BANKFIRST Individual Rating Lowered By Fitch.Business Editors CHICAGO--(BUSINESS WIRE)--Jan. 17, 2001 The individual rating for BANKFIRST Corporation Inc. (BANKFIRST) has been lowered to `C/D' from `C' by Fitch. The rating is removed from Rating Watch Negative where it was placed on Dec. 1, 2000, as a result of the merger of Fitch and Thomson Bankwatch. BANKFIRST's rating reflects the company's solid risk-adjusted returns Risk-Adjusted Return A measure of how much risk a fund or portfolio takes on to earn its returns, usually expressed as a number or a rating. Notes: This is often represented by the Sharpe Ratio. The more return per unit of risk, the better. , moderate risk-adjusted capitalization capitalization n. 1) the act of counting anticipated earnings and expenses as capital assets (property, equipment, fixtures) for accounting purposes. 2) the amount of anticipated net earnings which hypothetically can be used for conversion into capital assets. for the assigned rating, access to deposit funding, sound management and private ownership. These strengths are balanced by the company's high loss rates, aggressive growth, relatively short operating history as a specialized spe·cial·ize v. spe·cial·ized, spe·cial·iz·ing, spe·cial·iz·es v.intr. 1. To pursue a special activity, occupation, or field of study. 2. credit card lender, and limited operating scale in relation to peers. To date, BANKFIRST has achieved strong, albeit declining, profitability in its consumer credit card business, which is primarily targeted at low to moderate income consumers. The company is moderately capitalized relative to the assigned rating with equity to assets of 10.38% as of Sept. 30, 2000. To date, the company has financed its operations through deposits, although Fitch would expect the company to utilize the securitization Securitization The process of creating a financial instrument by combining other financial assets and then marketing them to investors. Notes: Mortgage backed securities are a perfect example of securitization. May also be spelled as "securitisation. markets in the future as it manages its growth. Loan loss rates, which were 16.44% in the third quarter, remain high, although presently offset by correspondingly high effective yields. Fitch would expect BANKFIRST to moderate loss rates in the future with tighter underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. and portfolio seasoning. Of concern has been aggressive portfolio growth as BANKFIRST's card portfolio has grown from $209 million at year-end 1998 to over $579 million at Sept. 30, 2000, however growth has moderated during 2000. While BANKFIRST has been in operation for a number of years, its focus on consumer credit cards is fairly recent, providing a limited track record. Moreover, the company's relatively small scale in relation to peers could put it in a competitive disadvantage as the low-end of the credit card market becomes more sophisticated. BANKFIRST Corp. is a Sioux Falls Sioux Falls, city (1990 pop. 100,814), seat of Minnehaha co., SE S.Dak., on the Big Sioux River; settled 1856, inc. as a village 1877, as a city 1883. Settlers abandoned the site in 1862 because of Native American raids, but with the establishment (1865) of Fort , SD-based bank holding company with assets of $730 million and shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. of $76 million at Sept. 30, 2000. |
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