Astoria Financial Corporation Reports 2015 First Quarter Earnings Per Common Share Of $0.17

LAKE SUCCESS, N.Y., April 22, 2015 /PRNewswire/ -- Astoria Financial Corporation (NYSE: AF) ("Astoria", the "Company"), the holding company for Astoria Bank ("the Bank") today reported net income available to common shareholders of $17.1 million, or $0.17 diluted earnings per common share ("diluted EPS"), for the quarter ended March 31, 2015, compared to net income available to common shareholders of $29.4 million, or $0.30 diluted EPS, for the quarter ended March 31, 2014.  Included in the 2014 first quarter results is a reduction in income tax expense of $11.5 million ($0.12 diluted EPS) related to the impact of New York State income tax legislation enacted on March 31, 2014 which resulted in a net income tax benefit for the 2014 first quarter.

Financial Highlights

Deposit Growth:

• Core deposits increased $129.7 million from December 31, 2014 to $6.9 billion and represent 74% of deposits at March 31, 2015, up from 72% at December 31, 2014.
• Consumer checking deposits increased $64.0 million from December 31, 2014, representing an annualized growth rate of 15.6%.
• Business checking deposits increased $38.2 million from December 31, 2014, representing an annualized growth rate of 27.4%.

Net Interest Margin Expansion:

• For the quarter ended March 31, 2015, the net interest margin increased to 2.34% from 2.30% for the prior quarter.

Monte N. Redman, President and Chief Executive Officer of Astoria, commenting on the quarter stated, "We are pleased with the results that we have reported today. Our core deposit growth of almost $130 million is encouraging, particularly the strong growth that we experienced in both our consumer and business checking deposits. The growth of these lower cost deposits was a contributing factor to the expansion of our net interest margin in the first quarter to 2.34% from 2.30% in the previous quarter."

Board Declares Quarterly Cash Dividend of $0.04 Per Share
The Board of Directors of the Company, at its April 22, 2015 meeting, declared a quarterly cash dividend of $0.04 per common share.  The dividend is payable on June 1, 2015 to shareholders of record as of May 15, 2015.  This is the eightieth consecutive quarterly cash dividend declared by the Company.

First Quarter Earnings Summary
Net interest income for the quarter ended March 31, 2015 totaled $85.7 million compared to $83.9 million for the previous quarter and $88.0 million for the 2014 first quarter.  The net interest margin for the quarter ended March 31, 2015 was 2.34%, compared to 2.30% for the previous quarter and 2.36% for the 2014 first quarter. Mr. Redman commented, "In a period where interest rates are under pressure and many of our competitors are experiencing shrinking margins, we are encouraged by the fact that our net interest margin expanded in the first quarter."

For the quarter ended March 31, 2015, a $343,000 loan loss release was recorded compared to a $2.3 million release in the prior quarter and a $1.6 million provision for loan losses recorded in the 2014 first quarter.  Mr. Redman stated, "The small release in the current quarter reflects the continued improvement of the asset quality in our loan portfolio, which continues to be positively affected by the reductions in the balances of some of our higher risk asset classes."

Non-interest income for the quarter ended March 31, 2015 totaled $12.9 million, compared to $13.6 million for the previous quarter and $13.7 million for the 2014 first quarter. The decreases are primarily due to decreases in mortgage banking income, net and customer service fees. 

General and administrative ("G&A") expense for the quarter ended March 31, 2015 totaled $70.1 million flat from $70.2 million for both the previous quarter and the 2014 first quarter.  Compensation and benefits expense increased to $36.3 million for the quarter ended March 31, 2015 compared to $33.4 million for the 2014 first quarter and FDIC insurance premium expense decreased to $4.2 million for the quarter ended March 31, 2015 compared to $8.6 million for the 2014 first quarter. Mr. Redman commented, "Our G&A expense remains at the lower end of our expected range as it was positively impacted by our FDIC insurance premiums, which have come down more quickly than we had expected.  We continue to believe that our G&A expense will remain within the $70 - $73 million per quarter range for the remainder of the year."    

Balance Sheet Summary
Total assets at March 31, 2015 were $15.5 billion, a decrease of $104.4 million from December 31, 2014. The decrease was primarily due to a decline in the loan portfolio which decreased $135.6 million from December 31, 2014 and totaled $11.8 billion at March 31, 2015. 

The MF/CRE mortgage loan portfolio totaled $4.9 billion at March 31, 2015, an increase of $75.0 million from December 31, 2014 and represents 41% of the total loan portfolio.  For the quarter ended March 31, 2015, MF/CRE loan originations totaled $259.9 million compared to $388.0 million for the prior quarter and $218.0 million for the 2014 comparable period. The MF/CRE loan production for the 2015 first quarter was originated with a weighted average loan-to-value ratio of approximately 50% and a weighted average debt coverage ratio of approximately 1.64. MF/CRE loan prepayments for the quarter ended March 31, 2015 totaled $146.2 million, up from $105.9 million for the previous quarter and $112.9 million for the 2014 first quarter. Mr. Redman commented, "During the quarter as interest rates moved lower, we maintained our pricing discipline, held firm on our terms and as a result, the MF/CRE portfolio grew by only $75 million, less than we had previously anticipated.  Holding fast on rates and terms also impacted our MF/CRE pipeline which at March 31, 2015 totaled approximately $237.6 million, down from approximately $422.0 million at December 31, 2014. As we maintain our disciplined approach to lending in this low rate, low spread, environment, we expect to see a reduced pace of growth in our MF/CRE portfolio.  At the same time, the reduction in our residential portfolio should continue, substantially offsetting the growth in the MF/CRE portfolio."

The residential mortgage loan portfolio totaled $6.7 billion at March 31, 2015, compared to $6.9 billion at December 31, 2014.  For the quarter ended March 31, 2015, residential loan originations for portfolio totaled $140.5 million compared to $129.1 million for the prior quarter and $98.3 million for the 2014 first quarter.  The weighted average loan-to-value ratio of the residential loan production for portfolio was approximately 62% at origination for the quarter ended March 31, 2015.  Residential loan prepayments for the quarter ended March 31, 2015 totaled $279.8 million, compared to $265.1 million for the previous quarter and $225.1 million for the 2014 first quarter. At March 31, 2015, the residential mortgage pipeline totaled approximately $299.1 million.

Deposits totaled $9.4 billion at March 31, 2015, a decrease of $97.9 million from December 31, 2014.  This decrease was primarily due to a decrease in higher cost certificates of deposit, partially offset by net increases in lower cost core deposits, particularly consumer and business checking deposits. Core deposits totaled $6.9 billion, or 74% of total deposits, and had a weighted average rate of 11 basis points at March 31, 2015.    

Stockholders' equity totaled $1.6 billion, or 10.32% of total assets at March 31, 2015, an increase of $23.2 million from December 31, 2014.  Astoria Bank's capital levels continue to be above the minimum levels required to be designated as "well-capitalized" for bank regulatory purposes. Under the Basel III guidelines which became effective in 2015 and the Dodd-Frank Act, Tier 1 leverage, Total risk-based, Tier 1 risk-based and Common Equity Tier 1 risk based capital ratios were 10.63%, 19.23%, 18.00% and 18.00%, respectively for Astoria Bank, and 9.56%, 17.44%, 16.22% and 14.85%, respectively for Astoria Financial Corporation at March 31, 2015.  At March 31, 2015, Astoria Financial Corporation's tangible common equity ratio was 8.39%.

Asset Quality
Non-performing loans ("NPLs"), totaled $118.9 million, or 1.01% of total loans, at March 31, 2015, compared to $127.8 million, or 1.07% of total loans, at December 31, 2014. Included in the NPLs at March 31, 2015 are $63.4 million of loans which are current or less than 90 days past due compared to $65.0 million at December 31, 2014. Total delinquent loans and NPLs at March 31, 2015 were $198.7 million compared to $227.7 million at December 31, 2014. Net charge-offs for the quarter ended March 31, 2015 totaled $757,000 compared to net recoveries of $316,000 in the previous quarter and net charge-offs of $6.6 million in the 2014 first quarter.

Future Outlook 
Commenting on the Company's future outlook, Mr. Redman stated, "We are very happy with the growth we have experienced in core deposits, particularly consumer and business checking deposits.  We continue to organically grow our premier deposit franchise in a market we believe is one of the best in the United States.  Despite the current low rate environment, we continue to see the positive results of our strategic shift to a more "bank-like" balance sheet such as the expansion of our net interest margin.  We look forward to seeing more positive results of this strategic shift as we move forward."  

Earnings Conference Call April 23, 2015 at 10:00 a.m. (ET)
The Company, as previously announced, indicated that Monte N. Redman, President & CEO will host an earnings conference call Thursday morning, April 23, 2015 at 10:00 a.m. (ET).  The toll-free dial-in number is (877) 709-8150.  A telephone replay will be available on April 23, 2015 from 1:00 p.m. (ET) through midnight (ET) Saturday, May 2, 2015.  The replay number is (877) 660-6853, ID# 13604512.  The conference call will also be simultaneously webcast on the Company's website www.astoriabank.com and archived for one year.

About Astoria Financial Corporation
Astoria Financial Corporation, with assets of $15.5 billion, is the holding company for Astoria Bank.  Established in 1888, Astoria Bank, with deposits in New York totaling $9.4 billion, is the second largest thrift depository in New York and provides the customers and local communities it serves with quality financial products and services through 87 convenient banking branch locations, a business banking office in Manhattan, and multiple delivery channels, including its flexible mobile banking app.  Astoria Bank commands a significant 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 Bank originates multi-family and commercial real estate loans, primarily on rent controlled and rent stabilized apartment buildings, located in New York City and the surrounding metropolitan area and originates residential mortgage loans through its banking and loan production offices in New York, a broker network in four states, primarily along the East Coast, and correspondent relationships covering 13 states and the District of Columbia.

Forward Looking Statements
This press release 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. These statements may be identified by the use of such words as "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "outlook," "plan," "potential," "predict," "project," "should," "will," "would," and similar terms and phrases, including references to assumptions.

Forward-looking statements are based on various assumptions and analyses made by us in light of our management's experience and perception of historical trends, current conditions and expected future developments, as well as other factors we believe are appropriate under the circumstances.  These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors (many of which are beyond our control) that could cause actual results to differ materially from future results expressed or implied by such forward-looking statements.  These factors include, without limitation, the following: the timing and occurrence or non-occurrence of events that may be subject to circumstances beyond our control; increases in competitive pressure among financial institutions or from non-financial institutions; changes in the interest rate environment; changes in deposit flows, loan demand or real estate values; changes in accounting principles, policies or guidelines; changes in 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; legislative or regulatory changes, including the implementation of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, and any actions regarding foreclosures; enhanced supervision and examination by the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System and the Consumer Financial Protection Bureau; effects of changes in existing U.S. government or government-sponsored mortgage programs; our ability to successfully implement technological changes; our ability to successfully  consummate new business initiatives;  litigation or other matters before regulatory agencies, whether currently existing or commencing in the future; or our ability to implement enhanced risk management policies, procedures and controls commensurate with shifts in our business strategies. We have no obligation to update any forward-looking statements to reflect events or circumstances after the date of this press release. 

Tables Follow

SOURCE Astoria Financial Corporation

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