Wednesday, July 23, 2014

Fitch Affirms Bank of Guam's IDR at 'BBB'

Guam News - Guam News

Guam - The ratings agency Fitch has affirmed the Bank of Guam's "Issuer Default Ratings" [IDRs] at 'BBB'.

An Issuer Default Rating is a measure of a bank's vulnerability to default on its financial obligations.

the Fitch report the Bank of Guam's ratings reflects a Stable Outlook based on the bank's "solid core capital position, as well as its dominant market share in Guam and the surrounding island regions, which provides the company with a stable core funding base and drives its profitability."

Fitch affirms Bank of Guam's ratings as follows:    

--Long-term IDR at 'BBB'; Outlook Stable;    
--Short-term IDR at 'F2';    
--Viability at 'bbb';    
--Support at '5';    
--Support Rating Floor at 'NF';    
--Long-term deposits at 'BBB+';    
--Short-term deposits at 'F2'.

SEE the Fitch Ratings announcment on BusinessWire HERE or READ it FULL below:


April 05, 2012 09:55 AM Eastern Daylight Time
Fitch Affirms Bank of Guam's IDR at 'BBB'; Outlook Stable

NEW YORK--(BUSINESS WIRE)--Fitch Ratings has affirmed the long-term and short-term Issuer Default Ratings (IDRs) of the Bank of Guam at 'BBB' and 'F2', respectively. The Rating Outlook is Stable. A complete list of rating actions follows at the end of this release.

The affirmation of Bank of Guam's ratings and its Stable Outlook largely reflects the bank's solid core capital position, as well as its dominant market share in Guam and the surrounding island regions, which provides the company with a stable core funding base and drives its profitability. Because of the relative strength of the Guam economy versus the U.S. mainland, Bank of Guam has had historically sound asset quality with low credit losses, although impaired loans have increased modestly recently. The bank's borrower and geographic concentrations limit potential upside to its ratings.

Bank of Guam holds approximately 33% of deposits in Guam. This dominant market position gives it a degree of pricing power, providing the bank with a lost cost funding base, aiding its net interest margin. In order to combat the adverse impact of lower interest rates, the bank acquired $100 million in residential mortgage and other consumer loans from Wells Fargo Finance in December 2011. Because of the higher-yielding nature of these credits, margins and profitability should improve in 2012. Fitch believes that the risks of this transaction have been controlled.

BOG's profitability is comparatively weak given its high cost operating structure. Net income was relatively flat in 2011 at $6 million, but returns diminished due to declining margins, a high cost structure related to the bank's widespread franchise which increases communication, technology and utility costs and weaker margins. The bank's historically high dividend payout ratio (72% in 2011) inhibits capital generation and capital measures deteriorated moderately (Fitch Core Capital of 11.69% at end-2011) but remain adequate given solid asset quality. Net credit losses were flat with the previous year at 0.46% of average loans and impaired loans improved as a percentage of the portfolio to 2.80%, in part due to the loan purchase noted above.

The ratings for Bank of Guam have limited upside potential given the bank's narrow business mix, as well as geographic and borrower concentrations, and modest profitability. The bank's ratings could be downgraded if military spending or tourism on Guam were to falter for a prolonged period. This could result in asset quality deterioration, likely related to the worsening of one of its large borrower relationships. Additionally, Bank of Guam's ratings could be negatively impacted if the adverse profitability and capital trends are not reversed in 2012.

Bank of Guam, headquartered in Hagatna, Guam is a $1.1 billion FDIC insured bank. The bank provides financial services to the U.S. territory of Guam and the surrounding island regions through its 24 branch offices. Bank of Guam also maintains a branch office in San Francisco.

Fitch affirms Bank of Guam's ratings as follows:

--Long-term IDR at 'BBB'; Outlook Stable;

--Short-term IDR at 'F2';

--Viability at 'bbb';

--Support at '5';

--Support Rating Floor at 'NF';

--Long-term deposits at 'BBB+';

--Short-term deposits at 'F2'.

Additional information is available at 'www.fitchratings.com'. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings.

Applicable Criteria and Related Research:

--'Global Financial Institutions Rating Criteria' (Aug. 16, 2011).

In addition to the source (s) of information identified in Fitch's Global Financial Institutions Rating Criteria, this action was additionally informed by information provided by the company.

Applicable Criteria and Related Research:

Global Financial Institutions Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=649171

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE.

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