Associated Banc-Corp said Thursday that it lost $24.7 million in the second quarter as loan losses rose in the sour economy.

The quarterly net loss, which amounts to 19 cents per share, is down from net income of $47.4 million, or profit of 37 cents per share, in the same period last year for the Green Bay-based parent company of Associated Bank.

However, the per-share loss was less than the average estimate of almost 23 cents per share from 11 analysts polled by Bloomberg News.

Contributing heavily to the loss was a large allocation, or provision, in the quarter to the bank's reserve for loans that could go bad. Associated added $155 million to the loan-loss reserve in the quarter, compared with $59 million in the second quarter of 2008.

"The higher-than-anticipated provision is the result of the continued weakness in the economy and related stress on our customers," Paul S. Beideman, Associated's chairman and chief executive, said in a statement. "While we believe loan-loss provisions and charge-offs will remain elevated, we expect the pace of deterioration to moderate in future quarters."

The big addition to loan-loss reserves was prompted mainly by the deterioration of construction and commercial real estate loans and declining commercial real estate collateral values, the bank said.

For the first six months of the year, net income was $10.7 million, or 8 cents per share, compared with $113.8 million, or 89 cents, in the first half of 2008.

During the quarter, Associated paid $7.3 million in dividends to the U.S. Treasury on its $525 million investment in the bank through the Troubled Asset Relief Program, or TARP.

The bank also paid an $11.3 million special assessment to the Federal Deposit Insurance Corp. in the quarter.

Associated, with assets of $24 billion, is the second-largest bank based in Wisconsin, trailing only Milwaukee's Marshall & Ilsley Corp.

After the announcement, Associated shares closed at $11.88, down 50 cents, or 4%.

Associated Banc-Corp

2nd quarter %

6/30 2009 2008 change

Net income - $24.7 $47.4 n.a.

EPS (diluted) - $0.19 $0.37 n.a.

6 months

Net income $10.7 $113.8 - 90.6

EPS (diluted) 0.08 $0.89 - 91.0

Figures in millions except for earnings per share. Percentages are based on unrounded sales and income figures.

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