May 17, 2017 / 9:02 PM / in a year

Fitch Affirms BBVA Compass Bancshares, Inc.'s L-T IDR at 'BBB+'; Outlook Stable

(The following statement was released by the rating agency) CHICAGO, May 17 (Fitch) Fitch Ratings has affirmed the Long-Term Issuer Default Rating (IDR) for BBVA Compass Bancshares, Inc. (BBVAC) at 'BBB+' and Viability Rating (VR) at 'bbb'. The Rating Outlook is Stable. This action follows Fitch's recent rating action on BBVAC's parent company, Banco Bilbao Vizcaya Argentaria SA (BBVA). Refer to Fitch's press release "Fitch Affirms BBVA at 'A-'; Outlook Stable" (dated April 28, 2017) for additional information on the BBVA rating action. A full list of rating actions follows at the end of this press release. KEY RATING DRIVERS IDRS AND SENIOR DEBT BBVAC's Long-Term IDR reflects the higher of its support-driven IDR or its standalone rating, the VR. BBVAC's support-driven IDR is 'BBB+', while its stand-alone rating or VR is 'bbb'. BBVAC's institutional support-driven IDR is higher than its VR, which reflects the parent's ability and propensity to provide support to BBVAC. BBVAC accounts for approximately 12% and 11% of consolidated parent assets and revenues, respectively. BBVAC's IDR is notched down one time from the parent's IDR of 'A-' reflecting its role in the group, the level of integration, the full ownership stake, and the support track record. VR BBVAC's VR, which reflects the company's intrinsic creditworthiness absent any extraordinary support, was affirmed at 'bbb' primarily reflecting the company's solid capital position, and still relatively good asset quality profile - despite energy-related asset quality deterioration that began impacting ratios in late 2015/early 2016. The ratings are constrained primarily by a weaker earnings profile. Capital remains solid, with a Common Equity Tier 1 under Basel III of 11.77%, on a transitional basis, up roughly 110bps from a year ago. This remains above the large regional bank peer median. BBVAC's capital requests have been modest to date, with relatively small dividends upstreamed to the parent. The company has one of the lowest total payouts in the peer group, incorporating only dividend payments. Fitch expects BBVAC to manage its capital profile conservatively given a weaker earnings profile. Excluding energy-related exposure, asset quality continues to remain relatively good. Fitch notes that NPAs, inclusive of accruing troubled debt restructurings, were somewhat higher than the peer median at year-end 2016, while NCOs remained around the average. Asset quality measures have been impacted by BBVAC's energy-related loan book, which has been declining and totaled around 4.8% of loans at March 31, 2017. Fitch expects some deterioration in asset quality for BBVAC, as well as the industry, from unsustainably low current levels. Offsetting these rating drivers, BBVAC's earnings performance continues to lag the average for large regional banks in the U.S. and is considered a key VR constraint by Fitch. BBVAC ROA in 2016 was just 41bps, as compared to the peer average (excluding BBVAC) of approximately 95bps. However, BBVAC's earnings profile is in line with other FBOs, who tend to lag large regional peers due to generally higher funding costs, greater reliance on spread income, and higher efficiency ratio. SUPPORT RATING AND SUPPORT RATING FLOOR BBVAC's Support Rating of '2' reflects the parent's ability and propensity to support BBVAC. BBVAC's support-driven IDR has historically been one notch below BBVA, reflecting Fitch's view that BBVAC is strategically important to BBVA, though not core. Since BBVAC's support reflects institutional support, there is no Support Rating Floor assigned. SUBORDINATED DEBT AND OTHER HYBRID SECURITIES Subordinated debt and other hybrid securities issued by BBVAC and by various issuing vehicles are all notched down from BBVAC's or its bank subsidiaries' VR in accordance with Fitch's assessment of each instrument's respective non-performance and relative loss severity risk profiles. HOLDING COMPANY BBVAC's IDR and VR are equalized with those of Compass Bank, reflecting its role as the bank holding company, which is mandated in the U.S. to act as a source of strength for its bank subsidiaries. LONG- AND SHORT-TERM DEPOSIT RATINGS BBVAC's uninsured deposit ratings are rated one notch higher than the company's Long-Term IDR and senior unsecured debt because U.S. uninsured deposits benefit from depositor preference. U.S. depositor preference gives deposit liabilities superior recovery prospects in the event of default. RATING SENSITIVITIES IDRS AND SENIOR DEBT Since BBVAC's ratings and Outlook are correlated with those of BBVA, changes in BBVA's ratings may result in changes to BBVAC's IDRs and Outlook. Given BBVAC's VR is at 'bbb', downward rating actions may be limited to just one notch, as BBVAC's VR would become the anchor for its IDR, absent any changes to the company's VR. VR Over the medium- to long-term, Fitch envisions limited VR upgrade potential given the bank's earnings profile. A downgrade to the VR would occur if BBVAC began to manage its capital more aggressively; however, given BBVAC's recent CCAR capital requests and historical dividend practices, this is viewed as unlikely. Further, Fitch expects that while the company's energy-related exposure is expected to continue to affect asset quality measures over the near term, it is not expected to impair capital. If capital erosion occurs because of elevated loan losses or other reasons, BBVAC's VR could be impacted. Fitch expects loan losses will deteriorate from currently unsustainably low levels, but outsized losses, particularly in the energy book, that reduce capital by more than 50bps could pressure ratings. However, over the more medium to long term, BBVAC's VR could be upgraded with improving earnings performance, combined with the continuation of moderating asset quality and the maintenance of capital at appropriate levels. SUPPORT RATING AND SUPPORT RATING FLOOR If Fitch views BBVAC as no longer strategically important to BBVA, the bank's support rating could be downgraded. If the support rating were downgraded, BBVAC's VR would likely become the anchor rating for the IDR. SUBORDINATED DEBT AND OTHER HYBRID SECURITIES These ratings are all primarily sensitive to any changes in BBVAC's VR. HOLDING COMPANY Should BBVAC's holding company begin to exhibit signs of weakness, or have inadequate cash flow coverage to meet near-term obligations, there is the potential that Fitch could notch the holding company IDR and VR down from the ratings of Compass Bank. LONG- AND SHORT-TERM DEPOSIT RATINGS The ratings of long- and short-term deposits issued by BBVAC and its subsidiaries are primarily sensitive to any change in BBVAC's Long- and Short-term IDRs. Fitch has affirmed the following ratings: BBVA Compass Bancshares, Inc. --Long-term IDR at 'BBB+'; Outlook Stable. --VR at 'bbb'; --Support at '2'; --Short-term IDR at 'F2'. Compass Bank --Long-term IDR at 'BBB+'; Outlook Stable; --Long-term deposits at 'A-'; --Senior unsecured at 'BBB+'; --Short-term IDR at 'F2'; --VR at 'bbb'; --Short-term deposits at 'F2'; --Support at '2'; --Subordinated debt at 'BBB-'. TexasBanc Capital Trust I --Preferred stock at 'BB-'. Contact: Primary Analyst Julie Solar Senior Director +1-312-368-5472 Fitch Ratings, Inc. 70 West Madison St. Chicago, IL 60602 Secondary Analyst Bain Rumohr Associate Director +1-312-368-3153 Committee Chairperson Justin Fuller Senior Director +1-212-908-2057 Media Relations: Hannah James, New York, Tel: + 1 646 582 4947, Email: Additional information is available on Applicable Criteria Global Bank Rating Criteria (pub. 25 Nov 2016) here Additional Disclosures Dodd-Frank Rating Information Disclosure Form here Solicitation Status here Endorsement Policy here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEB SITE AT WWW.FITCHRATINGS.COM. PUBLISHED RATINGS, CRITERIA, AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE, AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE CODE OF CONDUCT SECTION OF THIS SITE. DIRECTORS AND SHAREHOLDERS RELEVANT INTERESTS ARE AVAILABLE here. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE. Copyright © 2017 by Fitch Ratings, Inc., Fitch Ratings Ltd. and its subsidiaries. 33 Whitehall Street, NY, NY 10004. Telephone: 1-800-753-4824, (212) 908-0500. Fax: (212) 480-4435. Reproduction or retransmission in whole or in part is prohibited except by permission. All rights reserved. In issuing and maintaining its ratings and in making other reports (including forecast information), Fitch relies on factual information it receives from issuers and underwriters and from other sources Fitch believes to be credible. Fitch conducts a reasonable investigation of the factual information relied upon by it in accordance with its ratings methodology, and obtains reasonable verification of that information from independent sources, to the extent such sources are available for a given security or in a given jurisdiction. The manner of Fitch’s factual investigation and the scope of the third-party verification it obtains will vary depending on the nature of the rated security and its issuer, the requirements and practices in the jurisdiction in which the rated security is offered and sold and/or the issuer is located, the availability and nature of relevant public information, access to the management of the issuer and its advisers, the availability of pre-existing third-party verifications such as audit reports, agreed-upon procedures letters, appraisals, actuarial reports, engineering reports, legal opinions and other reports provided by third parties, the availability of independent and competent third- party verification sources with respect to the particular security or in the particular jurisdiction of the issuer, and a variety of other factors. Users of Fitch’s ratings and reports should understand that neither an enhanced factual investigation nor any third-party verification can ensure that all of the information Fitch relies on in connection with a rating or a report will be accurate and complete. Ultimately, the issuer and its advisers are responsible for the accuracy of the information they provide to Fitch and to the market in offering documents and other reports. In issuing its ratings and its reports, Fitch must rely on the work of experts, including independent auditors with respect to financial statements and attorneys with respect to legal and tax matters. Further, ratings and forecasts of financial and other information are inherently forward-looking and embody assumptions and predictions about future events that by their nature cannot be verified as facts. As a result, despite any verification of current facts, ratings and forecasts can be affected by future events or conditions that were not anticipated at the time a rating or forecast was issued or affirmed. The information in this report is provided “as is” without any representation or warranty of any kind, and Fitch does not represent or warrant that the report or any of its contents will meet any of the requirements of a recipient of the report. A Fitch rating is an opinion as to the creditworthiness of a security. This opinion and reports made by Fitch are based on established criteria and methodologies that Fitch is continuously evaluating and updating. Therefore, ratings and reports are the collective work product of Fitch and no individual, or group of individuals, is solely responsible for a rating or a report. The rating does not address the risk of loss due to risks other than credit risk, unless such risk is specifically mentioned. Fitch is not engaged in the offer or sale of any security. All Fitch reports have shared authorship. Individuals identified in a Fitch report were involved in, but are not solely responsible for, the opinions stated therein. The individuals are named for contact purposes only. A report providing a Fitch rating is neither a prospectus nor a substitute for the information assembled, verified and presented to investors by the issuer and its agents in connection with the sale of the securities. Ratings may be changed or withdrawn at any time for any reason in the sole discretion of Fitch. Fitch does not provide investment advice of any sort. Ratings are not a recommendation to buy, sell, or hold any security. Ratings do not comment on the adequacy of market price, the suitability of any security for a particular investor, or the tax-exempt nature or taxability of payments made in respect to any security. Fitch receives fees from issuers, insurers, guarantors, other obligors, and underwriters for rating securities. Such fees generally vary from US$1,000 to US$750,000 (or the applicable currency equivalent) per issue. In certain cases, Fitch will rate all or a number of issues issued by a particular issuer, or insured or guaranteed by a particular insurer or guarantor, for a single annual fee. Such fees are expected to vary from US$10,000 to US$1,500,000 (or the applicable currency equivalent). The assignment, publication, or dissemination of a rating by Fitch shall not constitute a consent by Fitch to use its name as an expert in connection with any registration statement filed under the United States securities laws, the Financial Services and Markets Act of 2000 of the United Kingdom, or the securities laws of any particular jurisdiction. Due to the relative efficiency of electronic publishing and distribution, Fitch research may be available to electronic subscribers up to three days earlier than to print subscribers. For Australia, New Zealand, Taiwan and South Korea only: Fitch Australia Pty Ltd holds an Australian financial services license (AFS license no. 337123) which authorizes it to provide credit ratings to wholesale clients only. Credit ratings information published by Fitch is not intended to be used by persons who are retail clients within the meaning of the Corporations Act 2001

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below