Associated Banc-Corp (ASB) 8-K Associated Reports Fourth Quarter and Year-End Results

NEWS RELEASE
For more information:
Investors: Joseph B. Selner, Chief Financial Officer, 920-491-7120
Media: Janet L. Ford, SVP Public Relations Director, 414-207-5070

Associated Reports Fourth Quarter and Year-End Results

• Net loss to common shareholders of $161.2 million for the year ended December 31, 2009 compared to net income of $165.2 million for the year ended December 31, 2008

• Net loss to common shareholders of $180.6 million for the fourth quarter compared to net income of $13.6 million for the fourth quarter of 2008

• Fourth quarter credit-related charges of $405.1 million, comprised of:

- Provision for loan losses of $394.8 million, with net charge offs of $233.8 million

- Increase in reserve for unfunded commitments of $10.3 million

• Decrease in the quarterly cash dividend from $0.05 to $0.01 per share     

GREEN BAY, Wis. —January 11, 2010 — Associated Banc-Corp (NASDAQ: ASBC) today reported a net loss to common shareholders of $161.2 million, or $1.26 per common share, for the year ended December 31, 2009. This compares to net income of $165.2 million, or $1.29 per common share, for the year ended December 31, 2008.

Net loss to common shareholders was $180.6 million, or $1.41 per common share, for the fourth quarter of 2009 compared to net income of $13.6 million, or $0.11 per common share, for the fourth quarter of 2008.

Commenting on the Company’s results, Philip B. Flynn, President and CEO said, “Given the persistent challenging operating conditions in the banking industry, my priority during my first several weeks as CEO of Associated was to ensure that reserves and capital are at levels we believe are appropriate to manage through the downturn and to position Associated to take advantage of opportunities as they arise. We are working diligently to respond to these conditions by aggressively identifying and addressing current challenges and the impact on our loan portfolio. The dividend reduction and the significant addition to the allowance that we have announced today are important parts of addressing these priorities. Our Board of Directors and management team are committed to creating value for Associated’s shareholders. We believe that getting out in front of our credit issues will put us on a path to accomplish this. I am confident that our strong market positions, business mix and management team will drive strong results as we emerge from the credit cycle.”

CREDIT QUALITY

In response to credit quality deterioration during the fourth quarter, the Company took additional steps late in the quarter to perform a more extensive review of criticized loans, with a particular focus on the construction and commercial real estate sectors. This review assessed loan performance, underlying project characteristics, collateral valuations, and the strength of borrower support in order to provide greater insight into existing and emerging credit issues.

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ASSOCIATED REPORTS YEAR-END RESULTS PAGE 2               

The Company recorded credit-related charges of $405.1 million in the fourth quarter of 2009, comprised of a $394.8 million provision for loan losses and a $10.3 million increase in the reserve for losses on unfunded commitments. Fourth quarter credit-related charges were up significantly from $95.4 million for the third quarter of 2009 and $65.0 million for the fourth quarter of 2008. The credit charges taken during the quarter reflect the growth in delinquencies, nonperforming loans and charge offs across the Company’s loan portfolios and the recognition of further declines in underlying collateral values. During the quarter, deterioration of the commercial real estate portfolio followed trends in the sector including elevated commercial vacancy rates, borrower bankruptcies and downward pressure on real estate values. The current macroeconomic environment continues to put pressure on other business sectors represented in our portfolio, but not to the degree seen in the commercial real estate sector.

Net charge offs for the quarter were $233.8 million ($165.2 million related to commercial real estate and construction) compared to $90.0 million for the third quarter of 2009 and $45.9 million for the fourth quarter of 2008. Total nonperforming loans were $1.122 billion ($720.8 million related to commercial real estate and construction) at December 31, 2009, compared to $885.8 million at September 30, 2009 and $340.7 million at December 31, 2008. Potential problem loans at December 31, 2009 of $1.596 billion ($989.2 million related to commercial real estate and construction) compares to $1.574 billion at September 30, 2009 and $937.8 million at December 31, 2008.

As a result of the increased loan loss provision and the decline in the balance of the Company’s loan portfolio, the allowance for loan losses rose to $573.5 million or 4.06% of total loans at December 31, 2009, compared to 2.79% at September 30, 2009 and 1.63% at December 31, 2008.

LOANS AND DEPOSITS

At December 31, 2009, the Company’s loan portfolio was $14.1 billion, down 4.3% from $14.8 billion at the end of the third quarter of 2009, and down 13.2% from $16.3 billion a year ago, as declines were experienced in all segments of the portfolio.

Total deposits were $16.7 billion at December 31, 2009, up 1.7% from $16.4 billion at September 30, 2009 and up 10.4% from $15.2 billion at December 31, 2008. Growth in both interest bearing and non-interest bearing demand and money market accounts was strong, up a combined $1.1 billion for the quarter and up $2.6 billion for the year ended December 31, 2009. The growth was offset by decreases in both brokered CD and time deposits, which were down a combined $0.8 billion for the quarter and down $1.1 billion for the year.

NET INTEREST INCOME AND NET INTEREST MARGIN

Net interest income for the fourth quarter was $178.4 million compared to $179.2 million for the third quarter of 2009 and $191.8 million for the fourth quarter of 2008. The Company’s net interest margin was 3.59% for the fourth quarter ended December 31, 2009, up 9 basis points compared to 3.50% for the third quarter of 2009 and down 29 basis points from 3.88% for the fourth quarter of 2008. The quarterly improvement in net interest margin was due to the continued decline in cost of deposits (18 basis points), reflecting the continued shift of deposit balances from higher cost time deposits to lower cost transaction accounts and higher investment portfolio yields (11 basis points) offset by lower loan yields (8 basis points). The reduction in loan yields is primarily due to the continued effect of the low interest rate environment and higher nonaccrual loan balances during the quarter.

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ASSOCIATED REPORTS YEAR-END RESULTS PAGE 3               

NON-INTEREST INCOME AND EXPENSE

Non-interest income for the fourth quarter of 2009 was $84.7 million, up $9.4 million compared to $75.3 million for the third quarter of 2009 and up $43.6 million from $41.1 million for the fourth quarter of 2008. The increase over the third quarter of 2009 was primarily due to the increase in mortgage banking income of $10.1 million discussed below. The increase over the fourth quarter of 2008 was primarily due to an increase in mortgage banking income of $10.4 million and the fact that the fourth quarter of 2008 included an other-than-temporary valuation loss on investments of $35.3 million.

Core fee-based revenue was $66.8 million for the fourth quarter of 2009 as compared to $66.5 million for the third quarter of 2009 and $67.0 million for the fourth quarter of 2008.

Mortgage loans originated for sale during the fourth quarter of 2009 were $671.3 million compared to $638.2 million for the third quarter of 2009. For the year ended December 31, 2009, mortgage loans originated for sale were a record $3.7 billion compared to $1.4 billion for 2008. Net mortgage banking income totaled $9.2 million for the fourth quarter of 2009, up $10.1 million from a third quarter 2009 net loss of $0.9 million and up $10.4 million from a $1.2 million loss in the fourth quarter of 2008. Fourth quarter 2009 mortgage banking results included a $0.7 million valuation recovery related to mortgage servicing rights, compared to a valuation charge of $4.7 million in the third quarter of 2009 and a $7.2 million valuation charge in the fourth quarter of 2008.

Total noninterest expense for the fourth quarter of 2009 was $159.0 million, up $17.9 million from $141.1 million in the third quarter of 2009, and up $10.2 million from $148.8 million in the fourth quarter of 2008. The increase over the third quarter of 2009 was primarily due to a $10.3 million increase in the reserve for unfunded commitments, increased spending for legal and professional fees, and increased foreclosure/OREO costs due to the increased levels of foreclosure and problem credits, in aggregate representing an increase of $5.2 million over similar expenses in the third quarter of 2009. The efficiency ratio for 2009 was 55.73%, compared to 52.41% for 2008.

CASH DIVIDEND

At its January 8, 2010 meeting, the Board of Directors approved a quarterly cash dividend of $0.01 per common share. The quarterly cash dividend will be paid on February 17, 2010 to shareholders of record on February 8, 2010.

ABOUT ASSOCIATED BANC-CORP

Associated Banc-Corp, headquartered in Green Bay, Wis., is a diversified bank holding company with total assets of $23 billion. Associated has 291 banking offices serving approximately 160 communities in Wisconsin, Illinois, and Minnesota. The Company offers a full range of traditional banking services and a variety of other financial products and services. More information about Associated Banc-Corp is available at www.associatedbank.com.

Statements made in this document that are not purely historical are forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995. This includes any statements regarding management’s plans, objectives, or goals for future operations, products or services, and forecasts of its revenues, earnings, or other measures of performance. Forward-looking statements are based on current management expectations and, by their nature, are subject to risks and uncertainties. These statements may be identified by the use of words such as “believe,” “expect,” “anticipate,” “plan,” “estimate,” “should,” “will,” “intend,” or similar expressions. Outcomes related to such statements are subject to numerous risk factors and uncertainties including those listed in the Company’s Annual Report filed on Form 10-K as updated by Form 10-Q for the three months ended September 30, 2009.

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Consolidated Balance Sheets (Unaudited)
Associated Banc-Corp

	December 31,			December 31,			Dec09 vs Dec08
(in thousands)	2009			2008			% Change
Assets
Cash and due from banks	$	770,816		$	533,338			44.5	%
Interest-bearing deposits in other financial institutions		26,091			12,649			106.3	%
Federal funds sold and securities purchased under agreements to resell		23,785			24,741			(3.9	%)
Investment securities available for sale, at fair value		5,835,533			5,143,414			13.5	%
Federal Home Loan Bank and Federal Reserve Bank stocks, at cost		181,316			206,003			(12.0	%)
Loans held for sale		81,238			87,084			(6.7	%)
Loans		14,128,625			16,283,908			(13.2	%)
Allowance for loan losses		(573,533	)		(265,378	)		116.1	%
Loans, net		13,555,092			16,018,530			(15.4	%)
Premises and equipment, net		186,564			190,942			(2.3	%)
Goodwill		929,168			929,168			0.0	%
Other intangible assets, net		92,807			80,165			15.8	%
Other assets		1,191,732			966,033			23.4	%
Total assets	$	22,874,142		$	24,192,067			(5.4	%)
Liabilities and Stockholders’ Equity
Noninterest-bearing deposits	$	3,274,973		$	2,814,079			16.4	%
Interest-bearing deposits, excluding Brokered CDs		13,311,672			11,551,181			15.2	%
Brokered CDs		141,968			789,536			(82.0	%)
Total deposits		16,728,613			15,154,796			10.4	%
Short-term borrowings		1,226,853			3,703,936			(66.9	%)
Long-term funding		1,953,998			1,861,647			5.0	%
Accrued expenses and other liabilities		226,070			595,185			(62.0	%)
Total liabilities		20,135,534			21,315,564			(5.5	%)
Stockholders’ Equity
Preferred equity		511,107			508,008			0.6	%
Common stock		1,284			1,281			0.2	%
Surplus		1,082,335			1,073,218			0.8	%
Retained earnings		1,081,156			1,293,941			(16.4	%)
Accumulated other comprehensive income		63,432			55			N/M
Treasury stock		(706	)		—			N/M
Total stockholders’ equity		2,738,608			2,876,503			(4.8	%)
Total liabilities and stockholders’ equity	$	22,874,142		$	24,192,067			(5.4	%)

N/M = Not meaningful.

Consolidated Statements of Income (Unaudited)
Associated Banc-Corp

	For The Three Months Ended									For The Year Ended,
	December 31,						Quarter			December 31,						Year-to-Date
(in thousands, except per share amounts)	2009			2008			% Change			2009			2008			% Change
Interest Income
Interest and fees on loans	$	172,624		$	230,872			(25.2	%)	$	752,265		$	952,653			(21.0	%)
Interest and dividends on investment securities and deposits in other financial institutions:
Taxable		48,567			38,032			27.7	%		193,031			133,471			44.6	%
Tax-exempt		8,987			9,811			(8.4	%)		35,798			39,733			(9.9	%)
Interest on federal funds sold and securities purchased under agreements to resell		32			154			(79.2	%)		162			852			(81.0	%)
Total interest income		230,210			278,869			(17.4	%)		981,256			1,126,709			(12.9	%)
Interest Expense
Interest on deposits		31,471			56,402			(44.2	%)		160,874			263,306			(38.9	%)
Interest on short-term borrowings		3,062			10,090			(69.7	%)		16,199			86,584			(81.3	%)
Interest on long-term funding		17,324			20,595			(15.9	%)		78,178			80,671			(3.1	%)
Total interest expense		51,857			87,087			(40.5	%)		255,251			430,561			(40.7	%)
Net Interest Income		178,353			191,782			(7.0	%)		726,005			696,148			4.3	%
Provision for loan losses		394,789			65,044			507.0	%		750,645			202,058			271.5	%
Net interest income (loss) after provision for loan losses		(216,436	)		126,738			(270.8	%)		(24,640	)		494,090			(105.0	%)
Noninterest Income
Trust service fees		9,906			8,248			20.1	%		36,009			38,420			(6.3	%)
Service charges on deposit accounts		29,213			30,946			(5.6	%)		116,918			118,368			(1.2	%)
Card-based and other nondeposit fees		12,359			12,297			0.5	%		45,977			48,540			(5.3	%)
Retail commissions		15,296			15,541			(1.6	%)		60,678			62,588			(3.1	%)
Mortgage banking, net		9,227			(1,227	)		(852.0	%)		40,882			14,684			178.4	%
Capital market fees, net		291			(33	)		(981.8	%)		5,536			7,390			(25.1	%)
Bank owned life insurance income		3,310			4,711			(29.7	%)		16,032			19,804			(19.0	%)
Asset sale (losses), net		(1,551	)		(1,054	)		47.2	%		(4,071	)		(1,668	)		144.1	%
Investment securities gains (losses), net		(395	)		(35,298	)		N/M			8,774			(52,541	)		N/M
Other		7,078			6,943			1.9	%		24,226			30,065			(19.4	%)
Total noninterest income		84,734			41,074			106.3	%		350,961			285,650			22.9	%
Noninterest Expense
Personnel expense		72,620			77,374			(6.1	%)		304,390			309,478			(1.6	%)
Occupancy		12,170			13,134			(7.3	%)		49,341			50,461			(2.2	%)
Equipment		4,551			4,785			(4.9	%)		18,385			19,123			(3.9	%)
Data processing		7,728			7,446			3.8	%		30,893			30,451			1.5	%
Business development and advertising		4,443			6,047			(26.5	%)		18,033			21,400			(15.7	%)
Other intangible amortization		1,386			1,564			(11.4	%)		5,543			6,269			(11.6	%)
Legal and professional fees		6,386			5,311			20.2	%		19,562			14,566			34.3	%
Foreclosure/OREO expense		10,852			6,716			61.6	%		38,129			13,685			178.6	%
FDIC expense		9,618			930			N/M			41,934			2,524			N/M
Other		29,260			25,443			15.0	%		85,210			89,503			(4.8	%)
Total noninterest expense		159,014			148,750			6.9	%		611,420			557,460			9.7	%
Income (Loss) before income taxes		(290,716	)		19,062			N/M			(285,099	)		222,280			N/M
Income tax expense (benefit)		(117,479	)		2,203			N/M			(153,240	)		53,828			N/M
Net income (loss)		(173,237	)		16,859			N/M			(131,859	)		168,452			(178.3	%)
Preferred stock dividends and discount		7,354			3,250			126.3	%		29,348			3,250			N/M
Net income (loss) available to common equity	$	(180,591	)	$	13,609			N/M		$	(161,207	)	$	165,202			(197.6	%)
Earnings (Loss) Per Common Share:
Basic	$	(1.41	)	$	0.11			N/M		$	(1.26	)	$	1.29			(197.7	%)
Diluted	$	(1.41	)	$	0.11			N/M		$	(1.26	)	$	1.29			(197.7	%)
Average Common Shares Outstanding:
Basic		127,869			127,717			0.1	%		127,858			127,501			0.3	%
Diluted		127,869			127,810			0.0	%		127,858			127,775			0.1	%

N/M = Not meaningful.

Consolidated Statements of Income (Unaudited) — Quarterly Trend
Associated Banc-Corp

(in thousands, except per share amounts)	4Q09			3Q09			2Q09			1Q09			4Q08
Interest Income
Interest and fees on loans	$	172,624		$	183,264		$	194,352		$	202,025		$	230,872
Interest and dividends on investment securities and deposits in other financial institutions:
Taxable		48,567			46,873			46,688			50,903			38,032
Tax-exempt		8,987			8,498			8,819			9,494			9,811
Interest on federal funds sold and securities purchased under agreements to resell		32			16			51			63			154
Total interest income		230,210			238,651			249,910			262,485			278,869
Interest Expense
Interest on deposits		31,471			37,811			44,993			46,599			56,402
Interest on short-term borrowings		3,062			2,895			5,088			5,154			10,090
Interest on long-term funding		17,324			18,709			20,691			21,454			20,595
Total interest expense		51,857			59,415			70,772			73,207			87,087
Net Interest Income		178,353			179,236			179,138			189,278			191,782
Provision for loan losses		394,789			95,410			155,022			105,424			65,044
Net interest income (loss) after provision for loan losses		(216,436	)		83,826			24,116			83,854			126,738
Noninterest Income
Trust service fees		9,906			9,057			8,569			8,477			8,248
Service charges on deposit accounts		29,213			30,829			29,671			27,205			30,946
Card-based and other nondeposit fees		12,359			11,586			11,858			10,174			12,297
Retail commissions		15,296			15,041			14,829			15,512			15,541
Total core fee-based revenue		66,774			66,513			64,927			61,368			67,032
Mortgage banking, net		9,227			(909	)		28,297			4,267			(1,227	)
Capital market fees, net		291			226			2,393			2,626			(33	)
Bank owned life insurance income		3,310			3,789			3,161			5,772			4,711
Asset sale (losses), net		(1,551	)		(126	)		(1,287	)		(1,107	)		(1,054	)
Investment securities gains (losses), net		(395	)		(42	)		(1,385	)		10,596			(35,298	)
Other		7,078			5,858			5,835			5,455			6,943
Total noninterest income		84,734			75,309			101,941			88,977			41,074
Noninterest Expense
Personnel expense		72,620			73,501			81,171			77,098			77,374
Occupancy		12,170			11,949			12,341			12,881			13,134
Equipment		4,551			4,575			4,670			4,589			4,785
Data processing		7,728			7,442			8,126			7,597			7,446
Business development and advertising		4,443			3,910			4,943			4,737			6,047
Other intangible amortization		1,386			1,386			1,385			1,386			1,564
Legal and professional fees		6,386			3,349			5,586			4,241			5,311
Foreclosure/OREO expense		10,852			8,688			13,576			5,013			6,716
FDIC expense		9,618			8,451			18,090			5,775			930
Other		29,260			17,860			20,143			17,947			25,443
Total noninterest expense		159,014			141,111			170,031			141,264			148,750
Income (Loss) before income taxes		(290,716	)		18,024			(43,974	)		31,567			19,062
Income tax expense (benefit)		(117,479	)		2,030			(26,633	)		(11,158	)		2,203
Net income (loss)		(173,237	)		15,994			(17,341	)		42,725			16,859
Preferred stock dividends and discount		7,354			7,342			7,331			7,321			3,250
Net income (loss) available to common equity	$	(180,591	)	$	8,652		$	(24,672	)	$	35,404		$	13,609
Earnings (Loss) Per Common Share:
Basic	$	(1.41	)	$	0.07		$	(0.19	)	$	0.28		$	0.11
Diluted	$	(1.41	)	$	0.07		$	(0.19	)	$	0.28		$	0.11
Average Common Shares Outstanding:
Basic		127,869			127,863			127,861			127,839			127,717
Diluted		127,869			127,863			127,861			127,845			127,810

Selected Quarterly Information
Associated Banc-Corp

(in thousands, except per share and full time
equivalent employee data)	YTD 2009			YTD 2008			4th Qtr 2009			3rd Qtr 2009			2nd Qtr 2009			1st Qtr 2009			4th Qtr 2008
Summary of Operations
Net interest income	$	726,005		$	696,148		$	178,353		$	179,236		$	179,138		$	189,278		$	191,782
Provision for loan losses		750,645			202,058			394,789			95,410			155,022			105,424			65,044
Asset sale gains (losses), net		(4,071	)		(1,668	)		(1,551	)		(126	)		(1,287	)		(1,107	)		(1,054	)
Investment securities gains (losses), net		8,774			(52,541	)		(395	)		(42	)		(1,385	)		10,596			(35,298	)
Noninterest income (excluding securities & asset gains)		346,258			339,859			86,680			75,477			104,613			79,488			77,426
Noninterest expense		611,420			557,460			159,014			141,111			170,031			141,264			148,750
Income (loss) before income taxes		(285,099	)		222,280			(290,716	)		18,024			(43,974	)		31,567			19,062
Income tax expense (benefit)		(153,240	)		53,828			(117,479	)		2,030			(26,633	)		(11,158	)		2,203
Net income (loss)		(131,859	)		168,452			(173,237	)		15,994			(17,341	)		42,725			16,859
Net income (loss) available to common equity		(161,207	)		165,202			(180,591	)		8,652			(24,672	)		35,404			13,609
Taxable equivalent adjustment		24,820			27,711			6,188			5,938			6,150			6,544			6,902
Per Common Share Data
Net income (loss):
Basic	$	(1.26	)	$	1.29		$	(1.41	)	$	0.07		$	(0.19	)	$	0.28		$	0.11
Diluted		(1.26	)		1.29			(1.41	)		0.07			(0.19	)		0.28			0.11
Dividends		0.47			1.27			0.05			0.05			0.05			0.32			0.32
Market Value:
High	$	21.39		$	29.23		$	13.00		$	12.67		$	19.00		$	21.39		$	24.21
Low		9.21			14.85			10.37			9.21			12.50			10.60			15.72
Close		11.01			20.93			11.01			11.42			12.50			15.45			20.93
Book value		17.42			18.54			17.42			18.88			18.49			18.68			18.54
Tangible book value		9.93			10.99			9.93			11.38			10.97			11.15			10.99
Performance Ratios (annualized)
Earning assets yield		4.72	%		5.82	%		4.59	%		4.62	%		4.70	%		4.94	%		5.57	%
Interest-bearing liabilities rate		1.45			2.53			1.24			1.36			1.57			1.61			2.00
Net interest margin		3.52			3.65			3.59			3.50			3.40			3.59			3.88
Return on average assets		(0.56	)		0.76			(3.02	)		0.27			(0.29	)		0.71			0.30
Return on average equity		(4.54	)		6.95			(23.72	)		2.19			(2.40	)		5.98			2.58
Return on average tangible common equity (1)		(11.25	)		11.81			(50.16	)		2.39			(6.88	)		10.05			3.83
Efficiency ratio (2)		55.73			52.41			58.63			54.14			58.65			51.31			53.87
Effective tax rate (benefit)		(53.75	)		24.22			(40.41	)		11.26			(60.57	)		(35.35	)		11.56
Dividend payout ratio (3)		N/M			97.69			N/M			71.43			N/M			114.29			290.91
Average Balances
Assets	$	23,609,471		$	22,037,963		$	22,773,576		$	23,362,954		$	24,064,567		$	24,255,783		$	22,646,421
Earning assets		21,337,382			19,839,706			20,499,225			21,063,016			21,847,267			21,959,077			20,436,483
Interest-bearing liabilities		17,659,282			17,019,832			16,663,947			17,412,341			18,125,389			18,457,879			17,363,481
Loans		15,595,636			16,080,565			14,605,107			15,248,895			16,122,063			16,430,347			16,285,881
Deposits		15,959,046			13,812,072			16,407,034			16,264,181			16,100,686			15,045,976			14,395,626
Wholesale funding		4,584,909			5,654,373			3,332,642			4,067,830			4,876,970			6,098,266			5,496,248
Common stockholders’ equity		2,393,475			2,366,453			2,387,534			2,394,410			2,400,664			2,391,325			2,376,639
Stockholders’ equity		2,902,911			2,423,332			2,898,132			2,904,210			2,909,700			2,899,603			2,602,917
Common stockholders’ equity/assets		10.14	%		10.74	%		10.48	%		10.25	%		9.98	%		9.86	%		10.49	%
Stockholders’ equity / assets		12.30	%		11.00	%		12.73	%		12.43	%		12.09	%		11.95	%		11.49	%
At Period End
Assets							$	22,874,142		$	22,881,527		$	24,013,567		$	24,349,725		$	24,192,067
Loans								14,128,625			14,765,597			15,310,107			15,917,952			16,283,908
Allowance for loan losses								573,533			412,530			407,167			313,228			265,378
Goodwill								929,168			929,168			929,168			929,168			929,168
Mortgage servicing rights, net								63,753			61,066			59,762			39,754			45,568
Other intangible assets								29,054			30,440			31,826			33,211			34,597
Deposits								16,728,613			16,446,109			16,320,391			15,873,189			15,154,796
Wholesale funding								3,180,851			3,279,100			4,474,542			5,326,734			5,565,583
Stockholders’ equity								2,738,608			2,924,659			2,873,768			2,897,169			2,876,503
Stockholders’ equity / assets								11.97	%		12.78	%		11.97	%		11.90	%		11.89	%
Tangible common equity / tangible assets (4)								5.79	%		6.64	%		6.09	%		6.10	%		6.05	%
Tangible equity/tangible assets (5)								8.12	%		8.96	%		8.30	%		8.27	%		8.23	%
Tier 1 risk-based capital ratio								12.52	%		13.14	%		12.45	%		11.93	%		11.91	%
Tier 1 leverage ratio								8.76	%		9.35	%		9.06	%		9.06	%		9.75	%
Total risk-based capital ratio								14.24	%		14.83	%		14.35	%		13.79	%		13.76	%
Shares outstanding, end of period								127,876			127,864			127,861			127,860			127,762
Selected trend information
Average full time equivalent employees								4,802			5,004			5,116			5,143			5,109
Trust assets under management, at market value							$	5,300,000		$	5,200,000		$	5,000,000		$	4,800,000		$	5,100,000
Mortgage loans originated for sale during period								671,305			638,229			1,335,175			1,079,732			247,465
Mortgage portfolio serviced for others								7,667,000			7,473,000			6,904,000			6,582,000			6,606,000
Mortgage servicing rights, net / Portfolio serviced for others								0.83	%		0.82	%		0.87	%		0.60	%		0.69	%

N/M = Not meaningful.

(1)	Return on average tangible common equity = Net income available to common equity divided by average common equity excluding average goodwill and other intangible assets. This is a non-GAAP financial measure.
(2)	Efficiency ratio = Noninterest expense divided by sum of taxable equivalent net interest income plus noninterest income, excluding investment securities gains, net, and asset sales gains, net.
	This is a non-GAAP financial measure.
(3)	Ratio is based upon basic earnings per common share.
(4)	Tangible common equity to tangible assets = Common stockholders’ equity excluding goodwill and other intangible assets divided by assets excluding goodwill and other intangible assets.
	This is a non-GAAP financial measure.
(5)	Tangible equity to tangible assets = Stockholders’ equity excluding goodwill and other intangible assets divided by assets excluding goodwill and other intangible assets.
	This is a non-GAAP financial measure.

Selected Asset Quality Information
Associated Banc-Corp

	Three months ended									Year ended
	December 31,									December 31,
(in thousands)	2009			2008			% Change			2009			2008			% Change
Allowance for Loan Losses
Beginning balance	$	412,530		$	246,189			67.6	%	$	265,378		$	200,570			32.3	%
Provision for loan losses		394,789			65,044			507.0	%		750,645			202,058			271.5	%
Charge offs		(236,367	)		(47,750	)		395.0	%		(452,206	)		(145,826	)		210.1	%
Recoveries		2,581			1,895			36.2	%		9,716			8,576			13.3	%
Net charge offs		(233,786	)		(45,855	)		409.8	%		(442,490	)		(137,250	)		222.4	%
Ending balance	$	573,533		$	265,378			116.1	%	$	573,533		$	265,378			116.1	%

					Dec09 vs Sep09									Dec09 vs Dec08
Net Charge Offs	Dec 31, 2009		Sept 30, 2009		%Change			Jun 30, 2009		Mar 31, 2009		Dec 31, 2008		%Change
Commercial, financial & agricultural	$	42,940	$	57,480		(25.3	%)	$	19,367	$	35,890	$	15,457		177.8	%
Commercial real estate		40,550		4,449		811.4	%		8,382		2,858		3,435		1080.5	%
Real estate — construction		124,659		12,837		871.1	%		16,249		3,452		17,698		604.4	%
Lease financing	��	261		319		(18.2	%)		988		2		202		29.2	%
Total commercial		208,410		75,085		177.6	%		44,986		42,202		36,792		466.5	%
Home equity		16,503		11,202		47.3	%		10,343		10,742		5,958		177.0	%
Installment		2,099		2,433		(13.7	%)		2,321		1,986		2,009		4.5	%
Total retail		18,602		13,635		36.4	%		12,664		12,728		7,967		133.5	%
Residential mortgage		6,774		1,327		410.5	%		3,433		2,644		1,096		518.1	%
Total net charge offs	$	233,786	$	90,047		159.6	%	$	61,083	$	57,574	$	45,855		409.8	%

Net Charge Offs to Average Loans	Dec 31, 2009			Sept 30, 2009			Jun 30, 2009			Mar 31, 2009			Dec 31, 2008
Commercial, financial & agricultural		4.90	%		6.11	%		1.91	%		3.41	%		1.43	%
Commercial real estate		4.12	%		0.45	%		0.92	%		0.32	%		0.39	%
Real estate — construction		31.85	%		2.85	%		3.07	%		0.62	%		2.99	%
Lease financing		1.05	%		1.19	%		3.49	%		0.01	%		0.65	%
Total commercial		9.15	%		3.13	%		1.82	%		1.67	%		1.42	%
Home equity		2.54	%		1.70	%		1.52	%		1.53	%		0.82	%
Installment		0.94	%		1.13	%		1.10	%		0.94	%		0.96	%
Total retail		2.13	%		1.56	%		1.42	%		1.39	%		0.85	%
Residential mortgage		1.27	%		0.23	%		0.53	%		0.43	%		0.20	%
Total net charge offs		6.35	%		2.34	%		1.52	%		1.42	%		1.12	%

							Dec09 vs Sep09												Dec09 vs Dec08
Credit Quality	Dec 31, 2009			Sept 30, 2009			% Change			Jun 30, 2009			Mar 31, 2009			Dec 31, 2008			% Change
Nonaccrual loans	$	1,077,799		$	845,320			27.5	%	$	700,514		$	433,246		$	326,857			229.7	%
Loans 90 or more days past due and still accruing		24,981			23,174			7.8	%		19,785			16,002			13,811			80.9	%
Restructured loans		19,037			17,256			10.3	%		13,089			2,927			—			N/M
Total nonperforming loans		1,121,817			885,750			26.7	%		733,388			452,175			340,668			229.3	%
Other real estate owned (OREO)		68,441			60,010			14.0	%		51,633			54,883			48,710			40.5	%
Total nonperforming assets	$	1,190,258		$	945,760			25.9	%	$	785,021		$	507,058		$	389,378			205.7	%
Provision for loan losses		394,789			95,410			313.8	%		155,022			105,424			65,044			507.0	%
Net charge offs		233,786			90,047			159.6	%		61,083			57,574			45,855			409.8	%
Allowance for loan losses / loans		4.06	%		2.79	%					2.66	%		1.97	%		1.63	%
Allowance for loan losses / nonperforming loans		51.13			46.57						55.52			69.27			77.90
Nonperforming loans / total loans		7.94			6.00						4.79			2.84			2.09
Nonperforming assets / total loans plus OREO		8.38			6.38						5.11			3.17			2.38
Nonperforming assets / total assets		5.20			4.13						3.27			2.08			1.61
Net charge offs / average loans (annualized)		6.35			2.34						1.52			1.42			1.12
Year-to-date net charge offs / average loans		2.84			1.75						1.47			1.42			0.85
Nonperforming loans by type:
Commercial, financial & agricultural	$	234,418		$	209,843			11.7	%	$	187,943		$	102,257		$	104,664			124.0	%
Commercial real estate		307,478			213,736			43.9	%		165,929			100,838			62,423			392.6	%
Real estate — construction		413,360			301,844			36.9	%		264,402			152,008			90,048			359.0	%
Lease financing		19,506			18,814			3.7	%		1,929			1,707			187			N/M
Total commercial		974,762			744,237			31.0	%		620,203			356,810			257,322			278.8	%
Home equity		44,257			45,905			(3.6	%)		38,474			35,224			31,035			42.6	%
Installment		7,577			7,387			2.6	%		7,545			6,755			7,155			5.9	%
Total retail		51,834			53,292			(2.7	%)		46,019			41,979			38,190			35.7	%
Residential mortgage		95,221			88,221			7.9	%		67,166			53,386			45,156			110.9	%
Total nonperforming loans	$	1,121,817		$	885,750			26.7	%	$	733,388		$	452,175		$	340,668			229.3	%
Loans past due 30-89 days	$	240,755		$	175,492			37.2	%	$	209,323		$	245,854		$	190,112			26.6	%

					Dec09 vs Sep09									Dec09 vs Dec08
Potential Problem Loans	Dec 31, 2009		Sept 30, 2009		% Change			Jun 30, 2009		Mar 31, 2009		Dec 31, 2008		% Change
Commercial, financial & agricultural	$	563,836	$	481,034		17.2	%	$	428,550	$	365,069	$	363,285		55.2	%
Commercial real estate		598,137		588,013		1.7	%		462,103		280,479		243,617		145.5	%
Real estate — construction		391,105		462,029		(15.4	%)		481,467		347,968		312,144		25.3	%
Lease financing		8,367		9,572		(12.6	%)		24,934		2,938		1,713		388.4	%
Total commercial		1,561,445		1,540,648		1.3	%		1,397,054		996,454		920,759		69.6	%
Home equity		13,400		15,933		(15.9	%)		13,626		5,935		8,900		50.6	%
Installment		1,524		1,908		(20.1	%)		1,043		1,132		889		71.4	%
Total retail		14,924		17,841		(16.3	%)		14,669		7,067		9,789		52.5	%
Residential mortgage		19,150		15,414		24.2	%		14,448		13,030		7,254		164.0	%
Total potential problem loans	$	1,595,519	$	1,573,903		1.4	%	$	1,426,171	$	1,016,551	$	937,802		70.1	%

N/M — Not meaningful.

Net Interest Income Analysis — Taxable Equivalent Basis
Associated Banc-Corp

	Year ended December 31, 2009							Year ended December 31, 2008
	Average		Interest		Average			Average		Interest		Average
(in thousands)	Balance		Income / Expense		Yield / Rate			Balance		Income / Expense		Yield / Rate
Earning assets:
Loans: (1) (2) (3)
Commercial	$	9,673,513	$	435,054		4.50	%	$	10,387,727	$	600,079		5.78	%
Residential mortgage		2,369,719		125,475		5.29			2,200,145		129,077		5.87
Retail		3,552,404		195,078		5.49			3,492,693		227,368		6.51
Total loans		15,595,636		755,607		4.84			16,080,565		956,524		5.95
Investments and other		5,741,746		250,469		4.36			3,759,141		197,896		5.26
Total earning assets		21,337,382		1,006,076		4.72			19,839,706		1,154,420		5.82
Other assets, net		2,272,089							2,198,257
Total assets	$	23,609,471						$	22,037,963
Interest-bearing liabilities:
Savings deposits	$	880,544	$	1,379		0.16	%	$	890,811	$	4,021		0.45	%
Interest-bearing demand deposits		2,154,745		4,794		0.22			1,752,991		15,061		0.86
Money market deposits		5,390,782		42,978		0.80			4,231,678		79,057		1.87
Time deposits, excluding Brokered CDs		3,880,878		102,490		2.64			3,957,174		148,294		3.75
Total interest-bearing deposits, excluding Brokered CDs		12,306,949		151,641		1.23			10,832,654		246,433		2.27
Brokered CDs		767,424		9,233		1.20			532,805		16,873		3.17
Total interest-bearing deposits		13,074,373		160,874		1.23			11,365,459		263,306		2.32
Wholesale funding		4,584,909		94,377		2.06			5,654,373		167,255		2.96
Total interest-bearing liabilities		17,659,282		255,251		1.45			17,019,832		430,561		2.53
Noninterest-bearing demand deposits		2,884,673							2,446,613
Other liabilities		162,605							148,186
Stockholders’ equity		2,902,911							2,423,332
Total liabilities and stockholders’ equity	$	23,609,471						$	22,037,963
Net interest income and rate spread (1)			$	750,825		3.27	%			$	723,859		3.29	%
Net interest margin (1)						3.52	%						3.65	%
Taxable equivalent adjustment			$	24,820						$	27,711

	Three months ended December 31, 2009							Three months ended December 31, 2008
	Average		Interest		Average			Average		Interest		Average
	Balance		Income / Expense		Yield / Rate			Balance		Income / Expense		Yield / Rate
Earning assets:
Loans: (1) (2) (3)
Commercial	$	9,037,436	$	100,124		4.40	%	$	10,333,624	$	144,181		5.55	%
Residential mortgage		2,108,755		27,316		5.17			2,218,470		31,300		5.63
Retail		3,458,916		45,980		5.29			3,733,787		56,406		6.02
Total loans		14,605,107		173,420		4.72			16,285,881		231,887		5.67
Investments and other		5,894,118		62,978		4.27			4,150,602		53,884		5.19
Total earning assets		20,499,225		236,398		4.59			20,436,483		285,771		5.57
Other assets, net		2,274,351							2,209,938
Total assets	$	22,773,576						$	22,646,421
Interest-bearing liabilities:
Savings deposits	$	869,996	$	344		0.16	%	$	880,155	$	903		0.41	%
Interest-bearing demand deposits		2,605,242		1,630		0.25			1,637,383		1,930		0.47
Money market deposits		5,658,251		8,463		0.59			4,889,011		17,480		1.42
Time deposits, excluding Brokered CDs		3,671,087		20,215		2.18			3,951,360		32,464		3.27
Total interest-bearing deposits, excluding Brokered CDs		12,804,576		30,652		0.95			11,357,909		52,777		1.85
Brokered CDs		526,729		819		0.62			509,324		3,625		2.83
Total interest-bearing deposits		13,331,305		31,471		0.94			11,867,233		56,402		1.89
Wholesale funding		3,332,642		20,386		2.43			5,496,248		30,685		2.22
Total interest-bearing liabilities		16,663,947		51,857		1.24			17,363,481		87,087		2.00
Noninterest-bearing demand deposits		3,075,729							2,528,393
Other liabilities		135,768							151,630
Stockholders’ equity		2,898,132							2,602,917
Total liabilities and stockholders’ equity	$	22,773,576						$	22,646,421
Net interest income and rate spread (1)			$	184,541		3.35	%			$	198,684		3.57	%
Net interest margin (1)						3.59	%						3.88	%
Taxable equivalent adjustment			$	6,188						$	6,902

(1)	The yield on tax exempt loans and securities is computed on a taxable equivalent basis using a tax rate of 35% for all periods presented and is net of the effects of certain disallowed interest deductions.
(2)	Nonaccrual loans and loans held for sale have been included in the average balances.
(3)	Interest income includes net loan fees.

Net Interest Income Analysis — Taxable Equivalent Basis
Associated Banc-Corp

	Three months ended December 31, 2009							Three months ended September 30, 2009
	Average		Interest		Average			Average		Interest		Average
(in thousands)	Balance		Income / Expense		Yield / Rate			Balance		Income / Expense		Yield / Rate
Earning assets:
Loans: (1) (2) (3)
Commercial	$	9,037,436	$	100,124		4.40	%	$	9,503,565	$	106,506		4.45	%
Residential mortgage		2,108,755		27,316		5.17			2,270,025		29,928		5.26
Retail		3,458,916		45,980		5.29			3,475,305		47,670		5.46
Total loans		14,605,107		173,420		4.72			15,248,895		184,104		4.80
Investments and other		5,894,118		62,978		4.27			5,814,121		60,485		4.16
Total earning assets		20,499,225		236,398		4.59			21,063,016		244,589		4.62
Other assets, net		2,274,351							2,299,938
Total assets	$	22,773,576						$	23,362,954
Interest-bearing liabilities:
Savings deposits	$	869,996	$	344		0.16	%	$	887,176	$	353		0.16	%
Interest-bearing demand deposits		2,605,242		1,630		0.25			2,330,976		1,298		0.22
Money market deposits		5,658,251		8,463		0.59			5,540,272		10,538		0.75
Time deposits, excluding Brokered CDs		3,671,087		20,215		2.18			3,847,942		23,998		2.47
Total interest-bearing deposits, excluding Brokered CDs		12,804,576		30,652		0.95			12,606,366		36,187		1.14
Brokered CDs		526,729		819		0.62			738,145		1,624		0.87
Total interest-bearing deposits		13,331,305		31,471		0.94			13,344,511		37,811		1.12
Wholesale funding		3,332,642		20,386		2.43			4,067,830		21,604		2.11
Total interest-bearing liabilities		16,663,947		51,857		1.24			17,412,341		59,415		1.36
Noninterest-bearing demand deposits		3,075,729							2,919,670
Other liabilities		135,768							126,733
Stockholders’ equity		2,898,132							2,904,210
Total liabilities and stockholders’ equity	$	22,773,576						$	23,362,954
Net interest income and rate spread (1)			$	184,541		3.35	%			$	185,174		3.26	%
Net interest margin (1)						3.59	%						3.50	%
Taxable equivalent adjustment			$	6,188						$	5,938

(1)	The yield on tax exempt loans and securities is computed on a taxable equivalent basis using a tax rate of 35% for all periods presented and is net of the effects of certain disallowed interest deductions.
(2)	Nonaccrual loans and loans held for sale have been included in the average balances.
(3)	Interest income includes net loan fees.

Financial Summary and Comparison
Associated Banc-Corp

					Dec09 vs Sep09									Dec09 vs Dec08
Period End Loan Composition	Dec 31, 2009		Sept 30, 2009		% Change			Jun 30, 2009		Mar 31, 2009		Dec 31, 2008		% Change
Commercial, financial & agricultural	$	3,450,632	$	3,613,457		(4.5	%)	$	3,904,925	$	4,160,274	$	4,388,691		(21.4	%)
Commercial real estate		3,817,066		3,902,340		(2.2	%)		3,737,749		3,575,301		3,566,551		7.0	%
Real estate — construction		1,397,493		1,611,857		(13.3	%)		1,963,919		2,228,090		2,260,888		(38.2	%)
Lease financing		95,851		102,130		(6.1	%)		110,262		116,100		122,113		(21.5	%)
Total commercial		8,761,042		9,229,784		(5.1	%)		9,716,855		10,079,765		10,338,243		(15.3	%)
Home equity		2,546,167		2,591,262		(1.7	%)		2,656,747		2,784,248		2,883,317		(11.7	%)
Installment		873,568		885,970		(1.4	%)		844,065		853,214		827,303		5.6	%
Total retail		3,419,735		3,477,232		(1.7	%)		3,500,812		3,637,462		3,710,620		(7.8	%)
Residential mortgage		1,947,848		2,058,581		(5.4	%)		2,092,440		2,200,725		2,235,045		(12.8	%)
Total loans	$	14,128,625	$	14,765,597		(4.3	%)	$	15,310,107	$	15,917,952	$	16,283,908		(13.2	%)

					Dec09 vs Sep09									Dec09 vs Dec08
Period End Deposit Composition	Dec 31, 2009		Sept 30, 2009		% Change			Jun 30, 2009		Mar 31, 2009		Dec 31, 2008		% Change
Demand	$	3,274,973	$	2,984,486		9.7	%	$	2,846,570	$	2,818,088	$	2,814,079		16.4	%
Savings		845,509		871,539		(3.0	%)		898,527		895,310		841,129		0.5	%
Interest-bearing demand		3,099,358		2,395,429		29.4	%		2,242,800		1,796,724		1,796,405		72.5	%
Money market		5,806,661		5,724,418		1.4	%		5,410,498		5,410,095		4,926,088		17.9	%
Brokered CDs		141,968		653,090		(78.3	%)		930,582		922,491		789,536		(82.0	%)
Other time deposits		3,560,144		3,817,147		(6.7	%)		3,991,414		4,030,481		3,987,559		(10.7	%)
Total deposits	$	16,728,613	$	16,446,109		1.7	%	$	16,320,391	$	15,873,189	$	15,154,796		10.4	%
Network transaction deposits included above in interest-bearing demand and money market	$	1,926,539	$	1,767,271		9.0	%	$	1,605,722	$	1,759,656	$	1,530,675		25.9	%
Customer repo sweeps (a)	$	195,858	$	242,575		(19.3	%)	$	269,809	$	333,706	$	505,788		(61.3	%)

(a) Included within short-term borrowings.