As a result of increases in criticized and classified assets
along with increases in other real estate balances that raise
the risk profile, A.M. Best Co., Oldwich, N.J., has downgraded
the financial strength rating to “bbb” from “bbb+” and issuer
credit rating to “bbb” from “bbb+” of First National Bank.
Concurrently, A.M. Best has downgraded the ICR to “bbb-” from
“bbb” of MoneyTree Corp., the holding company for FNB.
Continued erosion in this aspect of the quality of FNB’s
assets will require significant increases in provisioning
expenses, which could surpass FNB’s earnings, the credit ratings
organization said in a press release.
“This event would require FNB to diminish its capital
profile, which would ultimately impact its ability to repay TARP
funds in the near term.”
The outlook for all ratings is stable. Both companies are
domiciled in Lenoir City, TN.
The ratings for FNB are based on it being an “adequately
capitalized bank” tempered by the “continued negative impact of
the local real estate market on its loan portfolio with a
commercial real estate concentration.”
Stable and consistent sources of deposit have allowed FNB to
maintain a strong liquidity profile, A.M. Best reported, while
improving its net interest margin.
“Cost controls over the past year have improved the
efficiency ratio of FNB compared to prior years and are
anticipated to remain a continued part of the FNB rating profile
for the foreseeable future,” the ratings organization said.