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Astoria Financial Corp. Reports Operating Results (10-K)
Posted by: gurufocus (IP Logged)
Date: February 25, 2011 04:29PM
Astoria Financial Corp. (AF) filed Annual Report for the period ended 2010-12-31.
Highlight of Business Operations:
We originate mortgage loans either directly through our banking and loan production offices in New York or indirectly through brokers and our third party loan origination program. Mortgage loan originations and purchases for portfolio totaled $2.89 billion for the year ended December 31, 2010 and $3.16 billion for the year ended December 31, 2009. Our retail loan origination program accounted for $1.22 billion of portfolio originations during 2010 and $781.0 million during 2009. We also have an extensive broker network covering sixteen states and the District of Columbia. Our broker loan origination program consists of relationships with mortgage brokers and accounted for $1.23 billion of portfolio originations during 2010 and $1.99 billion during 2009. Our third party loan origination program includes relationships with other financial institutions and mortgage bankers covering seventeen states and the District of Columbia and accounted for portfolio purchases of $438.6 million during 2010 and $390.3 million during 2009. Mortgage loans purchased through our third party loan origination program are subject to the same underwriting standards as our retail and broker originations. Our various loan origination programs provide efficient and diverse delivery channels for deployment of our cash flows. Additionally, our broker and third party loan origination programs provide geographic diversification, reducing our exposure to concentrations of credit risk. At December 31, 2010, $5.42 billion, or 39.2%, of our total mortgage loan portfolio was secured by properties located in New York and $8.41 billion, or 60.8%, of our total mortgage loan portfolio was secured by properties located in 37 other states and the District of Columbia. Excluding New York, we have a concentration of greater than 5.0% of our total mortgage loan portfolio in five states: 9.7% in Illinois, 8.0% in New Jersey, 8.0% in Connecticut, 6.2% in California and 5.5% in Massachusetts.
We also originate mortgage loans for sale. Generally, we originate fifteen and thirty year fixed rate one-to-four family mortgage loans that conform to GSE guidelines for sale to various GSEs or other investors on a servicing released or retained basis. The sale of such loans is generally arranged through a master commitment on a mandatory delivery or best efforts basis. Originations of one-to-four family mortgage loans held-for-sale totaled $289.8 million in 2010 and $412.4 million in 2009, substantially all of which were originated through our retail loan origination program. Loans serviced for others totaled $1.44 billion at December 31, 2010.
Our primary lending emphasis is on the origination and purchase of first mortgage loans secured by one-to-four family properties that serve as the primary residence of the owner. To a much lesser degree, we have made loans secured by non-owner occupied one-to-four family properties acquired as an investment by the borrower, although we discontinued originating such loans in January 2008. We also originate a limited number of second home mortgage loans. At December 31, 2010, $10.86 billion, or 76.8%, of our total loan portfolio consisted of one-to-four family mortgage loans, of which $9.50 billion, or 87.5%, were hybrid adjustable rate mortgage, or ARM, loans and $1.36 billion, or 12.5%, were fixed rate loans. One-to-four family loan originations and purchases for portfolio totaled $2.89 billion in 2010 and $3.15 billion in 2009.
While we are primarily a one-to-four family mortgage lender, we also originate multi-family and commercial real estate loans. At December 31, 2010, $2.19 billion, or 15.5%, of our total loan portfolio consisted of multi-family mortgage loans and $771.7 million, or 5.5%, of our total loan portfolio consisted of commercial real estate loans. Included in our multi-family and commercial real estate loan portfolios are mixed use loans secured by properties which are intended for both residential and business use and are classified as multi-family or commercial real estate based on the greater number of residential versus commercial units. The multi-family and commercial real estate loans in our portfolio consist of both fixed rate and adjustable rate loans which were originated at prevailing market rates. Multi-family and commercial real estate loans are generally five to fifteen year term balloon loans amortized over fifteen to thirty years. We have also originated interest-only multi-family and commercial real estate loans to qualified borrowers. Such loans were underwritten on the basis of a fully amortizing loan. Multi-family and commercial real estate interest-only loans differ from one-to-four family interest-only loans in that the interest-only period for multi-family and commercial real estate loans generally ranges from one to five years and such loans typically provide for balloon payments at maturity. During the 2009 first quarter, we stopped offering interest-only multi-family and commercial real estate loans. Our portfolio of multi-family and commercial real estate interest-only loans totaled $340.0 million, or 11.5% of our total multi-family and commercial real estate loan portfolio at December 31, 2010 and was comprised primarily of multi-family loans.
At December 31, 2010, $15.1 million, or 0.1%, of our total loan portfolio consisted of construction loans. We stopped originating construction loans in the first quarter of 2007. We offered construction loans for all types of residential properties and certain commercial real estate properties. Generally, construction loan terms run between one and two years and are interest-only, adjustable rate loans indexed to the prime rate. We generally offered construction loans up to a maximum of $10.0 million. As of December 31, 2010, our average construction loan commitment was approximately $4.7 million and the average outstanding balance of loans in our construction loan portfolio was approximately $3.1 million.
For individual loans with balances of $10.0 million or less, loan approval authority has been delegated by the Board of Directors to members of our Loan Committee and Executive Loan Committee, which consist of certain members of executive management and other Astoria Federal officers. For loans with balances between $10.0 million and up to $15.0 million, the approval of one executive officer and two non-officer directors is required. For individual loans with balances in excess of $15.0 million or when the overall lending relationship exceeds $60.0 million (unless the Board of Directors has set a higher limit with respect to a particular borrower), approval by the Board of Directors is required.
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