Finally, a piece of good news in the banking business.
Standard & Poor's Corp. yesterday upgraded its credit rating of Sovran Financial Corp.'s debt, saying the bank holding company's merger with Citizens & Southern Corp. of Atlanta improved Sovran's ability to deal with an increase in troubled real estate loans.
In recent months, the rating agency has issued dozens of warnings about the risk associated with debt issued by Washington area financial institutions, including Sovran, because of their exposure in the sluggish commercial real estate market. Those concerns have resulted in a series of downgrades on the debt of nearly every area bank and thrift.
After all of the negative reports, yesterday's positive announcement caught even officials of the Norfolk-based company off guard.
"We're delighted," said Sovran spokesman Mike Smith, "but surprised. It's particularly satisfying because of all the recent downgrades."
Standard & Poor's said the upgrade to AA-minus/A-1-Plus on Sovran's jumbo certificates of deposit and letter-of-credit-backed issues, which support loans sold in the private sector, reflects a positive outlook for the merger of the two large regional banks to form the 13th-largest bank holding company in the nation.
"Citizens & Southern and Sovran Financial bring to the new company a history of conservative credit cultures, healthy profitability and good asset quality," the rating agency said.