We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Old National (ONB) Ratings Affirmed by Moody's, Outlook Stable
Read MoreHide Full Article
Old National Bancorp (ONB - Free Report) and its subsidiary Old National Bank’s ratings and assessments have been affirmed by Moody’s Investors Service. The rating outlook for the company remains stable.
Old National’s long-term issuer and senior unsecured debt ratings have been affirmed at A3. Its subsidiary’s baseline credit assessment (“BCA”) has been affirmed at a2.
Rationale behind Ratings Affirmation
Old National's solid capitalization, stable pre-provision profitability and robust deposit funding are the main reasons behind its ratings affirmation.
Although the company has commercial real estate (“CRE”) loan concentration above peer average, its overall risk appetite is viewed as being conservative per Moody's.
Its CRE concentration rose in 2016 because of a bank acquisition. However, before 2016, its CRE loan portfolio was small. Of the company’s total CRE loan portfolio, nearly 22% comprises construction loans, which are relatively riskier. However, apart from this, it does not have any large industry concentrations. In fact, it maintains granular commercial and CRE loan portfolios that have been supporting overall asset quality.
Moreover, supported by the company’s expense-saving programs and ongoing business optimization, its profitability has improved over time. In fact, Moody's is of the opinion that in the long run, the company’s revenue pressure will likely be offset by efficiency gains related to its strategic initiatives.
Per Moody's, Old National's capitalization will be maintained with a Moody's tangible common equity (“TCE”) ratio above 11%.
Further, the company’s funding and liquidity profiles, which remained weak between 2016 and 2018 because of its acquisitions, witnessed improvement later on. In 2020, average deposit growth was 16%, whereas loan growth was 15%. Moody’s is of the opinion that the company’s deposit and asset growth might reverse when excess market liquidity diminishes. Nevertheless, it will continue to maintain a solid core funded liquidity profile.
When can the Ratings be Upgraded?
An upward rating pressure might emerge if there is a decline in CRE concentration or if capitalization improves or the company’s liquidity profile becomes stronger.
What could Result in Downward Rating Pressure?
Ratings could be downgraded if the company’s capitalization falls or there is a decline in profitability.
Shares of the company have gained 25.4% over the past six months compared with 44.5% growth recorded by the industry.
Over the past few months, Moody’s affirmed the ratings for many finance companies. Some of them are SVB Financial Group , Signature Bank (SBNY - Free Report) and Huntington Bancshares (HBAN - Free Report) . While the outlook for Signature Bank was lowered to stable, the same for SVB Financial and Huntington Bancshares was affirmed at stable.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
Image: Bigstock
Old National (ONB) Ratings Affirmed by Moody's, Outlook Stable
Old National Bancorp (ONB - Free Report) and its subsidiary Old National Bank’s ratings and assessments have been affirmed by Moody’s Investors Service. The rating outlook for the company remains stable.
Old National’s long-term issuer and senior unsecured debt ratings have been affirmed at A3. Its subsidiary’s baseline credit assessment (“BCA”) has been affirmed at a2.
Rationale behind Ratings Affirmation
Old National's solid capitalization, stable pre-provision profitability and robust deposit funding are the main reasons behind its ratings affirmation.
Although the company has commercial real estate (“CRE”) loan concentration above peer average, its overall risk appetite is viewed as being conservative per Moody's.
Its CRE concentration rose in 2016 because of a bank acquisition. However, before 2016, its CRE loan portfolio was small. Of the company’s total CRE loan portfolio, nearly 22% comprises construction loans, which are relatively riskier. However, apart from this, it does not have any large industry concentrations. In fact, it maintains granular commercial and CRE loan portfolios that have been supporting overall asset quality.
Moreover, supported by the company’s expense-saving programs and ongoing business optimization, its profitability has improved over time. In fact, Moody's is of the opinion that in the long run, the company’s revenue pressure will likely be offset by efficiency gains related to its strategic initiatives.
Per Moody's, Old National's capitalization will be maintained with a Moody's tangible common equity (“TCE”) ratio above 11%.
Further, the company’s funding and liquidity profiles, which remained weak between 2016 and 2018 because of its acquisitions, witnessed improvement later on. In 2020, average deposit growth was 16%, whereas loan growth was 15%. Moody’s is of the opinion that the company’s deposit and asset growth might reverse when excess market liquidity diminishes. Nevertheless, it will continue to maintain a solid core funded liquidity profile.
When can the Ratings be Upgraded?
An upward rating pressure might emerge if there is a decline in CRE concentration or if capitalization improves or the company’s liquidity profile becomes stronger.
What could Result in Downward Rating Pressure?
Ratings could be downgraded if the company’s capitalization falls or there is a decline in profitability.
Shares of the company have gained 25.4% over the past six months compared with 44.5% growth recorded by the industry.
Currently, Old National carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Rating Actions by Moody’s on Other Banks
Over the past few months, Moody’s affirmed the ratings for many finance companies. Some of them are SVB Financial Group , Signature Bank (SBNY - Free Report) and Huntington Bancshares (HBAN - Free Report) . While the outlook for Signature Bank was lowered to stable, the same for SVB Financial and Huntington Bancshares was affirmed at stable.
These Stocks Are Poised to Soar Past the Pandemic
The COVID-19 outbreak has shifted consumer behavior dramatically, and a handful of high-tech companies have stepped up to keep America running. Right now, investors in these companies have a shot at serious profits. For example, Zoom jumped 108.5% in less than 4 months while most other stocks were sinking.
Our research shows that 5 cutting-edge stocks could skyrocket from the exponential increase in demand for “stay at home” technologies. This could be one of the biggest buying opportunities of this decade, especially for those who get in early.
See the 5 high-tech stocks now>>