Astoria Financial Corporation Reports 2016 Second Quarter Earnings Per Common Share Of $0.16

LAKE SUCCESS, N.Y., July 27, 2016 /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 $16.1 million, or $0.16 diluted earnings per common share ("diluted EPS"), for the quarter ended June 30, 2016, compared to net income available to common shareholders of $29.2 million, or $0.29 diluted EPS, for the quarter ended June 30, 2015. For the six months ended June 30, 2016, net income available to common shareholders totaled $32.5 million, or $0.32 diluted EPS compared to $46.4 million, or $0.46 diluted EPS, for the comparable 2015 period.  Included in both 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 related to New York City. 

Monte N. Redman, President and Chief Executive Officer of Astoria, commenting on the results stated, "We are pleased that we continue to add value to the Astoria franchise as evidenced by the continued growth that we have seen in core deposits.  Core deposits have grown by $131.8 million, including $81.5 million of business deposits since year end and now represent 81% of total deposits.  In addition our high quality, higher yielding MF/CRE mortgage loan portfolio now represents 45% of the total loan portfolio."

Board Declares Quarterly Cash Dividend of $0.04 Per Share
The Board of Directors of the Company, at its July 27, 2016 meeting, declared a quarterly cash dividend of $0.04 per common share.  The dividend is payable on August 19, 2016 to shareholders of record as of August 8, 2016.  This is the eighty fifth consecutive quarterly cash dividend declared by the Company.

Second Quarter and Six Month Earnings Summary
Net interest income for the quarter ended June 30, 2016 totaled $83.1 million compared to $83.3 million for the previous quarter and $85.2 million for the 2015 second quarter.  The net interest margin for the quarter ended June 30, 2016 was 2.36%, flat from  the previous quarter and up slightly from 2.35% for the 2015 second quarter. For the six months ended June 30, 2016, net interest income totaled $166.3 million, compared to $170.9 million for the comparable 2015 period, and the net interest margin was 2.36% for the six months ended June 30, 2016, up slightly from 2.34% for the six months ended June 30, 2015.

For the quarter ended June 30, 2016, a $3.0 million loan loss release was recorded compared to a $3.1 million release in the prior quarter and a $3.0 million loan loss release recorded in the 2015 second quarter. For the six months ended June 30, 2016, we recorded a loan loss release of $6.1 million compared to a $3.3 million loan loss release for the comparable 2015 period.  Mr. Redman stated, "The current quarter's loan loss release reflects the continued contraction in the overall loan portfolio including the positive impact of reductions in the balances of some of our higher risk asset classes and our overall strong credit metrics."

Non-interest income for the quarter ended June 30, 2015 totaled $11.9 million, compared to $11.4 million for the previous quarter and $15.3 million for the 2015 second quarter. Non-interest income for the six months ended June 30, 2016 totaled $23.3 million compared to $28.3 million for the comparable 2015 period.  The decrease for the six months ended June 30, 2016 is primarily due to decreases in both mortgage banking income, net and customer service fees. 

General and administrative ("G&A") expense for the quarter ended June 30, 2016 totaled $70.0 million compared to $69.5 million for the previous quarter and $71.9 million for the 2015 second quarter.  For the six months ended June 30, 2016, G&A expense totaled $139.6 million, down from $142.0 million for the 2015 comparable period. The decrease for the six months ended June 30, 2016 was primarily attributable to a decrease in FDIC insurance premiums, advertising expense and other expense, partially offset by an increase in compensation and benefits expense.

Balance Sheet Summary
Total assets at June 30, 2016 were $15.0 billion, a decrease of $59.1 million from December 31, 2015. The decrease was primarily due to a decline in the loan portfolio which decreased $313.8 million from December 31, 2015 and totaled $10.8 billion at June 30, 2016, and a decrease in cash of $68.3 million, partially offset by an increase in the securities portfolio of $320.7 million over the same time period. 

The MF/CRE mortgage loan portfolio totaled $4.9 billion at June 30, 2016, an increase of $66.4 million from December 31, 2015 and represents 45% of the total loan portfolio.  For the quarter and six months ended June 30, 2016, MF/CRE loan originations totaled $193.6 million and $411.0 million, respectively, compared to $192.8 million and $452.7 million, for the 2015 comparable periods. The MF/CRE loan production for the 2016 second quarter and six months ended June 30, 2016 were originated with weighted average loan-to-value ratios of approximately 43%, and weighted average debt coverage ratios of approximately 1.70 and 1.54, respectively. MF/CRE loan prepayments for the quarter and six months ended June 30, 2016 totaled $135.9 million and $272.2 million, respectively, down from $212.6 million and $358.8 million for the comparable 2015 periods. At June 30, 2016, the MF/CRE pipeline totaled approximately $227.0 million.    

The residential mortgage loan portfolio totaled $5.6 billion at June 30, 2016, compared to $6.0 billion at December 31, 2015.  For the quarter and six months ended June 30, 2016, residential loan originations for portfolio totaled $173.2 million and $262.7 million, respectively, compared to $222.1 million and $362.6 million for the 2015 comparable periods.  The weighted average loan-to-value ratio of the residential loan production for portfolio at origination was approximately 59% for both the quarter and six months ended June 30, 2016.  Residential loan prepayments for the quarter and six months ended June 30, 2016 totaled $289.4 million and $501.5 million, respectively, down from $392.9 million and $672.7 million for the comparable 2015 periods. At June 30, 2016, the residential mortgage pipeline totaled approximately $402.8 million.

Core deposits increased to $7.2 billion at June 30, 2016 from $7.1 billion at December 31, 2015.  This increase was primarily due to an increase in business checking deposits.  At June 30, 2016, core deposits represented 81% of total deposits and had a weighted average rate of 12 basis points. Certificates of deposit decreased by $286.7 million over the same time period and had a weighted average rate of 98 basis points at June 30, 2016. Total deposits were $9.0 billion at June 30, 2016, a decrease of $154.9 million since year end 2015. 

Stockholders' equity totaled $1.70 billion, or 11.29% of total assets at June 30, 2016, an increase of $31.9 million from December 31, 2015.  Astoria's capital levels continue to exceed the minimum levels required to be designated as "well-capitalized" for bank regulatory purposes. At June 30, 2016, Tier 1 leverage, Common Equity Tier 1 risk based, Tier 1 risk-based and Total risk-based capital ratios were 11.54%, 20.22%, 20.22% and 21.30%, respectively for Astoria Bank, and 10.46%, 16.93%, 18.41% and 19.48%, respectively for Astoria Financial Corporation.  At June 30, 2016, Astoria Financial Corporation's tangible common equity ratio was 9.31%.

Asset Quality
Non-performing loans ("NPLs"), totaled $155.2 million, or 1.43% of total loans, at June 30, 2016, compared to $138.2 million, or 1.24% of total loans, at December 31, 2015. Included in the NPLs at June 30, 2016 is $48.5 million of loans which are current or less than 90 days past due compared to $54.3 million at December 31, 2015. Total delinquent loans and NPLs at June 30, 2016 were $238.6 million compared to $243.7 million at December 31, 2015. Net charge-offs for the quarter ended June 30, 2016 totaled $1.2 million compared to $673,000 in the previous quarter and $33,000 in the 2015 second quarter.  For the six months ended June 30, 2016, net charge-offs totaled $1.9 million compared to $790,000 for the 2015 comparable period. 

Other real estate owned declined to $14.9 million at June 30. 2016, compared to $19.8 million at December 31, 2015.

Future Outlook
Commenting on the Company's future outlook, Mr. Redman stated, "As we previously announced on October 29, 2015, we have entered into a definitive agreement to merge with New York Community Bancorp ("NYCB") which has been overwhelmingly approved by the respective shareholders of both Astoria and NYCB at their shareholder meetings. We look forward to working with NYCB to continue to serve the communities which have come to rely on us for the past 127 years."

About Astoria Financial Corporation
Astoria Financial Corporation, with assets of $15.0 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 88 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.   

This communication contains certain forward-looking information about NYCB, Astoria, and the combined company after the close of the transaction that is intended to be covered by the safe harbor for "forward-looking statements" provided by the Private Securities Litigation Reform Act of 1995.  All statements other than statements of historical fact are forward-looking statements. Such statements involve inherent risks and uncertainties, many of which are difficult to predict and are generally beyond the control of NYCB, Astoria and the combined company.  Forward-looking statements speak only as of the date they are made and we assume no duty to update such statements. We caution readers that a number of important factors could cause actual results to differ materially from those expressed in, or implied or projected by, such forward-looking statements.  In addition to factors previously disclosed in reports filed by NYCB and Astoria with the SEC, risks and uncertainties for each institution and the combined institution include, but are not limited to: lower than expected revenues; credit quality deterioration or a reduction in real estate values could cause an increase in the allowance for credit losses and a reduction in net earnings; 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; increases in competitive pressure among financial institutions or from non-financial institutions; effects of changes in existing U.S. government or government-sponsored mortgage programs; the ability to complete the proposed transaction, including obtaining regulatory approvals and approval by the stockholders of Astoria or NYCB, or any future transaction, successfully integrate NYCB's and Astoria's integration plan, or achieve expected beneficial synergies and/or operating efficiencies, in each case within expected time-frames or at all; regulatory approvals may not be received on expected timeframes or at all; the possibility that personnel changes will not proceed as planned; the possibility that the cost of additional capital may be more than expected; the possibility that a change in the interest rate environment may reduce net interest margins; asset/liability re-pricing risks and liquidity risks; pending legal matters may take longer or cost more to resolve or may be resolved adversely; general economic conditions, either nationally or in the market areas in which the entities operate or anticipate doing business, are less favorable than expected; and environmental conditions, including natural disasters, may disrupt business, impede operations, or negatively affect the values of collateral securing loans.