MOODY'S ASSIGNS RATINGS TO FOUR AFFILIATE BANKS OF ASSOCIATED BANC-CORP (DEPOSITS AT A2/P-1)
Moody's Investors Service has assigned ratings to four bank affiliates of Associated Banc-Corp (ASBC) -- Associated Bank Green Bay, Associated Bank Milwaukee, Associated Bank Illinois, N.A., and Associated Bank North. The ratings of each of the banks have been assigned at A2 for long-term deposits and for other long-term senior obligations, Prime-1 for short-term deposits and other short-term senior obligations, and C for bank financial strength.
Moody's said the ratings reflect the group's substantial regional-banking franchise, its good profitability and its solid asset quality. The ratings also incorporate the significant challenges the group faces, such as expanding its commercial banking business in the areas acquired by the First Financial Corporation merger. This was a thrift oriented toward real estate lending that held a lower percentage of transaction deposit accounts. Moody's added that other challenges faced by ASBC were to offset secular pressure on the company's net interest margin by selling customers more services, and to reinvigorate deposit growth while improving ASBC's deposit mix.
Associated maintains large shares of certain communities in Wisconsin, and it has also extended its franchise into Illinois and Minnesota, partly as a result of an active acquisition program. The company ranked third in deposit share in Wisconsin with statewide share of nearly 9% at the end of the first quarter of 1999. ASBC also produces a comparatively good preprovision return on assets, supported by a moderate overhead level and by a relatively healthy contribution from its fee businesses. However, its core earnings are expected to be relatively flat for the full-year 1999 because of moderate asset growth, margin pressures, and lower mortgage-banking income, Moody's stated. ASBC's nonperforming assets are moderate -- about in line with peer averages -- although its loan losses have been consistently lower than average. Within the context of its footprint, ASBC has a relatively diversified portfolio of community loans, residential mortgages, commercial real estate, and consumer loans. Much of the ASBC's commercial real estate lending is owner occupied.
The company's liquidity is good, Moody's said, in that its investment portfolio equals a large percentage of its assets, and its core deposits are about equal to its loans. "Nevertheless, generating better core deposit growth and improving the deposit mix so that it contains more transaction accounts will be a challenge for management given the moderate growth of its competitive markets", the rating agency concluded. ASBC's capital ratios are about in line with its peers, and well in excess of regulatory thresholds to be classified as well capitalized.
Associated Banc-Corp, with assets of $ 11.6 billion, at mid-year 1999 is headquartered in Green Bay, Wisconsin.
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