Wisconsin Banking News

Sunset Bank to receive $5.6 million in federal funds; Associated Banc-Corp warns of quarterly loss

Sunset Bank to receive $5.6 million in federal funds

Waukesha-based Sunset Bank will receive $5.6 million in capital under the U.S. Treasury Department’s Capital Purchase Program (CPP), which is part of the department’s Troubled Asset Relief Program (TARP).

According to the Treasury Department, the voluntary CPP is designed to encourage U.S. financial institutions to build capital to increase the flow of financing to U.S. businesses and consumers and to support the U.S. economy.

Sunset Bank officials said the CPP funds will be used to reinvest in the local community with a focus on loans to credit-worthy business customers and qualified homebuyers.

"Nobody knows how long this recession will last or when the housing market will improve, but this gives us a chance to enhance our already strong capital ratio with a cushion so we are prepared and ready to assist our customers in these troubled times," said Robert Eastman, Sunset Bank’s chairman and chief executive officer. "It can be difficult for community banks to raise capital, so this additional capital gives us an opportunity to put Sunset Bank in a position to continue to be an important economic factor in the communities we serve."

Eastman said that Sunset Bank will use the funds to not only build capital, but also to fund much-needed small-business loans for customers who qualify under prudent underwriting standards. He added that terms of the agreement require the capital to be paid back.

"This capital is only available to stable institutions that qualify under a rigid regulatory review process," Eastman said. "Our main focus at Sunset Bank is reinvesting in the people and businesses of Waukesha County, and this allows us to do that. These funds give us more opportunity to take care of our customers and the community. We live and work here too and we want to help our neighbors during these tough economic times."

Associated Banc-Corp warns of quarterly loss

Associated Banc-Corp announced last week that it expects to record a provision for loan losses of $145 to $160 million for the second quarter, which may result in a net quarterly loss for the Green Bay-based parent company of Associated Bank.

The company’s second quarter net charge-offs are expected to be between $60 million and $70 million. After taking into consideration the increased provision, capital levels will exceed all well capitalized standards at June 30, the company said.

"This higher than anticipated provision results from asset quality downgrades to existing construction, commercial real estate and C&I credits, which are a result of weakness in the economy and further deterioration in collateral values," said Associated chairman and chief executive officer Paul Beideman. "We believe loan loss provisions and charge-offs will remain elevated due to the continued deterioration in the real estate sector and the weak economy. We expect the pace of loan and asset deterioration to moderate in future quarters."

Associated also announced that its board of directors has formed a new Risk and Credit Committee to supplement the company’s ongoing oversight of risk management in the areas of credit risk and investment portfolio risk. The board appointed the following directors to the Risk and Credit Committee: John Seramur (chairman), Eileen Kamerick and Richard Lommen.

Lisa Binder abrupty resigned as president of Associated Bank on May 15.

Associated Banc-Corp will release second quarter results on Thursday, July 16.


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