(Reuters) -Fitch Ratings downgraded the embattled regional lender on Tuesday Community Bancorp of New York (NYSE:) and its banking subsidiary, Flagstar Bank, from ‘BB+’ to ‘BB’.
The rating agency said the downgrade reflects its assessment that NYCB has a weaker earnings and profitability profile, coupled with the execution risk associated with the restructuring plan.
Last week, NYCB reported a first-quarter loss of $327 million, or 45 cents per share, as the lender set aside higher provisions for credit losses due to its exposure to the beleaguered commercial real estate sector.
The lender had said it expected annual losses to be between 50 cents and 55 cents in 2024, indicating there will be little relief in the near term as it maintains a high level of provisioning for the remainder of the year credit losses expected.
However, Fitch said its rating outlook for the bank is positive as risks have stabilized over the rating horizon.
The rating agency said it expects NYCB’s realized losses to materialize over time and are likely to be greater than those of peers given its weakening asset quality.
Fitch had earlier downgraded NYCB’s long-term issuer ratings to ‘BB+’/’B’ from ‘BBB-‘/’F3’ in March.
