Philip Flynn – President and CEO Joseph Selner – EVP and CFO

David George – Robert W. Baird & Co. Jon Arfstrom – RBC Capital Markets Scott Siefers – Sandler O'Neill & Partners LP Terry McEvoy – Oppenheimer & Co. Erika Penala – UBS Investment Bank David Konrad – KBW

Good afternoon everyone, and welcome to Associated Banc-Corp’s second quarter 2010 results conference call. My name is Joe, and I will be your operator today. (Operator instructions) During the course of the discussion today, Associated’s management may make statements that constitute projections, expectations, beliefs or similar forward-looking statements. Associated’s actual results could differ materials from the results anticipated or projected in any such forward-looking statements. Additional detailed information concerning the important factors that could cause Associated’s actual results to differ materially from the information discussed today, is ready available on the SEC website, in the Risk Factors section of Associated’s most recent Form 10-K and any subsequent Form 10-Q. (Operator instructions) At this time, I would like to turn the conference over to your host, Philip Flynn, President and CEO for opening remarks. Please go ahead sir.

Thanks Joe, and welcome to our second quarter conference call. Joining me today are Joe Selner, our CFO; and Scott Hickey, our Chief Credit Officer. This afternoon I will provide more detail on our second quarter results, and discuss the improvements in our credit quality, as well as our strong capital and liquidity positions. I will also provide you with an update one steps we are taking to position the company for future profitability and growth. Today, we reported a net loss to common shareholders of $10 million or $0.06 per share for the second quarter. This compares to a net loss of $34 million or $0.20 a share last quarter, and $25 million or $0.19 for the second quarter of ’09. We have taken a lot of action to strengthen our balance sheet and address our credit quality during the past few quarters, and we are seeing positive results. So let us start with credit, we saw a significant improvement in our key credit quality indicators during the quarter, including substantial declines in the loan loss provision, net charge-offs, non-performing loans, potential problem loans and early stage delinquencies. The provision for loan losses for the quarter was $98 million, down significantly from $165 million for the first quarter, and $395 million for the last quarter of ‘09. Net charge-offs for the quarter were $105 million, also significantly lower than $163 million for the first quarter and $234 million for the last quarter of ’09. While we are pleased with the declines in charge-offs in the last two quarters, we expect them to continue at elevated levels as we continue to work through our non-performing loans. Our allowance for loan losses was $568 million, or $4.5% of total loans for the quarter, up from 4.3% in the last quarter. Non-performing…

Thank you sir. (Operator instructions) Our first question comes from David George from Baird. David George – Robert W. Baird & Co.: Good afternoon and thanks for taking the question. A couple of things, on the NPAs that you sold during the quarter, how would you characterize these relative to the other NPAs that you're looking to dump over time? Was this kind of the best, average, worst? How would you characterize the stuff that you sold relative to the rest of the NPAs that you're looking to move? And then I have got one other question as a follow-up.

.: David George – Robert W. Baird & Co.: Okay. And then finally, on your liquidity, can you talk about your strategies to deploy that over time and I trust that your liquidity is still kind of related to your ratings from the rating agencies. Do you have any update as to when you think the credit ratings would be revisited from the agencies?

Yes, I can’t guess as to when the rating agencies, when in particular are going to adjust our ratings upwards. We are spending a lot of time with all the agencies, including visiting them quarterly to make sure they understand our story. And hopefully that will bear fruit pretty soon, because I think clearly the company is on demand. As far as the liquidity position, I would grant that it is conservative. And we are looking at our liquidity position frequently. Likely as the economy improves and with the positioning we are doing to take advantage of growth that will come the liquidity position will be used to fund new loans. That will be our hope. David George – Robert W. Baird & Co.: Okay. Appreciate it. Thank you.

Our next question comes from Jon Arfstrom with RBC Capital Markets. Jon Arfstrom – RBC Capital Markets: Thanks, good afternoon guys.

Hi, Jon. Jon Arfstrom – RBC Capital Markets: Just a question on – follow-up on Dave's question on some of the bids that you are seeing in the marketplace. Just curious on how deep that market is and if you have seen bids firm over the last couple of quarters?

Yes, you know, Jon I get that question quite a bit and I find it very difficult to generalize about the distressed loan sale market, because all these loans have their own particular circumstances. We found during the quarter that those loans that we put forward for sale, we got sold. I think the market from everything I hear is fairly broad, there is quite a bit of interest in buying distressed bank loans, and frankly at an average of $0.73 of what we had written the loans down to we were reasonably pleased with that price. So we, as you know, intend on continuing to sell loans both in bulk and individually, and we are pretty confident that we are going to be able to achieve the results that we have talked about. We believe that we are going to get a significant amount of these NPAs down over the next six months. We are going to be able to do that and actually become profitable. Jon Arfstrom – RBC Capital Markets: And then just a question on your coverage, your reserve coverage ratio. Where would you like to have that ultimately and how long does it take you to get to that target you're looking for?

Well, the coverage of the NPLs, which at 8% are still nothing to pat ourselves on the back, although it is a significant improvement in one quarter. That number needs to come down quite a bit. You know, certainly to half of that over a reasonable period of time. Our overall level of reserves against the loan book is pretty high right now. That will come down over time, and some of these ratios are being frankly exacerbated by the fact that the loan book has been shrinking. So the denominator has been shrinking along the way. Jon Arfstrom – RBC Capital Markets: And then just one question maybe on a little more offensive. What's possible for some of the targeted niches, some of those businesses you're looking to enter? I think you put this group in Milwaukee, but give us an idea of what you think is possible for that and some of the near term and longer term opportunities?

Yes, I believe that industry focused groups at regional banks are a real winner. I came from a bank that essentially became a bank of niches. So, areas such as health care, insurance, and others that we are looking at, by hiring industry experts and expanding your reach beyond just the natural three state footprint that we operate branches in, with a prudent measured growth in this businesses, can become a real winner for regional banks. So it is very early days. But I have experience with seeing these things built out to be significant contributors, but we are talking in quarters and years, not in the short term. Jon Arfstrom – RBC Capital Markets: How significant was it at UB?

Extremely significant. The specialty lending areas were as profitable or more profitable than the core commercial banks. Jon Arfstrom – RBC Capital Markets: Thanks.

Our next question comes from Scott Siefers with Sandler O'Neill. Scott Siefers – Sandler O'Neill & Partners LP: Good afternoon, guys. I guess I wanted to just ask another question on the loan sales. Just want to make sure that I understand it correctly. So you ended up basically taking a 25% hair cut on loans that had already been marked down, so I think one of the investor hopes was that the loans, kind of the pool that you were going to potentially sell was already marked down sufficiently such that there wouldn't be additional charges. Now, going forward, would you anticipate additional haircuts or it sounds like you said – you're selling the most, or you sold the most distressed stuff first. The reason why I ask is there's the sense that you're taking additional haircuts on stuff that was already marked down, a logical question is what does that say about the marks on the stuff that's already there? So, maybe if you can just kind of expand on that topic.

Sure. You know, bank accounting doesn’t allow us to mark our entire NPA book down to what we think is a market clearing price that is not what we can do. We have to mark them down according to the rules that we live with. A new buyer of that loan is going to expect a return when they buy the loan. So, I think it is very unlikely on average that you are going to sell distressed loans in the secondary market for that is a sort of further haircut, and if I at some point gave you or anyone else the impression that was the case, certainly we didn’t mean to. We have always anticipated that there would be some further loss or charge as we sell loans into the secondary market. The trick to this of course is to make sure that our reserve is more than adequate to handle that. Theoretically, if we had the entire non-performing loan book marked to clear the secondary market, we wouldn’t carry around the reserve, which of course isn’t the case. So, we have a very significant loan loss reserve up against our entire loan book, particularly the non-performing loans, which allow us to continue to sell these, and move down our NPAs, and do it within the core earnings we expect within the company. Scott Siefers – Sandler O'Neill & Partners LP: Okay. That's helpful. Thanks. And then if I can ask just a separate follow-up question just on the margin, assuming we don't get a rebound in loan demand in the near term, what's your sense for how much additional erosion is possible from where we are currently?

Our best estimate right now is it is going to be about flat from here. Scott Siefers – Sandler O'Neill & Partners LP: Okay. Okay. Great, thank you very much.

Our next question comes from Terry McEvoy with Oppenheimer. Terry McEvoy – Oppenheimer & Co.: Thanks. Good afternoon. I guess the first question, Associated gets quietly operated in the Chicago market, and now you're looking to add scale. What have you run into in terms of clients' perception if anything of Associated Bank, and is there going to be kind of a branding initiative where there's some upfront costs involved with getting that new group up and running?

That is a great question, and you know, Associated has been active in Chicago for a long time. We have a relative handful of retail branches in locations there. So no one would accuse us of being a household name in the Chicago retail marketplace. Commercial banking is a little different. You know, we’re hired some well known experienced bankers in Chicago, and we can support them not with for example a broad-based TV advertising campaign or something, but with targeted print, with event driven marketing efforts, and just with the general knowledge that the business community has with the folks that we are hiring down there. So we think we can make a difference for ourselves in the commercial banking space. You are absolutely right, if we at some point choose to expand in retail, in order to really be successful there would require significant outlay in marketing dollars to be noticed in a market as big as Chicago. Terry McEvoy – Oppenheimer & Co.: Then just a second question, we've never really heard much at all from Associated on wealth management or private banking, and you did mention that earlier. I guess in simple terms, what do you have now? And what are you looking to add to those two or maybe one business?

That is a great observation Terry. You know, one of the things I was struck by when I came here six months ago was, we have a very nice wealth management offering. We have a robust trust area, we have an asset management division that performs very well, outperforms most of the peers in this part of the world. But we haven’t had is enough distribution in my opinion to really sell those products. That is why we have been hiring private bankers on the relationship management side, so we can grow that business through our expanded distribution effort. Terry McEvoy – Oppenheimer & Co.: Thanks.

Our next question comes from Erika Penala with UBS. Erika Penala – UBS Investment Bank: Good afternoon. My first question is a clarification question. You mentioned that about 40% of the $216 in NPLs sold came out of non-construction commercial real estate.

Right. Erika Penala – UBS Investment Bank: If I add that back in, in the NPL totals for the quarter, it seems like the NPLs moved notably sequentially, and I was just wondering if you can give us a sense of what type of asset classes or geographies pushed commercial real estate NPLs higher?

Commercial real estate NPLs did not go higher in the June quarter. Erika Penala – UBS Investment Bank: I'm sorry, I must be – commercial – I'm looking at non-construction, $360.9 million versus $356.8 million a quarter ago.

Okay, it went up less than $4 million. Erika Penala – UBS Investment Bank: No, I guess I was adding back the $85 or so million that you sold, out of that bucket.

Okay. Erika Penala – UBS Investment Bank: So I was wondering, what the new inflows were like in that particular category.

Well, we had total inflows of new non-accruals of 169 million. Last quarter, we had total inflows across all asset classes of 287 and in the quarter before that 475, okay. So, we have gone from 475 of inflows to 287 to 169. I don’t have in front of me what that 169 is, but half of it or even more could well be commercial real estate assets. However, the trend of new non-performing asset creation is dramatically down. Erika Penala – UBS Investment Bank: Okay. And I just wanted to ask a follow-up question. You mentioned the geographic breakout of the loans – the NPLs that you sold. I was wondering if you could give us the geographic breakout of the term commercial real estate and construction loans you have remaining on NPL.

I may have that but I’m not sure. Hang on a minute. You know what I will recommend, I mean these are such detailed questions, why don’t you call Joe, and he can give that to you. Erika Penala – UBS Investment Bank: Sure. Thanks for taking my call.

Sure.

(Operator instructions) Our next question comes from David Konrad with KBW. David Konrad – KBW: Good afternoon. During the quarter, asset quality and credit costs improved materially, but pre-tax revision earnings kind of slipped a little bit from the prior quarter. You talked about margin outlook and liquidity there. But kind of a follow-up from Terry's question, expenses were up quite a bit linked quarter. I just wonder with all the initiatives for growth in the future, what should we see from the expense line in total over the next few quarters?

First of all, expenses were up $4 million. They went up dramatically on a linked quarter basis. I also recall that we had a significant security gain in the first quarter. So, core earnings slipped with the reduction in loans. But I think it is kind of in-line with what we have been expecting. Joe, do you still have…

Again, the increase in the quarter was related to legal and professional fees and foreclosure expenses and those have a little bit of variability in it. So the rest of the expenses were pretty well controlled. So I think that 3 million is really relating to those categories and so the rest of the expenses should be well controlled even though we are investing in people as Philip said. David Konrad – KBW: Okay.

We don’t expect it to move much more than it is.

But at the end of the day you are correct, I mean certainly the preprovision earnings of the company have been under pressure with the very substantial reduction in loan outstandings. There is no sugar coating in that, and the efforts that we are making now with adding people and building out some of our capabilities in places like Chicago are designed to take advantage of potential growth when we can see it.

Yes, the way we think it is, net interest income was down 9, fee income if you take off that gain was up 7, and expenses were up 3 to 4. So again, most of the change is going to be the net interest income and pre-tax provision. David Konrad – KBW: Okay, thank you.

I am showing no further questions on the phone. I will now turn the conference back to Mr. Flynn.

Well, thanks for joining us today on the call. In closing, we are very pleased with our progress to date in resolving our credit issues. A lot of work remains, but we are confident that the credit profile is going to continue to improve through the rest of the year. And likewise, the actions we are taking to bring in new and talented bankers across the franchise and the efforts we are making to refine our risk appetite, and streamline the credit approval process are going to bear fruit for us in the form of profitable loan growth in the future as the economy improves. So thanks for taking the time to join us today on the call, and if you have any additional questions, please feel free to call us, and thanks again for your interest in Associated.

Ladies and gentlemen, this concludes the Associated Banc-Corp’s second-quarter 2010 conference call. If you would like to listen to a replay of today’s conference, please dial 1-800-642-1687. For international participants, 1-706-645-9291 and entering the access code 85356495 followed by the pound sign. The replay will be available until August 22, 2010. Thank you for your participation. You may now disconnect.