tax on growth.

Increased political scrutiny on mid-sized banks following 2023 failures, impacting M&A defintely.

The failures of Silicon Valley Bank and others in 2023 created a lasting political and regulatory reaction, placing mid-sized banks under a much brighter spotlight. The political consensus shifted toward stricter oversight for banks in the $100 billion to $250 billion asset range, but the scrutiny trickles down to a bank of Associated Banc-Corp's size. This heightened political environment impacts M&A activity.

Any merger or acquisition (M&A) deal involving a regional bank now faces a much longer, more rigorous review from the Department of Justice (DOJ), the Federal Reserve, and the FDIC. The political temperature is simply too high for regulators to approve large, complex deals quickly. This means Associated Banc-Corp's strategic flexibility to grow via acquisition is constrained, forcing you to rely more heavily on organic loan growth, which management projects to be 5% to 6% for total loans in 2025.

Consumer Financial Protection Bureau (CFPB) focus on overdraft and junk fees, pressuring non-interest income.

This is where the political landscape just shifted in your favor. The Consumer Financial Protection Bureau (CFPB) finalized a rule to cap overdraft fees at $5 or the bank's breakeven cost, down from an industry average of around $27.08 per overdraft. This rule was set to take effect on October 1, 2025, and because Associated Banc-Corp's assets exceed the $10 billion threshold, it would have directly impacted your non-interest income.

However, Congress, using the Congressional Review Act (CRA), overturned the CFPB's overdraft rule in September 2025, a major political victory for the banking industry. This action removes the immediate threat to a significant revenue stream. Your Q2 2025 noninterest income was $67 million, and while management only guided for a modest 1% to 2% growth in 2025, the overturning of the rule eliminates the risk of a massive, politically-mandated revenue decline from this fee category.

This political action is a huge relief, but the underlying pressure from the CFPB on all non-interest income (junk fees) remains a long-term risk.

State-level political push for community reinvestment and local lending transparency.

Beyond federal politics, state and local political forces are increasingly focused on community reinvestment. Given Associated Banc-Corp's strong presence in Wisconsin, Illinois, and Minnesota, you face political pressure to demonstrate clear, measurable local impact.

This push often translates into stricter state-level Community Reinvestment Act (CRA) exams and demands for greater transparency in lending to low- and moderate-income (LMI) communities. Failure to meet these unwritten political expectations can lead to public relations issues and regulatory delays on branch openings or other state-level actions. This is less about a fine and more about social license to operate.

• Increase local lending reporting.
• Commit to specific LMI loan targets.
• Enhance transparency in fee structures.

Finance: Model the capital impact of a 10% RWA increase under a moderate B3E scenario by the end of Q1 2026.

Associated Banc-Corp (ASB) - PESTLE Analysis: Economic factors

Federal Reserve's Interest Rate Environment and Cost of Funds

The Federal Reserve's monetary policy is a primary economic driver for Associated Banc-Corp, and while rates have eased from their peak, the cost of funds remains elevated. As of October 2025, the Federal Funds Target Range stands at 3.75%-4.00%, a significant reduction from the high-rate cycle but still far above historical lows. This environment forces banks to pay more for deposits, which is the core challenge right now.

Associated Banc-Corp has navigated this well, but the pressure is real. They've had to compete aggressively for core customer deposits, which is why their deposit growth guidance for the full year 2025 is a conservative 1% to 3%. The bank's success hinges on managing this cost-of-funds dynamic better than its peers.

Net Interest Margin (NIM) Stability Amidst Competition

Despite the intense competition for deposits, Associated Banc-Corp has managed to keep its Net Interest Margin (NIM) stable at 3.04% in both Q2 and Q3 2025. This stability is a testament to their strategic shift: they sold off lower-yielding assets like mortgages and securities in late 2024/early 2025 and pivoted hard into higher-yielding Commercial & Industrial (C&I) loans.

The market risk of NIM compression-meaning the bank earns less profit on its loans versus what it pays on its deposits-is always present in a falling-rate environment. However, the bank is actually forecasting total Net Interest Income (NII) growth of 14% to 15% for the full fiscal year 2025, a strong indicator that their balance sheet repositioning strategy is paying off. That's a powerful offset to any deposit cost pressure.

Commercial Real Estate (CRE) Portfolio Stress and Loan Loss Provisions

The stress in the national Commercial Real Estate (CRE) market, particularly in the office sector, is a key risk factor. For Associated Banc-Corp, the total CRE portfolio stood at approximately $7.3 billion in Q2 2025. The most scrutinized segment, office loans, accounted for $917 million as of late 2024, which is about 13% of the total CRE book.

While the overall credit quality remains solid-total nonaccrual loans decreased to $106 million in Q3 2025-the bank must maintain a robust buffer. The provision for credit losses was $18 million in Q2 2025, and the Allowance for Credit Losses on Loans (ACLL) remains a conservative 1.35% of total loans. This is the cost of being a realist in today's CRE market.

Here's the quick math on the CRE exposure:

Strong Regional Employment Supports Consumer Performance

A major tailwind for Associated Banc-Corp is the relative strength of its Midwest footprint, which includes Wisconsin, Illinois, and Minnesota. The low unemployment rates in the region provide a stable backdrop for consumer loan performance, offsetting some of the CRE concerns.

The employment data for the region in mid-2025 is defintely a bright spot:

• Wisconsin's unemployment rate is notably low at approximately 3.0%.
• Minnesota's rate is also strong at 3.6% (August 2025).
• Illinois's rate, while higher, is still a manageable 4.4% (August 2025).

These figures, all below the national average of 4.3% in August 2025, mean lower loan delinquencies and stable household income for the bank's consumer base. This robust regional labor market is a key factor enabling the bank's overall solid credit quality, evidenced by the decrease in total nonaccrual loans year-over-year.

Associated Banc-Corp (ASB) - PESTLE Analysis: Social factors

Growing customer demand for seamless, mobile-first banking experiences and instant payment options.

You know the drill: if your banking app isn't fast, your customers will find one that is. The shift to mobile-first is no longer a luxury; it's the baseline for customer retention. In 2025, approximately 72% of U.S. adults are using mobile banking apps, and the total transaction value of digital payments in the US is projected to hit a staggering $3.15 trillion.

Associated Banc-Corp is responding by making significant digital investments. They launched a new digital banking platform in late 2022, and by 2025, this work has contributed to a crucial 'double-digit percentage' increase in customer acquisition and a corresponding double-digit percentage decrease in customer attrition. The bank's Associated Bank Digital platform includes tools like Money Monitor for budgeting and offers features like real-time alerts and mobile check deposit. It's a clear signal that digital customer satisfaction is driving core growth.

You simply have to deliver a flawless app experience now.

Increased investor and public focus on Environmental, Social, and Governance (ESG) metrics in lending and operations.

ESG is fundamentally changing how capital is allocated, and for a regional bank like Associated Banc-Corp, the 'S' factor-Social-is heavily scrutinized, especially in community lending. The bank continues to hold the highest possible Community Reinvestment Act (CRA) rating of Outstanding from the OCC.

This focus translates directly into quantifiable social impact and risk mitigation. In 2024 (as reported in the 2025 Sustainability Report), Associated Banc-Corp provided approximately $478 million in residential loans specifically to support Low-to-Moderate Income (LMI) and minority homeownership. Additionally, the bank has approximately $1.7 billion in outstanding credit commitments for renewable energy projects across North America, which addresses both the 'E' and 'S' pillars by supporting sustainable infrastructure.

The public expects banks to be good corporate citizens, and investors, especially younger ones, are watching: 82% of investors aged 21 to 43 consider a company's ESG record when making investment decisions, compared to only 35% of those 44 and older.

The bank's commitment to its workforce is also a key social metric:

• Colleagues logged over 60,600 hours of volunteer time in 2024.
• Nearly 835 internal promotions or lateral moves occurred in 2024, representing 21% of all colleagues advancing their careers.

Generational wealth transfer is driving demand for sophisticated digital wealth management tools.

The 'Great Wealth Transfer' is a massive risk and opportunity. An estimated $84 trillion is expected to pass from Baby Boomers to younger generations by 2045, and a critical portion-approximately $35.8 trillion-is expected to come from high-net-worth households by the end of 2025.

The problem for traditional firms is that 81% to 87% of younger High-Net-Worth Individuals (HNWIs) plan to switch wealth management firms after inheriting assets if the digital experience is lacking. This generation demands digital-first, holistic views of their entire financial picture.

Associated Banc-Corp is actively positioning its wealth management segment, which generated $25 million in revenue in Q3 2025. They offer a specific digital tool, Associated Bank Wealth Access, which uses 'Intelligent Aggregation' technology. This platform links to over 20,000 different financial institutions, giving clients a single, consolidated personal balance sheet view. This is how you retain the next-generation client: by blending advisor expertise with seamless, comprehensive digital access.

Talent wars for skilled technology and cybersecurity professionals in the financial sector.

The financial sector's reliance on technology means the battle for tech talent is fierce. The social factor here is the cost and availability of the specialized human capital needed to run a 'digitally enabled' bank. Associated Banc-Corp is focused on hiring for high-level technology and risk roles, such as 'Business Line Risk Manager - Bank Operations & Technology,' which require advanced certifications like CISSP or CRISC.

This competition for talent is visible in the bank's expense structure. Associated Banc-Corp reported noninterest expenses of $216 million in Q3 2025, with management noting that the increase was primarily driven by performance-based compensation-a direct result of needing to pay market rates to attract and retain top performers in technology, commercial banking, and other high-value areas.

Here's the quick math on talent: you pay more for a cybersecurity expert today to avoid a nine-figure data breach tomorrow.

Associated Banc-Corp (ASB) - PESTLE Analysis: Technological factors

You are right to focus on technology; it's the single biggest driver of efficiency and risk in banking right now. Associated Banc-Corp's (ASB) strategy for 2025 is clearly a digital-first approach, moving beyond simple online banking to integrating Artificial Intelligence (AI) for both growth and defense. The goal is simple: use smart tech to cut costs and deepen customer relationships.

Here's the quick math on the operational side: Associated Banc-Corp reported a noninterest expense of $216 million in the third quarter of 2025, and management expects total noninterest expense to grow by 5% to 6% for the full year 2025 (excluding non-recurring items). This expense growth is heavily weighted toward strategic technology and personnel investments that drive future revenue. Smart investment is key to improving the efficiency ratio, which stood at 54.8% in Q3 2025.

Major investment in Artificial Intelligence (AI) for fraud detection and personalized customer service is a priority.

Associated Banc-Corp is actively moving AI (Artificial Intelligence) from a pilot program to a core strategic tool. The bank has established an AI Council and implemented executive training programs to ensure top-down adoption, which is a smart move for managing risk and strategy.

The immediate impact is visible in two areas: customer acquisition and loan pipeline growth. The bank's digital-first strategy, which includes AI-powered tools like AI chatbots, helped reverse customer attrition and attract younger demographics. More importantly, the use of AI and related technologies is credited with driving a 36% growth in the commercial loan pipeline.

On the defense side, ASB is following the industry trend of using AI for fraud detection. Across the U.S. banking sector, over half of executives have an active pilot project using AI for financial forecasting or preventing fraud, recognizing that AI is now the most effective countermeasure against sophisticated cyberattacks.

Core system modernization is critical to reduce operating expenses and improve data analytics.

The bank is engaged in a progressive modernization strategy, which means upgrading systems piece by piece rather than a risky, expensive full core replacement. This 'people-led, digitally enabled' strategic plan has already delivered measurable results.

Since the launch of a new digital banking platform in September 2022, Associated Banc-Corp has executed 11 major customer-facing upgrades. This focus on the digital experience has been highly effective, contributing to:

• Double-digit percentage increases in customer acquisition.
• Double-digit percentage decreases in customer attrition.
• Multi-year highs in digital banking customer satisfaction.

This incremental modernization improves data analytics by establishing an API-driven (Application Programming Interface) ecosystem, allowing the bank to launch new features faster and automate back-office operations, which is the real key to reducing long-term operating expenses.

Cybersecurity spending is up, with an estimated 15% year-over-year increase to combat sophisticated attacks.

Cybersecurity is a non-negotiable cost of doing business in 2025, especially with the rise of Generative AI (Gen AI) being used by threat actors. While Associated Banc-Corp's total noninterest expense growth is projected at 5% to 6% for 2025, the technology component, particularly cybersecurity, is seeing a much sharper increase.

Based on industry benchmarks for regional banks of Associated Banc-Corp's size, the estimated year-over-year increase in dedicated cybersecurity budget is around 15%. This aggressive spending is necessary to combat the increasing sophistication of attacks. A survey of US bank executives in late 2024 confirmed that 86% said cybersecurity was their biggest area of budget increase for 2025.

This spending is directed at hardening defenses against ransomware and sophisticated phishing campaigns, and includes investment in new tools that use AI to analyze incoming threats in depth, a crucial layer of defense.

Adoption of cloud-based infrastructure to improve scalability and reduce latency in transaction processing.

The move to a cloud-based infrastructure is a fundamental enabler of Associated Banc-Corp's 'digital-first' and core modernization strategy. While the bank does not publicly disclose the exact percentage of its data and applications in the cloud, the industry trend for 2025 is clear: banks are accelerating cloud adoption to gain scalability, flexibility, and cost efficiency.

Cloud adoption is critical for several operational improvements:

• Scalability: Handling peak transaction volumes without system crashes, especially for mobile and digital channels.
• Reduced Latency: Processing real-time payments and transactions faster for a better customer experience.
• Security: Implementing modern security tools like Cloud Access Security Brokers (CASB) to enforce data policies for cloud-based applications.

This shift allows Associated Banc-Corp to launch new products in weeks, not quarters, which is the only way to keep pace with non-bank FinTech competitors.

Associated Banc-Corp (ASB) - PESTLE Analysis: Legal factors

Finalization and implementation of the Basel III Endgame rules will dominate compliance efforts through 2026.

You need to keep a close eye on the Basel III Endgame rules, even though Associated Banc-Corp is likely to avoid the most capital-intensive aspects. The current proposal targets banks with $100 billion or more in total consolidated assets, and Associated Banc-Corp's total assets stood at approximately $44 billion as of September 30, 2025. This size difference means the bank will probably be exempt from the full, stringent overhaul of risk-weighted assets (RWA) calculations that the largest banks face.

Still, there is one key part that will absolutely affect your balance sheet: the requirement to recognize unrealized gains and losses on available-for-sale securities in regulatory capital. This change forces banks to immediately reflect market fluctuations in their capital ratios, adding volatility. It's a defintely a new layer of complexity for capital planning, even for a bank of this size. The original implementation date of July 2025 is now highly unlikely due to regulatory delays and a planned re-proposal, pushing the full compliance focus well into 2026 and beyond.

Stricter data privacy and consumer protection laws, like those in California and other states, require new compliance frameworks.

The biggest legal headache right now isn't a single federal law; it's the chaotic patchwork of state-level data privacy regulations. By the end of 2025, 20 states are expected to have comprehensive privacy laws in effect, creating a compliance minefield for a multi-state operator like Associated Banc-Corp.

New laws in states like Delaware (effective January 1, 2025), Minnesota (effective July 31, 2025), and Maryland (effective October 1, 2025) each come with unique requirements for consumer rights, consent, and data protection assessments. The risk is material: the average cost of non-compliance for businesses is estimated at $14.82 million, which is nearly three times the average cost of proactive compliance.

Here's the quick math on the compliance challenge:

• Delaware Personal Data Privacy Act (DPDPA): Effective January 1, 2025.
• Minnesota Consumer Data Privacy Act (MCDPA): Effective July 31, 2025, with a data-level exemption for the Gramm-Leach-Bliley Act (GLBA), not a full entity-level one.
• Maryland Online Data Privacy Act (MODPA): Effective October 1, 2025.

You need to move fast on standardizing your universal opt-out mechanisms across all digital platforms. It's a massive operational lift.

Increased litigation risk from distressed commercial loan workouts, especially in the office sector.

The commercial real estate (CRE) market, particularly the office sector, is a major source of litigation risk in 2025. When loans go into default, the workout process-foreclosure, restructuring, or bankruptcy-invariably leads to legal action. Associated Banc-Corp's total period-end loans were $31.0 billion as of Q3 2025, with Commercial Real Estate lending totaling $7.3 billion.

Management is already anticipating elevated CRE payoff activity in the coming quarters, which signals a period of heightened legal and credit review. The direct exposure to the most troubled sub-sector, CRE Office Loans, is manageable but not insignificant. It represents 2.68% of the total loan portfolio, which is approximately $830.8 million in exposure.

What this estimate hides is the concentration of risk in the near term. The CRE Office portfolio has $155 million in remaining maturities set for 2025, and those will be the immediate drivers of potential litigation.

New SEC climate disclosure rules will mandate detailed reporting on climate-related risks.

The new Securities and Exchange Commission (SEC) climate disclosure rules, finalized in March 2024, are currently in legal limbo, which is a key legal risk for your compliance planning. The rules were subject to a voluntary stay and, as of September 2025, the litigation was held in abeyance by the Eighth Circuit. The SEC even voted to withdraw its defense of the rules in March 2025, though an intervening coalition is trying to uphold them.

Despite the stay, Associated Banc-Corp, as a large-accelerated filer, was originally slated to begin providing disclosures in their annual report for the fiscal year ending December 31, 2025. You still need to prepare for the core requirements, which include disclosing the material impacts of climate-related risks on strategy and financial statements, governance, and oversight. The final rule did eliminate the controversial Scope 3 greenhouse gas (GHG) emissions reporting, which is a significant reduction in compliance burden.

The uncertainty means you can't stop preparing, but you can prioritize. Focus on the internal governance and risk management processes-the qualitative disclosures-because those are the most likely to survive any legal challenge.

Associated Banc-Corp (ASB) - PESTLE Analysis: Environmental factors

The environmental factor landscape for Associated Banc-Corp (ASB) in 2025 is defined by a push-pull dynamic: strong market opportunity in green finance countered by regulatory uncertainty and a need for greater transparency on climate-related targets.

You're seeing a clear strategic pivot toward tangible, measurable environmental action, but the market will defintely demand more forward-looking commitments to truly mitigate transition risk.

Shareholder and activist pressure to set and meet measurable, time-bound climate-related financing targets.

While Associated Banc-Corp has made progress on operational and green lending fronts, the pressure from investors and activists for formal, time-bound climate-related financing targets remains a key risk factor in 2025. Honesty, the current disclosure on targets is a weak spot.

The 2024 Sustainability Report indicates that specific targets used by the organization to manage climate-related risks and opportunities are Not currently disclosed. This lack of a formal, public goal creates an information gap for stakeholders using frameworks like the Task Force on Climate-related Financial Disclosures (TCFD), potentially impacting the bank's Environmental, Social, and Governance (ESG) rating and cost of capital.

Here's the quick map of the pressure points and the bank's current response:

• Pressure Point: Setting a Net-Zero financed emissions target (Scope 3).
• Current Response: Focus on operational Scope 1 and 2 reductions and green lending volume.
• Investor Action: Increased scrutiny on climate-related risk management policies.

Growing market opportunity for green lending products, such as financing for renewable energy and energy-efficient building upgrades.

The opportunity in green lending is concrete and growing for Associated Banc-Corp, especially in the Midwest where energy transition financing is accelerating. The bank has already built a substantial portfolio in this area, which is a clear competitive advantage.

As of the end of 2024, the bank's outstanding credit commitments to develop, construct, and operate renewable energy facilities totaled approximately $1.7 billion. This commitment supports over 200 wind, solar, battery, hydroelectric, and geothermal generating facilities across North America, showcasing a strong, established presence in the high-growth renewable energy sector.

This is a smart play, as it maps to both environmental responsibility and high-quality commercial lending growth, which is a core focus for the bank, targeting 5% to 6% annual loan growth for 2025.

Operational focus on reducing Scope 1 and 2 emissions from bank branches and data centers.

Associated Banc-Corp is actively managing its direct environmental footprint (Scope 1 and 2 emissions) through energy efficiency programs across its real estate portfolio. This focus reduces operating expenses and demonstrates a commitment to core sustainability practices.

The most recent data shows an approximately 4 million kWh average reduction in annual energy consumption across the bank's real estate portfolio. This reduction is a direct result of multi-year initiatives like the LED retrofit program and the implementation of building automation systems. What this estimate hides is the ongoing capital expenditure required to maintain and expand these efficient systems in a footprint of nearly 200 banking locations.

Mandatory climate risk stress testing is being developed by regulators, impacting capital planning.

The regulatory landscape for climate risk stress testing has actually shifted in 2025, which is a key development for capital planning. While the long-term trend is toward mandatory testing, the near-term risk has been temporarily eased.

In February 2025, the Federal Reserve ended its Climate Scenario Analysis Exercise, a program that had required major US financial institutions to submit climate-related risk data. This move signals a pause or reversal in the immediate push for mandatory climate risk stress testing for banks like Associated Banc-Corp, which typically falls under the supervision of the Federal Reserve and the Office of the Comptroller of the Currency (OCC).

For now, capital planning is primarily focused on the traditional 2025 supervisory stress test scenarios, which include a severely adverse global recession but have dropped the explicit climate risk component. Still, the bank must maintain an Environmental Risk Management Policy, as the underlying physical and transition risks of climate change have not disappeared, only the immediate regulatory mandate for stress testing them has.