Enlarge
File photo
Moody's Investors Service has downgraded its ratings of Intrust Bank and its holding company, Intrust Financial Corp., according to an October research report.
Moody's Investors Service has downgraded its ratings of Intrust Bank and its holding company, Intrust Financial Corp., according to an October research report.
Moody's downgraded the bank over what it called increased asset quality concerns. Those concerns are reflected in increased volatility in the amounts of bad loans that Intrust is writing off and in the percentage of its loans that aren't performing, Moody's says.
The bank wrote off more than $7 million in bad loans in the third quarter, according to its most recent report to the Federal Deposit Insurance Corp. In contrast, in the first two quarters of the year, the bank recovered more bad loan debt than it had to write off.
Last year, Intrust wrote off $56 million in bad loans, almost all of it in the fourth quarter. In 2011, the bank wrote off just $8.9 million, while in 2010 it wrote off $55.2 million.
As of Sept. 30, 2.1 percent of Intrust's loans were behind on payments. The average for the 35 locally based banks was 1.48 percent, a WBJ analysis has found.
Moody's attributed some of its downgrade to Intrust's appetite for large, single-client relationships, unusual relative to the bank's size. But, Moody's report said, reducing that large exposure would reduce earnings when they're already challenged by limited growth and low interest rates, adding that it appears unlikely the concentration risk can be reduced in the near term.
Lyndon Wells, division director for public affairs at Intrust, says none of the bank's lending relationships exceed statutory limits.
"But we have some relationships in the bank that are reasonably sizable, and we've had some bad experience with a few of those," he says, "and that's caused the volatility in our loan performance."
John Stearns covers real estate, development and banking.
