Moody’s drops People's United Financial

Moody's Investors Service downgraded all long-term ratings of People's United Financial, Inc. (PBCT) and its subsidiaries.

People's United Financial’s issuer rating was downgraded to Baa1 from A3. The standalone bank financial strength rating of the company's lead bank, People's United Bank, was downgraded to C from C . The bank's standalone baseline credit assessment is now a3.

The bank's long-term deposit rating was downgraded to A3 from A2, its subordinated note rating was downgraded to Baa1 from A3 and its short-term deposit was downgraded to Prime-2 from Prime-1.

The outlook is now stable.

Moody's said the downgrade reflects concerns regarding People's United Financial’s high loan growth, especially in its commercial loan portfolios. The high growth rate signals that future asset quality metrics could be weaker than its historically strong levels. The high growth rate also weakens its funding structure.

These negative developments are occurring when the bank's capital ratios are no longer superior to those of similarly rated peers.

Moody's said it concluded that with these attributes, People's United Financial’s rating is better situated at the median of U.S. bank ratings.

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