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Moody’s takes negative actions on U.S. banks
Moody's Investors Service said it took negative rating actions on several U.S. regional banking groups with comparatively high energy-lending concentrations.
The long-term ratings, standalone baseline credit assessments (BCA), adjusted BCAs and long-term counterparty risk (CR) assessments of the following four banking groups were placed on review for downgrade: BOK Financial Corp. (A2); Cullen/Frost Bankers, Inc. (A2); Hancock Holding Co. (Baa1); and Texas Capital Bancshares, Inc. (Baa3).
In addition, the Prime-1 short-term deposit rating and Prime-1(cr) short-term CR Assessment of Hancock’s lead bank, Whitney Bank, were placed on review for downgrade.
The ratings, BCAs, adjusted BCAs, and CR Assessments of the following two banking groups were affirmed, but their outlooks were changed to negative from stable: Comerica Inc. (A3) and Associated Banc-Corp (senior unsecured Baa1).
In related actions, Moody's affirmed the ratings and maintained the outlooks of three other banks with comparatively high energy-lending concentrations: Amarillo National Bank (Baa1), BBVA Compass Bancshares, Inc. (Baa3) and Zions Bancorporation (senior unsecured medium-term note provisional Ba1).
Moody's said the actions were driven by three broad factors. First, these banks hold comparatively large energy-related loan exposures when compared to their tangible common equity.
Second, the prolonged period of low oil prices and Moody's expectation that prices will remain low for an extended period undermine the quality of the banks' energy-related loans.
Third, to various degrees, these banks operate in regional economies where the energy sector contributes more to the local economy than the national average, exposing the banks to deterioration in their non-energy loan portfolios, the agency said.
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