A.M. Best Downgrades Ratings of FNB and MoneyTree Corp.

National Mortgage News and Source Media

As a result of increases in criticized and classified assets along with increases in other real estate balances that raise the risk profile, A.M. Best Co., Oldwich, N.J., has downgraded the financial strength rating to “bbb” from “bbb+” and issuer credit rating to “bbb” from “bbb+” of First National Bank.

Concurrently, A.M. Best has downgraded the ICR to “bbb-” from “bbb” of MoneyTree Corp., the holding company for FNB.

Continued erosion in this aspect of the quality of FNB’s assets will require significant increases in provisioning expenses, which could surpass FNB’s earnings, the credit ratings organization said in a press release.

“This event would require FNB to diminish its capital profile, which would ultimately impact its ability to repay TARP funds in the near term.”

The outlook for all ratings is stable. Both companies are domiciled in Lenoir City, TN.

The ratings for FNB are based on it being an “adequately capitalized bank” tempered by the “continued negative impact of the local real estate market on its loan portfolio with a commercial real estate concentration.”

Stable and consistent sources of deposit have allowed FNB to maintain a strong liquidity profile, A.M. Best reported, while improving its net interest margin.

“Cost controls over the past year have improved the efficiency ratio of FNB compared to prior years and are anticipated to remain a continued part of the FNB rating profile for the foreseeable future,” the ratings organization said.