The odds of a capital raise by Associated Banc-Corp just went up.

That was the assessment of some on Wall Street after the Green Bay, Wis., company, currently operating under a memorandum of understanding with regulators, hired Union Bank veteran Philip B. Flynn as its president and chief executive.

Flynn is known for his credit expertise and commitment to strong coverage ratios. Analysts including Anthony Davis at Stifel, Nicolaus & Co. Inc. expect Flynn will want to at least partially close the gap between Associated and Union Bank, part of the Mitsubishi UFJ Financial Group Inc.-owned UnionBanCal, when it comes to key capital measurements such as tangible common equity and the Tier 1 common ratio.

"Given his credit background, we expect Mr. Flynn to take aggressive steps to address [Associated's] credit issues," Davis wrote in a note to clients. "We believe these steps are likely to include raising capital to bolster reserves" within the next few quarters.

Associated ended the third quarter with a TCE ratio of 6.64% and a Tier 1 common ratio of 8.67%, compared with Union Bank's TCE ratio of 8.29% and Tier 1 common ratio of 10.81%, Davis noted. The ratio of reserves to nonperforming assets stands at just 44% at Associated, which has been battered by losses related to real estate. When Flynn was the chief credit officer at Union Bank, Davis observed, the firm's coverage ratio increased from 148% at the end of 2000 to 215% at the end of 2003.

Flynn, 50, most recently was the vice chairman and chief operating officer at Union Bank, of San Francisco. He had been with the company since 1980, holding posts including head of commercial banking, head of specialized lending and head of commercial financial services. He had been a director of UnionBanCal since mid-2004.

An Associated spokeswoman did not respond Tuesday to a request for an interview with Flynn.

Flynn officially starts at Associated on Dec. 1, succeeding CEO Paul S. Beideman, who is known more for his experience with retail banking operations than with credit issues. Beideman announced his retirement plans in August. His duties as chairman will be handed to the board's lead director, William R. Hutchinson.

In a news release late Monday announcing Flynn's hiring, Hutchinson called the new CEO "a talented, experienced banker who understands how to manage the credit portfolio during tough times."

Associated disclosed last week that it had entered an MOU with the Office of the Comptroller of the Currency on Nov. 5, requiring the $23 billion-asset company to improve risk management and develop a three-year plan for maintaining capital levels.

The naming of a new CEO "answers the biggest question for the stock, but he comes in at a tough time and other questions remain," R. Scott Siefers, an analyst with Sandler O'Neill & Partners LP, wrote in a client note. He maintained his "hold" rating on the shares.

With Associated's credit losses threatening to chew through capital, the OCC required it to maintain higher-than-normal capital ratios.

Starting March 31 and lasting until the MOU is lifted, the company's Tier 1 capital to total average assets, currently at 8.33%, must stay above 8%, and total capital to risk-weighted assets, currently at 13.11%, must remain above 12%.

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