The credit rating of San Antonio-based Frost Bank is under review, and two other Texas banks have already been downgraded by Moody's as the rating agency raises the alarm about a potential recession and rising loan defaults.
The Moody's downgrades comes after three regional banks collapsed during the spring, sparking fears of a financial meltdown in the United States.in the Alamo City, in a report released Tuesday. The rating agency said it's analyzing Frost along with five other U.S. banks, including Bank of New York Mellon Corp., North Trust Corp., State Street Corp., Trust Financial Corp. and U.S.
Moody's is forecasting a recession in the fourth quarter of 2023 or the first quarter of 2024. In its report, the company also said persistently high interest rates are likely to put a dent in bank revenues. Despite the rating review, Frost Bank's Senior Vice President of Corporate Communications Bill Day told the"As of the second quarter, we had loaned out less than 44% of our deposit base — which is well below industry averages — and had 16% of our deposit base in highly liquid accounts at the Federal Reserve, meaning we have ready access to cash," Day wrote in an email.
Although Frost has so far avoided a credit downgrade from Moody's, two other Texas banks weren't as lucky. Houston-based Prosperity Bancshares and Amarillo National Bancorp were two of the 10 regional banks downgraded this week by the agency, CBS news reports.
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