On February 14, 2020, the Corporation completed its acquisition of First Staunton. The purchase price was based on an assumed 4% deposit premium at announcement. The conversion of the branches was completed simultaneously with the close of the transaction, expanding the Bank's presence into 9 new Metro-East St. Louis communities. As a result of the acquisition and other consolidations, a net of 7 branch locations were added.

The First Staunton acquisition constituted a business combination. The acquisition has been accounted for using the acquisition method of accounting and, accordingly, assets acquired, liabilities assumed, and consideration exchanged were recorded at estimated fair value on the acquisition date. The determination of estimated fair values required management to make certain estimates that are subjective in nature and may require adjustments upon the availability of new information regarding facts and circumstances which existed at the date of acquisition (i.e., appraisals) for up to a year following the acquisition. The Corporation continues to review information relating to events or circumstances existing at the acquisition date. Management anticipates that this review could result in adjustments to the acquisition date valuation amounts presented herein but does not anticipate that these adjustments will be material.

The Corporation recorded approximately $15 million in goodwill related to the First Staunton acquisition during the first quarter of 2020, however the Corporation subsequently reduced goodwill by $2 million during the second quarter of 2020. Upon review of information relating to events and circumstances existing at the acquisition date, and in accordance with applicable accounting guidance, the Corporation remeasured select previously reported fair value amounts. The adjustment to goodwill was driven by an update that increased the fair value of MSRs acquired. Goodwill created by the acquisition is not tax deductible. See Note 8 for additional information on goodwill, as well as the carrying amount and amortization of CDI assets related to the First Staunton acquisition.


($ in Thousands)	Purchase Accounting Adjustments		February 14, 2020
Assets
Cash and cash equivalents	$	—	$	44,782
Investment securities available for sale	(24)		98,743
Federal Home Loan Bank and Federal Reserve Bank stocks, at cost	—		781
Loans	(4,808)		369,741
Premises and equipment, net	(3,005)		4,865
Bank owned life insurance	9		6,770
Goodwill			13,414
Core deposit intangibles (included in other intangible assets, net on the face of the consolidated balance sheets)	7,379		7,379
OREO (included in other assets on the face of the consolidated balance sheets)	670		762
Other assets	4,193		9,090
Total assets			$	556,328
Liabilities
Deposits	$	1,285	$	438,684
Other borrowings	61		34,613
Accrued expenses and other liabilities	179		6,730
Total liabilities			$	480,028
Total consideration paid			$	76,300

The Corporation has purchased loans with the First Staunton acquisition, for which there was, at acquisition, evidence of more than insignificant deterioration of credit quality since origination. The carrying amount of those loans is as follows:


($ in Thousands)	February 14, 2020
Purchase price of loans at acquisition	$	77,221
Allowance for credit losses at acquisition	3,504
Non-credit discount/(premium) at acquisition	(951)
Par value of acquired loans at acquisition	$	79,774

On June 14, 2019, the Corporation completed its acquisition of the Wisconsin branches of Huntington. The Corporation paid a 4% premium on acquired deposits. The conversion of the branches happened simultaneously with the close of the transaction and the acquisition expanded the Bank's presence into 13 new Wisconsin communities. As a result of the acquisition and other consolidations, a net of 14 branch locations were added.

The Huntington branch acquisition constituted a business combination. The acquisition has been accounted for using the acquisition method of accounting and, accordingly, assets acquired, liabilities assumed, and consideration exchanged were recorded at estimated fair value on the acquisition date. The determination of estimated fair values required management to make certain estimates that are subjective in nature and may require adjustments upon the availability of new information regarding facts and circumstances which existed at the date of acquisition (i.e., appraisals) for up to a year following the acquisition.

The Corporation recorded approximately $7 million in goodwill related to the Huntington branch acquisition during the second quarter of 2019 and approximately $210,000 during the third quarter of 2019. Upon review of information relating to events and circumstances existing at the acquisition date, and in accordance with applicable accounting guidance, the Corporation remeasured select previously reported fair value amounts. The adjustment to goodwill was driven by an update that decreased the fair value of furniture acquired. Goodwill created by the acquisition is tax deductible. See Note 8 for additional information on goodwill.


($ in Thousands)	Purchase Accounting Adjustments		June 14, 2019
Assets
Cash and cash equivalents	$	—	$	551,250


Loans	(1,552)		116,346
Premises and equipment, net	4,800		22,430

Goodwill			7,286
Core deposit intangibles (included in other intangible assets, net on the face of the consolidated balance sheets)	22,630		22,630
OREO (included in other assets on the face of the consolidated balance sheets)	(2,561)		5,263
Other assets	—		559
Total assets			$	725,764
Liabilities
Deposits	$	156	$	725,173

Other liabilities	70		590
Total liabilities			$	725,764

Loans: Fair values for loans were based on a discounted cash flow methodology that considered factors including the type of loan and related collateral, classification status, fixed or variable interest rate, term of loan, amortization status and current discount rates. For the non-credit (interest and liquidity) premium, loans were grouped together according to similar characteristics when applying various valuation techniques. For the credit discount, loans were also grouped based on whether they had more than insignificant deterioration in credit since origination.

CDIs: This intangible asset represents the value of the relationships with deposit customers. The fair value was estimated based on a discounted cash flow methodology that gave appropriate consideration to expected customer attrition rates, net maintenance cost of the deposit base, alternative cost of funds, and the interest costs associated with customer deposits. The CDIs will be amortized on a straight-line basis over 10 years.

Time Deposits: The fair value for time deposits are estimated using a discounted cash flow calculation that applies interest rates currently being offered to the contractual interest rates on such time deposits.

FHLB Borrowings: The fair value of FHLB advances are estimated based on quoted market prices for the instrument if available, or for similar instruments if not available, or by using discounted cash flow analyses, based on current incremental borrowing rates for similar types of instruments.

On June 30, 2020, the Corporation announced that it had closed the previously announced sale of ABRC to USI. Under the terms of the agreement, the purchase price was $266 million in cash. Associated recorded a second quarter 2020 pre-tax book gain of approximately $163 million in conjunction with the sale.

During the third quarter of 2020, the Corporation announced branch sale transactions. With the continued migration to mobile and online channels along with declining foot traffic, the Corporation has a reduced need of branches in our distribution strategy. As a result of the pending sales, the Corporation transferred the related branch real estate to OREO and wrote the value down to fair value.

On September 11, 2020, Associated Bank entered into a definitive agreement with Morton Community Bank to sell 5 branches in Peoria, IL. Under the terms of the transaction, Associated Bank expects to sell approximately $208 million in total deposits

and no loans. Associated Bank will be receiving a 4% purchase premium on deposits transferred. The sale is expected to close in December 2020. With the sale of these branches, Associated Bank will exit the Peoria Community Market.

On September 12, 2020, Associated Bank entered into an agreement with Royal Bank to sell 2 branches in southwest Wisconsin. Under the terms of the transaction, Associated Bank expects to sell approximately $56 million in total deposits and no loans. Associated Bank will be receiving a 4% purchase premium on deposits transferred in the Prairie du Chien and Richland Center branches. This sale is expected to close in December 2020.