The head of Astoria Financial Corp. declared the outlook for residential mortgage portfolio lenders "remains challenging.
George Engleke, chairman and chief executive of the Lake Success, N.Y.-based thrift holding company, explained that companies like his would continue to suffer as long as the government subsidizes the market to keep 30-year fixed-rate conforming mortgage rates below normal market levels. Astoria originates 30-year FRMs but sells them and does not portfolio any.
In addition, the extension of the expanded conforming market limits will likely mean elevated levels of prepayment activity will continue to outpace Astoria's loan production, he said.
Total assets decreased at Astoria by $733 million from the previous quarter, as the total loan portfolio decreased $467 million during that period and by $882 million over the previous 12 months. The single-family loan portfolio shrunk from $11.7 billion at the end of the second quarter to $11.4 billion at the end of the third.
Those low rates and higher limits caused the reduction in Astoria's balance sheet, Engleke said, because his company is a jumbo hybrid adjustable-rate mortgage portfolio lender.
Residential mortgage originations for the portfolio in the third quarter were $647 million, down from $1.2 billion one year prior. Loan prepayments of one-to-four family loans for the third quarter were $849 million.
Astoria reported net income of $21.5 million for the third quarter, up from $8 million for the same period in 2009, as asset quality improved.
