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

LAKE SUCCESS, N.Y., Oct. 28, 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 $16.7 million, or $0.17 diluted earnings per common share ("diluted EPS"), for the quarter ended September 30, 2015, compared to $16.6 million, or $0.17 diluted EPS, for the quarter ended September 30, 2014. For the nine months ended September 30, 2015, net income available to common shareholders totaled $63.1 million, or $0.63 diluted EPS compared to $66.1 million, or $0.66 diluted EPS, for the comparable 2014 period.  Included in the 2015 nine month results is a reduction in income tax expense of $11.4 million ($0.12 per common share) related to the impact of income tax legislation enacted in the second quarter of 2015, primarily applicable to New York City.  Included in the 2014 nine month results was a reduction in income tax expense of $11.5 million ($0.11 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 disappointed by the lack of net growth in our loan portfolio, we are pleased with the continued growth of our lower cost business banking deposits, which grew to over $1 billion at September 30, 2015.  In addition, while many of our competitors continue to experience margin contraction in this low rate environment, our net interest margin increased slightly to 2.37% in the third quarter."

Board Declares Quarterly Cash Dividend of $0.04 Per Share
The Board of Directors of the Company, at its October 28, 2015 meeting, declared a quarterly cash dividend of $0.04 per common share.  The dividend is payable on December 1, 2015 to shareholders of record as of November 13, 2015.  This is the eighty-second consecutive quarterly cash dividend declared by the Company.

Third Quarter and Nine Month Earnings Summary
Net interest income for the quarter ended September 30, 2015 totaled $84.7 million compared to $85.2 million for the previous quarter and $84.6 million for the 2014 third quarter.  The net interest margin for the quarter ended September 30, 2015 was 2.37%, compared to 2.35% for the previous quarter and 2.31% for the 2014 third quarter. For the nine months ended September 30, 2015, net interest income totaled $255.6 million, compared to $258.4 million for the comparable 2014 period, and the net interest margin was 2.35% for the nine months ended September 30, 2015, up from 2.33% for the nine months ended September 30, 2014.

For the quarter ended September 30, 2015, a $4.4 million loan loss release was recorded compared to a $3.0 million release in both the prior quarter and the 2014 third quarter. For the nine months ended September 30, 2015, we recorded a loan loss release of $7.7 million compared to a $7.2 million loan loss release for the comparable 2014 period.  Mr. Redman stated, "The loan loss release recorded in the third quarter is a reflection of both the continued improvement in the asset quality of our loan portfolio as well as the slight contraction in the overall portfolio."

Non-interest income for the quarter ended September 30, 2015 totaled $12.9 million, compared to $15.3 million for the previous quarter and $13.8 million for the 2014 third quarter. The decreases were primarily due to declines in mortgage banking income, net and more specifically, a provision for MSR valuation in the most recent period compared to recoveries for MSR valuation in both the previous quarter and the 2014 comparable quarter.  Non-interest income for the nine months ended September 30, 2015 totaled $41.1 million compared to $41.3 million for the comparable 2014 period. 

General and administrative ("G&A") expense for the quarter ended September 30, 2015 totaled $72.6 million compared to $71.9 million for the previous quarter and $72.4 million for the 2014 third quarter.  For the nine months ended September 30, 2015, G&A expense totaled $214.6 million, relatively flat from $214.2 million for the 2014 comparable period. 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 influenced by lower FDIC insurance premiums."    

Balance Sheet Summary
Total assets at September 30, 2015 were $15.1 billion, a decrease of $540.8 million from December 31, 2014. The decrease was primarily due to a decline in the loan portfolio which decreased $704.1 million from December 31, 2014, and totaled $11.3 billion at September 30, 2015, partially offset by an increase in the securities portfolio of $126.9 million over the same period. 

The MF/CRE mortgage loan portfolio totaled $4.7 billion at September 30, 2015, a decrease of  $52.6 million from December 31, 2014 and represents 42% of the total loan portfolio.  For the quarter and nine months ended September 30, 2015, MF/CRE loan originations totaled $137.6 million and $590.3 million, respectively, compared to $226.9 million and $798.5 million, for the 2014 comparable periods. The MF/CRE loan production for the 2015 third quarter and nine months ended September 30, 2015 were originated with weighted average loan-to-value ratios of approximately 44% and 49%, respectively, and weighted average debt coverage ratios of approximately 1.59 and 1.52, respectively. MF/CRE loan prepayments for the quarter and nine months ended September 30, 2015 totaled $173.8 million and $532.6 million, respectively, up from $100.3 million and $269.8 million for the comparable 2014 periods. Mr. Redman commented, "During the third quarter, we experienced a decline in originations, largely the result of a depressed loan pipeline at the end of the second quarter.  The pipeline at September 30, 2015 was $414.8 million, nearly double the June 30, 2015 level of $236.3 million.  In addition, prepayment activity in our MF/CRE loan portfolio, which had increased sharply in the prior quarter, slowed in the third quarter. As a result, we expect a stronger quarter of loan originations and overall growth  in this portfolio in the fourth quarter."    

The residential mortgage loan portfolio totaled $6.2 billion at September 30, 2015, compared to $6.9 billion at December 31, 2014.  For the quarter and nine months ended September 30, 2015, residential loan originations for portfolio totaled $151.5 million and $514.0 million, respectively, compared to $145.3 million and $326.8 million for the 2014 comparable periods.  The weighted average loan-to-value ratio of the residential loan production for portfolio at origination was approximately 66% and 62% for the quarter and nine months ended September 30, 2015, respectively.  Residential loan prepayments for the quarter and nine months ended September 30, 2015 totaled $276.2 million and $948.9 million, respectively, compared to $317.5 million and $832.6 million for the comparable 2014 periods. At September 30, 2015, the residential mortgage pipeline totaled approximately $176.1 million.

Deposits totaled $9.0 billion at September 30, 2015, a decrease of $456.4 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. At September 30, 2015, core deposits totaled $6.9 billion with a weighted average rate of 12 basis points, and represent 77% of total deposits.    

Stockholders' equity totaled $1.65 billion, or 10.91% of total assets at September 30, 2015, an increase of $67.1 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 September 30, 2015, Tier 1 leverage, Common Equity Tier 1 risk based, Tier 1 risk-based and Total risk-based capital ratios were 11.00%, 19.00%, 19.00% and 20.22%, respectively for Astoria Bank, and 10.06%, 16.03%, 17.42% and 18.63%, respectively for Astoria Financial Corporation.  At September 30, 2015, Astoria Financial Corporation's tangible common equity ratio was 8.93%.

Asset Quality
Non-performing loans ("NPLs"), totaled $131.7 million, or 1.17% of total loans, at September 30, 2015, compared to $127.8 million, or 1.07% of total loans, at December 31, 2014. Included in the NPLs at September 30, 2015 is $59.1 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 September 30, 2015 were $227.1 million compared to $227.7 million at December 31, 2014. Net recoveries for the quarter ended September 30, 2015 totaled $439,000 compared to net charge-offs of $33,000 and $2.0 million in the previous quarter and 2014 third quarter, respectively.  Other real estate owned declined to $19.1 million at September 30, 2015, compared to $35.7 million at December 31, 2014.

Future Outlook
Commenting on the Company's future outlook, Mr. Redman stated, "As previously discussed, we believe that with the much stronger pipeline and the slowing down in the level of prepayments out of the portfolio, we will experience overall growth in the MF/CRE portfolio, with originations expected to total approximately $1 billion for all of 2015, slightly less than what we originated in 2014.    

"During the fourth quarter we will be opening our branch in Long Island City, Queens, which presents a strong growth opportunity for us as we look to continue to build upon the momentum which we have achieved in our  business banking group where business deposits have grown by 9% year-to-date and total more than $1 billion at the end of the quarter."

About Astoria Financial Corporation
Astoria Financial Corporation, with assets of $15.1 billion, is the holding company for Astoria Bank.  Established in 1888, Astoria Bank, with deposits in New York totaling $9.0 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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