Moody's announces completion of a periodic review for a group of North American Banks

New York, December 19, 2022 -- Moody's Investors Service ("Moody's") has completed a periodic review of the ratings -and other ratings that are associated with the same analytical units for the rated entity(entities) listed below.

The review was conducted through a portfolio review discussion held on 12 December 2022 in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. A possible outcome from periodic reviews is a referral of a rating to a rating committee.

This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement.

Key Rating Considerations

The principal methodology used for the rated entities listed below was Banks Methodology published in July 2021. Please see the Rating Methodologies page on https://ratings.moodys.com for a copy of this methodology.

Key rating considerations on a forward-looking basis may include but are not limited to the following summarized below.

Banks Methodology

Asset Risk: a bank's asset risk is fundamental to creditworthiness because banks have high leverage, which implies that a small deterioration in asset value has a large effect on solvency. Credit quality problems are typically at the root of most bank failures, even though these problems can take a variety of forms, for example a deteriorating value of the loan collateral, resulting in higher losses. Asset risk includes a bank's other assets as well may also be vulnerable to other non-lending risk including market risk and operational risk.

Capital: asset risk and the need for capital go hand in hand. The greater the risk of unexpected loss, the more capital a bank needs to hold in order to retain the confidence of creditors, which enables the bank to fund itself and to shield bondholders from loss.

Profitability: profitability is an important indicator of an institution's ability to generate capital, and is hence another measure of its ability to absorb losses and recover from shocks. A bank with weak or negative profitability has less ability to absorb asset risks than one with strong internal capital generation capacity, other things being equal.

Funding Structure: a bank's funding structure has a strong bearing on its probability of failure or requiring assistance, because some sources of funds are less reliable than others. A bank that makes significant use of an unreliable funding source — perhaps short-term in nature, or from particularly risk-sensitive counterparties — is more likely to suffer periodic difficulties in refinancing its debt, putting it at greater risk of needing support.

Liquid resources: to provide a full picture of liquidity, an assessment of the funding structure of a bank has to be viewed in the context of the composition of its assets. Liquid resources are enhanced when a bank has high-quality liquid assets that can both be readily sold or pledged for cash in private markets in response to its funding counterparts' changing behavior, or that can in extremis be repoed with central banks under standard terms.

Qualitative considerations: There are occasionally other bank-specific considerations that we believe can influence core fundamentals. These additional factors are typically qualitative in nature, although in some cases our assessments may be informed by certain quantitative indicators. These factors include Business Diversification, Opacity and Complexity and Corporate Behavior.

The bank ratings are ultimately derived from the application of our Support and Structural Analysis, which comprises the following:

Affiliate Support, where an entity may be supported by other entities within a group, or occasionally affiliated third parties, thus reducing its probability of default.

Loss Given Failure (LGF), where we undertake a liability-side analysis to assess the impact of a failure — absent government support — in terms of the potential resultant loss on the bank's rated debt instruments. We also incorporate instrument-specific coupon features.

Government Support, where an entity may be supported by public bodies, such as local, regional, national, or supranational institutions, again reducing the risk for some or all instruments. We assess this using our JDA framework.

• Ally Financial Inc.

• Amarillo National Bank

• American Express Company

• Associated Banc-Corp

• Axos Financial, Inc.

• Bank of America Corporation

• Bank of Hawaii Corporation

• Bank of Montreal

• Bank of N.T. Butterfield & Son Ltd.(The)

• Bank of New York Mellon Corporation (The)

• Bank of Nova Scotia

• Bank of the West

• Bank OZK

• BankUnited, Inc

• Berkshire Hills Bancorp, Inc.

• BMW Bank of North America

• BOK Financial Corporation

• Cadence Bank

• Canadian Imperial Bank of Commerce

• Capital One Financial Corporation

• CIBC Mellon Trust Company

• Citigroup Inc.

• Citizens Bank, N.A.

• Comerica Incorporated

• Commerce Bank

• Cullen/Frost Bankers, Inc.

• Deutsche Bank Trust Company Americas

• Dime Community Bancshares, Inc.

• Discover Financial Services

• F.N.B. Corporation

• Federal Farm Credit Banks

• Federal Home Loan Banks

• Federation des caisses Desjardins du Quebec

• Fifth Third Bancorp

• First American Trust, FSB

• First Citizens BancShares, Inc.

• First Hawaiian Bank

• First Horizon Corporation

• First Merchants Corporation

• First National of Nebraska, Inc.

• First Republic Bank

• FirstBank Puerto Rico

• Fulton Financial Corporation

• Goldman Sachs Group, Inc. (The)

• Hancock Whitney Corporation

• Hilltop Holdings Inc.

• HSBC Bank Canada

• HSBC USA Inc.

• Huntington Bancshares Incorporated

• INTRUST Financial Corporation

• JPMorgan Chase & Co.

• KeyCorp

• M&T Bank Corporation

• Merchants Bancorp

• Morgan Stanley

• National Bank of Canada

• New York Community Bancorp, Inc.

• Northern Trust Corporation

• Old National Bancorp

• Peapack-Gladstone Financial Corporation

• Pinnacle Financial Partners, Inc.

• PNC Financial Services Group, Inc.

• Popular, Inc.

• Prosperity Bank

• RBC (Barbados) Trading Bank Corporation

• Regions Financial Corporation

• Royal Bank of Canada

• Santander Holdings USA, Inc.

• Signature Bank

• Silvergate Capital Corporation

• SLM Corporation

• South State Corporation

• State Street Corporation

• SVB Financial Group

• Synovus Bank

• Texas Capital Bancshares, Inc.

• Toronto-Dominion Bank (The)

• Truist Financial Corporation

• U.S. Bancorp

• UMB Financial Corporation

• United Bank

• Washington Federal, Inc.

• Webster Financial Corporation

• Wells Fargo & Company

• Western Alliance Bancorporation

• WSFS Financial Corporation

• Zions Bancorporation

The principal methodology used for the rated entities listed below was Securities Industry Market Makers Methodology published in November 2019. Please see the Rating Methodologies page on https://ratings.moodys.com  for a copy of this methodology.

Key rating considerations on a forward-looking basis may include but are not limited to the following summarized below.

Securities Industry Market Makers Methodology

Liquidity and funding: market makers are inherently confidence sensitive. As such, important credit considerations for a market maker include the adequacy of its available resources to support its daily business activities and its longer-term plans, its level of preparedness to withstand a liquidity shock and a comparison of its long-term funding structure with its asset risk and other obligations.

Profitability: the strength and stability of a market maker's earnings are important considerations in evaluating its ability to generate capital to absorb losses and recover from shocks and assess its long-term viability. The strength of earnings provides an indication of the level and sustainability of a market maker's competitive position, and the stability of its earnings provides an indication of its ability to adapt to changes in the economic and business environments in the sector(s) in which it operates.

Risk appetite and leverage: market-making is inherently confidence sensitive and balance sheet intensive. Managing risk is therefore a core attribute of any market maker, due to the inherent complexity of securities markets, where the activities and sentiments of a wide range of parties (governments, regulators, market makers, counterparties, and end customers) have a direct and often rapid influence on pricing, volumes, and liquidity. Also, an assessment of balance sheet leverage provides an important gauge of the firm's exposure to reduced asset values that could make it insolvent or cause confidence-sensitive counterparties to be concerned about its solvency.

Operating environment: a market maker's operating environment can have an important bearing on its long-term viability. Relevant economic, judicial/regulatory, institutional, and general operating conditions may impact market makers' creditworthiness.

Other qualitative considerations: important other qualitative considerations that can affect a market maker's creditworthiness include the extent of its business diversification, the level of opacity and complexity in its activities and its corporate behavior.

Support and structural analysis: a market maker's ratings may be positively affected by the capacity and willingness of its affiliates and public bodies to provide it with support.

Sovereign or parent constraint: a market maker's ratings may be negatively affected by a constraint related to the relatively lower creditworthiness of its sovereign or parent.

Instrument-level rating considerations: individual instrument ratings also factor in notching considerations based on the seniority and collateral of the instruments.

• Citigroup Global Markets Europe AG

• Citigroup Global Markets Inc.

• Citigroup Global Markets Limited

• Goldman Sachs International

• J.P. Morgan Securities LLC

• J.P. Morgan Securities plc

• Morgan Stanley & Co. International plc

• Morgan Stanley Capital Group Inc.

• Morgan Stanley Capital Services LLC

• Morgan Stanley Europe SE

• Morgan Stanley MUFG Securities Co., Ltd.

• RBC (Barbados) Trading Bank Corporation

The principal methodology used for the rated entities listed below was Government-Related Issuers Methodology published in February 2020. Please see the Rating Methodologies page on https://ratings.moodys.com  for a copy of this methodology.

Key rating considerations on a forward-looking basis may include but are not limited to the following summarized below.

Government-Related Issuers Methodology

Assigning a Baseline Credit Assessment (BCA): The majority of Government-Related Issuers (GRIs) begin with an assessment of the GRI's standalone strength (i.e. BCA) – its ability to service and repay outstanding debt without recourse to extraordinary support from the supporting government - using the published sector-specific methodology that is most suitable for the predominant activities of the GRI. Our assessment of standalone strength includes any day-to-day support received from the government that can be clearly distinguished from extraordinary support. Support mechanisms, such as an obligation of the government to ensure the GRI's solvency and liquidity, are reflected in the BCA when they are legally or contractually documented.

Government uplift: The GRI's ratings include any uplift due to systemic support and typically focus on three structural factors and three factors explaining the level of the government's willingness to provide support. Structural factors address the legal and quasi-legal aspects of the government's relationship with the GRI and include: (1) guarantees, (2) ownership level and (3) barriers to support. The factors underlying willingness consider the softer connections between the two entities and include (4) the likelihood of government intervention, (5) political linkages and (6) economic importance. Support is determined using a joint default analysis framework which considers an estimate of the likelihood of extraordinary support, an assessment of the credit quality of the supporting government, and default correlation between the two entities.

GRIs without a BCA: In limited instances, it is not possible or meaningful to assign a BCA. The GRI is so inextricably linked to the government that a meaningful standalone BCA cannot be derived. In such cases, a top-down analytical approach is used that chiefly considers the ability and willingness of the government to provide timely support, instead of the usual bottom-up approach of starting with the BCA and then considering uplift towards the government's rating.

• Federal Farm Credit Banks

• Federal Home Loan Banks

This announcement applies only to Rated Entities with EU rated, UK rated, EU endorsed and UK endorsed ratings. Rated Entities, with Non EU rated, non UK rated, non EU endorsed and non UK endorsed ratings may be referenced herein to the extent necessary, if they are part of the same analytical unit.

Please see the Issuer page on https://ratings.moodys.com for each of the ratings covered, most updated credit rating action, rating history, and Credit Rating action Press Release including the rating rationale and factors that could lead to a rating upgrade or downgrade.

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