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Moody's rates First National of Nebraska's subordinated debt

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Moody's rates First National of Nebraska's subordinated debt

Moody's on March 12 assigned a Baa2 rating to First National of Nebraska Inc.'s subordinated debt.

The rating reflects the Omaha, Neb.-based company's "respectable profitability" and "healthy core deposit base," among other factors. But its credit card concentration, at almost 40% of its total loan portfolio, may be a cause for concern. Though net charge-offs for the book are low, they rose despite 2017's "favorable economic environment." That upward trend, Moody's pointed out, will be "a particular challenge since banks can no longer re-price their credit card borrowers as their credit risk increases."

First National's exposure to the agricultural sector also "contributes disproportionately to [its] non-performing loans," according to the agency. That said, the company has "significant" experience with agricultural loans, and its underwriting is conservative.

The rating agency also affirmed subsidiary First National Bank of Omaha's ratings — its issuer rating at Baa2, deposits at A2 and short-term deposits at Prime-1.

The ratings outlook is stable.