S&P drops Associated Banc to junk

Standard & Poor's said it revised the counterparty credit ratings on Associated Banc Corp. to BB+/B from BBB/A-2.

The outlook is negative.

"The ratings reflect our belief that Associated's credit costs may further exceed our expectations throughout 2009 and 2010," S&P analyst Sunsierre Newsome said in a statement.

"We expect that the company's loan portfolio could deteriorate further based on its current exposures to CRE and construction loans, as well as the worsening of its current loans into problem loan categories over the next several quarters. As a result, we believe the company's profitability and capital generation should remain weak over that period."

Ratings continue to be supported by Associated's good franchise in the Midwest, its management's conservative underwriting, and its good liquidity and funding, the agency said.

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