Associated Banc-Corp Earns $2.38 Per Diluted Share in 2006, 57 Cents in Fourth Quarter.

GREEN BAY, Wis. -- Associated Banc-Corp (NASDAQ: ASBC):

* Net income $316.6 million for 2006

* Net charge offs 12 basis points of average loans for the year

* Margin of 3.62% for 2006

* Deposits up 5% over prior year end

* Accelerated stock buyback executed in fourth quarter

Associated Banc-Corp (NASDAQ: ASBC) earned $0.57 per diluted share in the fourth quarter of 2006, compared to $0.64 in the fourth quarter of 2005. Net income for the fourth quarter of 2006 was $74.5 million, compared to $87.6 million for the fourth quarter of 2005.

The fourth quarters of both years included certain items that impact comparability between the year-over-year quarters. The fourth quarter of 2006 included a $2.1 million market valuation loss on the transfer of $0.3 billion of residential mortgages to loans held for sale and $1.8 million of severance expense, while the fourth quarter of 2005 included a $5.3 million gain on the sale of $1.5 billion of its mortgage portfolio serviced for others. Excluding these items, as well as asset and investment sales gains (losses) from both quarters, earnings per share were essentially level on a comparable quarter basis.

Associated earned $2.38 per diluted share in 2006, versus $2.43 in 2005. Net income for 2006 was $316.6 million, versus $320.2 million in 2005.

"While the operating environment in 2006 was challenging, we made meaningful progress toward improving the quality of earnings and executing our strategic objectives. We reduced wholesale funding by nearly $2 billion, realigned resources to increase focus on markets with more potential, improved fee income contribution and sustained credit quality. In addition, we aggressively managed expenses while continuing to focus on core deposit growth," Associated Chairman and CEO Paul S. Beideman said.

Return on average assets (ROA) and return on average equity (ROE) for 2006 were 1.50 percent and 13.89 percent, respectively. This compares to an ROA of 1.53 percent and an ROE of 15.24 percent in 2005. Return on average tangible equity (which is a non-GAAP measure that excludes the average of goodwill and other intangible assets from average equity) was 23.31 percent for 2006 compared to 23.47 percent in 2005. Book value per share rose to $17.44 as of Dec. 31, 2006, compared to $17.15 a year earlier.

Deposits at Dec. 31, 2006, were $14.3 billion, up 5 percent over year-end 2005, with growth in noninterest-bearing demand, money market, and time deposits overcoming declines in savings and interest-bearing demand deposits. Average deposits for 2006 were up 9 percent over 2005.

At Dec. 31, 2006, loans were $14.9 billion (impacted by a $0.3 billion transfer of residential mortgages to loans held for sale in December) compared to loans of $15.2 billion at year-end 2005. Without the transfer, loans were unchanged between year-end 2006 and 2005. Commercial, financial and agricultural loans grew $260 million, or 8 percent, and home equity loans grew $140 million, or 7 percent during 2006. These increases helped offset decreases in residential mortgages and installment loans, while commercial real estate loans were level. Average loan balances in 2006 were up 7 percent compared to 2005. At year-end 2006, the ratio of loans to deposits was 104 percent compared to 112 percent at year-end 2005.

In 2006 net charge offs were 0.12 percent of average loans compared to net charge offs of 0.09 percent of average loans in 2005. The allowance for loan losses at Dec. 31, 2006, was 1.37 percent of total loans compared to 1.34 percent at Dec. 31, 2005.

Associated's net interest income for 2006 was $669.5 million, versus $672.3 million for 2005. Net interest margin was 3.62 percent for 2006, versus 3.64 percent for 2005. The company's wholesale funding reduction strategy decreased the amount of lower-yielding securities in the investment portfolio and reduced the level of higher-costing wholesale borrowings. This, coupled with growth in average deposits, contributed to the company improving its margin in each of the last three quarters of 2006, despite the unfavorable yield curve.

Total noninterest income was $295.5 million for 2006, up 2 percent from $291.1 million for 2005. Core fee-based revenues (including trust service fees, service charges on deposit accounts, card-based and other non-deposit fees, and retail commissions) totaled $233.0 million, up 8 percent over $215.8 million for 2005, due to a combination of increased volumes and improved pricing.

Net mortgage banking income was $14.8 million for 2006, compared to $36.4 million in 2005. The majority of this decrease was attributable to the $2.1 million loss on market valuation associated with the fourth quarter 2006 transfer of $0.3 billion of portfolio loans to loans held for sale, the $5.3 million gain on the bulk servicing sale in fourth quarter 2005, and less favorable valuation recoveries on the mortgage servicing rights asset in 2006.

Noninterest expense grew a modest 3 percent between 2006 and 2005, including the full year impact of the acquisition of State Financial.

The effective tax rate for 2006 was 29.60 percent, versus 31.86 percent for 2005. The decline was primarily due to the resolution of certain multi-jurisdictional tax issues, as well as changes in exposure of uncertain tax positions in 2006, both resulting in the reduction of tax liabilities and income tax expense.

The company paid dividends of $1.14 per share in 2006, up 8 percent from $1.06 in 2005, making 2006 Associated's 36th consecutive year of increasing dividends.

Associated repurchased approximately 8 million shares of its common stock in 2006 at an average cost of $32.83 per share. Associated starts 2007 with an authorization to repurchase approximately 1.4 million additional shares.

Associated will host a live conference call for investors and analysts at 3 p.m. CST today. The toll-free dial-in number for the live call is 888-694-4769. The number for international callers is 973-582-2757. Participants should ask the operator for the Associated Banc-Corp 2006 earnings call, or for call ID number 8298239. A replay of the call will be available from 6 p.m. CDT today through Feb. 1 by calling 877-519-4471 (toll-free) domestically or 973-341-3080 internationally. The call ID number, 8298239, is required to access the replay.

Associated Banc-Corp, headquartered in Green Bay, Wis., is a diversified bank holding company with total assets of $21 billion. Associated has more than 315 banking offices serving more than 180 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 to be filed on Form 10-K.

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