Moody's affirmed a number of ratings for BNP Paribas SA units San Francisco-based Bank of the West and Honolulu-based First Hawaiian Bank.
For both banks, affirmed were their long-term issuer rating (local) of A3, long-term bank deposits rating (local) of Aa3, short-term bank deposits rating (local) of P-1, "a2" adjusted baseline credit assessment, "a2" baseline credit assessment, A1(cr) long-term counterparty risk assessment, and P-1(cr) short-term counterparty risk assessment.
The rating outlook for Bank of the West was kept at stable, while the rating outlook for First Hawaiian Bank was changed to stable from developing.
The change in the rating outlook for First Hawaiian Bank follows news that BNP Paribas is slashing its stake in First Hawaiian Inc., First Hawaiian Bank's parent company, through a secondary offering. The move would see the Paris-based financial giant's stake reduced to 64.6%, compared to the 82.6% the company currently owns. In fact, the company's ownership may drop to as low as 62.0% if the underwriters in the offering fully exercise their overallotment option. Moody's also said it believes First Hawaiian Bank will manage to keep its credit profile strong, pointing out that the bank has ample liquidity, high profitability and good asset-quality metrics.
With regard to Bank of the West, the rating agency noted that the bank is showing good asset-quality performance due to a low number of problem loans and net charge-offs. Capital ratios are high, and the bank benefits from excellent geographic diversity with its California and western U.S. footprint. Moody's also noted that the bank has an above-average reliance on net interest income, which poses a challenge to profitability due to low interest rates. In addition, while it lags peers in the core deposit funding of its loan portfolio, the bank has managed to grow the figure in recent periods.