Fitch Affirms National Consumer Cooperative Bank LT IDR at 'A-'; Rating Outlook Stable

Business Wire, March 4, 2008

CHICAGO -- Fitch Ratings has affirmed the ratings of National Consumer Cooperative Bank (NCB) and its related subsidiaries. The Rating Outlook is Stable. Approximately $450 million of debt and $1 billion of deposits are affected by this action. A complete list of ratings is detailed at the end of this release.

The affirmation of NCB's ratings continues to reflect appropriate risk adjusted capitalization, experienced management team, and knowledge of the cooperative market. The ratings also take into account NCB's relatively greater reliance on capital markets financing, niche focus in cooperative lending and modest profitability measures given its member-owned status. Although NCB is a government-sponsored enterprise (GSE), its ratings do not receive much benefit from its government charter.

The Stable Rating Outlook incorporates Fitch's expectations that NCB will maintain stable operating performance and manage close to current capital and liquidity levels. Deviation from current, capital or asset quality performance and/or operating losses over the near term, could warrant a negative rating repercussions.

Operating performance declined in 2007 as loan sales generated losses due to the lack of liquidity in the capital markets, specifically the commercial mortgage backed securities (CMBS) market. Gain (Loss)-on-sale income remains a significant proportion of operating income, which makes earnings more volatile. Small spreads on sold loans or reduction in loan growth could continue to adversely affect profitability. Fitch believes loan growth for 2008 will be minimal as originations will be driven by the ability to sell loans or fund loans on balance sheet. Profitability is expected to improve in 2008 versus 2007 but remain below historical levels, as NCB has improved pricing that better reflects current market conditions.

Although asset quality performance has shown some softening, NCB's portfolio has performed well, due to its experience in the cooperative sector and the secured nature of most of its loans. In Fitch's opinion, near-term asset quality performance should be within historical parameters and remain manageable as nonperforming loans were $21 million at Sept. 30, 2007.

While historically the majority of NCB's funding comes from capital markets, primarily through securitization, management has shifted to increased deposit funding and Federal Home Loan Bank Advances in the current volatile securitization market. Fitch expects NCB to return to the securitization market, once some stability is established. If NCB is unable to access the securitization market for a prolonged period, Fitch believes origination growth will need to be curtailed.

Fitch affirms the following ratings with a Stable Outlook:

National Consumer Cooperative Bank

--Long-term Issuer Default Rating (IDR) 'A-';

--Senior unsecured debt 'A-';

--Short-term IDR 'F2';

--Commercial paper 'F2';

--Individual 'B';

--Support '5';

--Support floor 'NF'.

NCB, FSB

--Long-term IDR 'A-';

--Short-term IDR 'F2';

--Long-term deposit obligations 'A';

--Short-term deposit obligations 'F1';

--Individual 'B';

--Support '1'.

NCB Capital Trust I

--Trust preferred stock 'BBB '.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.