Chevy Chase Bank's IDRs Downgraded

The Issuer Default Ratings of Chevy Chase Bank FSB, Bethesda, Md., have been downgraded by Fitch Ratings, partly for mortgage-related reasons. The long-term IDR was downgraded from BBB-minus to BB-plus, and the short-term IDR was downgraded from F3 to B. The downgrades were based on the "continued deterioration" of asset quality, as nonperforming assets rose from 1.7% of loans and real estate owned at Dec. 31, 2007, to 4.2% at June 30, Fitch said. "In March 2008, Fitch affirmed the company's ratings with a negative outlook that included the expectation of continued deterioration," the rating agency noted. "However, the pace in recent periods exceeded the initial expectation." Fitch noted that the bank has discontinued the origination of payment-option adjustable-rate mortgages, which had been "its primary lending product."