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KBRA Assigns Ratings to Level One Bancorp, Inc.
[November 27, 2019]

KBRA Assigns Ratings to Level One Bancorp, Inc.


Kroll Bond Rating Agency (KBRA) assigns a senior unsecured debt rating of BBB, subordinated debt rating of BBB-, and short-term debt rating of K3 for Farmington Hills, Michigan based Level One Bancorp, Inc. (NADSAQ: LEVL) ("Level One" or "the company"). In addition, KBRA assigns deposit and senior unsecured debt ratings of BBB+, a subordinated debt rating of BBB, and short-term deposit and debt ratings of K2 for its subsidiary, Level One Bank. The Outlook for all long-term ratings is Stable.

Level One's ratings are supported by its knowledgeable management team, many of whom have experience at larger banks. Moreover, management and the Board have significant inside ownership of the company with a vested interest in the overall success of the institution. KBRA also recognizes LEVL's steady profitability in recent years, which is, in part, due to the company's relatively solid NIM, though also attributable to strengthening noninterest income contributions. Given the recent additions of talent and low interest rates - mortgage banking production has been robust, resulting in a more diverse earnings profile than many similarly sized banks. Despite the regional issues during the crisis, Level One's operating markets have rebounded and are relatively strong - with higher than average household income and below national average unemployment rates, facilitating a favorable lending environment. The company's NPA (News - Alert) ratio is above average, though has been on the decline in recent quarters. Moreover, despite the higher level of problem assets, NCO activity has been nominal, and if further issues were to arise the company is adequately reserved. LEVL's pro forma capital position following the acquisition of Ann Arbor State Bank is expected to decrease materially, thoug management is committed to rebuilding those ratios and intends to maintain capital at more conservative levels over the longer term. Level One's deposit costs are higher than average given the reliance on noncore funding/time deposits, though the overall deposit mix is improving and includes a considerable portion of noninterest-bearing accounts. Moreover, the acquisition is expected to boost the level of core deposits in a relatively attractive and resilient market.



To view the report, click here.

The ratings are based on KBRA's Bank & Bank Holding Company Global Rating Methodology published on October 16, 2019.


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About KBRA and KBRA Europe

KBRA is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider and is a certified Credit Rating Agency (CRA) by the European Securities and Markets Authority (ESMA). Kroll Bond Rating Agency Europe Limited is registered with ESMA as a CRA.


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