New York, May 23, 2014 -- Moody's Investors Service affirmed all the ratings of New York Community
Bancorp, Inc. (NYCB) and its lead bank subsidiary,
New York Community Bank. New York Community Bank has long-
and short-term bank deposit ratings of A3 and Prime-2,
respectively, and a standalone bank financial strength rating of
C. NYCB's standalone baseline credit assessment is a3.
New York Community Bancorp, Inc. has an issuer rating of
Baa1. The rating outlook is stable.
..Issuer: New York Community Bancorp, Inc.
.... Issuer Rating, Affirmed Baa1
....Outlook, Remains Stable
..Issuer: New York Community Bank
.... Adjusted Baseline Credit Assessment,
Maintained a3
.... Baseline Credit Assessment, Maintained
a3
.... Bank Financial Strength Rating,
Affirmed C
....OSO Rating, Affirmed A3/P-2
....Deposit Rating, Affirmed A3/P-2
....Outlook, Remains Stable
..Issuer: New York Community Capital Trust V
....Backed Preferred Stock, Affirmed
Baa3 (hyb)
....Outlook, Remains Stable
RATINGS RATIONALE
The affirmation of NYCB's ratings with a stable outlook was based on Moody's
view that NYCB remains appropriately positioned at the median of the US
bank rating distribution. NYCB's strengths include a long-term
record of solid underwriting resulting in good asset quality. It
also has healthy risk-adjusted core profitability and a sustainable
niche business model focused on financing apartment buildings, principally
in the metropolitan New York City area. These strengths offset
its major credit weakness, which is concentration risk. Specifically,
NYCB's commercial real estate (CRE) portfolio is roughly 8.5
times Moody's adjusted tangible common equity (TCE), with multifamily
loans accounting for 73% of the total CRE portfolio at 31 December
2013. Moody's added that the bank is more reliant on wholesale
funding, as opposed to core deposit funding, than its banking
peers.
NYCB's asset quality continues to be better than average.
Compared with similarly-rated peers, NYCB's annual
net charge-offs of 0.05% and nonperforming assets
(nonaccruals, 90+ days past due, other real estate owned,
and accruing troubled debt restructured loans) equal to 6.7%
of TCE and reserves as of 31 December 2013, are relatively low.
Moody's believes that NYCB's strong asset quality metrics result from
its conservative underwriting standards. These include low loan-to-value
ratios, significant involvement of senior management members in
the property appraisal process, and the use of brokers who are familiar
with NYCB's underwriting guidelines. Moody's added that the maintenance
of NYCB's strong asset quality performance is also supported by its comparatively
moderate organic loan growth, which has not involved meaningful
new products or geographies in recent years.
Moody's said NYCB faces two key challenges going forward.
The first is growing competition, which could test its underwriting
as more banks expand their multifamily lending business. The government-sponsored
enterprises have also reduced their originations as mandated by their
regulator, which further fuel growth in banks' multifamily
lending. However, Moody's expects NYCB's loan
growth to be more moderate if heightened competition pressures pricing
and lending terms.
The second challenge is earnings pressure. NYCB's funding
cost is high relatively to peers because of its greater reliance on wholesale
funding. This funding structure places pressure on NYCB's
net interest margin, which is further compounded by the reinvestment
of higher-yielding assets into lower-yielding assets in
the current protracted low interest rate environment. Nonetheless,
some of the earnings pressure is offset by its very good efficiency ratio,
which is significantly better than most rated US banks.
The principal methodology used in this rating was Global Banks published
in May 2013. Please see the Credit Policy page on www.moodys.com
for a copy of this methodology.
REGULATORY DISCLOSURES
For ratings issued on a program, series or category/class of debt,
this announcement provides certain regulatory disclosures in relation
to each rating of a subsequently issued bond or note of the same series
or category/class of debt or pursuant to a program for which the ratings
are derived exclusively from existing ratings in accordance with Moody's
rating practices. For ratings issued on a support provider,
this announcement provides certain regulatory disclosures in relation
to the rating action on the support provider and in relation to each particular
rating action for securities that derive their credit ratings from the
support provider's credit rating. For provisional ratings,
this announcement provides certain regulatory disclosures in relation
to the provisional rating assigned, and in relation to a definitive
rating that may be assigned subsequent to the final issuance of the debt,
in each case where the transaction structure and terms have not changed
prior to the assignment of the definitive rating in a manner that would
have affected the rating. For further information please see the
ratings tab on the issuer/entity page for the respective issuer on www.moodys.com.
For any affected securities or rated entities receiving direct credit
support from the primary entity(ies) of this rating action, and
whose ratings may change as a result of this rating action, the
associated regulatory disclosures will be those of the guarantor entity.
Exceptions to this approach exist for the following disclosures,
if applicable to jurisdiction: Ancillary Services, Disclosure
to rated entity, Disclosure from rated entity.
Regulatory disclosures contained in this press release apply to the credit
rating and, if applicable, the related rating outlook or rating
review.
Please see www.moodys.com for any updates on changes to
the lead rating analyst and to the Moody's legal entity that has issued
the rating.
Please see the ratings tab on the issuer/entity page on www.moodys.com
for additional regulatory disclosures for each credit rating.
Thuy Nguyen
Asst Vice President - Analyst
Financial Institutions Group
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Robert Franklyn Young
MD - Financial Institutions
Financial Institutions Group
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Releasing Office:
Moody's Investors Service, Inc.
250 Greenwich Street
New York, NY 10007
U.S.A.
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Moody's affirms New York Community (Issuer Baa1); stable outlook
