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Fitch Ratings on Feb. 14 said it expects that, with limited opportunity to improve fee-based income in the near term, mid-tier banks will continue to face greater earnings headwinds in 2013 than larger institutions with greater revenue diversification.
The rating agency completed a peer review of 16 mid-tier regional banks. The group comprises banks with total assets ranging from $10 billion to $36 billion.
According to Fitch, the issuer default rating of the group is relatively dispersed, with a low of BB- and a high of A+.
Following the review, the agency revised ratings or outlooks for El Monte, Calif.-based Cathay General Bancorp; Lancaster, Pa.-based Fulton Financial Corp.; Omaha, Neb.-based First National of Nebraska Inc.; Wayzata, Minn.-based TCF Financial Corp.; Columbus, Ga.-based Synovus Financial Corp.; and Kansas City, Mo.-based UMB Financial Corp.
Fitch upgraded Cathay General's issuer default rating to BB+ from BB and revised the outlook to stable from positive. The upgrade indicates its improving operating performance as measured by return on assets, as well as continuation of its improving asset quality and capital levels. The ratings could experience negative pressure if capital management is aggressive once its memorandum of understanding is settled and TARP is repaid, or if earnings and asset quality experience a reversal in trends.
The ratings of Fulton Financial were downgraded to BBB+ from A-, and the outlook remains stable. The ratings change reflects lagging asset quality improvements, relatively higher funding costs compared to peers and sluggish economic recovery in one of its core markets. Further ratings improvement is unlikely in the near term given higher funding and credit cost relative to more highly rated institutions. Negative...