Astoria Profits Helped by Freddie Mac Stock Sale

Astoria Financial Corp., Lake Success, N.Y., had 4Q12 profits of $17 million, helped by a nearly $4 million after-tax gain from the sale of its Freddie Mac preferred stock. One year prior, the company had profits of $12 million.

For the full year, profits were $53 million, down from $67 million for 2011.

The company’s return to the multifamily/commercial real estate lending market continues to gain steam, as these loans now make up 24% of its portfolio, up from 18% as of Dec. 31, 2011.

In its press release, Astoria said its sale of the Freddie Mac stock, which had been written off in prior years as an impaired asset, had the effect of reducing the net deferred tax asset and eliminated the potential risk for the exclusion of the DTA related to the Freddie Mac stock from regulatory capital in the future.

Astoria’s geographic market was heavily impacted by Hurricane Sandy. Repair and recovery costs as a result of the storm reflected in non-interest expense totaled $855,000. In addition, Astoria contributed relief donations of $154,000 and waived banking fees of approximately $328,000 for customers impacted by the storm.

“From a credit standpoint, we have not currently experienced any notable increase in missed loan payments,” it added.

Astoria’s residential lending business is for its own portfolio, meaning it mostly deals in adjustable rate mortgages, a product which does not sell well to consumers in low interest rate environments.

Its portfolio of these loans decreased to $9.7 billion at the end of last year, down by $528.2 million from Sept. 30, 2012 and $850.3 million from Dec. 31, 2011. This was a result of prepayments exceeding new originations.

For the quarter and year ended Dec. 31, 2012, residential loan originations for portfolio totaled $220.4 million and $2.5 billion, respectively, compared to $1.1 billion and $3.5 billion, respectively, for the comparable 2011 periods.

On the other hand, multifamily/CRE production for 4Q12 and FY12 totaled $383.4 million and $1.6 billion, respectively, compared to $202.9 million and $204 million, respectively, for the comparable 2011 periods.

Monte Redman, president and CEO, said, "I am very pleased that our 2012 MF/CRE loan production exceeded our expectations, which demonstrates the success achieved since re-entering this business in late 2011. We remain confident that our continued focus on MF/CRE lending will further enhance our franchise and benefit the net interest margin and future profitability."

In terms of asset quality, as of the end of the year, residential nonperforming loans totaled $291.1 million, MF/CRE NPLs totaled $17.5 million and consumer and other NPLs totaled $6.5 million, compared to $294.7 million, $21.4 million and $6.1 million, respectively, at Sept. 30, 2012.