10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q

[x]	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2007 OR
[   ]	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from                               to Commission file number 001-11967 ASTORIA FINANCIAL CORPORATION (Exact name of registrant as specified in its charter)

Delaware	11-3170868
(State or other jurisdiction of	(I.R.S. Employer Identification
incorporation or organization)	Number)
One Astoria Federal Plaza, Lake Success, New York	11042-1085
(Address of principal executive offices)	(Zip Code)

(516) 327-3000
(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all the reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES      X           NO             

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer      X         Accelerated filer                 Non-accelerated filer             

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES                     NO      X     

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

Classes of Common Stock	Number of Shares Outstanding, October 31, 2007
.01 Par Value	96,035,932

PART I -- FINANCIAL INFORMATION

		Page
Item 1.	Financial Statements (Unaudited):
	Consolidated Statements of Financial Condition at September 30, 2007
	and December 31, 2006	2
	Consolidated Statements of Income for the Three and Nine Months
	Ended September 30, 2007 and September 30, 2006	3
	Consolidated Statement of Changes in Stockholders' Equity for the
	Nine Months Ended September 30, 2007	4
	Consolidated Statements of Cash Flows for the Nine Months Ended
	September 30, 2007 and September 30, 2006	5
	Notes to Consolidated Financial Statements	6
Item 2.	Management's Discussion and Analysis of Financial Condition and
	Results of Operations	13
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	44
Item 4.	Controls and Procedures	46
	PART II -- OTHER INFORMATION
Item 1.	Legal Proceedings	47
Item 1A.	Risk Factors	48
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	50
Item 3.	Defaults Upon Senior Securities	50
Item 4.	Submission of Matters to a Vote of Security Holders	50
Item 5.	Other Information	50
Item 6.	Exhibits	50
Signature		51

1

ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Financial Condition

	(Unaudited)
	At				At
(In Thousands, Except Share Data)	September 30, 2007				December 31, 2006
ASSETS:
Cash and due from banks		$	123,314			$	134,016
Repurchase agreements			34,143				71,694
Available-for-sale securities:
Encumbered			1,164,150				1,289,045
Unencumbered			194,212				271,280
			1,358,362				1,560,325
Held-to-maturity securities, fair value of $3,140,725 and $3,681,514, respectively:
Encumbered			3,069,897				3,442,079
Unencumbered			140,320				337,277
			3,210,217				3,779,356
Federal Home Loan Bank of New York stock, at cost			180,631				153,640
Loans held-for-sale, net			8,796				16,542
Loans receivable:
Mortgage loans, net			15,576,834				14,532,503
Consumer and other loans, net			376,445				439,188
			15,953,279				14,971,691
Allowance for loan losses			(78,254	)			(79,942	)
Loans receivable, net			15,875,025				14,891,749
Mortgage servicing rights, net			14,589				15,944
Accrued interest receivable			82,193				78,761
Premises and equipment, net			141,131				145,231
Goodwill			185,151				185,151
Bank owned life insurance			393,899				385,952
Other assets			138,651				136,158
Total assets		$	21,746,102			$	21,554,519
LIABILITIES:
Deposits:
Savings		$	1,940,322			$	2,129,416
Money market			352,858				435,657
NOW and demand deposit			1,442,840				1,496,986
Liquid certificates of deposit			1,463,845				1,447,462
Certificates of deposit			8,066,130				7,714,503
Total deposits			13,265,995				13,224,024
Reverse repurchase agreements			3,980,000				4,480,000
Federal Home Loan Bank of New York advances			2,553,000				1,940,000
Other borrowings, net			396,500				416,002
Mortgage escrow funds			167,431				132,080
Accrued expenses and other liabilities			177,501				146,659
Total liabilities			20,540,427				20,338,765
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 96,203,234 and 98,211,827
shares outstanding, respectively)			1,665				1,665
Additional paid-in capital			842,339				828,940
Retained earnings			1,888,432				1,856,528
Treasury stock (70,291,654 and 68,283,061 shares, at cost, respectively)			(1,447,809	)			(1,390,495	)
Accumulated other comprehensive loss			(57,407	)			(58,330	)
Unallocated common stock held by ESOP (5,880,457 and 6,155,918
shares, respectively)			(21,545	)			(22,554	)
Total stockholders' equity			1,205,675				1,215,754
Total liabilities and stockholders' equity		$	21,746,102			$	21,554,519

See accompanying Notes to Consolidated Financial Statements.

2

ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Income (Unaudited)

	For the				For the
	Three Months Ended				Nine Months Ended
	September 30,				September 30,
(In Thousands, Except Share Data)	2007		2006		2007		2006
Interest income:
Mortgage loans:
One-to-four family	$	150,645	$	127,735	$	428,729	$	378,226
Multi-family, commercial real
estate and construction		63,052		65,933		192,160		192,178
Consumer and other loans		7,472		9,099		23,478		26,918
Mortgage-backed and other securities		53,227		64,946		168,127		205,373
Federal funds sold and repurchase agreements		337		1,266		1,812		5,205
Federal Home Loan Bank of New York stock		2,899		2,049		8,246		5,535
Total interest income		277,632		271,028		822,552		813,435
Interest expense:
Deposits		116,950		102,103		341,404		275,357
Borrowings		79,505		78,258		229,553		234,549
Total interest expense		196,455		180,361		570,957		509,906
Net interest income		81,177		90,667		251,595		303,529
Provision for loan losses		500		-		500		-
Net interest income after provision for loan losses		80,677		90,667		251,095		303,529
Non-interest income:
Customer service fees		15,920		16,170		47,248		49,208
Other loan fees		1,153		983		3,481		2,755
Net gain on sales of securities		1,992		-		1,992		-
Mortgage banking income, net		155		181		1,995		3,810
Income from bank owned life insurance		4,238		3,957		12,728		12,063
Other		1,347		1,573		6,238		(348	)
Total non-interest income		24,805		22,864		73,682		67,488
Non-interest expense:
General and administrative:
Compensation and benefits		30,587		27,584		91,757		86,423
Occupancy, equipment and systems		16,159		16,104		49,174		49,209
Federal deposit insurance premiums		388		414		1,202		1,263
Advertising		1,390		1,839		5,282		5,668
Other		8,020		7,374		24,956		22,280
Total non-interest expense		56,544		53,315		172,371		164,843
Income before income tax expense		48,938		60,216		152,406		206,174
Income tax expense		13,630		19,122		47,257		68,383
Net income	$	35,308	$	41,094	$	105,149	$	137,791
Basic earnings per common share	$	0.39	$	0.44	$	1.16	$	1.44
Diluted earnings per common share	$	0.39	$	0.43	$	1.14	$	1.40
Dividends per common share	$	0.26	$	0.24	$	0.78	$	0.72
Basic weighted average common shares		90,174,456	93,944,367			90,763,008	95,563,670
Diluted weighted average common and
common equivalent shares		91,543,600	96,489,271			92,420,702	98,137,080

See accompanying Notes to Consolidated Financial Statements.

3

ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES
Consolidated Statement of Changes in Stockholders' Equity (Unaudited)
For the Nine Months Ended September 30, 2007

																	Unallocated
														Accumulated			Common
						Additional								Other			Stock
				Common		Paid-in		Retained			Treasury			Comprehensive			Held
(In Thousands, Except Share Data)	Total			Stock		Capital		Earnings			Stock			Loss			by ESOP
Balance at December 31, 2006	$	1,215,754			$1,665		$828,940	$	1,856,528		$	(1,390,495	)		$(58,330	)		$(22,554	)
Adjustment to retained earnings upon
adoption of EITF Issue No. 06-05 effective
January 1, 2007		(509	)		-		-		(509	)		-			-			-
Comprehensive income:
Net income		105,149			-		-		105,149			-			-			-
Other comprehensive (loss) income, net of tax:
Net unrealized loss on securities		(101	)		-		-		-			-			(101	)		-
Reclassification of prior service cost		222			-		-		-			-			222			-
Reclassification of net actuarial loss		658			-		-		-			-			658			-
Reclassification of loss on cash flow hedge		144			-		-		-			-			144			-
Comprehensive income		106,072
Common stock repurchased (2,500,000 shares)		(67,369	)		-		-		-			(67,369	)		-			-
Dividends on common stock ($0.78 per share)		(71,143	)		-		-		(71,143	)		-			-			-
Exercise of stock options and related tax
benefit (495,358 shares issued)		10,973			-		2,394		(1,553	)		10,132			-			-
Forfeitures of restricted stock (3,951 shares)		-			-		117		(40	)		(77	)		-			-
Stock-based compensation and allocation
of ESOP stock		11,897			-		10,888		-			-			-			1,009
Balance at September 30, 2007	$	1,205,675			$1,665		$842,339	$	1,888,432		$	(1,447,809	)		$(57,407	)		$(21,545	)

See accompanying Notes to Consolidated Financial Statements.

4

ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Unaudited)

	For the Nine Months Ended
	September 30,
(In Thousands)	2007			2006
Cash flows from operating activities:
Net income	$	105,149		$	137,791
Adjustments to reconcile net income to net cash provided by operating activities:
Net premium amortization on mortgage loans and mortgage-backed securities		13,314			10,644
Net amortization of deferred costs on consumer and other loans, other securities and borrowings		2,956			3,325
Net provision for loan and real estate losses		500			121
Depreciation and amortization		10,068			10,426
Net gain on sales of loans and securities		(3,312	)		(1,683	)
Originations of loans held-for-sale		(173,007	)		(182,174	)
Proceeds from sales and principal repayments of loans held-for-sale		182,087			192,922
Stock-based compensation and allocation of ESOP stock		11,897			9,629
Increase in accrued interest receivable		(3,432	)		(23	)
Mortgage servicing rights amortization, valuation allowance adjustments and capitalized amounts, net		1,355			335
Bank owned life insurance income and insurance proceeds received, net		(8,456	)		727
Decrease (increase) in other assets		505			(8,730	)
Increase in accrued expenses and other liabilities		32,660			15,396
Net cash provided by operating activities		172,284			188,706
Cash flows from investing activities:
Originations of loans receivable		(3,027,656	)		(2,140,222	)
Loan purchases through third parties		(320,810	)		(266,085	)
Principal payments on loans receivable		2,333,411			2,026,354
Proceeds from sales of non-performing loans		9,413			10,148
Purchases of securities available-for-sale		-			(25	)
Principal payments on securities held-to-maturity		570,204			750,831
Principal payments on securities available-for-sale		201,966			233,158
Proceeds from sales of securities available-for-sale		2,218			-
Net (purchases) redemptions of FHLB-NY stock		(26,991	)		5,898
Proceeds from sales of real estate owned, net		893			1,222
Purchases of premises and equipment, net of proceeds from sales		(5,968	)		(5,009	)
Net cash (used in) provided by investing activities		(263,320	)		616,270
Cash flows from financing activities:
Net increase in deposits		41,971			366,551
Net decrease in borrowings with original terms of three months or less		(187,000	)		(291,473	)
Proceeds from borrowings with original terms greater than three months		2,700,000			550,000
Repayments of borrowings with original terms greater than three months		(2,420,000	)		(1,374,000	)
Net increase in mortgage escrow funds		35,351			40,887
Common stock repurchased		(67,369	)		(195,661	)
Cash dividends paid to stockholders		(71,143	)		(68,948	)
Cash received for options exercised		8,579			18,388
Excess tax benefits from share-based payment arrangements		2,394			4,638
Net cash provided by (used in) financing activities		42,783			(949,618	)
Net decrease in cash and cash equivalents		(48,253	)		(144,642	)
Cash and cash equivalents at beginning of period		205,710			352,037
Cash and cash equivalents at end of period	$	157,457		$	207,395
Supplemental disclosures:
Cash paid during the period:
Interest	$	560,226		$	503,714
Income taxes	$	43,823		$	65,165
Additions to real estate owned	$	4,602		$	702

See accompanying Notes to Consolidated Financial Statements.

5

ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)

1. Basis of Presentation

The accompanying consolidated financial statements include the accounts of Astoria Financial Corporation and its wholly-owned subsidiaries: Astoria Federal Savings and Loan Association and its subsidiaries, referred to as Astoria Federal, and AF Insurance Agency, Inc. As used in this quarterly report, “we,” “us” and “our” refer to Astoria Financial Corporation and its consolidated subsidiaries. All significant inter-company accounts and transactions have been eliminated in consolidation.

In addition to Astoria Federal and AF Insurance Agency, Inc., we have another subsidiary, Astoria Capital Trust I, which is not consolidated with Astoria Financial Corporation for financial reporting purposes in accordance with Financial Accounting Standards Board, or FASB, revised Interpretation No. 46, “Consolidation of Variable Interest Entities, an interpretation of ARB No. 51.” Astoria Capital Trust I was formed in 1999 for the purpose of issuing $125.0 million aggregate liquidation amount of 9.75% Capital Securities due November 1, 2029, or Capital Securities, and $3.9 million of common securities which are 100% owned by Astoria Financial Corporation, and using the proceeds to acquire Junior Subordinated Debentures issued by Astoria Financial Corporation. The Junior Subordinated Debentures total $128.9 million, have an interest rate of 9.75%, mature on November 1, 2029 and are the sole assets of Astoria Capital Trust I. The Junior Subordinated Debentures are prepayable, in whole or in part, at our option on or after November 1, 2009 at declining premiums to November 1, 2019, after which the Junior Subordinated Debentures are prepayable at par value. The Capital Securities have the same prepayment provisions as the Junior Subordinated Debentures. Astoria Financial Corporation has fully and unconditionally guaranteed the Capital Securities along with all obligations of Astoria Capital Trust I under the trust agreement relating to the Capital Securities. See Note 9 of Notes to Consolidated Financial Statements included in Item 8, “Financial Statements and Supplementary Data” of our 2006 Annual Report on Form 10-K for restrictions on our subsidiaries’ ability to pay dividends to us.

In our opinion, the accompanying consolidated financial statements contain all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of our financial condition as of September 30, 2007 and December 31, 2006, our results of operations for the three and nine months ended September 30, 2007 and 2006, changes in our stockholders’ equity for the nine months ended September 30, 2007 and our cash flows for the nine months ended September 30, 2007 and 2006. In preparing the consolidated financial statements, we are required to make estimates and assumptions that affect the reported amounts of assets and liabilities for the consolidated statements of financial condition as of September 30, 2007 and December 31, 2006, and amounts of revenues and expenses in the consolidated statements of income for the three and nine months ended September 30, 2007 and 2006. The results of operations for the three and nine months ended September 30, 2007 are not necessarily indicative of the results of operations to be expected for the remainder of the year. Certain information and note disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles, or GAAP, have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission, or SEC.

These consolidated financial statements should be read in conjunction with our December 31, 2006 audited consolidated financial statements and related notes included in our 2006 Annual Report on Form 10-K.

6

2. Earnings Per Share, or EPS

The following table is a reconciliation of basic and diluted EPS.

	For the Three Months Ended September 30,
	2007				2006
	Basic		Diluted		Basic		Diluted
(In Thousands, Except Per Share Data)	EPS		EPS(1)		EPS		EPS(2)
Net income	$	35,308	$	35,308	$	41,094	$	41,094
Total weighted average basic
common shares outstanding		90,174		90,174		93,944		93,944
Effect of dilutive securities:
Options		-		1,222		-		2,500
Restricted stock		-		148		-		45
Total weighted average basic and
diluted common shares outstanding		90,174		91,544		93,944		96,489
Net earnings per common share	$	0.39	$	0.39	$	0.44	$	0.43
	For the Nine Months Ended September 30,
	2007				2006
	Basic		Diluted		Basic		Diluted
(In Thousands, Except Per Share Data)	EPS		EPS(3)		EPS		EPS(2)
Net income	$	105,149	$	105,149	$	137,791	$	137,791
Total weighted average basic
common shares outstanding		90,763		90,763		95,564		95,564
Effect of dilutive securities:
Options		-		1,539		-		2,544
Restricted stock		-		119		-		29
Total weighted average basic and
diluted common shares outstanding		90,763		92,421		95,564		98,137
Net earnings per common share		$ 1.16		$ 1.14		$ 1.44		$ 1.40

(1)	Options to purchase 3,214,867 shares of common stock were outstanding for the three months ended September 30, 2007, but were not included in the computation of diluted EPS because their inclusion would be anti-dilutive.
(2)	Options to purchase 1,224,100 shares of common stock were outstanding for the three and nine months ended September 30, 2006, but were not included in the computation of diluted EPS because their inclusion would be anti-dilutive.
(3)	Options to purchase 2,568,495 shares of common stock and 71,133 shares of unvested restricted stock were outstanding for the nine months ended September 30, 2007, but were not included in the computation of diluted EPS because their inclusion would be anti-dilutive.

3. Accounting for Servicing of Financial Assets

Effective January 1, 2007, we adopted Statement of Financial Accounting Standards, or SFAS, No. 156, “Accounting for Servicing of Financial Assets – an amendment of FASB Statement No. 140,” which amends SFAS No. 140, “Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities” with respect to the accounting for separately recognized servicing assets and servicing liabilities. SFAS No. 156 requires all separately recognized servicing assets and servicing liabilities to be initially measured at fair value, if practicable, and permits an entity to choose either the amortization method, which is consistent with prior GAAP, or the fair value measurement method for subsequent measurements.

7

Additionally, at the initial adoption, SFAS No. 156 permits a one-time reclassification of available-for-sale securities to trading securities by entities with recognized servicing rights, without calling into question the treatment of other available-for-sale securities, provided that the securities are identified in some manner as offsetting the entity’s exposure to changes in the fair value of servicing assets or servicing liabilities that a servicer elects to subsequently measure at fair value. Upon our adoption of SFAS No. 156, we elected to apply the amortization method for measurements of our mortgage servicing rights, or MSR, and we did not reclassify any of our available-for-sale securities to trading securities.

The following disclosures, which are generally not required in interim period financial statements, are included herein as a result of our adoption of SFAS No. 156 in the first quarter of 2007.

Mortgage Servicing Rights

We own rights to service mortgage loans for investors with aggregate unpaid principal balances of $1.29 billion at September 30, 2007 and $1.36 billion at December 31, 2006, which are not reflected in the accompanying consolidated statements of financial condition. We recognize as separate assets the rights to service mortgage loans. The right to service loans for others is generally obtained through the sale of loans with servicing retained. The initial recognition of originated MSR is measured at fair value. The fair value of MSR is estimated by reference to quoted market prices of similar loans sold servicing released. MSR are amortized in proportion to and over the period of estimated net servicing income. MSR are assessed for impairment based on fair value at each reporting date. MSR impairment, if any, is recognized in a valuation allowance through charges to earnings. Increases in the fair value of impaired MSR are recognized only up to the amount of the previously recognized valuation allowance. Fees earned for servicing loans are reported as income when the related mortgage loan payments are collected.

We assess impairment of our MSR based on the estimated fair value of those rights on a stratum-by-stratum basis with any impairment recognized through a valuation allowance for each impaired stratum. We stratify our MSR by underlying loan type (primarily fixed and adjustable) and interest rate. The estimated fair values of each MSR stratum are obtained through independent third party valuations through an analysis of future cash flows, incorporating numerous market based assumptions including market discount rates, prepayment speeds, servicing income, servicing costs, default rates and other market driven data. Individual allowances for each stratum are then adjusted in subsequent periods to reflect changes in the measurement of impairment.

At September 30, 2007, our MSR, net, had an estimated fair value of $14.6 million and were valued based on expected future cash flows considering a weighted average discount rate of 9.52%, a weighted average constant prepayment rate on mortgages of 12.48% and a weighted average life of 5.5 years. At December 31, 2006, our MSR, net, had an estimated fair value of $16.0 million and were valued based on expected future cash flows considering a weighted average discount rate of 9.02%, a weighted average constant prepayment rate on mortgages of 13.23% and a weighted average life of 5.3 years.

The fair value of MSR is highly sensitive to changes in assumptions. Changes in prepayment speed assumptions have the most significant impact on the fair value of our MSR. Generally, as interest rates decline, mortgage loan prepayments accelerate due to increased refinance activity, which results in a decrease in the fair value of MSR. As interest rates rise, mortgage loan prepayments slow down, which results in an increase in the fair value of MSR. Thus, any

8

measurement of the fair value of our MSR is limited by the conditions existing and the assumptions utilized as of a particular point in time, and those assumptions may not be appropriate if they are applied at a different point in time.

MSR activity is summarized as follows:

	(In Thousands)
Carrying amount before valuation allowance at January 1, 2007		$20,665
Additions - servicing obligations that result from
transfers of financial assets		1,005
Amortization		(2,645	)
Carrying amount before valuation allowance at September 30, 2007		19,025
Valuation allowance at January 1, 2007		(4,721	)
Recovery of valuation allowance		285
Valuation allowance at September 30, 2007		(4,436	)
Net carrying amount at September 30, 2007		$14,589

Mortgage banking income, net, is summarized as follows:

	For the Three Months Ended						For the Nine Months Ended
	September 30,						September 30,
(In Thousands)	2007			2006			2007			2006
Loan servicing fees	$	985		$	1,073		$	3,052		$	3,392
Net gain on sales of loans		323			468			1,303			1,660
Amortization of MSR		(784	)		(865	)		(2,645	)		(2,747	)
(Provision for) recovery of valuation
allowance on MSR		(369	)		(495	)		285			1,505
Total mortgage banking income, net	$	155		$	181		$	1,995		$	3,810

Repurchase Agreements and Reverse Repurchase Agreements

We purchase securities under agreements to resell (repurchase agreements). These agreements represent short-term loans and are reflected as an asset in the consolidated statements of financial condition. Repurchase agreements totaled $34.1 million at September 30, 2007 and $71.7 million at December 31, 2006. We may sell, loan or otherwise dispose of such securities to other parties in the normal course of our operations. The same securities are to be resold at the maturity of the repurchase agreements. The fair value of the securities held under these agreements was $34.9 million as of September 30, 2007 and $72.6 million as of December 31, 2006. None of the securities held under repurchase agreements were sold or repledged at September 30, 2007 and December 31, 2006.

We enter into sales of securities under agreements to repurchase with selected dealers and banks (reverse repurchase agreements). Such agreements are accounted for as secured financing transactions since we maintain effective control over the transferred securities and the transfer meets the other criteria for such accounting. Obligations to repurchase securities sold are reflected as a liability in our consolidated statements of financial condition. Reverse repurchase agreements totaled $3.98 billion at September 30, 2007 and $4.48 billion at December 31, 2006. The securities underlying the agreements are delivered to a custodial account for the benefit of the dealer or bank with whom each transaction is executed. The dealers or banks, who may sell, loan or otherwise dispose of such securities to other parties in the normal course of their operations, agree to resell us the same securities at the maturities of the agreements. We retain the right of substitution of collateral throughout the terms of the agreements. The securities underlying the agreements are classified as encumbered securities in our consolidated statements of financial condition.

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4. Pension Plans and Other Postretirement Benefits

The following tables set forth information regarding the components of net periodic cost for our defined benefit pension plans and other postretirement benefit plan.

							Other Postretirement
	Pension Benefits						Benefits
	For the Three Months Ended						For the Three Months Ended
	September 30,						September 30,
(In Thousands)	2007			2006			2007			2006
Service cost	$	829		$	864		$	116		$	150
Interest cost		2,624			2,546			257			283
Expected return on plan assets		(3,211	)		(3,039	)		-			-
Amortization of prior service cost		92			92			42			42
Recognized net actuarial loss (gain)		477			796			(6	)		-
Net periodic cost	$	811		$	1,259		$	409		$	475
							Other Postretirement
	Pension Benefits						Benefits
	For the Nine Months Ended						For the Nine Months Ended
	September 30,						September 30,
(In Thousands)	2007			2006			2007			2006
Service cost	$	2,486		$	2,593		$	348		$	450
Interest cost		7,873			7,638			770			849
Expected return on plan assets		(9,635	)		(9,117	)		-			-
Amortization of prior service cost		276			276			126			126
Recognized net actuarial loss (gain)		1,433			2,390			(17	)		-
Net periodic cost	$	2,433		$	3,780		$	1,227		$	1,425

5. Income Taxes

Effective January 1, 2007, we adopted FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109,” or FIN 48, which clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with SFAS No. 109, “Accounting for Income Taxes.” FIN 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. There was no change to the net amount of assets and liabilities recognized in the statement of financial condition as a result of our adoption of FIN 48.

The following disclosures, which are generally not required in interim period financial statements, are included herein as a result of our adoption of FIN 48 in the first quarter of 2007.

We file income tax returns in the United States federal jurisdiction and in New York State and City jurisdictions. Certain of our subsidiaries also file income tax returns in various other state jurisdictions. With few exceptions, we are no longer subject to federal, state and local income tax examinations by tax authorities for years prior to 2003. The Internal Revenue Service commenced an examination of our 2005 federal income tax return in the first quarter of 2007.

At January 1, 2007, we had $9.9 million of net unrecognized tax benefits, all of which would affect our effective income tax rate if recognized. Accruals of interest and penalties related to unrecognized tax benefits are recognized in income tax expense. At January 1, 2007, we had $3.5 million of such accrued interest payable in addition to our liability for unrecognized tax

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benefits. During the nine months ended September 30, 2007, we accrued $1.2 million in interest as part of our income tax expense. During the three months ended September 30, 2007, unrecognized tax benefits and related accrued interest were reduced by $3.6 million, with a corresponding reduction in income tax expense, as a result of a lapse in the applicable statute of limitations. It is reasonably possible that a decrease in net unrecognized tax benefits of approximately $3.3 million may occur within the next twelve months as a result of lapses in applicable statutes of limitations.

6. Goodwill Litigation

We are a party to two actions against the United States, involving assisted acquisitions made in the early 1980’s and supervisory goodwill accounting utilized in connection therewith, or goodwill litigation, which could result in a gain.

In one of the actions, entitled The Long Island Savings Bank, FSB et al vs. The United States, or the LISB goodwill litigation, the U.S. Court of Federal Claims rendered a decision on September 15, 2005 awarding us $435.8 million in damages from the U.S. government. No portion of the $435.8 million award was recognized in our consolidated financial statements. On December 14, 2005, the United States filed an appeal of such award and, on February 1, 2007, the United States Court of Appeals for the Federal Circuit, or Court of Appeals, reversed such award. On April 2, 2007, we filed a petition for rehearing or rehearing en banc. Acting en banc, the appellate court returned the case to the original panel of judges for revision. The panel, on September 13, 2007, withdrew and vacated its earlier opinion and issued a new decision. This decision also reversed the award of $435.8 million in damages awarded to us by the U.S. Court of Federal Claims. We have again filed with the court a petition for rehearing or rehearing en banc.

The other action is entitled Astoria Federal Savings and Loan Association vs. United States. The evidentiary phase of the trial in this action, which commenced on April 19, 2007 before the U.S. Court of Federal Claims, has been concluded. Post trial motions and closing arguments are expected to be concluded in the fourth quarter of 2007.

The ultimate outcomes of the two actions pending against the United States and the timing of such outcomes are uncertain and there can be no assurance that we will benefit financially from such litigation. Legal expense related to these two actions has been recognized as it has been incurred.

7. Impact of Accounting Standards and Interpretations

Effective January 1, 2007, we adopted Emerging Issues Task Force, or EITF, Issue No. 06-05, “Accounting for Purchases of Life Insurance – Determining the Amount That Could Be Realized in Accordance with FASB Technical Bulletin No. 85-4.” Technical Bulletin No. 85-4, “Accounting for Purchases of Life Insurance,” requires that the amount that could be realized under a life insurance contract as of the date of the statement of financial condition should be reported as an asset. The EITF concluded that a policyholder should consider any additional amounts (i.e., amounts other than cash surrender value) included in the contractual terms of the policy in determining the amount that could be realized under the insurance contract. Amounts that are recoverable beyond one year from the surrender of the policy are discounted to present value. Upon adoption of EITF Issue No. 06-05 on January 1, 2007, we recorded an adjustment of $509,000 to reduce retained earnings and our investment in Bank Owned Life Insurance, or BOLI, to discount the deferred acquisition cost component of our BOLI investment to its present value. Adoption of EITF Issue No. 06-05 had no additional effect on the carrying amount of our BOLI investment.

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In June 2007, the FASB ratified a consensus reached by the EITF on Issue No. 06-11, “Accounting for Income Tax Benefits of Dividends on Share-Based Payment Awards,” which clarifies the accounting for income tax benefits related to the payment of dividends on equity-classified employee share-based payment awards that are charged to retained earnings under revised SFAS No. 123, “Share-Based Payment.” The EITF concluded that a realized income tax benefit from dividends or dividend equivalents that are charged to retained earnings and are paid to employees for equity classified nonvested equity shares, nonvested equity share units, and outstanding equity share options should be recognized as an increase to additional paid-in capital. EITF Issue No. 06-11 should be applied prospectively to the income tax benefits that result from dividends on equity-classified employee share-based payment awards that are declared in fiscal years beginning after December 15, 2007, and interim periods within those fiscal years. Early application is permitted as of the beginning of a fiscal year for which interim or annual financial statements have not yet been issued. Retrospective application to previously issued financial statements is prohibited. We do not expect our adoption of EITF Issue No. 06-11 to have a material impact on our financial condition or results of operations.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities, Including an amendment of FASB Statement No. 115,” which permits entities to choose to measure many financial instruments and certain other items at fair value that are not currently required to be measured at fair value. At the effective date, an entity may elect the fair value option for eligible items that exist at that date and report the effect of the first remeasurement to fair value as a cumulative-effect adjustment to the opening balance of retained earnings. Subsequent to the effective date, unrealized gains and losses on items for which the fair value option has been elected are to be reported in earnings. If the fair value option is elected for any available-for-sale or held-to-maturity securities at the effective date, cumulative unrealized gains and losses at that date are included in the cumulative-effect adjustment and those securities are to be reported as trading securities under SFAS No. 115, but the accounting for a transfer to the trading category under SFAS No. 115 does not apply. Electing the fair value option for an existing held-to-maturity security will not call into question the intent of an entity to hold other debt securities to maturity in the future.SFAS No. 159 also establishes presentation and disclosure requirements designed to facilitate comparisons between entities that choose different measurement attributes for similar types of assets and liabilities. SFAS No. 159 does not affect any existing accounting literature that requires certain assets and liabilities to be carried at fair value and does not eliminate disclosure requirements included in other accounting standards. SFAS No. 159 is effective as of the beginning of an entity’s first fiscal year that begins after November 15, 2007. Early adoption is permitted as of the beginning of a fiscal year that begins on or before November 15, 2007, provided the entity (1) also adopts all of the requirements of SFAS No. 157, “Fair Value Measurements,” (2) has not yet issued financial statements for any interim period of the fiscal year of adoption, and (3) chooses early adoption within 120 days of the beginning of the fiscal year of adoption. We did not early adopt SFAS No. 159 as of January 1, 2007 and, therefore, will adopt the standard as of January 1, 2008. We do not expect our adoption of SFAS No. 159 to have a material impact on our financial condition or results of operations.

In September 2006, the FASB issued SFAS No. 157 which defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. SFAS No. 157 applies only to fair value measurements already required or permitted by other accounting standards and does not impose requirements for additional fair value measures. SFAS No. 157 was issued to increase consistency and comparability in reporting fair values. SFAS No. 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. The provisions are to be

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applied prospectively as of the beginning of the fiscal year in which the statement is initially applied, with certain exceptions. A transition adjustment, measured as the difference between the carrying amounts and the fair values of certain specific financial instruments at the date SFAS No. 157 is initially applied, is to be recognized as a cumulative-effect adjustment to the opening balance of retained earnings for the fiscal year in which SFAS No. 157 is initially applied. We do not expect our adoption of SFAS No. 157 to have a material impact on our financial condition or results of operations.

ITEM 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

This Quarterly Report on Form 10-Q contains a number of forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. These statements may be identified by the use of the words “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 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 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;
• 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.

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Executive Summary

The following overview should be read in conjunction with our Management’s Discussion and Analysis of Financial Condition and Results of Operations, or MD&A, in its entirety.

Astoria Financial Corporation is a Delaware corporation organized as the unitary savings and loan association holding company of Astoria Federal. Our primary business is the operation of Astoria Federal. Astoria Federal's principal business is attracting retail deposits from the general public and investing those deposits, together with funds generated from borrowings, operations and principal repayments on loans and securities, primarily in one-to-four family mortgage loans, multi-family mortgage loans, commercial real estate loans and mortgage-backed securities. Our results of operations are dependent primarily on our net interest income, which is the difference between the interest earned on our assets, primarily our loan and securities portfolios, and the interest paid on our deposits and borrowings. Our earnings are also significantly affected by general economic and competitive conditions, particularly changes in market interest rates and U.S. Treasury yield curves, government policies and actions of regulatory authorities.

As the premier Long Island community bank, our goals are to enhance shareholder value while building a solid banking franchise. We focus on growing our core businesses of mortgage lending and retail banking while maintaining superior asset quality and controlling operating expenses. Additionally, we continue to provide returns to shareholders through dividends and stock repurchases. We have been successful in achieving these goals over the past several years and that trend has continued into 2007.

The past several months have been highlighted by significant disruption and volatility in the financial and capital marketplaces. This turbulence has been attributable to a variety of factors, including the fallout associated with the subprime mortgage market. One aspect of this fallout has been significant deterioration in the activity of the secondary residential mortgage market. The disruptions have been exacerbated by the acceleration of the softening of the real estate and housing market. We continue to closely monitor the local and national real estate markets and other factors related to risks inherent in our loan portfolio. Subprime mortgage lending, which has been the riskiest sector of the residential housing market, is not a market that we have ever actively pursued. Our loss experience in 2007 has been relatively consistent with our experience over the past several years and in recent years has been primarily attributable to a small number of loans. Additionally, we continue to adhere to prudent underwriting standards. However, based on our evaluation of the foregoing factors, and in recognition of the recent increases in non-performing loans and net loan charge-offs, our 2007 third quarter analyses indicated that a modest provision for loan losses was warranted for the period ended September 30, 2007.

Although these market conditions have generally had a negative impact on a majority of mortgage industry participants, they have also provided positive opportunities for prime portfolio lenders like us. The recent dislocations in the secondary residential mortgage market have led to fewer participants, and thus less competition in mortgage originations, stricter underwriting standards and wider pricing spreads. We expect these conditions will enable us to continue to grow our one-to-four family mortgage loan portfolio while enhancing our credit quality standards.

The turmoil in the mortgage market has impacted the global markets as well as the domestic markets and led to a significant credit and liquidity crisis during the third quarter. In response to the liquidity and credit crisis and potential impact on the overall economy, the Federal Open Market Committee, or FOMC, reduced the Discount Rate and Federal Funds Rate by 50 basis

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points during the 2007 third quarter. These decreases in short-term interest rates have resulted in a more positively sloped yield curve. If this pattern of yield curve steepening continues, it should result in greater opportunities for earning asset growth and the eventual expansion of our net interest margin. The flat-to-inverted yield curve which existed throughout 2006 and into the first half of 2007 limited profitable growth opportunities. We continue to pursue our strategy of emphasizing deposit and loan growth while reducing the securities portfolio through normal cash flow.

Our total loan portfolio increased during the nine months ended September 30, 2007. This increase is primarily due to an increase in one-to-four family mortgage loans as a result of strong loan originations and purchases in 2007, due to our competitive pricing and the previously discussed recent dislocations in the secondary residential mortgage market.

Total deposits increased during the nine months ended September 30, 2007. This increase was primarily attributable to the growth of our certificates of deposit and our Liquid certificates of deposit, or Liquid CDs, during the first half of 2007 resulting from the success of our marketing efforts and competitive pricing strategies which have focused on attracting and retaining these types of deposits. During the 2007 third quarter, as short-term market interest rates declined, retail deposit pricing remained at higher levels as certain financial institutions attempted to sustain their liquidity by offering deposit products with rates well above the market. We have chosen to maintain our deposit pricing discipline, and instead have taken advantage of lower cost borrowings for funding some of our loan growth in the third quarter.

Our securities portfolio decreased from December 31, 2006, which is consistent with our strategy of reducing this portfolio through normal cash flow, as we remain focused on originations of mortgage loans and growth in our loan portfolio. Our borrowings portfolio increased from December 31, 2006, primarily as a result of our use of lower cost borrowings to fund some of our loan growth during the 2007 third quarter.

Net income, the net interest margin and the net interest rate spread for the three and nine months ended September 30, 2007 decreased compared to the three and nine months ended September 30, 2006. The decreases in net income were primarily due to decreases in net interest income and increases in non-interest expense, partially offset by increases in non-interest income. The decreases in net interest income, as well as the decreases in the net interest margin and the net interest rate spread, were primarily the result of increases in interest expense. The interest rate environment, characterized by a flat-to-inverted yield curve during 2006 and in the first half of 2007, coupled with a very competitive environment for deposits and rising interest rates, resulted in significant increases in the costs of our certificates of deposits, Liquid CDs and borrowings. The increases in non-interest expense were primarily due to increases in compensation and benefits expense and other non-interest expense. The increase in non-interest income for the three months ended September 30, 2007 was primarily due to a net gain on sales of securities in the 2007 third quarter. The increase in non-interest income for the nine months ended September 30, 2007 was primarily due to an increase in other non-interest income, resulting from the $5.5 million charge for the termination of our interest rate swap agreements in March 2006, and the net gain on sales of securities, partially offset by decreases in customer service fees and mortgage banking income, net.

The recent decrease in short-term interest rates has produced a more positively sloped U.S. Treasury yield curve, and a more favorable operating environment for us going forward. We expect the yield curve to remain positively sloped for the remainder of 2007 and 2008, which should result in earning asset growth and an expansion of our net interest margin in 2008. Our focus going forward will be to continue to capitalize on the secondary residential mortgage

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market dislocations, which we believe will produce robust quality loan growth. Deposit growth will remain a focus; however, in the near term, if competitive pricing pressures continue, we may continue to fund some of our loan growth with lower cost borrowings and normal cash flow from the securities portfolio. We expect to continue to maintain tangible capital levels between 4.50% and 4.75% .

Available Information

Our internet website address is www.astoriafederal.com. Financial information, including our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports, can be obtained free of charge from our investor relations website at http://ir.astoriafederal.com. The above reports are available on our website immediately after they are electronically filed with or furnished to the SEC. Such reports are also available on the SEC’s website at www.sec.gov.

Critical Accounting Policies

Note 1 of Notes to Consolidated Financial Statements included in Item 8, “Financial Statements and Supplementary Data,” of our 2006 Annual Report on Form 10-K, as supplemented by our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2007 and June 30, 2007 and this report, contains a summary of our significant accounting policies. Various elements of our accounting policies, by their nature, are inherently subject to estimation techniques, valuation assumptions and other subjective assessments. Our policies with respect to the methodologies used to determine the allowance for loan losses, the valuation of MSR and judgments regarding goodwill and securities impairment are our most critical accounting policies because they are important to the presentation of our financial condition and results of operations, involve a higher degree of complexity and require management to make difficult and subjective judgments which often require assumptions or estimates about highly uncertain matters. The use of different judgments, assumptions and estimates could result in material differences in our results of operations or financial condition. These critical accounting policies are reviewed quarterly with the Audit Committee of our Board of Directors. The following description of these policies should be read in conjunction with the corresponding section of our 2006 Annual Report on Form 10-K.

Allowance for Loan Losses

Our allowance for loan losses is established and maintained through a provision for loan losses based on our evaluation of the probable inherent losses in our loan portfolio. We evaluate the adequacy of our allowance on a quarterly basis. The allowance is comprised of both specific valuation allowances and general valuation allowances.

Specific valuation allowances are established in connection with individual loan reviews and the asset classification process, including the procedures for impairment recognition under SFAS No. 114, "Accounting by Creditors for Impairment of a Loan, an amendment of FASB Statements No. 5 and 15," and SFAS No. 118, "Accounting by Creditors for Impairment of a Loan - Income Recognition and Disclosures, an amendment of FASB Statement No. 114." Such evaluation, which includes a review of loans on which full collectibility is not reasonably assured, considers the estimated fair value of the underlying collateral, if any, current and anticipated economic and regulatory conditions, current and historical loss experience of similar loans and other factors that determine risk exposure to arrive at an adequate loan loss allowance.

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Loan reviews are completed quarterly for all loans individually classified by the Asset Classification Committee. Individual loan reviews are generally completed annually for multi-family, commercial real estate and construction loans in excess of $2.5 million, commercial business loans in excess of $200,000, one-to-four family loans in excess of $1.0 million and debt restructurings. In addition, we generally review annually at least fifty percent of the outstanding balances of multi-family, commercial real estate and construction loans to single borrowers with concentrations in excess of $2.5 million.

The primary considerations in establishing specific valuation allowances are the current estimated value of a loan’s underlying collateral and the loan’s payment history. Updated estimates of value are obtained when loans are individually classified by our Asset Classification Committee as either substandard or doubtful, as well as special mention and watch list loans in excess of $2.5 million. For loans meeting these criteria, we update our estimate of the value of the property securing the loan through either an updated appraisal, a visual inspection of the property or a market analysis of comparable homes in the area. For multi-family and commercial real estate loans, we may also perform a cash flow analysis for the property based on current operating financial statements. Other current and anticipated economic conditions on which our specific valuation allowances rely are the impact that national and/or local economic and business conditions may have on borrowers, the impact that local real estate markets may have on collateral values, the level and direction of interest rates and their combined effect on real estate values and the ability of borrowers to service debt. For multi-family and commercial real estate loans, additional factors specific to a borrower or the underlying collateral are considered. These factors include, but are not limited to, the composition of tenancy, occupancy levels for the property, cash flow estimates and the existence of personal guarantees. We also review all regulatory notices, bulletins and memoranda with the purpose of identifying upcoming changes in regulatory conditions which may impact our calculation of specific valuation allowances. The Office of Thrift Supervision, or OTS, periodically reviews our reserve methodology during regulatory examinations and any comments regarding changes to reserves are considered by management in determining valuation allowances.

Pursuant to our policy, loan losses are charged-off in the period the loans, or portions thereof, are deemed uncollectible. The determination of the loans on which full collectibility is not reasonably assured, the estimates of the fair value of the underlying collateral and the assessment of economic and regulatory conditions are subject to assumptions and judgments by management. Specific valuation allowances could differ materially as a result of changes in these assumptions and judgments.

General valuation allowances represent loss allowances that have been established to recognize the inherent risks associated with our lending activities, but which, unlike specific allowances, have not been allocated to particular problem loans. The determination of the adequacy of the valuation allowance takes into consideration a variety of factors. We segment our loan portfolio into like categories by composition and size and perform analyses against each category. These include historical loss experience and delinquency levels and trends. We analyze our historical loan loss experience by category (loan type) over 3, 5, 10, 12 and 16-year periods. Losses within each loan category are stress tested by applying the highest level of charge-offs and the lowest amount of recoveries as a percentage of the average portfolio balance during those respective time horizons. The resulting range of allowance percentages is used as an integral part of our judgment in developing estimated loss percentages to apply to the portfolio. We also consider the size, composition, risk profile, delinquency levels and cure rates of our portfolio, as well as our credit administration and asset management philosophies and procedures. In determining our allowance coverage percentages for non-performing loans, we consider our historical loss experience with respect to the ultimate disposition of the underlying collateral. In addition, we

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evaluate and consider the impact that existing and projected economic and market conditions may have on the portfolio, as well as known and inherent risks in the portfolio. We also evaluate and consider the allowance ratios and coverage percentages set forth in both peer group and regulatory agency data and any comments from the OTS resulting from their review of our general valuation allowance methodology during regulatory examinations. Our focus, however, is primarily on our historical loss experience and the impact of current economic conditions. After evaluating these variables, we determine appropriate allowance coverage percentages for each of our portfolio segments and the appropriate level of our allowance for loan losses.

Our allowance coverage percentages are used to estimate the amount of probable losses inherent in our loan portfolio in determining our general valuation allowances. Our evaluation of general valuation allowances is inherently subjective because, even though it is based on objective data, it is management's interpretation of that data that determines the amount of the appropriate allowance. Therefore, we annually review the actual performance and charge-off history of our portfolio and compare that to our previously determined allowance coverage percentages and specific valuation allowances. In doing so, we evaluate the impact the previously mentioned variables may have had on the portfolio to determine which changes, if any, should be made to our assumptions and analyses.

Our loss experience in 2007 has been consistent with our experience over the past several years and in recent years has been primarily attributable to a small number of loans. Our 2007 analyses did not result in any change in our methodology for determining our general and specific valuation allowances or our emphasis on the factors that we consider in establishing such allowances. Accordingly, such analyses did not indicate that any material changes in our allowance coverage percentages were required. However, our recent increases in non-performing loans and net loan charge-offs for the 2007 third quarter resulted in a determination to record a provision for loan losses. The balance of our allowance for loan losses represents management’s estimate of the probable inherent losses in our loan portfolio at September 30, 2007 and December 31, 2006.

Actual results could differ from our estimates as a result of changes in economic or market conditions. Changes in estimates could result in a material change in the allowance for loan losses. While we believe that the allowance for loan losses has been established and maintained at levels that reflect the risks inherent in our loan portfolio, future adjustments may be necessary if portfolio performance or economic or market conditions differ substantially from the conditions that existed at the time of the initial determinations.

For additional information regarding our allowance for loan losses, see “Provision for Loan Losses” and “Asset Quality” in this document and Part II, Item 7, “MD&A,” in our 2006 Annual Report on Form 10-K.

Valuation of MSR

MSR are amortized in proportion to and over the period of estimated net servicing income. MSR are assessed for impairment based on fair value at each reporting date. MSR impairment, if any, is recognized in a valuation allowance through charges to earnings. Impairment exists if the carrying amount of MSR exceeds the estimated fair value. The estimated fair value of MSR is obtained through independent third party valuations.

As previously discussed, the fair value of MSR is highly sensitive to changes in assumptions. Assuming an increase in interest rates of 100 basis points at September 30, 2007, the estimated fair value of our MSR would have been $1.9 million greater. Assuming a decrease in interest

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rates of 100 basis points at September 30, 2007, the estimated fair value of our MSR would have been $3.8 million lower.

For additional information regarding the assumptions used to value our MSR as well as the impact of changes in those assumptions, see Note 3 of Notes to Consolidated Financial Statements in Item 1. “Financial Statements (Unaudited).”

Goodwill Impairment

Goodwill is presumed to have an indefinite useful life and is tested, at least annually, for impairment at the reporting unit level. Impairment exists when the carrying amount of goodwill exceeds its implied fair value. At September 30, 2007, the carrying amount of our goodwill totaled $185.2 million. When performing the impairment test, if the fair value of a reporting unit exceeds its carrying amount, goodwill of the reporting unit is not considered impaired.

On September 30, 2007 we performed our annual goodwill impairment test. We determined the fair value of our reporting unit to be in excess of its carrying amount by $1.35 billion, using the quoted market price of our common stock on our impairment testing date as the basis for determining the fair value. Accordingly, as of our annual impairment test date, there was no indication of goodwill impairment. We would test our goodwill for impairment between annual tests if an event occurs or circumstances change that would more likely than not reduce the fair value of our reporting unit below its carrying amount. The identification of additional reporting units or the use of other valuation techniques could result in materially different evaluations of impairment.

Securities Impairment

Our available-for-sale securities portfolio is carried at estimated fair value, with any unrealized gains and losses, net of taxes, reported as accumulated other comprehensive income/loss in stockholders’ equity. Debt securities which we have the positive intent and ability to hold to maturity are classified as held-to-maturity and are carried at amortized cost. The fair values for substantially all of our securities are obtained from an independent nationally recognized pricing service. We use third party brokers to obtain prices for a small portion of the portfolio that we are not able to price using our third party pricing service.

Our investment portfolio is comprised primarily of fixed rate mortgage-backed securities guaranteed by a government sponsored enterprise, or GSE, as issuer. GSE issuance mortgage-backed securities comprised 91% of our securities portfolio at September 30, 2007. Non-GSE issuance mortgage-backed securities at September 30, 2007 comprised 6% of our securities portfolio and had an amortized cost of $282.1 million, 15% of which are classified as available-for-sale and 85% of which are classified as held-to-maturity. Based on the disclosure documents for our non-GSE issuance securities, none were backed by pools consisting primarily of subprime mortgage loans. Our non-GSE issuance securities have either a AAA credit rating or an insurance wrap and they perform similarly to our GSE issuance securities. While the recent mortgage market conditions reflecting credit quality concerns might significantly impact lower grade securities, the impact on our non-GSE securities has not been significant. Based on the high quality of our investment portfolio, we do not believe that current market conditions will significantly impact the pricing of our portfolio or our ability to obtain reliable prices.

The fair value of our investment portfolio is primarily impacted by changes in interest rates. In general, as interest rates rise, the fair value of fixed rate securities will decrease; as interest rates fall, the fair value of fixed rate securities will increase. We conduct a periodic review and

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evaluation of the securities portfolio to determine if the decline in the fair value of any security below its cost basis is other-than-temporary. We generally view changes in fair value caused by changes in interest rates as temporary, which is consistent with our experience. If we deem such decline to be other-than-temporary, the security is written down to a new cost basis and the resulting loss is charged to earnings as a component of non-interest income. At September 30, 2007, we had 218 securities with an estimated fair value totaling $4.40 billion which had an unrealized loss totaling $138.3 million, substantially all of which have been in a continuous unrealized loss position for more than twelve months. Substantially all of these securities are guaranteed by a GSE as issuer. At September 30, 2007, the impairments are deemed temporary based on the direct relationship of the decline in fair value to movements in interest rates, the estimated remaining life and high credit quality of the investments and our ability and intent to hold these investments until there is a full recovery of the unrealized loss, which may be until maturity. There were no other-than-temporary impairment write-downs during the nine months ended September 30, 2007.

Liquidity and Capital Resources

Our primary source of funds is cash provided by principal and interest payments on loans and securities. The most significant liquidity challenge we face is the variability in cash flows as a result of changes in mortgage refinance activity. Principal payments on loans and securities totaled $3.11 billion for the nine months ended September 30, 2007 and $3.01 billion for the nine months ended September 30, 2006. The net increase in loan and securities repayments was primarily the result of an increase in loan repayments for the nine months ended September 30, 2007, compared to the nine months ended September 30, 2006, partially offset by a decrease in securities repayments.

In addition to cash provided by principal and interest payments on loans and securities, our other sources of funds include cash provided by operating activities, deposits and borrowings. Net cash provided by operating activities totaled $172.3 million for the nine months ended September 30, 2007 and $188.7 million for the nine months ended September 30, 2006. Deposits increased $42.0 million during the nine months ended September 30, 2007 and $366.6 million during the nine months ended September 30, 2006. The net increases in deposits for the nine months ended September 30, 2007 and 2006 are primarily attributable to increases in certificates of deposit and Liquid CDs during 2006 and the first half of 2007 as a result of the success of our marketing efforts and competitive pricing strategies which have focused on attracting these types of deposits. During the 2007 third quarter, as short-term market interest rates declined, retail deposit pricing remained at higher levels. We have maintained our deposit pricing discipline, which has resulted in net deposit outflows, and instead have taken advantage of lower cost borrowings for funding some of our loan growth in the third quarter.

Net borrowings increased $93.5 million during the nine months ended September 30, 2007 and decreased $1.12 billion during the nine months ended September 30, 2006. The increase in net borrowings during the nine months ended September 30, 2007 is a result of our use of lower cost borrowings to fund some of our loan growth in the 2007 third quarter. The decrease in net borrowings during the nine months ended September 30, 2006 reflects our strategy of reducing the securities and borrowings portfolios through normal cash flow in response to the flat-to-inverted U.S. Treasury yield curve during that time.

Our primary use of funds is for the origination and purchase of mortgage loans. Gross mortgage loans originated and purchased during the nine months ended September 30, 2007 totaled $3.35 billion, of which $3.03 billion were originations and $317.4 million were purchases. This compares to gross mortgage loans originated and purchased during the nine months ended

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September 30, 2006 totaling $2.36 billion, of which $2.10 billion were originations and $263.3 million were purchases. Total mortgage loans originated include originations of loans held-for-sale totaling $171.5 million during the nine months ended September 30, 2007 and $180.7 million during the nine months ended September 30, 2006. The increase in mortgage loan originations is the result of an increase in one-to-four family loan originations, primarily as a result of mortgage refinance opportunities, our competitive pricing and the recent dislocations in the secondary residential mortgage market, partially offset by a decrease in multi-family and commercial real estate loan originations. Although we remain focused on the origination of one-to-four family, multi-family and commercial real estate loans, we do not believe that current market pricing for multi-family and commercial real estate loans supports aggressively pursuing such loans given the additional risks associated with this type of lending and are currently only originating multi-family and commercial real estate loans in the New York metropolitan area which includes New York, New Jersey and Connecticut.

We maintain liquidity levels to meet our operational needs in the normal course of our business. The levels of our liquid assets during any given period are dependent on our operating, investing and financing activities. Cash and due from banks and repurchase agreements, our most liquid assets, totaled $157.5 million at September 30, 2007 and $205.7 million at December 31, 2006. At September 30, 2007, we have $2.63 billion in borrowings with a weighted average rate of 4.80% maturing over the next twelve months. We have the flexibility to either repay or rollover these borrowings as they mature. The previously discussed recent disruption in the credit markets has not impacted our ability to engage in ordinary course borrowings. In addition, we have $7.03 billion in certificates of deposit and Liquid CDs with a weighted average rate of 4.72% maturing over the next twelve months.

The following table details our borrowing, certificate of deposit and Liquid CD maturities and their weighted average rates at September 30, 2007.

						Certificates of Deposit
	Borrowings					and Liquid CDs
				Weighted				Weighted
				Average				Average
(Dollars in Millions)	Amount			Rate		Amount		Rate
Contractual Maturity:
Within six months	$	928	(1)	3.84	%	$	4,113	4.57	%
Seven to twelve months		1,700	(2)	5.32			2,914	4.94
Thirteen to thirty-six months		1,200		4.30			2,117	4.79
Thirty-seven to sixty months		775	(3)	4.59			373	4.98
Over five years		2,329	(4)	4.77			13	4.26
Total	$	6,932		4.68	%	$	9,530	4.75	%

(1)	Includes $378.0 million of overnight and other short-term borrowings with a weighted average rate of 4.84%.
(2)	Includes $1.58 billion of borrowings, with a weighted average rate of 5.34%, which are callable by the counterparty within the next six months.
(3)	Includes $100.0 million of borrowings, with a rate of 5.02%, which are callable by the counterparty within seven to twelve months and at various times thereafter and $675.0 million of borrowings with a weighted average rate of 4.53%, which are callable by the counterparty within the next thirteen to thirty-six months.
(4)	Includes $1.00 billion of borrowings, with a weighted average rate of 4.22%, which are callable by the counterparty within the next six months and at various times thereafter and $950.0 million of borrowings, with a weighted average rate of 4.42%, which are callable by the counterparty within thirteen to thirty-six months and at various times thereafter.

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Additional sources of liquidity at the holding company level have included issuances of securities into the capital markets, including private issuances of trust preferred securities and senior debt. Holding company debt obligations are included in other borrowings. Our ability to continue to access the capital markets for additional financing at favorable terms may be limited by, among other things, market demand, interest rates, our capital levels, Astoria Federal’s ability to pay dividends to Astoria Financial Corporation, our credit profile and ratings and our business model. We do not believe that the previously discussed recent disruption in the credit markets will materially impact our ability to access the capital markets.

Astoria Financial Corporation’s primary uses of funds include payment of dividends, payment of principal and interest on its debt obligations and repurchases of common stock. Astoria Financial Corporation paid principal and interest on its debt obligations totaling $36.3 million during the nine months ended September 30, 2007. Our payment of dividends and repurchases of our common stock totaled $138.5 million during the nine months ended September 30, 2007. Our ability to pay dividends, service our debt obligations and repurchase common stock is dependent primarily upon receipt of capital distributions from Astoria Federal. Since Astoria Federal is a federally chartered savings association, there are limits on its ability to make distributions to Astoria Financial Corporation. During the nine months ended September 30, 2007, Astoria Federal paid dividends to Astoria Financial Corporation totaling $126.0 million.

On September 4, 2007, we paid a quarterly cash dividend of $0.26 per share on shares of our common stock outstanding as of the close of business on August 15, 2007 totaling $23.5 million. On October 17, 2007, we declared a quarterly cash dividend of $0.26 per share on shares of our common stock payable on December 3, 2007 to stockholders of record as of the close of business on November 15, 2007.

During the quarter ended September 30, 2007, we completed our eleventh stock repurchase plan, which was approved by our Board of Directors on December 21, 2005 and authorized the purchase, at management’s discretion, of 10,000,000 shares, or approximately 10% of our common stock outstanding, through December 31, 2007 in open-market or privately negotiated transactions. On April 18, 2007, our Board of Directors approved our twelfth stock repurchase plan authorizing the purchase of 10,000,000 shares, or approximately 10% of our common stock outstanding, in open-market or privately negotiated transactions. Stock repurchases under our twelfth stock repurchase plan commenced immediately following the completion of our eleventh stock repurchase plan on July 30, 2007. Under these plans, during the nine months ended September 30, 2007, we repurchased 2,500,000 shares of our common stock, at an aggregate cost of $67.4 million, of which 632,700 shares were acquired pursuant to our twelfth stock repurchase plan. For further information on our common stock repurchases, see Part II, Item 2, “Unregistered Sales of Equity Securities and Use of Proceeds.”

See “Financial Condition” for a further discussion of the changes in stockholders’ equity.

At September 30, 2007, Astoria Federal’s capital levels exceeded all of its regulatory capital requirements with a tangible capital ratio of 6.60%, leverage capital ratio of 6.60% and total risk-based capital ratio of 12.08% .. The minimum regulatory requirements are a tangible capital ratio of 1.50%, leverage capital ratio of 4.00% and total risk-based capital ratio of 8.00% . As of September 30, 2007, Astoria Federal continues to be a “well capitalized” institution.

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Off-Balance Sheet Arrangements and Contractual Obligations

We are a party to financial instruments with off-balance sheet risk in the normal course of our business in order to meet the financing needs of our customers and in connection with our overall interest rate risk management strategy. These instruments involve, to varying degrees, elements of credit, interest rate and liquidity risk. In accordance with GAAP, these instruments are either not recorded in the consolidated financial statements or are recorded in amounts that differ from the notional amounts. Such instruments primarily include lending commitments and lease commitments.

Lending commitments include commitments to originate and purchase loans and commitments to fund unused lines of credit. Additionally, in connection with our mortgage banking activities, we have commitments to fund loans held-for-sale and commitments to sell loans which are considered derivative instruments. Commitments to sell loans totaled $28.2 million at September 30, 2007. The fair values of our mortgage banking derivative instruments are immaterial to our financial condition and results of operations. We also have contractual obligations related to operating lease commitments which have not changed significantly from December 31, 2006.

The following table details our contractual obligations at September 30, 2007.

	Payments due by period
		Less than	One to	Three to	More than
(In Thousands)	Total	One Year	Three Years	Five Years	Five Years
Contractual Obligations:
Borrowings with original terms greater than three months	$6,553,866	$2,250,000	$1,200,000	$775,000	$2,328,866
Commitments to originate and purchase loans (1)	564,723	564,723	-	-	-
Commitments to fund unused lines of credit (2)	402,579	402,579	-	-	-
Total	$7,521,168	$3,217,302	$1,200,000	$775,000	$2,328,866

(1)	Commitments to originate and purchase loans include commitments to originate loans held-for-sale of $26.7 million.
(2)	Unused lines of credit relate primarily to home equity lines of credit.

In addition to the contractual obligations previously discussed, we have contingent liabilities related to assets sold with recourse and standby letters of credit. Contingent liabilities related to assets sold with recourse and standby letters of credit as of September 30, 2007 have not changed significantly from December 31, 2006.

For further information regarding our off-balance sheet arrangements and contractual obligations, see Part II, Item 7, “MD&A,” in our 2006 Annual Report on Form 10-K.

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Loan Portfolio

The following table sets forth the composition of our loans receivable portfolio in dollar amounts and in percentages of the portfolio at the dates indicated.

	At September 30, 2007				At December 31, 2006
			Percent				Percent
(Dollars in Thousands)	Amount		of Total		Amount		of Total
Mortgage loans (gross):
One-to-four family	$11,349,658		71.65	%	$10,214,146		68.67	%
Multi-family	2,989,024		18.87		2,987,531		20.09
Commercial real estate	1,044,288		6.59		1,100,218		7.40
Construction	89,397		0.56		140,182		0.94
Total mortgage loans	15,472,367		97.67		14,442,077		97.10
Consumer and other loans (gross):
Home equity	331,724		2.09		392,141		2.64
Commercial	21,965		0.14		22,262		0.15
Other	16,031		0.10		16,387		0.11
Total consumer and other loans	369,720		2.33		430,790		2.90
Total loans (gross)	15,842,087		100.00	%	14,872,867		100.00	%
Net unamortized premiums and
deferred loan costs	111,192				98,824
Total loans	15,953,279				14,971,691
Allowance for loan losses	(78,254	)			(79,942	)
Total loans, net	$15,875,025				$14,891,749

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Securities Portfolio

The following table sets forth the amortized cost and estimated fair value of securities available-for-sale and held-to-maturity at the dates indicated.

	At September 30, 2007				At December 31, 2006
			Estimated				Estimated
	Amortized		Fair		Amortized		Fair
(In Thousands)	Cost		Value		Cost		Value
Securities available-for-sale:
Mortgage-backed securities:
REMICs and CMOs (1):
GSE issuance	$	1,223,679	$	1,162,756	$	1,386,136	$	1,315,254
Non-GSE issuance		43,021		40,542		51,111		47,905
GSE pass-through certificates		54,351		55,195		64,995		65,956
Total mortgage-backed securities		1,321,051		1,258,493		1,502,242		1,429,115
FHLMC and FNMA preferred stock		103,495		99,319		123,495		130,217
Other securities		550		550		1,001		993
Total securities available-for-sale	$	1,425,096	$	1,358,362	$	1,626,738	$	1,560,325
Securities held-to-maturity:
Mortgage-backed securities:
REMICs and CMOs:
GSE issuance	$	2,952,112	$	2,890,101	$	3,474,662	$	3,386,413
Non-GSE issuance		239,128		231,586		283,017		273,394
GSE pass-through certificates		2,309		2,378		3,484		3,570
Total mortgage-backed securities		3,193,549		3,124,065		3,761,163		3,663,377
Obligations of states and political sub-
divisions and corporate debt securities		16,668		16,660		18,193		18,137
Total securities held-to-maturity	$	3,210,217	$	3,140,725	$	3,779,356	$	3,681,514

(1)Real estate mortgage investment conduits and collateralized mortgage obligations

Comparison of Financial Condition as of September 30, 2007 and December 31, 2006 and Operating Results for the Three and Nine Months Ended September 30, 2007 and 2006

Financial Condition

Total assets increased $191.6 million to $21.75 billion at September 30, 2007, from $21.55 billion at December 31, 2006. The increase in total assets primarily reflects an increase in loans receivable, partially offset by a decrease in securities.

Our total loan portfolio increased $981.6 million to $15.95 billion at September 30, 2007, from $14.97 billion at December 31, 2006. This increase was primarily the result of an increase in our mortgage loan portfolio. Mortgage loans, net, increased $1.05 billion to $15.58 billion at September 30, 2007, from $14.53 billion at December 31, 2006. This increase was primarily due to an increase in our one-to-four family mortgage loan portfolio. Gross mortgage loans originated and purchased during the nine months ended September 30, 2007 totaled $3.35 billion, of which $3.03 billion were originations and $317.4 million were purchases. This compares to gross mortgage loans originated and purchased during the nine months ended September 30, 2006 totaling $2.36 billion, of which $2.10 billion were originations and $263.3 million were purchases. Total mortgage loans originated include originations of loans held-for-sale totaling $171.5 million during the nine months ended September 30, 2007 and $180.7 million during the nine months ended September 30, 2006. As previously discussed, the increase

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in mortgage loan originations is the result of an increase in one-to-four family loan originations, partially offset by a decrease in multi-family and commercial real estate loan originations. Mortgage loan repayments increased to $2.15 billion for the nine months ended September 30, 2007, from $1.81 billion for the nine months ended September 30, 2006.

Our mortgage loan portfolio, as well as our originations and purchases, continue to consist primarily of one-to-four family mortgage loans. Our one-to-four family mortgage loans increased $1.14 billion to $11.35 billion at September 30, 2007, from $10.21 billion at December 31, 2006, and represented 71.7% of our total loan portfolio at September 30, 2007. One-to-four family loan originations and purchases totaled $3.00 billion for the nine months ended September 30, 2007 and $1.78 billion for the nine months ended September 30, 2006. The increase in one-to-four family loan originations is primarily attributable to mortgage refinance opportunities, our competitive pricing and the recent dislocations in the secondary residential mortgage market, as previously discussed.

Our multi-family mortgage loan portfolio totaled $2.99 billion at September 30, 2007 and at December 31, 2006. Our commercial real estate loan portfolio decreased $55.9 million to $1.04 billion at September 30, 2007, from $1.10 billion at December 31, 2006. Multi-family and commercial real estate loan originations totaled $344.4 million for the nine months ended September 30, 2007 and $559.4 million for the nine months ended September 30, 2006. As previously discussed, we do not believe that current market pricing for multi-family and commercial real estate loans supports aggressively pursuing such loans given the additional risks associated with this type of lending. At September 30, 2007, the average loan balance within our combined multi-family and commercial real estate loan portfolio continues to be less than $1.0 million and the average loan-to-value ratio, based on current principal balance and original appraised value, continues to be less than 65%.

Our construction loan portfolio decreased $50.8 million to $89.4 million at September 30, 2007, from $140.2 million at December 31, 2006. This decrease is primarily the result of our decision to not aggressively pursue these types of loans in the current real estate market. Our consumer and other loan portfolio decreased $61.1 million to $369.7 million at September 30, 2007, from $430.8 million at December 31, 2006. This decrease is primarily the result of a decline in consumer demand for home equity lines of credit resulting from increases in the prime rate during the first half of 2006.

Securities decreased $771.1 million to $4.57 billion at September 30, 2007, from $5.34 billion at December 31, 2006. This decrease, which reflects our previously discussed strategy of reducing the securities portfolio, was primarily the result of principal payments received. At September 30, 2007, our securities portfolio is comprised primarily of fixed rate REMIC and CMO securities. The amortized cost of our fixed rate REMICs and CMOs totaled $4.45 billion at September 30, 2007, and had a weighted average coupon of 4.27%, a weighted average collateral coupon of 5.73% and a weighted average life of 3.4 years.

Deposits increased $42.0 million to $13.27 billion at September 30, 2007, from $13.22 billion at December 31, 2006, primarily due to increases in certificates of deposit and Liquid CDs, substantially offset by decreases in savings, money market and NOW and demand deposit accounts.

Certificates of deposit increased $351.6 million to $8.07 billion at September 30, 2007, from $7.71 billion at December 31, 2006. Liquid CDs increased $16.4 million to $1.46 billion at September 30, 2007, from $1.45 billion at December 31, 2006. Our certificates of deposit and Liquid CDs increased primarily as a result of the continued success of our marketing efforts and

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competitive pricing strategies during the first half of 2007. We continue to experience intense competition for deposits. During the 2007 third quarter, as short-term market interest rates declined, retail deposit pricing remained at higher levels. In response, we have taken advantage of lower cost borrowings for funding some of our loan growth in the third quarter, which has resulted in net deposit outflows. Savings accounts decreased $189.1 million since December 31, 2006 to $1.94 billion at September 30, 2007. Money market accounts decreased $82.8 million since December 31, 2006 to $352.9 million at September 30, 2007. NOW and demand deposit accounts decreased $54.1 million since December 31, 2006 to $1.44 billion at September 30, 2007. The decreases in savings, money market and NOW and demand deposits accounts for the nine months ended September 30, 2007 were significantly lower than the decreases we had experienced during the nine months ended September 30, 2006.

Total borrowings, net, increased $93.5 million to $6.93 billion at September 30, 2007, from $6.84 billion at December 31, 2006, primarily due to an increase in Federal Home Loan Bank of New York, or FHLB-NY, advances, partially offset by a decrease in reverse repurchase agreements. The net increase in total borrowings is a result of our use of lower cost borrowings to fund some of our loan growth in the 2007 third quarter. For additional information, see “Liquidity and Capital Resources.”

Stockholders' equity decreased $10.1 million to $1.21 billion at September 30, 2007, from $1.22 billion at December 31, 2006. The decrease in stockholders’ equity was the result of dividends declared of $71.1 million and common stock repurchased of $67.4 million. These decreases were partially offset by net income of $105.1 million, stock-based compensation and the allocation of shares held by the employee stock ownership plan, or ESOP, of $11.9 million and the effect of stock options exercised and related tax benefit of $11.0 million.

Results of Operations

General

Net income for the three months ended September 30, 2007 decreased $5.8 million to $35.3 million, from $41.1 million for the three months ended September 30, 2006. Diluted earnings per common share decreased to $0.39 per share for the three months ended September 30, 2007, from $0.43 per share for the three months ended September 30, 2006. Return on average assets decreased to 0.66% for the three months ended September 30, 2007, from 0.76% for the three months ended September 30, 2006. Return on average stockholders’ equity decreased to 11.82% for the three months ended September 30, 2007, from 13.06% for the three months ended September 30, 2006. Return on average tangible stockholders’ equity, which represents average stockholders’ equity less average goodwill, decreased to 13.99% for the three months ended September 30, 2007, from 15.31% for the three months ended September 30, 2006.

Net income for the nine months ended September 30, 2007 decreased $32.7 million to $105.1 million, from $137.8 million for the nine months ended September 30, 2006. Diluted earnings per common share decreased to $1.14 per share for the nine months ended September 30, 2007, from $1.40 per share for the nine months ended September 30, 2006. Return on average assets decreased to 0.65% for the nine months ended September 30, 2007, from 0.84% for the nine months ended September 30, 2006. Return on average stockholders’ equity decreased to 11.67% for the nine months ended September 30, 2007, from 14.27% for the nine months ended September 30, 2006. Return on average tangible stockholders’ equity decreased to 13.79% for the nine months ended September 30, 2007, from 16.67% for the nine months ended September 30, 2006. The decreases in the returns on average assets, average stockholders’ equity and average tangible stockholders’ equity for the three and nine months ended September 30, 2007,

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compared to the three and nine months ended September 30, 2006, were primarily due to the decreases in net income.

Net Interest Income

Net interest income represents the difference between income on interest-earning assets and expense on interest-bearing liabilities. Net interest income depends primarily upon the volume of interest-earning assets and interest-bearing liabilities and the corresponding interest rates earned or paid. Our net interest income is significantly impacted by changes in interest rates and market yield curves and their related impact on cash flows. See Item 3, “Quantitative and Qualitative Disclosures About Market Risk,” for further discussion of the potential impact of changes in interest rates on our results of operations.

For the three months ended September 30, 2007, net interest income decreased $9.5 million to $81.2 million, from $90.7 million for the three months ended September 30, 2006. For the nine months ended September 30, 2007, net interest income decreased $51.9 million to $251.6 million, from $303.5 million for the nine months ended September 30, 2006. The decreases in net interest income for the three and nine months ended September 30, 2007 were primarily the result of increases in interest expense due to the upward repricing of our liabilities which are more sensitive to increases in interest rates than our assets, partially offset by increases in interest income. While the U.S. Treasury yield curve remained flat-to-inverted during 2006 and the first half of 2007, it did so at progressively higher levels of interest rates. These higher interest rates, coupled with a very competitive environment for deposits, resulted in significant increases in the costs of our certificates of deposit, Liquid CDs and borrowings.

The net interest margin decreased to 1.58% for the three months ended September 30, 2007, from 1.75% for the three months ended September 30, 2006, and decreased to 1.63% for the nine months ended September 30, 2007, from 1.93% for the nine months ended September 30, 2006. The net interest rate spread decreased to 1.46% for the three months ended September 30, 2007 from 1.64% for the three months ended September 30, 2006, and decreased to 1.52% for the nine months ended September 30, 2007, from 1.83% for the nine months ended September 30, 2006. The decreases in the net interest margin and the net interest rate spread were primarily due to the cost of our interest-bearing liabilities rising more rapidly than the yield on our interest-earning assets. Our borrowings, Liquid CDs and certificates of deposit reprice more frequently, reflecting increases in interest rates more rapidly, than our mortgage loans and securities which have longer repricing intervals and terms. In addition, the average balances of our Liquid CDs and certificates of deposit, which have a higher average cost than our other deposit products, have increased significantly. The average balance of net interest-earning assets decreased $34.1 million to $605.2 million for the three months ended September 30, 2007, from $639.3 million for the three months ended September 30, 2006, and $50.2 million to $608.9 million for the nine months ended September 30, 2007, from $659.1 million for the nine months ended September 30, 2006.

The changes in average interest-earning assets and interest-bearing liabilities and their related yields and costs are discussed in greater detail under “Interest Income” and “Interest Expense.”

Analysis of Net Interest Income

The following tables set forth certain information about the average balances of our assets and liabilities and their related yields and costs for the three and nine months ended September 30, 2007 and 2006. Average yields are derived by dividing income by the average balance of the related assets and average costs are derived by dividing expense by the average balance of the

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related liabilities, for the periods shown. Average balances are derived from average daily balances. The yields and costs include amortization of fees, costs, premiums and discounts which are considered adjustments to interest rates.

	For the Three Months Ended September 30,
				2007							2006
						Average							Average
	Average					Yield/		Average					Yield/
(Dollars in Thousands)	Balance			Interest		Cost		Balance			Interest		Cost
						(Annualized)							(Annualized)
Assets:
Interest-earning assets:
Mortgage loans (1):
One-to-four family	$	11,171,094		$	150,645	5.39	%	$	9,952,037		$	127,735	5.13	%
Multi-family, commercial
real estate and construction		4,154,097			63,052	6.07			4,268,318			65,933	6.18
Consumer and other loans (1)		384,019			7,472	7.78			468,436			9,099	7.77
Total loans		15,709,210			221,169	5.63			14,688,791			202,767	5.52
Mortgage-backed and
other securities (2)		4,711,162			53,227	4.52			5,774,554			64,946	4.50
Repurchase agreements		25,631			337	5.26			95,969			1,266	5.28
FHLB-NY stock		166,938			2,899	6.95			142,998			2,049	5.73
Total interest-earning assets		20,612,941			277,632	5.39			20,702,312			271,028	5.24
Goodwill		185,151							185,151
Other non-interest-earning assets		749,522							778,978
Total assets	$	21,547,614						$	21,666,441
Liabilities and stockholders' equity:
Interest-bearing liabilities:
Savings	$	1,983,161			2,016	0.41		$	2,277,608			2,309	0.41
Money market		365,919			926	1.01			506,959			1,281	1.01
NOW and demand deposit		1,453,669			214	0.06			1,482,642			218	0.06
Liquid CDs		1,570,599			18,501	4.71			1,243,914			15,184	4.88
Total core deposits		5,373,348			21,657	1.61			5,511,123			18,992	1.38
Certificates of deposit		7,946,982			95,293	4.80			7,505,903			83,111	4.43
Total deposits		13,320,330			116,950	3.51			13,017,026			102,103	3.14
Borrowings		6,687,400			79,505	4.76			7,045,962			78,258	4.44
Total interest-bearing liabilities		20,007,730			196,455	3.93			20,062,988			180,361	3.60
Non-interest-bearing liabilities		345,377							344,467
Total liabilities		20,353,107							20,407,455
Stockholders' equity		1,194,507							1,258,986
Total liabilities and stockholders'
equity	$	21,547,614						$	21,666,441
Net interest income/net interest
rate spread (3)				$	81,177	1.46	%				$	90,667	1.64	%
Net interest-earning assets/net
interest margin (4)	$	605,211				1.58	%	$	639,324				1.75	%
Ratio of interest-earning assets
to interest-bearing liabilities		1.03	x						1.03	x

(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.

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	For the Nine Months Ended September 30,
				2007							2006
						Average							Average
	Average					Yield/		Average					Yield/
(Dollars in Thousands)	Balance			Interest		Cost		Balance			Interest		Cost
						(Annualized)							(Annualized)
Assets:
Interest-earning assets:
Mortgage loans (1):
One-to-four family	$	10,771,698		$	428,729	5.31	%	$	9,921,036		$	378,226	5.08	%
Multi-family, commercial
real estate and construction		4,194,081			192,160	6.11			4,192,095			192,178	6.11
Consumer and other loans (1)		406,967			23,478	7.69			488,223			26,918	7.35
Total loans		15,372,746			644,367	5.59			14,601,354			597,322	5.45
Mortgage-backed and
other securities (2)		4,966,923			168,127	4.51			6,098,527			205,373	4.49
Federal funds sold and
repurchase agreements		45,772			1,812	5.28			145,121			5,205	4.78
FHLB-NY stock		156,955			8,246	7.00			141,577			5,535	5.21
Total interest-earning assets		20,542,396			822,552	5.34			20,986,579			813,435	5.17
Goodwill		185,151							185,151
Other non-interest-earning assets		756,862							788,337
Total assets	$	21,484,409						$	21,960,067
Liabilities and stockholders' equity:
Interest-bearing liabilities:
Savings	$	2,047,732			6,177	0.40		$	2,380,057			7,164	0.40
Money market		392,785			2,933	1.00			563,485			4,135	0.98
NOW and demand deposit		1,471,293			639	0.06			1,512,951			662	0.06
Liquid CDs		1,585,104			57,278	4.82			981,897			32,636	4.43
Total core deposits		5,496,914			67,027	1.63			5,438,390			44,597	1.09
Certificates of deposit		7,791,434			274,377	4.70			7,513,758			230,760	4.09
Total deposits		13,288,348			341,404	3.43			12,952,148			275,357	2.83
Borrowings		6,645,192			229,553	4.61			7,375,315			234,549	4.24
Total interest-bearing liabilities		19,933,540			570,957	3.82			20,327,463			509,906	3.34
Non-interest-bearing liabilities		349,186							345,408
Total liabilities		20,282,726							20,672,871
Stockholders' equity		1,201,683							1,287,196
Total liabilities and stockholders'
equity	$	21,484,409						$	21,960,067
Net interest income/net interest
rate spread (3)				$	251,595	1.52	%				$	303,529	1.83	%
Net interest-earning assets/net
interest margin (4)	$	608,856				1.63	%	$	659,116				1.93	%
Ratio of interest-earning assets
to interest-bearing liabilities		1.03	x						1.03	x

(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.

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Rate/Volume Analysis

The following table presents the extent to which changes in interest rates and changes in the volume of interest-earning assets and interest-bearing liabilities have affected our interest income and interest expense during the periods indicated. Information is provided in each category with respect to (1) the changes attributable to changes in volume (changes in volume multiplied by prior rate), (2) the changes attributable to changes in rate (changes in rate multiplied by prior volume), and (3) the net change. The changes attributable to the combined impact of volume and rate have been allocated proportionately to the changes due to volume and the changes due to rate.

	Three Months Ended September 30, 2007									Nine Months Ended September 30, 2007
	Compared to									Compared to
	Three Months Ended September 30, 2006									Nine Months Ended September 30, 2006
	Increase (Decrease)									Increase (Decrease)
(In Thousands)	Volume			Rate			Net			Volume			Rate			Net
Interest-earning assets:
Mortgage loans:
One-to-four family	$	16,205		$	6,705		$	22,910		$	33,051		$	17,452		$	50,503
Multi-family, commercial
real estate and construction		(1,730	)		(1,151	)		(2,881	)		(18	)		-			(18	)
Consumer and other loans		(1,639	)		12			(1,627	)		(4,640	)		1,200			(3,440	)
Mortgage-backed and other securities		(12,007	)		288			(11,719	)		(38,160	)		914			(37,246	)
Federal funds sold and
repurchase agreements		(924	)		(5	)		(929	)		(3,887	)		494			(3,393	)
FHLB-NY stock		374			476			850			651			2,060			2,711
Total		279			6,325			6,604			(13,003	)		22,120			9,117
Interest-bearing liabilities:
Savings		(293	)		-			(293	)		(987	)		-			(987	)
Money market		(355	)		-			(355	)		(1,285	)		83			(1,202	)
NOW and demand deposit		(4	)		-			(4	)		(23	)		-			(23	)
Liquid CDs		3,862			(545	)		3,317			21,553			3,089			24,642
Certificates of deposit		5,031			7,151			12,182			8,662			34,955			43,617
Borrowings		(4,150	)		5,397			1,247			(24,411	)		19,415			(4,996	)
Total		4,091			12,003			16,094			3,509			57,542			61,051
Net change in net interest income	$	(3,812	)	$	(5,678	)	$	(9,490	)	$	(16,512	)	$	(35,422	)	$	(51,934	)

Interest Income

Interest income for the three months ended September 30, 2007 increased $6.6 million to $277.6 million, from $271.0 million for the three months ended September 30, 2006. This increase was primarily the result of an increase in the average yield on interest-earning assets to 5.39% for the three months ended September 30, 2007, from 5.24% for the three months ended September 30, 2006. The average balance of interest-earning assets decreased $89.4 million to $20.61 billion for the three months ended September 30, 2007, from $20.70 billion for the three months ended September 30, 2006. The increase in the average yield on interest-earning assets was primarily the result of the overall increase in interest rates over the past several years. The decrease in the average balance of interest-earning assets was due to decreases in the average balances of mortgage-backed and other securities and repurchase agreements, partially offset by increases in the average balances of loans and FHLB-NY stock.

Interest income on one-to-four family mortgage loans increased $22.9 million to $150.6 million for the three months ended September 30, 2007, from $127.7 million for the three months ended September 30, 2006, which was primarily the result of an increase of $1.22 billion in the average

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balance of such loans, coupled with an increase in the average yield to 5.39% for the three months ended September 30, 2007, from 5.13% for the three months ended September 30, 2006. The increase in the average balance of one-to-four family mortgage loans is the result of strong levels of originations and purchases which have outpaced the levels of repayments over the past year. The increase in the average yield on one-to-four family mortgage loans is primarily due to the impact of the upward repricing of our adjustable rate mortgage loans, coupled with new loan originations at higher interest rates than the rates on the loans being repaid.

Interest income on multi-family, commercial real estate and construction loans decreased $2.8 million to $63.1 million for the three months ended September 30, 2007, from $65.9 million for the three months ended September 30, 2006, which was the result of a decrease of $114.2 million in the average balance of such loans, coupled with a decrease in the average yield to 6.07% for the three months ended September 30, 2007, from 6.18% for the three months ended September 30, 2006. Prepayment penalties totaled $1.7 million for the three months ended September 30, 2007 and $2.1 million for the three months ended September 30, 2006. The decrease in the average balance of multi-family, commercial real estate and construction loans reflects the levels of repayments which outpaced the levels of originations. Our originations of, and yields on, these loans have declined in recent periods due primarily to the competitive market pricing previously discussed.

Interest income on consumer and other loans decreased $1.6 million to $7.5 million for the three months ended September 30, 2007, from $9.1 million for the three months ended September 30, 2006, primarily due to a decrease of $84.4 million in the average balance of the portfolio. The average yield was 7.78% for the three months ended September 30, 2007 and 7.77% for the three months ended September 30, 2006. The decrease in the average balance of consumer and other loans was primarily the result of a decline in consumer demand for home equity lines of credit resulting from increases in the prime rate during the first half of 2006. Home equity lines of credit represented 89.7% of this portfolio at September 30, 2007.

Interest income on mortgage-backed and other securities decreased $11.7 million to $53.2 million for the three months ended September 30, 2007, from $64.9 million for the three months ended September 30, 2006. This decrease was primarily the result of a decrease of $1.06 billion in the average balance of the portfolio. The average yield was 4.52% for the three months ended September 30, 2007 and 4.50% for the three months ended September 30, 2006. The decrease in the average balance of mortgage-backed and other securities reflects our previously discussed strategy of reducing the securities portfolio.

Interest income on repurchase agreements decreased $929,000 to $337,000 for the three months ended September 30, 2007, primarily due to a decrease of $70.3 million in the average balance of the portfolio. The average yield was 5.26% for the three months ended September 30, 2007 and 5.28% for the three months ended September 30, 2006. Dividend income on FHLB-NY stock increased $850,000 to $2.9 million for the three months ended September 30 2007, primarily due to an increase in the average yield to 6.95% for the three months ended September 30, 2007, from 5.73% for the three months ended September 30, 2006, as a result of increases in the dividend rates paid by the FHLB-NY, coupled with an increase of $23.9 million in the average balance of FHLB-NY stock.

Interest income for the nine months ended September 30, 2007 increased $9.2 million to $822.6 million, from $813.4 million for the nine months ended September 30, 2006. This increase was primarily the result of an increase in the average yield on interest-earning assets to 5.34% for the nine months ended September 30, 2007, from 5.17% for the nine months ended September 30, 2006, partially offset by a decrease of $444.2 million in the average balance of interest-earning

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assets to $20.54 billion for the nine months ended September 30, 2007, from $20.99 billion for the nine months ended September 30, 2006.

Interest income on one-to-four family mortgage loans increased $50.5 million to $428.7 million for the nine months ended September 30, 2007, from $378.2 million for the nine months ended September 30, 2006, which was primarily the result of an increase of $850.7 million in the average balance of such loans, coupled with an increase in the average yield to 5.31% for the nine months ended September 30, 2007, from 5.08% for the nine months ended September 30, 2006.

Interest income on multi-family, commercial real estate and construction loans was $192.2 million for both the nine months ended September 30, 2007 and 2006. The average balance of such loans totaled $4.19 billion and the average yield was 6.11% for each of the nine month periods ended September 30, 2007 and 2006. Prepayment penalties totaled $5.1 million for the nine months ended September 30, 2007 and $5.8 million for the nine months ended September 30, 2006.

Interest income on consumer and other loans decreased $3.4 million to $23.5 million for the nine months ended September 30, 2007, from $26.9 million for the nine months ended September 30, 2006, primarily due to a decrease of $81.3 million in the average balance of the portfolio, partially offset by an increase in the average yield to 7.69% for the nine months ended September 30, 2007, from 7.35% for the nine months ended September 30, 2006. The increase in the average yield on consumer and other loans was primarily the result of an increase in the average yield on our home equity lines of credit due to the increase in the prime rate during the first half of 2006.

Interest income on mortgage-backed and other securities decreased $37.3 million to $168.1 million for the nine months ended September 30, 2007, from $205.4 million for the nine months ended September 30, 2006. This decrease was primarily the result of a decrease of $1.13 billion in the average balance of the portfolio. The average yield was 4.51% for the nine months ended September 30, 2007 and 4.49% for the nine months ended September 30, 2006.

Interest income on federal funds sold and repurchase agreements decreased $3.4 million to $1.8 million for the nine months ended September 30, 2007, primarily due to a decrease of $99.3 million in the average balance of the portfolio, partially offset by an increase in the average yield to 5.28% for the nine months ended September 30, 2007, from 4.78% for the nine months ended September 30, 2006. The increase in the average yield reflects the federal funds rate increases during the first half of 2006. Dividend income on FHLB-NY stock increased $2.7 million to $8.2 million for the nine months ended September 30, 2007, primarily due to an increase in the average yield to 7.00% for the nine months ended September 30, 2007, from 5.21% for the nine months ended September 30, 2006, coupled with an increase of $15.4 million in the average balance of FHLB-NY stock.

Except as otherwise noted, the principal reasons for the changes in the average yields and average balances of the various assets noted above for the nine months ended September 30, 2007 are consistent with the principal reasons for the changes noted for the three months ended September 30, 2007.

Interest Expense

Interest expense for the three months ended September 30, 2007 increased $16.1 million to $196.5 million, from $180.4 million for the three months ended September 30, 2006. This

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increase was primarily the result of an increase in the average cost of interest-bearing liabilities to 3.93% for the three months ended September 30, 2007, from 3.60% for the three months ended September 30, 2006. The increase in the average cost of interest-bearing liabilities was primarily due to the impact of the increase in interest rates on our certificates of deposit and borrowings, coupled with the increases in the average balances of certificates of deposit and Liquid CDs, which have a higher average cost than our other deposit products. The average balance of interest-bearing liabilities decreased $55.3 million to $20.01 billion for the three months ended September 30, 2007, from $20.06 billion for the three months ended September 30, 2006, due to a decrease in the average balance of borrowings, substantially offset by an increase in the average balance of deposits.

Interest expense on deposits increased $14.9 million to $117.0 million for the three months ended September 30, 2007, from $102.1 million for the three months ended September 30, 2006, primarily due to an increase of $303.3 million in the average balance of total deposits, coupled with an increase in the average cost of total deposits to 3.51% for the three months ended September 30, 2007, from 3.14% for the three months ended September 30, 2006. The increase in the average balance of total deposits was primarily the result of increases in the average balances of certificates of deposit and Liquid CDs, partially offset by decreases in the average balances of savings, money market and NOW and demand deposit accounts primarily as a result of continued competition for these types of deposits. The increase in the average cost of total deposits was primarily due to the impact of higher interest rates on our certificates of deposit, coupled with the increases in the average balances of certificates of deposit and Liquid CDs.

Interest expense on certificates of deposit increased $12.2 million to $95.3 million for the three months ended September 30, 2007, from $83.1 million for the three months ended September 30, 2006, primarily due to an increase in the average cost to 4.80% for the three months ended September 30, 2007, from 4.43% for the three months ended September 30, 2006, coupled with an increase of $441.1 million in the average balance. During the three months ended September 30, 2007, $2.15 billion of certificates of deposit, with a weighted average rate of 4.85% and a weighted average maturity at inception of fifteen months, matured and $2.23 billion of certificates of deposit were issued or repriced, with a weighted average rate of 4.97% and a weighted average maturity at inception of eleven months. Interest expense on Liquid CDs increased $3.3 million to $18.5 million for the three months ended September 30, 2007, from $15.2 million for the three months ended September 30, 2006, primarily due to an increase of $326.7 million in the average balance, partially offset by a decrease in the average cost to 4.71% for the three months ended September 30, 2007, from 4.88% for the three months ended September 30, 2006. The increases in the average balances of certificates of deposit and Liquid CDs were primarily a result of the success of our marketing efforts and competitive pricing strategies throughout 2006 and the first half of 2007 which focused on attracting these types of deposits. As previously discussed, during the 2007 third quarter, retail deposit pricing remained very competitive even as short-term market interest rates declined. We maintained our pricing discipline which contributed to the decrease in the average cost of our Liquid CDs in the 2007 third quarter compared to the 2006 third quarter.

Interest expense on savings accounts decreased $293,000 to $2.0 million for the three months ended September 30, 2007, from $2.3 million for the three months ended September 30, 2006, as a result of a decrease of $294.4 million in the average balance. Interest expense on money market accounts decreased $355,000 to $926,000 for the three months ended September 30, 2007, from $1.3 million for the three months ended September 30, 2006, as a result of a decrease of $141.0 million in the average balance. The decreases in the average balances of these accounts reflect the previously discussed continued intense competition for deposits.

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Interest expense on borrowings for the three months ended September 30, 2007 increased $1.2 million to $79.5 million, from $78.3 million for the three months ended September 30, 2006, primarily due to an increase in the average cost to 4.76% for the three months ended September 30, 2007, from 4.44% for the three months ended September 30, 2006, partially offset by a decrease of $358.6 million in the average balance. The increase in the average cost of borrowings reflects the upward repricing of borrowings which matured and were refinanced over the past year. The decrease in the average balance of borrowings was primarily the result of our strategy in 2006 of reducing both the securities and borrowings portfolios through normal cash flow, while emphasizing deposit and loan growth.

Interest expense for the nine months ended September 30, 2007 increased $61.1 million to $571.0 million, from $509.9 million for the nine months ended September 30, 2006. This increase was primarily the result of an increase in the average cost of interest-bearing liabilities to 3.82% for the nine months ended September 30, 2007, from 3.34% for the nine months ended September 30, 2006. The average balance of interest-bearing liabilities decreased $393.9 million to $19.93 billion for the nine months ended September 30, 2007, from $20.33 billion for the nine months ended September 30, 2006.

Interest expense on deposits increased $66.0 million to $341.4 million for the nine months ended September 30, 2007, from $275.4 million for the nine months ended September 30, 2006, primarily due to an increase in the average cost of total deposits to 3.43% for the nine months ended September 30, 2007, from 2.83% for the nine months ended September 30, 2006, coupled with an increase of $336.2 million in the average balance of total deposits. The increase in the average cost of total deposits was primarily due to the impact of higher interest rates on our certificates of deposit and Liquid CDs. The increase in the average balance of total deposits was primarily the result of increases in the average balances of Liquid CDs and certificates of deposit, partially offset by decreases in the average balances of savings, money market and NOW and demand deposit accounts. The decreases in savings, money market and NOW and demand deposits accounts during the nine months ended September 30, 2007 were significantly lower than the decreases we had experienced during the nine months ended September 30, 2006.

Interest expense on certificates of deposit increased $43.6 million to $274.4 million for the nine months ended September 30, 2007, from $230.8 million for the nine months ended September 30, 2006, primarily due to an increase in the average cost to 4.70% for the nine months ended September 30, 2007, from 4.09% for the nine months ended September 30, 2006, coupled with an increase of $277.7 million in the average balance. During the nine months ended September 30, 2007, $5.58 billion of certificates of deposit, with a weighted average rate of 4.76% and a weighted average maturity at inception of fifteen months, matured and $5.65 billion of certificates of deposit were issued or repriced, with a weighted average rate of 4.95% and a weighted average maturity at inception of eleven months. Interest expense on Liquid CDs increased $24.7 million to $57.3 million for the nine months ended September 30, 2007, from $32.6 million for the nine months ended September 30, 2006, primarily due to an increase of $603.2 million in the average balance, coupled with an increase in the average cost to 4.82% for the nine months ended September 30, 2007, from 4.43% for the nine months ended September 30, 2006.

Interest expense on savings accounts decreased $1.0 million to $6.2 million for the nine months ended September 30, 2007, from $7.2 million for the nine months ended September 30, 2006, as a result of a decrease of $332.3 million in the average balance. Interest expense on money market accounts decreased $1.2 million to $2.9 million for the nine months ended September 30,

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2007, from $4.1 million for the nine months ended September 30, 2006, as a result of a decrease of $170.7 million in the average balance.

Interest expense on borrowings for the nine months ended September 30, 2007 decreased $4.9 million to $229.6 million, from $234.5 million for the nine months ended September 30, 2006, resulting from a decrease of $730.1 million in the average balance, partially offset by an increase in the average cost to 4.61% for the nine months ended September 30, 2007, from 4.24% for the nine months ended September 30, 2006.

Except as otherwise noted, the principal reasons for the changes in the average costs and average balances of the various liabilities noted above for the nine months ended September 30, 2007 are consistent with the principal reasons for the changes noted for the three months ended September 30, 2007.

Provision for Loan Losses

The provision for loan losses was $500,000 for the three and nine months ended September 30, 2007, reflecting the higher levels of non-performing loans and net loan charge-offs experienced during the 2007 third quarter. No provision for loan losses was recorded for the three and nine months ended September 30, 2006. The allowance for loan losses was $78.3 million at September 30, 2007 and $79.9 million at December 31, 2006. The allowance for loan losses as a percentage of non-performing loans decreased to 95.06% at September 30, 2007, from 134.55% at December 31, 2006, primarily due to an increase in non-performing loans. The allowance for loan losses as a percentage of total loans was 0.49% at September 30, 2007 and 0.53% at December 31, 2006. We believe our allowance for loan losses has been established and maintained at levels that reflect the risks inherent in our loan portfolio, giving consideration to the composition and size of our loan portfolio, charge-off experience and non-accrual and non-performing loans. The balance of our allowance for loan losses represents management’s estimate of the probable inherent losses in our loan portfolio at September 30, 2007 and December 31, 2006.

We review our allowance for loan losses on a quarterly basis. Material factors considered during our quarterly review are our historical loss experience and the impact of current economic conditions. Our net loan charge-off experience was four basis points of average loans outstanding, annualized, for the three months ended September 30, 2007 and two basis points of average loans outstanding, annualized, for the nine months ended September 30, 2007, compared to three basis points of average loans outstanding, annualized, for the three months ended September 30, 2006 and one basis point of average loans outstanding, annualized, for the nine months ended September 30, 2006. Net loan charge-offs totaled $1.6 million for the three months ended September 30, 2007 and $2.2 million for the nine months ended September 30, 2007. Net loan charge-offs totaled $1.1 million for the three months ended September 30, 2006 and $1.2 million for the nine months ended September 30, 2006. Net loan charge-offs included a $1.5 million charge-off in the 2007 third quarter related to a non-performing construction loan which was sold and a $947,000 charge-off in the 2006 third quarter related to a non-performing multi-family loan which was sold in 2006.

The composition of our loan portfolio has remained relatively consistent over the last several years. At September 30, 2007, our loan portfolio was comprised of 72% one-to-four family mortgage loans, 19% multi-family mortgage loans, 7% commercial real estate loans and 2% other loan categories. Our non-performing loans continue to remain at low levels relative to the size of our loan portfolio. Our non-performing loans, which are comprised primarily of mortgage loans, increased $22.9 million to $82.3 million, or 0.52% of total loans, at September

36

30, 2007, from $59.4 million, or 0.40% of total loans, at December 31, 2006. This increase was primarily due to an increase of $27.1 million in non-performing one-to-four family mortgage loans, partially offset by a decrease of $6.2 million in non-performing multi-family mortgage loans. We sold non-performing mortgage loans totaling $9.4 million, primarily multi-family and commercial real estate loans, during the nine months ended September 30, 2007. The increase in non-performing loans and assets occurred primarily during the 2007 third quarter.

We continue to closely monitor the local and national real estate markets and other factors related to risks inherent in our loan portfolio. Subprime mortgage lending, which has been the riskiest sector of the residential housing market, is not a market that we have ever actively pursued. Our loss experience in 2007 has been relatively consistent with our experience over the past several years and in recent years has been primarily attributable to a small number of loans. Additionally, we continue to adhere to prudent underwriting standards. However, based on our evaluation of the foregoing factors, and in recognition of the recent increases in non-performing loans and net loan charge-offs, our 2007 third quarter analyses indicated that a modest provision for loan losses was warranted for the period ended September 30, 2007.

For further discussion of the methodology used to evaluate the allowance for loan losses, see “Critical Accounting Policies” and for further discussion of our loan portfolio composition and non-performing loans, see “Asset Quality.”

Non-Interest Income

Non-interest income for the three months ended September 30, 2007 increased $1.9 million to $24.8 million, from $22.9 million for the three months ended September 30, 2006, primarily due to a $2.0 million gain on the sale of an equity security in the 2007 third quarter. There were no sales of securities in 2006.

For the nine months ended September 30, 2007, non-interest income increased $6.2 million to $73.7 million, from $67.5 million for the nine months ended September 30, 2006, primarily due to an increase in other non-interest income and the net gain on sales of securities in the 2007 third quarter, partially offset by decreases in customer service fees and mortgage banking income, net.

Other non-interest income increased $6.6 million to $6.2 million for the nine months ended September 30, 2007, from a loss of $348,000 for the nine months ended September 30, 2006. This increase is primarily due to a $5.5 million charge for the termination of our interest rate swap agreements in March 2006, coupled with a gain recognized in the 2007 second quarter related to insurance proceeds from an individual life insurance policy on a former executive.

Mortgage banking income, net, which includes loan servicing fees, net gain on sales of loans, amortization of MSR and valuation allowance adjustments for the impairment of MSR, decreased $1.8 million to $2.0 million for the nine months ended September 30, 2007, from $3.8 million for the nine months ended September 30, 2006. This decrease was primarily due to a decrease in the recovery of the valuation allowance for the impairment of MSR. For the nine months ended September 30, 2007, we recorded a recovery of $285,000, compared to $1.5 million for the nine months ended September 30, 2006. The recoveries recorded for the nine months ended September 30, 2007 and 2006 primarily reflect decreases in projected loan prepayment speeds. Net gain on sales of loans decreased $357,000 to $1.3 million for the nine months ended September 30, 2007, from $1.7 million for the nine months ended September 30, 2006, primarily due to less favorable pricing opportunities for the nine months ended September 30, 2007, compared to the nine months ended September 30, 2006.

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Customer service fees decreased $2.0 million to $47.2 million for the nine months ended September 30, 2007, from $49.2 million for the nine months ended September 30, 2006. This decrease was primarily the result of decreases in insufficient fund fees related to transaction accounts, ATM fees and other checking charges.

Non-Interest Expense

Non-interest expense increased $3.2 million to $56.5 million for the three months ended September 30, 2007, from $53.3 million for the three months ended September 30, 2006, and increased $7.6 million to $172.4 million for the nine months ended September 30, 2007, from $164.8 million for the nine months ended September 30, 2006. These increases were primarily due to increases in compensation and benefits expense and other non-interest expense, partially offset by decreases in advertising expense.

Compensation and benefits expense increased $3.0 million, to $30.6 million for the three months ended September 30, 2007, from $27.6 million for the three months ended September 30, 2006, and increased $5.4 million to $91.8 million for the nine months ended September 30, 2007, from $86.4 million for the nine months ended September 30, 2006. These increases were primarily due to increases in salaries, stock-based compensation, corporate incentive bonuses and ESOP expense, partially offset by decreases in the net periodic cost of pension benefits. The increases in salaries expense primarily reflect normal performance increases over the past year. The increases in stock-based compensation expense reflect the additional expense related to restricted stock granted in December 2006. The increases in ESOP expense primarily reflect an increase in estimated shares to be released in 2007 as compared to 2006. The decreases in the net periodic cost of pension benefits are primarily the result of decreases in the amortization of the net actuarial loss.

Other expense increased $646,000 to $8.0 million for the three months ended September 30, 2007, from $7.4 million for the three months ended September 30, 2006, and increased $2.7 million to $25.0 million for the nine months ended September 30, 2007, from $22.3 million for the nine months ended September 30, 2006. These increases were primarily due to increased legal fees and other costs as a result of the goodwill litigation. See Note 6 of Notes to Consolidated Financial Statements in Item 1, “Financial Statements (Unaudited),” for further discussion of the goodwill litigation.

Advertising expense decreased $449,000 to $1.4 million for the three months ended September 30, 2007, from $1.8 million for the three months ended September 30, 2006, and decreased $386,000 to $5.3 million for the nine months ended September 30, 2007, from $5.7 million for the nine months ended September 30, 2006. These decreases were primarily due to a decrease in print advertising for our deposit products in September 2007.

Our percentage of general and administrative expense to average assets increased to 1.05% for the three months ended September 30, 2007, from 0.98% for the three months ended September 30, 2006, and increased to 1.07% for the nine months ended September 30, 2007, from 1.00% for the nine months ended September 30, 2006, primarily due to the previously discussed increases in non-interest expense. The efficiency ratio, which represents general and administrative expense divided by the sum of net interest income plus non-interest income, was 53.35% for the three months ended September 30, 2007 and 52.99% for the nine months ended September 30, 2007, compared to 46.96% for the three months ended September 30, 2006 and 44.43% for the nine months ended September 30, 2006. The increases in the efficiency ratios were primarily due to the previously discussed decreases in net interest income.

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Income Tax Expense

Income tax expense totaled $13.6 million for the three months ended September 30, 2007, representing an effective tax rate of 27.9%, and $47.3 million for the nine months ended September 30, 2007, representing an effective tax rate of 31.0% . Income tax expense totaled $19.1 million for the three months ended September 30, 2006, representing an effective tax rate of 31.8%, and $68.4 million for the nine months ended September 30, 2006, representing an effective tax rate of 33.2% . The decrease in the effective tax rate for 2007 was primarily due to a decrease in net unrecognized tax benefits and related accrued interest, resulting from the release of accruals for previous tax positions that have statutorily expired, coupled with a decrease in pre-tax book income without any significant change in the amount of non-temporary differences, such as tax exempt income. For additional information regarding net unrecognized tax benefits, see Note 5 of Notes to Consolidated Financial Statements in Item 1. “Financial Statements (Unaudited).”

Asset Quality

One of our key operating objectives has been and continues to be to maintain a high level of asset quality. Our concentration on one-to-four family mortgage lending and the maintenance of sound credit standards for new loan originations have resulted in our maintaining a low level of non-performing assets relative to the size of our loan portfolio. Through a variety of strategies, including, but not limited to, aggressive collection efforts and the marketing of non-performing loans and foreclosed properties, we have been proactive in addressing problem and non-performing assets which, in turn, has helped to maintain the strength of our financial condition.

As previously discussed, the composition of our loan portfolio, by property type, has remained consistent over the last several years. At September 30, 2007, our loan portfolio was comprised of 72% one-to-four family mortgage loans, 19% multi-family mortgage loans, 7% commercial real estate loans and 2% other loan categories. This compares to 69% one-to-four family mortgage loans, 20% multi-family mortgage loans, 7% commercial real estate loans and 4% other loan categories at December 31, 2006.

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The following table provides further details on the composition of our one-to-four family and multi-family and commercial real estate mortgage loan portfolios in dollar amounts and in percentages of the portfolio at the dates indicated.

	At September 30, 2007				At December 31, 2006
			Percent				Percent
(Dollars in Thousands)	Amount		of Total		Amount		of Total
One-to-four family:
Full documentation interest-only (1)	$	5,139,689	45.28	%	$	4,023,693	39.39	%
Full documentation amortizing		3,247,335	28.61			3,288,462	32.20
Reduced documentation interest-only (1) (2)		2,284,176	20.13			2,149,782	21.05
Reduced documentation amortizing (2)		678,458	5.98			752,209	7.36
Total one-to-four family	$	11,349,658	100.00	%	$	10,214,146	100.00	%
Multi-family and commercial real estate:
Full documentation amortizing	$	3,413,667	84.64	%	$	3,545,178	86.73	%
Full documentation interest-only		619,645	15.36			542,571	13.27
Total multi-family and commercial real estate	$	4,033,312	100.00	%	$	4,087,749	100.00	%

(1)

Interest-only loans require the borrower to pay interest only during the first ten years of the loan term. After the tenth anniversary of the loan, principal and interest payments are required to amortize the loan over the remaining loan term.

(2)

Reduced documentation loans are comprised primarily of SIFA (stated income, full asset) loans which require a potential borrower to complete a standard mortgage loan application and require the verification of a potential borrower’s asset information on the loan application, but not the income information provided. In addition, SIFA loans require the receipt of an appraisal of the real estate used as collateral for the mortgage loan and a credit report on the prospective borrower. Effective November 1, 2007, we have discontinued originating reduced documentation loans.

We do not originate negative amortization loans, payment option loans, or other loans with short-term interest-only periods. During the second quarter of 2006, we began underwriting our one-to-four family interest-only adjustable rate mortgage, or ARM, loans based on a fully amortizing thirty year loan. Additionally, effective in 2007, in accordance with federal banking regulatory requirements, we began underwriting our one-to-four family interest-only ARM loans at the fully indexed rate. Based on our underwriting standards and cumulative experience with our interest-only loans, these loans have performed as well as our fully amortizing loan products. The respective allowance coverage factors utilized for interest-only and amortizing loans give appropriate recognition to the potential for increased risk of default (and risk of loss) attributable to payment increases on interest-only loans once principal amortization begins. Our interest-only multi-family and commercial real estate loans do not represent a material component of our loan portfolio.

Our loan-to-value ratios upon origination are low overall and have been consistent over the past several years. The average loan-to-value ratios, based on current principal balance and original appraised value, of total one-to-four family loans outstanding as of September 30, 2007, by year of origination, were 66% for 2007, 67% for 2006, 69% for 2005, 68% for 2004 and 57% for pre-2004 originations. As of September 30, 2007, average loan-to-value ratios, based on current principal balance and original appraised value, of total multi-family and commercial real estate loans outstanding, by year of origination, were 63% for 2007, 67% for 2006, 67% for 2005, 63% for 2004 and 58% for pre-2004 originations.

The average loan-to-value ratios, based on current principal balance and original appraised value, of total one-to-four family loans outstanding as of December 31, 2006, by year of origination, were 67% for 2006, 69% for 2005, 69% for 2004 and 62% for pre-2004 originations. As of

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December 31, 2006, average loan-to-value ratios, based on current principal balance and original appraised value, of total multi-family and commercial real estate loans outstanding, by year of origination, were 62% for 2006, 66% for 2005, 65% for 2004 and 60% for pre-2004 originations.

As previously discussed, subprime mortgage lending, which has been the riskiest sector of the residential housing market, is not a market that we have ever actively pursued. The market does not apply a uniform definition of what constitutes “subprime” lending. Our reference to subprime lending relies upon the “Statement on Subprime Mortgage Lending” issued by the OTS and the other federal bank regulatory agencies, or the Agencies, on June 29, 2007, which further references the “Expanded Guidance for Subprime Lending Programs,” or the Expanded Guidance, issued by the Agencies by press release dated January 31, 2001. In the Expanded Guidance, the Agencies indicated that subprime lending does not refer to individual subprime loans originated and managed, in the ordinary course of business, as exceptions to prime risk selection standards. The Agencies recognize that many prime loan portfolios will contain such accounts. The Agencies also excluded prime loans that develop credit problems after acquisition and community development loans from the subprime arena. According to the Expanded Guidance, subprime loans are other loans to borrowers which display one or more characteristics of reduced payment capacity. Five specific criteria, which are not intended to be exhaustive and are not meant to define specific parameters for all subprime borrowers and may not match all markets or institutions’ specific subprime definitions, are set forth, including having a FICO score of 660 or below. Based upon the definition and exclusions described above, we are a prime lender. Within our loan portfolio, we have loans that, at the time of origination, had FICO scores of 660 or below. However, as we are a portfolio lender we review all data contained in borrower credit reports and do not base our underwriting decisions solely on FICO scores. We believe the aforementioned loans, when made, were amply collateralized and otherwise conformed to our prime lending standards.

Non-Performing Assets

The following table sets forth information regarding non-performing assets at the dates indicated.

	At September 30,			At December 31,
(Dollars in Thousands)	2007			2006
Non-accrual delinquent mortgage loans		$77,761			$58,110
Non-accrual delinquent consumer and other loans		1,453			818
Mortgage loans delinquent 90 days or more and
still accruing interest (1)		3,103			488
Total non-performing loans		82,317			59,416
Real estate owned, net (2)		4,336			627
Total non-performing assets		$86,653			$60,043
Non-performing loans to total loans		0.52	%		0.40	%
Non-performing loans to total assets		0.38			0.28
Non-performing assets to total assets		0.40			0.28
Allowance for loan losses to non-performing loans		95.06			134.55
Allowance for loan losses to total loans		0.49			0.53

(1)	Mortgage loans delinquent 90 days or more and still accruing interest consist solely of loans delinquent 90 days or more as to their maturity date but not their interest due.
(2)	Real estate acquired as a result of foreclosure or by deed in lieu of foreclosure is recorded at the lower of cost or fair value, less estimated selling costs, and is comprised of one-to-four family properties.

Non-performing assets increased $26.7 million to $86.7 million at September 30, 2007, from $60.0 million at December 31, 2006. Our ratio of non-performing assets to total assets was

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0.40% at September 30, 2007 and 0.28% at December 31, 2006. Non-performing loans, the most significant component of non-performing assets, increased $22.9 million to $82.3 million at September 30, 2007, from $59.4 million at December 31, 2006. The ratio of non-performing loans to total loans was 0.52% at September 30, 2007 and 0.40% at December 31, 2006. Non-performing mortgage loans, the most significant component of non-performing loans, totaled $80.9 million at September 30, 2007 and $58.6 million at December 31, 2006. The increases in non-performing loans and assets were primarily due to an increase of $27.1 million in non-performing one-to-four family mortgage loans, partially offset by a decrease of $6.2 million in non-performing multi-family mortgage loans. We sold non-performing mortgage loans totaling $9.4 million, primarily multi-family and commercial real estate loans, during the nine months ended September 30, 2007. The increase in non-performing loans and assets occurred primarily during the 2007 third quarter. We believe the increase is primarily due to the overall increase in our loan portfolio and to the softening of the real estate market. Despite the increase in non-performing loans at September 30, 2007, our non-performing loans continue to remain at low levels relative to the size of our loan portfolio.

The following table provides further details on the composition of our non-performing one-to-four family and multi-family and commercial real estate mortgage loans in dollar amounts, percentages of the portfolio and loan-to-value ratios, based on current principal balance and original appraised value, at the dates indicated.

	At September 30, 2007					At December 31, 2006
		Percent		Loan			Percent		Loan
		of		-to-			of		-to-
(Dollars in Thousands)	Amount	Total		Value		Amount	Total		Value
Non-performing loans:
One-to-four family:
Full documentation interest-only	$17,121	25.11	%	77	%	$   8,513	20.70	%	77	%
Full documentation amortizing	19,095	28.00		70		16,404	39.89		71
Reduced documentation interest-only	20,871	30.61		72		5,945	14.46		74
Reduced documentation amortizing	11,101	16.28		66		10,262	24.95		68
Total one-to-four family	$68,188	100.00	%	72	%	$41,124	100.00	%	72	%
Multi-family and commercial real estate:
Full documentation amortizing	$  9,404	100.00	%	65	%	$17,474	100.00	%	70	%

At September 30, 2007, the geographic composition of our non-performing one-to-four family mortgage loans was consistent with the geographic composition of our one-to-four family mortgage loan portfolio and, as of September 30, 2007, did not indicate a negative trend in any one particular geographic location.

We discontinue accruing interest on mortgage loans when such loans become 90 days delinquent as to their interest due, even though in some instances the borrower has only missed two payments. At September 30, 2007, $24.1 million of mortgage loans classified as non-performing had missed only two payments, compared to $17.3 million at December 31, 2006. We discontinue accruing interest on consumer and other loans when such loans become 90 days delinquent as to their payment due. In addition, we reverse all previously accrued and uncollected interest through a charge to interest income. While loans are in non-accrual status, interest due is monitored and income is recognized only to the extent cash is received until a return to accrual status is warranted.

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If all non-accrual loans at September 30, 2007 and 2006 had been performing in accordance with their original terms, we would have recorded interest income, with respect to such loans, of $3.8 million for the nine months ended September 30, 2007 and $2.5 million for the nine months ended September 30, 2006. This compares to actual payments recorded as interest income, with respect to such loans, of $1.8 million for the nine months ended September 30, 2007 and $1.1 million for the nine months ended September 30, 2006.

In addition to non-performing loans, we had $1.7 million of potential problem loans at September 30, 2007, compared to $734,000 at December 31, 2006. Such loans are 60-89 days delinquent as shown in the following table.

Delinquent Loans

The following table shows a comparison of delinquent loans at the dates indicated. Delinquent loans are reported based on the number of days the loan payments are past due, except in the case of mortgage loans 90 days or more which are reported as such when the loans become 90 days delinquent as to their interest due, even though in some cases the borrower has only missed two payments.

	At September 30, 2007						At December 31, 2006
	60-89 Days			90 Days or More			60-89 Days			90 Days or More
	Number			Number			Number			Number
	of			of			of			of
(Dollars in Thousands)	Loans	Amount		Loans	Amount		Loans	Amount		Loans	Amount
Mortgage loans:
One-to-four family	3		$   571	235		$68,188	2		$  92	159		$41,124
Multi-family	-		-	20		8,390	-		-	21		14,627
Commercial real estate	-		-	4		1,014	-		-	5		2,847
Construction	-		-	3		3,272	-		-	-		-
Consumer and other loans	41		1,091	34		1,453	38		642	33		818
Total delinquent loans	44		$1,662	296		$82,317	40		$734	218		$59,416
Delinquent loans to total loans			0.01%			0.52%			0.00%			0.40%

Allowance for Loan Losses

The following table sets forth the change in our allowance for losses on loans for the nine months ended September 30, 2007.

	(In Thousands)
Balance at December 31, 2006	$	79,942
Provision charged to operations		500
Charge-offs:
One-to-four family		(239	)
Multi-family		(73	)
Commercial real estate		(242	)
Construction		(1,454	)
Consumer and other loans		(522	)
Total charge-offs		(2,530	)
Recoveries:
One-to-four family		4
Commercial real estate		197
Consumer and other loans		141
Total recoveries		342
Net loan charge-offs		(2,188	)
Balance at September 30, 2007	$	78,254

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ITEM 3. Quantitative and Qualitative Disclosures about Market Risk

As a financial institution, the primary component of our market risk is interest rate risk, or IRR. The objective of our IRR management policy is to maintain an appropriate mix and level of assets, liabilities and off-balance sheet items to enable us to meet our earnings and/or growth objectives, while maintaining specified minimum capital levels as required by the OTS, in the case of Astoria Federal, and as established by our Board of Directors. We use a variety of analyses to monitor, control and adjust our asset and liability positions, primarily interest rate sensitivity gap analysis, or gap analysis, and net interest income sensitivity, or NII sensitivity, analysis. Additional IRR modeling is done by Astoria Federal in conformity with OTS requirements.

Gap Analysis

Gap analysis measures the difference between the amount of interest-earning assets anticipated to mature or reprice within specific time periods and the amount of interest-bearing liabilities anticipated to mature or reprice within the same time periods. Gap analysis does not indicate the impact of general interest rate movements on our net interest income because the actual repricing dates of various assets and liabilities will differ from our estimates and it does not give consideration to the yields and costs of the assets and liabilities or the projected yields and costs to replace or retain those assets and liabilities. Callable features of certain assets and liabilities, in addition to the foregoing, may also cause actual experience to vary from the analysis.

The following table, referred to as the Gap Table, sets forth the amount of interest-earning assets and interest-bearing liabilities outstanding at September 30, 2007 that we anticipate will reprice or mature in each of the future time periods shown using certain assumptions based on our historical experience and other market-based data available to us. The Gap Table includes $1.00 billion of callable borrowings classified according to their maturity dates, primarily in the more than five years category, which are callable within one year and at various times thereafter. The classifications of callable borrowings according to their maturity dates are based on our experience with, and expectations of, these types of instruments and the current interest rate environment. As indicated in the Gap Table, our one-year cumulative gap at September 30, 2007 was negative 21.53% compared to negative 21.06% at December 31, 2006.

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	At September 30, 2007
				More than			More than
				One Year			Three Years
	One Year			to			to			More than
(Dollars in Thousands)	or Less			Three Years			Five Years			Five Years			Total
Interest-earning assets:
Mortgage loans (1)		$ 4,618,692			$5,748,256			$4,626,201			$    406,323			$15,399,472
Consumer and other loans (1)		339,891			21,847			7,356			-			369,094
Repurchase agreements		34,143			-			-			-			34,143
Securities available-for-sale		88,547			668,512			567,612			103,495			1,428,166
Securities held-to-maturity		823,027			2,001,936			390,728			40			3,215,731
FHLB-NY stock		-			-			-			180,631			180,631
Total interest-earning assets		5,904,300			8,440,551			5,591,897			690,489			20,627,237
Net unamortized purchase premiums
and deferred costs (2)		33,279			35,752			30,903			2,674			102,608
Net interest-earning assets (3)		5,937,579			8,476,303			5,622,800			693,163			20,729,845
Interest-bearing liabilities:
Savings		247,442			412,326			412,326			868,228			1,940,322
Money market		155,016			96,141			96,141			5,560			352,858
NOW and demand deposit		112,963			225,938			225,938			878,001			1,442,840
Liquid CDs		1,463,845			-			-			-			1,463,845
Certificates of deposit		5,562,704			2,117,171			372,860			13,395			8,066,130
Borrowings, net		3,077,373			1,199,009			774,256			1,878,862			6,929,500
Total interest-bearing liabilities		10,619,343			4,050,585			1,881,521			3,644,046			20,195,495
Interest sensitivity gap		(4,681,764	)		4,425,718			3,741,279			(2,950,883	)		$     534,350
Cumulative interest sensitivity gap		$(4,681,764	)		$  (256,046	)		$3,485,233			$    534,350
Cumulative interest sensitivity
gap as a percentage of total assets		(21.53	)%		(1.18	)%		16.03	%		2.46	%
Cumulative net interest-earning
assets as a percentage of
interest-bearing liabilities		55.91	%		98.25	%		121.06	%		102.65	%

(1)	Mortgage loans and consumer and other loans include loans held-for-sale and exclude non-performing loans and the allowance for loan losses.
(2)	Net unamortized purchase premiums and deferred costs are prorated.
(3)	Includes securities available-for-sale at amortized cost.

NII Sensitivity Analysis

In managing IRR, we also use an internal income simulation model for our NII sensitivity analyses. These analyses measure changes in projected net interest income over various time periods resulting from hypothetical changes in interest rates. The interest rate scenarios most commonly analyzed reflect gradual and reasonable changes over a specified time period, which is typically one year. The base net interest income projection utilizes similar assumptions as those reflected in the Gap Table, assumes that cash flows are reinvested in similar assets and liabilities and that interest rates as of the reporting date remain constant over the projection period. For each alternative interest rate scenario, corresponding changes in the cash flow and repricing assumptions of each financial instrument are made to determine the impact on net interest income.

Assuming the entire yield curve was to increase 200 basis points, through quarterly parallel increments of 50 basis points and remain at that level thereafter, our projected net interest income for the twelve month period beginning October 1, 2007 would decrease by approximately 9.83% from the base projection. At December 31, 2006, in the up 200 basis point scenario, our projected net interest income for the twelve month period beginning January 1, 2007 would have decreased by approximately 10.09% from the base projection. Assuming the entire yield curve was to decrease 200 basis points, through quarterly parallel

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decrements of 50 basis points, and remain at that level thereafter, our projected net interest income for the twelve month period beginning October 1, 2007 would increase by approximately 3.59% from the base projection. At December 31, 2006, in the down 200 basis point scenario, our projected net interest income for the twelve month period beginning January 1, 2007 would have increased by approximately 4.34% from the base projection.

Various shortcomings are inherent in both the Gap Table and NII sensitivity analyses. Certain assumptions may not reflect the manner in which actual yields and costs respond to market changes. Similarly, prepayment estimates and similar assumptions are subjective in nature, involve uncertainties and, therefore, cannot be determined with precision. Changes in interest rates may also affect our operating environment and operating strategies as well as those of our competitors. In addition, certain adjustable rate assets have limitations on the magnitude of rate changes over specified periods of time. Accordingly, although our NII sensitivity analyses may provide an indication of our IRR exposure, such analyses are not intended to and do not provide a precise forecast of the effect of changes in market interest rates on our net interest income and our actual results will differ. Additionally, certain assets, liabilities and items of income and expense which may be affected by changes in interest rates, albeit to a much lesser degree, and which do not affect net interest income, are excluded from this analysis. These include income from bank owned life insurance and changes in the fair value of MSR. With respect to these items alone, and assuming the entire yield curve was to increase 200 basis points, through quarterly parallel increments of 50 basis points, and remain at that level thereafter, our projected net income for the twelve month period beginning October 1, 2007 would increase by approximately $3.8 million. Conversely, assuming the entire yield curve was to decrease 200 basis points, through quarterly parallel decrements of 50 basis points, and remain at that level thereafter, our projected net income for the twelve month period beginning October 1, 2007 would decrease by approximately $7.2 million with respect to these items alone.

For further information regarding our market risk and the limitations of our gap analysis and NII sensitivity analysis, see Part II, Item 7A, “Quantitative and Qualitative Disclosures about Market Risk,” included in our 2006 Annual Report on Form 10-K.

ITEM 4. Controls and Procedures

George L. Engelke, Jr., our Chairman and Chief Executive Officer, and Frank E. Fusco, our Executive Vice President, Treasurer and Chief Financial Officer, conducted an evaluation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of September 30, 2007. Based upon their evaluation, they each found that our disclosure controls and procedures were effective to ensure that information required to be disclosed in the reports we file and submit under the Exchange Act is recorded, processed, summarized and reported as and when required and that such information is accumulated and communicated to our management as appropriate to allow timely decisions regarding required disclosure.

There were no changes in our internal controls over financial reporting that occurred during the three months ended September 30, 2007 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II - OTHER INFORMATION

ITEM 1. Legal Proceedings

In the ordinary course of our business, we are routinely made defendant in or a party to pending or threatened legal actions or proceedings which, in some cases, seek substantial monetary damages from or other forms of relief against us. In our opinion, after consultation with legal counsel, we believe it unlikely that such actions or proceedings will have a material adverse effect on our financial condition, results of operations or liquidity.

Goodwill Litigation

As previously discussed, we are a party to two actions against the United States, involving assisted acquisitions made in the early 1980’s and supervisory goodwill accounting utilized in connection therewith, which could result in a gain.

On September 15, 2005, the U.S. Court of Federal Claims rendered a decision in the LISB goodwill litigation awarding us $435.8 million in damages from the U.S. government. No portion of the $435.8 million award was recognized in our consolidated financial statements. On December 14, 2005, the United States filed an appeal of such award and, on February 1, 2007, the Court of Appeals reversed such award. On April 2, 2007, we filed a petition for rehearing or rehearing en banc. Acting en banc, the appellate court returned the case to the original panel of judges for revision. The panel, on September 13, 2007, withdrew and vacated its earlier opinion and issued a new decision. This decision also reversed the award of $435.8 million in damages awarded to us by the U.S. Court of Federal Claims. We have again filed with the court a petition for rehearing or rehearing en banc.

The other action is entitled Astoria Federal Savings and Loan Association vs. United States. The evidentiary phase of the trial in this action, which commenced on April 19, 2007 before the U.S. Court of Federal Claims, has been concluded. Post trial motions and closing arguments are expected to be concluded in the fourth quarter of 2007.

The ultimate outcomes of the two actions pending against the United States and the timing of such outcomes are uncertain and there can be no assurance that we will benefit financially from such litigation. Legal expense related to these two actions has been recognized as it has been incurred.

McAnaney Litigation

In 2004, an action entitled David McAnaney and Carolyn McAnaney, individually and onbehalf of all others similarly situated vs. Astoria Financial Corporation, et al. was commenced in the U.S. District Court for the Eastern District of New York, or the Court. The action, commenced as a class action, alleges that in connection with the satisfaction of certain mortgage loans made by Astoria Federal, The Long Island Savings Bank, FSB, which was acquired by Astoria Federal in 1998, and their related entities, customers were charged attorney document preparation fees, recording fees and facsimile fees allegedly in violation of the federal Truth in Lending Act, the Real Estate Settlement Procedures Act, or RESPA, the Fair Debt Collection Act, or FDCA, and the New York State Deceptive Practices Act, and alleging unjust enrichment and common law fraud.

47

Astoria Federal previously moved to dismiss the amended complaint, which motion was granted in part and denied in part, dismissing claims based on violations of RESPA and FDCA. The Court further determined that class certification would be considered prior to considering summary judgment. The Court, on September 19, 2006, granted the plaintiff’s motion for class certification. Astoria Federal has denied the claims set forth in the complaint. Both we and the plaintiffs filed motions for summary judgment. The District Court, on September 12, 2007, granted our motion for summary judgment on the basis that all named plaintiffs’ Truth in Lending claims are time barred. All other aspects of plaintiffs’ and defendant’s motions for summary judgment were dismissed without prejudice. The Court found the named plaintiffs to be inadequate class representatives and provided plaintiffs’ counsel an opportunity to submit a motion for the substitution or intervention of new named plaintiffs. Plaintiffs’ counsel has moved the Court to reconsider its decision. We currently do not believe this action will likely have a material adverse impact on our financial condition or results of operations. However, no assurance can be given at this time that this litigation will be resolved amicably, that this litigation will not be costly to defend, that this litigation will not have an impact on our financial condition or results of operations or that, ultimately, any such impact will not be material.

ITEM 1A. Risk Factors

Changes in interest rates may reduce our net income.

Our earnings depend largely on the relationship between the yield on our interest-earning assets, primarily our mortgage loans and mortgage-backed securities, and the cost of our deposits and borrowings. This relationship, known as the interest rate spread, is subject to fluctuation and is affected by economic and competitive factors which influence market interest rates, the volume and mix of interest-earning assets and interest-bearing liabilities and the level of non-performing assets. Fluctuations in market interest rates affect customer demand for our products and services. We are subject to interest rate risk to the degree that our interest-bearing liabilities reprice or mature more slowly or more rapidly or on a different basis than our interest-earning assets.

In addition, the actual amount of time before mortgage loans and mortgage-backed securities are repaid can be significantly impacted by changes in mortgage prepayment rates and market interest rates. Mortgage prepayment rates will vary due to a number of factors, including the regional economy in the area where the underlying mortgages were originated, seasonal factors, demographic variables and the assumability of the underlying mortgages. However, the major factors affecting prepayment rates are prevailing interest rates, related mortgage refinancing opportunities and competition.

Some of our borrowings contain features that would allow them to be called prior to their contractual maturity. This would generally occur during periods of rising interest rates. If this were to occur, we would need to either renew the borrowings at a potentially higher rate of interest, which would negatively impact our net interest income, or repay such borrowings. If we sell securities to fund the repayment of such borrowings, any decline in estimated market value with respect to the securities sold would be realized and could result in a loss upon such sale.

The flat-to-inverted yield curve which existed throughout 2006 and the first half of 2007 limited profitable growth opportunities and continued to put pressure on our net interest rate spread and net interest margin. During the 2007 third quarter, the FOMC decreased the

48

Discount Rate and Federal Funds Rate 50 basis points which resulted in a decrease in short-term interest rates and a more positively sloped yield curve. We continue to pursue our strategy of emphasizing deposit and loan growth while reducing the securities portfolio through normal cash flow. However, based on the current retail deposit pricing, we may continue to use lower cost borrowings to fund our loan growth which may result in continued net deposit outflows.

Interest rates do and will continue to fluctuate, and we cannot predict future Federal Reserve Board actions or other factors that will cause rates to change. Accordingly, no assurance can be given that our net interest margin and net interest income will not remain under pressure.

Our results of operations are affected by economic conditions in the New York metropolitan area and other areas.

Our retail banking and a significant portion of our lending business (approximately 42% of our one-to-four family and 93% of our multi-family and commercial real estate mortgage loan portfolios at September 30, 2007) are concentrated in the New York metropolitan area, which includes New York, New Jersey and Connecticut. As a result of this geographic concentration, our results of operations largely depend upon economic conditions in this area, although they also depend on economic conditions in other areas as well.

Decreases in real estate values could adversely affect the value of property used as collateral for our loans. The average loan-to-value ratio of our mortgage loan portfolio is less than 65% based on current principal balances and original appraised values. However, no assurance can be given that the original appraised values are reflective of current market conditions. Adverse changes in the economy caused by inflation, recession, unemployment or other factors beyond our control may also have a negative effect on the ability of our borrowers to make timely loan payments, which would have an adverse impact on our earnings. Consequently, deterioration in economic conditions, particularly in the New York metropolitan area, could have a material adverse impact on the quality of our loan portfolio, which could result in an increase in delinquencies, causing a decrease in our interest income as well as an adverse impact on our loan loss experience, causing an increase in our allowance for loan losses. Such deterioration could also adversely impact the demand for our products and services and, accordingly, our results of operations.

The past several months have been highlighted by significant disruption and volatility in the financial and capital marketplaces. This turbulence has been attributable to a variety of factors, including the fallout associated with the subprime mortgage market. One aspect of this fallout has been significant deterioration in the activity of the secondary residential mortgage market. The disruptions have been exacerbated by the acceleration of the softening of the real estate and housing market. No assurance can be given that these conditions will improve or will not worsen or that such conditions will not result in an increase in delinquencies, causing a decrease in our interest income, or have an adverse impact on our loan loss experience, causing an increase in our allowance for loan losses.

For a summary of other risk factors relevant to our operations, see Part I, Item 1A, “Risk Factors,” in our 2006 Annual Report on Form 10-K and Part II, Item 1A, “Risk Factors,” in our June 30, 2007 Quarterly Report on Form 10-Q. There are no other material changes in risk factors relevant to our operations since June 30, 2007 except as discussed above.

49

ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table sets forth the repurchases of our common stock by month during the three months ended September 30, 2007.

			Total Number	Maximum
	Total		of Shares	Number of Shares
	Number of	Average	Purchased as Part	that May Yet Be
	Shares	Price Paid	of Publicly	Purchased Under the
Period	Purchased	per Share	Announced Plans	Plans
July 1, 2007 through
July 31, 2007	135,000	$24.47	135,000	9,982,300
August 1, 2007 through
August 31, 2007	445,000	$25.31	445,000	9,537,300
September 1, 2007 through
September 30, 2007	170,000	$26.28	170,000	9,367,300
Total	750,000	$25.38	750,000

During the quarter ended September 30, 2007, we completed our eleventh stock repurchase plan which was approved by our Board of Directors on December 21, 2005 and authorized the purchase, at management’s discretion, of 10,000,000 shares, or approximately 10% of our common stock outstanding, through December 31, 2007 in open-market or privately negotiated transactions. On April 18, 2007, our Board of Directors approved our twelfth stock repurchase plan authorizing the purchase of 10,000,000 shares, or approximately 10% of our common stock outstanding, in open-market or privately negotiated transactions. Stock repurchases under our twelfth stock repurchase plan commenced immediately following the completion of our eleventh stock repurchase plan on July 30, 2007.

ITEM 3. Defaults Upon Senior Securities

Not applicable.

ITEM 4. Submission of Matters to a Vote of Security Holders

Not applicable.

ITEM 5. Other Information

Not applicable.

ITEM 6. Exhibits

See Index of Exhibits on page 52.

50

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

			Astoria Financial Corporation
Dated:	November 8, 2007	By:	/s/	Frank E. Fusco
				Frank E. Fusco
				Executive Vice President, Treasurer
				and Chief Financial Officer
				(Principal Accounting Officer)

51

ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES

Index of Exhibits

Exhibit No. Identification of Exhibit

10.1	Amendment to Astoria Financial Corporation Amended and Restated Employment Agreement with Executive Officer by and between Astoria Financial Corporation and George L. Engelke, Jr., entered into as of August 15, 2007.
10.2	Amendment to Astoria Federal Savings and Loan Association Amended and Restated Employment Agreement with Executive Officer by and between Astoria Federal Savings and Loan Association and George L. Engelke, Jr., entered into as of August 15, 2007.
10.3	Amendment to Astoria Financial Corporation Amended and Restated Employment Agreement with Executive Officer by and between Astoria Financial Corporation and Monte N. Redman, entered into as of August 15, 2007.
10.4	Amendment to Astoria Federal Savings and Loan Association Amended and Restated Employment Agreement with Executive Officer by and between Astoria Federal Savings and Loan Association and Monte N. Redman, entered into as of August 15, 2007.
10.5	Amendment to Astoria Financial Corporation Amended and Restated Employment Agreement with Executive Officer by and between Astoria Financial Corporation and Alan P. Eggleston, entered into as of August 15, 2007.
10.6	Amendment to Astoria Federal Savings and Loan Association Amended and Restated Employment Agreement with Executive Officer by and between Astoria Federal Savings and Loan Association and Alan P. Eggleston, entered into as of August 15, 2007.
10.7	Astoria Financial Corporation Employment Agreement with Executive Officer by and between Astoria Financial Corporation and Frank E. Fusco, entered into as of August 15, 2007.
10.8	Astoria Federal Savings and Loan Association Employment Agreement with Executive Officer by and between Astoria Federal Savings and Loan Association and Frank E. Fusco, entered into as of August 15, 2007.
10.9	Amendment to Astoria Financial Corporation Amended and Restated Employment Agreement with Executive Officer by and between Astoria Financial Corporation and Arnold K. Greenberg, entered into as of August 15, 2007.
10.10	Amendment to Astoria Federal Savings and Loan Association Amended and Restated Employment Agreement with Executive Officer by and between Astoria Federal Savings and Loan Association and Arnold K. Greenberg, entered into as of August 15, 2007.
10.11	Amendment to Astoria Financial Corporation Amended and Restated Employment Agreement with Executive Officer by and between Astoria Financial Corporation and Gerard C. Keegan, entered into as of August 15, 2007.

52

Exhibit No. Identification of Exhibit

10.12	Amendment to Astoria Federal Savings and Loan Association Amended and Restated Employment Agreement with Executive Officer by and between Astoria Federal Savings and Loan Association and Gerard C. Keegan, entered into as of August 15, 2007.
10.13	Amendment to Astoria Financial Corporation Employment Agreement with Executive Officer by and between Astoria Financial Corporation and Gary T. McCann, entered into as of August 15, 2007.
10.14	Amendment to Astoria Federal Savings and Loan Association Employment Agreement with Executive Officer by and between Astoria Federal Savings and Loan Association and Gary T. McCann, entered into as of August 15, 2007.
31.1	Certifications of Chief Executive Officer.
31.2	Certifications of Chief Financial Officer.
32.1	Written Statement of Chief Executive Officer furnished pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350. Pursuant to SEC rules, this exhibit will not be deemed filed for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that section.
32.2	Written Statement of Chief Financial Officer furnished pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350. Pursuant to SEC rules, this exhibit will not be deemed filed for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that section.

53

EX-10.1

EXHIBIT 10.1

AMENDMENT TO
ASTORIA FINANCIAL CORPORATION
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT WITH EXECUTIVE OFFICER

     This Amendment to the Amended and Restated Employment Agreement (the “Restated Employment Agreement”) entered into as of January 1, 2000 by and between Astoria Financial Corporation, a business corporation organized and operation under the laws of the State of Delaware (the “Company”) and George L. Engelke, Jr. (the “Executive”) is entered into as of August 15, 2007.

      WITNESSETH:

     WHEREAS, the Company and Executive have previously entered into the Restated Employment Agreement which remains in full force and effect; and

      WHEREAS, the Company has realigned its executive management staff; and

     WHEREAS,prior to such realignment the Executive served as Chairman, President and Chief Executive Officer; and

     WHEREAS, following such realignment Executive has agreed to continue to serve as Chairman and Chief Executive Officer; and

     WHEREAS, the Board of Directors of the Company has determined that it is in the best interests of the shareholders of the Company to rescind the Company’s mandatory retirement policy for executive officers and, as a result, requested that Executive remain in the employ of the Company beyond his 70^th birthday, which Executive is agreeable to do;

     NOW THEREFORE,in consideration of the premises and the mutual covenants and conditions hereinafter set forth, the Company and Executive hereby agree to amend the Restated Employment Agreement as follows from and after the date hereof:

A)	Section 3. Duties. of the Restated Employment Agreement is amended to replace the title Chairman, President and Chief Executive Officer with the title Chairman and Chief Executive Officer where it appears in such Section.
B)	Section 4. Cash Compensation. of the Restated Employment Agreement is amended

Page 1 of 4

	to replace the salary set forth in such Section from an initial annual rate of Eight Hundred Ten Thousand Dollars ($810,000) to an initial annual rate of One Million One Hundred Thousand Dollars ($1,100,000) which the Company and Executive acknowledge is Executive’s current rate of annual salary.
C)	Section 9. Termination of Employment with Severance Benefits. of the Restated Employment Agreement is amended by amending Section 9(a)(i)(A) by replacing the title Chairman, President and Chief Executive Officer with the title Chairman and Chief Executive Officer where it appears in Section 9(a)(i)(A).
D)	Section 9. Termination of Employment with Severance Benefits. and Section 18. Notices. of the Restated Employment Agreement are amended by amending Section 9(b) and Section 18 to provide that the address of Thacher Proffitt & Wood is Two World Financial Center, New York, New York 10281.
E)	Section 10. Termination without Additional Company Liability. of the Restated Employment Agreement is amended by deleting Section 10(a)(v).
F)	Section 33. Compliance with Section 409A of the Code. is added to the Restated Employment Agreement to state as follows:
	Section 33. Compliance with Section 409A of the Code.
	In the event that this Agreement is construed to be a non-qualified deferred compensation plan described in section
409A of the Code, the Agreement shall be operated, administered and construed so as to conform to the requirements of section 409A.

Page 2 of 4

G)      The Restated Employment Agreement is in all other respects confirmed and ratified and the Restated Employment Agreement, as amended by this amendment remains in full force and effect.

     IN WITNESS WHEREOF,the Company has caused this Amendment to be executed and Executive has hereunto set his hand, all as the 15^th day of August 2007.

Attest: ASTORIA FINANCIAL CORPORATION

/S/ Alan P. Eggleston	By:	/S/ Gerard C. Keegan
Alan P. Eggleston	Name:	Gerard C. Keegan
	Title:	Vice Chairman and Chief
		Administrative Officer
[Seal]
	/S/ George L. Engelke, Jr.
	George L. Engelke, Jr.

Page 3 of 4

STATE OF NEW YORK	)
	)	SS.:
COUNTY OF NASSAU	)

     On this 15th day of August 2007, before me, the undersigned, personally appeared Gerard C. Keegan, personally known to me or proved to me on the basis of satisfactory evidence to be the individual(s) whose name(s) is (are) subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their capacity(ies), and that by his/her/their signature(s) on the instrument, the individual(s), or the person upon behalf of which the individual(s) acted, executed the instrument.

/S/ Marygrace Farruggia

          Notary Public

Marygrace Farruggia

Notary Public, State of New York

No. 4998931

Qualified in Suffolk County

Commission Expires 7/13/2010

STATE OF NEW YORK	)
	)	SS.:
COUNTY OF NASSAU	)

     On this 15^th day of August 2007, before me, the undersigned, personally appeared George L. Engelke, Jr., personally known to me or proved to me on the basis of satisfactory evidence to be the individual(s) whose name(s) is (are) subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their capacity(ies), and that by his/her/their signature(s) on the instrument, the individual(s), or the person upon behalf of which the individual(s) acted, executed the instrument.

/S/ Marygrace Farruggia

          Notary Public

Marygrace Farruggia

Notary Public, State of New York

No. 4998931

Qualified in Suffolk County

Commission Expires 7/13/2010

Page 4 of 4

EX-10.2

EXHIBIT 10.2

AMENDMENT TO
ASTORIA FEDERAL SAVINGS AND LOAN ASSOCIATION
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT WITH EXECUTIVE OFFICER

     This Amendment to the Amended and Restated Employment Agreement (the “Restated Employment Agreement”) entered into as of January 1, 2000 by and between Astoria Federal Savings and Loan Association, a savings association organized and operation under the federal laws of the United States(the “Association”) and George L. Engelke, Jr. (the “Executive”) is entered into as of August 15, 2007.

WITNESSETH:

     WHEREAS, the Association and Executive have previously entered into the Restated Employment Agreement which remains in full force and effect; and

      WHEREAS, the Association has realigned its executive management staff; and

     WHEREAS,prior to such realignment the Executive served as Chairman, President and Chief Executive Officer; and

     WHEREAS, following such realignment Executive has agreed to continue to serve as Chairman and Chief Executive Officer; and

     WHEREAS, the Board of Directors of the Association has determined that it is in the best interests of the shareholders of the Association to rescind the Association’s mandatory retirement policy for executive officers and, as a result, requested that Executive remain in the employ of the Association beyond his 70^th birthday, which Executive is agreeable to do;

     NOW THEREFORE,in consideration of the premises and the mutual covenants and conditions hereinafter set forth, the Association and Executive hereby agree to amend the Restated Employment Agreement as follows from and after the date hereof:

A)      Section 3. Duties. of the Restated Employment Agreement is amended to replace the title Chairman, President and Chief Executive Officer with the title Chairman and Chief Executive Officer where it appears in such Section.

Page 1 of 4

B)	Section 4. Cash Compensation. of the Restated Employment Agreement is amended to replace the salary set forth in such Section from an initial annual rate of Eight Hundred Ten Thousand Dollars ($810,000) to an initial annual rate of One Million One Hundred Thousand Dollars ($1,100,000) which the Association and Executive acknowledge is Executive ’s current rate of annual salary.
C)	Section 9. Termination of Employment with Severance Benefits. of the Restated Employment Agreement is amended by amending Section 9(a)(i)(A) by replacing the title Chairman, President and Chief Executive Officer with the title Chairman and Chief Executive Officer where it appears in Section 9(a)(i)(A).
D)	Section 9. Termination of Employment with Severance Benefits. and Section 17. Notices. of the Restated Employment Agreement are amended by amending Section 9(b) and Section 17 to provide that the address of Thacher Proffitt & Wood is Two World Financial Center, New York, New York 10281.
E)	Section 10. Termination without Additional Association Liability. of the Restated Employment Agreement is amended by deleting Section 10(a)(v).
F)	Section 30. Compliance with Section 409A of the Code. is added to the Restated Employment Agreement to state as follows:
	Section 30. Compliance with Section 409A of the Code.
	In the event that this Agreement is construed to be a non-qualified deferred compensation plan described in section
409A of the Code, the Agreement shall be operated, administered and construed so as to conform to the requirements of section 409A.

Page 2 of 4

G)      The Restated Employment Agreement is in all other respects confirmed and ratified and the Restated Employment Agreement, as amended by this amendment remains in full force and effect.

     IN WITNESS WHEREOF,the Association has caused this Amendment to be executed and Executive has hereunto set his hand, all as the 15^th day of August 2007.

Attest: ASTORIA FEDERAL SAVINGS AND LOAN
ASSOCIATION

/S/ Alan P. Eggleston	By:	/S/ Gerard C. Keegan
Alan P. Eggleston	Name:	Gerard C. Keegan
	Title:	Vice Chairman and Chief
		Administrative Officer
[Seal]
	/S/ George L. Engelke, Jr.
	George L. Engelke, Jr.

Page 3 of 4

STATE OF NEW YORK	)
	)	SS.:
COUNTY OF NASSAU	)

     On this 15th day of August 2007, before me, the undersigned, personally appeared Gerard C. Keegan, personally known to me or proved to me on the basis of satisfactory evidence to be the individual(s) whose name(s) is (are) subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their capacity(ies), and that by his/her/their signature(s) on the instrument, the individual(s), or the person upon behalf of which the individual(s) acted, executed the instrument.

/S/ Marygrace Farruggia

          Notary Public

Marygrace Farruggia

Notary Public, State of New York

No. 4998931

Qualified in Suffolk County

Commission Expires 7/13/2010

STATE OF NEW YORK	)
	)	SS.:
COUNTY OF NASSAU	)

     On this 15^th day of August 2007, before me, the undersigned, personally appeared George L. Engelke, Jr., personally known to me or proved to me on the basis of satisfactory evidence to be the individual(s) whose name(s) is (are) subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their capacity(ies), and that by his/her/their signature(s) on the instrument, the individual(s), or the person upon behalf of which the individual(s) acted, executed the instrument.

/S/ Marygrace Farruggia

          Notary Public

Marygrace Farruggia

Notary Public, State of New York

No. 4998931

Qualified in Suffolk County

Commission Expires 7/13/2010

Page 4 of 4

EX-10.3

EXHIBIT 10.3

AMENDMENT TO
ASTORIA FINANCIAL CORPORATION
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT WITH EXECUTIVE OFFICER

     This Amendment to the Amended and Restated Employment Agreement (the “Restated Employment Agreement”) entered into as of January 1, 2000 by and between Astoria Financial Corporation, a business corporation organized and operation under the laws of the State of Delaware (the “Company”) and Monte N. Redman (the“Executive”) is entered into as of August 15, 2007.

WITNESSETH:

     WHEREAS, the Company and Executive have previously entered into the Restated Employment Agreement which remains in full force and effect; and

      WHEREAS, the Company has realigned its executive management staff; and

     WHEREAS,prior to such realignment the Executive served as Executive Vice President and Chief Financial Officer; and

     WHEREAS, following such realignment Executive has agreed to continue to serve as President and Chief Operating Officer; and

     WHEREAS, the Board of Directors of the Company has determined that it is in the best interests of the shareholders of the Company to rescind the Company’s mandatory retirement policy for executive officers;

     NOW THEREFORE,in consideration of the premises and the mutual covenants and conditions hereinafter set forth, the Company and Executive hereby agree to amend the Restated Employment Agreement as follows from and after the date hereof:

A)	Section 3. Duties. of the Restated Employment Agreement is amended to replace the title Executive Vice President and Chief Financial Officer with the title President and Chief Operating Officer where it appears in such Section.
B)	Section 4. Cash Compensation. of the Restated Employment Agreement is amended to replace the salary set forth in such Section from an initial annual rate of Four

Page 1 of 4

	Hundred Ten Thousand Dollars ($410,000) to an initial annual rate of Eight Hundred Thousand Dollars ($800,000) which the Company and Executive acknowledge is Executive’s current rate of annual salary.
C)	Section 9. Termination of Employment with Severance Benefits. of the Restated Employment Agreement is amended by amending Section 9(a)(i)(A) by replacing the title Executive Vice President and Chief Financial Officer with the title President and Chief Operating Officer where it appears in Section 9(a)(i)(A).
D)	Section 9. Termination of Employment with Severance Benefits. and Section 18. Notices. of the Restated Employment Agreement are amended by amending Section 9(b) and Section 18 to provide that the address of Thacher Proffitt & Wood is Two World Financial Center, New York, New York 10281.
E)	Section 10. Termination without Additional Company Liability. of the Restated Employment Agreement is amended by deleting Section 10(a)(v).
F)	Section 33. Compliance with Section 409A of the Code. is added to the Restated Employment Agreement to state as follows:
	Section 33. Compliance with Section 409A of the Code.
	In the event that this Agreement is construed to be a non-qualified deferred compensation plan described in section
409A of the Code, the Agreement shall be operated, administered and construed so as to conform to the requirements of section 409A.

Page 2 of 4

G)      The Restated Employment Agreement is in all other respects confirmed and ratified and the Restated Employment Agreement, as amended by this amendment remains in full force and effect.

     IN WITNESS WHEREOF,the Company has caused this Amendment to be executed and Executive has hereunto set his hand, all as the 15^th day of August 2007.

Attest: ASTORIA FINANCIAL CORPORATION

/S/ Alan P. Eggleston	By:	/S/ George L. Engelke, Jr.
Alan P. Eggleston	Name:	George L. Engelke, Jr.
	Title:	Chairman and Chief Executive Officer
[Seal]
	/S/ Monte N. Redman
	Monte N. Redman

Page 3 of 4

STATE OF NEW YORK	)
	)	SS.:
COUNTY OF NASSAU	)

     On this 15th day of August 2007, before me, the undersigned, personally appeared George L. Engelke, Jr., personally known to me or proved to me on the basis of satisfactory evidence to be the individual(s) whose name(s) is (are) subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their capacity(ies), and that by his/her/their signature(s) on the instrument, the individual(s), or the person upon behalf of which the individual(s) acted, executed the instrument.

/S/ Marygrace Farruggia

          Notary Public

Marygrace Farruggia

Notary Public, State of New York

No. 4998931

Qualified in Suffolk County

Commission Expires 7/13/2010

STATE OF NEW YORK	)
	)	SS.:
COUNTY OF NASSAU	)

     On this 15^th day of August 2007, before me, the undersigned, personally appeared Monte N. Redman, personally known to me or proved to me on the basis of satisfactory evidence to be the individual(s) whose name(s) is (are) subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their capacity(ies), and that by his/her/their signature(s) on the instrument, the individual(s), or the person upon behalf of which the individual(s) acted, executed the instrument.

/S/ Marygrace Farruggia

          Notary Public

Marygrace Farruggia

Notary Public, State of New York

No. 4998931

Qualified in Suffolk County

Commission Expires 7/13/2010

Page 4 of 4

EX-10.4

EXHIBIT 10.4

AMENDMENT TO
ASTORIA FEDERAL SAVINGS AND LOAN ASSOCIATION
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT WITH EXECUTIVE OFFICER

     This Amendment to the Amended and Restated Employment Agreement (the “Restated Employment Agreement”) entered into as of January 1, 2000 by and between Astoria Federal Savings and Loan Association, a savings association organized and operation under the federal laws of the United States (the “Association”) and Monte N. Redman (the “Executive”) is entered into as of August 15, 2007.

WITNESSETH:

     WHEREAS, the Association and Executive have previously entered into the Restated Employment Agreement which remains in full force and effect; and

      WHEREAS, the Association has realigned its executive management staff; and

     WHEREAS,prior to such realignment the Executive served as Executive Vice President and Chief Financial Officer; and

     WHEREAS, following such realignment Executive has agreed to continue to serve as President and Chief Operating Officer; and

     WHEREAS, the Board of Directors of the Association has determined that it is in the best interests of the shareholders of the Association to rescind the Association’s mandatory retirement policy for executive officers;

     NOW THEREFORE,in consideration of the premises and the mutual covenants and conditions hereinafter set forth, the Association and Executive hereby agree to amend the Restated Employment Agreement as follows from and after the date hereof:

A)	Section 3. Duties. of the Restated Employment Agreement is amended to replace the title Executive Vice President and Chief Financial Officer with the title President and Chief Operating Officer where it appears in such Section.
B)	Section 4. Cash Compensation. of the Restated Employment Agreement is amended

Page 1 of 4

	to replace the salary set forth in such Section from an initial annual rate of Four Hundred Ten Thousand Dollars ($410,000) to an initial annual rate of Eight Hundred Thousand Dollars ($800,000) which the Association and Executive acknowledge is Executive’s current rate of annual salary.
C)	Section 9. Termination of Employment with Severance Benefits. of the Restated Employment Agreement is amended by amending Section 9(a)(i)(A) by replacing the title Executive Vice President and Chief Financial Officer with the title President and Chief Operating Officer where it appears in Section 9(a)(i)(A).
D)	Section 9. Termination of Employment with Severance Benefits. and Section 17. Notices. of the Restated Employment Agreement are amended by amending Section 9(b) and Section 17 to provide that the address of Thacher Proffitt & Wood is Two World Financial Center, New York, New York 10281.
E)	Section 10. Termination without Additional Association Liability. of the Restated Employment Agreement is amended by deleting Section 10(a)(v).
F)	Section 30. Compliance with Section 409A of the Code. is added to the Restated Employment Agreement to state as follows:
	Section 30. Compliance with Section 409A of the Code.
	In the event that this Agreement is construed to be a non-qualified deferred compensation plan described in section
409A of the Code, the Agreement shall be operated, administered and construed so as to conform to the requirements of section 409A.

Page 2 of 4

G)      The Restated Employment Agreement is in all other respects confirmed and ratified and the Restated Employment Agreement, as amended by this amendment remains in full force and effect.

     IN WITNESS WHEREOF,the Association has caused this Amendment to be executed and Executive has hereunto set his hand, all as the 15^th day of August 2007.

Attest: ASTORIA FEDERAL SAVINGS AND LOAN
ASSOCIATION

/S/ Alan P. Eggleston	By:	/S/ George L. Engelke, Jr.
Alan P. Eggleston	Name:	George L. Engelke, Jr.
	Title:	Chairman and Chief Executive Officer
[Seal]
	/S/ Monte N. Redman
	Monte N. Redman

Page 3 of 4

STATE OF NEW YORK	)
	)	SS.:
COUNTY OF NASSAU	)

     On this 15th day of August 2007, before me, the undersigned, personally appeared George L. Engelke, Jr., personally known to me or proved to me on the basis of satisfactory evidence to be the individual(s) whose name(s) is (are) subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their capacity(ies), and that by his/her/their signature(s) on the instrument, the individual(s), or the person upon behalf of which the individual(s) acted, executed the instrument.

/S/ Marygrace Farruggia

          Notary Public

Marygrace Farruggia

Notary Public, State of New York

No. 4998931

Qualified in Suffolk County

Commission Expires 7/13/2010

STATE OF NEW YORK	)
	)	SS.:
COUNTY OF NASSAU	)

     On this 15^th day of August 2007, before me, the undersigned, personally appeared Monte N. Redman, personally known to me or proved to me on the basis of satisfactory evidence to be the individual(s) whose name(s) is (are) subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their capacity(ies), and that by his/her/their signature(s) on the instrument, the individual(s), or the person upon behalf of which the individual(s) acted, executed the instrument.

/S/ Marygrace Farruggia

          Notary Public

Marygrace Farruggia

Notary Public, State of New York

No. 4998931

Qualified in Suffolk County

Commission Expires 7/13/2010

Page 4 of 4

EX-10.5

EXHIBIT 10.5

AMENDMENT TO
ASTORIA FINANCIAL CORPORATION
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT WITH EXECUTIVE OFFICER

     This Amendment to the Amended and Restated Employment Agreement (the “Restated Employment Agreement”) entered into as of January 1, 2000 by and between Astoria Financial Corporation, a business corporation organized and operation under the laws of the State of Delaware (the “Company”) and Alan P. Eggleston (the “Executive”) is entered into as of August 15, 2007.

WITNESSETH:

     WHEREAS, the Company and Executive have previously entered into the Restated Employment Agreement which remains in full force and effect; and

      WHEREAS, the Company has realigned its executive management staff; and

     WHEREAS,prior to such realignment the Executive served as Executive Vice President, Secretary and General Counsel; and

     WHEREAS, following such realignment Executive has agreed to continue to serve as Executive Vice President, Secretary and General Counsel; and

     WHEREAS, the Board of Directors of the Company has determined that it is in the best interests of the shareholders of the Company to rescind the Company’s mandatory retirement policy for executive officers;

     NOW THEREFORE,in consideration of the premises and the mutual covenants and conditions hereinafter set forth, the Company and Executive hereby agree to amend the Restated Employment Agreement as follows from and after the date hereof:

A)	Section 3. Duties. of the Restated Employment Agreement is amended to replace the title Executive Vice President and General Counsel with the title Executive Vice President, Secretary and General Counsel where it appears in such Section.
B)	Section 4. Cash Compensation. of the Restated Employment Agreement is amended to replace the salary set forth in such Section from an initial annual rate of Two

Page1of 4

	Hundred Seventy Five Thousand Dollars ($275,000) to an initial annual rate of Four Hundred Forty Five Thousand Dollars ($445,000) which the Company and Executive acknowledge is Executive’s current rate of annual salary.
C)	Section 9. Termination of Employment with Severance Benefits. of the Restated Employment Agreement is amended by amending Section 9(a)(i)(A) by replacing the title Executive Vice President and General Counsel with the title Executive Vice President, Secretary and General Counsel where it appears in Section 9(a)(i)(A).
D)	Section 9. Termination of Employment with Severance Benefits. and Section 18. Notices. of the Restated Employment Agreement are amended by amending Section 9(b) and Section 18 to provide that the address of Thacher Proffitt & Wood is Two World Financial Center, New York, New York 10281.
E)	Section 10. Termination without Additional Company Liability. of the Restated Employment Agreement is amended by deleting Section 10(a)(v).
F)	Section 33. Compliance with Section 409A of the Code. is added to the Restated Employment Agreement to state as follows:
	Section 33. Compliance with Section 409A of the Code.
	In the event that this Agreement is construed to be a non-qualified deferred compensation plan described in section
409A of the Code, the Agreement shall be operated, administered and construed so as to conform to the requirements of section 409A.

Page2of 4

G)      The Restated Employment Agreement is in all other respects confirmed and ratified and the Restated Employment Agreement, as amended by this amendment remains in full force and effect.

     IN WITNESS WHEREOF,the Company has caused this Amendment to be executed and Executive has hereunto set his hand, all as the 15^th day of August 2007.

Attest: ASTORIA FINANCIAL CORPORATION

/S/ Arnold K. Greenberg	By:	/S/ George L. Engelke, Jr.
Arnold K. Greenberg	Name:	George L. Engelke, Jr.
	Title:	Chairman and Chief Executive Officer
[Seal]
	/S/ Alan P. Eggleston
	Alan P. Eggleston

Page3of 4

STATE OF NEW YORK	)
	)	SS.:
COUNTY OF NASSAU	)

     On this 15th day of August 2007, before me, the undersigned, personally appeared George L. Engelke, Jr., personally known to me or proved to me on the basis of satisfactory evidence to be the individual(s) whose name(s) is (are) subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their capacity(ies), and that by his/her/their signature(s) on the instrument, the individual(s), or the person upon behalf of which the individual(s) acted, executed the instrument.

/S/ Marygrace Farruggia

          Notary Public

Marygrace Farruggia

Notary Public, State of New York

No. 4998931

Qualified in Suffolk County

Commission Expires 7/13/2010

STATE OF NEW YORK	)
	)	SS.:
COUNTY OF NASSAU	)

     On this 15^th day of August 2007, before me, the undersigned, personally appeared Alan P. Eggleston, personally known to me or proved to me on the basis of satisfactory evidence to be the individual(s) whose name(s) is (are) subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their capacity(ies), and that by his/her/their signature(s) on the instrument, the individual(s), or the person upon behalf of which the individual(s) acted, executed the instrument.

/S/ Marygrace Farruggia

          Notary Public

Marygrace Farruggia

Notary Public, State of New York

No. 4998931

Qualified in Suffolk County

Commission Expires 7/13/2010

Page4of 4

EX-10.6

EXHIBIT 10.6

AMENDMENT TO
ASTORIA FEDERAL SAVINGS AND LOAN ASSOCIATION
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT WITH EXECUTIVE OFFICER

     This Amendment to the Amended and Restated Employment Agreement (the “Restated Employment Agreement” ) entered into as of January 1, 2000 by and between Astoria Federal Savings and Loan Association, a savings association organized and operation under the federal laws of the United States(the “Association”) and Alan P. Eggleston (the “Executive”) is entered into as of August 15, 2007.

WITNESSETH:

     WHEREAS, the Association and Executive have previously entered into the Restated Employment Agreement which remains in full force and effect; and

     WHEREAS, the Association has realigned its executive management staff; and

     WHEREAS,prior to such realignment the Executive served as Executive Vice President, Secretary and General Counsel; and

     WHEREAS, following such realignment Executive has agreed to continue to serve as Executive Vice President, Secretary and General Counsel; and

     WHEREAS, the Board of Directors of the Association has determined that it is in the best interests of the shareholders of the Association to rescind the Association’s mandatory retirement policy for executive officers;

     NOW THEREFORE,in consideration of the premises and the mutual covenants and conditions hereinafter set forth, the Association and Executive hereby agree to amend the Restated Employment Agreement as follows from and after the date hereof:

A)	Section 3. Duties. of the Restated Employment Agreement is amended to replace the title Executive Vice President and General Counsel with the title Executive Vice President, Secretary and General Counsel where it appears in such Section.
B)	Section 4. Cash Compensation. of the Restated Employment Agreement is amended

Page 1of 4

	to replace the salary set forth in such Section from an initial annual rate of Two Hundred Seventy Five Thousand Dollars ($275,000) to an initial annual rate of Four Hundred Forty Five Thousand Dollars ($445,000) which the Association and Executive acknowledge is Executive’s current rate of annual salary.
C)	Section 9. Termination of Employment with Severance Benefits. of the Restated Employment Agreement is amended by amending Section 9(a)(i)(A) by replacing the title Executive Vice President and General Counsel with the title Executive Vice President, Secretary and General Counsel where it appears in Section 9(a)(i)(A).
D)	Section 9. Termination of Employment with Severance Benefits. and Section 17. Notices. of the Restated Employment Agreement are amended by amending Section 9(b) and Section 17 to provide that the address of Thacher Proffitt & Wood is Two World Financial Center, New York, New York 10281.
E)	Section 10. Termination without Additional Association Liability. of the Restated Employment Agreement is amended by deleting Section 10(a)(v).
F)	Section 30. Compliance with Section 409A of the Code. is added to the Restated Employment Agreement to state as follows:
	Section 30. Compliance with Section 409A of the Code.
	In the event that this Agreement is construed to be a non-qualified deferred compensation plan described in section
409A of the Code, the Agreement shall be operated, administered and construed so as to conform to the requirements of section 409A.

Page 2 of 4

G)      The Restated Employment Agreement is in all other respects confirmed and ratified and the Restated Employment Agreement, as amended by this amendment remains in full force and effect.

     IN WITNESS WHEREOF,the Association has caused this Amendment to be executed and Executive has hereunto set his hand, all as the 15^th day of August 2007.

Attest: ASTORIA FEDERAL SAVINGS AND LOAN
ASSOCIATION

/S/ Arnold K. Greenberg	By:	/S/ George L. Engelke, Jr.
Arnold K. Greenberg	Name:	George L. Engelke, Jr.
	Title:	Chairman and Chief Executive Officer
[Seal]
	/S/ Alan P. Eggleston
	Alan P. Eggleston

Page 3 of 4

STATE OF NEW YORK	)
	)	SS.:
COUNTY OF NASSAU	)

     On this 15th day of August 2007, before me, the undersigned, personally appeared George L. Engelke, Jr., personally known to me or proved to me on the basis of satisfactory evidence to be the individual(s) whose name(s) is (are) subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their capacity(ies), and that by his/her/their signature(s) on the instrument, the individual(s), or the person upon behalf of which the individual(s) acted, executed the instrument.

/S/ Marygrace Farruggia

          Notary Public

Marygrace Farruggia

Notary Public, State of New York

No. 4998931

Qualified in Suffolk County

Commission Expires 7/13/2010

STATE OF NEW YORK	)
	)	SS.:
COUNTY OF NASSAU	)

     On this 15^th day of August 2007, before me, the undersigned, personally appeared Alan P. Eggleston, personally known to me or proved to me on the basis of satisfactory evidence to be the individual(s) whose name(s) is (are) subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their capacity(ies), and that by his/her/their signature(s) on the instrument, the individual(s), or the person upon behalf of which the individual(s) acted, executed the instrument.

/S/ Marygrace Farruggia

          Notary Public

Marygrace Farruggia

Notary Public, State of New York

No. 4998931

Qualified in Suffolk County

Commission Expires 7/13/2010

Page 4 of 4

EX-10.7

Exhibit 10.7

ASTORIA FINANCIAL CORPORATION
EMPLOYMENT AGREEMENT WITH EXECUTIVE OFFICER

          This EMPLOYMENT AGREEMENT (the “Agreement”) is made and entered into as of August 15, 2007 by and between ASTORIA FINANCIAL CORPORATION, a business corporation organized and operating under the laws of the State of Delaware and having an office at One Astoria Federal Plaza, Lake Success, New York 11042-1085 (the “Company”), and FRANK E.FUSCO, an individual residing at 6 Philson Court, Commack, New York 11725 (the "Executive”).

WITNESSETH:

          WHEREAS, the Executive currently serves the Company in the capacity of Executive Vice President, Treasurer and Chief Financial Officer and as Executive Vice President, Treasurer and Chief Financial Officer of its wholly owned subsidiary, ASTORIA FEDERAL SAVINGS AND LOAN ASSOCIATION (the “Association”); and

          WHEREAS, the Executive currently has a Change of Control Severance Agreement with the Company dated January 1, 2000 which the Executive and the Company wish to terminate and replace with this Agreement; and

          WHEREAS, the Company desires to assure for itself the continued availability of the Executive’s services and the ability of the Executive to perform such services with a minimum of personal distraction in the event of a pending or threatened Change of Control (as hereinafter defined); and

          WHEREAS, the Executive is willing to continue to serve the Company on the terms and conditions hereinafter set forth;

          NOW,THEREFORE, in consideration of the premises and the mutual covenants and conditions hereinafter set forth, the Company and the Executive hereby terminate in its entirety the Change of Control Severance Agreement by and between the Company and the Executive dated as of January 1, 2000 and replace such Change of Control Severance Agreement in all respects and manner with this Agreement so as to provide as follows from and after the date hereof:

          Section 1.      Employment.

          The Company agrees to continue to employ the Executive, and the Executive hereby agrees to such continued employment, during the period and upon the terms and conditions set forth in this Agreement.

           Section 2.      Employment Period; Remaining Unexpired Employment Period.

Page 1 of 31

(a)	The terms and conditions of this Agreement shall be and remain in effect during the period of employment established under this Section 2 (the “Employment Period”). The Employment Period shall be for an initial term of three years beginning on the date of this Agreement and ending on the day before the third anniversary date of this Agreement, plus such extensions, if any, as are provided by the Board of Directors of the Company (the “Board”) pursuant to Section 2(b).
(b)	Beginning on the date of this Agreement, the Employment Period shall automatically be extended for one (1) additional day each day, unless either the Company or the Executive elects not to extend the Agreement further by giving written notice to the other party, in which case the Employment Period shall end on the day before the third anniversary of the date on which such written notice is given. For all purposes of this Agreement, the term “Remaining Unexpired Employment Period” as of any date shall mean the period beginning on such date and ending on:
	(i)	if a notice of non-extension has been given in accordance with this Section 2(b), the day before the third anniversary of the date on which such notice is given; and
	(ii)	in all other cases, the day before the third anniversary of the date as of which the Remaining Unexpired Employment Period is being determined.
	Upon termination of the Executive’s employment with the Company for any reason whatsoever, any daily extensions provided pursuant to this Section 2(b), if not previously discontinued, shall automatically cease.
(c)	Nothing in this Agreement shall be deemed to prohibit the Company from terminating the Executive’s employment at any time during the Employment Period with or without notice for any reason; provided, however, that the relative rights and obligations of the Company and the Executive in the event of any such termination shall be determined pursuant to this Agreement.

           Section 3.      Duties.

          The Executive shall serve as Executive Vice President, Treasurer and Chief Financial Officer of the Company, having such power, authority and responsibility and performing such duties as are prescribed by or pursuant to the By-Laws of the Company and as are customarily associated with such position. The Executive shall devote his or her full business time and attention (other than during weekends, holidays, approved vacation periods, and periods of illness or approved leaves of absence) to the business and affairs of the Company, its affiliates and subsidiaries and shall use his or her best efforts to advance the interests of the Company.

Page 2 of 31

           Section 4.      Cash Compensation.

           In consideration for the services to be rendered by the Executive hereunder, the Company shall pay to him or her a salary at an initial annual rate of FOUR HUNDRED THOUSAND DOLLARS ($400,000), payable in approximately equal installments in accordance with the Company’s customary payroll practices for senior officers. At least annually during the Employment Period, the Board shall review the Executive’s annual rate of salary and may, in its discretion, approve an increase therein. In no event shall the Executive’s annual rate of salary under this Agreement in effect at a particular time be reduced without his or her prior written consent and any such reduction in the absence of such consent shall be a material breach of this Agreement. In addition to salary, the Executive may receive other cash compensation from the Company for services hereunder at such times, in such amounts and on such terms and conditions as the Board may determine from time to time.

           Section 5.      Employee Benefit Plans and Programs.

          During the Employment Period, the Executive shall be treated as an employee of the Company and shall be entitled to participate in and receive benefits under any and all qualified or non-qualified retirement, pension, savings, profit-sharing or stock bonus plans, any and all group life, health (including hospitalization, medical and major medical), dental, accident and long term disability insurance plans, and any other employee benefit and compensation plans (including, but not limited to, any incentive compensation plans or programs, stock option and appreciation rights plans and restricted stock plans) as may from time to time be maintained by, or cover employees of, the Company, in accordance with the terms and conditions of such employee benefit plans and programs and compensation plans and programs and consistent with the Company’s customary practices.

           Section 6.      Indemnification and Insurance.

(a)

During the Employment Period and for a period of six (6) years thereafter, the Company shall cause the Executive to be covered by and named as an insured under any policy or contract of insurance obtained by it to insure its directors and officers against personal liability for acts or omissions in connection with service as an officer or director of the Company or service in other capacities at the request of the Company. The coverage provided to the Executive pursuant to this Section 6 shall be of the same scope and on the same terms and conditions as the coverage (if any) provided to other officers or directors of the Company.

(b)

To the maximum extent permitted under applicable law, during the Employment Period and for a period of six (6) years thereafter, the Company shall indemnify the Executive against, and hold him or her harmless from, any costs, liabilities, losses and exposures to the fullest extent and on the most favorable terms and conditions

Page 3 of 31

	that similar indemnification is offered to any director or officer of the Company or any subsidiary or affiliate thereof.
Section 7.      Other Activities.
(a)	The Executive may serve as a member of the boards of directors of such business, community and charitable organizations as he or she may disclose to and as may be approved by the Board (which approval shall not be unreasonably withheld); provided, however, that such service shall not materially interfere with the performance of his or her duties under this Agreement. The Executive may also engage in personal business and investment activities which do not materially interfere with the performance of his or her duties hereunder; provided, however, that such activities are not prohibited under any code of conduct or investment or securities trading policy established by the Company and generally applicable to all similarly situated executives.
(b)	The Executive may also serve as an officer or director of the Association on such terms and conditions as the Company and the Association may mutually agree upon, and such service shall not be deemed to materially interfere with the Executive’s performance of his or her duties hereunder or otherwise result in a material breach of this Agreement. If the Executive is discharged or suspended, or is subject to any regulatory prohibition or restriction with respect to participation in the affairs of the Association, he or she shall (subject to the Company’s powers of termination hereunder) continue to perform services for the Company in accordance with this Agreement but shall not directly or indirectly provide services to or participate in the affairs of the Association in a manner inconsistent with the terms of such discharge or suspension or any applicable regulatory order.
Section 8.      Working Facilities and Expenses.

          The Executive’s principal place of employment shall be at the Company’s executive offices at the address first above written, or at such other location within Queens County or Nassau County, New York at which the Company shall maintain its principal executive offices, or at such other location as the Company and the Executive may mutually agree upon. The Company shall provide the Executive at his or her principal place of employment with a private office, secretarial services and other support services and facilities suitable to his or her position with the Company and necessary or appropriate in connection with the performance of his or her assigned duties under this Agreement. The Company shall provide to the Executive for his or her exclusive use an automobile owned or leased by the Company and appropriate to his or her position, to be used in the performance of his or her duties hereunder, including commuting to and from his or her personal residence. The Company shall reimburse the Executive for his or her ordinary and necessary business expenses, including, without limitation, all expenses associated with his or her business use of the aforementioned automobile, fees for memberships in such clubs and organizations as the Executive

Page 4 of 31

and the Company shall mutually agree are necessary and appropriate for business purposes, and his or her travel and entertainment expenses incurred in connection with the performance of his or her duties under this Agreement, in each case upon presentation to the Company of an itemized account of such expenses in such form as the Company may reasonably require.

Section 9. Termination of Employment with Severance Benefits.
(a)	The Executive shall be entitled to the severance benefits described herein in the event that his or her employment with the Company terminates during the Employment Period under any of the following circumstances:
	(i)	the Executive’s voluntary resignation from employment with the Company within six (6) months following:
		(A)	the failure of the Board to appoint or re-appoint or elect or re-elect the Executive to the office of Executive Vice President, Treasurer and Chief Financial Officer (or a more senior office) of the Company;
		(B)	if the Executive is or becomes a member of the Board, the failure of the stockholders of the Company to elect or re-elect the Executive to the Board or the failure of the Board (or the nominating committee thereof) to nominate the Executive for such election or re-election;
		(C)	the expiration of a thirty (30) day period following the date on which the Executive gives written notice to the Company of its material failure, whether by amendment of the Company’s Certificate of Incorporation or By-laws, action of the Board or the Company’s stockholders or otherwise, to vest in the Executive the functions, duties, or responsibilities prescribed in Section 3 of this Agreement as of the date hereof, unless, during such thirty (30) day period, the Company cures such failure in a manner determined by the Executive, in his or her discretion, to be satisfactory;
		(D)	the expiration of a thirty (30) day period following the date on which the Executive gives written notice to the Company of its material breach of any term, condition or covenant contained in this Agreement (including, without limitation, any reduction of the Executive’s rate of base salary in effect from time to time and any change in the terms and conditions of any compensation or benefit program in which the Executive participates which, either individually or together with other changes, has a material adverse effect on the aggregate value of his or her total compensation package), unless, during such thirty (30) day period, the Company

Page 5 of 31

			cures such failure in a manner determined by the Executive, in his or her discretion, to be satisfactory; or
		(E)	the relocation of the Executive’s principal place of employment, without his or her written consent, to a location outside of Nassau County and Queens County, New York;
	(ii)	the termination of the Executive’s employment with the Company for any other reason not described in Section 10(a).
	In such event, the Company shall provide the benefits and pay to the Executive the amounts described in Section 9(b).
(b)	Upon the termination of the Executive’s employment with the Company under circumstances described in Section 9(a) of this Agreement, the Company shall pay and provide to the Executive (or, in the event of the Executive’s death following the Executive’s termination of employment, to his or her estate):
	(i)	his or her earned but unpaid compensation (including, without limitation, all items which constitute wages under Section 190.1 of the New York Labor Law and the payment of which is not otherwise provided for under this Section 9(b)) as of the date of the termination of his or her employment with the Company, such payment to be made at the time and in the manner prescribed by law applicable to the payment of wages but in any event not later than thirty (30) days after termination of employment;
	(ii)	the benefits, if any, to which he or she is entitled as a former employee under the employee benefit plans and programs and compensation plans and pro- grams maintained for the benefit of the Company’s officers and employees;
	(iii)	continued group life, health (including hospitalization, medical and major medical), dental, accident and long term disability insurance benefits, in addition to that provided pursuant to Section 9(b)(ii), and after taking into account the coverage provided by any subsequent employer, if and to the extent necessary to provide for the Executive, for the Remaining Unexpired Employment Period, coverage (including any co-payments and deductibles, but excluding any premium sharing arrangements, it being the intention of the parties to this Agreement that the premiums for such insurance benefits shall be the sole cost and expense of the Company) equivalent to the coverage to which he or she would have been entitled under such plans (as in effect on the date of his or her termination of employment, or, if his or her termination of employment occurs after a Change of Control, on the date of such Change of Control, whichever benefits are greater), if he or she had continued

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	working for the Company during the Remaining Unexpired Employment Period at the highest annual rate of salary or compensation, as applicable, achieved during that portion of the Employment Period which is prior to the Executive’s termination of employment with the Company;
(iv)	within thirty (30) days following the Executive’s termination of employment with the Company, a lump sum payment in an amount representing an estimate of the salary that the Executive would have earned if he or she had continued working for the Company during the Remaining Unexpired Employment Period at the highest annual rate of salary achieved during that portion of the Employment Period which is prior to the Executive’s termination of employment with the Company (the “Salary Severance Payment”). The Salary Severance Payment shall be computed using the following formula:
	SSP    =    BS x NY
	where:
	“SSP” is the amount of the Salary Severance Payment, before the deduction of applicable federal, state and local withholding taxes;
	“BS” is the highest annual rate of salary achieved during that portion of the Employment Period which is prior to the Executive’s termination of employment with the Company;
	“NY” is the Remaining Unexpired Employment Period expressed as a number of years (rounded, if such period is not a whole number, to the next highest whole number).
	The Salary Severance Payment shall be paid in lieu of all other payments of salary provided for under this Agreement in respect of the period following any such termination.
(v)	within thirty (30) days following the Executive’s termination of employment with the Company, a lump sum payment (the “DB Severance Payment”) in an amount equal to the excess, if any, of:
	(A)	the present value of the aggregate benefits to which he or she would be entitled under any and all qualified and non-qualified defined benefit pension plans maintained by, or covering employees of, the Company, if he or she were 100% vested thereunder and had continued working for the Company during the Remaining Unexpired

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	Employment Period, such benefits to be determined as of the date of termination of employment by adding to the service actually recognized under such plans an additional period equal to the Remaining Unexpired Employment Period and by adding to the compensation recognized under such plans for the most recent year recognized all amounts payable pursuant to Sections 9(b)(i), (iv), (vii), (viii) and (ix) of this Agreement; over
(B)	the present value of the benefits to which he or she is actually entitled under such defined benefit pension plans as of the date of his or her termination;
The DB Severance Payment shall be computed using the following formula:
	DBSP     =     SEVLS - LS
where:
“DBSP” is the amount of the DB Severance Payment, before the deduction of applicable federal, state and local withholding taxes;
“SEVLS” is the sum of the present value of the defined benefit pension benefits that have been or would be accrued by the Executive under all qualified and non-qualified defined benefit pension plans of which the Company or any of its affiliates or subsidiaries are a sponsor and in which the Executive is or, but for the completion of any service requirement that would have been completed during the Remaining Unexpired Employment Period, would be a participant utilizing the following assumptions:
	(I)	the executive is 100% vested in the plans regardless of actual service,
	(II)	the benefit to be valued shall be a single life annuity with monthly payments due on the first day of each month and with a guaranteed payout of not less than 120 monthly payments,
	(III)	the calculation shall be made utilizing the same mortality table and interest rate as would be utilized by the plan on the date of termination as if the calculation were being made pursuant to Section 417(e)(3)(A)(ii) of the Internal Revenue Code, as amended, (the “Code”);

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		(IV)	for purpose of calculating the Executive’s monthly or annual benefit under the defined benefit plans, additional service equal to the Remaining Unexpired Employment Period (rounded up to the next whole year if such period is not a whole number when expressed in years) shall be added to the Executive’s actual service to calculate the amount of the benefit; and
		(V)	for purpose of calculating the Executive’s monthly or annual benefit under the defined benefit plans, the following sums shall be added to the Executive’s compensation recognized under such plans for the most recent year recognized:
			(1)   payments made pursuant to Section 9(b)(i);
			(2)   the Salary Severance Payment;
			(3)   the Bonus Severance Payment;
			(4)   the Option Surrender Payment; and
			(5)   the RRP Surrender Payment.
	“LS” is the sum of the present value of the defined benefit pension benefits that are vested benefits actually accrued by the Executive under all qualified and non-qualified defined benefit pension plans maintained by, or covering employees of, the Company or any of its affiliates or subsidiaries in which the Executive is or, but for the completion of any service requirement, would be a participant utilizing the following assumptions:
		(I)	the benefit to be valued shall be a single life annuity with monthly payments due on the first day of each month and with a guaranteed payout of not less than 120 monthly payments, and
		(II)	the calculation shall be made utilizing the same mortality table and interest rate as would be utilized by the plan on the date of termination as if the calculation were being made pursuant to Section 417(e)(3)(A)(ii) of the Code;
(vi)	within thirty (30) days following the Executive’s termination of employment with the Company, a lump sum payment (the “Defined Contribution Severance Payment”) equal to the sum of:
	(A)	an estimate of the additional employer contributions to which he or she would have been entitled under any and all qualified and non-qualified defined contribution pension plans, excluding the employee

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	stock ownership plans, maintained by, or covering employees of, the Company or any of its affiliates or subsidiaries as if he or she were 100% vested thereunder and had continued working for the Company during the Remaining Unexpired Employment Period (the “401K Severance Payment”); and
(B)	an estimate of the value of the additional assets which would have been allocable to him or her through debt service or otherwise under any and all qualified and non-qualified employee stock ownership plans, maintained by, or covering employees of, the Company or any of its affiliates or subsidiaries as if he or she were 100% vested thereunder and had continued working for the Company during the Remaining Unexpired Employment Period, based on the fair market value of such assets at termination of employment (the “ESOP Severance Payment”).
The Defined Contribution Severance Payment shall be calculated as follows:
	DCSP     =     401KSP + ESOPSP
where:
“DCSP” is the amount of the Defined Contribution Severance Payment, before the deduction of applicable federal, state and local withholding taxes;
“401KSP” is the amount of the 401K Severance Payment, before the deduction of applicable federal, state and local withholding taxes; and
“ESOPSP” is the amount of the ESOP Severance Payment, before the deduction of applicable federal, state and local withholding taxes.
The 401KSP shall be calculated as follows:
	401KSP     =     (401KC x NY) + UVB
where
“401KC” is the sum of the Company Contributions as defined in the Association’s Incentive Savings Plan or, if made under another defined contribution pension plan other than an employee stock ownership plan, the comparable contribution made for the benefit of the Executive during the one year period which shall end on the date of his or her termination of his or her employment with the Company;

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“NY” is the Remaining Unexpired Employment Period expressed as a number of years (rounded, if such period is not a whole number, to the next highest whole number); and
“UVB” is the actual balance credited to the Executive’s account under the applicable plan at the date of his or her termination of employment that is not vested and does not become vested as a consequence of such termination of employment.
The ESOPSP shall be calculated as follows:
	ESOPSP = (((ALL x FMV) + C) x NY) + UVB
where:
“ALL” is the sum of the number of shares of the Company’s common stock or, if applicable, phantom shares of such stock by whatever term it is described allocated to the Executive’s accounts under all qualified and non-qualified employee stock ownership plans maintained by the Company or any of its affiliates or subsidiaries during or for the last complete plan year in which the Executive participated in such plans and received such an allocation whether the allocation occurred as a result of contributions made by the Company, the payment by the Company or any of its affiliates or subsidiaries of any loan payments under a leveraged employee stock ownership plan, the allocation of forfeitures under the terms of such plan or as a result of the use of cash or earnings allocated to the Executive’s account during such plan year to make loan payments that result in share allocations, provided however, that excluded shall be any shares or phantom shares allocated to the Executive’s account under any qualified and non-qualified employee stock ownership plans maintained by the Company or any of its affiliates or subsidiaries solely as a result of the termination of such plans, provided further, that if the shares allocated are not shares of the Association’s common stock or phantom shares of such stock than shares of whatever securities are so allocated shall be utilized, and provided further, that in the event that there shall be any shares or phantom shares allocated during the then current plan year or the last complete plan year to the Executive’s account under any qualified and non-qualified employee stock ownership plans maintained by the Association or any of its affiliates or subsidiaries solely as a result of the termination of such plans, the ALL shall be reduced (but not to an amount less than zero (0)) by an amount calculated by multiplying the number of shares or phantom shares allocated to the Executive’s account solely as a result of the termination of such plans times the FMV utilized to calculate the ESOPSP;

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	“C” is the sum of all cash allocated to the Executive’s accounts under all qualified and non-qualified employee stock ownership plans maintained by the Company during or for the last complete plan year in which the Executive participated in such plans whether the allocation occurred as a result of contributions made by the Company, the payment by the Company or the Association of any loan payments under a leveraged employee stock ownership plan or the allocation of forfeitures under the terms of such plan during such plan year;
	“FMV” is the closing price of the Company’s common stock on the New York Stock Exchange or on whatever other stock exchange or market such stock is publicly traded on the date the Executive’s employment terminatesor, if such day is not a day on which such securities are traded, on the most recent preceding trading day on which a trade occurs, provided however that if the security allocated to the Executive’s account during the last completed plan year is other than the Company’s common stock the closing price of such other security on the date the Executive’s employment terminates shall be utilized.
	“NY” is the Remaining Unexpired Employment Period expressed as a number of years (rounded, if such period is not a whole number, to the next highest whole number); and
	“UVB” is the actual balance credited to the Executive’s account under the applicable plan at the date of his or her termination of employment that is not vested and does not become vested as a consequence of such termination of employment.
(vii)	within thirty (30) days following the Executive’s termination of employment with the Company, the Company shall make a lump sum payment to the Executive in an amount equal to the estimated potential annual bonuses or incentive compensation that the Executive could have earned if the Executive had continued working for the Company during the Unexpired Employment Period at the highest annual rate of salary achieved during that portion of the Employment Period which is prior to the Executive’s termination of employment with the Company (the “Bonus Severance Payment”). The Bonus Severance Payment shall be computed using the following formula:
	BSP     =     ( BS x TIO x AP x NY)
	where:
	“BSP” is the amount of the Bonus Severance Payment, before the deduction

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	of applicable federal, state and local withholding taxes;
	“BS” is the highest annual rate of salary achieved during that portion of the Employment Period which is prior to the Executive’s termination of employment with the Company;
	“TIO” is the highest target incentive opportunity (expressed as a percentage of base salary) established by the Compensation Committee of the Board for the Executive pursuant to the Astoria Financial Corporation Executive Officer Annual Incentive Plan during that portion of the Employment Period which is prior to the Executive’s termination of employment with the Company;
	“AP” is the highest award percentage available to the Executive with respect to the financial performance of the Company (expressed as a percentage of the TIO) established by the Compensation Committee of the Board for the Executive pursuant to the Astoria Financial Corporation Executive Officer Annual Incentive Plan during the period during that portion of the Employment Period which is prior to the Executive’s termination of employment with the Company; and
	“NY” is the Remaining Unexpired Employment Period expressed as a number of years (rounded, if such period is not a whole number, to the next highest whole number).
(viii)	at the election of the Company made within thirty (30) days following the Executive’s termination of employment with the Company, upon the surrender of options or appreciation rights issued to the Executive under any stock option and appreciation rights plan or program maintained by, or covering employees of, the Company, a lump sum payment (the “Option Surrender Payment”). The Option Surrender Payment shall be calculated as follows:
	OSP     =     (FMV - EP) x N
	where:
	“OSP” is the amount of the Option Surrender Payment, before the deduction of applicable federal, state and local withholding taxes;
	“FMV” is the closing price of the Company’s common stock on the New York Stock Exchange, or on whatever other stock exchange or market such stock is publicly traded, on the date the Executive’s employment terminates

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	or, if such day is not a day on which such securities are traded, on the most recent preceding trading day on which a trade occurs, provided however that if the option or stock appreciation right is for a security other than the Company’s common stock, the fair market value of a share of stock of the same class as the stock subject to the option or appreciation right, determined as of the date of termination of employment shall be utilized;
	“EP” is the exercise price per share for such option or appreciation right, as specified in or under the relevant plan or program; and
	“N” is the number of shares with respect to which options or appreciation rights are being surrendered.
	For purposes of determining the Option Severance Payment and for purposes of determining the Executive’s right following his or her termination of employment with the Company to exercise any options or appreciation rights not surrendered pursuant hereto, the Executive shall be deemed fully vested in all options and appreciation rights under any stock option or appreciation rights plan or program maintained by, or covering employees of, the Company, even if he or she is not vested under such plan or program;
(ix)	at the election of the Company made within thirty (30) days following the Executive’s termination of employment with the Company, upon the surrender of any shares awarded to the Executive under any restricted stock plan maintained by, or covering employees of, the Company, a lump sum payment (the “RRP Surrender Payment”) The RRP Surrender Payment shall be calculated as follows:
	RSP     =     FMV x N
	where:
	“RSP” is the amount of the RRP Surrender Payment, before the deduction of applicable federal, state and local withholding taxes;
	“FMV” is the closing price of the Company’s common stock on the New York Stock Exchange, or on whatever other stock exchange or market such stock is publicly traded, on the date the Executive’s employment terminates or, if such day is not a day on which such securities are traded, on the preceding trading day on which a trade occurs, provided however that if the restricted stock is a security other than the Company’s common stock, the fair market value of a share of stock of the same class as the stock granted under such plan, determined as of the date of termination of employment shall be

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	utilized; and
	“N” is the number of shares which are being surrendered.
	For purposes of determining the RRP Surrender Payment and for purposes of determining the Executive’s right following his or her termination of employment with the Company to any stock not surrendered pursuant hereto, the Executive shall be deemed fully vested in all shares awarded under any restricted stock plan maintained by, or covering employees of, the Company, even if he or she is not vested under such plan.
The Salary Severance Payment, the DB Severance Payment, the Defined Contribution Severance Payment, the Bonus Severance Payment, the Option Surrender Payment and the RRP Surrender Payment shall be computed at the expense of the Company by an attorney of the firm of Thacher Proffitt & Wood, Two World Financial Center, New York, New York 10281 or, if such firm is unavailable or unwilling to perform such calculation, by a firm of independent certified public accountants selected by the Executive and reasonably satisfactory to the Company (the “Computation Advisor”). The determination of the Computation Advisor as to the amount of such payments shall be final and binding in the absence of manifest error.
The Company and the Executive hereby stipulate that the damages which may be incurred by the Executive following any such termination of employment are not capable of accurate measurement as of the date first above written and that the payments and benefits contemplated by this Section 9(b) constitute reasonable damages under the circumstances and shall be payable without any requirement of proof of actual damage and without regard to the Executive’s efforts, if any, to mitigate damages. The Company and the Executive further agree that the Company may condition the payment of the Salary Severance Payment, the DB Severance Payment, the Defined Contribution Severance Payment, the Bonus Severance Payment, the Option Surrender Payment and the RRP Surrender Payment on the receipt of the Executive’s resignation from any and all positions which he or she holds as an officer, director or committee member with respect to the Company, the Association or any subsidiary or affiliate of either of them.

          Section 10.      Termination without Additional Company Liability.

(a)	In the event that the Executive’s employment with the Company shall terminate during the Employment Period on account of:
	(i)	the discharge of the Executive for Cause, which, for purposes of this Agreement shall mean:

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		(A)	the Executive intentionally engages in dishonest conduct in connection with the Executive’s performance of services for the Company resulting in the Executive’s conviction of a felony;
		(B)	the Executive is convicted of, or pleads guilty or nolo contendere to, a felony or any crime involving moral turpitude;
		(C)	the Executive willfully fails or refuses to perform the Executive’s duties under this Agreement and fails to cure such breach within sixty (60) days following written notice thereof from the Company;
		(D)	the Executive breaches the Executive’s fiduciary duties to the Company for personal profit;
		(E)	the Executive’s willful breach or violation of any law, rule or regulation (other than traffic violations or similar offenses), or final cease and desist order in connection with the Executive’s performance of services for the Company; or
		(F)	the Executive’s material breach of any material provision of this Agreement which is not substantially cured within 60 days after written notice of such breach is received by the Executive from the Company.
	(ii)	the Executive’s voluntary resignation from employment with the Company for reasons other than those specified in Section 9(a) or 11(b);
	(iii)	the Executive’s death;
	(iv)	a determination that the Executive is Disabled;
	then the Company, except as otherwise specifically provided herein, shall have no further obligations under this Agreement, other than the payment to the Executive (or, in the event of his or her death, to his or her estate) of the amounts or benefits provided in Section 9(b)(i) and (ii) of this Agreement (the “Standard Termination Entitlements”).
(b)	For purposes of Section 10(a)(i), no act or failure to act, on the part of the Executive, shall be considered “intentional” or “willful” unless it is done, or omitted to be done, by the Executive in bad faith or without reasonable belief that the Executive’s action or omission was in the best interests of the Company. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board or based upon the written advice of counsel for the Company shall be conclusively presumed

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to be done, or omitted to be done, by the Executive in good faith and in the best interests of the Company. Except as specifically provided below, the cessation of employment of the Executive shall not be deemed to be for Cause within the meaning of Section 10(a)(i) unless and until:
(i)	the Board, by the affirmative vote of 75% of its entire membership, determines that the Executive is guilty of the conduct described in Section 10(a)(i) above measured against standards generally prevailing at the relevant time in the savings and community banking industry;
(ii)	prior to the vote contemplated by Section 10(b)(i), the Board shall provide the Executive with notice of the Company’s intent to discharge the Executive for Cause, detailing with particularity the facts and circumstances which are alleged to constitute Cause (the “Notice of Intent to Discharge”); and
(iii)	after the giving of the Notice of Intent to Discharge and before the taking of the vote contemplated by Section 10(b)(i), the Executive, together with the Executive’s legal counsel, if the Executive so desires, are afforded a reasonable opportunity to make both written and oral presentations before the Board for the purpose of refuting the alleged grounds for Cause for the Executive’s discharge; and Executive’s legal counsel, if the Executive so desires, are afforded a reasonable opportunity to make both written and oral presentations before the Board for the purpose of refuting the alleged grounds for Cause for the Executive’s discharge; and
(iv)	after the vote contemplated by Section 10(b)(i), the Company has furnished to the Executive a notice of termination which shall specify the effective date of the Executive’s termination of employment (which shall in no event be earlier than the date on which such notice is deemed given) and include a copy of a resolution or resolutions adopted by the Board, certified by its corporate secretary, authorizing the termination of the Executive’s employment with Cause and stating with particularity the facts and circumstances found to constitute Cause for the Executive’s discharge (the “Final Discharge Notice”).
If the Executive, during the 90 (ninety) day period commencing on the delivery by the Company to the Executive of the Notice of Intent to Discharge specified in Section 10(b)(ii), resigns his or her employment with the Company prior to the delivery to the Executive by the Company of the Final Discharge Notice specified in Section 10(b)(iv), then the cessation of employment of the Executive shall be deemed to be for Cause.
Following the giving of a Notice of Intent to Discharge, the Bank may temporarily suspend the Executive’s duties and authority and, in such event, may also suspend the payment of salary and other cash compensation, but not the Executive’s participation in retirement, insurance and other employee benefit plans. If the Executive is not

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	discharged or is discharged without Cause within forty-five (45) days after the giving of a Notice of Intent to Discharge, payments of salary and cash compensation shall resume, and all payments withheld during the period of suspension shall be promptly restored. If the Executive is discharged with Cause not later than forty-five (45) days after the giving of the Notice of Intent to Discharge, all payments withheld during the period of suspension shall be deemed forfeited and shall not be included in the Standard Termination Entitlements. If a Final Discharge Notice is given later than forty-five (45) days, but sooner than ninety (90) days, after the giving of the Notice of Intent to Discharge, all payments made to the Executive during the period beginning with the giving of the Notice of Intent to Discharge and ending with the Executive’s discharge with Cause shall be retained by the Executive and shall not be applied to offset the Standard Termination Entitlements. If the Bank does not give a Final Discharge Notice to the Executive within ninety (90) days after giving a Notice of Intent to Discharge, the Notice of Intent to Discharge shall be deemed withdrawn and any future action to discharge the Executive with Cause shall require the giving of a new Notice of Intent to Discharge. If the Executive resigns pursuant to Section 10(b), the Executive shall forfeit his or her right to suspended amounts that have not been restored as of the date of the Executive’s resignation or notice of resignation,whichever is earlier.
(c)	The Company may terminate the Executive’s employment on the basis that the Executive is Disabled during the Employment Period upon a determination by the Board, by the affirmative vote of 75% of its entire membership, acting in reliance on the written advice of a medical professional acceptable to it, that the Executive is suffering from a physical or mental impairment which, at the date of the determination, has prevented the Executive from performing the Executive’s assigned duties on a substantially full-time basis for a period of at least one hundred and eighty (180) days during the period of one (1) year ending with the date of the determination or is likely to result in death or prevent the Executive from performing the Executive’s assigned duties on a substantially full-time basis for a period of at least one hundred and eighty (180) days during the period of one (1) year beginning with the date of the determination. In such event:
	(A)	The Company shall pay and provide the Standard Termination Entitlements to the Executive;
	(B)	In addition to the Standard Termination Entitlements, the Company shall continue to pay to the Executive the Executive’s base salary, at the annual rate in effect for the Executive immediately prior to the termination of the Executive’s employment, during a period ending on the earliest of:
		(I)	the expiration of one hundred and eighty (180) days after the

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		date of termination of the Executive’s employment;
	(II)	the date on which long-term disability insurance benefits are first payable to the Executive under any long-term disability insurance plan covering the Executive; or
	(III)	the date of the Executive’s death.
A termination of employment due to Disability under this Section shall be effected by a notice of termination given to the Executive by the Company and shall take effect on the later of the effective date of termination specified in such notice or, if no such date is specified, the date on which the notice of termination is deemed given to the Executive.

          

          Section 11.     Termination Upon or Following a Change of Control.

(a)	A Change of Control of the Company (“Change of Control”) shall be deemed to have occurred upon the happening of any of the following events:
	(i)	approval by the stockholders of the Company of a transaction that would result in the reorganization, merger or consolidation of the Company with one or more other persons, other than a transaction following which:
		(A)	at least 51% of the equity ownership interests of the entity resulting from such transaction are beneficially owned (within the meaning of Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) in substantially the same relative proportions by persons who, immediately prior to such transaction, beneficially owned (within the meaning of Rule 13d-3 promulgated under the Exchange Act) at least 51% of the outstanding equity ownership interests in the Company; and
		(B)	at least 51% of the securities entitled to vote generally in the election of directors of the entity resulting from such transaction are beneficially owned (within the meaning of Rule 13d-3 promulgated under the Exchange Act) in substantially the same relative proportions by persons who, immediately prior to such transaction, beneficially owned (within the meaning of Rule 13d-3 promulgated under the Exchange Act) at least 51 % of the securities entitled to vote generally in the election of directors of the Company;
	(ii)	the acquisition of all or substantially all of the assets of the Company or

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	beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of the outstanding securities of the Company entitled to vote generally in the election of directors by any person or by any persons acting in concert, or approval by the stockholders of the Company of any transaction which would result in such an acquisition;
(iii)	a complete liquidation or dissolution of the Company, or approval by the stockholders of the Company of a plan for such liquidation or dissolution;
(iv)	the occurrence of any event if, immediately following such event, at least 50% of the members of the Board do not belong to any of the following groups:
	(A)	individuals who were members of the Board on the date of this Agreement; or
	(B)	individuals who first became members of the Board after the date of this Agreement either:
		(I)	upon election to serve as a member of the Board by affirmative vote of three-quarters of the members of such Board, or of a nominating committee thereof, in office at the time of such first election; or
		(II)	upon election by the stockholders of the Company to serve as a member of the Board, but only if nominated for election by affirmative vote of three-quarters of the members of the Board, or of a nominating committee thereof, in office at the time of such first nomination;
		provided, however, that such individual’s election or nomination did not result from an actual or threatened election contest (within the meaning of Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or other actual or threatened solicitation of proxies or consents (within the meaning of Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) other than by or on behalf of the Board; or
(v)	any event which would be described in Section 11(a)(i), (ii), (iii) or (iv) if the term “Association” were substituted for the term “Company” therein or the term “Board of Directors of the Association” were substituted for the term “Board”.

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		In no event, however, shall a Change of Control be deemed to have occurred as a result of any acquisition of securities or assets of the Company, the Association, or an affiliate or subsidiary of either of them, by the Company, the Association, or a subsidiary of either of them, or by any employee benefit plan maintained by any of them. For purposes of this Section 11 (a), the term "person" shall have the meaning assigned to it under Sections 13(d)(3) or 14(d)(2) of the Exchange Act.
	(b)	In the event of a Change of Control, the Executive shall be entitled to the payments and benefits contemplated by Section 9(b) in the event of his or her termination of employment with the Company under any of the circumstances described in Section 9(a) of this Agreement or under any of the following circumstances:
		(i)	resignation, voluntary or otherwise, by the Executive at any time during the Employment Period within six (6) months following his or her demotion, loss of title, office or significant authority or responsibility or following any reduction in any element of his or her package of compensation and benefits;
		(ii)	resignation, voluntary or otherwise, by the Executive at any time during the Employment Period within six (6) months following any relocation of his or her principal place of employment or any change in working conditions at such principal place of employment which the Executive, in his or her reasonable discretion, determines to be embarrassing, derogatory or otherwise adverse;
		(iii)	resignation, voluntary or otherwise, by the Executive at any time during the Employment Period within six (6) months following the failure of any successor to the Company in the Change of Control to include the Executive in any compensation or benefit program maintained by it or covering any of its executive officers, unless the Executive is already covered by a substantially similar plan of the Company which is at least as favorable to him or her; or
		(iv)	resignation, voluntary or otherwise, for any reason whatsoever during the Employment Period within six months following the effective date of the Change of Control.
Section 12.  Tax Indemnification.
	(a)	This Section 12 shall apply if the Executive’s employment is terminated upon or following:
		(i)	a Change of Control (as defined in Section 11 of this Agreement); or

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	(ii)	a change “in the ownership or effective control” of the Company or the Association or “in the ownership of a substantial portion of the assets” of the Company or the Association within the meaning of Section 28OG of the Code.
	If this Section 12 applies, then, if for any taxable year, the Executive shall be liable for the payment of an excise tax under Section 4999 of the Code with respect to any payment in the nature of compensation made by the Company, the Association or any direct or indirect subsidiary or affiliate of the Company or the Association to (or for the benefit of) the Executive, the Company shall pay to the Executive an amount intended to indemnify the Executive against the financial effects of the excise tax imposed on excess parachute payments under Section 28OG of the Code (the “Tax Indemnity Payment”). The Tax Indemnity Payment shall be determined under the following formula:
		TIP     =	E x P
			1 - (( FI x ( 1 - SLI )) + SLI + E + M )
	where: “TIP” is the Tax Indemnity Payment, before the deduction of applicable federal, state and local withholding taxes;
	“E” is the percentage rate at which an excise tax is assessed under Section 4999 of the Code;
	“P” is the amount with respect to which such excise tax is assessed, determined without regard to any amount payable pursuant to this Section 12;
	“FI” is the highest marginal rate of income tax applicable to the Executive under the Code for the taxable year in question;
	“SLI” is the sum of the highest marginal rates of income tax applicable to the Executive under all applicable state and local laws for the taxable year in question; and
	“M” is the highest marginal rate of Medicare tax applicable to the Executive under the Code for the taxable year in question.
(b)	The computation of the Tax Indemnity Payment shall be made at the expense of the Company by the Computation Advisor and shall be based on the following assumptions:

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	(i)	that a change in ownership, a change in effective ownership or control or a change in the ownership of a substantial portion of the assets of the Association or the Company has occurred within the meaning of Section 28OG of the Code (a “28OG Change of Control”);
	(ii)	that all direct or indirect payments made to or benefits conferred upon the Executive on account of the Executive’s termination of employment are “parachute payments” within the meaning of Section 28OG of the Code; and
	(iii)	that no portion of such payments is reasonable compensation for services rendered prior to the Executive’s termination of employment.
(c)	With respect to any payment that is presumed to be a parachute payment for purposes of Section 28OG of the Code, the Tax Indemnity Payment shall be made to the Executive on the earlier of the date the Company, the Association or any direct or indirect subsidiary or affiliate of the Company or the Association is required to withhold such tax or the date the tax is required to be paid by the Executive, unless, prior to such date, the Company delivers to the Executive the written opinion (the “Opinion Letter”), in form and substance reasonably satisfactory to the Executive, of the Computation Advisor or, if the Computation Advisor is unable to provide such opinion, of an attorney or firm of independent certified public accountants selected by the Company and reasonably satisfactory to the Executive, to the effect that the Executive has a reasonable basis on which to conclude that:
	(i)	no 28OG Change in Control has occurred, or
	(ii)	all or part of the payment or benefit in question is not a parachute payment for purposes of Section 28OG of the Code, or
	(iii)	all or a part of such payment or benefit constitutes reasonable compensation for services rendered prior to the 28OG Change of Control, or
	(iv)	for some other reason which shall be set forth in detail in such letter, no excise tax is due under Section 4999 of the Code with respect to such payment or benefit.
	If the Company delivers an Opinion Letter, the Computation Advisor shall recompute, and the Company shall make, the Tax Indemnity Payment, if any, in reliance on the information contained in the Opinion Letter.
(d)	In the event that the Executive’s liability for the excise tax under Section 4999 of the Code for a taxable year is subsequently determined to be different than the amount with respect to which the Tax Indemnity Payment is made, the Executive or the

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Company, as the case may be, shall pay to the other party at the time that the amount of such excise tax is finally determined, an appropriate amount, plus interest, such that the payment made pursuant to Sections 12(a) and 12(c), when increased by the amount of the payment made to the Executive pursuant to this Section 12(d), or when reduced by the amount of the payment made to the Company pursuant to this Section 12(d), equals the amount that should have properly been paid to the Executive under Sections 12(a) and 12(c). The interest paid to the Company under this Section 12(d) shall be determined at the rate provided under Section 1274(b)(2)(B) of the Code. The payment made to the Executive shall include such amount of interest as is necessary to satisfy any interest assessment made by the Internal Revenue Service and an additional amount equal to any monetary penalties assessed by the Internal Revenue Service on account of an underpayment of the excise tax. To confirm that the proper amount, if any, was paid to the Executive under this Section 12, the Executive shall furnish to the Company a copy of each tax return which reflects a liability for an excise tax, at least 20 days before the date on which such return is required to be filed with the Internal Revenue Service. Nothing in this Agreement shall give the Company any right to control or otherwise participate in any action, suit or proceeding to which the Executive is a party as a result of positions taken on the Executive’s federal income tax return with respect to the Executive’s liability for excise taxes under Section 4999 of the Code.

(e)

The provisions of this Section 12 are designed to reflect the provisions of applicable federal, state and local tax laws in effect on the date of this Agreement. If, after the date hereof, there shall be any change in any such laws, this Section 12 shall be modified in such manner as the Executive and the Company may mutually agree upon if and to the extent necessary to assure that the Executive is fully indemnified against the economic effects of the tax imposed under Section 4999 of the Code or any similar federal, state or local tax.

          Section 13.      Covenant Not To Compete.

          The Executive hereby covenants and agrees that, in the event of his or her termination of employment with the Company prior to the expiration of the Employment Period, for a period of one (1) year following the date of his or her termination of employment with the Company (or, if less, for the Remaining Unexpired Employment Period), the Executive shall not, without the written consent of the Company, become an officer, employee, consultant, director or trustee of any savings bank, savings and loan association, savings and loan holding company, bank or bank holding company, or any direct or indirect subsidiary or affiliate of any such entity, that entails working in any city, town or county in which the Association or the Company has an office or has filed an application for regulatory approval to establish an office, determined as of the effective date of the Executive’s termination of employment; provided, however, that this Section 13 shall not apply if the Executive’s employment is terminated for the reasons set forth in Section 9(a); and provided,further, that if the Executive’s employment shall be terminated on account of Disability as provided

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in Section 10(c) of this Agreement, this Section 13 shall not prevent the Executive from accepting any position or performing any services if:

(a)	he or she first offers, by written notice, to accept a similar position with or perform similar services for the Company on substantially the same terms and conditions and
(b)	the Company declines to accept such offer within ten (10) days after such notice is given.

          Section 14.      Confidentiality.

          Unless the Executive obtains the prior written consent of the Company, the Executive shall keep confidential and shall refrain from using for the benefit of the Executive or any person or entity other than the Company, any entity which is a subsidiary of the Company or any entity which the Company is a subsidiary of, any material document or information obtained from the Company, or from its affiliates or subsidiaries, in the course of the Executive’s employment with any of them concerning their properties, operations or business (unless such document or information is readily ascertainable from public or published information or trade sources or has otherwise been made available to the public through no fault of his or her own) until the same ceases to be material (or becomes so ascertainable or available); provided, however, that nothing in this Section 14 shall prevent the Executive, with or without the Company’s consent, from participating in or disclosing documents or information in connection with any judicial or administrative investigation, inquiry or proceeding to the extent that such participation or disclosure is required under applicable law.

          Section 15.      Solicitation.

          The Executive hereby covenants and agrees that, for a period of one (1) year following the Executive’s termination of employment with the Company, he or she shall not, without the written consent of the Company, either directly or indirectly:

(a)

solicit, offer employment to or take any other action intended, or that a reasonable person acting in like circumstances would expect, to have the effect of causing any officer or employee of the Company, the Association or any affiliate or subsidiary of ether of them, to terminate his or her employment and accept employment or become affiliated with, or provide services for compensation in any capacity whatsoever to, any savings bank, savings and loan association, bank, bank holding company, savings and loan holding company, or other institution engaged in the business of accepting deposits and making loans, doing business in any city, town or county in which the Association or the Company has an office or has filed an application for regulatory approval to establish an office;

(b)

provide any information, advice or recommendation with respect to any such officer or employee to any savings bank, savings and loan association, bank, bank holding

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company, savings and loan holding company, or other institution engaged in the business of accepting deposits and making loans, doing business in any city, town or county in which the Association or the Company has an office or has filed an application for regulatory approval to establish an office that is intended, or that a reasonable person acting in like circumstances would expect, to have the effect of causing any officer or employee of the Company, the Association, or any affiliate or subsidiary of either of them, to terminate his or her employment and accept employment, become affiliated with or provide services for compensation in any capacity whatsoever to any such savings bank, savings and loan association, bank, bank holding company, savings and loan holding company or other institution engaged in the business of accepting deposits and making loans; or

(c)

solicit, provide any information, advice or recommendation or take any other action intended, or that a reasonable person acting in like circumstances would expect, to have the effect of causing any customer of the Company, the Association, or any affiliate or subsidiary of either of them to terminate an existing business or commercial relationship with the Company, the Association, or any affiliate or subsidiary of either of them.

          Section 16.      No Effect on Employee Benefit Plans or Programs.

          The termination of the Executive’s employment during the term of this Agreement or thereafter, whether by the Company or by the Executive, shall have no effect on the rights and obligations of the parties hereto under the Company’s qualified or non-qualified retirement, pension, savings, thrift, profit-sharing or stock bonus plans, group life, health (including hospitalization, medical and major medical), dental, accident and long term disability insurance plans or such other employee benefit plans or programs, or compensation plans or programs, as may be maintained by, or cover employees of, the Company from time to time.

          Section 17.      Successors and Assigns.

          This Agreement will inure to the benefit of and be binding upon the Executive, his or her legal representatives and testate or intestate distributees, and the Company and its successors and assigns, including any successor by merger or consolidation or a statutory receiver or any other person or firm or corporation to which all or substantially all of the assets and business of the Company may be sold or otherwise transferred. Failure of the Company to obtain from any successor its express written assumption of the Company’s obligations under this Agreement at least sixty (60) days in advance of the scheduled effective date of any such succession shall be deemed a material breach of this Agreement.

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          Section 18. Notices.

          Any communication required or permitted to be given under this Agreement, including any notice, direction, designation, consent, instruction, objection or waiver, shall be in writing and shall be deemed to have been given at such time as it is delivered personally, or five (5) days after mailing if mailed, postage prepaid, by registered or certified mail, return receipt requested, addressed to such party at the address listed below or at such other address as one such party may by written notice specify to the other party:

If to the Executive:

Frank E. Fusco
6 Philson Court
Commack, New York 11725

If to the Company:

Astoria Financial Corporation
One Astoria Federal Plaza
Lake Success, New York 11042-1085

Attention: General Counsel

with a copy to:

Thacher Proffitt & Wood
Two World Financial Center
New York, New York 10281

Attention:         W. Edward Bright, Esq.

          Section 19.      Indemnification for Attorneys’ Fees.

          The Company shall indemnify, hold harmless and defend the Executive against reasonable costs, including legal fees, incurred by him or her in connection with or arising out of any action, suit or proceeding in which he or she may be involved, as a result of his or her efforts, in good faith, to defend or enforce the terms of this Agreement; provided, however, that in the case of any action, suit or proceeding instituted prior to a Change of Control, the Executive shall have substantially prevailed on the merits pursuant to a judgment, decree or order of a court of competent jurisdiction or of an arbitrator in an arbitration proceeding, or in a settlement. For purposes of this Agreement, any settlement agreement which provides for payment of any amounts in settlement of the Company’s obligations hereunder shall be conclusive evidence of the Executive’s entitlement to

Page 27 of 31

indemnification hereunder, and any such indemnification payments shall be in addition to amounts payable pursuant to such settlement agreement, unless such settlement agreement expressly provides otherwise.

          Section 20.      Severability.

          A determination that any provision of this Agreement is invalid or unenforceable shall not affect the validity or enforceability of any other provision hereof.

          Section 21.      Waiver.

          Failure to insist upon strict compliance with any of the terms, covenants or conditions hereof shall not be deemed a waiver of such term, covenant, or condition. A waiver of any provision of this Agreement must be made in writing, designated as a waiver, and signed by the party against whom its enforcement is sought. Any waiver or relinquishment of any right or power hereunder at any one or more times shall not be deemed a waiver or relinquishment of such right or power at any other time or times.

          Section 22.      Counterparts.

          This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original, and all of which shall constitute one and the same Agreement.

          Section 23.      Governing Law.

          This Agreement shall be governed by and construed and enforced in accordance with the federal laws of the United States and, to the extent that federal law is inapplicable, in accordance with the laws of the State of New York applicable to contracts entered into and to be performed entirely within the State of New York.

          Section 24.      Headings and Construction.

          The headings of sections in this Agreement are for convenience of reference only and are not intended to qualify the meaning of any section. Any reference to a section number shall refer to a section of this Agreement, unless otherwise stated.

          Section 25.      Entire Agreement: Modifications.

          This instrument contains the entire agreement of the parties relating to the subject matter hereof, and supersedes in its entirety any and all prior agreements, understandings or representations relating to the subject matter hereof. No modifications of this Agreement shall be valid unless made in writing and signed by the parties hereto.

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          Section 26.      Guarantee.

          The Company hereby agrees to guarantee the payment by the Association of any benefits and compensation to which the Executive is or may be entitled to under the terms and conditions of the Employment Agreement dated as of the 15th day of August, 2007 between the Association and the Executive.

          Section 27.      Non-duplication.

          In the event that the Executive shall perform services for the Association or any other affiliate or subsidiary of the Company, any compensation or benefits provided to the Executive by such other employer shall be applied to offset the obligations of the Company hereunder, it being intended that this Agreement set forth the aggregate compensation and benefits payable to the Executive for all services to the Company and all of its affiliates and subsidiaries.

          Section 28.      Survival.

          The provisions of any sections of this Agreement which by its terms contemplates performance after the expiration or termination of this Agreement (including, but not limited to, Sections 6, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 21, 26, 27, 29, 30 and 31) shall survive the expiration of the Employment Period or termination of this Agreement.

          Section 29.      Equitable Remedies.

          The Company and the Executive hereby stipulate that money damages are an inadequate remedy for violations of Sections 6(a), 13, 14 or 15 of this Agreement and agree that equitable remedies, including, without limitations, the remedies of specific performance and injunctive relief, shall be available with respect to the enforcement of such provisions.

          Section 30.      Required Regulatory Provisions.

          Notwithstanding anything herein contained to the contrary, any payments to the Executive by the Company, whether pursuant to this Agreement or otherwise, are subject to and conditioned upon their compliance with Section 18(k) of the Federal Deposit Insurance Act, 12 U.S.C. §1828(k), and any regulations promulgated thereunder.

          Section 31.      No Offset or Recoupment; No Attachment.

          The Company’s obligation to make the payments provided for in this Agreement and otherwise to perform its obligations under this Agreement shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Company or any of its affiliates or subsidiaries may have against the Executive. In no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to

Page 29 of 31

the Executive under any of the provisions of this Agreement and such amounts shall not be reduced whether or not the Executive obtains other employment. Except as required by law, no right to receive payments under this Agreement shall be subject to anticipation, commutation, alienation, sale, assignment, encumbrance, charge, pledge, or hypothecation, or to execution, attachment, levy, or similar process or assignment by operation of law, and any attempt, voluntary or involuntary, to affect any such action shall be null, void, and of no effect.

          Section 32.      Compliance with Section 409A of the Code.

          In the event that this Agreement is construed to be a non-qualified deferred compensation plan described in section 409A of the Code, the Agreement shall be operated, administered and construed so as to conform to the requirements of section 409A.

          IN WITNESS WHEREOF, the Company has caused this Agreement to be executed and the Executive has hereunto set his or her hand, all as of the day and year first above written.

Attest: ASTORIA FINANCIAL CORPORATION

/S/ Alan P. Eggleston	By:	/S/ George L. Engelke, Jr.
Alan P. Eggleston	Name:	George L. Engelke, Jr.
	Title:	Chairman, and Chief Executive Officer
[Seal]
	/S/ Frank E. Fusco
	FRANK E. FUSCO

Page 30 of 31

STATE OF NEW YORK	)
	)	SS.:
COUNTY OF NASSAU	)

          On this 14th day of September, 2007, before me, the undersigned, personally appeared George L. Engelke, Jr., personally known to me or proved to me on the basis of satisfactory evidence to be the individual(s) whose name(s) is (are) subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their capacity(ies), and that by his/her/their signature(s) on the instrument, the individual(s), or the person upon behalf of which the individual(s) acted, executed the instrument.

/S/ Anna Knice

Notary Public

Anna Knice
Notary Public, State of New York
No. 4980431
Qualified in Suffolk County
Commission Expires April 22, 2011

STATE OF NEW YORK	)
	)	SS.:
COUNTY OF NASSAU	)

          On this 14th day of September, 2007, before me, the undersigned, personally appeared Frank E. Fusco, personally known to me or proved to me on the basis of satisfactory evidence to be the individual(s) whose name(s) is (are) subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their capacity(ies), and that by his/her/their signature(s) on the instrument, the individual(s), or the person upon behalf of which the individual(s) acted, executed the instrument.

/S/ Anna Knice

Notary Public

Anna Knice
Notary Public, State of New York
No. 4980431
Qualified in Suffolk County
Commission Expires April 22, 2011

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EX-10.8

EXHIBIT 10.8

ASTORIA FEDERAL SAVINGS AND LOAN ASSOCIATION
EMPLOYMENT AGREEMENT WITH EXECUTIVE OFFICER

          This EMPLOYMENT AGREEMENT (the “Agreement”) is made and entered into as of August 15, 2007 by and between ASTORIA FEDERAL SAVINGS AND LOAN ASSOCIATION, a savings association organized and operating under the federal laws of the United States and having an office at One Astoria Federal Plaza, Lake Success, New York 11042-1085 (the “Association”), and FRANK E.FUSCO, an individual residing at 6 Philson Court, Commack, New York 11725 (the “Executive”).

WITNESSETH:

          WHEREAS, the Executive currently serves the Association in the capacity of Executive Vice President, Treasurer and Chief Financial Officer and as Executive Vice President, Treasurer and Chief Financial Officer of the Association’s savings and loan holding company, ASTORIA FINANCIAL CORPORATION,a publicly held business corporation organized and operating pursuant to the laws of the State of Delaware (the “Company”); and

          WHEREAS, the Executive currently has a Change of Control Severance Agreement with the Association dated January 1, 2000 which the Executive and the Association wish to terminate and replace with this Agreement; and

          WHEREAS, the Association desires to assure for itself the continued availability of the Executive’s services and the ability of the Executive to perform such services with a minimum of personal distraction in the event of a pending or threatened Change of Control (as hereinafter defined); and

          WHEREAS, the Executive is willing to continue to serve the Association on the terms and conditions hereinafter set forth;

          NOW,THEREFORE, in consideration of the premises and the mutual covenants and conditions hereinafter set forth, the Association and the Executive hereby terminate in its entirety the Change of Control Severance Agreement by and between the Association and the Executive dated as of January 1, 2000 and replace such Change of Control Severance Agreement in all respects and manner with this Agreement so as to provide as follows from and after the date hereof:

          Section 1.      Employment.

          The Association agrees to continue to employ the Executive, and the Executive hereby agrees to such continued employment, during the period and upon the terms and conditions set forth in this Agreement.

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          Section 2.      Employment Period; Remaining Unexpired Employment Period.

(a)	The terms and conditions of this Agreement shall be and remain in effect during the period of employment established under this Section 2 (the “Employment Period”). The Employment Period shall be for an initial term of three years beginning on the date of this Agreement and ending on the day before the third anniversary date of this Agreement. Prior to the first anniversary of the date of this Agreement and on each anniversary date thereafter (each an “Anniversary Date) the Board of Directors of the Association (the “Board”) shall review the terms of this Agreement and the Executive’s performance of services hereunder and may, in the absence of objection from the Executive, approve an extension of the Employment Period. In such event, the Employment Period shall be extended to the day before the third anniversary of the relevant Anniversary Date.
(b)	For all purposes of this Agreement, the term “Remaining Unexpired Employment Period” as of any date shall mean the period beginning on such date and ending on the day before the Anniversary Date on which the Employment Period (as extended pursuant to Section 2(a) of this Agreement) is then scheduled to expire.
(c)	Nothing in this Agreement shall be deemed to prohibit the Association from terminating the Executive’s employment at any time during the Employment Period with or without notice for any reason; provided, however, that the relative rights and obligations of the Association and the Executive in the event of any such termination shall be determined pursuant to this Agreement.

          Section 3.     Duties.

          The Executive shall serve as Executive Vice President, Treasurer and Chief Financial Officer of the Association, having such power, authority and responsibility and performing such duties as are prescribed by or pursuant to the By-Laws of the Association and as are customarily associated with such position. The Executive shall devote his or her full business time and attention (other than during weekends, holidays, approved vacation periods, and periods of illness or approved leaves of absence) to the business and affairs of the Association and shall use his or her best efforts to advance the interests of the Association.

          Section 4.     Cash Compensation.

          In consideration for the services to be rendered by the Executive hereunder, the Association shall pay to him or her a salary at an initial annual rate of FOUR HUNDRED THOUSAND DOLLARS ($400,000), payable in approximately equal installments in accordance with the Association’s customary payroll practices for senior officers. Prior to each Anniversary Date occurring during the Employment Period, the Board shall review the Executive’s annual rate of salary and may, in its

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discretion, approve an increase therein. In addition to salary, the Executive may receive other cash compensation from the Association for services hereunder at such times, in such amounts and on such terms and conditions as the Board may determine from time to time.

          Section 5.      Employee Benefit Plans and Programs.

          During the Employment Period, the Executive shall be treated as an employee of the Association and shall be entitled to participate in and receive benefits under any and all qualified or non-qualified retirement, pension, savings, profit-sharing or stock bonus plans, any and all group life, health (including hospitalization, medical and major medical), dental, accident and long term disability insurance plans, and any other employee benefit and compensation plans (including, but not limited to, any incentive compensation plans or programs, stock option and appreciation rights plans and restricted stock plans) as may from time to time be maintained by, or cover employees of, the Association, in accordance with the terms and conditions of such employee benefit plans and programs and compensation plans and programs and consistent with the Association’s customary practices.

          Section 6.      Indemnification and Insurance.

(a)

During the Employment Period and for a period of six (6) years thereafter, the Association shall cause the Executive to be covered by and named as an insured under any policy or contract of insurance obtained by it to insure its directors and officers against personal liability for acts or omissions in connection with service as an officer or director of the Association or service in other capacities at the request of the Association. The coverage provided to the Executive pursuant to this Section 6 shall be of the same scope and on the same terms and conditions as the coverage (if any) provided to other officers or directors of the Association.

(b)

To the maximum extent permitted under applicable law, during the Employment Period and for a period of six (6) years thereafter, the Association shall indemnify the Executive against, and hold him or her harmless from any costs, liabilities, losses and exposures to the fullest extent and on the most favorable terms and conditions that similar indemnification is offered to any director or officer of the Association or any subsidiary or affiliate thereof. This Section 6(b) shall not be applicable where Section 18 is applicable.

          Section 7.     Other Activities.

(a)      The Executive may serve as a member of the boards of directors of such business, community and charitable organizations as he or she may disclose to and as may be approved by the Board (which approval shall not be unreasonably withheld); provided, however, that such service shall not materially interfere with the performance of his or her duties under this Agreement. The Executive may also

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	engage in personal business and investment activities which do not materially interfere with the performance of his or her duties hereunder; provided, however, that such activities are not prohibited under any code of conduct or investment or securities trading policy established by the Association and generally applicable to all similarly situated executives.
(b)	The Executive may also serve as an officer or director of the Company on such terms and conditions as the Association and the Company may mutually agree upon, and such service shall not be deemed to materially interfere with the Executive’s performance of his or her duties hereunder or otherwise result in a material breach of this Agreement.

          Section 8.      Working Facilities and Expenses.

          The Executive’s principal place of employment shall be at the Association’s executive offices at the address first above written, or at such other location within Queens County or Nassau County, New York at which the Association shall maintain its principal executive offices, or at such other location as the Association and the Executive may mutually agree upon. The Association shall provide the Executive at his or her principal place of employment with a private office, secretarial services and other support services and facilities suitable to his or her position with the Association and necessary or appropriate in connection with the performance of his or her assigned duties under this Agreement. The Association shall provide to the Executive for his or her exclusive use an automobile owned or leased by the Association and appropriate to his or her position, to be used in the performance of his or her duties hereunder, including commuting to and from his or her personal residence. The Association shall reimburse the Executive for his or her ordinary and necessary business expenses, including, without limitation, all expenses associated with his or her business use of the aforementioned automobile, fees for memberships in such clubs and organizations as the Executive and the Association shall mutually agree are necessary and appropriate for business purposes, and his or her travel and entertainment expenses incurred in connection with the performance of his or her duties under this Agreement, in each case upon presentation to the Association of an itemized account of such expenses in such form as the Association may reasonably require.

          Section 9.      Termination of Employment with Severance Benefits.

(a)	The Executive shall be entitled to the severance benefits described herein in the event that his or her employment with the Association terminates during the Employment Period under any of the following circumstances:
	(i)	the Executive’s voluntary resignation from employment with the Association within six (6) months following:
		(A)	the failure of the Board to appoint or re-appoint or elect or re-elect the

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		Executive to the office of Executive Vice President, Treasurer and Chief Financial Officer (or a more senior office) of the Association;
		(B)	if the Executive is or becomes a member of the Board, the failure of the stockholders of the Association to elect or re-elect the Executive to the Board or the failure of the Board (or the nominating committee thereof) to nominate the Executive for such election or re-election;
		(C)	the expiration of a thirty (30) day period following the date on which the Executive gives written notice to the Association of its material failure, whether by amendment of the Association’s Organization Certificate or By-laws, action of the Board or the Association’s stockholders or otherwise, to vest in the Executive the functions, duties, or responsibilities prescribed in Section 3 of this Agreement as of the date hereof, unless, during such thirty (30) day period, the Association cures such failure;
		(D)	the expiration of a thirty (30) day period following the date on which the Executive gives written notice to the Association of its material breach of any term, condition or covenant contained in this Agreement (including, without limitation, any reduction of the Executive’s rate of base salary in effect from time to time and any change in the terms and conditions of any compensation or benefit program in which the Executive participates which, either individually or together with other changes, has a material adverse effect on the aggregate value of his or her total compensation package), unless, during such thirty (30) day period, the Association cures such failure; or
		(E)	the relocation of the Executive’s principal place of employment, without his or her written consent, to a location outside of Nassau County and Queens County, New York;
	(ii)	the termination of the Executive’s employment with the Association for any other reason not described in Section 10(a).
	In such event and subject to Section 27 of this Agreement, the Association shall provide the benefits and pay to the Executive the amounts described in Section 9(b).
(b)	Upon the termination of the Executive’s employment with the Association under circumstances described in Section 9(a) of this Agreement, the Association shall pay and provide to the Executive (or, in the event of the Executive’s death following the Executive’s termination of employment, to his or her estate):

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(i)	his or her earned but unpaid compensation (including, without limitation, all items which constitute wages under Section 190.1 of the New York Labor Law and the payment of which is not otherwise provided for under this Section 9(b)) as of the date of the termination of his or her employment with the Association, such payment to be made at the time and in the manner prescribed by law applicable to the payment of wages but in any event not later than thirty (30) days after termination of employment;
(ii)	the benefits, if any, to which he or she is entitled as a former employee under the employee benefit plans and programs and compensation plans and programs maintained for the benefit of the Association’s officers and employees;
(iii)	continued group life, health (including hospitalization, medical and major medical), dental, accident and long term disability insurance benefits, in addition to that provided pursuant to Section 9(b)(ii), and after taking into account the coverage provided by any subsequent employer, if and to the extent necessary to provide for the Executive, for the Remaining Unexpired Employment Period, coverage (including any co-payments and deductibles, but excluding any premium sharing arrangements, it being the intention of the parties to this Agreement that the premiums for such insurance benefits shall be the sole cost and expense of the Association) equivalent to the coverage to which he or she would have been entitled under such plans (as in effect on the date of his or her termination of employment, or, if his or her termination of employment occurs after a Change of Control, on the date of such Change of Control, whichever benefits are greater), if he or she had continued working for the Association during the Remaining Unexpired Employment Period at the highest annual rate of salary or compensation, as applicable, achieved during that portion of the Employment Period which is prior to the Executive’s termination of employment with the Association;
(iv)	within thirty (30) days following the Executive’s termination of employment with the Association, a lump sum payment in an amount representing an estimate of the salary that the Executive would have earned if he or she had continued working for the Association during the Remaining Unexpired Employment Period at the highest annual rate of salary achieved during that portion of the Employment Period which is prior to the Executive’s termination of employment with the Association (the "Salary Severance Payment”). The Salary Severance Payment shall be computed using the following formula:
	SSP     =     BS x NY where:

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	“SSP” is the amount of the Salary Severance Payment, before the deduction of applicable federal, state and local withholding taxes;
	“BS” is the highest annual rate of salary achieved during that portion of the Employment Period which is prior to the Executive’s termination of employment with the Association;
	“NY” is the Remaining Unexpired Employment Period expressed as a number of years (rounded, if such period is not a whole number, to the next highest whole number).
	The Salary Severance Payment shall be paid in lieu of all other payments of salary provided for under this Agreement in respect of the period following any such termination.
(v)	within thirty (30) days following the Executive’s termination of employment with the Association, a lump sum payment (the “DB Severance Payment”) in an amount equal to the excess, if any, of:
	(A)	the present value of the aggregate benefits to which he or she would be entitled under any and all qualified and non-qualified defined benefit pension plans maintained by, or covering employees of, the Association, if he or she were 100% vested thereunder and had continued working for the Association during the Remaining Unexpired Employment Period, such benefits to be determined as of the date of termination of employment by adding to the service actually recognized under such plans an additional period equal to the Remaining Unexpired Employment Period and by adding to the compensation recognized under such plans for the most recent year recognized all amounts payable pursuant to Sections 9(b)(i), (iv), (vii), (viii) and (ix) of this Agreement; over
	(B)	the present value of the benefits to which he or she is actually entitled under such defined benefit pension plans as of the date of his or her termination;
	The DB Severance Payment shall be computed using the following formula:
	DBSP     =     SEVLS - LS where: “DBSP” is the amount of the DB Severance Payment, before the deduction

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of applicable federal, state and local withholding taxes; “SEVLS” is the sum of the present value of the defined benefit pension benefits that have been or would be accrued by the Executive under all qualified and non-qualified defined benefit pension plans of which the Association or any of its affiliates or subsidiaries are a sponsor and in which the Executive is or, but for the completion of any service requirement that would have been completed during the Remaining Unexpired Employment Period, would be a participant utilizing the following assumptions:
	(I)	the executive is 100% vested in the plans regardless of actual service,
	(II)	the benefit to be valued shall be a single life annuity with monthly payments due on the first day of each month and with a guaranteed payout of not less than 120 monthly payments,
	(III)	the calculation shall be made utilizing the same mortality table and interest rate as would be utilized by the plan on the date of termination as if the calculation were being made pursuant to Section 417(e)(3)(A)(ii) of the Internal Revenue Code, as amended, (the “Code”);
	(IV)	for purpose of calculating the Executive’s monthly or annual benefit under the defined benefit plans, additional service equal to the Remaining Unexpired Employment Period (rounded up to the next whole year if such period is not a whole number when expressed in years) shall be added to the Executive’s actual service to calculate the amount of the benefit; and
	(V)	for purpose of calculating the Executive’s monthly or annual benefit under the defined benefit plans, the following sums shall be added to the Executive’s compensation recognized under such plans for the most recent year recognized:
		(1)	payments made pursuant to Section 9(b)(i);
		(2)	the Salary Severance Payment;
		(3)	the Bonus Severance Payment;
		(4)	the Option Surrender Payment; and
		(5)	the RRP Surrender Payment.

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	“LS” is the sum of the present value of the defined benefit pension benefits that are vested benefits actually accrued by the Executive under all qualified and non-qualified defined benefit pension plans maintained by, or covering employees of, the Company or any of its affiliates or subsidiaries in which the Executive is or, but for the completion of any service requirement, would be a participant utilizing the following assumptions:
		(I)	the benefit to be valued shall be a single life annuity with monthly payments due on the first day of each month and with a guaranteed payout of not less than 120 monthly payments, and
		(II)	the calculation shall be made utilizing the same mortality table and interest rate as would be utilized by the plan on the date of termination as if the calculation were being made pursuant to Section 417(e)(3)(A)(ii) of the Code;
(vi)	within thirty (30) days following the Executive’s termination of employment with the Association, a lump sum payment (the “Defined Contribution Severance Payment”) equal to the sum of:
	(A)	an estimate of the additional employer contributions to which he or she would have been entitled under any and all qualified and non-qualified defined contribution pension plans, excluding the employee stock ownership plans, maintained by, or covering employees of, the Association or any of its affiliates or subsidiaries as if he or she were 100% vested thereunder and had continued working for the Association during the Remaining Unexpired Employment Period (the 401K Severance Payment”); and
	(B)	an estimate of the value of the additional assets which would have been allocable to him or her through debt service or otherwise under any and all qualified and non-qualified employee stock ownership plans, maintained by, or covering employees of the Association or any of its affiliates or subsidiaries as if he or she were 100% vested thereunder and had continued working for the Association during the Remaining Unexpired Employment Period, based on the fair market value of such assets at termination of employment (the “ESOP Severance Payment”).
	The Defined Contribution Severance Payment shall be calculated as follows:
	DCSP     =     401KSP + ESOPSP

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where:

“DCSP” is the amount of the Defined Contribution Severance Payment, before the deduction of applicable federal, state and local withholding taxes;

“401KSP” is the amount of the 401K Severance Payment, before the deduction of applicable federal, state and local withholding taxes; and

“ESOPSP” is the amount of the ESOP Severance Payment, before the deduction of applicable federal, state and local withholding taxes.

The 401KSP shall be calculated as follows:

          401SP     =     (401KC x NY) + UVB

where

“401KC” is the sum of the Association Contributions as defined in the Association’s Incentive Savings Plan or, if made under another defined contribution pension plan other than an employee stock ownership plan, the comparable contribution made for the benefit of the Executive during the one year period which shall end on the date of his or her termination of his or her employment with the Association;

“NY” is the Remaining Unexpired Employment Period expressed as a number of years (rounded, if such period is not a whole number, to the next highest whole number); and

“UVB” is the actual balance credited to the Executive’s account under the applicable plan at the date of his or her termination of employment that is not vested and does not become vested as a consequence of such termination of employment.

The ESOPSP shall be calculated as follows:

ESOPSP     =     (((ALL x FMV) + C) x NY) + UVB

where:

“ALL” is the sum of the number of shares of the Association’s common stock or, if applicable, phantom shares of such stock by whatever term it is described allocated to the Executive’s accounts under all qualified and non-

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qualified employee stock ownership plans maintained by the Association or any of its affiliates or subsidiaries during or for the last complete plan year in which the Executive participated in such plans and received such an allocation whether the allocation occurred as a result of contributions made by the Association, the payment by the Association or any of its affiliates or subsidiaries of any loan payments under a leveraged employee stock ownership plan, the allocation of forfeitures under the terms of such plan or as a result of the use of cash or earnings allocated to the Executives account during such plan year to make loan payments that result in share allocations, provided however, that excluded shall be any shares or phantom shares allocated to the Executive’s account under any qualified and non-qualified employee stock ownership plans maintained by the Association or any of its affiliates or subsidiaries solely as a result of the termination of such plans, provided further, that if the shares allocated are not shares of the Association’s common stock or phantom shares of such stock than shares of whatever securities are so allocated shall be utilized, and provided further, that in the event that there shall be any shares or phantom shares allocated during the then current plan year or the last complete plan year to the Executive’s account under any qualified and non-qualified employee stock ownership plans maintained by the Association or any of its affiliates or subsidiaries solely as a result of the termination of such plans, the ALL shall be reduced (but not to an amount less than zero (0)) by an amount calculated by multiplying the number of shares or phantom shares allocated to the Executive’s account solely as a result of the termination of such plans times the FMV utilized to calculate the ESOPSP;

“C” is the sum of all cash allocated to the Executive’s accounts under all qualified and non-qualified employee stock ownership plans maintained by the Association during or for the last complete plan year in which the Executive participated in such plans whether the allocation occurred as a result of contributions made by the Association, the payment by the Association or the Association of any loan payments under a leveraged employee stock ownership plan or the allocation of forfeitures under the terms of such plan during such plan year;

“FMV” is the closing price of the Association’s common stock on the New York Stock Exchange or on whatever other stock exchange or market such stock is publicly traded on the date the Executive’s employment terminates or, if such day is not a day on which such securities are traded, on the most recent preceding trading day on which a trade occurs, provided however that if the security allocated to the Executive’s account during the last completed plan year is other than the Association’s common stock the closing price of such security on the date the Executive’s employment terminates shall be

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	utilized;
	“NY” is the Remaining Unexpired Employment Period expressed as a number of years (rounded, if such period is not a whole number, to the next highest whole number); and
	“UVB” is the actual balance credited to the Executive’s account under the applicable plan at the date of his or her termination of employment that is not vested and does not become vested as a consequence of such termination of employment.
(vii)	within thirty (30) days following the Executive’s termination of employment with the Association, the Association shall make a lump sum payment to the Executive in an amount equal to the estimated potential annual bonuses or incentive compensation that the Executive could have earned if the Executive had continued working for the Association during the Unexpired Employment Period at the highest annual rate of salary achieved during that portion of the Employment Period which is prior to the Executive’s termination of employment with the Association (the “Bonus Severance Payment”). The Bonus Severance Payment shall be computed using the following formula:
	BSP     =     ( BS x TIO x AP x NY) where: “BSP” is the amount of the Bonus Severance Payment, before the deduction of applicable federal, state and local withholding taxes; “BS” is the highest annual rate of salary achieved during that portion of the Employment Period which is prior to the Executive’s termination of employment with the Association; “TIO” is the highest target incentive opportunity (expressed as a percentage of base salary) established by the Compensation Committee of the Board for the Executive pursuant to the Astoria Financial Corporation Executive Officer Annual Incentive Plan during that portion of the Employment Period which is prior to the Executive’s termination of employment with the Association; “AP” is the highest award percentage available to the Executive with respect to the financial performance of the Company (expressed as a percentage of the TIO) established by the Compensation Committee of the Board for the

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	Executive pursuant to the Astoria Financial Corporation Executive Officer Annual Incentive Plan during the period during that portion of the Employment Period which is prior to the Executive’s termination of employment with the Association; and
	“NY” is the Remaining Unexpired Employment Period expressed as a number of years (rounded, if such period is not a whole number, to the next highest whole number).
(viii)	at the election of the Association made within thirty (30) days following the Executive’s termination of employment with the Association, upon the surrender of options or appreciation rights issued to the Executive under any stock option and appreciation rights plan or program maintained by, or covering employees of, the Association, a lump sum payment (the “Option Surrender Payment”). The Option Surrender Payment shall be calculated as follows:
	OSP     =     (FMV - EP) x N where: “OSP” is the amount of the Option Surrender Payment, before the deduction of applicable federal, state and local withholding taxes; “FMV” is the closing price of the Association’s common stock on the New York Stock Exchange, or on whatever other stock exchange or market such stock is publicly traded, on the date the Executive’s employment terminates or, if such day is not a day on which such securities are traded, on the most recent preceding trading day on which a trade occurs, provided however that if the option or stock appreciation right is for a security other than the Association’s common stock, the fair market value of a share of stock of the same class as the stock subject to the option or appreciation right, determined as of the date of termination of employment shall be utilized; “EP” is the exercise price per share for such option or appreciation right, as specified in or under the relevant plan or program; and “N” is the number of shares with respect to which options or appreciation rights are being surrendered. For purposes of determining the Option Severance Payment and for purposes of determining the Executive’s right following his or her termination of employment with the Association to exercise any options or appreciation

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	rights not surrendered pursuant hereto, the Executive shall be deemed fully vested in all options and appreciation rights under any stock option or appreciation rights plan or program maintained by, or covering employees of, the Association, even if he or she is not vested under such plan or program;
(ix)	at the election of the Association made within thirty (30) days following the Executive’s termination of employment with the Association, upon the surrender of any shares awarded to the Executive under any restricted stock plan maintained by, or covering employees of, the Association, a lump sum payment (the “RRP Surrender Payment”) The RRP Surrender Payment shall be calculated as follows:
	RSP     =     FMV x N where: “RSP” is the amount of the RRP Surrender Payment, before the deduction of applicable federal, state and local withholding taxes; “FMV” is the closing price of the Association’s common stock on the New York Stock Exchange, or on whatever other stock exchange or market such stock is publicly traded, on the date the Executive’s employment terminates or, if such day is not a day on which such securities are traded, on the most recent preceding trading day on which a trade occurs, provided however that if the restricted stock is a security other than the Association’s common stock, the fair market value of a share of stock of the same class as the stock granted under such plan, determined as of the date of termination of employment shall be utilized; and “N” is the number of shares which are being surrendered. For purposes of determining the RRP Surrender Payment and for purposes of determining the Executive’s right following his or her termination of employment with the Association to any stock not surrendered pursuant hereto, the Executive shall be deemed fully vested in all shares awarded under any restricted stock plan maintained by, or covering employees of, the Association, even if he or she is not vested under such plan.
The Salary Severance Payment, the DB Severance Payment, the Defined Contribution Severance Payment, the Bonus Severance Payment, the Option Surrender Payment and the RRP Surrender Payment shall be computed at the expense of the Association by an attorney of the firm of Thacher Proffitt & Wood, Two World Financial Center, New York, New York 10281 or, if such firm is

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	unavailable or unwilling to perform such calculation, by a firm of independent certified public accountants selected by the Executive and reasonably satisfactory to the Association (the “Computation Advisor”). The determination of the Computation Advisor as to the amount of such payments shall be final and binding in the absence of manifest error. The Association and the Executive hereby stipulate that the damages which may be incurred by the Executive following any such termination of employment are not capable of accurate measurement as of the date first above written and that the payments and benefits contemplated by this Section 9(b) constitute reasonable damages under the circumstances and shall be payable without any requirement of proof of actual damage and without regard to the Executive’s efforts, if any, to mitigate damages. The Association and the Executive further agree that the Association may condition the payment of the Salary Severance Payment, the DB Severance Payment, the Defined Contribution Severance Payment, the Bonus Severance Payment, the Option Surrender Payment and the RRP Surrender Payment on the receipt of the Executive’s resignation from any and all positions which he or she holds as an officer, director or committee member with respect to the Association, the Association or any subsidiary or affiliate of either of them.
Section 10. Termination without Additional Association Liability.
(a)	In the event that the Executive’s employment with the Association shall terminate during the Employment Period on account of:
	(i)	the discharge of the Executive for Cause, which, for purposes of this Agreement shall mean personal dishonesty, incompetence, wilful misconduct, breach of fiduciary duty involving personal profit, intentional failure to perform stated duties, wilful violation of any law, rule or regulation (other than traffic violations or similar offenses) or final cease and desist order, or any material breach of this Agreement, in each case measured against standards generally prevailing at the relevant time in the savings and community banking industry;
	(ii)	the Executive’s voluntary resignation from employment with the Association for reasons other than those specified in Section 9(a) or 11(b);
	(iii)	the Executive’s death;
	(iv)	a determination that the Executive is Disabled;
	then the Association, except as otherwise specifically provided herein, shall have no further obligations under this Agreement, other than the payment to the Executive

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	(or, in the event of his or her death, to his or her estate) of the amounts or benefits provided in Section 9(b)(i) and (ii) of this Agreement (the “Standard Termination Entitlements”).
(b)	The cessation of employment of the Executive shall not be deemed to be for Cause within the meaning of Section 10(a)(i) unless and until:
	(i)	the Board, by the affirmative vote of 75% of its entire membership, determines that the Executive is guilty of the conduct described in Section 10(a)(i) above measured against standards generally prevailing at the relevant time in the savings and community banking industry;
	(ii)	prior to the vote contemplated by Section 10(b)(i), the Board shall provide the Executive with notice of the Association’s intent to discharge the Executive for Cause, detailing with particularity the facts and circumstances which are alleged to constitute Cause (the “Notice of Intent to Discharge”); and
	(iii)	after the giving of the Notice of Intent to Discharge and before the taking of the vote contemplated by Section 10(b)(i), the Executive, together with the Executive’s legal counsel, if the Executive so desires, are afforded a reasonable opportunity to make both written and oral presentations before the Board for the purpose of refuting the alleged grounds for Cause for the Executive’s discharge; and
	(iv)	after the vote contemplated by Section 10(b)(i), the Association has furnished to the Executive a notice of termination which shall specify the effective date of the Executive’s termination of employment (which shall in no event be earlier than the date on which such notice is deemed given) and include a copy of a resolution or resolutions adopted by the Board, certified by its corporate secretary, authorizing the termination of the Executive’s employment with Cause and stating with particularity the facts and circumstances found to constitute Cause for the Executive’s discharge (the “Final Discharge Notice”).
	If the Executive, during the ninety (90) day period commencing on the delivery by the Association to the Executive of the Notice of Intent to Discharge specified in Section 10(b)(ii), resigns his or her employment with the Association prior to the delivery to the Executive by the Association of the Final Discharge Notice specified in Section 10(b)(iv), then the cessation of employment of the Executive shall be deemed to be for Cause.
	Following the giving of a Notice of Intent to Discharge, the Bank may temporarily suspend the Executive’s duties and authority and, in such event, may also suspend the

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	payment of salary and other cash compensation, but not the Executive’s participation in retirement, insurance and other employee benefit plans. If the Executive is not discharged or is discharged without Cause within forty-five (45) days after the giving of a Notice of Intent to Discharge, payments of salary and cash compensation shall resume, and all payments withheld during the period of suspension shall be promptly restored. If the Executive is discharged with Cause not later than forty-five (45) days after the giving of the Notice of Intent to Discharge, all payments withheld during the period of suspension shall be deemed forfeited and shall not be included in the Standard Termination Entitlements. If a Final Discharge Notice is given later than forty-five (45) days, but sooner than ninety (90) days, after the giving of the Notice of Intent to Discharge, all payments made to the Executive during the period beginning with the giving of the Notice of Intent to Discharge and ending with the Executive’s discharge with Cause shall be retained by the Executive and shall not be applied to offset the Standard Termination Entitlements. If the Bank does not give a Final Discharge Notice to the Executive within ninety (90) days after giving a Notice of Intent to Discharge, the Notice of Intent to Discharge shall be deemed withdrawn and any future action to discharge the Executive with Cause shall require the giving of a new Notice of Intent to Discharge. If the Executive resigns pursuant to Section 10(b), the Executive shall forfeit his or her right to suspended amounts that have not been restored as of the date of the Executive’s resignation or notice of resignation, whichever is earlier.
(c)	The Association may terminate the Executive’s employment on the basis that the Executive is Disabled during the Employment Period upon a determination by the Board, by the affirmative vote of 75% of its entire membership, acting in reliance on the written advice of a medical professional acceptable to it, that the Executive is suffering from a physical or mental impairment which, at the date of the determination, has prevented the Executive from performing the Executive’s assigned duties on a substantially full-time basis for a period of at least one hundred and eighty (180) days during the period of one (1) year ending with the date of the determination or is likely to result in death or prevent the Executive from performing the Executive’s assigned duties on a substantially full-time basis for a period of at least one hundred and eighty (180) days during the period of one (1) year beginning with the date of the determination. In such event:
		(A)	The Association shall pay and provide the Standard Termination Entitlements to the Executive;
		(B)	In addition to the Standard Termination Entitlements, the Association shall continue to pay to the Executive the Executive’s base salary, at the annual rate in effect for the Executive immediately prior to the termination of the Executive’s employment, during a period ending on the earliest of:

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				(I)	the expiration of one hundred and eighty (180) days after the date of termination of the Executive’s employment;
				(II)	the date on which long-term disability insurance benefits are first payable to the Executive under any long-term disability insurance plan covering the Executive; or
				(III)	the date of the Executive’s death.
			A termination of employment due to Disability under this Section shall be effected by a notice of termination given to the Executive by the Association and shall take effect on the later of the effective date of termination specified in such notice or, if no such date is specified, the date on which the notice of termination is deemed given to the Executive.
Section 11.   Termination Upon or Following a Change of Control.
	(a)	A Change of Control of the Association (“Change of Control”) shall be deemed to have occurred upon the happening of any of the following events:
		(i)	approval by the stockholders of the Association of a transaction that would result in the reorganization, merger or consolidation of the Association with one or more other persons, other than a transaction following which:
			(A)	at least 51% of the equity ownership interests of the entity resulting from such transaction are beneficially owned (within the meaning of Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) in substantially the same relative proportions by persons who, immediately prior to such transaction, beneficially owned (within the meaning of Rule 13d-3 promulgated under the Exchange Act) at least 51% of the outstanding equity ownership interests in the Association; and
			(B)	at least 51% of the securities entitled to vote generally in the election of directors of the entity resulting from such transaction are beneficially owned (within the meaning of Rule 13d-3 promulgated under the Exchange Act) in substantially the same relative proportions by persons who, immediately prior to such transaction, beneficially owned (within the meaning of Rule 13d-3 promulgated under the Exchange Act) at least 51 % of the securities entitled to vote generally in the election of directors of the Association;
		(ii)	the acquisition of all or substantially all of the assets of the Association or

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	beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 20% or more of the outstanding securities of the Association entitled to vote generally in the election of directors by any person or by any persons acting in concert, or approval by the stockholders of the Association of any transaction which would result in such an acquisition;
(iii)	a complete liquidation or dissolution of the Association, or approval by the stockholders of the Association of a plan for such liquidation or dissolution;
(iv)	the occurrence of any event if, immediately following such event, at least 50% of the members of the Board do not belong to any of the following groups:
	(A)	individuals who were members of the Board on the date of this Agreement; or
	(B)	individuals who first became members of the Board after the date of this Agreement either:
		(I)	upon election to serve as a member of the Board by affirmative vote of three-quarters of the members of such Board, or of a nominating committee thereof, in office at the time of such first election; or
		(II)	upon election by the stockholders of the Association to serve as a member of the Board, but only if nominated for election by affirmative vote of three-quarters of the members of the Board, or of a nominating committee thereof, in office at the time of such first nomination;
		provided, however, that such individual’s election or nomination did not result from an actual or threatened election contest (within the meaning of Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or other actual or threatened solicitation of proxies or consents (within the meaning of Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) other than by or on behalf of the Board; or
(v)	any event which would be described in Section 11(a)(i), (ii), (iii) or (iv) if the term “Company” were substituted for the term “Association” therein or the term “Board of Directors of the Company” were substituted for the term “Board”.

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	In no event, however, shall a Change of Control be deemed to have occurred as a result of any acquisition of securities or assets of the Association, the Association, or an affiliate or subsidiary of either of them, by the Association, the Association, or a subsidiary of either of them, or by any employee benefit plan maintained by any of them. For purposes of this Section 11 (a), the term “person” shall have the meaning assigned to it under Sections 13(d)(3) or 14(d)(2) of the Exchange Act.
(b)	In the event of a Change of Control, the Executive shall be entitled to the payments and benefits contemplated by Section 9(b) in the event of his or her termination of employment with the Association under any of the circumstances described in Section 9(a) of this Agreement or under any of the following circumstances:
	(i)	resignation, voluntary or otherwise, by the Executive at any time during the Employment Period within six (6) months following his or her demotion, loss of title, office or significant authority or responsibility or following any reduction in any element of his or her package of compensation and benefits;
	(ii)	resignation, voluntary or otherwise, by the Executive at any time during the Employment Period within six (6) months following any relocation of his or her principal place of employment or any change in working conditions at such principal place of employment which the Executive, in his or her reasonable discretion, determines to be embarrassing, derogatory or otherwise adverse;
	(iii)	resignation, voluntary or otherwise, by the Executive at any time during the Employment Period within six (6) months following the failure of any successor to the Association in the Change of Control to include the Executive in any compensation or benefit program maintained by it or covering any of its executive officers, unless the Executive is already covered by a substantially similar plan of the Association which is at least as favorable to him or her; or
	(iv)	resignation, voluntary or otherwise, for any reason whatsoever during the Employment Period within six months following the expiration of a transition period of thirty (30) days beginning on the effective date of the Change of Control (or for such longer period, not to exceed ninety (90) days beginning on the effective date of the Change of Control, as the Association or its successor may reasonably request) to facilitate a transfer of management responsibilities.

          Section 12.  Covenant Not To Compete.

          The Executive hereby covenants and agrees that, in the event of his or her termination of

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employment with the Association prior to the expiration of the Employment Period, for a period of one (1) year following the date of his or her termination of employment with the Association (or, if less, for the Remaining Unexpired Employment Period), the Executive shall not, without the written consent of the Association, become an officer, employee, consultant, director or trustee of any savings bank, savings and loan association, savings and loan holding Association, bank or bank holding Association, or any direct or indirect subsidiary or affiliate of any such entity, that entails working in any city, town or county in which the Association or the Association has an office or has filed an application for regulatory approval to establish an office, determined as of the effective date of the Executive’s termination of employment; provided, however, that this Section 12 shall not apply if the Executive’s employment is terminated for the reasons set forth in Section 9(a); and provided,further, that if the Executive’s employment shall be terminated on account of Disability as provided in Section 10(c) of this Agreement, this Section 12 shall not prevent the Executive from accepting any position or performing any services if:

	(a)	he or she first offers, by written notice, to accept a similar position with or perform similar services for the Association on substantially the same terms and conditions and
	(b)	the Association declines to accept such offer within ten (10) days after such notice is given.
Section 13.      Confidentiality.           Unless the Executive obtains the prior written consent of the Association, the Executive shall keep confidential and shall refrain from using for the benefit of the Executive or any person or entity other than the Association, any entity which is a subsidiary of the Association or any entity which the Association is a subsidiary of, any material document or information obtained from the Association, or from its affiliates or subsidiaries, in the course of the Executive’s employment with any of them concerning their properties, operations or business (unless such document or information is readily ascertainable from public or published information or trade sources or has otherwise been made available to the public through no fault of his or her own) until the same ceases to be material (or becomes so ascertainable or available); provided, however, that nothing in this Section 13 shall prevent the Executive, with or without the Association’s consent, from participating in or disclosing documents or information in connection with any judicial or administrative investigation, inquiry or proceeding to the extent that such participation or disclosure is required under applicable law.           Section 14.      Solicitation.           The Executive hereby covenants and agrees that, for a period of one (1) year following the Executive’s termination of employment with the Association, he or she shall not, without the written consent of the Association, either directly or indirectly:
	(a)	solicit, offer employment to or take any other action intended, or that a reasonable

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	person acting in like circumstances would expect, to have the effect of causing any officer or employee of the Company, the Association or any affiliate or subsidiary of ether of them, to terminate his or her employment and accept employment or become affiliated with, or provide services for compensation in any capacity whatsoever to, any savings bank, savings and loan association, bank, bank holding Association, savings and loan holding Association, or other institution engaged in the business of accepting deposits and making loans, doing business in any city, town or county in which the Association or the Company has an office or has filed an application for regulatory approval to establish an office;
(b)	provide any information, advice or recommendation with respect to any such officer or employee to any savings bank, savings and loan association, bank, bank holding company, savings and loan holding company, or other institution engaged in the business of accepting deposits and making loans, doing business in any city, town or county in which the Association or the Company has an office or has filed an application for regulatory approval to establish an office that is intended, or that a reasonable person acting in like circumstances would expect, to have the effect of causing any officer or employee of the Company, the Association, or any affiliate or subsidiary of either of them, to terminate his or her employment and accept employment, become affiliated with or provide services for compensation in any capacity whatsoever to any such savings bank, savings and loan association, bank, bank holding company, savings and loan holding company or other institution engaged in the business of accepting deposits and making loans; or
(c)	solicit, provide any information, advice or recommendation or take any other action intended, or that a reasonable person acting in like circumstances would expect, to have the effect of causing any customer of the Company, the Association, or any affiliate or subsidiary of either of them to terminate an existing business or commercial relationship with the Company, the Association, or any affiliate or subsidiary of either of them.

          Section 15.      No Effect on Employee Benefit Plans or Programs.

          The termination of the Executive’s employment during the term of this Agreement or thereafter, whether by the Association or by the Executive, shall have no effect on the rights and obligations of the parties hereto under the Association’s qualified or non-qualified retirement, pension, savings, thrift, profit-sharing or stock bonus plans, group life, health (including hospitalization, medical and major medical), dental, accident and long term disability insurance plans or such other employee benefit plans or programs, or compensation plans or programs, as may be maintained by, or cover employees of, the Association from time to time.

          Section 16.     Successors and Assigns.

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          This Agreement will inure to the benefit of and be binding upon the Executive, his or her legal representatives and testate or intestate distributees, and the Association and its successors and assigns, including any successor by merger or consolidation or a statutory receiver or any other person or firm or corporation to which all or substantially all of the assets and business of the Association may be sold or otherwise transferred. Failure of the Association to obtain from any successor its express written assumption of the Association’s obligations under this Agreement at least sixty (60) days in advance of the scheduled effective date of any such succession shall be deemed a material breach of this Agreement.

          Section 17.     Notices.

          Any communication required or permitted to be given under this Agreement, including any notice, direction, designation, consent, instruction, objection or waiver, shall be in writing and shall be deemed to have been given at such time as it is delivered personally, or five (5) days after mailing if mailed, postage prepaid, by registered or certified mail, return receipt requested, addressed to such party at the address listed below or at such other address as one such party may by written notice specify to the other party:

If to the Executive:

Frank E. Fusco
6 Philson Court
Commack, New York 11725

If to the Association:

Astoria Federal Savings and Loan Association
One Astoria Federal Plaza
Lake Success, New York 11042-1085

Attention: General Counsel

with a copy to:

Thacher Proffitt & Wood
Two World Financial Center
New York, New York 10281

Attention:      W. Edward Bright, Esq.

Section 18.    Indemnification for Attorneys’ Fees.

The Association shall indemnify, hold harmless and defend the Executive against reasonable

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costs, including legal fees, incurred by him or her in connection with or arising out of any action, suit or proceeding in which he or she may be involved, as a result of his or her efforts, in good faith, to defend or enforce the terms of this Agreement; provided, however, that in the case of any action, suit or proceeding instituted prior to a Change of Control, the Executive shall have substantially prevailed on the merits pursuant to a judgment, decree or order of a court of competent jurisdiction or of an arbitrator in an arbitration proceeding, or in a settlement. For purposes of this Agreement, any settlement agreement which provides for payment of any amounts in settlement of the Association’s obligations hereunder shall be conclusive evidence of the Executive’s entitlement to indemnification hereunder, and any such indemnification payments shall be in addition to amounts payable pursuant to such settlement agreement, unless such settlement agreement expressly provides otherwise.

          Section 19.     Severability.

          A determination that any provision of this Agreement is invalid or unenforceable shall not affect the validity or enforceability of any other provision hereof.

          Section 20.     Waiver.

          Failure to insist upon strict compliance with any of the terms, covenants or conditions hereof shall not be deemed a waiver of such term, covenant, or condition. A waiver of any provision of this Agreement must be made in writing, designated as a waiver, and signed by the party against whom its enforcement is sought. Any waiver or relinquishment of any right or power hereunder at any one or more times shall not be deemed a waiver or relinquishment of such right or power at any other time or times.

          Section 21.     Counterparts.

          This Agreement may be executed in two (2) or more counterparts, each of which shall be deemed an original, and all of which shall constitute one and the same Agreement.

          Section 22.     Governing Law.

          This Agreement shall be governed by and construed and enforced in accordance with the federal laws of the United States and, to the extent that federal law is inapplicable, in accordance with the laws of the State of New York applicable to contracts entered into and to be performed entirely within the State of New York.

          Section 23.     Headings and Construction.

          The headings of sections in this Agreement are for convenience of reference only and are not intended to qualify the meaning of any section. Any reference to a section number shall refer to a section of this Agreement, unless otherwise stated.

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          Section 24.      Entire Agreement: Modifications.

          This instrument contains the entire agreement of the parties relating to the subject matter hereof, and supersedes in its entirety any and all prior agreements, understandings or representations relating to the subject matter hereof. No modifications of this Agreement shall be valid unless made in writing and signed by the parties hereto.

          Section 25.     Survival.

          The provisions of any sections of this Agreement which by its terms contemplates performance after the expiration or termination of this Agreement (including, but not limited to, Sections 6, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 20, 26, 27 and 28) shall survive the expiration of the Employment Period or termination of this Agreement.

          Section 26.     Equitable Remedies.

          The Association and the Executive hereby stipulate that money damages are an inadequate remedy for violations of Sections 6(a), 12, 13 or 14 of this Agreement and agree that equitable remedies, including, without limitations, the remedies of specific performance and injunctive relief, shall be available with respect to the enforcement of such provisions.

          Section 27.      Required Regulatory Provisions.

          The following provisions are included for the purposes of complying with various laws, rules and regulations applicable to the Association:

(a)	Notwithstanding anything herein contained to the contrary, in no event shall the aggregate amount of compensation payable to the Executive pursuant to Section 9(b) of this Agreement (exclusive of amounts described in Section 9(b)(i), (ii), (viii) or (ix)) exceed three times the Executive’s average annual total compensation for the last five consecutive calendar years to end prior to the Executive’s termination of employment with the Association (or for the Executive’s entire period of employment with the Association if less than five calendar years).
(b)	Notwithstanding anything herein contained to the contrary, any payments to the Executive by the Association, whether pursuant to this Agreement or otherwise, are subject to and conditioned upon their compliance with Section 18(k) of the Federal Deposit Insurance Act (“FDI Act”), 12 U.S.C. §1828(k), and any regulations promulgated thereunder.
(c)	Notwithstanding anything herein contained to the contrary, if the Executive is suspended from office and/or temporarily prohibited from participating in the conduct of the affairs of the Association pursuant to a notice served under Section

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	8(e)(3) or 8(g)(1) of the FDI Act, 12 U.S.C. §1818(e)(3) or 1818(g)(1), the Association’s obligations under this Agreement shall be suspended as of the date of service of such notice, unless stayed by appropriate proceedings. If the charges in such notice are dismissed, the Association, in its discretion, may (i) pay to the Executive all or part of the compensation withheld while the Association’s obligations hereunder were suspended and (ii) reinstate, in whole or in part, any of the obligations which were suspended.
(d)	Notwithstanding anything herein contained to the contrary, if the Executive is removed and/or permanently prohibited from participating in the conduct of the Association’s affairs by an order issued under Section 8(e)(4) or 8(g)(1) of the FDI Act, 12 U.S.C. §1818(e)(4) or (g)(1), all prospective obligations of the Association under this Agreement shall terminate as of the effective date of the order, but vested rights and obligations of the Association and the Executive shall not be affected.
(e)	Notwithstanding anything herein contained to the contrary, if the Association is in default (within the meaning of Section 3(x)(1) of the FDI Act, 12 U.S.C. §1813(x)(1), all prospective obligations of the Association under this Agreement shall terminate as of the date of default, but vested rights and obligations of the Association and the Executive shall not be affected.
(f)	Notwithstanding anything herein contained to the contrary, all prospective obligations of the Association hereunder shall be terminated, except to the extent that a continuation of this Agreement is necessary for the continued operation of the Association: (i) by the Director of the Office of Thrift Supervision (“OTS”) or his or her designee or the Federal Deposit Insurance Corporation (“FDIC”), at the time the FDIC enters into an agreement to provide assistance to or on behalf of the Association under the authority contained in Section 13(c) of the FDI Act, 12 U.S.C. §1823(c); (ii) by the Director of the OTS or his or her designee at the time such Director or designee approves a supervisory merger to resolve problems related to the operation of the Association or when the Association is determined by such Director to be in an unsafe or unsound condition. The vested rights and obligations of the parties shall not be affected.

If and to the extent that any of the foregoing provisions shall cease to be required or by applicable law, rule or regulation, the same shall become inoperative as though eliminated by formal amendment of this Agreement.

          Section 28.      No Offset or Recoupment; No Attachment.

          The Association’s obligation to make the payments provided for in this Agreement and otherwise to perform its obligations under this Agreement shall not be affected by any set-off, counterclaim, recoupment, defense or other claim, right or action which the Association or any of

Page26of 28

its affiliates or subsidiaries may have against the Executive. In no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement and such amounts shall not be reduced whether or not the Executive obtains other employment. Except as required by law, no right to receive payments under this Agreement shall be subject to anticipation, commutation, alienation, sale, assignment, encumbrance, charge, pledge, or hypothecation, or to execution, attachment, levy, or similar process or assignment by operation of law, and any attempt, voluntary or involuntary, to affect any such action shall be null, void, and of no effect.

          Section 32.      Compliance with Section 409A of the Code.

          In the event that this Agreement is construed to be a non-qualified deferred compensation plan described in section 409A of the Code, the Agreement shall be operated, administered and construed so as to conform to the requirements of section 409A.

          IN WITNESS WHEREOF, the Association has caused this Agreement to be executed and the Executive has hereunto set his or her hand, all as of the day and year first above written.

ATTEST:	ASTORIA FEDERAL SAVINGS AND LOAN
	ASSOCIATION
/S/ Alan P. Eggleston
Alan P. Eggleston	By:	/S/ George L. Engelke, Jr.
	Name:	George L. Engelke, Jr.
	Title:	Chairman and Chief Executive Officer
[Seal]
	/S/ Frank E. Fusco
	FRANK E. FUSCO

Page27of 28

STATE OF NEW YORK	)
	)	ss.:
COUNTY OF NASSAU	)

          On this 14th day of September, 2007, before me, the undersigned, personally appeared George L. Engelke, Jr., personally known to me or proved to me on the basis of satisfactory evidence to be the individual(s) whose name(s) is (are) subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their capacity(ies), and that by his/her/their signature(s) on the instrument, the individual(s), or the person upon behalf of which the individual(s) acted, executed the instrument.

/S/ Anna Knice

Notary Public

Anna Knice
Notary Public, State of New York
No.4980431
Qualified in Suffolk County
Commission Expires April 22, 2011
STATE OF NEW YORK	)
	)	ss.:
COUNTY OF NASSAU	)

          On this 14th day of September, 2007, before me, the undersigned, personally Frank E. Fusco, personally known to me or proved to me on the basis of satisfactory evidence to be the individual(s) whose name(s) is (are) subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their capacity(ies), and that by his/her/their signature(s) on the instrument, the individual(s), or the person upon behalf of which the individual(s) acted, executed the instrument.

/S/ Anna Knice

Notary Public

Anna Knice
Notary Public, State of New York
No.4980431
Qualified in Suffolk County
Commission Expires April 22, 2011

Page28of 28

EX-10.9

EXHIBIT 10.9

AMENDMENT TO
ASTORIA FINANCIAL CORPORATION
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT WITH EXECUTIVE OFFICER

          This Amendment to the Amended and Restated Employment Agreement (the “Restated Employment Agreement”) entered into as of January 1, 2000 by and between Astoria Financial Corporation, a business corporation organized and operation under the laws of the State of Delaware (the “Company”) and Arnold K. Greenberg (the “Executive”) is entered into as of August 15, 2007.

WITNESSETH:

          WHEREAS, the Company and Executive have previously entered into the Restated Employment Agreement which remains in full force and effect; and

          WHEREAS, the Company has realigned its executive management staff; and

          WHEREAS,prior to such realignment the Executive served as Executive Vice President; and

          WHEREAS, following such realignment Executive has agreed to continue to serve as Executive Vice President; and

          WHEREAS, the Board of Directors of the Company has determined that it is in the best interests of the shareholders of the Company to rescind the Company’s mandatory retirement policy for executive officers;

          NOW THEREFORE,in consideration of the premises and the mutual covenants and conditions hereinafter set forth, the Company and Executive hereby agree to amend the Restated Employment Agreement as follows from and after the date hereof:

A)      Section 4. Cash Compensation. of the Restated Employment Agreement is amended to replace the salary set forth in such Section from an initial annual rate of Three Hundred Forty Five Thousand Dollars ($345,000) to an initial annual rate of Four Hundred Eighty Three Thousand Dollars ($483,000) which the Company and Executive acknowledge is Executive’s current rate of annual salary.

Page1of 3

B)	Section 9. Termination of Employment with Severance Benefits. and Section 18. Notices. of the Restated Employment Agreement are amended by amending Section 9(b) and Section 18 to provide that the address of Thacher Proffitt & Wood is Two World Financial Center, New York, New York 10281.
C)	Section 10. Termination without Additional Company Liability. of the Restated Employment Agreement is amended by deleting Section 10(a)(v).
D)	Section 33. Compliance with Section 409A of the Code. is added to the Restated Employment Agreement to state as follows:
	Section 33. Compliance with Section 409A of the Code.
In the event that this Agreement is construed to be a non-qualified deferred compensation plan described in section 409A of the Code, the Agreement shall be operated, administered and construed so as to conform to the requirements of section 409A.
E)	The Restated Employment Agreement is in all other respects confirmed and ratified and the Restated Employment Agreement, as amended by this amendment remains in full force and effect.

          IN WITNESS WHEREOF,the Company has caused this Amendment to be executed and Executive has hereunto set his hand, all as the 15^th day of August 2007.

Attest:	ASTORIA FINANCIAL CORPORATION
/S/ Alan P. Eggleston	By:	/S/ George L. Engelke, Jr.
Alan P. Eggleston		Name: George L. Engelke, Jr.
		Title: Chairman and Chief Executive Officer
[Seal]
		/S/ Arnold K. Greenberg
		Arnold K. Greenberg

Page2of 3

STATE OF NEW YORK	)
	)	SS.:
COUNTY OF NASSAU	)

          On this 15th day of August 2007, before me, the undersigned, personally appeared George L. Engelke, Jr., personally known to me or proved to me on the basis of satisfactory evidence to be the individual(s) whose name(s) is (are) subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their capacity(ies), and that by his/her/their signature(s) on the instrument, the individual(s), or the person upon behalf of which the individual(s) acted, executed the instrument.

/S/Marygrace Farruggia

          Notary Public

Marygrace Farruggia

Notary Public, State of New York

No. 4998931

Qualified in Suffolk County

Commission Expires 7/13/2010

STATE OF NEW YORK	)
	)	SS.:
COUNTY OF NASSAU	)

          On this 15^th day of August 2007, before me, the undersigned, personally appeared Arnold K. Greenberg, personally known to me or proved to me on the basis of satisfactory evidence to be the individual(s) whose name(s) is (are) subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their capacity(ies), and that by his/her/their signature(s) on the instrument, the individual(s), or the person upon behalf of which the individual(s) acted, executed the instrument.

/S/Marygrace Farruggia

          Notary Public

Marygrace Farruggia

Notary Public, State of New York

No. 4998931

Qualified in Suffolk County

Commission Expires 7/13/2010

Page3of 3

EX-10.10

EXHIBIT 10.10

AMENDMENT TO
ASTORIA FEDERAL SAVINGS AND LOAN ASSOCIATION
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT WITH EXECUTIVE OFFICER

          This Amendment to the Amended and Restated Employment Agreement (the “Restated Employment Agreement”) entered into as of January 1, 2000 by and between Astoria Federal Savings and Loan Association, a savings association organized and operation under the federal laws of the United States(the “Association”) and Arnold K. Greenberg (the “Executive”) is entered into as of August 15, 2007.

WITNESSETH:

          WHEREAS, the Association and Executive have previously entered into the Restated Employment Agreement which remains in full force and effect; and

          WHEREAS, the Association has realigned its executive management staff; and

          WHEREAS,prior to such realignment the Executive served as Executive Vice President; and

          WHEREAS, following such realignment Executive has agreed to continue to serve as Executive Vice President; and

          WHEREAS, the Board of Directors of the Association has determined that it is in the best interests of the shareholders of the Association to rescind the Association’s mandatory retirement policy for executive officers;

          NOW THEREFORE,in consideration of the premises and the mutual covenants and conditions hereinafter set forth, the Association and Executive hereby agree to amend the Restated Employment Agreement as follows from and after the date hereof:

A)	Section 4. Cash Compensation. of the Restated Employment Agreement is amended to replace the salary set forth in such Section from an initial annual rate of Three Hundred Forty Five Thousand Dollars ($345,000) to an initial annual rate of Four Hundred Eighty Three Thousand Dollars ($483,000) which the Association and Executive acknowledge is Executive’s current rate of annual salary.
B)	Section 9. Termination of Employment with Severance Benefits. and Section 17. Notices. of the Restated Employment Agreement are amended by amending Section 9(b) and Section 17 to provide that the address of Thacher Proffitt & Wood is Two

Page 1 of 3

	World Financial Center, New York, New York 10281.
C)	Section 10. Termination without Additional Association Liability. of the Restated Employment Agreement is amended by deleting Section 10(a)(v).
D)	Section 30. Compliance with Section 409A of the Code. is added to the Restated Employment Agreement to state as follows:
	Section 30. Compliance with Section 409A of the Code.
	In the event that this Agreement is construed to be a non-qualified deferred compensation plan described in section
409A of the Code, the Agreement shall be operated, administered and construed so as to conform to the requirements of section 409A.
E)	The Restated Employment Agreement is in all other respects confirmed and ratified and the Restated Employment Agreement, as amended by this amendment remains in full force and effect.

          IN WITNESS WHEREOF,the Association has caused this Amendment to be executed and Executive has hereunto set his hand, all as the 15^th day of August 2007.

Attest:	ASTORIA FEDERAL SAVINGS AND LOAN
	ASSOCIATION
/s/ Alan P. Eggleston	By:	/S/ George L. Engelke, Jr.
Alan P. Eggleston	Name: George L. Engelke, Jr.
	Title: Chairman and Chief Executive Officer
[Seal]
	/S/ Arnold K. Greenberg
	Arnold K. Greenberg

Page 2 of 3

STATE OF NEW YORK	)
	)	SS.:
COUNTY OF NASSAU	)

          On this 15th day of August 2007, before me, the undersigned, personally appeared George L. Engelke, Jr., personally known to me or proved to me on the basis of satisfactory evidence to be the individual(s) whose name(s) is (are) subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their capacity(ies), and that by his/her/their signature(s) on the instrument, the individual(s), or the person upon behalf of which the individual(s) acted, executed the instrument.

/S/ Marygrace Farruggia

          Notary Public

Marygrace Farruggia

Notary Public, State of New York

No. 4998931

Qualified in Suffolk County

Commission Expires 7/13/2010

STATE OF NEW YORK	)
	)	SS.:
COUNTY OF NASSAU	)

          On this 15^th day of August 2007, before me, the undersigned, personally appeared Arnold K. Greenberg, personally known to me or proved to me on the basis of satisfactory evidence to be the individual(s) whose name(s) is (are) subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their capacity(ies), and that by his/her/their signature(s) on the instrument, the individual(s), or the person upon behalf of which the individual(s) acted, executed the instrument.

/S/ Marygrace Farruggia

          Notary Public

Marygrace Farruggia

Notary Public, State of New York

No. 4998931

Qualified in Suffolk County

Commission Expires 7/13/2010

Page 3 of 3

EX-10.11

EXHIBIT 10.11

AMENDMENT TO
ASTORIA FINANCIAL CORPORATION
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT WITH EXECUTIVE OFFICER

          This Amendment to the Amended and Restated Employment Agreement (the “Restated Employment Agreement”) entered into as of January 1, 2000 by and between Astoria Financial Corporation, a business corporation organized and operation under the laws of the State of Delaware (the “Company”) and Gerard C. Keegan (the “Executive”) is entered into as of August 15, 2007.

WITNESSETH:

          WHEREAS, the Company and Executive have previously entered into the Restated Employment Agreement which remains in full force and effect; and

          WHEREAS, the Company has realigned its executive management staff; and

          WHEREAS,prior to such realignment the Executive served as Vice Chairman and Chief Administrative Officer; and

          WHEREAS, following such realignment Executive has agreed to continue to serve as Vice Chairman and Chief Administrative Officer; and

          WHEREAS, the Board of Directors of the Company has determined that it is in the best interests of the shareholders of the Company to rescind the Company’s mandatory retirement policy for executive officers;

          NOW THEREFORE,in consideration of the premises and the mutual covenants and conditions hereinafter set forth, the Company and Executive hereby agree to amend the Restated Employment Agreement as follows from and after the date hereof:

A)      Section 4. Cash Compensation. of the Restated Employment Agreement is amended to replace the salary set forth in such Section from an initial annual rate of Three Hundred Seventy Five Thousand Dollars ($375,000) to an initial annual rate of Five Hundred Twenty Four Thousand Dollars ($524,000) which the Company and Executive acknowledge is Executive’s current rate of annual salary.

Page 1 of 3

B)	Section 9. Termination of Employment with Severance Benefits. and Section 18. Notices. of the Restated Employment Agreement are amended by amending Section 9(b) and Section 18 to provide that the address of Thacher Proffitt & Wood is Two World Financial Center, New York, New York 10281.
C)	Section 10. Termination without Additional Company Liability. of the Restated Employment Agreement is amended by deleting Section 10(a)(v).
D)	Section 33. Compliance with Section 409A of the Code. is added to the Restated Employment Agreement to state as follows:
Section 33. Compliance with Section 409A of the Code.           In the event that this Agreement is construed to be a non-qualified deferred compensation plan described in section 409A of the Code, the Agreement shall be operated, administered and construed so as to conform to the requirements of section 409A.
E)	The Restated Employment Agreement is in all other respects confirmed and ratified and the Restated Employment Agreement, as amended by this amendment remains in full force and effect.

          IN WITNESS WHEREOF,the Company has caused this Amendment to be executed and Executive has hereunto set his hand, all as the 15^th day of August 2007.

Attest:	ASTORIA FINANCIAL CORPORATION
/S/ Alan P. Eggleston	By:	/S/ George L. Engelke, Jr.
Alan P. Eggleston	Name: George L. Engelke, Jr.
	Title: Chairman and Chief Executive Officer
[Seal]
	/S/ Gerard C. Keegan
	Gerard C. Keegan

Page 2 of 3

STATE OF NEW YORK	)
	)	SS.:
COUNTY OF NASSAU	)

          On this 15th day of August 2007, before me, the undersigned, personally appeared George L. Engelke, Jr., personally known to me or proved to me on the basis of satisfactory evidence to be the individual(s) whose name(s) is (are) subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their capacity(ies), and that by his/her/their signature(s) on the instrument, the individual(s), or the person upon behalf of which the individual(s) acted, executed the instrument.

/S/ Marygrace Farruggia

          Notary Public

Marygrace Farruggia

Notary Public, State of New York

No. 4998931

Qualified in Suffolk County

Commission Expires 7/13/2010

STATE OF NEW YORK	)
	)	SS.:
COUNTY OF NASSAU	)

          On this 15^th day of August 2007, before me, the undersigned, personally appeared Gerard C. Keegan, personally known to me or proved to me on the basis of satisfactory evidence to be the individual(s) whose name(s) is (are) subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their capacity(ies), and that by his/her/their signature(s) on the instrument, the individual(s), or the person upon behalf of which the individual(s) acted, executed the instrument.

/S/ Marygrace Farruggia

          Notary Public

Marygrace Farruggia

Notary Public, State of New York

No. 4998931

Qualified in Suffolk County

Commission Expires 7/13/2010

Page 3 of 3

EX-10.12

EXHIBIT 10.12

AMENDMENT TO
ASTORIA FEDERAL SAVINGS AND LOAN ASSOCIATION
AMENDED AND RESTATED
EMPLOYMENT AGREEMENT WITH EXECUTIVE OFFICER

          This Amendment to the Amended and Restated Employment Agreement (the “Restated Employment Agreement”) entered into as of January 1, 2000 by and between Astoria Federal Savings and Loan Association, a savings association organized and operation under the federal laws of the United States(the “Association”) and Gerard C. Keegan (the “Executive”) is entered into as of August 15, 2007.

WITNESSETH:

          WHEREAS, the Association and Executive have previously entered into the Restated Employment Agreement which remains in full force and effect; and

          WHEREAS, the Association has realigned its executive management staff; and

          WHEREAS,prior to such realignment the Executive served as Vice Chairman and Chief Administrative Officer; and

          WHEREAS, following such realignment Executive has agreed to continue to serve as Vice Chairman and Chief Administrative Officer; and

          WHEREAS, the Board of Directors of the Association has determined that it is in the best interests of the shareholders of the Association to rescind the Association’s mandatory retirement policy for executive officers;

          NOW THEREFORE,in consideration of the premises and the mutual covenants and conditions hereinafter set forth, the Association and Executive hereby agree to amend the Restated Employment Agreement as follows from and after the date hereof:

A)	Section 4. Cash Compensation. of the Restated Employment Agreement is amended to replace the salary set forth in such Section from an initial annual rate of Three Hundred Seventy Five Thousand Dollars ($375,000) to an initial annual rate of Five Hundred Twenty Four Thousand Dollars ($524,000) which the Association and Executive acknowledge is Executive’s current rate of annual salary.
B)	Section 9. Termination of Employment with Severance Benefits. and Section 17. Notices. of the Restated Employment Agreement are amended by amending Section 9(b) and Section 17 to provide that the address of Thacher Proffitt & Wood is Two

Page 1 of 3

	World Financial Center, New York, New York 10281.
C)	Section 10. Termination without Additional Association Liability. of the Restated Employment Agreement is amended by deleting Section 10(a)(v).
D)	Section 30. Compliance with Section 409A of the Code. is added to the Restated Employment Agreement to state as follows:
Section 30. Compliance with Section 409A of the Code.           In the event that this Agreement is construed to be a non-qualified deferred compensation plan described in section 409A of the Code, the Agreement shall be operated, administered and construed so as to conform to the requirements of section 409A.
E)	The Restated Employment Agreement is in all other respects confirmed and ratified and the Restated Employment Agreement, as amended by this amendment remains in full force and effect.

          IN WITNESS WHEREOF,the Association has caused this Amendment to be executed and Executive has hereunto set his hand, all as the 15^th day of August 2007.

Attest:	ASTORIA FEDERAL SAVINGS AND LOAN
	ASSOCIATION
/S/ Alan P. Eggleston	By:	/S/ George L. Engelke, Jr.
Alan P. Eggleston	Name: George L. Engelke, Jr.
	Title: Chairman and Chief Executive Officer
[Seal]
	/S/ Gerard C. Keegan
	Gerard C. Keegan

Page 2 of 3

STATE OF NEW YORK	)
	)	SS.:
COUNTY OF NASSAU	)

          On this 15th day of August 2007, before me, the undersigned, personally appeared George L. Engelke, Jr., personally known to me or proved to me on the basis of satisfactory evidence to be the individual(s) whose name(s) is (are) subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their capacity(ies), and that by his/her/their signature(s) on the instrument, the individual(s), or the person upon behalf of which the individual(s) acted, executed the instrument.

/S/ Marygrace Farruggia

          Notary Public

Marygrace Farruggia

Notary Public, State of New York

No. 4998931

Qualified in Suffolk County

Commission Expires 7/13/2010

STATE OF NEW YORK	)
	)	SS.:
COUNTY OF NASSAU	)

          On this 15^th day of August 2007, before me, the undersigned, personally appeared Gerard C. Keegan, personally known to me or proved to me on the basis of satisfactory evidence to be the individual(s) whose name(s) is (are) subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their capacity(ies), and that by his/her/their signature(s) on the instrument, the individual(s), or the person upon behalf of which the individual(s) acted, executed the instrument.

/S/ Marygrace Farruggia

          Notary Public

Marygrace Farruggia

Notary Public, State of New York

No. 4998931

Qualified in Suffolk County

Commission Expires 7/13/2010

Page 3 of 3

EX-10.13

EXHIBIT 10.13

AMENDMENT TO
ASTORIA FINANCIAL CORPORATION
EMPLOYMENT AGREEMENT WITH EXECUTIVE OFFICER

          This Amendment to the Employment Agreement (the “Employment Agreement”) entered into as of December 1, 2003 by and between Astoria Financial Corporation, a business corporation organized and operation under the laws of the State of Delaware (the “Company”) and Gary T. McCann (the “Executive”) is entered into as of August 15, 2007.

WITNESSETH:

          WHEREAS, the Company and Executive have previously entered into the Employment Agreement which remains in full force and effect; and

          WHEREAS, the Company has realigned its executive management staff; and

          WHEREAS,prior to such realignment the Executive served as Executive Vice President; and

          WHEREAS, following such realignment Executive has agreed to continue to serve as Executive Vice President; and

          WHEREAS, the Board of Directors of the Company has determined that it is in the best interests of the shareholders of the Company to rescind the Company’s mandatory retirement policy for executive officers;

          NOW THEREFORE,in consideration of the premises and the mutual covenants and conditions hereinafter set forth, the Company and Executive hereby agree to amend the Employment Agreement as follows from and after the date hereof:

A)	Section 4. Cash Compensation. of the Employment Agreement is amended to replace the salary set forth in such Section from an initial annual rate of Two Hundred Twelve Thousand Dollars ($212,000) to an initial annual rate of Four Hundred Thousand Dollars ($400,000) which the Company and Executive acknowledge is Executive’s current rate of annual salary.
B)	Section 10. Termination without Additional Company Liability. of the Employment Agreement is amended by deleting Section 10(a)(v).

Page 1 of 3

C)	Section 32. Compliance with Section 409A of the Code. is added to the Employment Agreement to state as follows:
Section 32. Compliance with Section 409A of the Code.           In the event that this Agreement is construed to be a non-qualified deferred compensation plan described in section 409A of the Code, the Agreement shall be operated, administered and construed so as to conform to the requirements of section 409A.
D)	The Employment Agreement is in all other respects confirmed and ratified and the Employment Agreement, as amended by this amendment remains in full force and effect.

          IN WITNESS WHEREOF,the Company has caused this Amendment to be executed and Executive has hereunto set his hand, all as the 15^th day of August 2007.

Attest:	ASTORIA FINANCIAL CORPORATION
/S/ Alan P. Eggleston	By:	/S/ George L. Engelke, Jr.
Alan P. Eggleston	Name: George L. Engelke, Jr.
	Title: Chairman and Chief Executive Officer
[Seal]
	/S/ Gary T. McCann
	Gary T. McCann

Page 2 of 3

STATE OF NEW YORK	)
	)	SS.:
COUNTY OF NASSAU	)

          On this 15th day of August 2007, before me, the undersigned, personally appeared George L. Engelke, Jr., personally known to me or proved to me on the basis of satisfactory evidence to be the individual(s) whose name(s) is (are) subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their capacity(ies), and that by his/her/their signature(s) on the instrument, the individual(s), or the person upon behalf of which the individual(s) acted, executed the instrument.

/S/ Marygrace Farruggia

          Notary Public

Marygrace Farruggia

Notary Public, State of New York

No. 4998931

Qualified in Suffolk County

Commission Expires 7/13/2010

STATE OF NEW YORK	)
	)	SS.:
COUNTY OF NASSAU	)

          On this 15^th day of August 2007, before me, the undersigned, personally appeared Gary T. McCann, personally known to me or proved to me on the basis of satisfactory evidence to be the individual(s) whose name(s) is (are) subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their capacity(ies), and that by his/her/their signature(s) on the instrument, the individual(s), or the person upon behalf of which the individual(s) acted, executed the instrument.

/S/ Marygrace Farruggia

          Notary Public

Marygrace Farruggia

Notary Public, State of New York

No. 4998931

Qualified in Suffolk County

Commission Expires 7/13/2010

Page 3 of 3

EX-10.14

EXHIBIT 10.14

AMENDMENT TO
ASTORIA FEDERAL SAVINGS AND LOAN ASSOCIATION
EMPLOYMENT AGREEMENT WITH EXECUTIVE OFFICER

          This Amendment to the Employment Agreement (the “Employment Agreement”) entered into as of December 1, 2003 by and between Astoria Federal Savings and Loan Association, a savings association organized and operation under the federal laws of the United States(the “Association”) and Gary T. McCann (the “Executive”) is entered into as of August 15, 2007.

WITNESSETH:

          WHEREAS, the Association and Executive have previously entered into the Employment Agreement which remains in full force and effect; and

          WHEREAS, the Association has realigned its executive management staff; and

          WHEREAS,prior to such realignment the Executive served as Executive Vice President; and

          WHEREAS, following such realignment Executive has agreed to continue to serve as Executive Vice President; and

          WHEREAS, the Board of Directors of the Association has determined that it is in the best interests of the shareholders of the Association to rescind the Association’s mandatory retirement policy for executive officers;

          NOW THEREFORE,in consideration of the premises and the mutual covenants and conditions hereinafter set forth, the Association and Executive hereby agree to amend the Employment Agreement as follows from and after the date hereof:

A)	Section 4. Cash Compensation. of the Employment Agreement is amended to replace the salary set forth in such Section from an initial annual rate of Two Hundred Twelve Thousand Dollars ($212,000) to an initial annual rate of Four Hundred Thousand Dollars ($400,000) which the Association and Executive acknowledge is Executive’s current rate of annual salary.
B)	Section 10. Termination without Additional Association Liability. of the Employment Agreement is amended by deleting Section 10(a)(v).

Page 1 of 3

C)	Section 29. Compliance with Section 409A of the Code. is added to the Employment Agreement to state as follows:
	Section 29. Compliance with Section 409A of the Code.
	In the event that this Agreement is construed to be a non-qualified deferred compensation plan described in section
409A of the Code, the Agreement shall be operated, administered and construed so as to conform to the requirements of section 409A.
D)	The Employment Agreement is in all other respects confirmed and ratified and the Employment Agreement, as amended by this amendment remains in full force and effect.

          IN WITNESS WHEREOF,the Association has caused this Amendment to be executed and Executive has hereunto set his hand, all as the 15^th day of August 2007.

Attest:	ASTORIA FEDERAL SAVINGS AND LOAN
	ASSOCIATION
/S/ Alan P. Eggleston	By:	/S/ George L. Engelke, Jr.
Alan P. Eggleston	Name: George L. Engelke, Jr.
	Title: Chairman and Chief Executive Officer
[Seal]
	/S/ Gary T. McCann
	Gary T. McCann

Page 2 of 3

STATE OF NEW YORK	)
	)	SS.:
COUNTY OF NASSAU	)

          On this 15th day of August 2007, before me, the undersigned, personally appeared George L. Engelke, Jr., personally known to me or proved to me on the basis of satisfactory evidence to be the individual(s) whose name(s) is (are) subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their capacity(ies), and that by his/her/their signature(s) on the instrument, the individual(s), or the person upon behalf of which the individual(s) acted, executed the instrument.

/S/ Marygrace Farruggia

          Notary Public

Marygrace Farruggia

Notary Public, State of New York

No. 4998931

Qualified in Suffolk County

Commission Expires 7/13/2010

STATE OF NEW YORK	)
	)	SS.:
COUNTY OF NASSAU	)

          On this 15^th day of August 2007, before me, the undersigned, personally appeared Gary T. McCann, personally known to me or proved to me on the basis of satisfactory evidence to be the individual(s) whose name(s) is (are) subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their capacity(ies), and that by his/her/their signature(s) on the instrument, the individual(s), or the person upon behalf of which the individual(s) acted, executed the instrument.

/S/ Marygrace Farruggia

          Notary Public

Marygrace Farruggia

Notary Public, State of New York

No. 4998931

Qualified in Suffolk County

Commission Expires 7/13/2010

Page 3 of 3

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, George L. Engelke, Jr., certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of Astoria Financial Corporation;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	(d)	Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.	The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
	(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
	(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 8, 2007

/s/ George L. Engelke, Jr.                      
George L. Engelke, Jr.
Chairman and Chief Executive Officer
Astoria Financial Corporation

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, Frank E. Fusco, certify that:

1.	I have reviewed this Quarterly Report on Form 10-Q of Astoria Financial Corporation;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
	(a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
	(b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
	(c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
	(d)	Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.	The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
	(a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
	(b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: November 8, 2007

/s/ Frank E. Fusco                      
Frank E. Fusco
Executive Vice President, Treasurer and Chief Financial Officer
Astoria Financial Corporation

EX-32.1

Exhibit 32.1

STATEMENT FURNISHED PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002, 18 U.S.C. SECTION 1350

      The undersigned, George L. Engelke, Jr., is the Chairman and Chief Executive Officer of Astoria Financial Corporation (the “Company”).

      This statement is being furnished in connection with the filing by the Company of the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2007 (the “Report”).

      By execution of this statement, I certify that:

(A)	the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d)) and
(B)	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods covered by the Report.

November 8, 2007	/s/	George L. Engelke, Jr.
Dated		George L. Engelke, Jr.

EX-32.2

Exhibit 32.2

STATEMENT FURNISHED PURSUANT TO SECTION 906 OF THE
SARBANES-OXLEY ACT OF 2002, 18 U.S.C. SECTION 1350

      The undersigned, Frank E. Fusco, is the Executive Vice President, Treasurer and Chief Financial Officer of Astoria Financial Corporation (the “Company”).

      This statement is being furnished in connection with the filing by the Company of the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2007 (the “Report”).

      By execution of this statement, I certify that:

(A)	the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d)) and
(B)	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company as of the dates and for the periods covered by the Report.

November 8, 2007	/s/	Frank E. Fusco
Dated		Frank E. Fusco