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EX-31.1 - EXHIBIT 31.1 - ASTORIA FINANCIAL CORPaf20160331ex31d1.htm
EX-31.2 - EXHIBIT 31.2 - ASTORIA FINANCIAL CORPaf20160331ex31d2.htm
EX-32.1 - EXHIBIT 32.1 - ASTORIA FINANCIAL CORPaf20160331ex32d1.htm

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q

x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2016

OR
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from         to        

Commission file number 001-11967

ASTORIA FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
 
11-3170868
(State or other jurisdiction of
 
(I.R.S. Employer Identification
incorporation or organization)
 
Number)
 
 
 
One Astoria Bank Plaza, Lake Success, New York
 
11042-1085
(Address of principal executive offices)
 
(Zip Code)

(516) 327-3000
(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
YES x  NO ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). YES x  NO ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company (as these items are defined in Rule 12b-2 of the Exchange Act).
Large accelerated filer x Accelerated filer ¨    Non-accelerated filer ¨    Smaller reporting company ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
YES ¨  NO x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
 
 
Classes of Common Stock
 
Number of Shares Outstanding, April 29, 2016
 
$0.01 Par Value
 
101,406,677



 
 
Page
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 




1


ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Financial Condition

 
 
(Unaudited)
 
 
 
 
 
(In Thousands, Except Share Data)
At March 31, 2016
 
At December 31, 2015
Assets:
 
 

 
 
 
 

 
Cash and due from banks
 
$
186,051

 
 
 
$
200,538

 
Available-for-sale securities:
 
 

 
 
 
 

 
Encumbered
 
82,444

 
 
 
81,481

 
Unencumbered
 
306,434

 
 
 
335,317

 
Total available-for-sale securities
 
388,878

 
 
 
416,798

 
Held-to-maturity securities, fair value of $2,469,458 and $2,286,092, respectively:
 
 

 
 
 
 

 
Encumbered
 
1,112,134

 
 
 
1,123,480

 
Unencumbered
 
1,331,369

 
 
 
1,173,319

 
Total held-to-maturity securities
 
2,443,503

 
 
 
2,296,799

 
Federal Home Loan Bank of New York stock, at cost
 
131,582

 
 
 
131,137

 
Loans held-for-sale, net
 
7,672

 
 
 
8,960

 
Loans receivable
 
11,005,081

 
 
 
11,153,081

 
Allowance for loan losses
 
(94,200
)
 
 
 
(98,000
)
 
Loans receivable, net
 
10,910,881

 
 
 
11,055,081

 
Mortgage servicing rights, net
 
9,900

 
 
 
11,014

 
Accrued interest receivable
 
36,139

 
 
 
34,996

 
Premises and equipment, net
 
108,172

 
 
 
109,758

 
Goodwill
 
185,151

 
 
 
185,151

 
Bank owned life insurance
 
441,935

 
 
 
439,646

 
Real estate owned, net
 
12,691

 
 
 
19,798

 
Other assets
 
160,982

 
 
 
166,535

 
Total assets
 
$
15,023,537

 
 
 
$
15,076,211

 
Liabilities:
 
 

 
 
 
 

 
Deposits:
 
 

 
 
 
 

 
NOW and demand deposit
 
$
2,482,665

 
 
 
$
2,413,823

 
Money market
 
2,635,057

 
 
 
2,560,204

 
Savings
 
2,136,721

 
 
 
2,137,818

 
Certificates of deposit
 
1,797,096

 
 
 
1,994,182

 
Total deposits
 
9,051,539

 
 
 
9,106,027

 
Federal funds purchased
 
355,000

 
 
 
435,000

 
Reverse repurchase agreements
 
1,100,000

 
 
 
1,100,000

 
Federal Home Loan Bank of New York advances
 
2,195,000

 
 
 
2,180,000

 
Other borrowings, net
 
249,354

 
 
 
249,222

 
Mortgage escrow funds
 
163,231

 
 
 
115,435

 
Accrued expenses and other liabilities
 
227,612

 
 
 
227,079

 
Total liabilities
 
13,341,736

 
 
 
13,412,763

 
Stockholders’ Equity:
 
 

 
 
 
 

 
Preferred stock, $1.00 par value; 5,000,000 shares authorized:
 
 

 
 
 
 

 
Series C (150,000 shares authorized; and 135,000 shares issued and outstanding)
 
129,796

 
 
 
129,796

 
Common stock, $0.01 par value (200,000,000 shares authorized; 166,494,888 shares issued; and 101,406,550 and 100,721,358 shares outstanding, respectively)
 
1,665

 
 
 
1,665

 
Additional paid-in capital
 
893,648

 
 
 
902,349

 
Retained earnings
 
2,053,897

 
 
 
2,045,391

 
Treasury stock (65,088,338 and 65,773,530 shares, at cost, respectively)
 
(1,342,998
)
 
 
 
(1,357,136
)
 
Accumulated other comprehensive loss
 
(54,207
)
 
 
 
(58,617
)
 
Total stockholders’ equity
 
1,681,801

 
 
 
1,663,448

 
Total liabilities and stockholders’ equity
 
$
15,023,537

 
 
 
$
15,076,211

 
See accompanying Notes to Consolidated Financial Statements.

2


ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Income (Unaudited)

 
For the 
 Three Months Ended 
 March 31,
(In Thousands, Except Share Data)
2016
 
2015
Interest income:
 

 
 

Residential mortgage loans
$
47,375

 
$
53,962

Multi-family and commercial real estate mortgage loans
46,805

 
47,492

Consumer and other loans
2,372

 
2,190

Mortgage-backed and other securities
16,904

 
15,070

Interest-earning cash accounts
120

 
89

Federal Home Loan Bank of New York stock
1,421

 
1,522

Total interest income
114,997

 
120,325

Interest expense:
 

 
 

Deposits
7,462

 
10,729

Borrowings
24,283

 
23,875

Total interest expense
31,745

 
34,604

Net interest income
83,252

 
85,721

Provision for loan losses credited to operations
(3,127
)
 
(343
)
Net interest income after provision for loan losses
86,379

 
86,064

Non-interest income:
 

 
 

Customer service fees
6,988

 
8,211

Other loan fees
534

 
553

Gain on sales of securities
86

 

Mortgage banking (loss) income, net
(37
)
 
327

Income from bank owned life insurance
2,289

 
2,197

Other
1,541

 
1,645

Total non-interest income
11,401

 
12,933

Non-interest expense:
 

 
 

General and administrative:
 

 
 

Compensation and benefits
38,253

 
36,281

Occupancy, equipment and systems
19,391

 
19,658

Federal deposit insurance premium
3,530

 
4,201

Advertising
1,453

 
2,264

Other
6,895

 
7,708

Total non-interest expense
69,522

 
70,112

Income before income tax expense
28,258

 
28,885

Income tax expense
9,693

 
9,578

Net income
18,565

 
19,307

Preferred stock dividends
2,194

 
2,194

Net income available to common shareholders
$
16,371

 
$
17,113

 
 
 
 
Basic earnings per common share
$
0.16

 
$
0.17

Diluted earnings per common share
$
0.16

 
$
0.17

 
 
 
 
Basic weighted average common shares outstanding
100,368,931

 
99,252,031

Diluted weighted average common shares outstanding
100,368,931

 
99,252,031


See accompanying Notes to Consolidated Financial Statements.

3


ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Comprehensive Income (Unaudited)

 
For the 
 Three Months Ended 
 March 31,
(In Thousands)
2016
 
2015
 
 
 
 
Net income
$
18,565

 
$
19,307

 
 
 
 
Other comprehensive income, net of tax:
 

 
 

Net unrealized gain on securities available-for-sale:
 
 
 
Net unrealized holding gain on securities arising during the period
4,036

 
1,993

Reclassification adjustment for gain on sales of securities included in net income
(51
)
 

Net unrealized gain on securities available-for-sale
3,985

 
1,993

 
 
 
 
Reclassification adjustment for net actuarial loss on pension plans and other postretirement benefits included in net income
397

 
469

 
 
 
 
Reclassification adjustment for prior service cost on pension plans and other postretirement benefits included in net income
28

 
29

 
 
 
 
Total other comprehensive income, net of tax
4,410

 
2,491

 
 
 
 
Comprehensive income
$
22,975

 
$
21,798


See accompanying Notes to Consolidated Financial Statements.


4


ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES
Consolidated Statement of Changes in Stockholders’ Equity (Unaudited)
For the Three Months Ended March 31, 2016 and 2015

(In Thousands, Except Share Data)
Total
 
Preferred Stock
 
Common Stock
 
Additional Paid-in Capital
 
Retained Earnings
 
Treasury Stock
 
Accumulated Other Comprehensive Loss
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at December 31, 2015
$
1,663,448

 
$
129,796

 
$
1,665

 
$
902,349

 
$
2,045,391

 
$
(1,357,136
)
 
 
$
(58,617
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income
18,565

 

 

 

 
18,565

 

 
 

 
Other comprehensive income, net of tax
4,410

 

 

 

 

 

 
 
4,410

 
Dividends on preferred stock ($16.25 per share)
(2,194
)
 

 

 

 
(2,194
)
 

 
 

 
Dividends on common stock ($0.04 per share)
(4,053
)
 

 

 

 
(4,053
)
 

 
 

 
Sales of treasury stock (2,710 shares)
41

 

 

 

 
(15
)
 
56

 
 

 
Restricted stock grants (685,872 shares)

 

 

 
(10,329
)
 
(3,823
)
 
14,152

 
 

 
Forfeitures of restricted stock (3,390 shares)

 

 

 
45

 
25

 
(70
)
 
 

 
Stock-based compensation
1,581

 

 

 
1,580

 
1

 

 
 

 
Net tax benefit excess from stock-based compensation
3

 

 

 
3

 

 

 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at March 31, 2016
$
1,681,801

 
$
129,796

 
$
1,665

 
$
893,648

 
$
2,053,897

 
$
(1,342,998
)
 
 
$
(54,207
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at December 31, 2014
$
1,580,070

 
$
129,796

 
$
1,665

 
$
897,049

 
$
1,992,833

 
$
(1,375,322
)
 
 
$
(65,951
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income
19,307

 

 

 

 
19,307

 

 
 

 
Other comprehensive income, net of tax
2,491

 

 

 

 

 

 
 
2,491

 
Dividends on preferred stock ($16.25 per share)
(2,194
)
 

 

 

 
(2,194
)
 

 
 

 
Dividends on common stock ($0.04 per share)
(3,995
)
 

 

 

 
(3,995
)
 

 
 

 
Sales of treasury stock (471,680 shares)
6,009

 

 

 

 
(3,739
)
 
9,748

 
 

 
Restricted stock grants (26,232 shares)

 

 

 
(330
)
 
(212
)
 
542

 
 

 
Forfeitures of restricted stock (41,404 shares)

 

 

 
478

 
378

 
(856
)
 
 

 
Stock-based compensation
1,608

 

 

 
1,597

 
11

 

 
 

 
Net tax benefit shortfall from stock-based compensation
(6
)
 

 

 
(6
)
 

 

 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at March 31, 2015
$
1,603,290

 
$
129,796

 
$
1,665

 
$
898,788

 
$
2,002,389

 
$
(1,365,888
)
 
 
$
(63,460
)
 

See accompanying Notes to Consolidated Financial Statements.


5


ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Unaudited)

 
For the Three Months Ended March 31,
(In Thousands)
2016
 
2015
Cash flows from operating activities:
 
 

 
 
 
 

 
Net income
 
$
18,565

 
 
 
$
19,307

 
Adjustments to reconcile net income to net cash provided by operating activities:
 
 

 
 
 
 

 
Net amortization on loans
 
2,310

 
 
 
2,883

 
Net amortization on securities and borrowings
 
1,822

 
 
 
2,322

 
Net provision for loan and real estate losses credited to operations
 
(2,918
)
 
 
 
(181
)
 
Depreciation and amortization
 
3,694

 
 
 
3,024

 
Net gain on sales of loans and securities
 
(518
)
 
 
 
(463
)
 
Mortgage servicing rights amortization and valuation allowance adjustments, net
 
1,404

 
 
 
1,130

 
Stock-based compensation
 
1,581

 
 
 
1,608

 
Deferred income tax expense
 
75

 
 
 
1,191

 
Originations of loans held-for-sale
 
(27,258
)
 
 
 
(27,463
)
 
Proceeds from sales and principal repayments of loans held-for-sale
 
28,288

 
 
 
27,585

 
Increase in accrued interest receivable
 
(1,143
)
 
 
 
(580
)
 
Bank owned life insurance income and insurance proceeds received, net
 
(2,289
)
 
 
 
(2,197
)
 
Decrease in other assets
 
2,572

 
 
 
2,457

 
Increase (decrease) in accrued expenses and other liabilities
 
1,219

 
 
 
(1,847
)
 
Net cash provided by operating activities
 
27,404

 
 
 
28,776

 
Cash flows from investing activities:
 
 

 
 
 
 

 
Originations of loans receivable
 
(309,871
)
 
 
 
(389,387
)
 
Loan purchases through third parties
 
(29,048
)
 
 
 
(49,855
)
 
Principal payments on loans receivable
 
482,897

 
 
 
563,529

 
Proceeds from sales of delinquent and non-performing loans
 
400

 
 
 
5,806

 
Purchases of securities held-to-maturity
 
(354,392
)
 
 
 
(93,428
)
 
Purchases of securities available-for-sale
 

 
 
 
(37,049
)
 
Principal payments on securities held-to-maturity
 
206,196

 
 
 
105,752

 
Principal payments on securities available-for-sale
 
11,447

 
 
 
10,949

 
Proceeds from sales of securities available-for-sale
 
23,065

 
 
 

 
Net purchases of Federal Home Loan Bank of New York stock
 
(445
)
 
 
 
(868
)
 
Proceeds from sales of real estate owned, net
 
7,863

 
 
 
6,670

 
Purchases of premises and equipment, net of proceeds from sales
 
(2,108
)
 
 
 
(2,977
)
 
Net cash provided by investing activities
 
36,004

 
 
 
119,142

 
Cash flows from financing activities:
 
 

 
 
 
 

 
Net decrease in deposits
 
(54,488
)
 
 
 
(97,880
)
 
Net decrease in borrowings with original terms of three months or less
 
(270,000
)
 
 
 
(74,000
)
 
Repayments of borrowings with original terms greater than three months
 
(345,000
)
 
 
 

 
Proceeds from borrowings with terms greater than three months
 
550,000

 
 
 

 
Net increase in mortgage escrow funds
 
47,796

 
 
 
46,729

 
Proceeds from sales of treasury stock
 
41

 
 
 
6,009

 
Cash dividends paid to stockholders
 
(6,247
)
 
 
 
(6,189
)
 
Net tax benefit excess (shortfall) from stock-based compensation
 
3

 
 
 
(6
)
 
Net cash used in financing activities
 
(77,895
)
 
 
 
(125,337
)
 
Net (decrease) increase in cash and cash equivalents
 
(14,487
)
 
 
 
22,581

 
Cash and cash equivalents at beginning of period
 
200,538

 
 
 
143,185

 
Cash and cash equivalents at end of period
 
$
186,051

 
 
 
$
165,766

 
 
 
 
 
 
 
 
 
Supplemental disclosures:
 
 

 
 
 
 

 
Interest paid
 
$
27,977

 
 
 
$
31,708

 
Income taxes paid
 
$
4,613

 
 
 
$
1,477

 
Additions to real estate owned
 
$
965

 
 
 
$
1,269

 
Loans transferred to held-for-sale
 
$

 
 
 
$
6,205

 

See accompanying Notes to Consolidated Financial Statements.

6


ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)

1.    Basis of Presentation

The accompanying consolidated financial statements include the accounts of Astoria Financial Corporation and its wholly-owned subsidiaries: Astoria Bank and its subsidiaries, referred to as Astoria Bank, and AF Insurance Agency, Inc.  As used in this quarterly report, "Astoria," “we,” “us” and “our” refer to Astoria Financial Corporation and its consolidated subsidiaries.  All significant inter-company accounts and transactions have been eliminated in consolidation.

In our opinion, the accompanying consolidated financial statements contain all adjustments (consisting only of normal recurring adjustments) necessary for a fair presentation of our financial condition as of March 31, 2016 and December 31, 2015, our results of operations and other comprehensive income for the three months ended March 31, 2016 and 2015, changes in our stockholders’ equity for the three months ended March 31, 2016 and 2015 and our cash flows for the three months ended March 31, 2016 and 2015.  In preparing the consolidated financial statements, we are required to make estimates and assumptions that affect the reported amounts of assets and liabilities for the consolidated statements of financial condition as of March 31, 2016 and December 31, 2015, and amounts of revenues, expenses and other comprehensive income in the consolidated statements of income and comprehensive income for the three months ended March 31, 2016 and 2015.  The results of operations and other comprehensive income for the three months ended March 31, 2016 are not necessarily indicative of the results of operations and other comprehensive income to be expected for the remainder of the year.  Certain information and note disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles, or GAAP, have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission, or SEC.

These consolidated financial statements should be read in conjunction with our December 31, 2015 audited consolidated financial statements and related notes included in our 2015 Annual Report on Form 10-K.

2.    Merger Agreement with New York Community Bancorp, Inc.

On October 28, 2015, Astoria entered into an Agreement and Plan of Merger, or the Merger Agreement, with New York Community Bancorp, Inc., a Delaware corporation, or NYCB. The Merger Agreement provides that, upon the terms and subject to the conditions set forth therein, Astoria will merge with and into NYCB, with NYCB as the surviving corporation, such merger referred to as the Merger. Immediately following the Merger, Astoria’s wholly owned subsidiary, Astoria Bank, will merge with and into NYCB’s wholly owned subsidiary, New York Community Bank, such merger referred to as the Bank Merger. New York Community Bank will be the surviving entity in the Bank Merger. The Merger Agreement was unanimously approved and adopted by the Board of Directors of each of Astoria and NYCB.


7


Subject to the terms and conditions of the Merger Agreement, at the effective time of the Merger, or the Effective Time, Astoria stockholders will have the right to receive one share of common stock, par value $0.01 per share, of NYCB, or NYCB Common Stock, and $0.50 in cash for each share of common stock, par value $0.01 per share, of Astoria Financial Corporation, or Astoria Common Stock. Also in the Merger, each share of Astoria 6.50% Non-Cumulative Perpetual Preferred Stock, Series C, par value $1.00 per share, with a liquidation preference of $1,000 per share, issued and outstanding immediately prior to the Effective Time will be automatically converted into the right to receive one share of NYCB 6.50% Non-Cumulative Perpetual Preferred Stock, Series A, par value $0.01 per share, with a liquidation preference of $1,000 per share.

The Merger Agreement contains customary representations and warranties from both Astoria and NYCB, and each party has agreed to customary covenants, including, among others, covenants relating to (1) the conduct of Astoria’s and NYCB’s businesses during the interim period between the execution of the Merger Agreement and the Effective Time, (2) the obligation of NYCB to call a meeting of its stockholders to adopt the Merger Agreement and approve an amendment to its charter to increase the authorized shares of NYCB Common Stock from 600 million to 900 million, and, subject to certain exceptions, to recommend that its stockholders adopt the Merger Agreement and the transactions contemplated thereby, (3) the obligation of Astoria to call a meeting of its stockholders to adopt the Merger Agreement, and, subject to certain exceptions, to recommend that its stockholders adopt the Merger Agreement, and (4) Astoria’s non-solicitation obligations relating to alternative acquisition proposals. Astoria and NYCB have agreed to use their reasonable best efforts to prepare and file all applications, notices, and other documents to obtain all necessary consents and approvals for consummation of the transactions contemplated by the Merger Agreement.

The completion of the Merger is subject to customary conditions, including (1) adoption of the Merger Agreement by Astoria’s stockholders, (2) adoption of the Merger Agreement and approval of the NYCB charter amendment by NYCB’s stockholders, (3) authorization for listing on the New York Stock Exchange of the shares of NYCB Common Stock to be issued in the Merger, (4) the receipt of required regulatory approvals, including the approval of the Board of Governors of the Federal Reserve System, or FRB, the Federal Deposit Insurance Corporation, or FDIC, and the New York State Department of Financial Services, or DFS, (5) effectiveness of the registration statement on Form S-4 for the NYCB Common Stock to be issued in the Merger, and (6) the absence of any order, injunction or other legal restraint preventing the completion of the Merger or making the completion of the Merger illegal. The registration statement on Form S-4 for the NYCB Common Stock to be issued in the Merger became effective on March 16, 2016, and special meetings of Astoria’s and NYCB’s respective stockholders were held on April 26, 2016, at which Astoria’s stockholders adopted the Merger Agreement and NYCB’s stockholders adopted the Merger Agreement and approved the NYCB charter amendment. In addition, all applications and notices necessary to obtain the required regulatory approvals to complete the Merger have been submitted or sent by Astoria or NYCB.

Each party’s obligation to complete the Merger is also subject to certain additional customary conditions, including (1) subject to certain exceptions, the accuracy of the representations and warranties of the other party, (2) performance in all material respect by the other party of its obligations under the Merger Agreement and (3) receipt by such party of an opinion from its counsel to the effect that the Merger will qualify as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code.

The Merger Agreement also provides certain termination rights for both Astoria and NYCB and further provides that a termination fee of $69.5 million will be payable by either Astoria or NYCB, as applicable, upon termination of the Merger Agreement under certain circumstances.


8


3.    Securities

The following tables set forth the amortized cost and estimated fair value of securities available-for-sale and held-to-maturity at the dates indicated.
 
At March 31, 2016
(In Thousands)
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Estimated
Fair
Value
Available-for-sale:
 

 
 
 

 
 
 
 

 
 
 

Residential mortgage-backed securities:
 

 
 
 

 
 
 
 

 
 
 

GSE (1) issuance REMICs and CMOs (2)
$
297,400

 
 
$
4,846

 
 
 
$
(459
)
 
 
$
301,787

Non-GSE issuance REMICs and CMOs
2,612

 
 
7

 
 
 
(2
)
 
 
2,617

GSE pass-through certificates
10,292

 
 
454

 
 
 
(2
)
 
 
10,744

Total residential mortgage-backed securities
310,304

 
 
5,307

 
 
 
(463
)
 
 
315,148

Obligations of GSEs
73,701

 
 
28

 
 
 

 
 
73,729

Fannie Mae stock
15

 
 

 
 
 
(14
)
 
 
1

Total securities available-for-sale
$
384,020

 
 
$
5,335

 
 
 
$
(477
)
 
 
$
388,878

Held-to-maturity:
 

 
 
 

 
 
 
 

 
 
 

Residential mortgage-backed securities:
 

 
 
 

 
 
 
 

 
 
 

GSE issuance REMICs and CMOs
$
1,305,818

 
 
$
20,083

 
 
 
$
(3,049
)
 
 
$
1,322,852

Non-GSE issuance REMICs and CMOs
197

 
 

 
 
 
(7
)
 
 
190

GSE pass-through certificates
250,658

 
 
3,420

 
 
 
(881
)
 
 
253,197

Total residential mortgage-backed securities
1,556,673

 
 
23,503

 
 
 
(3,937
)
 
 
1,576,239

Multi-family mortgage-backed securities:
 

 
 
 

 
 
 
 

 
 
 

GSE issuance REMICs
613,877

 
 
8,381

 
 
 
(171
)
 
 
622,087

Obligations of GSEs
192,541

 
 
483

 
 
 
(87
)
 
 
192,937

Corporate Debt securities
80,000

 
 
214

 
 
 
(2,432
)
 
 
77,782

Other
412

 
 
1

 
 
 

 
 
413

Total securities held-to-maturity
$
2,443,503

 
 
$
32,582

 
 
 
$
(6,627
)
 
 
$
2,469,458


(1)
Government-sponsored enterprise
(2)
Real estate mortgage investment conduits and collateralized mortgage obligations

9


 
At December 31, 2015
(In Thousands)
Amortized
Cost
 
Gross
Unrealized
Gains
 
Gross
Unrealized
Losses
 
Estimated
Fair
Value
Available-for-sale:
 

 
 
 

 
 
 
 

 
 
 

Residential mortgage-backed securities:
 

 
 
 

 
 
 
 

 
 
 

GSE issuance REMICs and CMOs
$
331,099

 
 
$
2,374

 
 
 
$
(2,934
)
 
 
$
330,539

Non-GSE issuance REMICs and CMOs
3,048

 
 
13

 
 
 
(7
)
 
 
3,054

GSE pass-through certificates
10,781

 
 
485

 
 
 
(2
)
 
 
11,264

Total residential mortgage-backed securities
344,928

 
 
2,872

 
 
 
(2,943
)
 
 
344,857

Obligations of GSEs
73,701

 
 

 
 
 
(1,762
)
 
 
71,939

Fannie Mae stock
15

 
 

 
 
 
(13
)
 
 
2

Total securities available-for-sale
$
418,644

 
 
$
2,872

 
 
 
$
(4,718
)
 
 
$
416,798

Held-to-maturity:
 

 
 
 

 
 
 
 

 
 
 

Residential mortgage-backed securities:
 

 
 
 

 
 
 
 

 
 
 

GSE issuance REMICs and CMOs
$
1,361,907

 
 
$
8,135

 
 
 
$
(14,128
)
 
 
$
1,355,914

Non-GSE issuance REMICs and CMOs
198

 
 

 
 
 
(5
)
 
 
193

GSE pass-through certificates
260,707

 
 
1,535

 
 
 
(3,413
)
 
 
258,829

Total residential mortgage-backed securities
1,622,812

 
 
9,670

 
 
 
(17,546
)
 
 
1,614,936

Multi-family mortgage-backed securities:
 
 
 
 
 
 
 
 
 
 
 
GSE issuance REMICs
434,587

 
 
1,255

 
 
 
(2,334
)
 
 
433,508

Obligations of GSEs
178,967

 
 
220

 
 
 
(480
)
 
 
178,707

Corporate debt securities
60,000

 
 

 
 
 
(1,493
)
 
 
58,507

Other
433

 
 
1

 
 
 

 
 
434

Total securities held-to-maturity
$
2,296,799

 
 
$
11,146

 
 
 
$
(21,853
)
 
 
$
2,286,092


The following tables set forth the estimated fair values of securities with gross unrealized losses at the dates indicated, segregated between securities that have been in a continuous unrealized loss position for less than twelve months and those that have been in a continuous unrealized loss position for twelve months or longer at the dates indicated.
 
At March 31, 2016
 
 
Less Than Twelve Months
 
Twelve Months or Longer
 
Total
 
(In Thousands)
Estimated
Fair Value
 
Gross
Unrealized
Losses
 
Estimated
Fair Value
 
Gross
Unrealized
Losses
 
Estimated
Fair Value
 
Gross
Unrealized
Losses
Available-for-sale:
 

 
 
 

 
 
 

 
 
 

 
 
 

 
 
 

 
Residential mortgage-backed securities:
 

 
 
 

 
 
 

 
 
 

 
 
 

 
 
 

 
GSE issuance REMICs and CMOs
$
19,950

 
 
$
(131
)
 
 
$
23,962

 
 
$
(328
)
 
 
$
43,912

 
 
$
(459
)
 
Non-GSE issuance REMICs and CMOs
109

 
 
(1
)
 
 
63

 
 
(1
)
 
 
172

 
 
(2
)
 
GSE pass-through certificates
16

 
 
(1
)
 
 
99

 
 
(1
)
 
 
115

 
 
(2
)
 
Fannie Mae stock

 
 

 
 
1

 
 
(14
)
 
 
1

 
 
(14
)
 
Total temporarily impaired securities
available-for-sale
$
20,075

 
 
$
(133
)
 
 
$
24,125

 
 
$
(344
)
 
 
$
44,200

 
 
$
(477
)
 
Held-to-maturity:
 

 
 
 

 
 
 

 
 
 

 
 
 

 
 
 

 
Residential mortgage-backed securities:
 

 
 
 

 
 
 

 
 
 

 
 
 

 
 
 

 
GSE issuance REMICs and CMOs
$
51,103

 
 
$
(149
)
 
 
$
234,606

 
 
$
(2,900
)
 
 
$
285,709

 
 
$
(3,049
)
 
Non-GSE issuance REMICs and CMOs

 
 

 
 
190

 
 
(7
)
 
 
190

 
 
(7
)
 
GSE pass-through certificates

 
 

 
 
104,675

 
 
(881
)
 
 
104,675

 
 
(881
)
 
Multi-family mortgage-backed securities:
 

 
 
 

 
 
 

 
 
 

 
 
 

 
 
 

 
GSE issuance REMICs
79,344

 
 
(171
)
 
 

 
 

 
 
79,344

 
 
(171
)
 
Obligations of GSEs
24,888

 
 
(87
)
 
 

 
 

 
 
24,888

 
 
(87
)
 
Corporate debt securities
67,569

 
 
(2,432
)
 
 

 
 

 
 
67,569

 
 
(2,432
)
 
Total temporarily impaired securities
held-to-maturity
$
222,904

 
 
$
(2,839
)
 
 
$
339,471

 
 
$
(3,788
)
 
 
$
562,375

 
 
$
(6,627
)
 

10


 
At December 31, 2015
 
 
Less Than Twelve Months
 
Twelve Months or Longer
 
Total
 
(In Thousands)
Estimated
Fair Value
 
Gross
Unrealized
Losses
 
Estimated
Fair Value
 
Gross
Unrealized
Losses
 
Estimated
Fair Value
 
Gross
Unrealized
Losses
Available-for-sale:
 

 
 
 

 
 
 

 
 
 

 
 
 

 
 
 

 
Residential mortgage-backed securities:
 

 
 
 

 
 
 

 
 
 

 
 
 

 
 
 

 
GSE issuance REMICs and CMOs
$
189,364

 
 
$
(2,934
)
 
 
$

 
 
$

 
 
$
189,364

 
 
$
(2,934
)
 
Non-GSE issuance REMICs and CMOs
75

 
 
(2
)
 
 
64

 
 
(5
)
 
 
139

 
 
(7
)
 
GSE pass-through certificates
97

 
 
(1
)
 
 
103

 
 
(1
)
 
 
200

 
 
(2
)
 
Obligations of GSEs
24,602

 
 
(390
)
 
 
47,337

 
 
(1,372
)
 
 
71,939

 
 
(1,762
)
 
Fannie Mae stock

 
 

 
 
2

 
 
(13
)
 
 
2

 
 
(13
)
 
Total temporarily impaired securities
available-for-sale
$
214,138

 
 
$
(3,327
)
 
 
$
47,506

 
 
$
(1,391
)
 
 
$
261,644

 
 
$
(4,718
)
 
Held-to-maturity:
 

 
 
 

 
 
 

 
 
 

 
 
 

 
 
 

 
Residential mortgage-backed securities:
 

 
 
 

 
 
 

 
 
 

 
 
 

 
 
 

 
GSE issuance REMICs and CMOs
$
395,659

 
 
$
(3,972
)
 
 
$
289,645

 
 
$
(10,156
)
 
 
$
685,304

 
 
$
(14,128
)
 
Non-GSE issuance REMICs and CMOs

 
 

 
 
193

 
 
(5
)
 
 
193

 
 
(5
)
 
GSE pass-through certificates
56,503

 
 
(586
)
 
 
106,738

 
 
(2,827
)
 
 
163,241

 
 
(3,413
)
 
Multi-family mortgage-backed securities:
 
 
 
 
 
 
 
 
 
 
 
 


 
 


 
GSE issuance REMICs
276,601

 
 
(2,334
)
 
 

 
 

 
 
276,601

 
 
(2,334
)
 
Obligations of GSEs
107,824

 
 
(480
)
 
 

 
 

 
 
107,824

 
 
(480
)
 
Corporate debt securities
58,507

 
 
(1,493
)
 
 

 
 

 
 
58,507

 
 
(1,493
)
 
Total temporarily impaired securities
held-to-maturity
$
895,094

 
 
$
(8,865
)
 
 
$
396,576

 
 
$
(12,988
)
 
 
$
1,291,670

 
 
$
(21,853
)
 

We held 61 securities which had an unrealized loss at March 31, 2016 and 129 securities which had an unrealized loss at December 31, 2015.  Securities in unrealized loss positions are analyzed as part of our ongoing assessment of other-than-temporary impairment. Our assertion regarding our intent not to sell, or that it is not more likely than not that we will be required to sell a security before its anticipated recovery, is based on a number of factors, including a quantitative estimate of the expected recovery period (which may extend to maturity), and our intended strategy with respect to the identified security or portfolio. If we do have the intent to sell, or believe it is more likely than not that we will be required to sell the security before its anticipated recovery, the unrealized loss is charged directly to earnings in the Consolidated Statements of Income and Comprehensive Income. Other factors considered in determining whether or not an impairment is temporary include the severity of the impairment; the duration of the impairment; the cause of the impairment; the near-term prospects of the issuer; and the estimated recovery period. The unrealized losses on our residential and multi-family mortgage-backed securities and GSE obligations at March 31, 2016 were primarily caused by movements in market interest rates subsequent to the purchase of such securities or obligations. The unrealized losses on our corporate debt obligations was primarily due to the observed credit spread widening that occurred during the first quarter of 2016, which we attribute to the contemporaneous broad-based equity market volatility. We do not consider the resulting unrealized losses to be anything other than temporary impairment.

During the three months ended March 31, 2016, proceeds from sales of securities from the available-for-sale portfolio totaled $23.1 million, resulting in gross realized gains of $86,000. There were no sales of securities from the available-for-sale portfolio during the three months ended March 31, 2015.


11


At March 31, 2016, available-for-sale debt securities, excluding mortgage-backed securities, had an amortized cost of $73.7 million, an estimated fair value of $73.7 million and contractual maturities in 2021 and 2022At March 31, 2016, held-to-maturity debt securities, excluding mortgage-backed securities, had an amortized cost of $273.0 million, an estimated fair value of $271.1 million and contractual maturities primarily in 2016 through 2027.  Actual maturities may differ from contractual maturities because issuers may have the right to prepay or call obligations with or without prepayment penalties.

At March 31, 2016, the amortized cost of callable securities in our portfolio totaled $211.3 million, of which $194.9 million are callable within one year and at various times thereafter. The balance of accrued interest receivable for securities totaled $7.2 million at March 31, 2016 and $7.4 million at December 31, 2015.


12


4.    Loans Receivable and Allowance for Loan Losses

The following tables set forth the composition of our loans receivable portfolio, and an aging analysis by accruing and non-accrual loans, by segment and class at the dates indicated.
 
At March 31, 2016
 
Past Due
 
 
 
 
 
 
(In Thousands)
30-59
Days
 
60-89
Days
 
90 Days
or More
 
Total
Past Due
 
Current
 
Total
Accruing loans:
 

 
 

 
 

 
 

 
 

 
 

Mortgage loans (gross):
 

 
 

 
 

 
 

 
 

 
 

Residential:
 

 
 

 
 

 
 

 
 

 
 

Full documentation interest-only
$
3,802

 
$
1,490

 
$

 
$
5,292

 
$
356,324

 
$
361,616

Full documentation amortizing
31,902

 
9,725

 
433

 
42,060

 
4,498,438

 
4,540,498

Reduced documentation interest-only
7,111

 
2,405

 

 
9,516

 
202,030

 
211,546

Reduced documentation amortizing
16,404

 
3,679

 

 
20,083

 
556,416

 
576,499

Total residential
59,219

 
17,299

 
433

 
76,951

 
5,613,208

 
5,690,159

Multi-family
6,632

 
2,609

 
484

 
9,725

 
4,060,832

 
4,070,557

Commercial real estate

 
859

 
2,239

 
3,098

 
805,136

 
808,234

Total mortgage loans
65,851

 
20,767

 
3,156

 
89,774

 
10,479,176

 
10,568,950

Consumer and other loans (gross):
 

 
 

 
 

 
 

 
 

 
 

Home equity and other consumer
1,259

 
125

 

 
1,384

 
147,666

 
149,050

Commercial and industrial

 

 

 

 <