Associated Earns 57 Cents Per Diluted Share in First Quarter of 2007.

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

* Net income of $73.4 million

* Net interest margin remains stable

* Accelerated stock buyback of 2 million shares executed

* Lisa B. Binder hired as president and COO

Associated Banc-Corp (NASDAQ: ASBC) earned $73.4 million, or $.57 per diluted share, in the first quarter of 2007. Net income was $81.7 million, or $.60 per diluted share, in the first quarter of 2006. Book value per share rose to $17.54 as of March 31, 2007, up 3 percent over a year earlier.

For the first quarter of 2007, return on average assets (ROA) was 1.46 percent and return on average equity (ROE) was 13.35 percent, compared to an ROA of 1.52 percent and ROE of 14.16 percent for the first quarter of 2006. Return on average tangible equity (which is a non-GAAP measure that excludes average goodwill and other intangible assets from average equity) was 22.63 percent in the first quarter of 2007, versus 23.48 percent in the same quarter in 2006.

Comparatively, for the fourth quarter of 2006, net income was $74.5 million and diluted earnings per share were $.57, while book value per share was $17.44 at year-end 2006. ROA was 1.43 percent, ROE was 13.19 percent and return on average tangible equity was 22.31 percent for the fourth quarter of 2006.

The effective tax rate was 32.37 percent for first quarter 2007 and 31.73 percent for fourth quarter 2006, compared to 25.52 percent for first quarter 2006, which included the reduction of previously recorded tax liabilities and income tax expense of approximately $7.7 million (or $0.06 of diluted earnings per share).

Deposits at March 31, 2007, were $14.0 billion, up $0.4 billion or 3 percent higher than at March 31, 2006. Since year-end 2006, deposits were down $0.3 billion, which is primarily attributable to seasonal declines in commercial noninterest-bearing demand deposits.

Loans as of March 31, 2007, were $14.9 billion, unchanged from year-end 2006, and down $0.7 billion or 4 percent from a year ago. Commercial and industrial loans grew $0.2 billion (6 percent) and real estate construction grew $0.1 billion (5 percent) between the March 31 periods. These increases were offset by a $0.3 billion reduction in commercial real estate loans, a $0.3 billion transfer of residential mortgages to loans held for sale in December 2006 and subsequent sale in January 2007, and a runoff of consumer mortgages. At March 31, 2007, the ratio of loans to deposits improved to 106 percent, compared to 114 percent at March 31, 2006.

As of March 31, 2007, the allowance for loan losses represented 1.37 percent of total loans, compared to 1.31 percent a year ago and 1.37 percent at year-end 2006. On an annualized basis, first quarter 2007 net charge offs were 0.14 percent of average loans, compared to 0.18 percent for fourth quarter 2006 and 0.12 percent for the full year 2006. The provision for loan losses was $5.1 million, $4.5 million and $7.1 million, respectively, for the first quarter of 2007, the first quarter of 2006 and the fourth quarter of 2006, approximating net charge off levels for each period. Nonperforming loans rose to $153 million, representing 1.03 percent of total loans, compared to $142 million or 0.96 percent of loans at December 31, 2006.

Net interest margin and net interest income were impacted by Associated's reduction of higher-costing wholesale borrowings by nearly $2 billion and the reduction of lower-yielding assets by more than $1 billion during 2006. The restructuring of the balance sheet, coupled with the growth in average deposits (up 2 percent between first quarter periods), improved the net interest margin to 3.62 percent, compared to 3.48 percent for the first quarter of 2006. The net interest margin was down 2 basis points from fourth quarter 2006, due in large part to the seasonal outflow of net free funds (notably noninterest-bearing demand deposits).

Net interest income for first quarter 2007 was $159.0 million on average earning assets of $18.4 billion, versus net interest income for first quarter 2006 of $166.9 million on average earning assets of $19.9 billion. The cost of funding stock repurchases (on approximately 10 million shares repurchased over the past five quarters) explains approximately $3.6 million of the decrease in net interest income between the first quarter periods.

Noninterest income of $82.7 million for first quarter 2007 was up $11.9 million or 17 percent over the same period in 2006, and up $8.2 million or 11 percent over fourth quarter 2006.

Core fee-based revenue, aided by increased volumes and improved pricing throughout 2006, grew between the first quarter periods, with trust service fees up 16 percent to $10.3 million, service charges on deposits up 10 percent to $23.0 million, card-based and other nondeposit fees up 15 percent to $11.3 million and retail commissions unchanged at $15.5 million. Compared to the fourth quarter of 2006, core fee-based revenue was down less than 1 percent, as the increases in trust fees, card-based and other nondeposit fees, and retail commissions were offset by seasonally lower service charges on deposits.

Net mortgage banking income was $9.6 million for the first quarter of 2007, including a net $6.6 million gain that resulted from a $7.8 million gain on the March 2007 bulk sales of $2.3 billion (or 28 percent) of its mortgage portfolio serviced for others, net of a $1.2 million valuation reserve expense. Associated periodically considers sales of portions of its mortgage servicing portfolio to effectively manage earnings volatility risk. For the first quarter of 2006, net mortgage banking income of $4.4 million included $1.4 million of valuation reserve recovery. Removing the bulk servicing sales gain and the changes in the valuation reserve, net mortgage banking income between the first quarter periods was unchanged. Net mortgage banking income for the fourth quarter of 2006 was $1.7 million, including both a $2.1 million loss on market valuation associated with the $0.3 billion transfer of residential mortgages to loans held for sale previously mentioned, and a $0.5 million valuation reserve expense.

Noninterest expenses remained controlled. The efficiency ratio was 52.22 percent, 51.00 percent and 50.26 percent for the first quarter of 2007, the first quarter of 2006 and the fourth quarter of 2006, respectively. Noninterest expense was $128.1 million for the first quarter of 2007, up $4.7 million (4 percent) over the first quarter of 2006, primarily attributable to a $4.7 million increase in personnel costs. Compared to fourth quarter 2006, noninterest expense was up $3.7 million (3 percent), with personnel costs up $5.7 million, offset in part by nonpersonnel expenses which were down $2.0 million in aggregate. In particular, personnel expense increased over fourth quarter 2006 as the first quarter reflected annual re-sets in health benefits, Social Security and unemployment costs, and the fourth quarter included reductions to variable compensation linked to performance results of 2006.

During the first quarter of 2007, Associated repurchased 2 million shares of its common stock at a total purchase cost of $68.2 million. Also during the first quarter, the company paid a dividend of 29 cents per share, up 7 percent from the first-quarter dividend in 2006.

"We are seeing momentum in our commercial banking business as loan originations and pipelines improved late in the quarter. Our core fee income categories showed growth, which we expect to continue. Also, asset quality and expense metrics remained strong," Associated Chairman and CEO Paul S. Beideman said. "Our executive management team was enhanced with the addition of Lisa Binder to the organization as president and COO. She provides added depth and expertise to help us effectively execute our strategic priorities."

Associated will host a conference call for investors and analysts at 3 p.m. CDT today. The toll-free dial-in number for the live call is 800-936-9754. The number for international callers is 973-935-2048. Participants should ask the operator for the Associated Banc-Corp first quarter 2007 earnings call, or for call ID number 8606949. A replay of the call will be available starting at 6 p.m. CDT on April 19 through May 10, 2007, by calling 877-519-4471 (toll-free) domestically or 973-341-3080 internationally. The call ID number, 8606949, 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 300 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 filed on Form 10-K.

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