Mortgage Biz Cited in Bank IDR Downgrade

The short-term Issuer Default Rating and short-term deposit rating of Chevy Chase Bank FSB have been downgraded from F2 to F3 by Fitch Ratings, which cited the "challenging operating environment" of the mortgage banking business. Fitch also downgraded Chevy Chase's Individual rating from B/C to C, but affirmed the bank's long-term IDR at BBB-minus. The rating agency said the downgrades stemmed from "profitability pressure" at the bank in the past year. "Expected earnings pressure combined with the company's obligations on its preferred debt and balance sheet growth will likely reduce capital levels," Fitch said. "Also a consideration in Fitch's downgrade of the short-term IDR is the reduced flexibility due to less favorable terms and pricing in the capital markets for residential mortgage securitizations." Fitch can be found online at http://www.fitchratings.com.