Moody’s Investor Service has downgraded the long-term ratings of Intrust Bank and its holding company, Intrust Financial Corp.
Moody’s said that it downgraded Intrust Bank’s issuer rating from A3 to Baa1, and its standalone bank financial strength rating/baseline credit assessment dropped from a rating of C/a3 to to C-/baa1.
And Intrust Financial’s issuer rating was downgraded from Baa1 to Baa3, Moody’s said.
Lyndon Wells, Intrust’s division director of public affairs, said the $4 billion bank and its holding company take the downgraded ratings “very seriously” and have taken steps to strengthen oversight of their loan portfolios.
Moody’s, which analyzes and rates the credit worthiness of bond issuers and their bonds, said the downgrades were the result of increased asset-quality concerns — largely with non-accrual loans, loans that are more than 90 days past due and troubled debt restructured loans — and the holding company’s “persistently high double leverage.”
“Some of this is the result of INTRUST’s appetite for large single-client credit relationships relative to its size,” Moody’s said in its ratings downgrade. “INTRUST’s strategic challenge is that a reduction of its large exposures would reduce earnings at a time when they are already challenged by limited growth and low interest rates.”
“We’ve had our challenges the last couple of years,” Wells said of Intrust’s performance. “We’ve already implemented a number of processes to strengthen our credit administration processes … more carefully.”
Wells said the downgrades are not a statement on the bank’s safety and soundness. A review of the Office of the Comptroller of the Currency’s database shows that no enforcement actions have been issued against Intrust. The OCC is Intrust’s regulator.
Rick LeCompte, a finance professor at Wichita State University, said an examination of Intrust’s Tier 1 capital and total risk-based capital ratios show that the bank’s ratios are well within the limits of a safe and sound bank. “I have no problem there,” LeCompte said.