EX-99.1 2 v172414_ex99-1.htm

FOR IMMEDIATE RELEASE
Contact:     
Peter J. Cunningham
   
First Vice President
   
Investor Relations
   
516-327-7877
   
ir@astoriafederal.com

ASTORIA FINANCIAL CORPORATION ANNOUNCES FOURTH QUARTER EPS OF $0.09

Quarterly Cash Dividend of $0.13 Per Share Declared

Lake Success, New York, January 27, 2010 — Astoria Financial Corporation (NYSE: AF) (“Astoria,” the “Company”), the holding company for Astoria Federal Savings and Loan Association (“Astoria Federal”, the “Bank”), today reported net income of $8.1 million, or $0.09 diluted earnings per share (“EPS”) for the quarter ended December 31, 2009 compared to $29.4  million, or $0.32 EPS, (operating income of $22.1 million, or $0.24 operating EPS), for the 2008 fourth quarter.(a)  Operating income equaled net income for the 2009 fourth quarter.
 
For the year ended December 31, 2009, net income totaled $27.7 million, or $0.30 EPS, (operating income of $38.6 million, or $0.42 operating EPS) compared to $75.3 million, or $0.82 EPS, (operating income of $125.8 million, or $1.38 operating EPS) for the year ended December 31, 2008.(b)
 
Operating income and operating EPS, representing net income and EPS determined in accordance with generally accepted accounting principles (“GAAP”) excluding the effects of certain items that are not routine to our core operations, provide a meaningful comparison for evaluating Astoria’s operating results and are detailed in the footnotes below.   For a reconciliation of GAAP and non-GAAP measures, please refer to the “Reconciliation of GAAP and non-GAAP Measures’ table included in this release.
 
Commenting on the quarter and full year results, George L. Engelke, Jr., Chairman and Chief Executive Officer of Astoria, noted “While the decreases in the year-over-year fourth quarter and full year results reflect the effect of a prolonged and severe job loss recession that has resulted in increased loan delinquencies, higher credit costs and non-performing loans as compared to a year ago, the fundamental operating performance of the Company on a linked quarter basis is encouraging.  Specifically, the improvement in net interest income and the net interest margin coupled with the stabilizing trend in non-performing loans, will have a positive impact on earnings in future quarters.”
 
(a)   Included in the 2008 fourth quarter is a tax benefit of $7.4 million, or $0.08 per diluted share, due to a tax adjustment related to the recognition of the 2008 third quarter other-than-temporary impairment (“OTTI”) charge relating to Freddie Mac preferred stock.
 
1
 
Board Declares Quarterly Cash Dividend of $0.13 Per Share
 
The Board of Directors of the Company, at their January 27, 2010 meeting, declared a quarterly cash dividend of $0.13 per common share.  The dividend is payable on March 1, 2010 to shareholders of record as of February 16, 2010.  This is the fifty-ninth consecutive quarterly cash dividend declared by the Company.
 
Board Sets Annual Shareholders’ Meeting Date
 
The Board of Directors of the Company, at their January 27, 2010 meeting, established May 19, 2010 as the date for the Annual Meeting of Shareholders, with a voting record date of March 24, 2010.
 
Fourth Quarter and Full Year Earnings Summary
 
Net interest income for the quarter ended December 31, 2009 totaled $105.0 million compared to $103.1 million for the 2009 third quarter and $114.9 million for the 2008 fourth quarter.   For the year ended December 31, 2009, net interest income increased $33.4 million, or 8.4%, from the year ended December 31, 2008, to $428.8 million.
 
Astoria’s net interest margin for the quarter ended December 31, 2009 increased to 2.15%, 8 basis points above the 2009 third quarter and was just 3 basis points lower than the 2008 fourth quarter.  The linked quarter increase was due to the cost of interest-bearing liabilities declining more rapidly than the yield on interest-earning assets.  During the 2009 fourth quarter, $2.2 billion of CDs matured (excluding Liquid CDs), with a weighted average rate of 3.28% and an original weighted average maturity of 12 months, and $1.6 billion of CDs were issued or repriced, with a weighted average rate of 1.59% and a weighted average maturity of 18 months.
 
For the year ended December 31, 2009, the margin was 2.13%, 22 basis points higher than the margin for the year ended December 31, 2008.   The increase, like that of the linked quarter increase, was primarily due to the cost of interest-bearing liabilities declining more rapidly than the yield on interest-earning assets.  For the year ended December 31, 2009, $7.6 billion of CDs matured (excluding Liquid CDs), with a weighted average rate of 3.31% and an original weighted average maturity of 12 months, and $6.5 billion of CDs were issued or repriced, with a weighted average rate of 1.94% and a weighted average maturity of 14 months.  “We have been successful in reducing the cost of CDs while extending the maturity terms in an effort to improve interest rate risk sensitivity,” Mr. Engelke noted.    During 2009, the one-year cumulative interest rate sensitivity gap was reduced to negative 6.77% at December 31, 2009 compared to negative 19.06% at December 31, 2008, primarily due to increased mortgage cash flow, as well as a significant increase in mortgage loans repricing into one-year ARMs, coupled with the aforementioned extension of CD maturities.  For additional detail regarding the yields on interest-earning assets and costs on interest-bearing liabilities please refer to the “Average Balance Sheets” tables included in this release.
 
2
 
For the quarter ended December 31, 2009, a $50.0 million provision for loan losses was recorded which was equal to the provision for the previous quarter and $5.0 million greater than the $45.0 million provision for the 2008 fourth quarter.  For the year ended December 31, 2009, provisions for loan losses totaled $200.0 million compared to $69.0 million for 2008.  Mr. Engelke noted, “The significant increase in the 2009 provisions recognizes the deterioration in the financial condition of many prime residential borrowers during the year, due to the severity of a prolonged job loss recession, weakness in the national housing market and a decline in real estate values, which resulted in higher loan delinquencies, credit costs and non-performing loans.”
 
Non-interest income for the quarter ended December 31, 2009 totaled $23.3 million compared to $19.2 million for the comparable 2008 quarter.  The $4.1 million increase is primarily due to security gains of $1.5 million and net mortgage banking income of $805,000 compared to a $2.2 million net mortgage banking loss in the 2008 fourth quarter.   For the year ended December 31, 2009, non-interest income (excluding a $5.3 OTTI charge and a $1.6 million building write-down) totaled $86.7 million compared to $88.9 million (excluding a $77.7 million OTTI charge) for the comparable 2008 period.  The $2.2 million decrease is primarily due to a $7.8 million decrease in bank owned life insurance income, a $4.6 million decrease in customer service fees and $2.3 million, net, in lower of cost or market write-downs on non-performing loans held-for-sale during 2009, partially offset by $7.4 million in securities gains and a $6.0 million increase in mortgage banking income, net.
 
General and administrative expense (“G&A”) for the quarter ended December 31, 2009 totaled $66.8 million compared to $63.2 million for the 2009 third quarter and $56.2 million for the 2008 fourth quarter.  The linked quarter increase was primarily due to a $1.8 million increase in ESOP expense, a $1.0 million increase in real estate owned related expense and a $702,000 increase in advertising expense.  The fourth quarter year over year increase was due primarily to a $6.0 million increase in FDIC deposit insurance premiums and a $5.2 million increase in compensation and benefits expense, primarily due to increased pension expense.
 
For the year ended December 31, 2009, G&A totaled $270.1 million compared to $233.3 million.  The $36.8 million increase was primarily due to an $8.5 million increase in compensation and benefits expense primarily due to increased pension expense partially offset by lower ESOP expense, a $22.1 million increase in regular FDIC deposit insurance premiums and a $9.9 million FDIC deposit insurance special assessment in the 2009 second quarter, partially offset by lower occupancy, equipment and systems expense and lower advertising expense.
 
Balance Sheet Summary
 
Total assets decreased $421.1 million and $1.7 billion for the quarter and twelve months ended December 31, 2009, respectively, and totaled $20.3 billion.  The decrease for the fourth quarter was due to a $189.1 million decrease in the loan portfolio and $293.7 million decrease in the securities portfolio.  The full year decrease was due to decreases of $454.3 million in the one-to-four family loan portfolio, $426.9 million in the multi-family/commercial real estate (“CRE”) mortgage loan portfolios and $858.7 million in the securities portfolio.  At December 31, 2009, the one-to-four family loan portfolio totaled $11.9 billion, the multi-family/CRE portfolio totaled $3.4 billion and the securities portfolio totaled $3.2 billion.
 
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For the quarter and twelve months ended December 31, 2009, one-to-four family loan originations for portfolio totaled $916.4 million and $3.1 billion, respectively, compared to $422.7 million and $3.7 billion, respectively, for the comparable 2008 periods.  One-to-four family loan prepayments for the quarter and twelve months ended December 31, 2009 totaled $891.3 million and $3.1 billion, respectively, compared to $330.3 million and $2.6 billion, respectively, for the comparable 2008 periods.  The loan-to-value ratio of the one-to-four family loan production for portfolio for the 2009 fourth quarter and full year averaged 61% and 58%, respectively, at origination and the individual loan amount averaged $700,000 and $715,000, respectively.
 
Deposits for the quarter ended December 31, 2009 decreased $406.4 million from the previous quarter and $667.7 million from December 31, 2008, and totaled $12.8 billion at December 31, 2009.  The decreases were due primarily to decreases in CDs.   Commenting on deposit flows, Mr. Engelke noted, “During the fourth quarter and throughout the year, accelerated mortgage prepayment activity, which outpaced our loan production, influenced our decision to reduce higher cost CDs.   Important to note, low-cost savings, money market and checking deposits increased $426.3 million, or 11.9%, for the twelve months ended December 31, 2009.  Also important to note, total deposits are comprised of retail deposits and do not include any broker or municipal deposits.”
 
Borrowings for the quarter ended December 31, 2009 increased $40.1 million from the previous quarter and decreased $1.1 billion from December 31, 2008 to $5.9 billion.
 
Stockholders’ equity totaled $1.2 billion, or 5.97% of total assets at December 31, 2009.  Astoria Federal continues to be designated as well-capitalized with core, tangible, risk-based and Tier 1 risk-based capital ratios of 6.89%, 6.89%, 12.99% and 11.72%, respectively, at December 31, 2009.
 
Asset Quality
 
           Non-performing loans (“NPL”), including troubled debt restructurings (“TDR”) of $57.2 million, totaled $408.6 million, or 2.02% of total assets, at December 31, 2009, essentially flat from the previous quarter.  During the 2009 fourth quarter, $13.1 million of non-performing loans were either sold or classified as held-for-sale.  At December 31, 2009, one-to-four family non-performing loans totaled $330.1 million and multi-family/CRE/construction non-performing loans totaled $73.7 million compared to $323.8 million and $80.8 million, respectively, at September 30, 2009.  Important to note, of the $330.1 million of non-performing one-to-four family loans, $228.5 million, or 69%, represent residential loans which, at 180 days delinquent and annually thereafter, were reviewed and adjusted, as needed, to the estimated fair value of the underlying collateral at such time, less estimated selling costs.  Commenting on asset quality, Mr. Engelke noted, “Although non-performing loans have increased from a year ago, they have stabilized on a linked quarter basis.  In addition, although early stage loan delinquencies have increased slightly from the previous quarter, they are down from a year ago.”
 
The comparative table below illustrates loan migration from 30 days delinquent to 90+ days delinquent:
 
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(In millions)
  
30-59 Days
Past Due
    
60-89 Days
Past Due
    
Combined
30-89 Days
Past Due
    
Linked Qtr
Change
    
90 + Days
Past Due
(NPL)
    
Total 30-90+
Days Past Due
  
At Dec. 31, 2008
   $ 229.8     $ 70.1     $ 299.9     $ +74.2     $ 238.6     $ 538.5  
At March 31, 2009
   $ 215.9     $ 105.7     $ 321.6     $ +21.7     $ 336.6     $ 658.2  
At June 30, 2009
   $ 210.5     $ 109.7     $ 320.2     $ (1.4 )   $ 360.0     $ 680.2  
At Sept. 30, 2009
   $ 197.6     $ 75.9     $ 273.5     $ (46.7 )   $ 408.5     $ 682.0  
At Dec. 31, 2009
   $ 212.9     $ 76.3     $ 289.2     $ +15.7     $ 408.6     $ 697.8  
 
The table below details, as of December 31, 2009, the ten largest concentrations by state of one-to-four family loans and the respective non-performing residential loan totals in those states. More comprehensive state details are included in the ‘One-to-Four Family Residential Loan Portfolio-Geographic Analysis’ table included in this release.
 
(In millions)
State
  
Total 1-4
Family Loans
    
% of Total
1-4 Family
Portfolio
    
Total 1-4
Family
NPLs
    
NPLs as %
of State
Total
  
New York
   $ 3,079.6       25.8 %   $ 41.4       1.34 %
Illinois
   $ 1,435.7       12.1 %   $ 41.5       2.89 %
Connecticut
   $ 1,200.4       10.1 %   $ 28.6       2.38 %
California
   $ 1,077.7       9.1 %   $ 52.2       4.84 %
New Jersey
   $ 921.9       7.8 %   $ 41.6       4.51 %
Massachusetts
   $ 833.3       7.0 %   $ 16.7       2.00 %
Virginia
   $ 785.2       6.6 %   $ 16.2       2.06 %
Maryland
   $ 761.3       6.4 %   $ 38.1       5.00 %
Washington
   $ 354.7       3.0 %   $ 2.9       0.82 %
Florida
   $ 267.7       2.3 %   $ 26.1       9.75 %
Top 10 States
   $ 10,717.5       90.2 %   $ 305.3       2.85 %
All other states (1)
  $ 1,177.9       9.8 %   $ 24.8       2.11 %
Total 1-4 Family Portfolio
   $ 11,895.4       100 %   $ 330.1       2.78 %
 (1)  Includes 29 states and Washington, D.C.

Net loan charge-offs for the quarter ended December 31, 2009 totaled $32.6 million (of which $22.8 million represented one-to-four family loans and $9.2 million represented multi-family/CRE loans) compared to $33.6 million (of which $22.1 million represented one-to-four family loans and $11.1 million represented multi-family/CRE and construction loans) for the 2009 third quarter.  Included in the $22.8 million of one-to-four family loan net charge-offs are $17.3 million of charge-offs on $68.5 million of non-performing loans which, at 180 days delinquent and annually thereafter, were reviewed and required an adjustment to reduce the carrying value to the estimated fair value of the underlying collateral less estimated selling costs.
 
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Selected Asset Quality Metrics (at or for the three and twelve months ended December 31, 2009)
 
($ in millions)
  
1-4
Family
    
Multi-
family
    
CRE
    
Construction
    
Consumer
& Other
    
Total
  
Loan portfolio balance
   $ 11,895.4     $ 2,559.1     $ 866.8     $ 23.6     $ 330.0
(1)
   $ 15,780.7
(2)
Non-performing loans
   $ 330.1
(3)
   $ 59.5     $ 8.7     $ 5.5     $ 4.8     $ 408.6
(3)
NPLs/total loans
     2.09 %     0.38 %     0.06 %     0.03 %     0.03 %     2.59 %
Net charge-offs  4Q09
   $ 22.8     $ 8.3     $ 0.9     $ 0.0     $ 0.6     $ 32.6  
Net charge-offs  YTD
   $ 76.8     $ 33.3     $ 2.6     $ 10.3     $ 2.0     $ 125.0  
(1)  Includes home equity loans of $302.4 million
(2)  Includes $105.9 million of net unamortized premiums and deferred loan costs
(3)  Includes $228.5 million reviewed and adjusted, as needed, at 180 days delinquent and annually thereafter

Future Outlook
 
Commenting on the outlook for 2010, Mr. Engelke stated, “Despite high unemployment and a weak housing market, we continue to remain cautiously optimistic as the economy begins to show signs of improvement.  We are encouraged by the stabilizing trends we are seeing in non-performing loans, which if sustained, will have a positive impact on future credit costs and earnings.   In the near term, as a result of the U.S. government’s efforts to keep residential mortgage rates artificially low coupled with elevated conforming loan limits in many of the markets we operate in, loan prepayments will remain high and restrain loan and balance sheet growth.  If and when these government programs subside, mortgage rates should return to normal market levels and we should resume loan and balance sheet growth at reasonable spreads.  With respect to the net interest margin, we expect modest increases in the first half of 2010 as we continue to realize the benefit from significant CD repricing opportunities.”
 
Astoria Financial Corporation, with assets of $20.3 billion, is the holding company for Astoria Federal Savings and Loan Association.  Established in 1888, Astoria Federal, with deposits in New York totaling $12.8 billion, is the largest thrift depository headquartered in New York and embraces its philosophy of “Putting people first” by providing the customers and local communities it serves with quality financial products and services through 85 convenient banking office locations and multiple delivery channels, including its enhanced website, www.astoriafederal.com.  Astoria Federal commands the fourth largest deposit market share in the attractive Long Island market, which includes Brooklyn, Queens, Nassau, and Suffolk counties with a population exceeding that of 38 individual states.  Astoria Federal originates mortgage loans  through its banking and loan production offices in New York, an extensive broker network covering sixteen states, primarily along the East Coast, and the District of Columbia, and through correspondent relationships covering seventeen states and the District of Columbia.

Earnings Conference Call January 28, 2010 at 10:00 a.m. (ET)
The Company, as previously announced, indicated that Mr. Engelke will host an earnings conference call Thursday morning, January 28, 2010 at 10:00 a.m. (ET). The toll-free dial-in number is (888) 562-3356, conference ID # 47721913. A telephone replay will be available on January 28, 2010 from 1:00 p.m. (ET) through midnight Friday, February 5, 2010 (ET). The replay number is (800) 642-1687, ID # 47721913. The conference call will also be simultaneously webcast on the Company’s website www.astoriafederal.com and archived for one year.
 
6

Forward Looking Statements
 
This document contains a number of forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.  These statements may be identified by the use of such words as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “outlook,” “plan,” “potential,” “predict,” “project,” “should,” “will,” “would,” and similar terms and phrases, including references to assumptions.
 
Forward-looking statements are based on various assumptions and analyses made by us in light of our management’s experience and perception of historical trends, current conditions and expected future developments, as well as other factors we believe are appropriate under the circumstances.  These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors (many of which are beyond our control) that could cause actual results to differ materially from future results expressed or implied by such forward-looking statements.  These factors include, without limitation, the following: the timing and occurrence or non-occurrence of events may be subject to circumstances beyond our control; there may be increases in competitive pressure among financial institutions or from non-financial institutions; changes in the interest rate environment may reduce interest margins or affect the value of our investments; changes in deposit flows, loan demand or real estate values may adversely affect our business; changes in accounting principles, policies or guidelines may cause our financial condition to be perceived differently; general economic conditions, either nationally or locally in some or all of the areas in which we do business, or conditions in the real estate or securities markets or the banking industry may be less favorable than we currently anticipate; legislative or regulatory changes may adversely affect our business; applicable technological changes may be more difficult or expensive than we anticipate; success or consummation of new business initiatives may be more difficult or expensive than we anticipate; or litigation or matters before regulatory agencies, whether currently existing or commencing in the future, may be determined adverse to us or may delay the occurrence or non-occurrence of events longer than we anticipate. We assume no obligation to update any forward-looking statements to reflect events or circumstances after the date of this document.

Tables Follow

 
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ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(In Thousands, Except Share Data)

   
At
    
At
  
   
December 31,
    
December 31,
  
   
2009
    
2008
  
ASSETS
            
Cash and due from banks
   $ 71,540     $ 76,233  
Repurchase agreements
     40,030       24,060  
Securities available-for-sale
     860,694       1,390,440  
Securities held-to-maturity (fair value of $2,367,520 and $2,643,955, respectively)
     2,317,885       2,646,862  
Federal Home Loan Bank of New York stock, at cost
     178,929       211,900  
Loans held-for-sale, net
     34,274       5,272  
Loans receivable:
                
Mortgage loans, net
     15,447,115       16,372,383  
Consumer and other loans, net
     333,607       340,061  
      15,780,722       16,712,444  
Allowance for loan losses
     (194,049 )     (119,029 )
Total loans receivable, net
     15,586,673       16,593,415  
Mortgage servicing rights, net
     8,850       8,216  
Accrued interest receivable
     66,121       79,589  
Premises and equipment, net
     136,195       139,828  
Goodwill
     185,151       185,151  
Bank owned life insurance
     401,735       401,280  
Real estate owned, net
     46,220       25,481  
Other assets
     317,882       194,384  
                 
TOTAL ASSETS
   $ 20,252,179     $ 21,982,111  
                 
LIABILITIES
                
Deposits
   $ 12,812,238     $ 13,479,924  
Reverse repurchase agreements
     2,500,000       2,850,000  
Federal Home Loan Bank of New York advances
     3,000,000       3,738,000  
Other borrowings, net
     377,834       377,274  
Mortgage escrow funds
     114,036       133,656  
Accrued expenses and other liabilities
     239,457       221,488  
                 
TOTAL LIABILITIES
     19,043,565       20,800,342  
                 
STOCKHOLDERS' EQUITY
                
Preferred stock, $1.00 par value; (5,000,000 shares authorized; none issued and outstanding)
     -       -  
Common stock, $.01 par value;  (200,000,000 shares authorized; 166,494,888 shares issued; and 97,083,607 and 95,881,132 shares outstanding, respectively)
     1,665       1,665  
Additional paid-in capital
     857,662       856,021  
Retained earnings
     1,829,199       1,864,257  
Treasury stock (69,411,281 and 70,613,756 shares, at cost, respectively)
     (1,434,362 )     (1,459,211 )
Accumulated other comprehensive loss
     (29,779 )     (61,865 )
Unallocated common stock held by ESOP (4,304,635 and 5,212,668 shares, respectively)
     (15,771 )     (19,098 )
                 
TOTAL STOCKHOLDERS' EQUITY
     1,208,614       1,181,769  
                 
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
   $ 20,252,179     $ 21,982,111  

 
8
 
ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME
(In Thousands, Except Share Data)

   
For the Three Months Ended
    
For the Twelve Months Ended
  
   
December 31,
    
December 31,
  
   
2009
    
2008
    
2009
    
2008
  
Interest income:
                        
Mortgage loans:
                        
One-to-four family
   $ 144,472     $ 168,298     $ 609,724     $ 637,297  
Multi-family, commercial real estate
                                
and construction
     51,941       57,939       217,480       234,922  
Consumer and other loans
     2,787       3,613       10,882       17,325  
Mortgage-backed and other securities
     33,348       45,218       149,655       185,160  
Federal funds sold, repurchase agreements and
                                
interest-earning cash accounts
     54       71       448       1,939  
Federal Home Loan Bank of New York stock
     2,502       1,895       9,352       13,068  
Total interest income
     235,104       277,034       997,541       1,089,711  
Interest expense:
                                
Deposits
     67,302       92,876       315,371       393,897  
Borrowings
     62,847       69,213       253,401       300,430  
Total interest expense
     130,149       162,089       568,772       694,327  
                                 
Net interest income
     104,955       114,945       428,769       395,384  
Provision for loan losses
     50,000       45,000       200,000       69,000  
Net interest income after provision for loan losses
     54,955       69,945       228,769       326,384  
Non-interest income:
                                
Customer service fees
     14,622       14,828       57,887       62,489  
Other loan fees
     1,081       929       3,918       3,985  
Gain on sales of securities
     1,494       -       7,426       -  
Other-than-temporary impairment write-down of securities
     -       -       (5,300 )     (77,696 )
Mortgage banking income (loss), net
     805       (2,199 )     5,567       (413 )
Income from bank owned life insurance
     2,372       4,063       8,950       16,733  
Other
     2,975       1,587       1,353       6,082  
Total non-interest income
     23,349       19,208       79,801       11,180  
Non-interest expense:
                                
General and administrative:
                                
Compensation and benefits
     34,105       28,886       133,318       124,846  
Occupancy, equipment and systems
     16,320       16,342       64,685       66,553  
Federal deposit insurance premiums
     6,568       545       24,300       2,213  
Federal deposit insurance special assessment
     -       -       9,851       -  
Advertising
     1,663       2,147       5,404       7,116  
Other
     8,179       8,325       32,498       32,532  
Total non-interest expense
     66,835       56,245       270,056       233,260  
                                 
Income before income tax expense
     11,469       32,908       38,514       104,304  
Income tax expense
     3,329       3,460       10,830       28,962  
                                 
Net income
   $ 8,140     $ 29,448     $ 27,684     $ 75,342  
                                 
Basic earnings per common share
   $ 0.09     $ 0.33     $ 0.30     $ 0.83  
                                 
Diluted earnings per common share
   $ 0.09     $ 0.32     $ 0.30     $ 0.82  
                                 
Basic weighted average common shares
     90,927,734       89,749,299       90,593,060       89,580,322  
Diluted weighted average common and common
                                
equivalent shares
     90,958,013       89,966,383       90,602,189       90,406,527  
 
 
9
 
 
ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES

AVERAGE BALANCE SHEETS
(Dollars in Thousands)

   
For the Three Months Ended December 31,
  
   
2009
    
2008
  
               
Average
                
Average
  
   
Average
          
Yield/
    
Average
          
Yield/
  
   
Balance
    
Interest
    
Cost
    
Balance
    
Interest
    
Cost
  
               
(Annualized)
                
(Annualized)
  
Assets:
                                    
Interest-earning assets:
                                    
Mortgage loans (1):
                                    
One-to-four family
   $ 12,082,069     $ 144,472       4.78 %   $ 12,500,269     $ 168,298       5.39 %
Multi-family, commercial real estate and construction
     3,507,603       51,941       5.92       3,927,039       57,939       5.90  
Consumer and other loans (1)
     334,514       2,787       3.33       339,951       3,613       4.25  
Total loans
     15,924,186       199,200       5.00       16,767,259       229,850       5.48  
Mortgage-backed and other securities (2)
     3,261,507       33,348       4.09       4,101,024       45,218       4.41  
Repurchase agreements and interest-earning cash accounts
     140,917       54       0.15       37,974       71       0.75  
Federal Home Loan Bank stock
     176,841       2,502       5.66       223,571       1,895       3.39  
Total interest-earning assets
     19,503,451       235,104       4.82       21,129,828       277,034       5.24  
Goodwill
     185,151                       185,151                  
Other non-interest-earning assets
     778,275                       774,382                  
Total assets
   $ 20,466,877                     $ 22,089,361                  
                                                 
Liabilities and stockholders' equity:
                                                
Interest-bearing liabilities:
                                                
Savings
   $ 1,986,183       2,025       0.41     $ 1,830,246       1,866       0.41  
Money market
     327,318       362       0.44       294,471       775       1.05  
NOW and demand deposit
     1,569,940       259       0.07       1,449,421       323       0.09  
Liquid certificates of deposit
     756,872       1,018       0.54       1,019,222       6,210       2.44  
Total core deposits
     4,640,313       3,664       0.32       4,593,360       9,174       0.80  
Certificates of deposit
     8,361,153       63,638       3.04       8,602,462       83,702       3.89  
Total deposits
     13,001,466       67,302       2.07       13,195,822       92,876       2.82  
Borrowings
     5,830,420       62,847       4.31       7,312,640       69,213       3.79  
Total interest-bearing liabilities
     18,831,886       130,149       2.76       20,508,462       162,089       3.16  
Non-interest-bearing liabilities
     431,510                       390,758                  
Total liabilities
     19,263,396                       20,899,220                  
Stockholders' equity
     1,203,481                       1,190,141                  
Total liabilities and stockholders' equity
   $ 20,466,877                     $ 22,089,361                  
                                                 
Net interest income/net interest rate spread (3)
           $ 104,955       2.06 %           $ 114,945       2.08 %
Net interest-earning assets/net interest margin (4)
   $ 671,565               2.15 %   $ 621,366               2.18 %
Ratio of interest-earning assets to interest-bearing liabilities
     1.04 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.

 
10
 

ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES

AVERAGE BALANCE SHEETS
(Dollars in Thousands)

   
For the Twelve Months Ended December 31,
  
   
2009
    
2008
  
               
Average
                
Average
  
   
Average
          
Yield/
    
Average
          
Yield/
  
   
Balance
    
Interest
    
Cost
    
Balance
    
Interest
    
Cost
  
                                     
Assets:
                                    
Interest-earning assets:
                                    
Mortgage loans (1):
                                    
One-to-four family
   $ 12,166,413     $ 609,724       5.01 %   $ 11,962,010     $ 637,297       5.33 %
Multi-family, commercial real estate and construction
     3,680,486       217,480       5.91       3,947,413       234,922       5.95  
Consumer and other loans (1)
     336,545       10,882       3.23       345,019       17,325       5.02  
Total loans
     16,183,444       838,086       5.18       16,254,442       889,544       5.47  
Mortgage-backed and other securities (2)
     3,494,966       149,655       4.28       4,194,320       185,160       4.41  
Federal funds sold, repurchase agreements and interest-earning cash accounts
     226,689       448       0.20       88,650       1,939       2.19  
Federal Home Loan Bank stock
     181,472       9,352       5.15       207,535       13,068       6.30  
Total interest-earning assets
     20,086,571       997,541       4.97       20,744,947       1,089,711       5.25  
Goodwill
     185,151                       185,151                  
Other non-interest-earning assets
     822,036                       820,216                  
Total assets
   $ 21,093,758                     $ 21,750,314                  
                                                 
Liabilities and stockholders' equity:
                                                
Interest-bearing liabilities:
                                                
Savings
   $ 1,928,842       7,806       0.40     $ 1,863,622       7,551       0.41  
Money market
     317,168       2,095       0.66       311,910       3,189       1.02  
NOW and demand deposit
     1,534,131       1,064       0.07       1,470,402       1,290       0.09  
Liquid certificates of deposit
     884,436       10,659       1.21       1,225,153       36,792       3.00  
Total core deposits
     4,664,577       21,624       0.46       4,871,087       48,822       1.00  
Certificates of deposit
     8,728,580       293,747       3.37       8,192,114       345,075       4.21  
Total deposits
     13,393,157       315,371       2.35       13,063,201       393,897       3.02  
Borrowings
     6,051,655       253,401       4.19       7,069,155       300,430       4.25  
Total interest-bearing liabilities
     19,444,812       568,772       2.93       20,132,356       694,327       3.45  
Non-interest-bearing liabilities
     451,677                       410,082                  
Total liabilities
     19,896,489                       20,542,438                  
Stockholders' equity
     1,197,269                       1,207,876                  
Total liabilities and stockholders' equity
   $ 21,093,758                     $ 21,750,314                  
                                                 
Net interest income/net interest rate spread (3)
           $ 428,769       2.04 %           $ 395,384       1.80 %
Net interest-earning assets/net interest margin (4)
   $ 641,759               2.13 %   $ 612,591               1.91 %
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.
 
 
11
 
 

SELECTED FINANCIAL RATIOS AND OTHER DATA

   
For the
    
At or For the
  
   
Three Months Ended
    
Twelve Months Ended
  
   
December 31,
    
December 31,
  
   
2009
    
2008
    
2009
    
2008
  
   
(Annualized)
              
Selected Returns and Financial Ratios
                        
Return on average stockholders' equity
     2.71 %     9.90 %     2.31 %     6.24 %
Return on average tangible stockholders' equity (1)
     3.20       11.72       2.74       7.37  
Return on average assets
     0.16       0.53       0.13       0.35  
General and administrative expense to average assets
     1.31       1.02       1.28       1.07  
Efficiency ratio (2)
     52.09       41.93       53.10       57.37  
Net interest rate spread
     2.06       2.08       2.04       1.80  
Net interest margin
     2.15       2.18       2.13       1.91  
                                 
Selected Non-GAAP Returns and Financial Ratios (3)
                                
Non-GAAP return on average stockholders' equity
     2.71 %     7.42 %     3.22 %     10.42 %
Non-GAAP return on average tangible stockholders' equity (1)
     3.20       8.78       3.81       12.30  
Non-GAAP return on average assets
     0.16       0.40       0.18       0.58  
Non-GAAP general and administrative expense to average assets
     1.31       1.02       1.23       1.07  
Non-GAAP efficiency ratio (2)
     52.09       41.93       50.48       48.17  
                                 
Asset Quality Data (dollars in thousands)
                                
Non-performing assets (4)
                   $ 454,792     $ 264,101  
Non-performing loans (4)
                     408,572       238,620  
Loans delinquent 90 days or more and still accruing interest
                     600       33  
Non-accrual loans
                     407,972       238,587  
Loans 60-89 days delinquent
                     76,314       70,062  
Loans 30-59 days delinquent
                     212,894       229,834  
Net charge-offs
   $ 32,589     $ 12,289       124,980       28,917  
                                 
Non-performing loans/total loans
                     2.59 %     1.43 %
Non-performing loans/total assets
                     2.02       1.09  
Non-performing assets/total assets
                     2.25       1.20  
Allowance for loan losses/non-performing loans
                     47.49       49.88  
Allowance for loan losses/non-accrual loans
                     47.56       49.89  
Allowance for loan losses/total loans
                     1.23       0.71  
Net charge-offs to average loans outstanding
     0.82 %     0.29 %     0.77       0.18  
                                 
Capital Ratios (Astoria Federal)
                                
Tangible
                     6.89 %     6.39 %
Core
                     6.89       6.39  
Risk-based
                     12.99       12.02  
Tier 1 risk-based
                     11.72       11.07  
                                 
Other Data
                                
Cash dividends paid per common share
   $ 0.13     $ 0.26     $ 0.52     $ 1.04  
Book value per share (5)
                     13.03       13.03  
Tangible book value per share (6)
                     11.03       10.99  
Tangible stockholders' equity/tangible assets (1) (7)
                     5.10 %     4.57 %
Mortgage loans serviced for others (in thousands)
                   $ 1,379,259     $ 1,225,656  
Full time equivalent employees
                     1,592       1,575  
 
 
(1)
Tangible stockholders' equity represents stockholders' equity less goodwill.
(2)
Efficiency ratio represents general and administrative expense divided by the sum of net interest income plus non-interest income.
(3)
See page 14 for a reconciliation of GAAP measures to non-GAAP measures for the three and twelve months ended December 31, 2009 and 2008.
(4)
Non-performing assets and non-performing loans include, but are not limited to, one-to-four family mortgage loans which at 180 days past due we obtained an estimate of collateral value and charged-off any portion of the loan in excess of the estimated collateral value less estimated selling costs.
(5)
Book value per share represents stockholders' equity divided by outstanding shares, excluding unallocated Employee Stock Ownership Plan, or ESOP, shares.
(6)
Tangible book value per share represents stockholders' equity less goodwill divided by outstanding shares, excluding unallocated ESOP shares.
(7)
Tangible assets represent assets less goodwill.
 
 
12
 
 
ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES

END OF PERIOD BALANCES AND RATES
(Dollars in Thousands)

   
At December 31, 2009
    
At September 30, 2009
    
At December 31, 2008
  
         
Weighted
          
Weighted
          
Weighted
  
         
Average
          
Average
          
Average
  
   
Balance
    
Rate (1)
    
Balance
    
Rate (1)
    
Balance
    
Rate (1)
  
Selected interest-earning assets:
                                    
Mortgage loans, gross (2):
                                    
One-to-four family
   $ 11,565,280       5.22 %   $ 11,681,844       5.36 %   $ 12,172,075       5.64 %
Multi-family, commercial real estate and construction
     3,375,795       6.03       3,442,046       6.03       3,850,762       5.98  
Mortgage-backed and other securities (3)
     3,178,579       4.04       3,472,308       4.08       4,037,302       4.34  
                                                 
Interest-bearing liabilities:
                                                
Savings
     2,041,701       0.40       1,959,171       0.40       1,832,790       0.40  
Money market
     326,842       0.44       330,299       0.44       289,135       1.03  
NOW and demand deposit
     1,646,633       0.06       1,522,017       0.06       1,466,916       0.06  
Liquid certificates of deposit
     711,509       0.50       812,141       0.64       981,733       2.32  
Total core deposits
     4,726,685       0.30       4,623,628       0.33       4,570,574       0.74  
Certificates of deposit
     8,085,553       2.79       8,594,991       3.15       8,909,350       3.83  
Total deposits
     12,812,238       1.87       13,218,619       2.16       13,479,924       2.78  
Borrowings, net
     5,877,834       4.17       5,837,723       4.24       6,965,274       3.72  
 
(1) 
Weighted average rates represent stated or coupon interest rates excluding the effect of yield adjustments for premiums, discounts and deferred loan origination fees and costs and the impact of prepayment penalties.
(2) 
Mortgage loans exclude loans held-for-sale and non-performing loans.
(3) 
Securities available-for-sale are reported at fair value and securities held-to-maturity are reported at amortized cost.

 
13
 
 
ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES

RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES
(In Thousands, Except Per Share Data)

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

   
For the Three Months Ended
  
   
December 31, 2009
    
December 31, 2008
  
   
GAAP
    
Adjustments
    
Non-GAAP
    
GAAP
    
Adjustments (1)
    
Non-GAAP
  
                                     
Net interest income
   $ 104,955     $ -     $ 104,955     $ 114,945     $ -     $ 114,945  
Provision for loan losses
     50,000       -       50,000       45,000       -       45,000  
                                                 
Net interest income after provision for loan losses
     54,955       -       54,955       69,945       -       69,945  
Non-interest income
     23,349       -       23,349       19,208       -       19,208  
Non-interest expense (general and administrative expense)
     66,835       -       66,835       56,245       -       56,245  
                                                 
Income before income tax expense
     11,469       -       11,469       32,908       -       32,908  
Income tax expense
     3,329       -       3,329       3,460       7,378       10,838  
                                                 
Net income (2)
   $ 8,140     $ -     $ 8,140     $ 29,448     $ (7,378 )   $ 22,070  
                                                 
Basic earnings per common share (2)
   $ 0.09     $ -     $ 0.09     $ 0.33     $ (0.08 )   $ 0.24 (3)
                                                 
Diluted earnings per common share (2)
   $ 0.09     $ -     $ 0.09     $ 0.32     $ (0.08 )   $ 0.24  

   
For the Twelve Months Ended
  
   
December 31, 2009
    
December 31, 2008
  
   
GAAP
    
Adjustments (4)
    
Non-GAAP
    
GAAP
    
Adjustments (1)
    
Non-GAAP
  
                                     
Net interest income
   $ 428,769     $ -     $ 428,769     $ 395,384     $ -     $ 395,384  
Provision for loan losses
     200,000       -       200,000       69,000       -       69,000  
                                                 
Net interest income after provision for loan losses
     228,769       -       228,769       326,384       -       326,384  
Non-interest income
     79,801       6,888       86,689       11,180       77,696       88,876  
Non-interest expense (general and administrative expense)
     270,056       (9,851 )     260,205       233,260       -       233,260  
                                                 
Income before income tax expense
     38,514       16,739       55,253       104,304       77,696       182,000  
Income tax expense
     10,830       5,859       16,689       28,962       27,194       56,156  
                                                 
Net income (2)
   $ 27,684     $ 10,880     $ 38,564     $ 75,342     $ 50,502     $ 125,844  
                                                 
Basic earnings per common share (2)
   $ 0.30     $ 0.12     $ 0.42     $ 0.83     $ 0.56     $ 1.39  
                                                 
Diluted earnings per common share (2)
   $ 0.30     $ 0.12     $ 0.42     $ 0.82     $ 0.56     $ 1.38  
 
Non-GAAP returns are calculated substituting non-GAAP net income for net income in the corresponding ratio calculation, while the non-GAAP general and administrative expense to average assets ratio substitutes non-GAAP general and administrative expense (non-GAAP non-interest expense) for general and administrative expense (non-interest expense) in the corresponding ratio calculation.  Similarly, the non-GAAP efficiency ratio substitutes non-GAAP non-interest income and non-GAAP general and administrative expense for non-interest income and general and administrative expense in the corresponding ratio calculation.
 
 
(1)
Adjustments relate to the other-than-temporary impairment write-down of securities charge recorded in the 2008 third quarter and subsequent tax adjustment recorded in the 2008 fourth quarter as a result of tax changes due to the enactment of the Emergency Economic Stabilization Act in October 2008.
(2)
Non-GAAP net income and non-GAAP EPS are also referred to as operating income and operating EPS throughout this release.
(3)
Figures do not cross foot due to rounding.
(4)
Non-interest income adjustment relates to the $1.6 million lower of cost or market write-down of premises and equipment held-for-sale recorded in the 2009 second quarter and the $5.3 million other-than-temporary impairment write-down of securities charge recorded in the 2009 first quarter and non-interest expense adjustment relates to the federal deposit insurance special assessment recorded in the 2009 second quarter.

 
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One-to-Four Family Residential Loan Portfolio - Geographic Analysis
(Dollars in millions)

   
At December 31, 2009
  
               
Non-perfoming loans
  
State
  
Total loans
    
Non-performing loans
    
as % of total loans
  
New York
                                                                                      
Full Income
   $ 2,736.7     $ 22.9       0.84 %
Alt A < 70% LTV
   $ 261.0     $ 9.1       3.49 %
Alt A  70%-80% LTV
   $ 81.9     $ 9.4       11.48 %
State Total
   $ 3,079.6     $ 41.4       1.34 %
                         
Illinois
                        
Full Income
   $ 1,170.0     $ 14.0       1.20 %
Alt A < 70% LTV
   $ 128.1     $ 9.9       7.73 %
Alt A  70%-80% LTV
   $ 137.6     $ 17.6       12.79 %
State Total
   $ 1,435.7     $ 41.5       2.89 %
                         
Connecticut
                        
Full Income
   $ 1,009.0     $ 8.5       0.84 %
Alt A < 70% LTV
   $ 126.5     $ 8.6       6.80 %
Alt A  70%-80% LTV
   $ 64.9     $ 11.5       17.72 %
State Total
   $ 1,200.4     $ 28.6       2.38 %
                         
California
                        
Full Income
   $ 731.6     $ 22.0       3.01 %
Alt A < 70% LTV
   $ 175.3     $ 10.5       5.99 %
Alt A  70%-80% LTV
   $ 170.8     $ 19.7       11.53 %
State Total
   $ 1,077.7     $ 52.2       4.84 %
                         
New Jersey
                        
Full Income
   $ 732.3     $ 22.0       3.00 %
Alt A < 70% LTV
   $ 96.4     $ 7.2       7.47 %
Alt A  70%-80% LTV
   $ 93.2     $ 12.4       13.30 %
State Total
   $ 921.9     $ 41.6       4.51 %
                         
Massachusetts
                        
Full Income
   $ 716.6     $ 6.7       0.93 %
Alt A < 70% LTV
   $ 77.1     $ 3.9       5.06 %
Alt A  70%-80% LTV
   $ 39.6     $ 6.1       15.40 %
State Total
   $ 833.3     $ 16.7       2.00 %
                         
Virginia
                        
Full Income
   $ 600.8     $ 8.9       1.48 %
Alt A < 70% LTV
   $ 76.1     $ 0.9       1.18 %
Alt A  70%-80% LTV
   $ 108.3     $ 6.4       5.91 %
State Total
   $ 785.2     $ 16.2       2.06 %
                         
Maryland
                        
Full Income
   $ 587.6     $ 12.9       2.20 %
Alt A < 70% LTV
   $ 80.1     $ 5.8       7.24 %
Alt A  70%-80% LTV
   $ 93.6     $ 19.4       20.73 %
State Total
   $ 761.3     $ 38.1       5.00 %
                         
Washington
                        
Full Income
   $ 343.9     $ 1.4       0.41 %
Alt A < 70% LTV
   $ 7.6     $ 1.5       19.74 %
Alt A  70%-80% LTV
   $ 3.2     $ 0.0       0.00 %
State Total
   $ 354.7     $ 2.9       0.82 %
                         
Florida
                        
Full Income
   $ 178.6     $ 13.8       7.73 %
Alt A < 70% LTV
   $ 51.9     $ 4.9       9.44 %
Alt A  70%-80% LTV
   $ 37.2     $ 7.4       19.89 %
State Total
   $ 267.7     $ 26.1       9.75 %
                         
Other States
                        
Full Income
   $ 1,033.8     $ 14.2       1.37 %
Alt A < 70% LTV
   $ 80.6     $ 3.9       4.84 %
Alt A  70%-80% LTV
   $ 63.5     $ 6.7       10.55 %
State Total
   $ 1,177.9     $ 24.8       2.11 %
                         
Total all states
                        
Full Income
   $ 9,840.9     $ 147.3       1.50 %
Alt A < 70% LTV
   $ 1,160.7     $ 66.2       5.70 %
Alt A  70%-80% LTV
   $ 893.8     $ 116.6       13.05 %
Grand total
   $ 11,895.4     $ 330.1       2.78 %

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

 
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