CHICAGO--(BUSINESS WIRE)--Fitch Ratings has maintained the ratings for First National of Nebraska (FNNI) and all of its rated subsidiaries on Rating Watch Negative. A full list of ratings is provided at the end of this release.
Fitch's maintenance of the Rating Watch Negative reflects the stress on liquidity balances at FNNI, given required amortization payments on its term loan, and the need to either repay or refinance its term loan. At Dec. 31, 2010 the parent company had cash balances of $56.9 million compared to a term loan note balance of $93.8 million, which is due in June 2011. As such, Fitch believes that absent the extension or refinancing of the term loan or a capital raise to repay the loan, the parent company may be unable to meet its obligations. However, Fitch does note that there are efforts underway to address this potential liquidity issue, which include seeking approval to upstream $25 million to the parent company after the sale of the remaining 49% of its First National Merchant Solutions business, and efforts to extend or refinance the balance of the term loan.
Resolution of the Rating Watch will be dependent on the outcome of the aforementioned initiatives at the parent. If FNNI is successful at refinancing its term loan or raising capital and is able to comfortably service its debt obligations and operating expenses over the next 12 to twenty-four months, Fitch could affirm the company's current ratings. Furthermore, Fitch notes that given FNNI's recent improvement in asset quality metrics as well as improved consolidated capital ratios, there could be some stability in the company's current ratings should it resolve its parent company liquidity issues. That said, should FNNI be unable to extend the maturity of the term loan note or significantly improve liquidity at the parent company in the very near term, a multi-notch downgrade of the ratings of both FNNI and its subsidiaries would be likely.
FNNI has operations in Nebraska, Kansas, South Dakota, Colorado, Texas, and Illinois. The lead bank First National Bank of Omaha represents 88% of consolidated assets, and the company's credit card operations are housed in the lead bank. FNNI became a private company in 2002 and is controlled by the Lauritzen family. At Dec. 31, 2010 the bank had consolidated assets of $14.97 billion and $10.73 billion in managed loans.
Fitch maintains the following ratings on Rating Watch Negative:
First National of Nebraska, Inc.
--Long-term Issuer Default Rating (IDR) 'BB+';
--Short-term IDR 'B';
--Individual 'C/D'.
First National Bank of Omaha
--Long-term IDR 'BB+';
--Short-term IDR 'B';
--Subordinated debt 'BB';
--Long-term deposits 'BBB-';
--Short-term deposits 'F3';
--Individual 'C/D'.
First National Bank (Fort Collins)
--Long-term IDR 'BB+';
--Short-term IDR 'B';
--Subordinated debt 'BB';
--Long-term deposits 'BBB-';
--Short-term deposits 'F3';
--Individual 'C/D'.
First National Bank (North Platte)
--Long-term IDR 'BB+';
--Short-term IDR 'B';
--Subordinated debt 'BB';
--Long-term deposits 'BBB-';
---Short-term deposits 'F3'.
--Individual at 'C/D'.
Fitch has affirmed the following ratings:
First National of Nebraska, Inc.
--Support rating '5'
--Support Floor rating 'NF'.
First National Bank of Omaha
--Support rating '5'
--Support Floor rating 'NF'.
First National Bank (Fort Collins)
--Support rating '5'
--Support Floor rating 'NF'.
First National Bank (North Platte)
--Support rating '5'
--Support Floor rating 'NF'.
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research:
--'Global Financial Institutions Rating Criteria' (Aug. 16, 2010);
--'Bank Holding Companies' (Dec. 30, 2009);
--'Equity Credit for Hybrids & Other Capital Securities-Amended' (Dec. 29, 2009);
--'Rating Hybrid Securities' (Dec 29, 2009);
--'Short-Term Ratings Criteria for Corporate Finance' (Nov. 2, 2010).
Applicable Criteria and Related Research:
Global Financial Institutions Rating Criteria
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=547685
Bank Holding Companies
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=493324
Equity Credit for Hybrids & Other Capital Securities - Amended
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=493112
Rating Hybrid Securities
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=493086
Short-Term Ratings Criteria for Corporate Finance
http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=568726
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