Moody’s Investors Services posted a long-term rating and review for Associated Banc-Corp.NYSE: ASB) and its main bank subsidiary, Associated Bank, NA, have been reviewed for downgrading to the so-called junk status. The price of ASB shares he fell 1.5% early Tuesday sales.
The company’s long-term and non-performing loans are rated Baa3, the lowest in the investment grade, and its commercial paper is P-2.
Short-term banks’ Prime-1 for deposits and P-2 for counterparty risk have been determined and are not reviewed.
The review was prompted by the bank’s recent decline in capitalization and liquidity across the board, which resulted in ratings that fell below those of its rated peers, Moody’s said.
As such, the review will focus on Associated’s (ASB) financial plans and strategies and the risks associated with the bank’s new business ventures.
“In addition, the bank has taken steps to reduce its earnings, such as increasing car loans, bringing risks to the bank due to new businesses that need to be reassessed,” Moody’s said.
Associated Banc-Corp’s financial ratio, as measured by liquid banking assets to tangible banking assets, was 13% as of Sept. 30, 2022 compared to the average of 22.23%.
A company’s debt is important because it affects its ability to get money at a low cost. Stronger expectations make the rate even higher when borrowing money.
SA analyst Sheen Bay Research sees Associated Banc-Corp’s (ASB) growth slow but remains positive.