Astoria Financial Corporation Reports Third Quarter EPS of $0.23

Quarterly Cash Dividend of $0.13 Per Share Declared

Oct 20, 2010, 16:28 ET from Astoria Financial Corporation

LAKE SUCCESS, N.Y., Oct. 20 /PRNewswire-FirstCall/ -- 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 $21.5 million, or $0.23 diluted earnings per share ("EPS"), for the quarter ended September 30, 2010, increases of 169% and 156%, respectively, over net income of $8.0 million, or $0.09 EPS, for the quarter ended September 30, 2009.  For the nine months ended September 30, 2010, net income totaled $49.9 million, or $0.53 EPS, compared to $19.5 million, or $0.21 EPS, for the comparable 2009 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.  Included in the 2009 nine month period are charges totaling $16.7 million ($10.9 million, or $0.12 per share, after-tax,) which are not routine to our core operations.  For further details of such items and a reconciliation of GAAP and non-GAAP measures, please refer to the "Reconciliation of GAAP Measures to Non-GAAP Measures" table included in this release.

Commenting on the 2010 third quarter results, George L. Engelke, Jr., Chairman and Chief Executive Officer of Astoria, stated, "I am pleased to report significantly improved earnings for the 2010 third quarter compared to both the prior quarter and last year's third quarter, despite considerable shrinkage of the balance sheet.  The improvement is due primarily to lower credit costs reflecting the overall improvement in asset quality, particularly lower loan delinquencies and non-performing loans."  

Board Declares Quarterly Cash Dividend of $0.13 Per Share

The Board of Directors of the Company, at their October 20, 2010 meeting, declared a quarterly cash dividend of $0.13 per common share.  The dividend is payable on December 1, 2010 to shareholders of record as of November 15, 2010.  This is the sixty-second consecutive quarterly cash dividend declared by the Company.

Third Quarter and Nine Month Earnings Summary

Net interest income for the quarter ended September 30, 2010 increased to $106.0 million from $103.1 million for the 2009 third quarter.  For the nine months ended September 30, 2010, net interest income increased to $332.3 million from $323.8 million for the comparable 2009 period.

The net interest margin for the quarter ended September 30, 2010 was 2.32%, five basis points lower than the previous quarter and 25 basis points higher than the 2009 third quarter.  The linked quarter decrease was primarily due to the effect of one extra day of interest expense in the third quarter. The year-over-year increase in the margin was due to the cost of interest-bearing liabilities declining more rapidly than the yield on interest-earning assets.  "The continued decline in liability costs, due primarily to lower certificates of deposit ("CD") repricing, should help to offset the decline in asset yields.  Non-Liquid CDs totaling $2.0 billion are scheduled to mature in the 2010 fourth quarter and $1.8 billion are scheduled to mature in the first half of 2011, with a weighted average rate of 1.81% and 1.92%, respectively.  On the asset side, $894.1 million of hybrid ARM loans, with a weighted average rate of 4.66%, are scheduled to reprice downward during the 2010 fourth quarter and $1.6 billion of hybrid ARM loans, with a weighted average rate of 4.46%, are scheduled to reprice downward during the first half of 2011,"  Mr. Engelke noted.

For the quarter ended September 30, 2010, a $20.0 million provision for loan losses was recorded which is $15.0 million lower than the previous quarter and $30.0 million lower than the 2009 third quarter.  For the nine months ended September 30, 2010, the provision for loan losses totaled $100.0 million compared to $150.0 million for the comparable period in 2009.  Mr. Engelke noted, "The decrease in the provision this year recognizes the improving trends in overall loan delinquencies, particularly, in our multi-family and CRE portfolios."

Non-interest income for the quarter ended September 30, 2010 totaled $18.6 million compared to $20.1 million for the 2009 third quarter.  The decrease is primarily due to the absence of gain on sales of securities in 2010 and a decrease in customer service fees, partially offset by an increase in other non-interest income.        

For the nine months ended September 30, 2010, non-interest income totaled $60.5 million compared to $56.5 million for the comparable 2009 period.  The increase is primarily due to an increase in other non-interest income, of which $6.2 million was from a goodwill litigation settlement in the 2010 second quarter, and an other-than-temporary impairment charge related to Freddie Mac securities recorded in the 2009 first quarter, partially offset by the absence of gain on sales of securities in 2010 and decreases in customer service fees and mortgage banking income, net.  

General and administrative ("G&A") expense for the quarter ended September 30, 2010 totaled $70.9 million compared to $63.2 million for the 2009 third quarter.  The increase is primarily due to a $4.1 million increase in compensation and benefits, primarily increased ESOP expense and accruals for incentive compensation, and a $2.6 million increase in other expense, primarily real estate owned related expense.

For the nine months ended September 30, 2010, G&A expense totaled $215.0 million compared to $203.2 million for the comparable 2009 period.  The increase was due primarily to the following:  a $6.7 million increase in compensation and benefits, primarily related to ESOP expense and accruals for incentive compensation, a $10.9 million increase in other expense, of which $7.9 million was related to the McAnaney litigation settlement, and a $2.0 million increase in regular FDIC insurance premiums, partially offset by the $9.9 million FDIC special assessment recorded in 2009.

Balance Sheet Summary

Total assets decreased $733.1 million from the previous quarter and $1.3 billion from December 31, 2009 and totaled $18.9 billion at September 30, 2010.  The loan portfolio declined $467.1 million from the previous quarter and $881.5 million from December 31, 2009 and totaled $14.9 billion at September 30, 2010.  The one-to-four family portfolio totaled $11.4 billion at September 30, 2010 compared to $11.7 billion at June 30, 2010 and $11.9 billion at December 31, 2009.  The combined multifamily/commercial real estate portfolio totaled $3.1 billion at September 30, 2010 compared to $3.2 billion at June 30, 2010 and $3.4 billion at December 31, 2009.  For the quarter and nine months ended September 30, 2010, securities decreased $145.5 million and $587.4 million, respectively, to $2.6 billion.  Commenting on the decrease in the balance sheet, Mr. Engelke stated, "The combination of conforming 30-year fixed-rate mortgage interest rates at historic lows and high conforming loan limits, resulting from the U.S. Government's efforts to stimulate housing loan demand, has had a negative impact on jumbo hybrid ARM portfolio lenders such as Astoria and has contributed to the decrease in our loan portfolio and balance sheet."

For the quarter and nine months ended September 30, 2010, one-to-four family loan originations for portfolio totaled $646.7 million and $2.2 billion, respectively, compared to $1.2 billion and $2.2 billion, respectively, for the comparable 2009 periods.  This production was achieved while maintaining strict underwriting standards.  The loan-to-value ratio of the one-to-four family loan production for portfolio for the 2010 third quarter and nine months averaged approximately 63% and 62%, respectively, at origination and the loan amount averaged approximately $728,000 and $734,000, respectively.  One-to-four family loan prepayments for the quarter and nine months ended September 30, 2010 totaled $848.3 million and $2.3 billion, respectively, compared to $939.6 million and $2.2 billion, respectively, for the comparable 2009 periods.  

Deposits for the quarter ended September 30, 2010 decreased $141.2 million from the previous quarter and $705.0 million from December 31, 2009, and totaled $12.1 billion at September 30, 2010.  The decreases were due primarily to decreases in CDs.  Importantly, low-cost savings, money market and checking account deposits increased $231.3 million from December 31, 2009, or 8% annualized.

Borrowings for the quarter ended September 30, 2010 decreased $599.9 million from the previous quarter and $664.7 million from December 31, 2009 to $5.2 billion.

Stockholders' equity totaled $1.2 billion, or 6.56% of total assets at September 30, 2010.  Astoria Federal continues to be designated as well-capitalized with core, tangible, risk-based and Tier 1 risk-based capital ratios of 7.59%, 7.59%, 14.13% and 12.87%, respectively, at September 30, 2010.

Asset Quality

Non-performing loans ("NPLs"), including troubled debt restructurings ("TDR") of $53.5 million, totaled $399.6 million, or 2.11% of total assets at September 30, 2010, a decrease of $15.5 million from the previous quarter.  During the 2010 third quarter, $22.3 million of NPLs were either sold or classified as held-for-sale.  At September 30, 2010, one-to-four family NPLs declined to $345.7 million, multi-family/CRE/construction NPLs declined to $48.9 million and consumer and other NPLs declined to $5.0 million compared to $350.6 million, $59.2 million and $5.3 million at June 30, 2010.  Of the $345.7 million of non-performing one-to-four family loans, $247.8 million, or 72%, 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, 2009

$197.6

$  75.9

$273.5

$(46.7)

$408.5

$682.0

At Dec. 31, 2009

$212.9

$  76.3

$289.2

$ 15.7

$408.6

$697.8

At March 31, 2010

$185.6

$  82.7

$268.3

$(20.9)

$419.1

$687.4

At June 30, 2010

$230.9

$  77.5

$308.4

$40.1

$415.1

$723.5

At Sept. 30, 2010

$181.6

$  70.4

$252.0

$(56.4)

$399.6

$651.6

The table below details, as of September 30, 2010, 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

$3,119.2

27.4%

$48.8

1.56%

Illinois

$1,430.9

12.6%

$51.1

3.57%

Connecticut

$1,057.6

9.3%

$30.9

2.92%

California

$  911.7

8.0%

$41.3

4.53%

New Jersey

$  853.7

7.5%

$50.0

5.86%

Massachusetts

$  787.3

6.9%

$11.8

1.50%

Virginia

$  707.4

6.2%

$16.9

2.39%

Maryland

$  699.0

6.1%

$41.9

5.99%

Washington

$  330.7

2.9%

$ 0.6

0.18%

Florida

$  236.2

2.1%

$26.9

11.39%

Top 10 States

$10,133.7

89.0%

$320.2

3.16%

All other states (1)

$ 1,235.2

11.0%

$  25.5

2.06%

Total 1-4 Family Portfolio

$11,368.9

100%

$345.7

3.04%

(1)  Includes 28 states and Washington, D.C.

Net loan charge-offs for the quarter ended September 30, 2010 totaled $24.8 million (including $18.4 million of one-to-four family loans and $5.4 million of multi-family/CRE loans) compared to $34.7 million (including $20.1 million of one-to-four family loans and $12.6 million of multi-family/CRE loans) for the previous quarter.  Included in the $18.4 million of one-to-four family net loan charge-offs are $16.2 million of charge-offs on $71.7 million of NPLs which, at 180 days delinquent and annually thereafter, were reviewed and adjusted, as needed, to the estimated fair value of the underlying collateral less selling costs.  "While we expect NPL levels may remain elevated for some time, 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, 72% of the residential NPLs to their adjusted fair value less selling costs," Mr. Engelke noted.

Selected Asset Quality Metrics

(at or for the three and nine months ended September 30, 2010)

($ in millions)

1-4

Family

Multi-

family

CRE

Construction

Consumer

& Other

Total

Loan portfolio balance

$11,368.9

$ 2,309.1

$ 793.4

$   15.7

$  319.3(1)

$14,899.2(2)

Non-performing loans

$ 345.7(3)

$  38.5(4)

$     3.7

$     6.7

$          5.0

$     399.6(3)

NPLs/total loans

2.32%

0.26%

0.02%

0.05%

0.03%

2.68%

Net charge-offs  3Q10

$       18.4

$        5.0

$     0.4

$     0.0

$          1.0

$           24.8

Net charge-offs  YTD

$       56.0

$      22.4

$     6.2

$     1.5

$          1.7

$           87.8

(1)  Includes home equity loans of $290.6 million

(2)  Includes $92.8 million of net unamortized premiums and deferred loan costs

(3)  Includes $247.8 million reviewed and adjusted, as needed, at 180 days delinquent and annually thereafter

(4)  Includes $22.4 million of TDRs performing in accordance with their modified terms

Future Outlook  

Commenting on the near-term outlook, Mr. Engelke stated, "Although we remain cautiously optimistic with respect to the outlook for credit quality and we expect credit costs will continue to decline over the next several quarters resulting in improved financial performance, the operating environment for residential mortgage portfolio lenders, nonetheless, remains challenging. The U.S. government continues to subsidize the residential mortgage market with programs designed to keep 30-year fixed-rate conforming loans, which we originate but do not retain for our portfolio, below normal market rate levels.  In addition, the U.S. Congress recently extended the expanded conforming loan limits in many of the markets we operate in through September 2011, therefore, we anticipate that elevated levels of mortgage prepayment activity will continue to outpace our loan production.  This will, more than likely, result in the loan portfolio and balance sheet declining further in the near term.  We anticipate maintaining a relatively stable net interest margin which, when coupled with lower credit costs, should mitigate the earnings impact from a smaller balance sheet.  In the meantime, we will continue to strengthen the balance sheet by continuing to originate quality residential mortgage loans for portfolio.  We expect capital levels will continue to increase as earnings continue to improve which should position us to take advantage of future balance sheet growth opportunities that may arise."

Earnings Conference Call October 21, 2010 at 10:00 a.m. (ET)

The Company, as previously announced, indicated that Mr. Engelke will host an earnings conference call Thursday morning, October 21, 2010 at 10:00 a.m. (ET).   The toll-free dial-in number is (888) 562-3356, ID# 12186796.  A telephone replay will be available on October 21, 2010 from 1:00 p.m. (ET) through midnight October 30, 2010 (ET).   The replay number is (800) 642-1687, ID#: 12186796.  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 $18.9 billion, is the holding company for Astoria Federal Savings and Loan Association.  Established in 1888, Astoria Federal, with deposits in New York totaling $12.1 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 sixteen states, primarily along the East Coast, and the District of Columbia, and through correspondent relationships covering seventeen 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," "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 its 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 of the 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 may adversely affect our business; applicable 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 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 assume 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,

2010

2009

ASSETS

Cash and due from banks

$

241,514

$

71,540

Repurchase agreements

32,040

40,030

Securities available-for-sale

657,885

860,694

Securities held-to-maturity

(fair value of $1,996,017 and $2,367,520, respectively)

1,933,318

2,317,885

Federal Home Loan Bank of New York stock, at cost

163,501

178,929

Loans held-for-sale, net

35,338

34,274

Loans receivable:

Mortgage loans, net

14,577,036

15,447,115

Consumer and other loans, net

322,157

333,607

14,899,193

15,780,722

Allowance for loan losses

(206,231)

(194,049)

Total loans receivable, net

14,692,962

15,586,673

Mortgage servicing rights, net

8,030

8,850

Accrued interest receivable

61,768

66,121

Premises and equipment, net

133,735

136,195

Goodwill

185,151

185,151

Bank owned life insurance

408,470

401,735

Real estate owned, net

64,763

46,220

Other assets

318,374

317,882

TOTAL ASSETS

$

18,936,849

$

20,252,179

LIABILITIES

Deposits

$

12,107,286

$

12,812,238

Reverse repurchase agreements

2,100,000

2,500,000

Federal Home Loan Bank of New York advances

2,735,000

3,000,000

Other borrowings, net

378,111

377,834

Mortgage escrow funds

146,678

114,036

Accrued expenses and other liabilities

228,083

239,457

TOTAL LIABILITIES

17,695,158

19,043,565

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 97,877,469 and 97,083,607 shares

outstanding, respectively)

1,665

1,665

Additional paid-in capital

859,880

857,662

Retained earnings

1,836,456

1,829,199

Treasury stock (68,617,419 and 69,411,281 shares, at cost, respectively)

(1,417,956)

(1,434,362)

Accumulated other comprehensive loss

(24,876)

(29,779)

Unallocated common stock held by ESOP

(3,678,768 and 4,304,635 shares, respectively)

(13,478)

(15,771)

TOTAL STOCKHOLDERS' EQUITY

1,241,691

1,208,614

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$

18,936,849

$

20,252,179

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,

2010

2009

2010

2009

Interest income:

One-to-four family mortgage loans 

$

130,936

$

147,765

$

408,640

$

465,252

Multi-family, commercial real estate and construction

mortgage loans

48,446

52,947

149,169

165,539

Consumer and other loans

2,656

2,760

7,975

8,095

Mortgage-backed and other securities

25,336

35,980

86,319

116,307

Repurchase agreements and interest-earning cash accounts 

188

163

257

394

Federal Home Loan Bank of New York stock

1,999

2,487

6,416

6,850

Total interest income

209,561

242,102

658,776

762,437

Interest expense:

Deposits

46,144

75,348

149,182

248,069

Borrowings

57,392

63,671

177,268

190,554

Total interest expense

103,536

139,019

326,450

438,623

Net interest income

106,025

103,083

332,326

323,814

Provision for loan losses

20,000

50,000

100,000

150,000

Net interest income after provision for loan losses

86,025

53,083

232,326

173,814

Non-interest income:

Customer service fees

12,463

14,186

39,128

43,265

Other loan fees

974

959

2,546

2,837

Gain on sales of securities

-

3,820

-

5,932

Other-than-temporary impairment write-down of securities

-

-

-

(5,300)

Mortgage banking income, net

631

883

2,788

4,762

Income from bank owned life insurance

2,383

2,131

6,735

6,578

Other

2,161

(1,899)

9,279

(1,622)

Total non-interest income

18,612

20,080

60,476

56,452

Non-interest expense:

General and administrative:

Compensation and benefits

35,999

31,850

105,884

99,213

Occupancy, equipment and systems

16,506

15,969

49,592

48,365

Federal deposit insurance premiums

6,509

6,928

19,722

17,732

Federal deposit insurance special assessment

-

-

-

9,851

Advertising

1,743

961

4,557

3,741

Other

10,147

7,531

35,236

24,319

Total non-interest expense

70,904

63,239

214,991

203,221

Income before income tax expense

33,733

9,924

77,811

27,045

Income tax expense

12,282

1,876

27,888

7,501

Net income

$

21,451

$

8,048

$

49,923

$

19,544

Basic earnings per common share

$

0.23

$

0.09

$

0.53

$

0.21

Diluted earnings per common share 

$

0.23

$

0.09

$

0.53

$

0.21

Basic weighted average common shares

91,863,115

90,696,563

91,650,000

90,480,277

Diluted weighted average common and common

equivalent shares

91,863,115

90,702,558

91,650,045

90,482,356

ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES 

AVERAGE BALANCE SHEETS

(Dollars in Thousands)

For the Three Months Ended September 30,

 2010

2009

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

$

11,678,392

$

130,936

4.48%

$

12,071,749

$

147,765

4.90%

Multi-family, commercial real

  estate and construction

3,201,711

48,446

6.05

3,610,912

52,947

5.87

Consumer and other loans (1)

323,916

2,656

3.28

334,282

2,760

3.30

Total loans

15,204,019

182,038

4.79

16,016,943

203,472

5.08

Mortgage-backed and other securities (2)

2,555,951

25,336

3.97

3,451,257

35,980

4.17

Repurchase agreements and

      interest-earning cash accounts

332,171

188

0.23

299,242

163

0.22

Federal Home Loan Bank stock

174,220

1,999

4.59

177,285

2,487

5.61

Total interest-earning assets

18,266,361

209,561

4.59

19,944,727

242,102

4.86

Goodwill

185,151

185,151

Other non-interest-earning assets

888,925

856,892

Total assets 

$

19,340,437

$

20,986,770

Liabilities and stockholders' equity:

Interest-bearing liabilities:

Savings

$

2,205,587

2,245

0.41

$

1,950,731

1,989

0.41

Money market

342,453

385

0.45

328,826

447

0.54

NOW and demand deposit

1,686,109

279

0.07

1,545,609

258

0.07

Liquid certificates of deposit

585,814

689

0.47

860,239

1,708

0.79

Total core deposits

4,819,963

3,598

0.30

4,685,405

4,402

0.38

Certificates of deposit

7,356,689

42,546

2.31

8,738,587

70,946

3.25

Total deposits

12,176,652

46,144

1.52

13,423,992

75,348

2.25

Borrowings

5,527,188

57,392

4.15

5,886,006

63,671

4.33

Total interest-bearing liabilities

17,703,840

103,536

2.34

19,309,998

139,019

2.88

Non-interest-bearing liabilities 

405,907

478,697

Total liabilities

18,109,747

19,788,695

Stockholders' equity

1,230,690

1,198,075

Total liabilities and stockholders' equity

$

19,340,437

$

20,986,770

Net interest income/net interest

rate spread (3)

$

106,025

2.25%

$

103,083

1.98%

Net interest-earning assets/net

interest margin (4)

$

562,521

2.32%

$

634,729

2.07%

Ratio of interest-earning assets

to interest-bearing liabilities

1.03x

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,

2010

2009

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

$

11,856,597

$

408,640

4.60

%

$

12,194,836

$

465,252

5.09

%

Multi-family, commercial real

  estate and construction

3,319,318

149,169

5.99

3,738,746

165,539

5.90

Consumer and other loans (1)

328,264

7,975

3.24

337,229

8,095

3.20

Total loans

15,504,179

565,784

4.87

16,270,811

638,886

5.24

Mortgage-backed and other securities (2)

2,897,654

86,319

3.97

3,573,641

116,307

4.34

Repurchase agreements and

      interest-earning cash accounts

181,366

257

0.19

255,594

394

0.21

Federal Home Loan Bank stock

177,246

6,416

4.83

183,032

6,850

4.99

Total interest-earning assets

18,760,445

658,776

4.68

20,283,078

762,437

5.01

Goodwill

185,151

185,151

Other non-interest-earning assets

879,392

837,257

Total assets

$

19,824,988

$

21,305,486

Liabilities and stockholders' equity:

Interest-bearing liabilities:

Savings

$

2,142,373

6,477

0.40

$

1,909,519

5,781

0.40

Money market

336,482

1,117

0.44

313,747

1,733

0.74

NOW and demand deposit

1,662,287

807

0.06

1,522,064

805

0.07

Liquid certificates of deposit

626,625

2,281

0.49

927,424

9,641

1.39

Total core deposits

4,767,767

10,682

0.30

4,672,754

17,960

0.51

Certificates of deposit

7,689,649

138,500

2.40

8,852,402

230,109

3.47

Total deposits

12,457,416

149,182

1.60

13,525,156

248,069

2.45

Borrowings

5,730,714

177,268

4.12

6,126,211

190,554

4.15

Total interest-bearing liabilities

18,188,130

326,450

2.39

19,651,367

438,623

2.98

Non-interest-bearing liabilities

416,514

458,474

Total liabilities

18,604,644

20,109,841

Stockholders' equity

1,220,344

1,195,645

Total liabilities and stockholders' equity

$

19,824,988

$

21,305,486

Net interest income/net interest

rate spread (3)

$

332,326

2.29

%

$

323,814

2.03

%

Net interest-earning assets/net

interest margin (4)

$

572,315

2.36

%

$

631,711

2.13

%

Ratio of interest-earning assets

to interest-bearing liabilities

1.03x

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,

2010

2009

2010

2009

Selected Returns and Financial Ratios (annualized)

   Return on average stockholders' equity

6.97%

2.69%

5.45%

2.18%

   Return on average tangible stockholders' equity (1)

8.21

3.18

6.43

2.58

   Return on average assets

0.44

0.15

0.34

0.12

   General and administrative expense to average assets

1.47

1.21

1.45

1.27

   Efficiency ratio (2)

56.89

51.35

54.73

53.44

   Net interest rate spread

2.25

1.98

2.29

2.03

   Net interest margin

2.32

2.07

2.36

2.13

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

   Non-GAAP return on average stockholders' equity

5.68%

3.39%

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

6.70

4.01

   Non-GAAP return on average assets

0.35

0.19

   Non-GAAP general and administrative expense to average assets

1.39

1.21

   Non-GAAP efficiency ratio (2)

53.36

49.95

Asset Quality Data (dollars in thousands)

   Non-performing assets (4)

$

464,383

$

449,926

   Non-performing loans (4)

399,620

408,458

      Loans delinquent 90 days or more and still accruing interest

619

21

      Non-accrual loans

399,001

408,437

   Loans 60-89 days delinquent

70,359

75,875

   Loans 30-59 days delinquent

181,631

197,560

   Net charge-offs

$

24,768

$

33,633

87,818

92,391

   Non-performing loans/total loans

2.68%

2.56%

   Non-performing loans/total assets

2.11

1.98

   Non-performing assets/total assets

2.45

2.18

   Allowance for loan losses/non-performing loans

51.61

43.25

   Allowance for loan losses/non-accrual loans

51.69

43.25

   Allowance for loan losses/total loans

1.38

1.11

   Net charge-offs to average loans outstanding (annualized)

0.65%

0.84%

0.76

0.76

Capital Ratios (Astoria Federal)

   Tangible

7.59%

6.72%

   Core

7.59

6.72

   Risk-based

14.13

12.77

   Tier 1 risk-based

12.87

11.49

Other Data

   Cash dividends paid per common share

$

0.13

$

0.13

$

0.39

$

0.39

   Book value per share (5)

13.18

13.04

   Tangible book value per share (6)

11.22

11.04

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

5.63%

4.98%

   Mortgage loans serviced for others (in thousands)

$

1,421,223

$

1,355,090

   Full time equivalent employees

1,573

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 and 2009.  

 (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, 2010

At June  30, 2010

At September 30, 2009

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

$

11,023,120

4.87%

$

11,358,339

4.99%

$

11,681,844

5.36%

Multi-family, commercial real estate

and construction

3,069,335

6.04

3,175,604

6.04

3,442,046

6.03

Mortgage-backed and other securities (3)

2,591,203

4.00

2,736,725

4.11

3,472,308

4.08

Interest-bearing liabilities:

Savings

2,234,606

0.40

2,183,350

0.40

1,959,171

0.40

Money market

349,883

0.45

337,455

0.45

330,299

0.44

NOW and demand deposit

1,662,000

0.06

1,687,163

0.06

1,522,017

0.06

Liquid certificates of deposit

546,626

0.38

607,853

0.50

812,141

0.64

Total core deposits

4,793,115

0.28

4,815,821

0.30

4,623,628

0.33

Certificates of deposit

7,314,171

2.28

7,432,620

2.34

8,594,991

3.15

Total deposits

12,107,286

1.49

12,248,441

1.54

13,218,619

2.16

Borrowings, net

5,213,111

4.12

5,813,019

4.02

5,837,723

4.24

(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

September 30, 2009

  GAAP

Adjustments (1)

Non-GAAP

  GAAP

Adjustments (2)

Non-GAAP

Net interest income

$332,326

$         -

$332,326

$323,814

$         -

$323,814

Provision for loan losses

100,000

-

100,000

150,000

-

150,000

Net interest income after provision for loan losses

232,326

-

232,326

173,814

-

173,814

Non-interest income

60,476

(4,635)

55,841

56,452

6,888

63,340

Non-interest expense (general and administrative expense)

214,991

(7,850)

207,141

203,221

(9,851)

193,370

Income before income tax expense

77,811

3,215

81,026

27,045

16,739

43,784

Income tax expense

27,888

1,133

29,021

7,501

5,859

13,360

Net income

$  49,923

$   2,082

$  52,005

$  19,544

$ 10,880

$  30,424

Basic earnings per common share

$0.53

$0.02

$0.55

$0.21

$0.12

$0.33

Diluted earnings per common share

$0.53

$0.02

$0.55

$0.21

$0.12

$0.33

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.

(2)  Non-interest income adjustment relates to the $1.6 million lower of cost or market write-down of premises and equipment held-for-sale recorded in the 2009 second quarter and the $5.3 million other-than-temporary impairment write-down of securities charge recorded in the 2009 first quarter. Non-interest expense adjustment relates to the federal deposit insurance special assessment recorded in the 2009 second quarter.

ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES

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

(Dollars in millions)

At September 30, 2010

Non-perfoming loans

State

Total loans

Non-performing loans

as % of total loans

New York

  Full Income

$2,812.3

$25.9

0.92%

  Alt A < 70% LTV

$235.7

$11.8

5.01%

  Alt A  70%-80% LTV

$71.2

$11.1

15.59%

State Total

$3,119.2

$48.8

1.56%

Illinois

  Full Income

$1,188.6

$20.8

1.75%

  Alt A < 70% LTV

$120.0

$11.9

9.92%

  Alt A  70%-80% LTV

$122.3

$18.4

15.04%

State Total

$1,430.9

$51.1

3.57%

Connecticut

  Full Income

$885.9

$11.4

1.29%

  Alt A < 70% LTV

$118.8

$10.9

9.18%

  Alt A  70%-80% LTV

$52.9

$8.6

16.26%

State Total

$1,057.6

$30.9

2.92%

California

  Full Income

$608.5

$13.5

2.22%

  Alt A < 70% LTV

$156.2

$7.5

4.80%

  Alt A  70%-80% LTV

$147.0

$20.3

13.81%

State Total

$911.7

$41.3

4.53%

New Jersey

  Full Income

$677.5

$26.0

3.84%

  Alt A < 70% LTV

$90.9

$8.8

9.68%

  Alt A  70%-80% LTV

$85.3

$15.2

17.82%

State Total

$853.7

$50.0

5.86%

Massachusetts

  Full Income

$685.3

$5.1

0.74%

  Alt A < 70% LTV

$68.1

$2.3

3.38%

  Alt A  70%-80% LTV

$33.9

$4.4

12.98%

State Total

$787.3

$11.8

1.50%

Virginia

  Full Income

$542.5

$4.5

0.83%

  Alt A < 70% LTV

$69.1

$3.1

4.49%

  Alt A  70%-80% LTV

$95.8

$9.3

9.71%

State Total

$707.4

$16.9

2.39%

Maryland

  Full Income

$540.8

$17.5

3.24%

  Alt A < 70% LTV

$74.2

$5.2

7.01%

  Alt A  70%-80% LTV

$84.0

$19.2

22.86%

State Total

$699.0

$41.9

5.99%

Washington

  Full Income

$322.3

$0.0

0.00%

  Alt A < 70% LTV

$5.9

$0.6

10.17%

  Alt A  70%-80% LTV

$2.5

$0.0

0.00%

State Total

$330.7

$0.6

0.18%

Florida

  Full Income

$160.5

$14.0

8.72%

  Alt A < 70% LTV

$44.3

$6.0

13.54%

  Alt A  70%-80% LTV

$31.4

$6.9

21.97%

State Total

$236.2

$26.9

11.39%

Other States

  Full Income

$1,108.1

$15.8

1.43%

  Alt A < 70% LTV

$75.0

$4.3

5.73%

  Alt A  70%-80% LTV

$52.1

$5.4

10.36%

Other States Total

$1,235.2

$25.5

2.06%

Total all states

  Full Income

$9,532.3

$154.5

1.62%

  Alt A < 70% LTV

$1,058.2

$72.4

6.84%

  Alt A  70%-80% LTV

$778.4

$118.8

15.26%

Grand total

$11,368.9

$345.7

3.04%

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

SOURCE Astoria Financial Corporation



RELATED LINKS

http://www.astoriafederal.com