Fitch Ratings has downgraded the long-term Issuer Default Ratings (IDRs) for Citizens Republic Bancorp, Inc. (CRBC) and its principal banking subsidiaries to 'B' and 'B+', respectively. The short-term ratings of 'B' are affirmed. Fitch has affirmed the individual rating for CRBC at 'D/E' and lowered the individual ratings for the principal subsidiaries to 'D/E' from 'D'. The Rating Outlook is Negative. A complete list of ratings is provided at the end of this release.
Fitch downgraded CRBC's ratings and placed them on Rating Watch Negative on Aug. 14, 2009. Resolution of the Negative Rating Watch hinged on the company's ability to raise additional capital and the extent of asset quality stabilization or deterioration. Since that time, CRBC had approximately 76% participation in its debt exchange offers but withdrew its application for the U.S. Treasury's Capital Assistance Program. While the exchanges helped bolster common equity, CRBC has not issued additional common equity and Fitch believes that it could not issue common equity currently given market conditions and its common stock price.
The downgrade reflects Fitch's continued belief that prolonged credit stress will hamper the company's performance and erode capital. To date, the most severe credit pressure has occurred in CRBC's land and construction and development loan books. CRBC did report some signs of asset quality stabilization in the third quarter of 2009, but Fitch anticipates that the company will experience increased credit stress in certain portions of the commercial real estate loan portfolio as well as the consumer loan book (please see the Fitch report 'U.S. Bank CRE Exposure Review' dated Nov. 16, 2009). CRBC is also concentrated in Michigan and Ohio, markets that have experienced some of the most significant stress in housing and commercial real estate prices. Consequently, Fitch believes the company will operate at a loss in 2009 and likely in 2010 and losses will significantly erode current capital levels. The Negative Rating Outlook incorporates these factors and Fitch's expectations of significantly elevated credit costs and the level of capital erosion anticipated.
Citizens Republic Bancorp, Inc. is a $12.1 billion bank holding company headquartered in Flint, MI that operates more than 230 offices and 260 ATMS in the Midwest. It serves markets in Michigan, Ohio, Wisconsin, and Indiana as Citizens Bank, and operates F&M Bank in Iowa. CB Wealth Management, National Association is a limited-purpose trust charter.
Fitch has taken the following rating actions:
Citizens Republic Bancorp, Inc.
--Long-term Issuer Default Rating (IDR) downgraded to 'B' from 'B+';
--Subordinated debt downgraded to 'CCC/RR6' from 'B-/RR6';
--Preferred stock downgraded to 'CC/RR6' from 'CCC/RR6';
--Short-term IDR affirmed at 'B';
--Individual affirmed at 'D/E';
--Support affirmed at '5';
--Support floor affirmed at 'NF'.
Citizens Bank
F&M Bank-Iowa
--Long-term deposits downgraded to 'BB-' from 'BB';
--Long-term IDR downgraded to 'B+' from 'BB-';
--Short-term deposits affirmed at 'B';
--Short-term IDR affirmed at 'B';
--Individual downgraded to 'D/E' from 'D';
--Support affirmed at '5';
--Support floor affirmed at 'NF'.
CB Wealth Management, National Association
--Long-term IDR downgraded to 'B+' from 'BB-';
--Short-term IDR affirmed at 'B';
--Individual downgraded to 'D/E' from 'D';
--Support affirmed at '5';
--Support floor affirmed at 'NF'.
Citizens Funding Trust I
--Preferred stock downgraded to 'CC/RR6' from 'CCC/RR6'.
Additional information is available at www.fitchratings.com.
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or
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