Astoria Financial Corporation Reports 2015 Second Quarter Earnings Per Common Share Of $0.29

LAKE SUCCESS, N.Y., July 22, 2015 /PRNewswire/ -- Astoria Financial Corporation (NYSE: AF) ("Astoria", or the "Company"), the holding company for Astoria Bank (the "Bank") today reported net income available to common shareholders of $29.2 million, or $0.29 diluted earnings per common share ("diluted EPS"), for the quarter ended June 30, 2015, compared to net income available to common shareholders of $20.1 million, or $0.20 diluted EPS, for the quarter ended June 30, 2014. For the six months ended June 30, 2015, net income available to common shareholders totaled $46.4 million, or $0.46 diluted EPS compared to $49.5 million, or $0.50 diluted EPS, for the comparable 2014 period.  Included in the 2015 second quarter and six month results is a reduction in income tax expense of $11.4 million ($0.11 per common share) related to the impact of income tax legislation enacted in the second quarter of 2015, primarily as applicable to New York City.  Included in the 2014 second quarter results was a $5.7 million loan loss release ($3.7 million or $0.04 per common share, after tax) resulting from the designation of non-performing residential mortgage loans as held-for-sale.  Also included in the 2014 six month results was a reduction in income tax expense of $11.5 million ($0.12 per common share) related to the impact of New York State income tax legislation enacted on March 31, 2014.

Monte N. Redman, President and Chief Executive Officer of Astoria, commenting on the quarter stated, "While we are somewhat disappointed by the lack of net growth in our loan portfolio in the second quarter, we are pleased with the continued growth of our lower cost business banking deposits as well as the fact that, in this low rate environment, our net interest margin increased slightly to 2.35% while many of our competitors have recently experienced margin contraction."

Board Declares Quarterly Cash Dividend of $0.04 Per Share
The Board of Directors of the Company, at its July 22, 2015 meeting, declared a quarterly cash dividend of $0.04 per common share.  The dividend is payable on September 1, 2015 to shareholders of record as of August 14, 2015.  This is the eighty first consecutive quarterly cash dividend declared by the Company.

Second Quarter and Six Month Earnings Summary 
Net interest income for the quarter ended June 30, 2015 totaled $85.2 million compared to $85.7 million for the previous quarter and $85.8 million for the 2014 second quarter.  The net interest margin for the quarter ended June 30, 2015 was 2.35%, compared to 2.34% for the previous quarter and 2.31% for the 2014 second quarter. For the six months ended June 30, 2015, net interest income totaled $170.9 million, compared to $173.7 million for the comparable 2014 period, and the net interest margin was 2.34% for the six months ended June 30, 2015, flat from 2.34% for the six months ended June 30, 2014.

For the quarter ended June 30, 2015, a $3.0 million loan loss release was recorded compared to a $343,000 release in the prior quarter and a $5.7 million loan loss release recorded in the 2014 second quarter. For the six months ended June 30, 2015, we recorded a loan loss release of $3.3 million compared to a net $4.1 million loan loss release for the comparable 2014 period.  Mr. Redman stated, "The loan loss release recorded in the second quarter reflects the continued improvement in the asset quality and change in composition of our loan portfolio."

Non-interest income for the quarter ended June 30, 2015 totaled $15.3 million, compared to $12.9 million for the previous quarter and $13.8 million for the 2014 second quarter. Non-interest income for the six months ended June 30, 2015 totaled $28.3 million compared to $27.5 million for the comparable 2014 period.  The increases for the quarter and six months ended June 30, 2015 are primarily due to increases in mortgage banking income, net. 

General and administrative ("G&A") expense for the quarter ended June 30, 2015 totaled $71.9 million compared to $70.1 million for the previous quarter and $71.6 million for the 2014 second quarter.  For the six months ended June 30, 2015, G&A expense totaled $142.0 million, relatively flat from $141.8 million for the 2014 comparable period. The linked quarterly increase was primarily attributable to an increase in compensation and benefits expense to $37.7 million for the quarter ended June 30, 2015 from $36.3 million for the previous quarter. Mr. Redman commented, "While investment in support of our strategic initiatives continued, our total G&A expense remained within our expected range of $70 - $73 million per quarter as it continued to be positively impacted by lower FDIC insurance premiums."    

New York State tax legislation, signed into law on April 13, 2015, largely conformed New York City banking income tax laws with the New York State legislation enacted in 2014, and also made certain refinements to the New York State legislation.  For Astoria, the effect of the 2015 legislation was the elimination of the $7.2 million deferred tax asset valuation allowance, and the establishment and recognition of additional state and local deferred tax assets of $4.2 million.

Balance Sheet Summary
Total assets at June 30, 2015 were $15.3 billion, a decrease of $344.7 million from December 31, 2014. The decrease was primarily due to a decline in the loan portfolio which decreased $443.4 million from December 31, 2014 and totaled $11.5 billion at June 30, 2015, partially offset by an increase in the securities portfolio of $67.5 million over the same period. 

The MF/CRE mortgage loan portfolio totaled $4.8 billion at June 30, 2015, an increase of $19.1 million from December 31, 2014 and represents 42% of the total loan portfolio.  For the quarter and six months ended June 30, 2015, MF/CRE loan originations totaled $192.8 million and $452.7 million, respectively, compared to $353.5 million and $571.5 million, for the 2014 comparable periods. The MF/CRE loan production for the 2015 second quarter and six months ended June 30, 2015 were originated with weighted average loan-to-value ratios of approximately 51%, and weighted average debt coverage ratios of approximately 1.38 and 1.50, respectively, for the quarter and six months ended June 30, 2015. MF/CRE loan prepayments for the quarter and six months ended June 30, 2015 totaled $212.6 million and $358.8 million, respectively, up from $56.6 million and $169.5 million for the comparable 2014 periods. Mr. Redman commented, "During the second quarter, we experienced a sharp increase in prepayment activity in our MF/CRE loan portfolio, due in part to some of our competitors' willingness to offer more cash on loans, or loosened covenants, terms that we did not feel comfortable offering in the current interest rate environment."  At June 30, 2015, the MF/CRE pipeline totaled approximately $236.3 million.    

The residential mortgage loan portfolio totaled $6.4 billion at June 30, 2015, compared to $6.9 billion at December 31, 2014.  For the quarter and six months ended June 30, 2015, residential loan originations for portfolio totaled $222.1 million and $362.6 million, respectively, compared to $83.2 million and $181.5 million for the 2014 comparable periods.  The weighted average loan-to-value ratio of the residential loan production for portfolio at origination was approximately 60% for both the quarter and six months ended June 30, 2015.  Residential loan prepayments for the quarter and six months ended June 30, 2015 totaled $392.9 million and $672.7 million, respectively, up from $289.9 million and $515.1 million for the comparable 2014 periods. At June 30, 2015, the residential mortgage pipeline totaled approximately $221.0 million.

Deposits totaled $9.2 billion at June 30, 2015, a decrease of $277.1 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, representing 75% of total deposits, and had a weighted average rate of 12 basis points at June 30, 2015.    

Stockholders' equity totaled $1.63 billion, or 10.65% of total assets at June 30, 2015, an increase of $48.5 million from December 31, 2014.  Astoria's capital levels continue to exceed the minimum levels required to be designated as "well-capitalized" for bank regulatory purposes. At June 30, 2015, Tier 1 leverage, Common Equity Tier 1 risk based, Tier 1 risk-based and Total risk-based capital ratios were 10.95%, 18.83%, 18.83% and 20.06%, respectively for Astoria Bank, and 9.83%, 15.59%, 16.96% and 18.19%, respectively for Astoria Financial Corporation.  At June 30, 2015, Astoria Financial Corporation's tangible common equity ratio was 8.69%.

Asset Quality
Non-performing loans ("NPLs"), totaled $122.8 million, or 1.07% of total loans, at June 30, 2015, compared to $127.8 million, or 1.07% of total loans, at December 31, 2014. Included in the NPLs at June 30, 2015 is $56.7 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 June 30, 2015 were $216.0 million compared to $227.7 million at December 31, 2014. Net charge-offs for the quarter ended June 30, 2015 totaled $33,000 compared to $757,000 in the previous quarter and $9.7 million in the 2014 second quarter.  Other real estate owned declined to $23.4 million at June 30. 2015, compared to $35.7 million at December 31, 2014.

Future Outlook
Commenting on the Company's future outlook, Mr. Redman stated, "With the 30 year conforming mortgage rate north of 4%, we believe that the elevated pace of prepayment activity which we experienced in the first half of 2015 will slow during the second half of the year.   

We also believe that we will continue to build upon the momentum we have achieved in business banking where, over the past twelve months, highly desirable business checking account balances have grown by 16% and total business deposits have grown by 22%.  During that same time period, total outstanding business banking loans, including commercial real estate loans originated through our business banking operations, have grown by 49%.  To further enhance our business banking growth, we plan on opening a branch in Long Island City, Queens, before the end of the year, primarily to provide further support to our business bankers."

Earnings Conference Call July 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, July 23, 2015 at 10:00 a.m. (ET).   The toll-free dial-in number is (877) 709-8150.  A telephone replay will be available from July 23, 2015 at 1:00 p.m. (ET) through midnight (ET) Saturday, August 1, 2015.  The replay number is (877) 660-6853, ID# 13612522.  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 $15.3 billion, is the holding company for Astoria Bank.  Established in 1888, Astoria Bank, with deposits in New York totaling $9.2 billion, is the second largest thrift depository in New York and provides its retail and business 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 collateral 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 and regulatory expectations. We have no obligation to update any forward-looking statements to reflect events or circumstances after the date of this press release.                                                                             

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SOURCE Astoria Financial Corporation

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