Fitch Ratings has placed W.T.B. Financial Corporation's (WTBF) ratings on Rating Watch Negative to reflect the sizable increase and elevated level of nonperforming assets (NPAs) that have accumulated over the last six months. Fitch is mindful of WTBF's historically strong asset quality; however, the economy has placed an unprecedented level of stress on real estate values. Consequently, the ratio of NPAs to loans and other real estate owned increased to 4.24% on June 30, 2009 from 2.67% on Dec 31, 2008. Contributing to the escalation of NPAs is WTBF's construction loan portfolio, which represents 20% of total loans and 16.2% of non-accrual loans on June 30, 2009. Charge-offs have been elevated over the last several quarters with a slight decline in second quarter-2009 (2Q'09) to an annualized 1.94% from 2.18% in 1Q'09. The impact on operating performance from increased problem assets has resulted in operating losses hampering capital augmentation. An offsetting factor to the elevated level of NPAs is the strong capital position on June 30, 2009, with a tangible capital ratio of 7.14% and strong pre-tax pre-provision earnings.
Resolution of the Negative Watch will be predicated upon further review of potential asset quality deterioration and its possible impact on capital and profitability. In addition, Fitch will focus on holding company liquidity levels and contingency planning.
Fitch has placed the following ratings on Rating Watch Negative:
W.T.B. Financial Corporation
-- Long-term Issuer Default Rating (IDR) 'BBB+';
-- Short-Term IDR 'F2';
-- Individual 'B/C';
-- Preferred Stock 'BBB'.
Washington Trust Bank
-- Long-term IDR 'BBB+';
-- Short-Term IDR 'F2';
-- Individual 'B/C';
-- Long-Term Deposits 'A-';
-- Short-Term Deposits 'F2'.
Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.
Contacts:
Fitch Ratings, New York
Eric Newell, +1-212-908-0769
John
Mackerey, +1-212-908-0366
or
Brian Bertsch, +1-212-908-0549
(Media Relations)
brian.bertsch@fitchratings.com