Just as it had warned last month, Associated Banc-Corp ended the second quarter in the red after increasing its allowance for loan losses.

The Green Bay, Wis., company more than doubled its loan-loss provision from last year's second quarter, to $155 million, amid the continued decline in commercial real estate values and weakness in construction and real estate credits.

Nonperforming loans at the end of the second stood at $733.4 million, up 62% from the first quarter and more than double the $288.9 million reported a year earlier.

Investors were prepared for the bad news, after word from the company in late June that it did not expect to show a profit for the quarter.

The net loss was $24.7 million, or 19 cents a share, compared with year-earlier earnings of $47.4 million, or 37 cents a share.

But Paul S. Beideman, Associated's chairman and chief executive, indicated that the rate of decay in the company's loan book may finally be slowing.

"While we believe loan-loss provisions and chargeoffs will remain elevated, we expect the pace of deterioration to moderate in future quarters," Beideman said in a news release.

A more concrete reason for optimism was the 22% growth in deposits from last year's second quarter. Total deposits reached $16.3 billion.

The company ended the quarter with a tangible common equity ratio of 6.09%, slightly down from the 6.1% first-quarter ratio.

The second-quarter results included a Federal Deposit Insurance Corp. special assessment expense of $11.3 million.

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