UPDATE 1-Associated Banc-Corp posts surprise Q3 profit

* Q3 EPS $0.07 vs est loss $0.08

* Interest expenses fall 43 pct

* Shares up 10 pct

Oct 22 (Reuters) - Associated Banc-Corp (ASBC.O), a Wisconsin-based regional bank, posted a surprise quarterly profit, helped by a 43 percent fall in interest expense.

Net income available to common shareholders was $8.7 million, or 7 cents a share, compared with $37.8 million, or 30 cents a share, in the year-ago period.

Analysts expected the company to post a loss of 8 cents a share, according to Thomson Reuters I/B/E/S.

Provision for bad loans rose 73 percent to $95.4 million. Net charge-offs were $90.0 million, compared with $38.4 million in the year-ago quarter.

The company expects loan loss provisions and charge offs to remain elevated.

Associated, which has taken $525 million from the government's $700 billion Troubled Asset Relief Program, reported interest expense of $59.4 million, down from $104.9 million.

The bank, which operates about 300 branches in Wisconsin, Illinois and Minnesota and has about $24 billion in total assets, has been trying to bring down its non-performing assets in its commercial-lending and home-equity portfolios.

Shares of the company were up 4 percent at $11.51, on heavy volumes, in afternoon trade on Nasdaq. It touched a high of $12.18 earlier in the day. (Reporting by Sweta Singh in Bangalore; Editing by Ratul Ray Chaudhuri)