Fitch affirms Emigrant

Fitch Ratings said it affirmed Emigrant Bancorp Inc.'s long-term issuer default rating at B-, short-term issuer default rating at B, viability rating at b-, senior debt at CCC/RR6, support rating at 5 and support floor at No Floor and the preferred stock of Emigrant Capital Trust I and Emigrant Capital Trust II at CC/RR6. The outlook is stable.

The affirmation follows Emigrant's announcement that it plans to sell the majority of its retail deposits to Apple Bank for Savings for an undisclosed price. Fitch believes the company is likely to fund the deposit sale with a combination of cash, FHLB borrowings and sales from its securities portfolio.

The agency said it views this transaction as an important milestone in the execution of Emigrant's long-term strategic plan. It will allow Emigrant to reduce non-interest expenses and improve its overall cost structure and profitability, Fitch said.

The sale will leave Emigrant largely reliant on its two online deposit franchises as well as wholesale funding. Fitch generally views online deposits as relatively less sticky than traditional retail deposits because switching costs for consumers tend to be much lower. However, the agency said Emigrant has built up expertise in online deposit gathering, and this funding source has proven to be stable over the past seven years.

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