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Moody’s snips Associated Banc-Corp
Moody’s Investors Service said it downgraded all its long-term ratings for Associated Banc-Corp, including its local-currency subordinate rating to Baa2 from Baa1 and its senior unsecured shelf and subordinate shelf local-currency ratings to (P)Baa2 from (P)Baa1. Moody's also lowered the non-cumulative preferred stock and preferred shelf non-cumulative local-currency ratings to Ba1(hyb) and (P)Ba1 from Baa3(hyb) and (P)Baa3, respectively.
The agency said it also revised the outlook to stable from ratings under review concluding the review for downgrade started on Jan. 23.
Moody’s noted the bank’s weaker capital position and its high concentration on commercial real estate, which it considers a risk to Associated’s credit profile. As of Dec. 31, about 53% of the bank’s deposits were uninsured.
“Associated's capital ratio has steadily declined from pre-pandemic levels. At year-end 2022, Associated's Moody's adjusted tangible common equity (TCE) to risk-weighted assets, declined to just under 9% from just under 10% at year-end 2019. Over the same timeframe, its reported common equity tier 1 (CET1) ratio decreased to 9.4% from 10.2%, though as of 31 March 2023, there was a small increase to 9.5%. This decline in capitalization is a credit negative as it limits the bank's capacity to absorb risks in an increasingly challenging operating environment,” Moody’s said in a press release.
However, “The stable outlook for Associated reflects Moody's view that the bank will maintain its asset quality, capitalization, funding and liquidity despite the deteriorating operating environment over the next 12 to 18 months,” the agency said.
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