Astoria Takes Hit On GSE Preferreds

Astoria Financial Corp. here saw its net income decline from $37.1 million in the fourth quarter of 2006 to $19.7 million in the fourth quarter of 2007.

However, the company said its operating income was down only slightly from last year if the impairment of preferred stock in Freddie Mac is excluded from the results. The company took a non-cash charge of $13.3 million relating to its Freddie Mac-preferred shares. Astoria also took a $3.7 million after-tax charge related to the termination of interest rate swap agreements earlier in the year.

George Engelke, chairman and CEO of Astoria Financial, said that the quarterly and full-year results "were in line with our expectations" given the negative impact of a flat to inverted yield curve. He said the Federal Reserve Board's recent interest rate cuts have created a more positively sloped yield curve, which should benefit the portfolio lender.

Astoria said that nonperforming assets increased by $24 million in the fourth quarter, totaling $106.3 million, or 0.49% of total assets, at the end of the year. The rise primarily reflected an increase in overdue payments on single-family home loans. (c) 2008 Mortgage Servicing News and SourceMedia, Inc. All Rights Reserved. http://www.mortgageservicingnews.com/ http://www.sourcemedia.com/

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