(Rewrites, adds details from Moody’s release throughout)

Feb 6 (Reuters) – Rating agency Moody’s downgraded Recent York Community Bancorp’s long-term and short-term issuer rankings to junk on Tuesday and warned of further downgrades.

The agency also downgraded all long-term and a number of short-term rankings and assessments of its lead bank, Flagstar Bank.

Moody’s downgraded NYCB’s rankings from Baa3 to Ba2, which is taken under consideration a junk rating.

The downgrade reflects Moody’s views that NYCB faces high governance risks from its transition with regards to the leadership of its second and third lines of defense – the prospect and audit functions of the bank – at a pivotal time, the agency said.

The rating agency also said the elevated use of market funding may limit the bank’s financial flexibility in the current environment. (Reporting by Gursimran Kaur in Bengaluru; Editing by Rashmi Aich)