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EX-32.1 - EXHIBIT 32.1 - ASTORIA FINANCIAL CORPaf20160630ex32d1.htm
EX-31.2 - EXHIBIT 31.2 - ASTORIA FINANCIAL CORPaf20160630ex31d2.htm
EX-31.1 - EXHIBIT 31.1 - ASTORIA FINANCIAL CORPaf20160630ex31d1.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 June 30, 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, July 29, 2016
 
$0.01 Par Value
 
101,341,264



 
 
Page
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 




1


ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Financial Condition

 
 
(Unaudited)
 
 
 
 
 
(In Thousands, Except Share Data)
At June 30, 2016
 
At December 31, 2015
Assets:
 
 

 
 
 
 

 
Cash and due from banks
 
$
132,195

 
 
 
$
200,538

 
Available-for-sale securities:
 
 

 
 
 
 

 
Encumbered
 
32,951

 
 
 
81,481

 
Unencumbered
 
323,396

 
 
 
335,317

 
Total available-for-sale securities
 
356,347

 
 
 
416,798

 
Held-to-maturity securities, fair value of $2,716,702 and $2,286,092, respectively:
 
 

 
 
 
 

 
Encumbered
 
1,153,806

 
 
 
1,123,480

 
Unencumbered
 
1,524,124

 
 
 
1,173,319

 
Total held-to-maturity securities
 
2,677,930

 
 
 
2,296,799

 
Federal Home Loan Bank of New York stock, at cost
 
137,909

 
 
 
131,137

 
Loans held-for-sale, net
 
6,843

 
 
 
8,960

 
Loans receivable
 
10,839,329

 
 
 
11,153,081

 
Allowance for loan losses
 
(90,000
)
 
 
 
(98,000
)
 
Loans receivable, net
 
10,749,329

 
 
 
11,055,081

 
Mortgage servicing rights, net
 
8,881

 
 
 
11,014

 
Accrued interest receivable
 
35,565

 
 
 
34,996

 
Premises and equipment, net
 
106,601

 
 
 
109,758

 
Goodwill
 
185,151

 
 
 
185,151

 
Bank owned life insurance
 
442,271

 
 
 
439,646

 
Real estate owned, net
 
14,940

 
 
 
19,798

 
Other assets
 
163,109

 
 
 
166,535

 
Total assets
 
$
15,017,071

 
 
 
$
15,076,211

 
Liabilities:
 
 

 
 
 
 

 
Deposits:
 
 

 
 
 
 

 
NOW and demand deposit
 
$
2,463,702

 
 
 
$
2,413,823

 
Money market
 
2,674,935

 
 
 
2,560,204

 
Savings
 
2,104,975

 
 
 
2,137,818

 
Certificates of deposit
 
1,707,518

 
 
 
1,994,182

 
Total deposits
 
8,951,130

 
 
 
9,106,027

 
Federal funds purchased
 
295,000

 
 
 
435,000

 
Reverse repurchase agreements
 
1,100,000

 
 
 
1,100,000

 
Federal Home Loan Bank of New York advances
 
2,374,000

 
 
 
2,180,000

 
Other borrowings, net
 
249,487

 
 
 
249,222

 
Mortgage escrow funds
 
131,042

 
 
 
115,435

 
Accrued expenses and other liabilities
 
221,088

 
 
 
227,079

 
Total liabilities
 
13,321,747

 
 
 
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 101,341,169 and 100,721,358 shares outstanding, respectively)
 
1,665

 
 
 
1,665

 
Additional paid-in capital
 
895,095

 
 
 
902,349

 
Retained earnings
 
2,066,471

 
 
 
2,045,391

 
Treasury stock (65,153,719 and 65,773,530 shares, at cost, respectively)
 
(1,344,347
)
 
 
 
(1,357,136
)
 
Accumulated other comprehensive loss
 
(53,356
)
 
 
 
(58,617
)
 
Total stockholders’ equity
 
1,695,324

 
 
 
1,663,448

 
Total liabilities and stockholders’ equity
 
$
15,017,071

 
 
 
$
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 
 June 30,
 
For the 
 Six Months Ended 
 June 30,
(In Thousands, Except Share Data)
2016
 
2015
 
2016
 
2015
Interest income:
 

 
 

 
 
 
 
Residential mortgage loans
$
45,683

 
$
51,375

 
$
93,058

 
$
105,337

Multi-family and commercial real estate mortgage loans
46,607

 
48,611

 
93,412

 
96,103

Consumer and other loans
2,435

 
2,242

 
4,807

 
4,432

Mortgage-backed and other securities
17,400

 
15,238

 
34,304

 
30,308

Interest-earning cash accounts
116

 
107

 
236

 
196

Federal Home Loan Bank of New York stock
1,487

 
1,461

 
2,908

 
2,983

Total interest income
113,728

 
119,034

 
228,725

 
239,359

Interest expense:
 

 
 

 
 
 
 
Deposits
6,557

 
9,944

 
14,019

 
20,673

Borrowings
24,085

 
23,940

 
48,368

 
47,815

Total interest expense
30,642

 
33,884

 
62,387

 
68,488

Net interest income
83,086

 
85,150

 
166,338

 
170,871

Provision for loan losses credited to operations
(3,006
)
 
(2,967
)
 
(6,133
)
 
(3,310
)
Net interest income after provision for loan losses
86,092

 
88,117

 
172,471

 
174,181

Non-interest income:
 

 
 

 
 
 
 
Customer service fees
7,542

 
8,871

 
14,530

 
17,082

Other loan fees
567

 
553

 
1,101

 
1,106

Gain on sales of securities

 
72

 
86

 
72

Mortgage banking income, net
155

 
2,076

 
118

 
2,403

Income from bank owned life insurance
2,336

 
2,179

 
4,625

 
4,376

Other
1,316

 
1,591

 
2,857

 
3,236

Total non-interest income
11,916

 
15,342

 
23,317

 
28,275

Non-interest expense:
 

 
 

 
 
 
 
General and administrative:
 

 
 

 
 
 
 
Compensation and benefits
36,708

 
37,655

 
74,961

 
73,936

Occupancy, equipment and systems
18,840

 
18,980

 
38,231

 
38,638

Federal deposit insurance premium
3,031

 
4,335

 
6,561

 
8,536

Advertising
3,018

 
2,801

 
4,471

 
5,065

Other
8,452

 
8,105

 
15,347

 
15,813

Total non-interest expense
70,049

 
71,876

 
139,571

 
141,988

Income before income tax expense
27,959

 
31,583

 
56,217

 
60,468

Income tax expense
9,623

 
152

 
19,316

 
9,730

Net income
18,336

 
31,431

 
36,901

 
50,738

Preferred stock dividends
2,194

 
2,194

 
4,388

 
4,388

Net income available to common shareholders
$
16,142

 
$
29,237

 
$
32,513

 
$
46,350

 
 
 
 
 
 
 
 
Basic earnings per common share
$
0.16

 
$
0.29

 
$
0.32

 
$
0.46

Diluted earnings per common share
$
0.16

 
$
0.29

 
$
0.32

 
$
0.46

 
 
 
 
 
 
 
 
Basic weighted average common shares outstanding
100,380,937

 
99,664,442

 
100,374,934

 
99,459,376

Diluted weighted average common shares outstanding
100,380,937

 
99,664,442

 
100,374,934

 
99,459,376


See accompanying Notes to Consolidated Financial Statements.

3


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

 
For the 
 Three Months Ended 
 June 30,
 
For the 
 Six Months Ended 
 June 30,
(In Thousands)
2016
 
2015
 
2016
 
2015
 
 
 
 
 
 
 
 
Net income
$
18,336

 
$
31,431

 
$
36,901

 
$
50,738

 
 
 
 
 
 
 
 
Other comprehensive income (loss), net of tax:
 

 
 

 
 
 
 
Net unrealized gain (loss) on securities available-for-sale:
 
 
 
 
 
 
 
Net unrealized holding gain (loss) on securities arising during the period
507

 
(2,748
)
 
4,543

 
(755
)
Reclassification adjustment for gain on sales of securities included in net income

 
(43
)
 
(51
)
 
(43
)
Net unrealized gain (loss) on securities available-for-sale
507

 
(2,791
)
 
4,492

 
(798
)
 
 
 
 
 
 
 
 
Reclassification adjustment for net actuarial loss on pension plans and other postretirement benefits included in net income
315

 
417

 
712

 
886

 
 
 
 
 
 
 
 
Reclassification adjustment for prior service cost on pension plans and other postretirement benefits included in net income
29

 
27

 
57

 
56

 
 
 
 
 
 
 
 
Total other comprehensive income (loss), net of tax
851

 
(2,347
)
 
5,261

 
144

 
 
 
 
 
 
 
 
Comprehensive income
$
19,187

 
$
29,084

 
$
42,162

 
$
50,882


See accompanying Notes to Consolidated Financial Statements.


4


ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES
Consolidated Statement of Changes in Stockholders’ Equity (Unaudited)
For the Six Months Ended June 30, 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
36,901

 

 

 

 
36,901

 

 
 

 
Other comprehensive income, net of tax
5,261

 

 

 

 

 

 
 
5,261

 
Dividends on preferred stock ($32.50 per share)
(4,388
)
 

 

 

 
(4,388
)
 

 
 

 
Dividends on common stock ($0.08 per share)
(8,107
)
 

 

 

 
(8,107
)
 

 
 

 
Sales of treasury stock (5,519 shares)
83

 

 

 

 
(31
)
 
114

 
 

 
Restricted stock grants (685,872 shares)

 

 

 
(10,329
)
 
(3,823
)
 
14,152

 
 

 
Forfeitures of restricted stock (71,580 shares)

 

 

 
950

 
527

 
(1,477
)
 
 

 
Stock-based compensation
2,107

 

 

 
2,106

 
1

 

 
 

 
Net tax benefit excess from stock-based compensation
19

 

 

 
19

 

 

 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at June 30, 2016
$
1,695,324

 
$
129,796

 
$
1,665

 
$
895,095

 
$
2,066,471

 
$
(1,344,347
)
 
 
$
(53,356
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at December 31, 2014
$
1,580,070

 
$
129,796

 
$
1,665

 
$
897,049

 
$
1,992,833

 
$
(1,375,322
)
 
 
$
(65,951
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income
50,738

 

 

 

 
50,738

 

 
 

 
Other comprehensive income, net of tax
144

 

 

 

 

 

 
 
144

 
Dividends on preferred stock ($32.50 per share)
(4,388
)
 

 

 

 
(4,388
)
 

 
 

 
Dividends on common stock ($0.08 per share)
(8,024
)
 

 

 

 
(8,024
)
 

 
 

 
Sales of treasury stock (475,182 shares)
6,055

 

 

 

 
(3,765
)
 
9,820

 
 

 
Restricted stock grants (426,552 shares)

 

 

 
(5,562
)
 
(3,252
)
 
8,814

 
 

 
Forfeitures of restricted stock (50,294 shares)

 

 

 
583

 
456

 
(1,039
)
 
 

 
Stock-based compensation
3,916

 

 

 
3,903

 
13

 

 
 

 
Net tax benefit excess from stock-based compensation
11

 

 

 
11

 

 

 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at June 30, 2015
$
1,628,522

 
$
129,796

 
$
1,665

 
$
895,984

 
$
2,024,611

 
$
(1,357,727
)
 
 
$
(65,807
)
 

See accompanying Notes to Consolidated Financial Statements.


5


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

 
For the Six Months Ended June 30,
(In Thousands)
2016
 
2015
Cash flows from operating activities:
 
 

 
 
 
 

 
Net income
 
$
36,901

 
 
 
$
50,738

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

 
 
 
 

 
Net amortization on loans
 
5,058

 
 
 
6,219

 
Net amortization on securities and borrowings
 
3,988

 
 
 
4,855

 
Net provision for loan and real estate losses credited to operations
 
(5,545
)
 
 
 
(2,774
)
 
Depreciation and amortization
 
7,299

 
 
 
6,134

 
Net gain on sales of loans and securities
 
(1,091
)
 
 
 
(1,081
)
 
Mortgage servicing rights amortization and valuation allowance adjustments, net
 
2,696

 
 
 
611

 
Stock-based compensation
 
2,107

 
 
 
3,916

 
Deferred income tax expense (benefit)
 
1,206

 
 
 
(10,019
)
 
Originations of loans held-for-sale
 
(55,461
)
 
 
 
(61,079
)
 
Proceeds from sales and principal repayments of loans held-for-sale
 
57,312

 
 
 
60,759

 
Increase in accrued interest receivable
 
(569
)
 
 
 
(124
)
 
Bank owned life insurance income and insurance proceeds received, net
 
(2,625
)
 
 
 
(4,376
)
 
Increase in other assets
 
(1,498
)
 
 
 
(1,417
)
 
Decrease in accrued expenses and other liabilities
 
(4,657
)
 
 
 
(3,882
)
 
Net cash provided by operating activities
 
45,121

 
 
 
48,480

 
Cash flows from investing activities:
 
 

 
 
 
 

 
Originations of loans receivable
 
(641,986
)
 
 
 
(767,399
)
 
Loan purchases through third parties
 
(101,252
)
 
 
 
(117,596
)
 
Principal payments on loans receivable
 
1,042,436

 
 
 
1,311,864

 
Proceeds from sales of delinquent and non-performing loans
 
2,182

 
 
 
6,183

 
Purchases of securities held-to-maturity
 
(822,576
)
 
 
 
(272,524
)
 
Purchases of securities available-for-sale
 
(30,000
)
 
 
 
(88,156
)
 
Principal payments on securities held-to-maturity
 
438,127

 
 
 
245,317

 
Principal payments on securities available-for-sale
 
74,610

 
 
 
22,977

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

 
 
 
19,026

 
Net (purchases) redemptions of Federal Home Loan Bank of New York stock
 
(6,772
)
 
 
 
2,370

 
Proceeds from sales of real estate owned, net
 
10,527

 
 
 
15,524

 
Purchases of premises and equipment, net of proceeds from sales
 
(4,142
)
 
 
 
(5,478
)
 
Net cash (used in) provided by investing activities
 
(15,781
)
 
 
 
372,108

 
Cash flows from financing activities:
 
 

 
 
 
 

 
Net decrease in deposits
 
(154,897
)
 
 
 
(277,139
)
 
Net decrease in borrowings with original terms of three months or less
 
(426,000
)
 
 
 
(129,000
)
 
Repayments of borrowings with original terms greater than three months
 
(895,000
)
 
 
 

 
Proceeds from borrowings with terms greater than three months
 
1,375,000

 
 
 

 
Net increase in mortgage escrow funds
 
15,607

 
 
 
17,502

 
Proceeds from sales of treasury stock
 
83

 
 
 
6,055

 
Cash dividends paid to stockholders
 
(12,495
)
 
 
 
(12,412
)
 
Net tax benefit excess from stock-based compensation
 
19

 
 
 
11

 
Net cash used in financing activities
 
(97,683
)
 
 
 
(394,983
)
 
Net (decrease) increase in cash and cash equivalents
 
(68,343
)
 
 
 
25,605

 
Cash and cash equivalents at beginning of period
 
200,538

 
 
 
143,185

 
Cash and cash equivalents at end of period
 
$
132,195

 
 
 
$
168,790

 
 
 
 
 
 
 
 
 
Supplemental disclosures:
 
 

 
 
 
 

 
Interest paid
 
$
61,544

 
 
 
$
68,450

 
Income taxes paid
 
$
13,595

 
 
 
$
17,732

 
Additions to real estate owned
 
$
6,257

 
 
 
$
3,736

 
Loans transferred to held-for-sale
 
$
1,562

 
 
 
$
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 June 30, 2016 and December 31, 2015, our results of operations and other comprehensive income for the three and six months ended June 30, 2016 and 2015, changes in our stockholders’ equity for the six months ended June 30, 2016 and 2015 and our cash flows for the six months ended June 30, 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 June 30, 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 and six months ended June 30, 2016 and 2015.  The results of operations and other comprehensive income for the three and six months ended June 30, 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.

Changes in Income Tax Legislation

New York State, or NY State, income tax reform legislation, or the 2014 NY State legislation, was enacted on March 31, 2014 and generally became effective in 2015.  Prior to the effective date of the 2014 NY State legislation, we were subject to taxation in NY State under an alternative taxation method based on assets.  The 2014 NY State legislation, among other things, removed that alternative method and required that we be taxed in a manner that resulted in an increase in our NY State income tax expense beginning in 2015.

On April 13, 2015, a package of additional legislation, or the 2015 NY State legislation, was signed into law in NY State that, among other things, largely conformed New York City, or NY City, banking income tax laws to the 2014 NY State legislation. The 2015 NY State legislation was effective retroactively to tax years beginning on or after January 1, 2015. In addition, on June 30, 2015, the State of Connecticut enacted tax legislation that changed the method for calculating Connecticut income taxes, resulting in the recognition of certain deferred tax assets. Under GAAP, the effects of changes in tax law on current and deferred taxes are accounted for in the period that includes the enactment date of the change, which means that we recorded the impacts of the legislation in the second quarter of 2015.


7


The tax law changes effective in 2015 resulted in a reduction in income tax expense of $11.4 million in the 2015 second quarter comprised of (i) the elimination of our valuation allowance totaling $7.2 million, which previously offset certain deferred tax assets, and (ii) the recognition of additional deferred tax assets totaling $4.2 million, primarily related to NY City taxation.

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.

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,

8


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.

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 June 30, 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)
$
283,609

 
 
$
5,278

 
 
 
$
(75
)
 
 
$
288,812

Non-GSE issuance REMICs and CMOs
2,213

 
 
6

 
 
 
(2
)
 
 
2,217

GSE pass-through certificates
9,821

 
 
448

 
 
 
(2
)
 
 
10,267

Total residential mortgage-backed securities
295,643

 
 
5,732

 
 
 
(79
)
 
 
301,296

Obligations of GSEs
54,992

 
 
57

 
 
 

 
 
55,049

Fannie Mae stock
15

 
 

 
 
 
(13
)
 
 
2

Total securities available-for-sale
$
350,650

 
 
$
5,789

 
 
 
$
(92
)
 
 
$
356,347

Held-to-maturity:
 

 
 
 

 
 
 
 

 
 
 

Residential mortgage-backed securities:
 

 
 
 

 
 
 
 

 
 
 

GSE issuance REMICs and CMOs
$
1,217,296

 
 
$
22,029

 
 
 
$
(1,131
)
 
 
$
1,238,194

Non-GSE issuance REMICs and CMOs
196

 
 

 
 
 
(7
)
 
 
189

GSE pass-through certificates
238,763

 
 
4,383

 
 
 
(274
)
 
 
242,872

Total residential mortgage-backed securities
1,456,255

 
 
26,412

 
 
 
(1,412
)
 
 
1,481,255

Multi-family mortgage-backed securities:
 

 
 
 

 
 
 
 

 
 
 

GSE issuance REMICs
895,011

 
 
14,624

 
 
 
(47
)
 
 
909,588

Obligations of GSEs
246,274

 
 
870

 
 
 

 
 
247,144

Corporate Debt securities
80,000

 
 
436

 
 
 
(2,112
)
 
 
78,324

Other
390

 
 
1

 
 
 

 
 
391

Total securities held-to-maturity
$
2,677,930

 
 
$
42,343

 
 
 
$
(3,571
)
 
 
$
2,716,702


(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 June 30, 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
$

 
 
$

 
 
$
22,913

 
 
$
(75
)
 
 
$
22,913

 
 
$
(75
)
 
Non-GSE issuance REMICs and CMOs
38

 
 
(1
)
 
 
79

 
 
(1
)
 
 
117

 
 
(2
)
 
GSE pass-through certificates
74

 
 
(1
)
 
 
92

 
 
(1
)
 
 
166

 
 
(2
)
 
Fannie Mae stock

 
 

 
 
2

 
 
(13
)
 
 
2

 
 
(13
)
 
Total temporarily impaired securities
available-for-sale
$
112

 
 
$
(2
)
 
 
$
23,086

 
 
$
(90
)
 
 
$
23,198

 
 
$
(92
)
 
Held-to-maturity:
 

 
 
 

 
 
 

 
 
 

 
 
 

 
 
 

 
Residential mortgage-backed securities:
 

 
 
 

 
 
 

 
 
 

 
 
 

 
 
 

 
GSE issuance REMICs and CMOs
$
9,800

 
 
$
(1
)
 
 
$
157,856

 
 
$
(1,130
)
 
 
$
167,656

 
 
$
(1,131
)
 
Non-GSE issuance REMICs and CMOs

 
 

 
 
189

 
 
(7
)
 
 
189

 
 
(7
)
 
GSE pass-through certificates

 
 

 
 
69,687

 
 
(274
)
 
 
69,687

 
 
(274
)
 
Multi-family mortgage-backed securities:
 

 
 
 

 
 
 

 
 
 

 
 
 

 
 
 

 
GSE issuance REMICs
45,407

 
 
(47
)
 
 

 
 

 
 
45,407

 
 
(47
)
 
Corporate debt securities
67,888

 
 
(2,112
)
 
 

 
 

 
 
67,888

 
 
(2,112
)
 
Total temporarily impaired securities
held-to-maturity
$
123,095

 
 
$
(2,160
)
 
 
$
227,732

 
 
$
(1,411
)
 
 
$
350,827

 
 
$
(3,571
)
 

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 tempora