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TMCNet:  KBRA Comments on First National of Nebraska, Inc.'s Proposed Subordinated Note Issuance

[March 13, 2018]

KBRA Comments on First National of Nebraska, Inc.'s Proposed Subordinated Note Issuance

Kroll Bond Rating Agency (KBRA) currently maintains a senior unsecured debt rating of A- and subordinated debt rating of BBB+ for First National of Nebraska, Inc. ("FNNI", "the Company"). Additionally, KBRA maintains deposit and senior unsecured debt rating of A for the lead bank subsidiary, First National Bank of Omaha. The Outlook for all long-term ratings is Stable.

The proceeds of the proposed $150 million subordinated debt issuance will be used to bolster working and risk-based capital as well as the liquidity of the Company. Further, pro forma debt is expected to remain manageable post close. On a consolidated basis, FNNI had $50 million in subordinated debt, issued by the subsidiary bank, $150 million in trust preferred securities, and $2.0 billion in common equity and retained earnings as of December 31, 2017. Additionally, FNNI had $158.2 million in cash, which KBRA believes is adequate to service holding company debt. Management intends to keep the proceeds of the offering at the holding company; accordingly, KBRA expects the double leverage ratio, which stood at 102% at December 31, 2017, to remain at an acceptable level.

In October of 2017, KBRA affirmed FNNI's senior unsecured and subodinated debt ratings, as well as its short-term debt rating, primarily due to FNNI's stable fee income streams, comfortable capital position, and sizeable deposit market share in key geographies. FNNI's relatively lower diversification by geography and product mix compared to larger U.S. banks were the main rating constraints.


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About KBRA and KBRA Europe

KBRA is a full service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. In addition, KBRA is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider and a certified Credit Rating Agency (CRA) by the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe Limited is registered with ESMA as a CRA.

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