Oct 30 - Fitch Ratings has completed a peer review of the
following 14 rated large regional banks: BB&T Corporation (BBT), Capital One
Finance Corporation (COF), Comerica Incorporated (CMA), Fifth Third Bancorp
(FITB), Huntington Bancshares Inc (HBAN), Keycorp (KEY), M&T Bank Corporation
(MTB), PNC Financial Services Group (PNC), Regions Financial Corporation (RF),
SunTrust Banks Inc. (STI), US Bancorp (USB), UnionBanCal Corporation (UBC),
Wells Fargo & Company (WFC), and Zions Bancorporation (ZION).
Refer to Wells Fargo's individual release for a discussion of rating actions
taken on WFC.
RATING ACTION AND RATIONALE
All ratings were affirmed. CMA's ratings were affirmed at 'A', but the Rating
Outlook remains Negative reflecting financial performance that continues to lag
regional peers. Conversely, HBAN's, RF's, ZION's Rating Outlooks were revised to
Positive from Stable. HBAN's Outlook was revised due to improvements in its risk
profile, earnings performance, and capital profile. RF's Outlook was revised
given an improving overall risk profile with moderating asset quality and the
maintenance of a solid capital and liquidity positions. ZION's Outlook was
revised to Positive reflecting improving profitability, improving asset quality
ratios, and on balance modestly improved capital ratios. FITB's Rating Outlook
remains Positive, supported by its strong earnings profile, somewhat offset by
still elevated levels of problem assets.
The Issuer Default Ratings (IDRs) span a relatively disperse set of ratings from
higher rated WFC and USB (both 'AA-') to RF and ZION (both rated 'BBB-'). The
majority of this peer group is rated 'A-' with a Stable Rating Outlook. The peer
group is generally comprised of three groupings of banks.
The first group is comprised of USB, WFC, BBT and PNC, whose ratings are 'AA-'
or 'A+', supported mainly by strong earnings profiles or moderate risk profiles.
These companies have demonstrated a strong level of consistency through the most
recent crisis, and stable earnings performance. Although non-performing assets
(NPAs) and/or net charge-offs (NCOs) increased for these companies, the
companies' capital profiles and reserves were adequate to absorb the associated
The second group includes a much larger diverse set of companies whose credit
profiles includes various strengths, offset by some attributes that keep them
from being in the top segment. Ratings in this grouping span from 'A' to
'BBB+'/Rating Outlook Positive. Companies in this grouping include UBC, COF,
CMA, FITB, KEY, MTB, and HBAN. Some of these companies continually report solid
earnings, namely FITB but the ratings still incorporate elevated credit risk, or
in the case of MTB, strong risk-adjusted earnings are offset by a relatively low
capital position. While other companies have strong capital levels, KEY, UBC and
CMA as examples, but whose core earnings profiles lag the peer group.
The last group of large regionals includes STI, RF, and ZION, companies that
have lagged the large regional bank group during the financial crisis in terms
of earnings and asset quality, but recently have shown improving trends. These
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