S&B Muni PHILOSOPHY
The S&B Municipal Credit Analytics – or S&B MUNI – is instrumental in the management of risk across your bank’s municipal portfolio. S&B MUNI equips your bank for the demands of regulatory due diligence. Using a credit impairment methodology, it is a crucial third-party perspective to your bank’s existing processes and is independent from other credit ratings.
S&B MUNI’s primary goal is to identify problem credits early. Credits are monitored for market risk, including instances of default, credit downgrades, financial mismanagement, or various economic or material events, such as the recent pandemic. S&B MUNI’s ratings are also a valuable tool for investments in non-rated municipal debt, municipal loans or private placement debt
S&B MUNI RATING METHODOLOGY CHART
HISTORY OF S&B MUNI
S&B MUNI started out serving community banks more than 10 years ago, reviewing municipal credits most affected by the Great Recession. With the implementation of OCC Dodd Frank-related guidelines in 2013, S&B positioned itself with a methodology and process for these investment-grade due diligence requirements. S&B MUNI continues to provide a precise, timely and affordable solution for municipal purchases and ongoing monitoring for bankers, adapting to industry changes like pension reporting or pandemic risk.
S&B MUNI CREDIT RATING SCALE
The S&B MUNI credit rating scale is designed for bankers. It is similar to a credit risk scale for monitoring loans and problem loan credits. Ultimately, the S&B scale identifies whether a municipal credit could face impairment or has become impaired. This scale is not directly transferable to the NRSRO rating grades. S&B MUNI applies positive (“+”) and negative (“-“) gradations to the ratings in certain instances to reflect stronger or weaker credits within each credit rating.
An S&B 1 rating indicates financial strength and that S&B believes there is minimal risk regarding the municipality’s ability to pay principal and interest as expected.
An S&B 2 rating reveals some decrease in financial strength, but S&B believes there would still be minimal risk regarding the municipality’s ability to pay principal and interest.
An S&B 3 rating indicates a municipality that has shown negative trends in financial management. Although S&B believes this municipality will pay principal and interest as expected, the credit should be monitored closely for any further deterioration.
An S&B 4 rating indicates a municipality with significant financial issues that could impact its ability to pay principal and interest as expected. The municipality would be considered impaired and would be classified for Other Than Temporarily Impaired (OTTI).
Jim Thorpe Neighborhood Bank“
We presented the Strategic Capital Plan to the board this morning. After a thorough review, the board approved the plan as submitted. Thank you for your assistance in creating the plan documents. The documents were well written and presented a detailed and comprehensive review of the bank.
Gregory Hartman, EVP / CFO
Our company has been utilizing the S&B PRR for several years now, and this useful resource has become one of the keystone documents by which we measure our success. The PRR peer, industry, and economic data allow for a focused review of our company, better enabling us to execute strategic initiatives. Ultimately, the PRR helps us increase performance and better manage risk. Thank you, Seifried and Brew!
Bill W. Jones, President-CEO
Mauch Chunk Trust Company“
Jamie provides a multi-faceted plan covering all aspects of risk, not inclusive of just capital. The comprehensive Capital Plan including contingency planning is beneficial to management and our board and adheres to regulatory guidelines. We will definitely continue seeking Jamie’s expertise advise in this area.
Denise Rautzhan, Chief Financial Officer
NebraskaLand National Bank“
The annual Capital Planning process completed with Jamie and his team at Seifried & Brew is a vital component of our short-term and long-range financial planning process. Jamie consistently provides valuable insight and assistance in preparing the plan. Additionally, the quarterly Performance Risk Report provides bank management and board members with a deeper understanding of the ongoing operations of our financial institution in a clear, concise manner.
Bob Sundquist, CFO/CRO