Moody's Affirms New York Community (Senior at A3), Changes Outlook to Negative

(Source: Info-Prod Research (Middle East))Moody's Investors Service affirmed theratings of New York Community Bancorp, Inc. and its savings banksubsidiary, New York Community Bank, and changed the outlook on theseentities to negative from stable. New York Community Bancorp, Inc. israted A3 for senior debt, and New York Community Bank is rated C+ forbank financial strength, and A2 and Prime-1 for long- and short-termdeposits, respectively. In a separate but simultaneous action, Moody'sdowngraded the trust preferred ratings of Haven Capital Trust II and NewYork Community Capital Trust V to Baa2 from Baa1, in accordance withMoody's new methodology for rating bank hybrid securities andsubordinated debt. Following the downgrade, the outlook on Haven CapitalTrust II and New York Capital Trust V is also negative. This separaterating action concludes the review for possible downgrade of theseratings that was initiated on December 3, 2009. New York CommunityBancorp, Inc. and its subsidiaries are referred to collectively hereafteras 'NYCB'. The affirmation of the ratings of, and change in outlook on New YorkCommunity Bancorp, Inc. and New York Community Bank to negative fromstable is in response to NYCB's entry into an FDIC-assisted transactionto acquire certain assets and assume the deposits and wholesaleborrowings of AmTrust Bank, a Cleveland, Ohio-based thrift institution.The affirmation of the ratings reflects NYCB's sound credit fundamentals,which Moody's believes remain intact with this deal. The negative outlookreflects Moody's view of the increased potential for integration riskinherent in the company's profile, now that NYCB has acquired bankingplatforms in Arizona, Florida and Ohio, coupled with the expectation thatit will seek to leverage those platforms through further acquisitions. Moody's recognizes NYCB's good track record in acquiring and integratingbanking institutions, and the positive aspects of the AmTrusttransaction, particularly the loss-sharing agreement with the FDIC thatlimits NYCB's potential losses, the improved funding profile resultingfrom the assumption of its deposits, and the favorable impact on thecompany's profitability. Nevertheless, these positive considerations areoutweighed by the additional challenges of managing and expanding arelatively large franchise in geographies that are not contiguous withNYCB's metro New York area home base, compounded by the possibility thatthe structures of future transactions may not be as benign in their riskprofile. Separate from the outlook change discussed above, Moody's downgraded thetrust preferred ratings of Haven Capital Trust II and New York CommunityTrust V to Baa2 from Baa1. The starting point for these hybrid ratings isthe Baseline Credit Assessment of A2 at the bank, adjusted for parentalsupport if any (the Adjusted Baseline Credit Assessment), which isfurther adjusted for structural subordination of the holding company anddoes not incorporate uplift for systemic support. In the case of NYCB,there is no parental support, and therefore the Adjusted Baseline CreditAssessment is of the bank is identical to its Baseline Credit Assessmentof A2. These lowered ratings reflect the coupon deferral risk associatedwith the respective instruments and are in line with Moody's recentlypublished methodology entitled "Moody's Guidelines for Rating Bank HybridSecurities and Subordinated Debt". Following the downgrade, the outlookon these two entities is also negative.

Originally published by Info-Prod Strategic Business Information.

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