Fitch Affirms National Consumer Cooperative Bank Following Announcement.

Business Editors

NEW YORK--(BUSINESS WIRE)--Nov. 13, 2003

Fitch Ratings has affirmed National Consumer Cooperative Bank's (NCB) 'A-'senior unsecured rating and 'F2' commercial paper rating following the bank's announcement that it has reached an agreement with the U.S. Treasury Department (Treasury) on a repayment plan for the Treasury's subordinated debt investment in NCB. The Rating Outlook remains Stable. Approximately $360 million of senior debt and commercial paper is affected by this action. Along with the affirmation of NCB, Fitch has assigned new ratings to its wholly-owned thrift, NCB, FSB. The ratings of the thrift primarily reflect its ownership by and strategic importance to NCB in terms of funding. A complete list of ratings is detailed at the end of this release.

NCB has announced that it has reached an agreement in principle with the Treasury to repay the Department's $182 million subordinated investment (Class A notes) in the bank. The Class A notes date from the inception of the bank and carry a final maturity of 2020. NCB had previously produced a repayment plan, however it was never formally approved. Under the new plan, NCB and the Treasury have agreed to a repayment schedule of the Class A notes, which calls for a $50 million upfront payment, followed by yearly amortizing payments through 2020. The $50 million repayment is expected to be funded by the issuance of an equal amount of trust preferred stock. Although the new plan represents an acceleration of repayment of the Class A notes from NCB's previous schedule, Fitch believes the repayment plan is manageable within the bank's current liquidity profile. As part of the Class A note restructuring, Treasury has agreed to support legislative changes to NCB's charter, potentially allowing NCB to enter new lending segments beyond its core mission of cooperative lending. The plan will require the approval of NCB's senior creditors before it can be adopted.

Fitch's affirmation reflects the view that the proposed restructuring should not materially affect NCB's funding, liquidity or future operating performance. The new plan preserves the duration of the company's term debt, while the higher coupon on the trust preferred will be offset by a downward repricing of the remaining Class A notes. Although, in Fitch's view the repayment plan effectively diminishes NCB's ties to the federal government over time, Fitch has never attributed significant importance to this in NCB's ratings.

Fitch's rating continues to reflect the bank's consistent operating performance over an extended period, solid risk-adjusted capitalization, and proven access to liquidity. NCB's consistent operating performance, is reflected in extended period of profitability while credit quality issues have been manageable. The bank's capital, when viewed on a managed basis, appears appropriate for the current ratings and risk profile of its assets. NCB maintains good liquidity through various sources such as deposits, unsecured debt, and asset-backed securitization. Notwithstanding, rating concerns recognize NCB's relatively greater reliance on capital markets funding, niche focus in cooperative lending, and modest profitability measures. Fitch's rating concerns highlight NCB's relatively greater reliance on securitization funding relative to others bank and finance peers. NCB's core mission aimed at cooperative lending, leaves NCB more exposed to the competitive forces and the financial health of the cooperative sector. The modest level of profitability reflects NCB's cooperative nature, although more recent improvements have been driven by increased gain-on-sale income, which is not likely to be sustained. Fitch notes that proposed changes in NCB's charter would allow it greater flexibility to enter new lending segments, however, Fitch would carefully review and monitor any such expansion.

Ratings Affirmed with a Stable Outlook

National Consumer Cooperative Bank 

-- Senior Unsecured 'A-';

-- Commercial Paper 'F2';

-- Individual 'B';

-- Support '5'.

New Ratings Assigned with a Stable Outlook

NCB Funding Trust I

-- Trust Preferred Stock 'BBB+'.

NCB, FSB

-- Uninsured LT Deposits 'A-';

-- Long Term Issuer 'A-';

-- Uninsured ST Deposits 'F2';

-- Short Term Issuer 'F2';

-- Individual 'B';

-- Support '1'.