Moody's Investor Services, a rating arm of
), has maintained its ratings for
) and its bank subsidiary Associated Bank, N.A. The rating agency
maintained senior unsecured rating at Baa1 and commercial paper
rating at Prime-2 on Associated Bank-Corp. The subsidiary bank
holds A3 and Prime-2 rating, owing to its long-term and
short-term deposits, respectively.
What Do the Ratings Indicate?
All the ratings reaffirm a stable outlook. According to the
rating agency, the rating affirmation reflects Associated
Bank-Corp's efforts towards rebalancing its loan portfolio, a
strong liquidity profile and superior asset quality ratios. These
positives partially offset the company's reduced core
Since 2010, asset quality has exhibited continuous improvement.
As of Sep 30, non-accrual loans declined 25.4% year over year to
$207.6 million and total nonperforming assets declined 26.0% from
the year-ago quarter. Additionally, the company has lessened its
exposure in the construction sector, although its presence
remains in real estate.
Associated Banc-Corp's strong balance sheet reflects a healthy
liquidity profile. As of Sep 30, average loans rose nearly 5.4%
from the prior-year quarter and average deposits increased 3.0%
year over year. Its ratio of core deposits to average gross loans
is better than its peers. Alongside, the company enjoys
substantial deposit market share in Wisconsin.
Core profitability has been hampered by a moderate net interest
margin and surging operating costs and costs related to
restructuring of the company's branch network, business portfolio
and upgrade of its technology platforms. Moreover, a streamlined
exposure in the construction sector, a prolonged low interest
environment, reduced loan spreads and an elevated level of
floating-rate loans have lead to the decline in NIM and ratio of
pre-tax pre-provision income to risk-weighted assets since
Associated Banc-Corp remains well capitalized. As of Sep 30,
2013, Tier 1 common risk-based capital ratio was 11.64%,
significantly above most large regional banks. However, capital
ratios have declined from 2011 owing to increased capital
returns. The payout ratio in 2012 soared to 57%. As the company
intends to enhance shareholder value, capital ratios are expected
to decline further. The company expects to return almost 100% of
earnings to shareholders in 2013.
Among others in the banking sector, Moody's recently rated
First Horizon National Corp.
) and its subsidiaries. The agency downgraded the senior
unsecured debt rating of First Horizon National Corporation to
Baa3 from Baa2.
Associated Banc-Corp currently carries a Zacks Rank #3 (Hold).
Private Bancorp Inc.
) is a better-performing banking stock in the Mid-West region
with a Zacks Rank #1 (Strong Buy).
ASSOC BANC CORP (ASBC): Free Stock Analysis
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MOODYS CORP (MCO): Free Stock Analysis Report
PRIVATEBANCORP (PVTB): Free Stock Analysis
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