Good afternoon, everyone, and welcome to Associated Banc-Corp third quarter 2011 earnings conference call. My name is John and I will be your operator today. At this time, all participants are in a listen-only mode. We will be conducting a question-and-answer session at the end of this conference. As a reminder, this conference is being recorded. During the course of discussion today, Associated management may make statements that constitute projections, expectations, beliefs, or similar forward-looking statement. Associated's actual results could differ materially from the results anticipated or projected in such forward-looking statement. Additional detailed information concerning the important factors that could cause Associated's actual results to differ materially from the information discussed today is readily available on the SEC website in the risk factor session of Associated's most recent form 10-K and any subsequent form 10-Q. Following today’s presentation, instructions will be given with the question-and-answer session. As a reminder, this conference is being recorded, Thursday, October 20, 2011. At this time, I would like to turn the conference over to Philip Flynn, president and CEO for opening remarks. Please go ahead, sir.

Thank you, John, and welcome to our third quarter conference call. Joining me today are Joe Selner, our CFO, and Scott Hickey, our chief credit officer, and our recently-appointed Deputy CFO Chris Niles. This afternoon, I'll begin by reviewing our results for the quarter and then update you with what’s going on with our businesses. I'll begin by pointing out a few highlights from our third quarter results on Slide 2. We reported net income to common shareholders of $34 million or $0.20 a share. This compares to net income of $26 million or $0.15 a share for the second quarter, a 33% increase. Our loan portfolio grew 3% to 13.5 billion during the quarter, with solid growth from each of our major segments including commercial, commercial real estate and residential mortgage. We continue to see the results from the investments we are making in these areas. Consistent with our strategy to fund loan growth, primarily through runoff of the securities portfolio, net interest income from loans grew quarter-over-quarter, while securities income continued to contract. The net interest margin for the quarter was 323 basis points, down 6 basis points from last quarter. This was driven by a compression of yields on earning assets, partially offset by a decline in cost of non-brokered deposits, and partially reflecting the effect of our TARP refinancing. We’re pleased with the ongoing improvement in our credit quality indicators including a 14% decline in nonaccrual loans during this quarter. Nonaccrual loans of 403 million are at the lowest level in seven quarters, and represent 3% of total loans, down from 3.6% last quarter. We recorded a provision for loan losses of $4 million, less the net charge-offs of 30 million. The lower provision and reserve release were driven by the continued ongoing improvement in the…

(Operator instructions). We’ll take our first questions from Terry Mcevoy from Oppenheimer. Please go ahead, Terry. Terry Mcevoy – Oppenheimer & Co. : Thanks. Good afternoon. I wonder if you could talk about the opportunities in Wisconsin and Milwaukee for just hiring any employees that are maybe looking for a new home given some consolidation in that marketplace. Is that window still open? I know you provided some numbers on the last call in terms of hiring, any update there would be appreciated.

Sure, Terry. We continue to always look for high-quality people who can help us grow the company, and the window that you’ve referred to in Milwaukee remains open. We’ve hired, I think as I said before, at this point, more than 100 people, most of those in customer-facing roles from M&I Bank and we continue to believe that over the coming quarters, the potential disruption that we’ll see from the integration of that bank will give us opportunities both on the hiring front, but most importantly an opportunity for us to grow our own business. Terry Mcevoy – Oppenheimer & Co. : And then, I guess my second question, is it too early to think about buybacks, increases in dividends? I know the last third quarter you took care of TARP, is there, I guess, another window there or is there a gap that needs to happen before you kind of have those types of conversations with the appropriate people?

Yeah, we’ve said publically that we will be reviewing our dividend policy and so we’ll be taking a look at that prior to the end of the year. Terry Mcevoy – Oppenheimer & Co. : Great, thanks, Phil.

Sure.

Okay, thank you sir. And we’ll take our next question from Chris McGratty from KBW. Chris, please go ahead.

Good morning, guys, or good afternoon. In terms of the Durbin, you know you gave the revenue numbers, what is the, you know, what’s your sense of how much you’re going to be able to mitigate? I know it’s a little early, but as you get into 2012, what percentage, you know, ballpark, do you think that you guys could offset?

Yeah, Chris, we’re still in the process of deciding how we’re going to respond to this. So I’m just not prepared right now to hazard a guess as to what we might be able to mitigate. We’re committed with whatever we do to be sure that we deliver a valuable service to our customers and that we get paid a fair and reasonable price for that. So we are looking at all the different ways that we price our services to customers and certainly, we’re mindful of the fact that, you know, a significant amount of revenue that we used to receive from interchange fees has gone away because of Durbin. And we need to do what we can to be sure that we’re receiving a fair amount of revenue for what we’re providing. But we’ll roll out more detail on exactly what we plan to do in this coming quarter.

Okay, great. You know, in light of the – in the revenue pressures in the industry, you guys are investing quite a bit in the branch, your kind of refurbishment initiative. How much of the expenses are kind of in the numbers or you know, are a step up kind of going forward?

Yeah, we’ll provide more guidance as we get into January and talk about 2012, but we’re in the first year of a four-year project, so you know, certainly the expense of what we’re planning to do, particularly with our branch refurbishment is not yet completely reflected in our numbers.

Okay. That’s helpful. And then lastly on the provision, you know, you guided, I think the lower dollar amount going forward. Is there a change of going negative?

There is a change it goes negative, yes.

Okay.

I’ve said before that I'm not a huge fan of that, but the reality is accounting rules and the rapid improvement in the portfolio could result in that.

Okay. And then last, the growth number you gave, was that – that was an unannualized number, the 2%?

Yeah, that’s quarter over quarter. We grew – we’ve grown about 9% year over year. We’ve grown –we grew about 4%, I recall, first to second quarter, about 3% second to third quarter and we’re anticipating about 2 to 3% in the fourth quarter.

That helps a lot. Thanks a lot.

Sure.

Okay, thank you. And we’ll take our next question from Emlen Harmon from Jefferies. Please go ahead with your questions. Emlen Harmon – Jefferies & Co.: Thanks. Good evening. Just – maybe a follow up to the question on expenses and understanding the ramp there. If you guys could talk on just kind of the – on the branch side, investment side of things there. Could you talk too just about specialty lending, kind of where you are hiring from there and you know how we think about expenses ramping up in that part of the business as well?

Sure. A component of the growth that you saw in our commercial and business lending segment came out of our specialized lending area. In fact, about 140 million of that was out of that growth – 70 of that was out of the mortgage warehouse so that’s, you know, that’s not long lived outstandings, it’s driven by refi activity out there in the broker world. We have hired the vast majority of the people that we need in our specialized lending group, so there isn’t a whole lot more hiring we have to do there. A part of our specialized lending group, however, is the commercial deposit and treasury management area. We hired a new head of that. We’ve hired a number of new people there, but there is some more hiring to do in Treasury Management. Overall, we’re up to just over half a billion dollars of outstandings in the specialty lending areas, as I said, a pretty good chunk of that is mortgage warehouse, about 240 actually. So we’re getting steady, but not unreasonably rapid growth there, which we actually planned for. Emlen Harmon – Jefferies & Co.: Got you. So it sounds like, at least from a salaries perspective, you’re getting kind of – you’re getting closer to a run rate at least and then is there a – is there a variable component to this comp on that side of the business? You know, as you see that grow more, does that come into play at all?

Well, there’s a variable component to almost all of our customer-facing relationship managers. So sure. Emlen Harmon – Jefferies & Co.: Okay. And then just one…

We accrued for that along the way, so you know, whatever incentives we plan on paying for this year’s performance in January has been accrued. They’re in the numbers. Emlen Harmon – Jefferies & Co.: Got you. Okay. And then again, just touching on the dividend, you said you were going to take a look at your policy in the fourth quarter. Does the outstandings [inaudible] and MOU affect your approach there at all or is that not much of a concern?

We’re in constant contact with the Feds, so whatever plans we would have around any capital activities, including the dividends repayment, we would run by them as a matter of course. So I’m not real concerned about that right now. Emlen Harmon – Jefferies & Co.: Okay, great. Thanks for taking my questions.

Sure.

Okay, thank you. And we’ll take our next question from John Arfstrom from RBC Capital. John, please go ahead. You phone may be muted. We’ve opened up John Arfstom’s line. John Arfstrom – RBC Capital: Can you hear me?

Yep. John Arfstrom – RBC Capital: All right. Well, good afternoon. A question on loan growth. Phil, you talked about how a lot of the growth had come from the national business and you said that 70 million was an increase in warehouse. Where else did it come from, maybe geographically or type other than the warehouse growth?

Sure. Let me run through where the loan growth came from if you want. First of all, on the commercial and business lending side. We had a – call it 200 million of growth there so about 138 million of that came out of the specialized groups of which 70 was from the mortgage warehouse business. About 30 each from oil and gas, power and utilities. And then the rest from other odds and ends. And then out of our general commercial business, we had about 60 million of growth and that was spread out, you know, across fee, the three state footprint. In the commercial real estate area, we had 108 million of growth, about 50 out of Wisconsin, about 30 out of Illinois, the rest of it in Minnesota, generally speaking. We had quite a bit of growth in the multi-family area, which we’ve been focusing on. And then our residential mortgage business grew by about $113 million and much of that came out of Chicago, Milwaukee and then the rest was scattered in other places. John Arfstrom – RBC Capital: Do you expect the mix to be similar in Q4? Meaning, will it be as warehoused every year? Do you expect other drivers in Q4?

Yeah. We think our warehouse outstandings will start to tail off. We’re already seeing our own origination pipelines slowing quite a bit this past couple of weeks. I’m sure that’s the case with our broker customers. So I think by the time we get to the end of this quarter, you’ll see the warehouse outstandings come down. But that aside, we would expect to get good solid, balanced growth from each of the three areas. We continue to grow our [inaudible] portfolio adjusted rate mortgage business, we continue to have a very strong pipeline in the commercial real estate business and the combination of the specialty as well the course of the general commercial lending in small business areas will continue to grow too. John Arfstrom – RBC Capital: Okay. Good. And then just a question on the securities portfolio side. Where would you like that to be in terms of overall size?

We’ve continued to allow securities portfolio to serve as a source of liquidity in funding for our ongoing loan growth and we would expect to see that portfolio continue to shrink for the next couple of quarters. John Arfstrom – RBC Capital: That will the source of funds for lending?

We are pleasantly surprised by some of the influence we’re seeing on the DDA and other fronts as customers seek liquidity. But as we look forward, we’ll continue to optimize the [inaudible] of our liabilities and expect that we’ll continue to do the investment portfolio for the next couple of quarters. John Arfstrom – RBC Capital: Okay. And then, Phil, just one last question for you. I don’t know if you want to take a stab at it or not, but in your summary slide, Slide 8, in 2012 and beyond you talk about focusing on levers for expansion. I think I know some of the answers, but are there may be a top – top two or three priorities that we should focus on for ’12 and beyond?

Yeah. I don’t want to get deeply into talking about ’12, but since I kind of opened up the question with the slide, I think you’re going to continue to see loan growth. I mean, that’s very important. If you recall the past at Associate, we had about a $16 billion loan portfolio which shrank by about 4 billion and is now climbing back to about 12.5 billion. So you should continue to see probably the most important earnings driver being loan growth. And as Chris was just saying, over the coming quarters, we’ll get to a point where the securities portfolio will probably stick and then you’ll see some balance sheet expansion driven by loan growth. That’s the most important area. Additionally, we’ll expect to see a pickup in our retail business reflecting the significant investment we’re making in refurbishing the branch system out there, probably later in the year although we are starting to see, you know, pretty encouraging deposit growth, which is, of course, critically important. On the fee side, you know, we’ve had a lot of headwinds in fees, of course as we know form Reg E and coming Durbin. So certainly, year over year there’ll be a lot of pressure there. But as I was saying before, we need to figure out an appropriate way to get paid for the services we’re providing and we will do that. John Arfstrom – RBC Capital: Okay, thank you.

Okay, thank you. (Operator Instructions). We’ll take our next question from Scott Siefers from Sandler O’Neill. Scott, please go ahead. Scott Siefers – Sandler O'Neill: Good afternoon, guys. I think most of my questions have been answered, but I guess number one, so NII, you know, it looks like we’re hopefully reaching that reflection point. Do you think given the ongoing securities portfolio reduction, I mean, can we – can I stabilize it in the fourth quarter? Is that going to be something we see maybe early next year? How are you thinking about that? I mean, you give a give good color on the next couple of quarters of securities portfolio decline and then on margins, how are you thinking about reaching that reflection point?

Well, I think we’re close. Arguably, we’re there, but you know, within the next quarter or two it will be clearly – clearly we will reach that reflection point. The issue that we’ve been facing is, you know, the plan for funding the loans has worked out very well. We expect it to be reducing the securities portfolio in order to fund, you know, reasonably robust loan growth and that’s what we’ve been doing. What hasn’t worked out so well is that we’re trading a yield on securities for essentially about the same yield on loans while we expect the loan yields to be higher. But interest rates have come down so dramatically over the course of the year that it’s sort of a wash right now as we trade out of security and make a loan. So until we get to the point where, you know, we’re done funding loan growth and start to see some balance sheet expansion, you know, it’s kind of a struggle to get a lot of NII growth right now. Scott Siefers – Sandler O'Neill: Okay. I appreciate that. And then, I wanted to ask, I guess basically the same question on the fee side. You’ve given a lot of good color on whether it’s the rate fee for Durbin, but I guess probably, you know, the biggest dollar over the, let’s call it the last several quarters has been in the mortgage business. A good chunk of that is, for example, [inaudible] portfolio loans. I think where once we get beyond the fourth quarter and the impact of the Durbin, you know, should we be ultimately at a steady state on the fee income side, are you thinking?

Just for clarity, the portfolioing of loans actually reduced our fee income. Scott Siefers – Sandler O'Neill: Yeah, that’s what I meant.

Yeah. So we dampened that fee income brand, which is in part why we alluded to the fact that we would expect in the current rate environment we’re not portfolioing the fixed rate [inaudible],that despite the slowdown, we’ll see some lips into the fourth quarter from those fees as well. One day we would like to see a steady state, but it’s a very volital routine now. Scott Siefers – Sandler O'Neill: Okay. I think that is about it. All right, thank you.

Okay, thank you. We’ll take our final question at the moment coming from Erika Penala from Bank of Amercia. Erika, please go ahead with your question. Russell Gunther – BofA/Merrill Lynch: Hi. Good afternoon. This is Russell Gunther on for Erika. Most of my questions have been asked and answered, but I just have one. Within your early staged delinquency bucket, it looks like commercial real estate increased a bit. Also a little pickup in the restructured accruing loans in this bucket as well. Could you give us a sense for what was going on in this quarter and how that commercial real estate is performing in general?

Sure. So there’s two questions. First of all, the accruing TDR, a little bit of pickup was really a result of the new guidance on how we account for that. There wasn’t any news in there, Scott?

Accruing really this just – we – the accruing loans restructured, it went up slightly primarily as we looked – we had to look back three quarters to January 1. As we looked back, there were about 14 million in loans that we reclassified into restructuring relatively minor. So that was kind of the look back for three quarters. On the 30-to-89 day tick up, you know, we’ve now seen that for two quarters and you know, we’ve done some digging there because we were a little bit concerned about that trend. It turns out that of the – call it $100 million in that bucket today, that about 70 million or so is four loans. Two of those have since paid current since the end of September. Another one that was going to be paid off is now being retained and rebooked and will be current. So as we sit today, I’m not really concerned about that 30-to-89 days bucket. If it continued to trend up for some reason, we would certainly be concerned and we’ll talk about it more in the next call. But I think we’re okay there.

Overall, the commercial real estate continues to improve. Russell Gunther – BofA/Merrill Lynch: Thank you for that. That’s very helpful. Just one clarifying question please, on the loan growth, the 3%, is that end of period or averages?

That’s end of period. Russell Gunther – BofA/Merrill Lynch: End of period, okay, great.

Although, the average has been about that too. Russell Gunther – BofA/Merrill Lynch: Okay.

We’re not getting real spiky stuff at the end. I mean, this has been pretty steady throughout the quarters. Russell Gunther – BofA/Merrill Lynch: Great. All right, thanks a lot, guys.

Sure.

Okay, thank you. I’m showing no further questions in the queue. I’d like to turn the call back to Philip Flynn for closing comments.

Thanks. Thanks for joining us today on our call. We’re very pleased with the results from the quarter and in spite of a soft economy we continue to see opportunities in our market to grow our business. We were proud to have delivered on our commitment to our shareholders to repay TARP in a shareholder-friendly manner. We look forward to talking to you again next quarter and if you have any questions, as always in the meantime, give us a call. Thanks again for your interest in Associates.

Ladies and gentlemen, this concludes the Associated Banc-Corp Third Quarter 2011 conference call. You may now disconnect.