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Yields below are based on the Q2-09 dividends. ASBC, CMA, FMBI, FULT, HBAN, MBFI, ONB, SNV, SUSQ and USB have reduced their Q2-09 dividends - and BBT its Q3-09 div Fitch downgrades First Midwest Bancorp ratings AP 5-22 Fitch Ratings downgraded the long-term issuer default ratings of First Midwest Bancorp Inc. and its subsidiary, First Midwest Bank, citing deteriorating credit quality and expected higher credit costs. The agency also assigned the bank and its holding company a "Negative" ratings outlook. Fitch lowered the companies' long-term issuer default ratings to "BBB" from "BBB+" and affirmed their short-term issuer default ratings of "F2." It said it based the changes on First Midwest's "deteriorating credit quality and Fitch's expectation of higher credit costs over the near term." First Midwest started reporting worsening asset quality in its residential land and development portfolio a year ago as the housing market in the Chicagoland area "began to experience significant stress," Fitch said. "This portfolio has continued to exhibit considerable weakness, and now represents nearly 60% of FMBI's nonaccrual assets," the agency said. "However, more recently, signs of weakness in other portfolios have emerged." Most notable among those, Fitch said, was the bank's nonaccruing commercial loans, which increased 113% in Q1-09 and now represent 2.2% of that part of its portfolio. The ratings agency said several commercial real estate categories, including office, retail, and industrial, also have deteriorated. "Although (First Midwest Bancorp) has a history of solid operating performance, the need to build reserves given the level of asset quality deterioration will likely erode earnings through higher provisioning expenses," it said in a statement. BBT Prices 75 million share offering at $20 PRNewswire 5-12 BB&T Corporation (BBT) announced today that it has priced a public offering of 75 million shares of common stock at a price to the public of $20 per share for total gross proceeds of $1.5 billion. BB&T intends to use the proceeds of this offering, in addition to other funds, to repay the preferred stock and associated warrants that it issued to the U.S. Department of the Treasury as part of its Capital Purchase Program. S&P puts 23 financial firms on negative watch AP 5-05 Credit ratings agency Standard & Poor's is reviewing whether to cut the ratings of 23 regional and national banks. The firms were placed on "CreditWatch Negative" on Monday, which means there is a 50 percent chance the ratings will be cut in the next three months. S&P said it expects the results of the reviews by the end of May. The negative watch is tied to an ongoing industrywide review S&P is conducting on the financial services sector, which has been battered for nearly two years by the credit crisis and ongoing recession. Amid the review, S&P will look at potential mounting loan losses and earnings for the financial firms. The ratings agency will also try to determine how loan losses would affect a bank's cash cushion, possibly leading to a costly capital raise. The 23 banks S&P placed on watch were identified in an initial review as likely to underperform compared with their peers amid the weakening credit and economic environment. They will now face a more detailed review. S&P said the ratings cuts could be multiple-notch declines, but some banks could also keep their same ratings after the review. A ratings downgrade makes it more expensive and sometimes more difficult to borrow money. Amid the credit crisis, banks seen as struggling or facing liquidity problems have also seen their share prices tumble further than their competitors. The banks being reviewed for a potential downgrade include: Associated Banc Corp.; Astoria Financial Corp.; BB&T Corp.; Bank of America Corp.; Capital One Financial Corp.; Carolina First Bank; Citigroup Inc.; Citizens Republic Bancorp Inc.; Comerica Inc.; Fifth Third Bancorp; First National Bank of Omaha; Huntington Bancshares Inc.; KeyCorp; M&T Bank Corp.; PNC Financial Services Group Inc.; Regions Financial Corp.; Susquehanna Bancshares Inc.; Synovus Financial Corp.; U.S. Bancorp; Webster Financial Corp.; Wells Fargo & Co.; Whitney Holding Corp.; and Wilmington Trust Corp. What About Stres at Smaller Banks? dealbook.blogs.nytimes.com 5-07 As Wall Street awaits the official release of the government’s much-discussed (and much-leaked) stress tests, there’s a larger question that some analysts think is getting overlooked. It’s all well and good to check up on 19 big lenders, but how healthy are the rest of the 8,000 or so American banks? In a report on Tuesday, Richard X. Bove of Rochdale Research said that “the application of the stress test to these companies could conceivably drive at least 150 of them out of business quickly.” He didn’t name names, however, adding that “due to a lawsuit, I am unable to provide a more specific definition.” Analysts at RBC Capital Markets weren’t feeling so restrained, however. RBC published a report Thursday that analyzed the rest of the 100 largest banks. The analysts made it clear that this was a hypothetical exercise — they don’t expect the government to announce a “Stress Test II” — but they said that the examinations for the big guys are apt to provide a framework for overseeing the smaller ones. “As these banks undergo their normal regulatory exams, the metrics used in the stress tests of the top 19 banks will likely be used in their exams,” they wrote. After running the numbers with various assumptions, including a goal of a 4% ratio of tangible common equity to risk-weighted assets, the RBC team came to this conclusion: “Dozens of companies will likely need to raise capital over the next 12 months.” Which banks? A table with the report shows that, under RBC’s assumptions, Huntington Bancshares would need about $1.8 billion in additional capital to reach the target ratio, while M&T Bank would need $1.6 billion. Many other lenders, including Comerica and Synovus Financial, would need smaller amounts. The analysts present a few caveats: They note that they used similar loss assumptions for all banks, which doesn’t account for certain banks being run better than others, and that some banks could earn their way out of needing extra capital. In general, investors seem to be growing more upbeat about banks, and bank stocks have risen from what the analysts described as “going-out-of-business” prices in March. But Wall Street may be overestimating banks’ earning potential in the years to come, the analysts added. They said that earnings power was likely to be below that of the 2003-2006 period, in part because of tighter oversight and higher capital requirements. Stress Testing the Rest of the Banks Cyrus Sanati, dealbook.blogs.nytimes.com 5-13 Analysts at SNL Financial are estimating that, taken together, the nation’s not-so-big banks would need to raise $75 billion under the government’s own stress-test criteria — the same amount of capital that the government is requiring large banks like Citigroup and Bank of America to find. The federal stress tests were meant to determine how much extra capital that 19 major financial institutions would need to weather a worse-than-expected turn in the economy, based on projected losses in a host of assets, like commercial loans and home mortgages. SNL Financial decided to take the same methodology the government used to test the big banks and apply it to more than 400 banks that have more than $1 billion in assets but were considered too small for the federal stress tests. (Analysts at RBC Capital Markets did a similar exercise last week.) SNL’s mini-bank stress test, summarized in a report on Tuesday, found that 367 out of 418 bank holding companies would need to raise a combined $75 billion in additional Tier 1 common capital under the stress test’s “adverse” loan-loss scenario. That is roughly the same amount the government wants 10 large banks to raise on their own. So far, the large banks don’t seem to be too concerned about finding the money — some have already sold stock to raise the required capital — but it could be much more difficult for smaller lenders to do the same. Here are some examples from SNL’s stress tests: They found that Popular, a bank with nearly $39 billion in assets that received $935 million under the government’s Troubled Asset Relief Program, would need to raise nearly $2.2 billion in additional capital, or more than three times its current Tier 1 capital level. Another bank, FBOP, which has $17.3 billion in assets and did not participate in TARP, would need to raise nearly $1.7 billion in additional capital, or 10 times its current Tier 1 capital level. Ratings & Dividend Changes - May On 5-11 BBT announced a reduced dividend, says it is cutting its third-quarter dividend to 15 cents per share from $0.46/share paid of 5-01-09. On 5-20 MTB declared a dividend of $0.70/share payable June 30, 2009 to stockholders of record at the close of business on June 1, 2009. Home Page Factoids Previous Update |