LAKE SUCCESS, N.Y., Oct. 15 /PRNewswire-FirstCall/ -- Astoria Financial Corporation ("Astoria," the "Company"), the holding company for Astoria Federal Savings and Loan Association ("Astoria Federal"), today reported a net loss of $16.5 million (operating income of $41.4 million), or $0.18 diluted loss per share (operating earnings per share ("EPS") of $0.46), for the quarter ended September 30, 2008 compared to net income of $35.3 million, or $0.39 EPS, for the 2007 third quarter.
For the nine months ended September 30, 2008, net income totaled $45.9 million (operating income of $103.8 million), or $0.51 diluted earnings per share (operating EPS of $1.14), compared to $105.1 million, or $1.14 EPS, for the comparable 2007 period.
Included in the third quarter and nine month 2008 results is an other-than-temporary impairment, after-tax, non-cash charge ("OTTI"), of $57.9 million, or $0.64 per diluted share, relating to Freddie Mac preferred stock. The OTTI reduced the carrying amount of two perpetual preferred stock issues of Freddie Mac to a combined market value of $5.3 million at September 30, 2008. The tax benefit recognized on the OTTI was based on the treatment of the OTTI as a capital loss, which limited the tax benefit to the Company. Subsequently, on October 3, 2008, the Emergency Economic Stabilization Act was enacted which includes a provision permitting banks to recognize OTTI charges relating to Freddie Mac preferred stock as an ordinary loss, increasing the tax benefit to the Company. Had the Company recognized the OTTI as an ordinary loss for the quarter ended September 30, 2008, the OTTI recorded would have been $50.5 million, or $0.56 per diluted share. The Company will recognize the additional tax benefit in the quarter ending December 31, 2008 totaling approximately $7.4 million, or $0.08 per diluted share. The perpetual preferred stock issues are held in the Company's available-for-sale securities portfolio. Prior to this charge, impairment was recorded as an unrealized mark-to-market loss on securities available-for-sale and reflected as a reduction to equity through other comprehensive income. Operating income and operating EPS, representing net income and EPS determined in accordance with generally accepted accounting principles ("GAAP") excluding the effects of the after-tax, non-cash OTTI charge noted above, provide a more meaningful comparison for effectively evaluating Astoria's operating results. For a reconciliation of operating income and operating EPS to GAAP net income and EPS, please refer to the table on page 14.
Third Quarter 2008 Financial Highlights: -- Operating EPS of $0.46, up 24% from the 2008 second quarter EPS -- Margin increased 25 basis points from the linked quarter to 2.06% -- Loan portfolio increased $542 million, or 13% annualized -- One-to-four family loan portfolio increased $533 million, or 18% annualized -- Mortgage loan production increased $251 million, or 23%, from the 2007 third quarter and totaled $1.3 billion -- One-to-four family loan production increased $187 million, or 19%, from the 2007 third quarter and totaled $1.2 billion
Commenting on the 2008 third quarter results, George L. Engelke, Jr., Chairman and Chief Executive Officer of Astoria, noted, "We are pleased with the solid fundamental operating results achieved in the third quarter, despite the continued deterioration of the national housing market. The positive operating results are due to lower liability costs, solid quality loan growth and an increase in retail deposits. As we anticipated, our non-performing loans and delinquencies increased, however, significant margin improvement helped mitigate the impact of the increases."
Board Declares Quarterly Cash Dividend of $0.26 Per Share
The Board of Directors of the Company, at their October 15, 2008 meeting, declared a quarterly cash dividend of $0.26 per share. The dividend is payable on December 1, 2008 to shareholders of record as of November 17, 2008. This is the fifty-fourth consecutive quarterly cash dividend declared by the Company.
Third Quarter and Nine Month Earnings Summary
Net interest income for the quarter ended September 30, 2008 increased $14.5 million, or 16%, from the 2008 second quarter and $25.9 million, or 32%, from the 2007 third quarter to $107.1 million. For the nine months ended September 30, 2008, net interest income increased $28.8 million, or 11%, from the comparable 2007 period, to $280.4 million.
Astoria's net interest margin for the quarter ended September 30, 2008 increased to 2.06%, 25 basis points above the 2008 second quarter and 48 basis points above the 2007 third quarter. The increases were primarily due to decreases in the cost of interest bearing-liabilities. During the 2008 third quarter, $2.3 billion of CDs (excluding Liquid CDs), with a weighted average rate of 4.25%, matured and $2.6 billion of CDs were issued or repriced with a weighted average rate of 3.64%. During the 2008 fourth quarter, CDs (excluding Liquid CDs) totaling $1.7 billion, with a weighted average rate of 4.11% are scheduled to mature.
For the quarter ended September 30, 2008, a $13.0 million provision for loan losses was recorded compared to $7.0 million for the previous quarter and $500,000 for the 2007 third quarter. For the nine months ended September 30, 2008, the provision for loan losses totaled $24.0 million compared to $500,000 for the comparable 2007 period. The increases recognize the rise in non-performing loans against a backdrop of continued deterioration in the housing market and weakness in the overall economy as well as the Company's loan growth. The provision for the 2008 fourth quarter is expected to remain at or increase somewhat from the 2008 third quarter provision.
Non-interest income for the quarter and nine months ended September 30, 2008 included a $77.7 million pre-tax OTTI. Excluding the OTTI, non-interest income totaled $22.4 million for the quarter ended September 30, 2008 compared to $24.8 million for the comparable 2007 period. The decrease is primarily due to a gain on the sale of an equity security position recorded in the 2007 third quarter. For the nine months ended September 30, 2008, non interest income totaled $69.7 million, excluding the OTTI, compared to $73.7 million for the comparable 2007 period. The decrease is primarily due to the aforementioned gain on sale and the receipt of insurance proceeds in 2007.
General and administrative expense ("G&A") for the quarter ended September 30, 2008 decreased $1.2 million, to $58.8 million, from the 2008 second quarter and increased $2.3 million from the 2007 third quarter. The linked quarter decrease is primarily due to lower compensation and benefits expense and other expense, including lower goodwill litigation expense, partially offset by increased advertising expense. The year over year increase is due primarily to increases in compensation and benefits expense and advertising expense.
For the nine months ended September 30, 2008, G&A expense increased $4.6 million compared to the nine months ended September 30, 2007, to $177.0 million. The increase was primarily due to an increase in compensation and benefits expense and REO expense, partially offset by a decrease in goodwill litigation expense.
The operating effective tax rate, which excludes the tax benefit related to the OTTI, was reduced to approximately 28% for the quarter ended September 30, 2008 due to the release of accruals for previous tax positions that statutorily expired. It is expected that the fourth quarter operating effective tax rate will return to a more normal level of approximately 34%.
Balance Sheet Summary
For the quarter and nine months ended September 30, 2008, the total loan portfolio increased $542.4 million and $567.7 million, respectively, to $16.7 billion. The loan growth was funded primarily with wholesale borrowings and, to a lesser extent, retail deposits. Total loan production for the quarter and nine months ended September 30, 2008 increased to $1.3 billion and $3.7 billion, respectively, from $1.1 billion and $3.3 billion, respectively, for the comparable 2007 periods.
For the quarter and nine months ended September 30, 2008, the one-to-four family mortgage loan portfolio increased $533.3 million and $731.0 million, respectively, to $12.4 billion. One-to-four family loan originations and purchases for the quarter and nine months ended September 30, 2008 increased 19% and 11%, respectively, to $1.2 billion and $3.3 billion, respectively, from $982.0 million and $3.0 billion, respectively, for the comparable 2007 periods. One-to-four family loan prepayments for the quarter and nine months ended September 30, 2008 totaled $516.9 million and $2.2 billion, respectively, compared to $430.4 million and $1.5 billion, respectively, for the comparable 2007 periods. Indicative of Astoria's conservative underwriting standards, the loan-to-value ("LTV") ratio of the 2008 third quarter one-to-four family loan production for portfolio averaged approximately 58%. The loan amounts averaged approximately $680,000.
For the quarter ended September 30, 2008, the multi-family and commercial real estate ("CRE") loan portfolio increased $9.7 million and for the nine months ended September 30, 2008 decreased $122.4 million. Multi-family and CRE loan originations totaled $154.1 million and $347.9 million, for the three and nine months ended September 30, 2008 compared to $90.5 million and $344.4 million for the comparable 2007 periods. At September 30, 2008, the combined multi-family and CRE loan portfolio totaled $3.9 billion, or 23% of total loans. The loan-to-value ratio of the 2008 third quarter combined multi-family and CRE loan production averaged approximately 52% and the loan amounts averaged approximately $2.0 million.
"It is important to note that the double-digit increase in total loan production has been achieved without sacrificing asset quality, as reflected in the very low average LTV ratios," Mr. Engelke noted.
Asset Quality
Despite the increase in non-performing loans, overall asset quality remains strong. Non-performing loans ("NPL") totaled $164.8 million at September 30, 2008, an increase of $36.2 million from the previous quarter, and represent just 0.74% of total assets. At September 30, 2008, one-to-four family non-performing loans totaled $126.9 million and multi-family/CRE non-performing loans totaled $33.6 million, compared to $101.0 million and $24.5 million, respectively, at June 30, 2008.
The comparative table below illustrates loan migration from 30 days delinquent to 90+ days delinquent:
30-59 Days 60-89 Days 90 + Days Total 30 + Days (In millions) Past Due Past Due Past Due (NPL) Past Due -------- -------- -------------- -------- At December 31, 2007 $144.4 $39.1 $68.1 $251.6 At March 31, 2008 $136.3 $48.8 $106.6 $291.7 At June 30, 2008 $134.5 $51.0 $128.6 $314.1 At September 30, 2008 $171.0 $54.7 $164.8 $390.5
The table below details, as of September 30, 2008, the states with a total of 1% or more of our one-to- four family loan portfolio and the respective non-performing loan totals in those states:
(In millions) % of 1-4 Family Total 1-4 NPLs as % of Total 1-4 Loan Family State/DC State/DC Family Loans Portfolio NPLs Total -------- ------------ ---------- --------- ----------------- New York Metro* $5,212.5 42% $38.2 0.73% California $1,408.4 11% $17.4 1.24% Illinois $1,302.4 11% $14.4 1.11% Virginia $962.9 8% $13.2 1.37% Maryland $889.3 7% $14.9 1.68% Massachusetts $841.7 7% $5.0 0.59% Florida $321.7 3% $13.0 4.04% Washington $269.7 2% $0.0 0.00% Georgia $164.8 1% $1.1 0.67% Washington D.C. $133.6 1% $2.0 1.50% Pennsylvania $130.9 1% $2.0 1.53% ------ -- ---- Total States 1% or More $11,637.9 94% $121.2 1.04% Other States $721.4 6% $5.7 0.79% ------ -- ---- Total 1-4 Family Portfolio $12,359.3 100% $126.9 1.03% ========= ==== ====== * NY, NJ, CT
Net loan charge-offs for the quarter and nine months ended September 30, 2008 totaled $8.5 million and $16.6 million, respectively, compared to net loan charge-offs of $1.6 million and $2.2 million, respectively, for the 2007 comparable periods. For the quarter and nine months ended September 30, 2008, one-to-four family net loan charge-offs totaled $5.3 million and $10.2 million, respectively.
Commenting on asset quality, Mr. Engelke noted, "Although we have never actively participated in high-risk sub-prime residential lending, as a geographically diversified residential lender, we are not immune to the negative consequences arising from overall economic weakness and, in particular, the deterioration in the housing industry nationally. As expected, non-performing loans and charge-offs increased in the third quarter, however our overall asset quality remains strong, with non-performing loans representing just 74 basis points of total assets. We expect that non-performing loans and charge-offs will continue to increase as the housing market continues to decline and overall economic weakness persists but should, nonetheless, remain at manageable levels."
Balance Sheet Summary (Continued)
Deposits increased $20.1 million and $59.7 million for the quarter and nine months ended September 30, 2008 and totaled $13.1 billion. Total assets increased $553.4 million and $454.1 million for the quarter and nine months ended September 30, 2008 and totaled $22.2 billion.
Key balance sheet highlights, reflecting the improvement in the quality of the Company's balance sheet since December 31, 1999, follow:
($ in millions) 12/31/99 12/31/01 12/31/03 12/31/05 -------- -------- -------- -------- Assets $22,700 $22,672 $22,462 $22,380 Loans $10,286 $12,167 $12,687 $14,392 Securities $10,763 $8,013 $8,448 $6,572 Deposits $9,555 $10,904 $11,187 $12,810 Borrowings $11,528 $9,826 $9,632 $7,938 ($ in millions) 12/31/07 9/30/08 Cumulative -------- ------- % Change -------- Assets $21,719 $22,173 ( 2%) Loans $16,155 $16,723 + 63% Securities $4,371 $4,159 (61%) Deposits $13,049 $13,109 + 37% Borrowings $7,185 $7,500 (35%)
The following table illustrates the above improvement on an outstanding per share basis:
Amount per share 12/31/99 12/31/01 12/31/03 12/31/05 ---------------- -------- -------- -------- -------- Loans $66.28 $89.36 $107.51 $137.11 Deposits $61.57 $80.09 $94.80 $122.04 Amount per share 12/31/07 9/30/08 % Change CAGR ---------------- -------- ------- -------- ---- Loans $168.76 $174.51 163% 12% Deposits $136.32 $136.80 122% 10%
Stockholders' equity was $1.2 billion, or 5.37% of total assets at September 30, 2008. Astoria Federal continues to maintain capital ratios in excess of regulatory requirements with core, tangible and risk-based capital ratios of 6.16%, 6.16 % and 11.43%, respectively, at September 30, 2008.
Future Outlook
Commenting on the outlook for the remainder of 2008, Mr. Engelke stated, "We expect the net interest margin will continue to increase in the fourth quarter as we realize the full benefit from liabilities which repriced lower in the third quarter and the additional benefit from lower deposit costs in the fourth quarter and modest earning asset growth. With respect to asset quality, as the housing crisis continues and the economy remains weak with job losses increasing, the challenges facing residential lenders will continue. Accordingly, we expect our non-performing assets and loan delinquencies will increase somewhat in the 2008 fourth quarter but should, nonetheless, remain at manageable levels. The Company's tangible capital ratio target remains between 4.50% and 4.75%."
Astoria Financial Corporation, with assets of $22.2 billion, is the holding company for Astoria Federal Savings and Loan Association. Established in 1888, Astoria Federal, with deposits in New York totaling $13.1 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, http://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 eighteen states, primarily the East Coast, and the District of Columbia, and through correspondent relationships covering nineteen states and the District of Columbia.
Earnings Conference Call October 16, 2008 at 10:00 a.m. (ET)
The Company, as previously announced, indicated that Mr. Engelke will host an earnings conference call Thursday morning, October 16, 2008 at 10:00 a.m. (ET). The toll-free dial-in number is (888) 562-3356, conference ID # 64189352. A telephone replay will be available on October 16, 2008 from 1:00 p.m. (ET) through Friday, October 24, 2008, 11:59 p.m. (ET). The replay number is (800) 642-1687, ID # 64189352. The conference call will also be simultaneously webcast on the Company's website http://www.astoriafederal.com/ and archived for one year.
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 its 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.
Page 8 ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION ---------------------------------------------- (In Thousands, Except Share Data) At At September 30, December 31, 2008 2007 ---- ---- ASSETS ------ Cash and due from banks $71,964 $93,972 Repurchase agreements 56,000 24,218 Securities available-for-sale 1,397,660 1,313,306 Securities held-to-maturity (fair value of $2,730,051 and $3,013,014, respectively) 2,761,473 3,057,544 Federal Home Loan Bank of New York stock, at cost 226,835 201,490 Loans held-for-sale, net 8,748 6,306 Loans receivable: Mortgage loans, net 16,384,459 15,791,962 Consumer and other loans, net 338,278 363,052 ------- ------- 16,722,737 16,155,014 Allowance for loan losses (86,318) (78,946) ------- ------- Total loans receivable, net 16,636,419 16,076,068 Mortgage servicing rights, net 11,485 12,910 Accrued interest receivable 82,381 79,132 Premises and equipment, net 138,533 139,563 Goodwill 185,151 185,151 Bank owned life insurance 401,443 398,280 Other assets 195,358 131,428 ------- ------- TOTAL ASSETS $22,173,450 $21,719,368 =========== =========== LIABILITIES ----------- Deposits $13,109,183 $13,049,438 Reverse repurchase agreements 3,050,000 3,730,000 Federal Home Loan Bank of New York advances 4,073,100 3,058,000 Other borrowings, net 377,124 396,658 Mortgage escrow funds 163,374 129,412 Accrued expenses and other liabilities 210,775 144,516 ------- ------- TOTAL LIABILITIES 20,983,556 20,508,024 ---------- ---------- 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 95,829,245 and 95,728,562 shares outstanding, respectively) 1,665 1,665 Additional paid-in capital 850,777 846,227 Retained earnings 1,858,618 1,883,902 Treasury stock (70,665,643 and 70,766,326 shares, at cost, respectively) (1,460,288) (1,459,865) Accumulated other comprehensive loss (41,076) (39,476) Unallocated common stock held by ESOP (5,404,849 and 5,761,391 shares, respectively) (19,802) (21,109) ------- ------- TOTAL STOCKHOLDERS' EQUITY 1,189,894 1,211,344 --------- --------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $22,173,450 $21,719,368 =========== =========== Page 9 ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME --------------------------------- (In Thousands, Except Share Data) For the Three For the Nine Months Ended Months Ended September 30, September 30, ------------- ------------- 2008 2007 2008 2007 ---- ---- ---- ---- Interest income: Mortgage loans: One-to-four family $163,154 $150,645 $468,999 $428,729 Multi-family, commercial real estate and construction 57,982 63,052 176,983 192,160 Consumer and other loans 4,103 7,472 13,712 23,478 Mortgage-backed and other securities 45,341 53,227 139,942 168,127 Federal funds sold and repurchase agreements 214 337 1,868 1,812 Federal Home Loan Bank of New York stock 3,148 2,899 11,173 8,246 ----- ----- ------ ----- Total interest income 273,942 277,632 812,677 822,552 ------- ------- ------- ------- Interest expense: Deposits 92,967 116,950 301,021 341,404 Borrowings 73,902 79,505 231,217 229,553 ------ ------ ------- ------- Total interest expense 166,869 196,455 532,238 570,957 ------- ------- ------- ------- Net interest income 107,073 81,177 280,439 251,595 Provision for loan losses 13,000 500 24,000 500 ------ --- ------ --- Net interest income after provision for loan losses 94,073 80,677 256,439 251,095 ------ ------ ------- ------- Non-interest (loss) income: Customer service fees 15,752 15,920 47,661 47,248 Other loan fees 927 1,153 3,056 3,481 Gain on sales of securities - 1,992 - 1,992 Other-than-temporary impairment write-down of securities (77,696) - (77,696) - Mortgage banking (loss) income, net (281) 155 1,744 1,995 Income from bank owned life insurance 4,273 4,238 12,670 12,728 Other 1,727 1,347 4,537 6,238 ----- ----- ----- ----- Total non-interest (loss) income (55,298) 24,805 (8,028) 73,682 ------- ------ ------ ------ Non-interest expense: General and administrative: Compensation and benefits 31,594 30,587 95,960 91,757 Occupancy, equipment and systems 16,460 16,159 50,211 49,174 Federal deposit insurance premiums 549 388 1,668 1,202 Advertising 2,346 1,390 4,969 5,282 Other 7,855 8,020 24,207 24,956 ----- ----- ------ ------ Total non-interest expense 58,804 56,544 177,015 172,371 ------ ------ ------- ------- (Loss) income before income tax (benefit) expense (20,029) 48,938 71,396 152,406 Income tax (benefit) expense (3,570) 13,630 25,502 47,257 ------ ------ ------ ------ Net (loss) income $(16,459) $35,308 $45,894 $105,149 ======== ======= ======= ======== Basic (loss) earnings per common share $(0.18) $0.39 $0.51 $1.16 ====== ===== ===== ===== Diluted (loss) earnings per common share $(0.18) $0.39 $0.51 $1.14 ====== ===== ===== ===== Basic weighted average common shares 89,546,664 90,174,456 89,523,584 90,763,008 Diluted weighted average common and common equivalent shares 90,614,601 91,543,600 90,814,665 92,420,702 ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES Page 10 SELECTED FINANCIAL RATIOS AND OTHER DATA ---------------------------------------- For the At or For the Three Months Nine Months Ended Ended September 30, September 30, -------------- -------------- 2008 2007 2008 2007 ---- ---- ---- ---- Selected Returns and Financial Ratios (annualized) ------------- Return on average stockholders' equity (5.47)% 11.82% 5.04% 11.67% Return on average tangible stockholders' equity (1) (6.47) 13.99 5.95 13.79 Return on average assets (0.30) 0.66 0.28 0.65 General and administrative expense to average assets 1.07 1.05 1.09 1.07 Efficiency ratio (2) 113.58 53.35 64.98 52.99 Net interest rate spread (3) 1.96 1.46 1.71 1.52 Net interest margin (4) 2.06 1.58 1.81 1.63 Selected Non-GAAP Returns and Financial Ratios (annualized) (5) ----------------- Non-GAAP return on average stockholders' equity 13.77% 11.82% 11.41% 11.67% Non-GAAP return on average tangible stockholders' equity (1) 16.28 13.99 13.46 13.79 Non-GAAP return on average assets 0.76 0.66 0.64 0.65 Non-GAAP efficiency ratio (2) 45.42 53.35 50.56 52.99 Dividend payout ratio 56.52 66.67 68.42 68.42 Asset Quality Data (dollars in thousands) (6) --------------- Non-performing assets $187,063 $62,510 Non-performing loans 164,769 58,174 Loans delinquent 90 days or more and still accruing interest 23 3,103 Non-accrual loans 164,746 55,071 Loans 60-89 days delinquent 54,742 25,805 Loans 30-59 days delinquent 170,981 148,571 Net charge-offs $8,525 $1,645 16,628 2,188 Non-performing loans/total loans 0.99% 0.36% Non-performing loans/total assets 0.74 0.27 Non-performing assets/total assets 0.84 0.29 Allowance for loan losses/non-performing loans 52.39 134.52 Allowance for loan losses/non-accrual loans 52.39 142.10 Allowance for loan losses/total loans 0.52 0.49 Net charge-offs to average loans outstanding (annualized) 0.21% 0.04% 0.14 0.02 Capital Ratios (Astoria Federal) --------- Tangible 6.16% 6.60% Core 6.16 6.60 Risk-based 11.43 12.08 Other Data ---------- Cash dividends paid per common share $0.26 $0.26 $0.78 $0.78 Book value per share (7) 13.16 13.35 Tangible book value per share (8) 11.11 11.30 Tangible stockholders' equity/tangible assets (1) (9) 4.57% 4.73% Mortgage loans serviced for others (in thousands) $1,231,890 $1,286,661 Full time equivalent employees 1,586 1,629 (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 (loss) income. (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. (5) The information presented for the three and nine months ended September 30, 2008 represents pro forma calculations which are not in conformity with U.S. generally accepted accounting principles, or GAAP. The 2008 information excludes the $57.9 million, after tax, ($77.7 million, before tax), other-than-temporary impairment write-down of securities charge recorded in the 2008 third quarter. See page 14 for a reconciliation of GAAP net income to non-GAAP net income for the three and nine months ended September 30, 2008. (6) Loans totaling $24.1 million have been reclassified from non-accrual to 60-89 days delinquent as of September 30, 2007 to conform the September 30, 2007 information to the current year presentation. The related September 30, 2007 asset quality ratios have been revised as necessary. (7) Book value per share represents stockholders' equity divided by outstanding shares, excluding unallocated Employee Stock Ownership Plan, or ESOP, shares. (8) Tangible book value per share represents stockholders' equity less goodwill divided by outstanding shares, excluding unallocated ESOP shares. (9) Tangible assets represent assets less goodwill. Page 11 ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES AVERAGE BALANCE SHEETS ---------------------- (Dollars in Thousands) For the Three Months Ended September 30, 2008 ---- Average Average Yield/ Balance Interest Cost ------- -------- ---- (Annualized) Assets: Interest-earning assets: Mortgage loans (1): One-to-four family $12,159,385 $163,154 5.37% Multi-family, commercial real estate and construction 3,915,922 57,982 5.92 Consumer and other loans (1) 338,947 4,103 4.84 ------- ----- Total loans 16,414,254 225,239 5.49 Mortgage-backed and other securities (2) 4,146,498 45,341 4.37 Federal funds sold and repurchase agreements 40,133 214 2.13 Federal Home Loan Bank stock 215,409 3,148 5.85 ------- ----- Total interest-earning assets 20,816,294 273,942 5.26 ------- Goodwill 185,151 Other non-interest-earning assets 881,458 ------- Total assets $21,882,903 =========== Liabilities and stockholders' equity: Interest-bearing liabilities: Savings $1,865,841 1,898 0.41 Money market 312,224 811 1.04 NOW and demand deposit 1,477,188 336 0.09 Liquid certificates of deposit 1,157,399 7,195 2.49 --------- ----- Total core deposits 4,812,652 10,240 0.85 Certificates of deposit 8,259,422 82,727 4.01 --------- ------ Total deposits 13,072,074 92,967 2.84 Borrowings 7,150,428 73,902 4.13 --------- ------ Total interest-bearing liabilities 20,222,502 166,869 3.30 ------- Non-interest-bearing liabilities 457,316 ------- Total liabilities 20,679,818 Stockholders' equity 1,203,085 --------- Total liabilities and stockholders' equity $21,882,903 =========== Net interest income/net interest rate spread $107,073 1.96% ======== ==== Net interest-earning assets/net interest margin $593,792 2.06% ======== ==== Ratio of interest-earning assets to interest-bearing liabilities 1.03x ===== 2007 ---- Average Average Yield/ Balance Interest Cost ------- -------- ---- (Annualized) Assets: Interest-earning assets: Mortgage loans (1): One-to-four family $11,171,094 $150,645 5.39% Multi-family, commercial real estate and construction 4,154,097 63,052 6.07 Consumer and other loans (1) 384,019 7,472 7.78 ------- ----- Total loans 15,709,210 221,169 5.63 Mortgage-backed and other securities (2) 4,711,162 53,227 4.52 Federal funds sold and repurchase agreements 25,631 337 5.26 Federal Home Loan Bank stock 166,938 2,899 6.95 ------- ----- Total interest-earning assets 20,612,941 277,632 5.39 ------- Goodwill 185,151 Other non-interest-earning assets 749,522 ------- Total assets $21,547,614 =========== Liabilities and stockholders' equity: Interest-bearing liabilities: Savings $1,983,161 2,016 0.41 Money market 365,919 926 1.01 NOW and demand deposit 1,453,669 214 0.06 Liquid certificates of deposit 1,570,599 18,501 4.71 --------- ------ Total core deposits 5,373,348 21,657 1.61 Certificates of deposit 7,946,982 95,293 4.80 --------- ------ Total deposits 13,320,330 116,950 3.51 Borrowings 6,687,400 79,505 4.76 --------- ------ Total interest-bearing liabilities 20,007,730 196,455 3.93 ------- Non-interest-bearing liabilities 345,377 ------- Total liabilities 20,353,107 Stockholders' equity 1,194,507 --------- Total liabilities and stockholders' equity $21,547,614 =========== Net interest income/net interest rate spread $81,177 1.46% ======= ==== Net interest-earning assets/net interest margin $605,211 1.58% ======== ==== Ratio of interest-earning assets to interest-bearing liabilities 1.03x ===== (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. Page 12 ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES AVERAGE BALANCE SHEETS ---------------------- (Dollars in Thousands) For the Nine Months Ended September 30, 2008 ---- Average Average Yield/ Balance Interest Cost ------- -------- ---- (Annualized) Assets: Interest-earning assets: Mortgage loans (1): One-to-four family $11,781,281 $468,999 5.31% Multi-family, commercial real estate and construction 3,954,253 176,983 5.97 Consumer and other loans (1) 346,720 13,712 5.27 ------- ------ Total loans 16,082,254 659,694 5.47 Mortgage-backed and other securities (2) 4,225,646 139,942 4.42 Federal funds sold and repurchase agreements 105,665 1,868 2.36 Federal Home Loan Bank stock 202,151 11,173 7.37 ------- ------ Total interest-earning assets 20,615,716 812,677 5.26 ------- Goodwill 185,151 Other non-interest-earning assets 834,947 ------- Total assets $21,635,814 =========== Liabilities and stockholders' equity: Interest-bearing liabilities: Savings $1,874,828 5,685 0.40 Money market 317,766 2,414 1.01 NOW and demand deposit 1,477,447 967 0.09 Liquid certificates of deposit 1,294,298 30,582 3.15 --------- ------ Total core deposits 4,964,339 39,648 1.06 Certificates of deposit 8,054,333 261,373 4.33 --------- ------- Total deposits 13,018,672 301,021 3.08 Borrowings 6,987,400 231,217 4.41 --------- ------- Total interest-bearing liabilities 20,006,072 532,238 3.55 ------- Non-interest-bearing liabilities 416,570 ------- Total liabilities 20,422,642 Stockholders' equity 1,213,172 --------- Total liabilities and stockholders' equity $21,635,814 =========== Net interest income/net interest rate spread $280,439 1.71% ======== ==== Net interest-earning assets/net interest margin $609,644 1.81% ======== ==== Ratio of interest-earning assets to interest-bearing liabilities 1.03x ===== 2007 ---- Average Average Yield/ Balance Interest Cost ------- -------- ---- (Annualized) Assets: Interest-earning assets: Mortgage loans (1): One-to-four family $10,771,698 $428,729 5.31% Multi-family, commercial real estate and construction 4,194,081 192,160 6.11 Consumer and other loans (1) 406,967 23,478 7.69 ------- ------ Total loans 15,372,746 644,367 5.59 Mortgage-backed and other securities (2) 4,966,923 168,127 4.51 Federal funds sold and repurchase agreements 45,772 1,812 5.28 Federal Home Loan Bank stock 156,955 8,246 7.00 ------- ----- Total interest-earning assets 20,542,396 822,552 5.34 ------- Goodwill 185,151 Other non-interest-earning assets 756,862 ------- Total assets $21,484,409 =========== Liabilities and stockholders' equity: Interest-bearing liabilities: Savings $2,047,732 6,177 0.40 Money market 392,785 2,933 1.00 NOW and demand deposit 1,471,293 639 0.06 Liquid certificates of deposit 1,585,104 57,278 4.82 --------- ------ Total core deposits 5,496,914 67,027 1.63 Certificates of deposit 7,791,434 274,377 4.70 --------- ------- Total deposits 13,288,348 341,404 3.43 Borrowings 6,645,192 229,553 4.61 --------- ------- Total interest-bearing liabilities 19,933,540 570,957 3.82 ------- Non-interest-bearing liabilities 349,186 ------- Total liabilities 20,282,726 Stockholders' equity 1,201,683 --------- Total liabilities and stockholders' equity $21,484,409 =========== Net interest income/net interest rate spread $251,595 1.52% ======== ==== Net interest-earning assets/net interest margin $608,856 1.63% ======== ==== Ratio of interest-earning assets to interest-bearing liabilities 1.03x ===== (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. Page 13 ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES END OF PERIOD BALANCES AND RATES -------------------------------- (Dollars in Thousands) At September 30, At June 30, 2008 2008 ---------------- ---------------- Weighted Weighted Average Average Balance Rate (1) Balance Rate (1) --------- -------- --------- -------- Selected interest-earning assets: Mortgage loans, gross (2): One-to-four family $12,359,266 5.65% $11,825,962 5.64% Multi-family, commercial real estate and construction 3,913,075 5.92 3,905,610 5.90 Mortgage-backed and other securities (3) 4,159,133 4.35 4,203,529 4.32 Interest-bearing liabilities: Savings 1,842,781 0.40 1,886,470 0.40 Money market 302,760 1.06 316,607 1.02 NOW and demand deposit 1,440,230 0.06 1,506,549 0.06 Liquid certificates of deposit 1,075,485 2.47 1,246,359 2.47 --------- --------- Total core deposits 4,661,256 0.82 4,955,985 0.86 Certificates of deposit 8,447,927 3.92 8,133,061 4.10 --------- --------- Total deposits 13,109,183 2.82 13,089,046 2.87 Borrowings, net 7,500,224 3.86 6,937,975 4.28 At September 30, 2007 ---------------- Weighted Average Balance Rate (1) --------- -------- Selected interest-earning assets: Mortgage loans, gross (2): One-to-four family $11,349,658 5.65% Multi-family, commercial real estate and construction 4,122,709 5.93 Mortgage-backed and other securities (3) 4,568,579 4.33 Interest-bearing liabilities: Savings 1,940,322 0.40 Money market 352,858 1.01 NOW and demand deposit 1,442,840 0.06 Liquid certificates of deposit 1,463,845 4.46 --------- Total core deposits 5,199,865 1.49 Certificates of deposit 8,066,130 4.80 --------- Total deposits 13,265,995 3.50 Borrowings, net 6,929,500 4.68 (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 include non-performing loans. (3) Securities available-for-sale are reported at fair value and securities held-to-maturity are reported at amortized cost. ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES Page 14 RECONCILIATION OF GAAP NET INCOME TO NON-GAAP NET INCOME (1) ------------------------------------------------------------ (In Thousands, Except Per Share Data) Non-GAAP net income, non-GAAP earnings per share and non-GAAP returns, representing net income and earnings per share determined in accordance with GAAP excluding the effects of the after-tax charges noted below, provide a meaningful comparison for effectively evaluating Astoria's operating results. For the Three Months Ended September 30, 2008 ------------------ Adjustments Non-GAAP GAAP (2) (1) ------- ----------- -------- Net interest income $107,073 $- $107,073 Provision for loan losses 13,000 - 13,000 ----- ---- ----- Net interest income after provision for loan losses 94,073 - 94,073 Non-interest (loss) income (55,298) 77,696 22,398 Non-interest expense 58,804 - 58,804 ----- ---- ----- (Loss) income before income tax (benefit) expense (20,029) 77,696 57,667 Income tax (benefit) expense (3,570) 19,816 16,246 ----- ----- ----- Net (loss) income $(16,459) $57,880 $41,421 ------ ----- ----- Basic (loss) earnings per common share $(0.18) $0.65 $0.46 (3) ----- ---- ---- -- Diluted (loss) earnings per common share $(0.18) $0.64 $0.46 ----- ---- ---- For the Nine Months Ended September 30, 2008 ------------------ Adjustments Non-GAAP GAAP (2) (1) ---- ----------- -------- Net interest income $280,439 $- $280,439 Provision for loan losses 24,000 - 24,000 ----- ---- ----- Net interest income after provision for loan losses 256,439 - 256,439 Non-interest (loss) income (8,028) 77,696 69,668 Non-interest expense 177,015 - 177,015 ------ ---- ------- (Loss) income before income tax (benefit) expense 71,396 77,696 149,092 Income tax (benefit) expense 25,502 19,816 45,318 ----- ----- ----- Net (loss) income $45,894 $57,880 $103,774 ----- ----- ------ Basic (loss) earnings per common share $0.51 $0.65 $1.16 ---- ---- ---- Diluted (loss) earnings per common share $0.51 $0.64 $1.14 (3) ---- ---- ---- -- ----------------------------------------- (1) Non-GAAP net income is also referred to as operating income and operating EPS throughout this release. (2) Adjustments relate to the other-than-temporary impairment write-down of securities charge and the related tax effects recorded in the 2008 third quarter. (3) Figures do not cross foot due to rounding.
