Astoria Financial Corporation Reports Third Quarter and Nine Months Earnings Per Share of $0.12 and $0.58, Respectively

Quarterly Cash Dividend of $0.13 Per Share Declared

Oct 19, 2011, 16:30 ET from Astoria Financial Corporation

LAKE SUCCESS, N.Y., Oct. 19, 2011 /PRNewswire/ -- Astoria Financial Corporation (NYSE: AF) ("Astoria," the "Company"), the holding company for Astoria Federal Savings and Loan Association ("Astoria Federal"), today reported net income of $11.2 million, or $0.12 diluted earnings per share ("diluted EPS"), for the quarter ended September 30, 2011 compared to net income of $21.5 million, or $0.23 diluted EPS, for the quarter ended September 30, 2010.  For the nine months ended September 30, 2011, net income totaled $55.4 million, or $0.58 diluted EPS, increases of 11% and 9%, respectively, over net income of $49.9 million, or $0.53 diluted EPS, for the comparable 2010 period.  Included in the 2010 nine month period are net charges totaling $3.2 million ($2.1 million, or $0.02 per share, after-tax), which are not routine to our core operations.  For further details, please refer to the "Reconciliation of GAAP Measures to Non-GAAP Measures" table included in this release.

Commenting on the 2011 third quarter results, Monte N. Redman, President and Chief Executive Officer of Astoria, stated, "Our financial results for the quarter were negatively impacted by two events: the decrease in average interest-earning assets by almost $400 million from the 2011 second quarter, due in part to the flattening of the U.S. Treasury yield curve which kept residential mortgage prepayment activity at elevated levels, and a non-cash increase of over $3 million in ESOP expense, due to our lower stock price during the third quarter.  On a more positive note, the pace of the decline in the balance sheet and loan portfolio has slowed significantly in the third quarter and we expect to see modest growth in the 2011 fourth quarter, accelerating further in 2012."

Financial Highlights

  • Low cost savings, money market and checking accounts increased $389.6 million, or 31% annualized, to $5.4 billion, from June 30, 2011 and increased $987.7 million, or 22%, from September 30, 2010.
  • Early stage loan delinquencies (30-89 days past due) decreased $18.7 million, or 9%, to $188.5 million, from June 30, 2011 and $63.5 million, or 25%, from September 30, 2010.
  • Total past due loans and REO decreased $23.6 million, or 4%, to $619.2 million, from June 30, 2011 and $97.1 million, or 14%, from September 30, 2010.
  • The Company's tangible common equity ratio increased to 6.55%, up 9 basis points from June 30, 2011 and 92 basis points from September 30, 2010.
  • Astoria Federal's leverage and tangible capital ratios increased to 8.75%, up 14 basis points from June 30, 2011 and 116 basis points from September 30, 2010.  
  • Astoria Federal's Tier 1 risk-based capital ratio increased to 14.89%, up 41 basis points from June 30, 2011 and 202 basis points from September 30, 2010.  
  • The residential loan pipeline, excluding our own customer loan refinances, totaled $1.0 billion at September 30, 2011, 28% higher than June 30, 2011
  • The multi-family loan pipeline totaled $252.7 million at September 30, 2011 versus no pipeline at June 30, 2011

Board Declares Quarterly Cash Dividend of $0.13 Per Share

The Board of Directors of the Company, at their October 19, 2011 meeting, declared a quarterly cash dividend of $0.13 per common share.  The dividend is payable on December 1, 2011 to shareholders of record as of November 15, 2011.  This is the sixty-sixth consecutive quarterly cash dividend declared by the Company.

Third Quarter and Nine Months Earnings Summary

Net interest income for the quarter ended September 30, 2011 totaled $90.6 million compared to $95.7 million for the previous quarter and $106.0 million for the 2010 third quarter.  For the nine months ended September 30, 2011, net interest income totaled $287.9 million compared to $332.3 million for the comparable 2010 period.  The decreases in net interest income are due primarily to decreases in average interest-earning assets of $385.5 million on a linked quarter basis and $2.3 billion for both the year over year quarter and nine month periods and asset yields declining greater than the cost of funds, due to the prolonged low interest rate environment.  The net interest margin for the quarter ended September 30, 2011 was 2.27% compared to 2.34% for the previous quarter and 2.32% for the 2010 third quarter.  Approximately 2 basis points of the linked quarter decrease is due to one extra day of interest expense in the 2011 third quarter.  For the nine months ended September 30, 2011, the net interest margin was 2.34% compared to 2.36% for the comparable 2010 nine month period.

For the quarter ended September 30, 2011, a $10.0 million provision for loan losses was recorded, which was equal to the provision for the previous quarter and 50% lower than the $20.0 million provision recorded for the 2010 third quarter.  For the nine months ended September 30, 2011, the provision for loan losses totaled $27.0 million compared to $100.0 million for the comparable 2010 period.   Mr. Redman noted, "Despite the improved credit metrics of the loan portfolio, including the noted decline in total loan delinquencies, we felt it prudent, at this time, to maintain our strong allowance for loan losses coverage ratio, which was 1.34% of total loans at September 30, 2011."

Non-interest income for the quarter ended September 30, 2011 totaled $16.5 million compared to $17.0 million for the previous quarter and $18.6 million for the 2010 third quarter.  Non-interest income for the nine months ended September 30, 2011 totaled $51.6 million compared to $60.5 million for the comparable 2010 period.  The decrease for the nine months ended September 30, 2011 is due to a $6.2 million gain relating to a litigation settlement recorded in 2010, partially offset by a $1.5 million impairment write-down of premises and equipment recorded in 2010, coupled with a decrease of $3.4 million in customer service fees.  

General and administrative ("G&A") expense for the quarter ended September 30, 2011 totaled $78.6 million compared to $76.0 million for the previous quarter and $70.9 million for the 2010 third quarter. The linked quarter increase is primarily due to an increase in compensation and benefits expense, primarily a non-cash increase in ESOP expense of over $3 million, due to the lower stock price in the 2011 third quarter, partially offset by lower incentive bonus expense.  The quarterly year over year increase is due to a $4.3 million increase in FDIC deposit insurance expense and a $3.5 million increase in compensation and benefits expense, primarily ESOP expense.  Mr. Redman stated, "Excluding the increase in the non-cash ESOP expense, G&A expenses remained essentially flat on a linked quarter basis."

For the nine months ended September 30, 2011, G&A expense totaled $224.2 million compared to $215.0 million for the nine months ended September 30, 2010.  The increase is due to a $7.8 million increase in FDIC deposit insurance expense, a $7.3 million increase in compensation and benefits expense, primarily ESOP and pension expense, and a $1.8 million increase in advertising expense, partially offset by a $7.9 million litigation settlement expense recorded in 2010.

Balance Sheet Summary

Total assets decreased $143.7 million from June 30, 2011 and $1.1 billion from December 31, 2010 and totaled $17.0 billion at September 30, 2011.  The decline is primarily due to a decrease in the loan portfolio.  "We believe the decline in the balance sheet has reached an inflection point in the third quarter, evidenced by the smallest quarterly decline in the balance sheet in two years.  As previously stated, our expectation for modest loan and balance sheet growth in the 2011 fourth quarter and more significant growth in 2012 is predicated on two factors.  The one-to-four family loan pipeline at September 30, 2011, excluding our own customer loan refinances, was $1.0 billion, or 28%, higher than it was at June 30, 2011, which should mitigate the effect of elevated prepayment activity, and the multi-family loan pipeline at September 30, 2011 was $252.7 million and growing, due to the resumption of lending in the 2011 third quarter," Mr. Redman noted.

The one-to-four family portfolio increased $11.4 million from June 30, 2011 to $10.6 billion at September 30, 2011, the first increase in the portfolio in more than two years.  For the quarter and nine months ended September 30, 2011, one-to-four family loan originations for portfolio totaled $1.0 billion and $2.4 billion, respectively, compared to $646.7 million and $2.2 billion, respectively, for the comparable 2010 periods.  The loan-to-value ratio of the one-to-four family loan production for portfolio for the 2011 third quarter and nine months each averaged approximately 60% at origination and the loan amount averaged approximately $782,000 and $766,000, respectively.  One-to-four family loan prepayments for the quarter and nine months ended September 30, 2011 totaled $892.9 million and $2.3 billion, respectively, compared to $848.3 million and $2.3 billion, respectively, for the comparable 2010 periods.

The combined multi-family/commercial real estate ("CRE") portfolio totaled $2.4 billion at September 30, 2011 compared to $2.6 billion at June 30, 2011 and $3.0 billion at December 31, 2010.  Multi-family/CRE loan prepayments for the quarter and nine months ended September 30, 2011 totaled $176.1 million and $502.5 million, respectively, compared to $70.1 million and $186.4 million for the comparable 2010 periods.  

The securities portfolio increased $61.7 million from June 30, 2011 and totaled $2.5 billion at September 30, 2011.  We expect to maintain the securities portfolio at, or slightly higher than, current levels throughout the remainder of the year.

Deposits increased $56.5 million from June 30, 2011 and decreased $331.9 million from December 31, 2010 to $11.3 billion at September 30, 2011.  Importantly, low-cost savings, money market and checking account deposits increased $389.6 million, or 31% annualized, from June 30, 2011 and $618.9 million, or 17% annualized, from December 31, 2010.  Certificate of deposit ("CD") accounts (including Liquid CDs) decreased $333.1 million from the previous quarter and $950.7 million from December 31, 2010.  Notwithstanding the decline in CDs, during the nine months ended September 30, 2011, we extended $606.5 million of CDs for terms of two years or more in an effort to help limit our exposure to future increases in interest rates.  At September 30, 2011, our one-year interest rate sensitivity gap was positive 3.22%.

Borrowings decreased $263.9 million from June 30, 2011 and $846.7 million from December 31, 2010 to $4.0 billion at September 30, 2011.

Stockholders' equity totaled $1.3 billion, or 7.57% of total assets, at September 30, 2011.  Astoria Federal continues to be designated as well-capitalized with leverage, tangible, risk-based and Tier 1 risk-based capital ratios of 8.75%, 8.75%, 16.18% and 14.89%, respectively, at September 30, 2011.

Asset Quality

Non-performing loans ("NPLs"), including troubled debt restructurings of $36.8 million, totaled $380.0 million, or 2.24% of total assets, at September 30, 2011, an increase of $3.7 million from the previous quarter.  One-to-four family NPLs totaled $324.9 million, multi-family/CRE/construction NPLs totaled $49.6 million and consumer and other NPLs totaled $5.5 million, compared to $329.6 million, $41.6 million and $5.2 million, respectively, at June 30, 2011.  Of the $324.9 million of one-to-four family NPLs, $258.7 million, or 80%, represent residential loans which, at 180 days delinquent and annually thereafter, were reviewed and charged-off, as needed, to the estimated fair value of the underlying collateral at such time, less estimated selling costs.

The following table illustrates loan migration trends from 30 days delinquent to 90+ days delinquent:

($ in millions)

30-59 Days Past Due

60-89 Days Past Due

Combined 30-89 Days Past Due

Change from Previous Quarter

90 + Days Past Due (NPLs)

Total 30-90+ Days Past Due

At Sept. 30, 2010

$181.6

$  70.4

$252.0

$(56.4)

$399.6

$651.6

At Dec. 31, 2010

$165.8

$  54.3

$220.1

$(31.9)

$390.7

$610.8

At March 31, 2011

$155.0

$  62.2

$217.2

$  (2.9)

$373.8

$591.0

At June 30, 2011

$162.8

$  44.4

$207.2

$ (10.0)

$376.3

$583.5

At Sept. 30, 2011

$143.8

$  44.7

$188.5

$ (18.7)

$380.0

$568.5

The table below details, as of September 30, 2011, the ten largest concentrations by state of one-to-four family loans and the respective non-performing loan totals in those states.  More comprehensive state details are included in the "One-to-Four Family Residential Loan Portfolio-Geographic Analysis" table included in this release.  

($ in millions)

State

Total 1-4 Family Loans

% of Total 1-4 Family Loan Portfolio

Total 1-4 Family NPLs

NPLs as % of State Total

New York

$2,994.0

28.3%

$40.6

1.36%

Illinois

$1,286.4

12.2%

$49.5

3.85%

Connecticut

$1,041.1

9.9%

$32.1

3.08%

New Jersey

$  763.8

7.2%

$56.6

7.41%

Massachusetts

$  753.6

7.1%

$11.2

1.49%

California

$  721.9

6.8%

$35.0

4.85%

Virginia

$  636.9

6.0%

$12.4

1.95%

Maryland

$  622.2

5.9%

$39.9

6.41%

Washington

$  309.1

2.9%

$ 2.7

0.87%

Texas

$  246.4

2.3%

$ 0.0

0.0%

Top 10 States

$ 9,375.4

88.6%

$280.0

2.99%

All other states (1,2)

$ 1,187.0

11.4%

$  44.9

3.78%

Total 1-4 Family Portfolio

$10,562.4

100%

$324.9

3.08%

(1)  Includes 27 states and Washington, D.C.

(2)  Includes Florida with $203.3 million total loans, of which $23.2 million are non-performing loans.

Net loan charge-offs for the quarter and nine months ended September 30, 2011 totaled $14.4 million and $50.1 million, respectively, down from $24.8 million and $87.8 million, respectively, for the comparable 2010 periods.  Included in the 2011 third quarter one-to-four family net loan charge-offs are $13.9 million of charge-offs on $59.7 million of NPLs which, at 180 days delinquent and annually thereafter, were reviewed in the 2011 third quarter and charged-off, as needed, to the estimated fair value of the underlying collateral less estimated selling costs.  "While we expect NPL levels will remain elevated for some time, especially in those states requiring judicial foreclosure, it is important to note that the loss potential remaining has been greatly reduced as a result of our having already reviewed, marked down, and charged-off as necessary, 80% of the residential NPLs to their adjusted fair value less estimated selling costs," Mr. Redman noted.

Selected Asset Quality Metrics

(at or for the three months ended September 30, 2011, except as noted)

($ in millions)

1-4 Family

Multi- family

CRE

Construction

Consumer & Other

Total

Loan portfolio balance

$10,562.4

$ 1,685.2

$ 692.8

$   12.9

$  288.6(1)

$13,319.6 (2)

Non-performing loans

$     324.9 (3)

$     34.0

$   10.9

$     4.7

$     5.5

$     380.0

NPLs/total loans

2.44%

0.26%

0.08%

0.03%

0.04%

2.85%

Net charge-offs  3Q11

$      14.7

$      0.0

$  0.0

$   (0.4)

$     0.1

$       14.4

Net charge-offs YTD

$      41.8

$      6.7

$  0.8

$   (0.1)

$     1.0

$       50.1 (4)

(1)  Includes home equity loans of $265.3 million

(2)  Includes $77.8 million of net unamortized premiums and deferred loan costs

(3)  Includes $258.7 million, or 80%, of NPLs reviewed and charged-off, as needed, at 180 days delinquent and annually thereafter

(4)  Does not foot due to rounding

Future Outlook  

Commenting on the outlook for the fourth quarter and 2012, Mr. Redman stated, "We continue to operate in a challenging environment; economic growth remains weak, unemployment stubbornly remains elevated and home values continue to remain soft.  In addition, the implementation of Operation Twist by the Federal Reserve has contributed to a flattening of the U.S. Treasury yield curve, putting further downward pressure on long term interest rates and current mortgage product offerings, as well as increasing mortgage loan prepayments. However, we are optimistic that the increase in our loan pipeline, coupled with the reduction in the expanded conforming loan limits that commenced October 1, 2011 and the resumption of multi-family/commercial real estate lending, should facilitate modest loan and balance sheet growth in the fourth quarter and more robust growth in 2012.  With respect to the net interest margin, we expect that, in the current low interest rate environment, with increased loan prepayment activity, the margin for the 2011 fourth quarter will be down slightly from the third quarter and for 2012 may be somewhat lower than the margin for 2011."

Earnings Conference Call October 20, 2011 at 10:00 a.m. (ET)

The Company, as previously announced, indicated that Monte N. Redman, President & CEO will host an earnings conference call Thursday morning, October 20, 2011 at 10:00 a.m. (ET).  The toll-free dial-in number is (888) 562-3356, ID# 12289136.  A telephone replay will be available on October 20, 2011 from 1:00 p.m. (ET) through midnight October 29, 2011 (ET).  The replay number is (800) 585-8367, ID# 12289136.  The conference call will also be simultaneously webcast on the Company's website www.astoriafederal.com and archived for one year.

Astoria Financial Corporation, with assets of $17.0 billion, is the holding company for Astoria Federal Savings and Loan Association.  Established in 1888, Astoria Federal, with deposits in New York totaling $11.3 billion, is the largest thrift depository in New York and embraces its philosophy of "Putting people first" by providing the customers and local communities it serves with quality financial products and services through 85 convenient banking office locations and multiple delivery channels, including its enhanced website, www.astoriafederal.com.  Astoria Federal commands the fourth largest deposit market share in the attractive Long Island market, which includes Brooklyn, Queens, Nassau, and Suffolk counties with a population exceeding that of 38 individual states.  Astoria Federal originates mortgage loans through its banking and loan production offices in New York, an extensive broker network covering fourteen states, primarily along the East Coast, and the District of Columbia, and through correspondent relationships covering fifteen states and the District of Columbia.

Forward Looking Statements

This document contains a number of forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements may be identified by the use of such words as "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "outlook," "plan," "potential," "predict," "project," "should," "will," "would," and similar terms and phrases, including references to assumptions.

Forward-looking statements are based on various assumptions and analyses made by us in light of our management's experience and perception of historical trends, current conditions and expected future developments, as well as other factors we believe are appropriate under the circumstances.  These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors (many of which are beyond our control) that could cause actual results to differ materially from future results expressed or implied by such forward-looking statements.  These factors include, without limitation, the following: the timing and occurrence or non-occurrence of events may be subject to circumstances beyond our control; there may be increases in competitive pressure among financial institutions or from non-financial institutions; changes in the interest rate environment may reduce interest margins or affect the value of our investments; changes in deposit flows, loan demand or real estate values may adversely affect our business; changes in accounting principles, policies or guidelines may cause our financial condition to be perceived differently; general economic conditions, either nationally or locally in some or all areas in which we do business, or conditions in the real estate or securities markets or the banking industry may be less favorable than we currently anticipate; legislative or regulatory changes, including the implementation of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, may adversely affect our business; technological changes may be more difficult or expensive than we anticipate; success or consummation of new business initiatives may be more difficult or expensive than we anticipate; or litigation or other matters before regulatory agencies, whether currently existing or commencing in the future, may be determined adverse to us or may delay the occurrence or non-occurrence of events longer than we anticipate. We have no obligation to update any forward-looking statements to reflect events or circumstances after the date of this document.

Tables Follow

ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(In Thousands, Except Share Data)

At

At

September 30,

December 31,

2011

2010

ASSETS

Cash and due from banks

$

110,886

$

67,476

Repurchase agreements

-

51,540

Securities available-for-sale

402,023

561,953

Securities held-to-maturity

   (fair value of $2,135,140 and $2,042,110, respectively)

2,075,029

2,003,784

Federal Home Loan Bank of New York stock, at cost

126,759

149,174

Loans held-for-sale, net

13,957

44,870

Loans receivable:

     Mortgage loans, net

13,029,240

13,911,200

     Consumer and other loans, net

290,337

311,847

13,319,577

14,223,047

     Allowance for loan losses

(178,351)

(201,499)

Total loans receivable, net

13,141,226

14,021,548

Mortgage servicing rights, net

8,254

9,204

Accrued interest receivable

48,227

55,492

Premises and equipment, net

120,373

133,362

Goodwill

185,151

185,151

Bank owned life insurance

408,614

410,418

Real estate owned, net

50,762

63,782

Other assets

285,387

331,515

TOTAL ASSETS

$

16,976,648

$

18,089,269

LIABILITIES

Deposits

$

11,267,147

$

11,599,000

Reverse repurchase agreements

1,700,000

2,100,000

Federal Home Loan Bank of New York advances

1,944,000

2,391,000

Other borrowings, net

378,481

378,204

Mortgage escrow funds

132,622

109,374

Accrued expenses and other liabilities

269,853

269,911

TOTAL LIABILITIES

15,692,103

16,847,489

STOCKHOLDERS' EQUITY

Preferred stock, $1.00 par value; (5,000,000 shares authorized;

   none issued and outstanding)

-

-

Common stock, $.01 par value;  (200,000,000  shares authorized;

   166,494,888 shares issued; and 98,537,391 and 97,877,469    shares outstanding, respectively)

1,665

1,665

Additional paid-in capital

871,153

864,744

Retained earnings

1,862,215

1,848,095

Treasury stock (67,957,497 and 68,617,419 shares, at cost,    respectively)

(1,404,318)

(1,417,956)

Accumulated other comprehensive loss

(36,990)

(42,161)

Unallocated common stock held by ESOP

   (2,505,716 and 3,441,130 shares, respectively)

(9,180)

(12,607)

TOTAL STOCKHOLDERS' EQUITY

1,284,545

1,241,780

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

16,976,648

$

18,089,269

ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME

(In Thousands, Except Share Data)

For the Three Months Ended

For the Nine Months Ended

September 30,

September 30,

2011

2010

2011

2010

Interest income:

     One-to-four family mortgage loans

$

105,769

$

130,936

$

332,314

$

408,640

     Multi-family, commercial real estate and          construction mortgage loans

39,338

48,446

124,915

149,169

     Consumer and other loans

2,461

2,656

7,477

7,975

     Mortgage-backed and other securities

19,670

25,336

63,432

86,319

     Repurchase agreements and interest-earning          cash accounts

54

188

221

257

     Federal Home Loan Bank of New York stock

1,432

1,999

5,386

6,416

Total interest income

168,724

209,561

533,745

658,776

Interest expense:

     Deposits

33,486

46,144

106,156

149,182

     Borrowings

44,594

57,392

139,694

177,268

Total interest expense

78,080

103,536

245,850

326,450

Net interest income

90,644

106,025

287,895

332,326

Provision for loan losses

10,000

20,000

27,000

100,000

Net interest income after provision for loan losses

80,644

86,025

260,895

232,326

Non-interest income:

     Customer service fees

11,867

12,463

35,696

39,128

     Other loan fees

637

974

2,374

2,546

     Mortgage banking income, net

40

631

2,843

2,788

     Income from bank owned life insurance

2,738

2,383

7,602

6,735

     Other

1,260

2,161

3,110

9,279

Total non-interest income

16,542

18,612

51,625

60,476

Non-interest expense:

 General and administrative:

     Compensation and benefits

39,496

35,999

113,197

105,884

     Occupancy, equipment and systems

16,178

16,506

48,667

49,592

     Federal deposit insurance premiums

10,837

6,509

27,529

19,722

     Advertising

2,623

1,743

6,356

4,557

     Other

9,462

10,147

28,420

35,236

Total non-interest expense

78,596

70,904

224,169

214,991

Income before income tax expense

18,590

33,733

88,351

77,811

Income tax expense

7,374

12,282

32,906

27,888

Net income

$

11,216

$

21,451

$

55,445

$

49,923

Basic earnings per common share

$

0.12

$

0.23

$

0.58

$

0.53

Diluted earnings per common share

$

0.12

$

0.23

$

0.58

$

0.53

Basic weighted average common shares

93,338,310

91,863,115

93,009,518

91,650,000

Diluted weighted average common and common

   equivalent shares

93,338,310

91,863,115

93,009,518

91,650,045

ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES

AVERAGE BALANCE SHEETS

(Dollars in Thousands)

For the Three Months Ended September 30,

2011

2010

Average

Average

Average

Yield/

Average

Yield/

Balance

Interest

Cost

Balance

Interest

Cost

(Annualized)

(Annualized)

Assets:

Interest-earning assets:

Mortgage loans (1):

One-to-four family

$

10,604,853

$

105,769

3.99

%

$

11,678,392

$

130,936

4.48

%

Multi-family, commercial real

  estate and construction

2,515,957

39,338

6.25

3,201,711

48,446

6.05

Consumer and other loans (1)

293,238

2,461

3.36

323,916

2,656

3.28

Total loans

13,414,048

147,568

4.40

15,204,019

182,038

4.79

Mortgage-backed and other securities (2)

2,344,816

19,670

3.36

2,555,951

25,336

3.97

Repurchase agreements and

      interest-earning cash accounts

115,228

54

0.19

332,171

188

0.23

Federal Home Loan Bank stock

128,664

1,432

4.45

174,220

1,999

4.59

Total interest-earning assets

16,002,756

168,724

4.22

18,266,361

209,561

4.59

Goodwill

185,151

185,151

Other non-interest-earning assets

925,222

888,925

Total assets

$

17,113,129

$

19,340,437

Liabilities and stockholders' equity:

Interest-bearing liabilities:

Savings

$

2,799,738

2,316

0.33

$

2,407,180

2,448

0.41

Money market

646,966

1,491

0.92

342,453

385

0.45

NOW and demand deposit

1,804,760

301

0.07

1,686,109

279

0.07

Liquid certificates of deposit

328,426

193

0.24

585,814

689

0.47

Total core deposits

5,579,890

4,301

0.31

5,021,556

3,801

0.30

Certificates of deposit

5,623,449

29,185

2.08

7,155,096

42,343

2.37

Total deposits

11,203,339

33,486

1.20

12,176,652

46,144

1.52

Borrowings

4,210,625

44,594

4.24

5,527,188

57,392

4.15

Total interest-bearing liabilities

15,413,964

78,080

2.03

17,703,840

103,536

2.34

Non-interest-bearing liabilities

421,604

405,907

Total liabilities

15,835,568

18,109,747

Stockholders' equity

1,277,561

1,230,690

Total liabilities and stockholders' equity

$

17,113,129

$

19,340,437

Net interest income/net interest

rate spread (3)

$

90,644

2.19

%

$

106,025

2.25

%

Net interest-earning assets/net

interest margin (4)

$

588,792

2.27

%

$

562,521

2.32

%

Ratio of interest-earning assets

to interest-bearing liabilities

1.04x

1.03x

(1)  Mortgage loans and consumer and other loans include loans held-for-sale and non-performing loans and exclude the allowance for loan losses.

(2)  Securities available-for-sale are included at average amortized cost.

(3)  Net interest rate spread represents the difference between the average yield on average interest-earning assets and the average cost of average

      interest-bearing liabilities.  

(4)  Net interest margin represents net interest income divided by average interest-earning assets.

ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES

AVERAGE BALANCE SHEETS

(Dollars in Thousands)

For the Nine Months Ended September 30,

2011

2010

Average

Average

Average

Yield/

Average

Yield/

Balance

Interest

Cost

Balance

Interest

Cost

(Annualized)

(Annualized)

Assets:

Interest-earning assets:

Mortgage loans (1):

One-to-four family

$

10,701,179

$

332,314

4.14

%

$

11,856,597

$

408,640

4.60

%

Multi-family, commercial real

  estate and construction

2,694,186

124,915

6.18

3,319,318

149,169

5.99

Consumer and other loans (1)

300,502

7,477

3.32

328,264

7,975

3.24

Total loans

13,695,867

464,706

4.52

15,504,179

565,784

4.87

Mortgage-backed and other securities (2)

2,441,661

63,432

3.46

2,897,654

86,319

3.97

Repurchase agreements and

      interest-earning cash accounts

153,312

221

0.19

181,366

257

0.19

Federal Home Loan Bank stock

134,549

5,386

5.34

177,246

6,416

4.83

Total interest-earning assets

16,425,389

533,745

4.33

18,760,445

658,776

4.68

Goodwill

185,151

185,151

Other non-interest-earning assets

908,537

879,392

Total assets

$

17,519,077

$

19,824,988

Liabilities and stockholders' equity:

Interest-bearing liabilities:

Savings

$

2,770,622

7,812

0.38

$

2,324,727

7,023

0.40

Money market

476,046

2,370

0.66

336,482

1,117

0.44

NOW and demand deposit

1,787,848

872

0.07

1,662,287

807

0.06

Liquid certificates of deposit

384,259

699

0.24

626,625

2,281

0.49

Total core deposits

5,418,775

11,753

0.29

4,950,121

11,228

0.30

Certificates of deposit

5,933,823

94,403

2.12

7,507,295

137,954

2.45

Total deposits

11,352,598

106,156

1.25

12,457,416

149,182

1.60

Borrowings

4,484,543

139,694

4.15

5,730,714

177,268

4.12

Total interest-bearing liabilities

15,837,141

245,850

2.07

18,188,130

326,450

2.39

Non-interest-bearing liabilities

417,391

416,514

Total liabilities

16,254,532

18,604,644

Stockholders' equity

1,264,545

1,220,344

Total liabilities and stockholders' equity

$

17,519,077

$

19,824,988

Net interest income/net interest

rate spread (3)

$

287,895

2.26

%

$

332,326

2.29

%

Net interest-earning assets/net

interest margin (4)

$

588,248

2.34

%

$

572,315

2.36

%

Ratio of interest-earning assets

to interest-bearing liabilities

1.04x

1.03x

(1)  Mortgage loans and consumer and other loans include loans held-for-sale and non-performing loans and exclude the allowance for loan losses.

(2)  Securities available-for-sale are included at average amortized cost.

(3)  Net interest rate spread represents the difference between the average yield on average interest-earning assets and the average cost of average

      interest-bearing liabilities.  

(4)  Net interest margin represents net interest income divided by average interest-earning assets.

ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES

SELECTED FINANCIAL RATIOS AND OTHER DATA

For the

At or For the

Three Months Ended

Nine Months Ended

September 30,

September 30,

2011

2010

2011

2010

Selected Returns and Financial Ratios (annualized)

Return on average stockholders' equity

3.51

%

6.97

%

5.85

%

5.45

%

Return on average tangible stockholders' equity (1)

4.11

8.21

6.85

6.43

Return on average assets

0.26

0.44

0.42

0.34

General and administrative expense to average assets

1.84

1.47

1.71

1.45

Efficiency ratio (2)

73.33

56.89

66.03

54.73

Net interest rate spread

2.19

2.25

2.26

2.29

Net interest margin

2.27

2.32

2.34

2.36

Selected Non-GAAP Returns and Financial Ratios (annualized) (3)

Non-GAAP return on average stockholders' equity

5.85

%

5.68

%

Non-GAAP return on average tangible stockholders' equity (1)

6.85

6.70

Non-GAAP return on average assets

0.42

0.35

Non-GAAP general and administrative expense to average assets

1.71

1.39

Non-GAAP efficiency ratio (2)

66.03

53.36

Asset Quality Data (dollars in thousands)

Non-performing assets (4)

$

430,745

$

464,383

Non-performing loans (4)

379,983

399,620

      Loans delinquent 90 days or more and still accruing interest

1,006

619

      Non-accrual loans

378,977

399,001

Loans 60-89 days delinquent

44,723

70,359

Loans 30-59 days delinquent

143,776

181,631

Net charge-offs

$

14,366

$

24,768

50,148

87,818

Non-performing loans/total loans

2.85

%

2.68

%

Non-performing loans/total assets

2.24

2.11

Non-performing assets/total assets

2.54

2.45

Allowance for loan losses/non-performing loans

46.94

51.61

Allowance for loan losses/non-accrual loans

47.06

51.69

Allowance for loan losses/total loans

1.34

1.38

Net charge-offs to average loans outstanding (annualized)

0.43

%

0.65

%

0.49

0.76

Capital Ratios (Astoria Federal)

Tangible

8.75

%

7.59

%

Leverage

8.75

7.59

Risk-based

16.18

14.13

Tier 1 risk-based

14.89

12.87

Other Data

Cash dividends paid per common share

$

0.13

$

0.13

$

0.39

$

0.39

Book value per share (5)

13.38

13.18

Tangible book value per share (6)

11.45

11.22

Tangible common stockholders' equity/tangible assets (1) (7)

6.55

%

5.63

%

Mortgage loans serviced for others (in thousands)

$

1,449,781

$

1,421,223

Full time equivalent employees

1,604

1,573

 (1) Tangible stockholders' equity represents stockholders' equity less goodwill.    

 (2) Efficiency ratio represents general and administrative expense divided by the sum of net interest income plus non-interest income.  

 (3) See the "Reconciliation of GAAP Measures to Non-GAAP Measures" table included in this release for a reconciliation of GAAP measures to       non-GAAP measures for the nine months ended September 30, 2010.  

 (4) Non-performing assets and non-performing loans include, but are not limited to, one-to-four family mortgage loans which at 180 days past due and annually       thereafter we obtained an estimate of collateral value and charged-off any portion of the loan in excess of the estimated collateral value less estimated selling       costs.  

 (5) Book value per share represents stockholders' equity divided by outstanding shares, excluding unallocated Employee Stock Ownership Plan, or ESOP, shares.  

 (6) Tangible book value per share represents stockholders' equity less goodwill divided by outstanding shares, excluding unallocated ESOP shares.  

 (7) Tangible assets represent assets less goodwill.  

ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES

END OF PERIOD BALANCES AND RATES

(Dollars in Thousands)

At September 30, 2011

At June 30, 2011

At September 30, 2010

Weighted

Weighted

Weighted

Average

Average

Average

 Balance

Rate (1)

 Balance

Rate (1)

 Balance

Rate (1)

Selected interest-earning assets:

Mortgage loans, gross (2):

One-to-four family

$

10,237,483

4.34

%

$

10,221,438

4.50

%

$

11,023,120

4.87

%

Multi-family, commercial real estate

and construction

2,341,280

6.05

2,542,053

6.06

3,069,335

6.04

Mortgage-backed and other securities (3)

2,477,052

3.65

2,415,376

3.73

2,591,203

4.00

Interest-bearing liabilities:

Savings

2,760,922

0.25

2,838,239

0.40

2,435,287

0.40

Money market

864,253

0.94

397,148

0.46

349,883

0.45

NOW and demand deposit

1,809,662

0.06

1,809,863

0.06

1,662,000

0.06

Liquid certificates of deposit

301,221

0.19

363,393

0.25

546,626

0.38

Total core deposits

5,736,058

0.29

5,408,643

0.28

4,993,796

0.29

Certificates of deposit

5,531,089

2.05

5,801,977

2.09

7,113,490

2.33

Total deposits

11,267,147

1.15

11,210,620

1.22

12,107,286

1.49

Borrowings, net

4,022,481

4.14

4,286,389

4.20

5,213,111

4.12

 (1)     Weighted average rates represent stated or coupon interest rates excluding the effect of yield adjustments for premiums,  

           discounts and deferred loan origination fees and costs and the impact of prepayment penalties.  

 (2)     Mortgage loans exclude loans held-for-sale and non-performing loans.  

 (3)     Securities available-for-sale are reported at fair value and securities held-to-maturity are reported at amortized cost.  

ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES

RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES

(In Thousands, Except Per Share Data)

Income and expense and related financial ratios determined in accordance with GAAP (GAAP measures) excluding the adjustments detailed in the following table (non-GAAP measures) provide a meaningful comparison for effectively evaluating Astoria's operating results.

For the Nine Months Ended

September 30, 2010

  GAAP

Adjustments (1)

Non-GAAP

Net interest income

$332,326

$         -

$332,326

Provision for loan losses

100,000

-

100,000

Net interest income after provision for loan losses

232,326

-

232,326

Non-interest income

60,476

(4,635)

55,841

Non-interest expense (general and administrative expense)

214,991

(7,850)

207,141

Income before income tax expense

77,811

3,215

81,026

Income tax expense

27,888

1,133

29,021

Net income

$ 49,923

$   2,082

$  52,005

Basic earnings per common share

$0.53

$0.02

$0.55

Diluted earnings per common share

$0.53

$0.02

$0.55

Non-GAAP returns are calculated substituting non-GAAP net income for net income in the corresponding ratio calculation, while the non-GAAP general and administrative expense to average assets ratio substitutes non-GAAP general and administrative expense (non-GAAP non-interest expense) for general and administrative expense (non-interest expense) in the corresponding ratio calculation.  Similarly, the non-GAAP efficiency ratio substitutes non-GAAP non-interest income and non-GAAP general and administrative expense for non-interest income and general and administrative expense in the corresponding ratio calculation.

(1) Non-interest income adjustment relates to the $6.2 million goodwill litigation settlement, partially offset by the $1.5 million impairment write-down of premises and equipment, recorded in the 2010 second quarter.  Non-interest expense adjustment relates to the McAnaney litigation settlement recorded in the 2010 second quarter.

ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES

One-to-Four Family Residential Loan Portfolio - Geographic Analysis

(Dollars in millions)

At September 30, 2011

Non-performing loans

State

Total loans

Non-performing loans

as % of total loans

New York

  Full Income

$2,722.0

$18.7

0.69%

  Alt A < 70% LTV

$211.7

$12.1

5.72%

  Alt A  70%-80% LTV

$60.3

$9.8

16.25%

State Total

$2,994.0

$40.6

1.36%

Illinois

  Full Income

$1,073.0

$20.0

1.86%

  Alt A < 70% LTV

$109.4

$12.5

11.43%

  Alt A  70%-80% LTV

$104.0

$17.0

16.35%

State Total

$1,286.4

$49.5

3.85%

Connecticut

  Full Income

$892.2

$14.0

1.57%

  Alt A < 70% LTV

$102.9

$12.0

11.66%

  Alt A  70%-80% LTV

$46.0

$6.1

13.26%

State Total

$1,041.1

$32.1

3.08%

New Jersey

  Full Income

$604.9

$26.7

4.41%

  Alt A < 70% LTV

$80.2

$9.9

12.34%

  Alt A  70%-80% LTV

$78.7

$20.0

25.41%

State Total

$763.8

$56.6

7.41%

Massachusetts

  Full Income

$666.2

$5.8

0.87%

  Alt A < 70% LTV

$61.6

$2.8

4.55%

  Alt A  70%-80% LTV

$25.8

$2.6

10.08%

State Total

$753.6

$11.2

1.49%

California

  Full Income

$463.3

$14.5

3.13%

  Alt A < 70% LTV

$137.7

$9.4

6.83%

  Alt A  70%-80% LTV

$120.9

$11.1

9.18%

State Total

$721.9

$35.0

4.85%

Virginia

  Full Income

$491.8

$5.9

1.20%

  Alt A < 70% LTV

$65.1

$0.7

1.08%

  Alt A  70%-80% LTV

$80.0

$5.8

7.25%

State Total

$636.9

$12.4

1.95%

Maryland

  Full Income

$483.6

$18.3

3.78%

  Alt A < 70% LTV

$66.0

$6.5

9.85%

  Alt A  70%-80% LTV

$72.6

$15.1

20.80%

State Total

$622.2

$39.9

6.41%

Washington

  Full Income

$304.0

$2.3

0.76%

  Alt A < 70% LTV

$3.4

$0.0

0.00%

  Alt A  70%-80% LTV

$1.7

$0.4

23.53%

State Total

$309.1

$2.7

0.87%

Texas

  Full Income

$246.3

$0.0

0.00%

  Alt A < 70% LTV

$0.1

$0.0

0.00%

  Alt A  70%-80% LTV

$0.0

$0.0

0.00%

State Total

$246.4

$0.0

0.00%

Other States*

  Full Income

$1,015.3

$24.6

2.42%

  Alt A < 70% LTV

$103.8

$10.2

9.83%

  Alt A  70%-80% LTV

$67.9

$10.1

14.87%

Other States Total

$1,187.0

$44.9

3.78%

Total all states

  Full Income

$8,962.6

$150.8

1.68%

  Alt A < 70% LTV

$941.9

$76.1

8.08%

  Alt A  70%-80% LTV

$657.9

$98.0

14.90%

Grand total

$10,562.4

$324.9

3.08%

* Includes Florida with $203.3 million total loans, of which $23.2 million are non-performing loans.

Note:  LTVs are based on current principal balances and original appraised values

SOURCE Astoria Financial Corporation



RELATED LINKS

http://www.astoriafederal.com