Astoria Financial Corporation Reports 2016 Fourth Quarter and Full Year Earnings Per Common Share of $0.14 and $0.62, Respectively

LAKE SUCCESS, N.Y., Jan. 25, 2017 /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 $13.7 million, or $0.14 diluted earnings per common share ("diluted EPS"), for the quarter ended December 31, 2016, compared to net income available to common shareholders of $16.2 million, or $0.16 diluted EPS, for the quarter ended December 31, 2015. For the year ended December 31, 2016, net income available to common shareholders totaled $62.8 million, or $0.62 diluted EPS compared to $79.3 million, or $0.79 diluted EPS, for the comparable 2015 period.  Included in the 2015 full year 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 related to New York City. 

Monte N. Redman, President and Chief Executive Officer of Astoria, commenting on the results stated, "During 2016, we continued our emphasis on growing core deposits which grew by $164.3 million and now represent 82% of total deposits, up from 78% at year end 2015."

Board Declares Quarterly Cash Dividend of $0.04 Per Share; Sets Annual Shareholder Meeting Date

The Board of Directors of the Company, at its January 25, 2017 meeting, declared a quarterly cash dividend of $0.04 per common share.  The dividend is payable on March 1, 2017 to shareholders of record as of February 15, 2017.  This is the eighty seventh consecutive quarterly cash dividend declared by the Company. In addition, the Board established June 7, 2017 as the date for the Annual Meeting of Shareholders, and set April 14, 2017 as the voting record date.

Fourth Quarter and Full Year Earnings Summary

Net interest income for the quarter ended December 31, 2016 totaled $81.6 million compared to $83.6 million for the previous quarter and $84.7 million for the 2015 fourth quarter.  The net interest margin for the quarter ended December 31, 2016 was 2.37%, down slightly from 2.39% for both the previous and year ago quarters. For the year ended December 31, 2016, net interest income totaled $331.6 million, compared to $340.3 million for the comparable 2015 period, and the net interest margin was 2.37% for the year ended December 31, 2016, up slightly from 2.36% for the year ended December 31, 2015.

For the quarter ended December 31, 2016, a $2.0 million loan loss release was recorded compared to a $1.0 million release in the prior quarter and a $4.3 million loan loss release recorded in the 2015 fourth quarter. For the year ended December 31, 2016, we recorded a loan loss release of $9.2 million compared to a $12.1 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, 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 December 31, 2016 totaled $14.9 million, compared to $12.8 million for the previous quarter and $13.5 million for the 2015 fourth quarter. These increases are primarily due to an increase in mortgage banking income, net.  Non-interest income for the year ended December 31, 2016 totaled $51.0 million compared to $54.6 million for the comparable 2015 period. This  decrease is primarily due to decreases in both customer service fees and mortgage banking income, net. 

General and administrative ("G&A") expense for the quarter ended December 31, 2016 totaled $71.2 million compared to $68.7 million for the previous quarter and $74.5 million for the 2015 fourth quarter.  For the year ended December 31, 2016, G&A expense totaled $279.5 million, down from $289.1 million for the 2015 comparable period. The decrease for the twelve month period ended December 31, 2016 was primarily attributable to decreases in FDIC insurance premiums and advertising expense. Included in the 2016 fourth quarter and full year results are merger related expenses of $1.8 million and $2.7 million, respectively, compared to $4.1 million in both the 2015 fourth quarter and full-year results.

Balance Sheet Summary

Total assets at December 31, 2016 were $14.6 billion, a decrease of $517.6 million from December 31, 2015. The decrease was primarily due to a decline in the loan portfolio which decreased $735.9 million from December 31, 2015 and totaled $10.4 billion at December 31, 2016, partially offset by an increase in the securities portfolio of $306.6 million over the same time period. 

The MF/CRE mortgage loan portfolio totaled $4.8 billion at December 31, 2016, a decrease of $67.7 million from December 31, 2015 and represents 46% of the total loan portfolio.  For the quarter and year ended December 31, 2016, MF/CRE loan originations totaled $97.5 million and $717.7 million, respectively, compared to $300.4 million and $890.7 million, for the 2015 comparable periods. The MF/CRE loan production for the quarter and year ended December 31, 2016 were originated with weighted average loan-to-value ratios of approximately 34% and 43%, respectively, and weighted average debt coverage ratios of approximately 2.17 and 1.65, respectively. MF/CRE loan prepayments for the quarter and year ended December 31, 2016 totaled $133.0 million and $638.9 million, respectively, compared to $156.8 million and $689.4 million for the comparable 2015 periods. At December 31, 2016, the MF/CRE pipeline totaled approximately $142.7 million.    

The residential mortgage loan portfolio totaled $5.4 billion at December 31, 2016 compared to $6.0 billion at December 31, 2015.  For the quarter and year ended December 31, 2016, residential loan originations for portfolio totaled $239.7 million and $763.9 million, respectively, compared to $102.9 million and $616.9 million for the 2015 comparable periods.  The weighted average loan-to-value ratio of the residential loan production for portfolio at origination was approximately 58% and 60%, respectively, for the quarter and year ended December 31, 2016.  Residential loan prepayments for the quarter and year ended December 31, 2016 totaled $306.1 million and $1.1 billion, respectively, compared to $243.9 million and $1.2 billion for the comparable 2015 periods. At December 31, 2016, the residential mortgage pipeline totaled approximately $251.4 million.

Total deposits were $8.9 billion at December 31, 2016, a decrease of $229.0 million since year end 2015. Core deposits increased to $7.3 billion at December 31, 2016 from $7.1 billion at December 31, 2015.  At December 31, 2016, core deposits represented 82% of total deposits and had a weighted average rate of 12 basis points. Certificates of deposit decreased by $393.3 million over the same time period and had a weighted average rate of 101 basis points at December 31, 2016.

Stockholders' equity totaled $1.71 billion, or 11.77% of total assets at December 31, 2016, an increase of $50.6 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 December 31, 2016, Tier 1 leverage, Common Equity Tier 1 risk based, Tier 1 risk-based and Total risk-based capital ratios were 12.09%, 20.85%, 20.85% and 21.88%, respectively for Astoria Bank, and 10.85%,17.29%, 18.78% and 19.81%, respectively for Astoria Financial Corporation.  At December 31, 2016, Astoria Financial Corporation's tangible common equity ratio was 9.73%.

Asset Quality

Non-performing loans ("NPLs"), totaled $148.2 million, or 1.42% of total loans, at December 31, 2016, compared to $138.2 million, or 1.24% of total loans, at December 31, 2015. Included in the NPLs at December 31, 2016 is $40.9 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 December 31, 2016 were $241.7 million compared to $243.7 million at December 31, 2015. Net recoveries for the quarter ended December 31, 2016 totaled $423,000 compared to net charge-offs of $1.3 million in the previous quarter and $1.2 million in the 2015 fourth quarter.  For the year ended December 31, 2016, net charge-offs totaled $2.7 million compared to $1.5 million for the 2015 comparable period.  Other real estate owned declined to $15.1 million at December 31, 2016, compared to $19.8 million at December 31, 2015.

About Astoria Financial Corporation

Astoria Financial Corporation, with assets of $14.6 billion, is the holding company for Astoria Bank.  Established in 1888, Astoria Bank, with deposits in New York totaling $8.9 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; the impact of the termination of the merger agreement with NYCB, including and resulting changes in our operations; 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 those that may be implemented by the new administration in Washington, D.C; 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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