Fitch Affirms New York Community Bancorp's Ratings on AmTrust Bank Acquisition

Fitch Ratings has affirmed New York Community Bancorp (NYB) and its subsidiaries' long-term and short-term Issuer Default Ratings (IDRs) at 'BBB' and 'F2', respectively. The Rating Outlook is Stable. A full list of ratings follows this release.

The affirmation reflects NYB's continued strong operating performance relative to many of its similarly rated peers. Non-performing assets, which Fitch expects will continue to escalate reflecting negative macro-economic factors, are expected to remain manageable. Fitch incorporated its view of stress on NYB's commercial real estate (CRE) portfolio, which is made up of largely multi-family loans. For NYB's existing multi-family loan portfolio, Fitch assumed performance that will be notably better than the baseline assumption for the asset class due to the company's strong underwriting, conservative loan-to-values, and its long-term experience in its niche multi-family lending space. While de minimus losses have materialized through September 2009, Fitch expects losses that do come about will be materially lower than what will eventually be the industry's experience. Improvement of profitability during the nine months ending Sept. 30, 2009 reflects wider spreads and continued strong operational efficiency. Prior to the AmTrust Bank acquisition, NYB took steps to raise capital ratios, with its tangible common equity (TCE) ratio at 6.0% at Sept. 30, 2009.

On Dec. 4, 2009, NYB announced the acquisition of certain assets and liabilities of AmTrust Bank after the Office of Thrift Supervision closed the institution and named the Federal Deposit Insurance Corporation (FDIC) receiver. NYB expects the transaction will be immediately accretive to operating earnings and tangible capital. The transaction will add approximately $11 billion of assets, and after using excess liquidity to pay off legacy AmTrust wholesale borrowings, NYB expects total assets will total $42 billion. Credit risk resulting from the transaction is largely mitigated by a loss-sharing agreement with the FDIC which states that 80% of losses up to $907 million and 95% of losses beyond $907 million will be refunded by the FDIC. Any loan past due greater than 59 days at the closing of the transaction will remain with the FDIC. Further deterioration in the loan portfolio would result in a maximum principal loss to NYB of $430 million which would be offset by a asset discount of $425 million.

In connection with the acquisition, NYB announced a capital raise that it anticipates will net $754 million of new common stock. Regulatory capital ratios without the additional capital remain within the definition of 'well-capitalized' per regulatory standards. The TCE ratio without the additional capital would fall from 6.0% to 4.5%. If NYB raises the full $754 million, TCE would increase to 6.3%. Also part of the acquisition agreement, NYB issued 25 million equity participation units to the FDIC. The FDIC has the choice to exercise this instrument by Dec. 23, 2009. If exercised, NYB can choose to pay the FDIC in equity or cash.

The Stable Outlook reflects Fitch's expectation of improved balance sheet metrics and net performing assets (NPAs) which may increase, but remain manageable. In Fitch's view, operational risk is the most significant risk of this transaction. While NYB has had an active and successful history of acquisitions, this is the first of this magnitude and differs most significantly from previous transactions due to the geographic footprint of AmTrust. Consequently, Fitch views the synergies of the transaction as potentially challenging, and will monitor NYB's progress of integration as well as deposit levels. NYB has decided it will keep the AmTrust name and will maintain front-line personnel in order to mitigate deposit attrition. If operational risks develop that exceed Fitch's expectations, or losses emanating from its loss portfolio become unmanageable in Fitch's view, there would be negative rating pressure.

NYB, with $32.9 billion of assets at Sept. 30, 2009, is headquartered in Westbury, NY and primarily provides multi-family loans for rent-controlled and rent-stabilized properties.

The following ratings have been affirmed, with Stable Outlook:

New York Community Bancorp

--Long-Term IDR at 'BBB';

--Short-Term IDR at 'F2';

--Individual Rating at 'B/C';

--Support at '5';

--Support Floor at 'NF';

--Long-term FDIC guaranteed debt at 'AAA';;

--Short-term FDIC guaranteed debt at 'F1+'.

New York Community Bank

--Long-Term IDR at 'BBB';

--Short-Term IDR at 'F2';

--Individual Rating at 'B/C';

--Support at '5';

--Support Floor at 'NF';

--Long-term Deposits at 'BBB+';

--Long-term FDIC guaranteed debt at 'AAA';;

--Short-term FDIC guaranteed debt at 'F1+';

--Short-Term Deposits at 'F2'.

New York Commercial Bank

--Long-Term IDR at 'BBB';

--Short-Term IDR at 'F2';

--Individual Rating at 'B/C';

--Support at '5';

--Support Floor at 'NF';

--Long-term Deposits at 'BBB+';

--Short-Term Deposits at 'F2'.

Richmond County Capital Corporation

--Preferred Stock at 'BBB-'.

Roslyn Real Estate Asset Corp

--Preferred Stock at 'BBB-'

Additional information is available at ' www.fitchratings.com'.

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