Fitch Affirms Compass Bancshares, Inc.'s IDRs at 'A+/F1'; Outlook Revised to Stable

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CHICAGO--(BUSINESS WIRE)-- Fitch Ratings has affirmed Compass Bancshares, Inc.'s (CBSS) long- and short-term Issuer Default Ratings (IDRs) at 'A+/F1'. The Rating Outlook is revised to Stable from Positive. A complete list of rating actions follows at the end of this release.

The affirmation of CBSS' ratings reflects the strategic importance and high degree of integration with its parent Banco Bilbao Vizcaya Argentaria SA (BBVA). CBSS was acquired by BBVA in September 2007. In Fitch's rating criteria, a bank's standalone risk is reflected in Fitch's Individual ratings and the prospect of external support is reflected in Fitch's Support ratings. Collectively these ratings drive Fitch's Long- and Short-term IDRs.

Since CBSS' ratings and Outlook are correlated to those of BBVA, changes in BBVA's ratings result in changes to CBSS' IDRs and Outlook. Earlier today, Fitch affirmed BBVA's ratings at 'AA-/F1+' and revised its Outlook to Stable from Positive. (For additional information, please see Fitch's press release 'Fitch Revises BBVA's Outlook to Stable; Affirms at 'AA-'', dated Nov. 12, 2010).

In evaluating CBSS' standalone credit profile, Fitch has also affirmed the bank's Individual Rating at 'C' reflecting moderating trends in asset quality, capital, earnings, and liquidity. While problem asset levels remain elevated, the bank's level of nonaccrual assets has fallen over 22% since the March 31, 2010 peak-level. CBSS has also been able to reduce its concentration to construction and land development loans (C&LD), a portfolio which has exhibited considerable stress over the past several years. C&LD loans as a percentage of capital have fallen to 105% of capital at Sept. 30, 2010, down from 152% a year ago. Lastly, the credit risk associated with the loans acquired through Guaranty Bank is greatly mitigated through loss sharing agreements with the FDIC.

Capital levels have also been significantly enhanced over the past 12 months, having benefited additionally through external capital support from its BBVA. Tier 1 common remains high at 11.1%, and well above regional bank peer averages. CBSS also returned to modest profitability during 2010 with modest profits reported in each quarter this year, while core earnings power has remained good, as measured by pre-tax pre-provision net revenues. CBSS had reported losses in 2009 and 2008 due to large provisioning expenses, as well as impairments to the company's goodwill. Lastly, CBSS has been able to reduce its reliance on wholesale funding and improve its overall funding profile over the past 12 months. Wholesale liabilities declined 38% during the 12 months ending June 30, 2010, while customer deposits increased approximately 28% during the same period. The Individual rating could be upgraded if CBSS achieves improved profitability metrics more in line with peer averages at the 'B/C' rating category. Upward momentum in ratings would also occur in conjunction with a continued decline in NPAs and sustained strong capital levels.

Fitch has affirmed the following ratings and revised the Outlook to Stable from Positive:

Compass Bancshares, Inc.

--Long-term IDR at 'A+';

--Short-term IDR at 'F1';

--Individual at 'C';

--Support at '1'.

Compass Bank

--Long-term deposits at 'AA-';

--Short-term deposits at 'F1'.

--Long-term IDR at 'A+';

--Short-term IDR at 'F1';

--Senior unsecured at 'A+';

--Subordinated debt at 'A';

--Individual at 'C';

--Support at '1'.

TexasBanc Capital Trust I

--Preferred stock at 'A-'.

Additional information is available at www.fitchratings.com.

Applicable Criteria and Related Research:

--'Global Financial Institutions Rating Criteria' (Aug. 16, 2010)

--'Bank Holding Companies' (Dec. 30, 2009)

Applicable Criteria and Related Research:

Global Financial Institutions Rating Criteria

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=547685

Bank Holding Companies

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=493324

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