F.N.B. Fails to Gain on Moody's Rating - Analyst Blog


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The stock price of F.N.B. Corporation ( FNB ) remained unchanged despite Moody's Investors Service, a rating arm of Moody's Corp. ( MCO ), first time assigned ratings to the company on Thursday. Though an issuer rating of Baa3 and a stable outlook failed to gain investors' confidence, the grades reflect the company asset quality strength.  

F.N.B. Corporation's subsidiary First National Bank of Pennsylvania, long-term deposits and other senior obligation were rated at Baa2, while short-term obligations were rated at Prime-2. Further, the standalone bank's financial strength rating (BFSR) was C-, which implied credit assessment of baa2.

The rating agency assigned the ratings based on F.N.B. Corporation's stable asset quality, consistent flow of revenues and its existing foothold in Western Pennsylvania. However, it also took into account First National Bank of Pennsylvania's comparatively weaker capital position and its risky acquisitions in unexplored markets beyond Pennsylvania.

In second-quarter 2013 F.N.B. Corporation's total revenue of $144.6 million surpassed the Zacks Consensus Estimate of $132.0 million. Efficient risk management, cost control and healthy net interest margin continue to enhance the company's profitability. However, the continued low interest rate scenario will likely compress F.N.B. Corporation's margin, going forward.

Further the company has a moderate risk profile with commercial real estate loans (including commercial mortgages, multifamily mortgages, construction loans and excluding owner-occupied properties), of approximately 195% of Moody's adjusted tangible common equity at second-quarter 2013.

On the flip side, F.N.B. Corporation's capital ratios witnessed deterioration in the quarter. As of Jun 30, 2013, the estimated total risk-based capital ratio was 11.9%, compared with 12.3% as of Mar 31, 2013.

Further, the estimated Tier 1 risk-based capital ratio was 10.4%, down from 10.7% as of Mar 31, 2013. The leverage ratio was 8.3% compared with 8.4% in the prior quarter. Though these ratios were above the regulatory requirements, they lagged the figures reported by the company's peers.

Currently, F.N.B. Corporation's carries a Zacks Rank #3 (Hold). Better-performing banks include Community Trust Bancorp Inc. ( CTBI ) and Simmons First National Corporation ( SFNC ). Both of these stocks carry a Zacks Rank #1 (Strong Buy).

COMMUN TRUST BC (CTBI): Free Stock Analysis Report

FNB CORP (FNB): Free Stock Analysis Report

MOODYS CORP (MCO): Free Stock Analysis Report

SIMMONS FIRST A (SFNC): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
More Headlines for: CTBI , FNB , MCO , SFNC

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