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SEC Filings, Earing Reports, Press Releases
Astoria Financial Corp. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: August 7, 2012 06:22PM
Astoria Financial Corp. (AF) filed Quarterly Report for the period ended 2012-06-30. Astoria Financial Corp has a market cap of $944.1 million; its shares were traded at around $9.77 with a P/E ratio of 20 and P/S ratio of 1.2. The dividend yield of Astoria Financial Corp stocks is 1.7%.
Highlight of Business Operations:We are impacted by both national and regional economic factors. With one-to-four family mortgage loans from various regions of the country held in our portfolio, the condition of the national economy impacts our earnings. During 2011 and continuing into 2012, the U.S. economy has shown signs of a very slow and tenuous recovery from the recession experienced since 2008. The national unemployment rate, while still at a high level, has reflected some declines from its peak of 10.0% for October 2009. The national unemployment rate ranged from 8.5% to 8.1% during the first half of 2012, somewhat improved compared to the 2011 first half range from 9.4% to 8.9%. Softness in the housing and real estate markets persists, although the extent of such softness varies from region to region. With respect to our multi-family mortgage loan origination activities, primarily focused in New York, we have observed favorable market conditions during the first half of 2012.
The fair value of our securities portfolio is primarily impacted by changes in interest rates. In general, as interest rates rise, the fair value of fixed rate securities will decrease; as interest rates fall, the fair value of fixed rate securities will increase. We conduct a periodic review and evaluation of the securities portfolio to determine if a decline in the fair value of any security below its cost basis is other-than-temporary. Our evaluation of other-than-temporary impairment, or OTTI, considers the duration and severity of the impairment, our assessments of the reason for the decline in value, the likelihood of a near-term recovery and our intent and ability to not sell the securities. We generally view changes in fair value caused by changes in interest rates as temporary, which is consistent with our experience. If such decline is deemed other-than-temporary, the security is written down to a new cost basis and the resulting loss is charged to earnings as a component of non-interest income, except for the amount of the total OTTI for a debt security that does not represent credit losses which is recognized in other comprehensive income/loss, net of applicable taxes. At June 30, 2012, we held 34 securities with an estimated fair value totaling $237.9 million which had an unrealized loss totaling $1.0 million. Of the securities in an unrealized loss position at June 30, 2012, $13.2 million, with an unrealized loss of $128,000, have been in a continuous unrealized loss position for more than twelve months. At June 30, 2012, the impairments are deemed temporary based on (1) the direct relationship of the decline in fair value to movements in interest rates, (2) the estimated remaining life and high credit quality of the investments and (3) the fact that we do not intend to sell these securities and it is not more likely than not that we will be required to sell these securities before their anticipated recovery of the remaining amortized cost basis and we expect to recover the entire amortized cost basis of the security.
Securities repayments of $539.6 million and sales of $51.8 million were in excess of securities purchased totaling $497.1 million during the six months ended June 30, 2012 and resulted in a decrease of $103.3 million in the securities portfolio to $2.37 billion at June 30, 2012, compared to $2.47 billion at December 31, 2011. However, we expect to maintain our securities portfolio at approximately the June 30, 2012 level throughout the remainder of 2012. At June 30, 2012, our securities portfolio was comprised primarily of fixed rate REMIC and CMO securities which had an amortized cost of $2.25 billion, a weighted average current coupon of 3.46%, a weighted average collateral coupon of 4.80% and a weighted average life of 2.4 years. For additional information regarding our securities portfolio, see Note 2 of Notes to Consolidated Financial Statements in Item 1, Financial Statements (Unaudited).
Net income for the three months ended June 30, 2012 decreased $4.0 million to $12.8 million, from $16.8 million for the three months ended June 30, 2011, reflecting a lower level of net interest income and non-interest income, partially offset by a reduction in non-interest expense. Diluted earnings per common share was $0.13 per share for the three months ended June 30, 2012, compared to $0.18 per share for the three months ended June 30, 2011. Return on average assets was 0.30% for the three months ended June 30, 2012, compared to 0.39% for the three months ended June 30, 2011. Return on average stockholders equity was 4.02% for the three months ended June 30, 2012, compared to 5.31% for the three months ended June 30, 2011. Return on average tangible stockholders equity, which represents average stockholders equity less average goodwill, was 4.70% for the three months ended June 30, 2012, compared to 6.21% for the three months ended June 30, 2011.
Net income for the six months ended June 30, 2012 decreased $21.4 million to $22.8 million, from $44.2 million for the six months ended June 30, 2011, primarily due to a decrease in net interest income and increases in non-interest expense and provision for loan losses. Diluted earnings per common share was $0.24 per share for the six months ended June 30, 2012, compared to $0.46 per share for the six months ended June 30, 2011. Return on average assets was 0.27% for the six months ended June 30, 2012, compared to 0.50% for the six months ended June 30, 2011. Return on average stockholders equity was 3.61% for the six months ended June 30, 2012, compared to 7.03% for the six months ended June 30, 2011. Return on average tangible stockholders equity was 4.23% for the six months ended June 30, 2012, compared to 8.24% for the six months ended June 30, 2011. Our results of operations for the six months ended June 30, 2012 include net charges of $3.4 million ($2.2 million, after tax) included in non-interest expense associated with cost control initiatives implemented in the 2012 first quarter. See Non-Interest Expense for additional information on the cost control initiatives implemented in the 2012 first quarter. The decreases in the returns on average assets, average stockholders equity and average tangible stockholders equity for the three and six months ended June 30, 2012, compared to the three and six months ended June 30, 2011, were primarily due to the decreases in net income.
Stocks Discussed: AF,