Ratings could be positively affected should FNNI continue to remediate problem assets, operate at a sustained level of higher profitability, and successfully pursue growth strategies, all while maintaining strong capital and liquidity ratios both on an absolute basis and relative to rated peers.
FNNI became a private company in 2002 and is controlled by the Lauritzen family.
is successful at refinancing its term loan or raising capital and is able to comfortably service its debt obligations and operating expenses over the next 12 to twenty-four months, Fitch could affirm the company's current ratings.
The placement on Rating Watch Negative reflects reduced liquidity balances at FNNI, given required amortization payments on its term loan and a reduction in dividend upstream potential from subsidiary banks, due to reduced earnings and capital preservation.
If FNNI is able to raise sufficient capital to comfortably service debt obligations and operating expenses over the medium-term (12 to 24 months) without relying on dividend capacity from subsidiary banks, Fitch could affirm current ratings.
The Negative Outlook reflects the headwinds FNNI will face in 2010 as historically high provision expenses continue to pressure earnings and capital ratios while the implementation of the Credit Card Accountability, Responsibility, and Disclosure (CARD) Act of 2009 could challenge the bank's competitive positioning in the credit card industry.
FNNI operates 10 commercial bank subsidiaries in Nebraska, Kansas, South Dakota, Colorado, Texas, and Illinois.
Fitch believes the company will take advantage of the Term Asset-Backed Securities Loan Facility (TALF) in order to refinance maturing obligations, but should scheduled issuances be delayed, FNNI may need to seek facility extensions.
FNNI suspended its dividend after the payment of $8 million in early 2009, which Fitch views as a positive step in preserving capital and liquidity.
continues to demonstrate above-peer asset sensitivity due to its ability to quickly reprice its credit card portfolio and its strong retail deposit base, which allows the company to lag deposit pricing.
InfiCorp became a wholly-owned subsidiary of FNNI
in July 2000.
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