Associated Banc-Corp's IDRs Downgraded

The Issuer Default Ratings of Associated Banc-Corp have been downgraded by Fitch Ratings, and the rating outlook of its subsidiaries has been revised to negative due to growth in nonperforming assets linked to residential land development and construction loans. The company's long-term IDR was downgraded from A-minus to BBB-plus and its short-term IDR was downgraded from F1 to F2. The downgrades reflect Associated Banc-Corp's "continued reliance on short-term borrowings while maintaining a modest level of liquid assets and bank-level capital ratios that remain less" than those of most peers, the rating agency said. The ratings of the company's principal subsidiaries were affirmed, but the outlook was revised to negative because of "marked increases" in its NPAs and net chargeoffs that were attributed largely to weakness in the residential land development and construction loan book. Fitch said the company "has a lengthy track record of very manageable credit losses even during periods of elevated NPAs," but that real estate prices and mortgage market conditions are likely to "challenge" it in remediating problem credits.