DBRS Morningstar Assigns Short-Term Ratings of R-1 (low) to Equitable Bank with a Stable Trend and Discontinues Short-Term Ratings of Concentra Bank

DBRS Limited (DBRS Morningstar) assigned a Short-Term Issuer Rating of R-1 (low) and a Short-Term Instruments rating of R-1 (low) to Equitable Bank (Equitable or the Bank). Both trends are Stable. DBRS Morningstar also discontinued and withdrew the Short-Term Issuer Rating and Short-Term Instruments rating of Concentra Bank, which is 100% owned by Equitable, at the request of Equitable.

RATING DRIVERS
The Short-Term Issuer Rating and Short-Term Instruments rating will move in tandem with Equitable’s Long-Term Issuer Rating. Continued progress in diversifying funding sources, particularly through more stable direct-to-consumer channels, and revenue, through higher noninterest income, while maintaining sound asset quality would lead to a ratings upgrade.

Conversely, the Bank’s ratings would be downgraded if there were material operational issues with the acquisition integration. Additionally, significant losses in the loan portfolio as a result of unforeseen weakness in underwriting and/or risk management, disproportionate growth in commercial originations that weaken the Bank’s risk profile, or substantive funding pressure caused by deposit outflows would also result in a ratings downgrade.

ENVIRONMENTAL, SOCIAL, GOVERNANCE CONSIDERATIONS
There were no Environmental/Social/Governance factors that had a significant or relevant effect on the credit analysis.

A description of how DBRS Morningstar considers ESG factors within the DBRS Morningstar analytical framework can be found in the DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings at https://www.dbrsmorningstar.com/research/396929/dbrs-morningstar-criteria-approach-to-environmental-social-and-governance-risk-factors-in-credit-ratings (May 17, 2022).

Notes:
All figures are in Canadian dollars unless otherwise noted.

The principal methodology is the Global Methodology for Rating Banks and Banking Organisations (June 23, 2022; https://www.dbrsmorningstar.com/research/398692). In addition, DBRS Morningstar uses the DBRS Morningstar Criteria: Approach to Environmental, Social, and Governance Risk Factors in Credit Ratings (https://www.dbrsmorningstar.com/research/396929/dbrs-morningstar-criteria-approach-to-environmental-social-and-governance-risk-factors-in-credit-ratings; May 17, 2022) in its consideration of ESG factors.

The credit rating methodologies used in the analysis of this transaction can be found at: https://www.dbrsmorningstar.com/about/methodologies.

The related regulatory disclosures pursuant to the National Instrument 25-101 Designated Rating Organizations are hereby incorporated by reference and can be found on the issuer page at www.dbrsmorningstar.com.

The rating was initiated at the request of the rated entity.

The rated entity or its related entities did participate in the rating process for this rating action.

DBRS Morningstar had access to the accounts, management, and other relevant internal documents of the rated entity or its related entities in connection with this rating action.

This is a solicited credit rating.

The conditions that lead to the assignment of a Negative or Positive trend are generally resolved within a 12-month period. DBRS Morningstar’s outlooks and ratings are under regular surveillance.

For more information on this credit or on this industry, visit www.dbrsmorningstar.com.

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