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SHAWMUT NATIONAL CORPORATION CREDIT RATINGS UPGRADED BY DUFF & PHELPS

 CHICAGO, Aug. 11 /PRNewswire/ -- Duff & Phelps Credit Rating Co. has upgraded the ratings of Shawmut National Corporation and its lower tier holding companies, Shawmut Corporation and Hartford National Corporation, as well as the ratings of its two subsidiary banks, Boston- based Shawmut Bank, N.A., and Hartford-based Shawmut Bank Connecticut, N.A. The senior debt rating of Shawmut Corporation and Hartford National is raised to 'BBB' (triple B) from `BBB-' (triple B minus); the subordinated debt rating of Shawmut National Corporation, Shawmut Corporation, and Hartford National Corporation is upgraded to `BBB-' (triple B minus) from `BB+' (double B plus); and the preferred stock rating of Shawmut National Corporation is raised to `BB+' (double B plus) from `BB' (double B). Approximately $1.04 billion of securities are affected by these rating actions. The long-term deposit rating for Shawmut Bank, N.A., and Shawmut Bank Connecticut, N.A., is upgraded to `BBB+' (triple B plus) from `BBB' (triple B), while the short-term deposit rating is reaffirmed at Duff 2.
 The rating upgrades recognize the continued improvement in the underlying fundamentals of the corporation, including earnings, asset quality, capitalization, and liquidity. The progression in the recovery from severe asset quality problems has evolved from a position of identifying and containing loan problems to one of building core earnings power and establishing an infrastructure to improve the organization's competitive position. The strengthening in balance sheet measures over the last 12-18 months is clear; non-performing assets have dropped precipitously, loan loss reserve measures have improved, and capitalization ratios have been enhanced.
 While residual asset quality problems will need to be resolved, the larger challenge for Shawmut will be improving core profitability, i.e., earnings before asset quality charges.
 Non-performing assets declined to $513 million, 3.38 percent of loans and other real estate owned at June 30, 1993, compared with $777 million, 5.12 percent, and $1.33 billion, 9.50 percent, three months and 12 months earlier, respectively. The bulk sale of problem assets contributed, to a degree, to this sharp reduction, but dynamics within the loan portfolio also show improvement. The inflow of problem assets has declined significantly, while the outflow remains steady. Reserves as a percent of non-accruing loans equaled 171 percent at mid-year 1993 compared with 139 percent at March 31, 1993. Capital ratios are solid with the leverage ratio equaling 5.87 percent at June 30, 1993.
 Positively, core earnings improved in the second quarter of 1993 to $94.4 million after stabilizing in a narrow band the previous four quarters between $74 million and $78 million. The improvement is due to growth in net interest income and good control of overhead expense. Net income equaled $56 million, .89 percent, in the second quarter of 1993, compared with $9 million, .16 percent, in 1992. The rating upgrades also incorporate our expectation that Shawmut will be a participant in the consolidation of the New England banking market as reflected by its pending acquisition of New Dartmouth Bank.
 -0- 8/11/93
 /CONTACT: Charles J. Orabutt, Jr., of Duff & Phelps Credit Rating Co., 312-368-3153/
 (SNC)


CO: Shawmut National Corporation ST: Massachusetts IN: FIN SU: RTG

SM -- NY042 -- 1612 08/11/93 11:01 EDT
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Publication:PR Newswire
Date:Aug 11, 1993
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