Fitch Ratings on March 29 announced ratings for Dime Community Bancshares, New York Community Bancorp and Astoria Financial as part of its U.S. Niche Real Estate Bank Peer Review.
For Lake Success, N.Y.-based Astoria Financial Corp., the rating agency maintained its "Rating Watch Evolving" on the company's BBB- long-term issuer default rating. Fitch also maintained the company's short-term issuer default rating of F3, senior debt rating of BBB-, preferred stock rating of B, and viability rating of bbb-. For subsidiary Astoria Bank, Fitch maintained its BBB- long-term issuer default rating, F3 short-term issuer default rating, BBB long-term deposits rating, F2 short-term deposits rating and "bbb-" viability rating.
The rating agency said that it views Astoria's pending deal with Montebello, N.Y.-based Sterling Bancorp as positive. It said the transaction could result in a better earnings profile, an improved interest rate sensitivity and a lower loan to deposit ratio. Fitch also noted, however, that the estimated pro forma capital ratios will be lower than Astoria Financial's reported ratios at the end of 2016. Besides possible execution risks, the deal would also increase the company's commercial real estate concentration.
For Brooklyn, N.Y.-based Dime Community Bancshares Inc., Fitch affirmed the company's BBB long-term issuer default rating, F2 short-term issuer default rating, "bbb" viability rating, 5 support rating and NF support rating floor. For unit Dime Community Bank, Fitch affirmed its BBB long-term issuer default rating, F2 short-term issuer default rating, "bbb" viability rating, BBB+ long-term deposits rating, F2 short-term deposits rating, 5 support rating and NF support rating floor.
The rating agency cited the company's stable asset quality, solid capital levels and concentrated business model as factors that support the ratings.
For Westbury, N.Y.-based New York Community Bancorp Inc., the rating agency affirmed its BBB+ long-term issuer default rating, BB- preferred stock rating, "bbb+" viability rating, F2 short-term issuer default rating, 5 support rating and NF support floor rating.
Fitch also affirmed units New York Community Bank's and New York Commercial Bank's BBB+ long-term issuer default ratings, A- long-term issuer deposits ratings, "bbb+" viability ratings, F2 short-term issuer default ratings, 5 support ratings, NF support floor ratings and F2 short-term deposits ratings.
All long-term ratings had a stable outlook.
According to Fitch, New York Community Bancorp's business model has resulted in strong asset quality with low credit losses over several business cycles. This, along with solid underwriting and stable earnings, support the company's ratings. The rating agency noted, however, that the company's concentrated loan portfolio and high reliance on wholesale funding somewhat offset its strengths.
According to Fitch, it recognizes that the business models of the U.S. Niche Real Estate Banks are different, but characterizes the institutions as having limited deposit franchises and geographic concentrations compared to bigger banks. Banks with total assets of around $5 billion to roughly $50 billion that lend primarily in the New York City metropolitan residential real estate market comprise the group.