Magazine article American Banker

S&P Cuts Texas Commerce Debt Ratings

Magazine article American Banker

S&P Cuts Texas Commerce Debt Ratings

Article excerpt

DALLAS -- For the second time in a year, Standard & Poor's Corp. has lowered its rating on the senior debt of Texas Commerce Bancshares Inc. because of loan problems.

Standard & Poor's, one of the leading debt-grading agencies, lowered the rating on Texas Commerce's senior debt to AA-minus from AA.

On March 22 last year S&P lowered the Houston-based firm's senior debt rating to AA, removing the company from the elite ranks of AAA-rated banks.

"These actions reflect the company's decreasing asset quality and the resultant effect upon the company's earnings," the agency's statement said. "A decline in the energy industry and its impact upon the Houston economy have been a primary cause."

Texas Commerce spokeswoman Jan Jackson downplayed the S&P action. saying the bank company's primary capital ratio if 7.33%, which ranks it fifth among the top 25 bank holding companies.

"We understand the challenges that persuaded Standard & Poor's to cahnge its rating, but we are pleased that the rating continues to recognize Texas Commerce's strong capital ratio as well as its stable localized funding base," Ms. Jackson said.

Frank W. Anderson, an analyst with Weber, Hall, Sale & Associates Inc. of Dallas, said the change in the ratings was not surprising. Mr. Anderson said he believes the rating agencies are taking a harder look at many banks and non-bank companies.

"The rating agencies are looking at these issues with a more jaundiced eye," Mr. Anderson said. "With several years of energy problems and predictions of gloom and doom in the real estate industry, if you are going to err, then you want to err on the side of conservatism. …

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