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MB Financial (MBFI) Under Review for Upgrade by Moody's

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The ratings of MB Financial, Inc. , along with its subsidiaries, have been kept under review for a possible upgrade by Moody's Investors Service — a rating arm of Moody's Corporation (MCO - Free Report) . Moreover, the rating agency will review the Chicago-based bank's senior unsecured rating of Ba1 and baseline credit assessment of baa3, along with its lead bank’s issuer rating of Ba1.

In addition, the rating outlook has been changed to ‘Review for Upgrade’ from the current ‘Stable’.

Rationale Behind the Review

The review follows the announcement of the stock-cash acquisition deal with Fifth Third Bancorp (FITB - Free Report) , headquartered at Cincinnati, OH, under which MB Financial will be merged with Fifth Third, for a total value of $4.7 billion. However, the deal awaits meeting all customary closing conditions, including certain regulatory approvals and MB Financial shareholders’ approval.
 
MB Financial, with about $20 billion in assets, serves middle-market customers as a leader with its strong deposit franchise, customer-centric corporate culture and commercial expertise. Per Moody’s, post-merger, MB Financial’s strengths and Fifth Third’s huge corporate lending, capital markets, wealth management and the payments business will benefit customers with complementary capabilities of both banks.

Furthermore, MB Financial's diversified sources of earnings and core base of retail deposits justify its baa3 standalone baseline credit assessment (BCA). Per Moody’s, though the bank has weak liquidity and low tangible capitalization, stable net interest margin and steady fee income generation are positive factors. Moreover, concentrated commercial real estate lending and loan growth support baa3 BCA.

Conclusion
 
The rating outlook is valuable for firms since it preserves investors’ confidence in the stock and boosts its creditworthiness in the market. An upgrade in the same increases investors’ confidence and reflects the company’s strong financials.

MB Financial’s shares have gained 15.2% in the last six months compared with 4.7% growth recorded by the industry. Currently, the bank carries a Zacks Rank #3 (Hold).


 

A better-ranked stock to consider is Comerica Incorporated (CMA - Free Report) , which has been witnessing upward estimate revisions for the last 60 days. Also, the company’s shares have risen nearly 25.8% in the last six months. It carries a Zacks Rank of 2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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