DBRS Assigns Rating of BBB to The Equitable Trust Company

DBRS has today assigned The Equitable Trust Company (Equitable Trust) a BBB Deposits and Senior Debt rating and a BBB (low) Subordinated Debt rating. Concurrently, its parent, Equitable Group Inc. (Holding Company) has been assigned a BBB (low) Senior Debt rating. All trends are Stable.

Equitable Group Inc., through its wholly owned operating subsidiary Equitable Trust (collectively, Equitable), is a niche mortgage lender focused on single-family, small commercial and large commercial lending sourced through brokers and funded by securitization and brokered deposits.

To assist in assessing asset quality, a key ratings driver, DBRS utilized its structured finance RMBS model to assess the quality of Equitable’s uninsured residential mortgages and ran the uninsured portion of the commercial portfolio through DBRS’s CMBS model. The results supported a conclusion that Equitable is adequately capitalized to support its current ratings based on a runoff scenario.

While Equitable benefits from a low-cost structure, its business model and size results in a number of concentration-related risks, including little revenue diversification, geographic loan concentration and limited funding sources.

The Trust Company’s senior debt rating of BBB is comprised of an intrinsic rating assessment of BBB and a support assessment of SA-3, reflecting DBRS’s view that no immediate support is likely from outside sources. The Holding Company’s senior rating reflects the structural subordination relative to the Trust Company.

Notes:
The applicable methodologies are the Global Methodology for Rating Banks and Banking Organisations (June 2012), Rating Parent/Holding Companies and Their Subsidiaries (March 2010), and DBRS Criteria: Intrinsic and Support Assessments (February 2009), which can be found on DBRS’s website at www.dbrs.com.

The sources of information used for this rating include company documents. DBRS considers the quality of information available to it for the purposes of providing this rating of satisfactory quality.

This rating is endorsed by DBRS Ratings Limited for use in the European Union.