Recently, Moody's Investors Service, the credit rating wing of
), affirmed all ratings of the bank holding company of Trustmark
National Bank -
). The bank had previously received an "A3" and "Prime-2" long-
and short-term bank deposit ratings, respectively.
The standalone bank financial strength rating of "C"
(equivalent to a baseline credit assessment of "a3") and a "Baa1"
issuer rating of Trustmark Corporation were also confirmed in the
same event. All these ratings carry a negative outlook.
The rating affirmation came on the back of the company's
successful integration of BancTrust Financial Group, Inc. of
Mobile, Alabama while maintaining core profitability and capital
The credit management of Trustmark Corporation performed well
during the acquisition of BancTrust and generated profits
consistently. Also, the integration of the acquired entity did
not result in business attritions. The ratings agency also
identified that the overall commercial real estate concentration
that fell from the pre-crisis levels is not significant enough
when compared to peers.
Moody's opines that the overall financial profile of Trustmark
Corporation was affected by the takeover. However, the company's
profile remained on par with its industry counterparts.
The negative outlook affirmed by Moody's was reflective of two
aspects - the first being mounting operating costs that are
unlikely to mitigate declining accretion income, hampering
profitability. Secondly, as other real estate owned (OREO)
comprises approximately 50% of Trustmark Corporation's
non-performing assets, delay in the sale of the OREO portfolio
increases the risk of credit costs with deterioration in market
Rating affirmations from credit rating agencies play an
important part in retaining investor confidence as well as
maintaining creditworthiness in the market. Although Trustmark
Corporation's present score with the credit rating agency is
expected to help it write more business going forward, we remain
skeptical regarding the prospects owing to the negative outlook
Trustmark Corporation currently carries a Zacks Rank #3
(Hold). Some better-ranked stocks in the banking sector include
Farmers Capital Bank Corp.
). Both the stocks carry a Zacks Rank #1 (Strong Buy).
BNC BANCORP (BNCN): Free Stock Analysis
FARMERS CAP KY (FFKT): Free Stock Analysis
MOODYS CORP (MCO): Free Stock Analysis Report
TRUSTMARK CP (TRMK): Free Stock Analysis
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