Associated accepts government money

Associated Bank, based in Green Bay, announced recently that it has sold $525 million of senior preferred shares and related common stock warrants to the U.S. Department of the Treasury under the federal government’s voluntary Capital Purchase Program.

“The Treasury Department’s investment is confirmation of the strength of Associated Banc-Corp,” said Paul S. Beideman, chairman and CEO.

The additional capital will increase the company’s Tier 1 capital ratio to 12.22 percent from 9.22 percent at Sept. 30, 2008, and increase the total capital ratio to 14.08 percent, compared to 11.08 percent at Sept. 30.

“The additional capital will support our customers’ borrowing needs and other growth opportunities in our markets,” Beideman said. “We believe our participation in the Capital Purchase Program will benefit our customers, shareholders and the communities we serve.”

The Capital Purchase Program is often labeled as a “bailout of troubled banks.”

Beideman said that is not the case.

“The primary purpose of the Capital Purchase Program is to build confidence in the country’s financial system and keep credit markets open. If capital levels are stronger, the financial system is stronger."

“Treasury is consulting with the banking regulators to identify those banks where additional capital is likely to be most effective. It is our understanding that the banking regulators are making recommendations to the treasury about which banks will be in the best position to use the capital to make more loans. Given that the purpose of the equity investments is to spur more lending, the treasury is likely to invest in healthy, viable institutions.

“Under the Capital Purchase Program, treasury receives senior preferred stock that will pay cumulative dividends at a rate of 5 percent per year for the first five years and 9 percent thereafter.”

He said Associated is the same company it was before participation in the Capital Purchase Program. He added that business initiatives have not changed.

“We continue to execute our strategies for growth,” Beideman said. “The additional capital we receive through the Capital Purchase Program will broaden our ability to meet our customers’ borrowing needs and support other growth opportunities in our markets.”

Associated Bank has total assets of $22 billion. Associated has approximately 300 banking offices serving 180 communities in Wisconsin, Illinois and Minnesota. There are four Associated locations in Hudson.

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