Laurentian Bank of Canada’s mounting troubles have put its credit rating at risk, according to the latest analyst to downgrade the Montreal-based lender.

A series of snowballing setbacks prompted National Bank of Canada analyst Gabriel Dechaine to cut his rating to underperform from sector perform. It’s his second downgrade in just over a month; he last lowered his rating on the bank in September following Laurentian’s strategic review that ended without finding a buyer. Since then, new challenges have emerged, including a service outage and the departure of key leaders.

 “LB’s wholesale funding costs are rising in the wake of potential rating agency actions,” Dechaine said, citing an S&P Global Ratings downgrade to Laurentian Bank’s outlook to negative from stable on Thursday. DBRS Morningstar is undertaking a similar review and Dechaine expects an update in November.  

Laurentian Bank has strong capital and liquidity levels, a spokesperson for the lender said in an email. The stock dropped 2.6 per cent at the close on Tuesday.

The analyst also dropped his price target to $27, the lowest among analysts tracked by Bloomberg, from $32. The new target reflects a more conservative net interest margin, he wrote in a note dated Monday. 

National Bank joins other firms, including Canadian Imperial Bank of Commerce and Royal Bank of Canada, in downgrading and slashing price targets after the conclusion of the review in September. Three analysts now rate Laurentian the equivalent of a sell, while seven recommend holding and one analyst retains a buy rating, according to Bloomberg-compiled data.