Attached files

file filename
EX-32.1 - EXHIBIT 32.1 - ASTORIA FINANCIAL CORPaf20170630ex32d1.htm
EX-31.2 - EXHIBIT 31.2 - ASTORIA FINANCIAL CORPaf20170630ex31d2.htm
EX-31.1 - EXHIBIT 31.1 - ASTORIA FINANCIAL CORPaf20170630ex31d1.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, 2017
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, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer x    Accelerated filer ¨    Non-accelerated filer ¨ (Do not check if a smaller reporting company)    Smaller reporting company ¨    Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
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 28, 2017
 
$0.01 Par Value
 
101,717,865



 
 
Page
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 





1


ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Financial Condition

 
 
(Unaudited)
 
 
 
 
 
(In Thousands, Except Share Data)
At June 30, 2017
 
At December 31, 2016
Assets:
 
 

 
 
 
 

 
Cash and due from banks
 
$
105,764

 
 
 
$
129,944

 
Available-for-sale securities:
 
 

 
 
 
 

 
Encumbered
 
34,169

 
 
 
35,080

 
Unencumbered
 
220,811

 
 
 
244,965

 
Total available-for-sale securities
 
254,980

 
 
 
280,045

 
Held-to-maturity securities, fair value of $2,874,880 and $2,690,546, respectively:
 
 

 
 
 
 

 
Encumbered
 
1,154,343

 
 
 
1,194,685

 
Unencumbered
 
1,761,122

 
 
 
1,545,447

 
Total held-to-maturity securities
 
2,915,465

 
 
 
2,740,132

 
Federal Home Loan Bank of New York stock, at cost
 
105,958

 
 
 
124,807

 
Loans held-for-sale, net
 
7,920

 
 
 
11,584

 
Loans receivable
 
9,899,632

 
 
 
10,417,187

 
Allowance for loan losses
 
(79,500
)
 
 
 
(86,100
)
 
Loans receivable, net
 
9,820,132

 
 
 
10,331,087

 
Mortgage servicing rights, net
 
10,168

 
 
 
10,130

 
Accrued interest receivable
 
34,017

 
 
 
34,994

 
Premises and equipment, net
 
96,005

 
 
 
101,021

 
Goodwill
 
185,151

 
 
 
185,151

 
Bank owned life insurance
 
442,388

 
 
 
441,064

 
Real estate owned, net
 
14,807

 
 
 
15,144

 
Other assets
 
155,585

 
 
 
153,549

 
Total assets
 
$
14,148,340

 
 
 
$
14,558,652

 
Liabilities:
 
 

 
 
 
 

 
Deposits:
 
 

 
 
 
 

 
NOW and demand deposit
 
$
2,549,323

 
 
 
$
2,521,094

 
Money market
 
2,776,313

 
 
 
2,706,895

 
Savings
 
2,026,585

 
 
 
2,048,202

 
Certificates of deposit
 
1,537,335

 
 
 
1,600,864

 
Total deposits
 
8,889,556

 
 
 
8,877,055

 
Federal funds purchased
 
170,000

 
 
 
195,000

 
Securities sold under agreements to repurchase
 
1,100,000

 
 
 
1,100,000

 
Federal Home Loan Bank of New York advances
 
1,710,000

 
 
 
2,090,000

 
Other borrowings, net
 
197,945

 
 
 
249,752

 
Mortgage escrow funds
 
124,708

 
 
 
112,975

 
Accrued expenses and other liabilities
 
217,095

 
 
 
219,797

 
Total liabilities
 
12,409,304

 
 
 
12,844,579

 
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 101,717,818 and 101,210,478 shares outstanding, respectively)
 
1,665

 
 
 
1,665

 
Additional paid-in capital
 
824,451

 
 
 
830,417

 
Retained earnings
 
2,175,308

 
 
 
2,155,785

 
Treasury stock (64,777,070 and 65,284,410 shares, at cost, respectively)
 
(1,336,244
)
 
 
 
(1,346,709
)
 
Accumulated other comprehensive loss
 
(55,940
)
 
 
 
(56,881
)
 
Total stockholders’ equity
 
1,739,036

 
 
 
1,714,073

 
Total liabilities and stockholders’ equity
 
$
14,148,340

 
 
 
$
14,558,652

 
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)
2017
 
2016
 
2017
 
2016
Interest income:
 

 
 

 
 
 
 
Residential mortgage loans
$
42,560

 
$
45,683

 
$
86,620

 
$
93,058

Multi-family and commercial real estate mortgage loans
43,423

 
46,607

 
86,829

 
93,412

Consumer and other loans
2,382

 
2,435

 
4,674

 
4,807

Mortgage-backed and other securities
18,615

 
17,400

 
36,615

 
34,304

Interest-earning cash accounts
180

 
116

 
341

 
236

Federal Home Loan Bank of New York stock
1,440

 
1,487

 
3,234

 
2,908

Total interest income
108,600

 
113,728

 
218,313

 
228,725

Interest expense:
 

 
 

 
 
 
 
Deposits
6,617

 
6,557

 
12,976

 
14,019

Borrowings
23,446

 
24,085

 
46,685

 
48,368

Total interest expense
30,063

 
30,642

 
59,661

 
62,387

Net interest income
78,537

 
83,086

 
158,652

 
166,338

Provision for loan losses credited to operations
(2,455
)
 
(3,006
)
 
(4,941
)
 
(6,133
)
Net interest income after provision for loan losses
80,992

 
86,092

 
163,593

 
172,471

Non-interest income:
 

 
 

 
 
 
 
Customer service fees
6,853

 
7,542

 
13,462

 
14,530

Other loan fees
497

 
567

 
1,092

 
1,101

Gain on sales of securities

 

 

 
86

Mortgage banking income, net
993

 
155

 
2,287

 
118

Income from bank owned life insurance
2,277

 
2,336

 
4,429

 
4,625

Other
1,222

 
1,316

 
2,446

 
2,857

Total non-interest income
11,842

 
11,916

 
23,716

 
23,317

Non-interest expense:
 

 
 

 
 
 
 
General and administrative:
 

 
 

 
 
 
 
Compensation and benefits
36,064

 
36,708

 
73,061

 
74,961

Occupancy, equipment and systems
19,616

 
18,840

 
39,828

 
38,231

Federal deposit insurance premium
1,375

 
3,031

 
3,673

 
6,561

Advertising
559

 
3,018

 
1,148

 
4,471

Other
7,121

 
8,452

 
18,989

 
15,347

Total non-interest expense
64,735

 
70,049

 
136,699

 
139,571

Income before income tax expense
28,099

 
27,959

 
50,610

 
56,217

Income tax expense
10,116

 
9,623

 
18,220

 
19,316

Net income
17,983

 
18,336

 
32,390

 
36,901

Preferred stock dividends
2,194

 
2,194

 
4,388

 
4,388

Net income available to common shareholders
$
15,789

 
$
16,142

 
$
28,002

 
$
32,513

 
 
 
 
 
 
 
 
Basic earnings per common share
$
0.16

 
$
0.16

 
$
0.28

 
$
0.32

Diluted earnings per common share
$
0.16

 
$
0.16

 
$
0.28

 
$
0.32

 
 
 
 
 
 
 
 
Basic weighted average common shares outstanding
100,595,630

 
100,380,937

 
100,590,645

 
100,374,934

Diluted weighted average common shares outstanding
100,595,630

 
100,380,937

 
100,590,645

 
100,374,934


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)
2017
 
2016
 
2017
 
2016
 
 
 
 
 
 
 
 
Net income
$
17,983

 
$
18,336

 
$
32,390

 
$
36,901

 
 
 
 
 
 
 
 
Other comprehensive income, net of tax:
 

 
 

 
 
 
 
Net unrealized gain on securities available-for-sale:
 
 
 
 
 
 
 
Net unrealized holding gain on securities arising during the period
658

 
507

 
226

 
4,543

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

 

 

 
(51
)
Net unrealized gain on securities available-for-sale
658

 
507

 
226

 
4,492

 
 
 
 
 
 
 
 
Reclassification adjustment for net actuarial loss on pension plans and other postretirement benefits included in net income
287

 
315

 
658

 
712

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

 
29

 
57

 
57

 
 
 
 
 
 
 
 
Total other comprehensive income, net of tax
973

 
851

 
941

 
5,261

 
 
 
 
 
 
 
 
Comprehensive income
$
18,956

 
$
19,187

 
$
33,331

 
$
42,162


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, 2017 and 2016

(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, 2016
$
1,714,073

 
$
129,796

 
$
1,665

 
$
830,417

 
$
2,155,785

 
$
(1,346,709
)
 
 
$
(56,881
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income
32,390

 

 

 

 
32,390

 

 
 

 
Other comprehensive income, net of tax
941

 

 

 

 

 

 
 
941

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

 

 

 
(4,388
)
 

 
 

 
Dividends on common stock ($0.08 per share)
(8,118
)
 

 

 

 
(8,118
)
 

 
 

 
Sales of treasury stock (3,696 shares)
70

 

 

 

 
(6
)
 
76

 
 

 
Restricted stock grants (521,784 shares)

 

 

 
(10,329
)
 
(434
)
 
10,763

 
 

 
Forfeitures of restricted stock (18,140 shares)

 

 

 
298

 
76

 
(374
)
 
 

 
Stock-based compensation
4,068

 

 

 
4,065

 
3

 

 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Balance at June 30, 2017
$
1,739,036

 
$
129,796

 
$
1,665

 
$
824,451

 
$
2,175,308

 
$
(1,336,244
)
 
 
$
(55,940
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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
)
 

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)
2017
 
2016
Cash flows from operating activities:
 
 

 
 
 
 

 
Net income
 
$
32,390

 
 
 
$
36,901

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

 
 
 
 

 
Net amortization on loans
 
4,509

 
 
 
5,058

 
Net amortization on securities and borrowings
 
3,019

 
 
 
3,988

 
Net provision for loan and real estate losses credited to operations
 
(4,617
)
 
 
 
(5,545
)
 
Depreciation and amortization
 
6,094

 
 
 
7,299

 
Net gain on sales of loans and securities
 
(955
)
 
 
 
(1,091
)
 
Mortgage servicing rights amortization and valuation allowance adjustments, net
 
511

 
 
 
2,696

 
Stock-based compensation
 
4,068

 
 
 
2,107

 
Deferred income tax (benefit) expense
 
(1,507
)
 
 
 
1,206

 
Originations of loans held-for-sale
 
(52,483
)
 
 
 
(55,461
)
 
Proceeds from sales and principal repayments of loans held-for-sale
 
56,912

 
 
 
57,312

 
Decrease (increase) in accrued interest receivable
 
977

 
 
 
(569
)
 
Bank owned life insurance income and insurance proceeds received, net
 
(1,324
)
 
 
 
(2,625
)
 
Increase in other assets
 
(705
)
 
 
 
(1,498
)
 
Increase in accrued expenses and other liabilities
 
(1,959
)
 
 
 
(4,657
)
 
Net cash provided by operating activities
 
44,930

 
 
 
45,121

 
Cash flows from investing activities:
 
 

 
 
 
 

 
Originations of loans receivable
 
(436,784
)
 
 
 
(641,986
)
 
Loan purchases through third parties
 
(79,448
)
 
 
 
(101,252
)
 
Principal payments on loans receivable
 
1,016,421

 
 
 
1,042,436

 
Proceeds from sales of delinquent and non-performing loans
 
527

 
 
 
2,182

 
Purchases of securities held-to-maturity
 
(677,066
)
 
 
 
(822,576
)
 
Purchases of securities available-for-sale
 

 
 
 
(30,000
)
 
Principal payments on securities held-to-maturity
 
499,317

 
 
 
438,127

 
Principal payments on securities available-for-sale
 
24,885

 
 
 
74,610

 
Proceeds from sales of securities available-for-sale
 

 
 
 
23,065

 
Purchases of Federal Home Loan Bank of New York stock
 
(21,587
)
 
 
 
(61,460
)
 
Redemptions of Federal Home Loan Bank of New York stock
 
40,436

 
 
 
54,688

 
Proceeds from sales of real estate owned, net
 
10,112

 
 
 
10,527

 
Purchases of premises and equipment, net of proceeds from sales
 
(1,079
)
 
 
 
(4,142
)
 
Net cash provided by (used in) investing activities
 
375,734

 
 
 
(15,781
)
 
Cash flows from financing activities:
 
 

 
 
 
 

 
Net increase (decrease) in deposits
 
12,501

 
 
 
(154,897
)
 
Net increase (decrease) in borrowings with original terms of three months or less
 
145,000

 
 
 
(426,000
)
 
Proceeds from borrowings with terms greater than three months
 
950,000

 
 
 
1,375,000

 
Repayments of borrowings with original terms greater than three months
 
(1,550,000
)
 
 
 
(895,000
)
 
Cash payments for debt issuance costs
 
(1,642
)
 
 
 

 
Net increase in mortgage escrow funds
 
11,733

 
 
 
15,607

 
Proceeds from sales of treasury stock
 
70

 
 
 
83

 
Cash dividends paid to stockholders
 
(12,506
)
 
 
 
(12,495
)
 
Net tax benefit excess from stock-based compensation
 

 
 
 
19

 
Net cash used in financing activities
 
(444,844
)
 
 
 
(97,683
)
 
Net decrease in cash and cash equivalents
 
(24,180
)
 
 
 
(68,343
)
 
Cash and cash equivalents at beginning of period
 
129,944

 
 
 
200,538

 
Cash and cash equivalents at end of period
 
$
105,764

 
 
 
$
132,195

 
 
 
 
 
 
 
 
 
Supplemental disclosures:
 
 

 
 
 
 

 
Interest paid
 
$
59,881

 
 
 
$
61,544

 
Income taxes paid
 
$
18,947

 
 
 
$
13,595

 
Additions to real estate owned
 
$
10,099

 
 
 
$
6,257

 
Loans transferred to held-for-sale
 
$
886

 
 
 
$
1,562

 

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, 2017 and December 31, 2016, our results of operations and other comprehensive income for the three and six months ended June 30, 2017 and 2016, changes in our stockholders’ equity for the six months ended June 30, 2017 and 2016 and our cash flows for the six months ended June 30, 2017 and 2016.  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, 2017 and December 31, 2016, 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, 2017 and 2016.  The results of operations and other comprehensive income for the three and six months ended June 30, 2017 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, 2016 audited consolidated financial statements and related notes included in our 2016 Annual Report on Form 10-K.


2.    Merger Agreement with Sterling Bancorp

On March 6, 2017, Astoria entered into an Agreement and Plan of Merger, or the Sterling Merger Agreement, with Sterling Bancorp, a Delaware corporation, or Sterling. The Sterling Merger Agreement provides that, upon the terms and subject to the conditions set forth therein, Astoria will merge with and into Sterling, with Sterling as the surviving corporation, such merger referred to as the Sterling Merger. Immediately following the consummation of the Sterling Merger, Astoria’s wholly owned subsidiary, Astoria Bank, will merge with and into Sterling’s wholly owned subsidiary, Sterling National Bank, such merger referred to as the Sterling Bank Merger. Sterling National Bank will be the surviving entity in the Sterling Bank Merger. The Sterling Merger Agreement was unanimously approved and adopted by the Board of Directors of each of Astoria and Sterling.

Subject to the terms and conditions of the Sterling Merger Agreement, at the effective time of the Sterling Merger, or the Effective Time, Astoria stockholders will have the right to receive 0.875 shares of common stock, par value $0.01 per share, of Sterling, or Sterling Common Stock, for each share of common stock, par value $0.01 per share, of Astoria Financial Corporation, or Astoria Common Stock. Also in the Sterling 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

7


Effective Time will be automatically converted into the right to receive one share of Sterling 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 Sterling Merger Agreement contains customary representations and warranties from both Astoria and Sterling, and each party has agreed to customary covenants, including, among others, covenants relating to (1) the conduct of Astoria’s and Sterling’s businesses during the interim period between the execution of the Sterling Merger Agreement and the Effective Time, (2) the obligation of Sterling to call a meeting of its stockholders to adopt the Sterling Merger Agreement and approve an amendment to its charter to increase the authorized shares of Sterling Common Stock from 190 million to 310 million, and, subject to certain exceptions, to recommend that its stockholders adopt the Sterling Merger Agreement and the transactions contemplated thereby, (3) the obligation of Astoria to call a meeting of its stockholders to adopt the Sterling Merger Agreement, and, subject to certain exceptions, to recommend that its stockholders adopt the Sterling Merger Agreement, and (4) Astoria’s non-solicitation obligations relating to alternative acquisition proposals. Astoria and Sterling 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 Sterling Merger Agreement.

The completion of the Sterling Merger is subject to customary conditions, including (1) adoption of the Sterling Merger Agreement by Astoria’s stockholders, (2) adoption of the Sterling Merger Agreement and approval of the Sterling charter amendment by Sterling’s stockholders, (3) authorization for listing on the New York Stock Exchange of the shares of Sterling Common Stock to be issued in the Sterling Merger, (4) the receipt of required regulatory approvals, including the approval of the Board of Governors of the Federal Reserve System, or FRB, and the Office of the Comptroller of the Currency, or OCC, (5) effectiveness of the registration statement on Form S-4 for the Sterling Common Stock to be issued in the Sterling Merger, and (6) the absence of any order, injunction or other legal restraint preventing the completion of the Sterling Merger or making the completion of the Sterling Merger illegal. The registration statement on Form S-4 for the Sterling Common Stock to be issued in the Sterling Merger was filed on April 5, 2017 and was declared effective by the SEC on April 28, 2017. Special meetings of Astoria’s and Sterling’s respective stockholders were held on June 13, 2017, at which Astoria’s stockholders adopted the Sterling Merger Agreement and Sterling’s stockholders adopted the Sterling Merger Agreement and approved the Sterling charter amendment. In addition, all applications and notices necessary to obtain the required regulatory approvals to complete the Sterling Merger have been submitted or sent by Astoria or Sterling.

Each party’s obligation to complete the Sterling 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 Sterling Merger Agreement, and (3) receipt by such party of an opinion from its counsel to the effect that the Sterling Merger will qualify as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code.

The Sterling Merger Agreement also provides certain termination rights for both Astoria and Sterling and further provides that a termination fee of $75.7 million will be payable by either Astoria or Sterling, as applicable, upon termination of the Sterling 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 June 30, 2017
(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)
$
218,429

 
 
$
1,113

 
 
 
$
(2,624
)
 
 
$
216,918

Non-GSE issuance REMICs and CMOs
854

 
 

 
 
 
(3
)
 
 
851

GSE pass-through certificates
7,706

 
 
302

 
 
 
(1
)
 
 
8,007

Total residential mortgage-backed securities
226,989

 
 
1,415

 
 
 
(2,628
)
 
 
225,776

Obligations of GSEs
30,000

 
 

 
 
 
(798
)
 
 
29,202

Fannie Mae stock
15

 
 

 
 
 
(13
)
 
 
2

Total securities available-for-sale
$
257,004

 
 
$
1,415

 
 
 
$
(3,439
)
 
 
$
254,980

Held-to-maturity:
 

 
 
 

 
 
 
 

 
 
 

Residential mortgage-backed securities:
 

 
 
 

 
 
 
 

 
 
 

GSE issuance REMICs and CMOs
$
1,323,264

 
 
$
5,438

 
 
 
$
(10,269
)
 
 
$
1,318,433

Non-GSE issuance REMICs and CMOs
189

 
 

 
 
 
(6
)
 
 
183

GSE pass-through certificates
221,541

 
 
1,008

 
 
 
(2,340
)
 
 
220,209

Total residential mortgage-backed securities
1,544,994

 
 
6,446

 
 
 
(12,615
)
 
 
1,538,825

Multi-family mortgage-backed securities:
 

 
 
 

 
 
 
 

 
 
 

GSE issuance REMICs
895,870

 
 
273

 
 
 
(16,971
)
 
 
879,172

Obligations of GSEs
394,303

 
 
17

 
 
 
(13,609
)
 
 
380,711

Corporate Debt securities
80,000

 
 

 
 
 
(4,126
)
 
 
75,874

Other
298

 
 

 
 
 

 
 
298

Total securities held-to-maturity
$
2,915,465

 
 
$
6,736

 
 
 
$
(47,321
)
 
 
$
2,874,880


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

9


 
At December 31, 2016
(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
$
242,172

 
 
$
1,327

 
 
 
$
(2,706
)
 
 
$
240,793

Non-GSE issuance REMICs and CMOs
1,442

 
 
2

 
 
 
(1
)
 
 
1,443

GSE pass-through certificates
8,571

 
 
361

 
 
 
(2
)
 
 
8,930

Total residential mortgage-backed securities
252,185

 
 
1,690

 
 
 
(2,709
)
 
 
251,166

Obligations of GSEs
30,000

 
 

 
 
 
(1,125
)
 
 
28,875

Fannie Mae stock
15

 
 

 
 
 
(11
)
 
 
4

Total securities available-for-sale
$
282,200

 
 
$
1,690

 
 
 
$
(3,845
)
 
 
$
280,045

Held-to-maturity:
 

 
 
 

 
 
 
 

 
 
 

Residential mortgage-backed securities:
 

 
 
 

 
 
 
 

 
 
 

GSE issuance REMICs and CMOs
$
1,119,175

 
 
$
4,896

 
 
 
$
(11,957
)
 
 
$
1,112,114

Non-GSE issuance REMICs and CMOs
193

 
 

 
 
 
(7
)
 
 
186

GSE pass-through certificates
228,976

 
 
665

 
 
 
(3,282
)
 
 
226,359

Total residential mortgage-backed securities
1,348,344

 
 
5,561

 
 
 
(15,246
)
 
 
1,338,659

Multi-family mortgage-backed securities:
 
 
 
 
 
 
 
 
 
 
 
GSE issuance REMICs
927,119

 
 
363

 
 
 
(19,290
)
 
 
908,192

Obligations of GSEs
384,325

 
 
54

 
 
 
(16,510
)
 
 
367,869

Corporate debt securities
80,000

 
 

 
 
 
(4,518
)
 
 
75,482

Other
344

 
 

 
 
 

 
 
344

Total securities held-to-maturity
$
2,740,132

 
 
$
5,978

 
 
 
$
(55,564
)
 
 
$
2,690,546


The following contractual maturity table sets forth certain information regarding the amortized costs and estimated fair values of our securities available-for-sale and securities held-to-maturity at June 30, 2017 and does not reflect the effect of prepayments or scheduled principal amortization on our REMICs, CMOs and pass-through certificates or the effect of callable features on our obligations of GSEs (all of which are callable in 2017 and at various times thereafter).
 
June 30, 2017
 
Available-for-Sale
 
Held-to-Maturity
(Dollars in Thousands)
Amortized
Cost
 
Estimated
Fair Value
 
Amortized
Cost
 
Estimated
Fair Value
Securities remaining period to contractual maturity:
 
 
 
 
 
 
 
 
 
 
 
Within one year
 
$
842

 
 
 
$
840

 
 
$
49,964

 
$
49,964

Over one to five years
 
275

 
 
 
275

 
 
17,272

 
17,287

Over five to ten years
 
36,072

 
 
 
35,449

 
 
434,341

 
419,787

Over ten years
 
219,815

 
 
 
218,416

 
 
2,413,888

 
2,387,842

Total securities
 
$
257,004

 
 
 
$
254,980

 
 
$
2,915,465

 
$
2,874,880



10


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, 2017
 
 
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
$
104,918

 
 
$
(1,943
)
 
 
$
19,459

 
 
$
(681
)
 
 
$
124,377

 
 
$
(2,624
)
 
Non-GSE issuance REMICs and CMOs
756

 
 
(2
)
 
 
67

 
 
(1
)
 
 
823

 
 
(3
)
 
GSE pass-through certificates

 
 

 
 
53

 
 
(1
)
 
 
53

 
 
(1
)
 
Obligations of GSEs
29,202

 
 
(798
)
 
 

 
 

 
 
29,202

 
 
(798
)
 
Fannie Mae stock

 
 

 
 
2

 
 
(13
)
 
 
2

 
 
(13
)
 
Total temporarily impaired securities
available-for-sale
$
134,876

 
 
$
(2,743
)
 
 
$
19,581

 
 
$
(696
)
 
 
$
154,457

 
 
$
(3,439
)
 
Held-to-maturity:
 

 
 
 

 
 
 

 
 
 

 
 
 

 
 
 

 
Residential mortgage-backed securities:
 

 
 
 

 
 
 

 
 
 

 
 
 

 
 
 

 
GSE issuance REMICs and CMOs
$
705,134

 
 
$
(6,681
)
 
 
$
119,515

 
 
$
(3,588
)
 
 
$
824,649

 
 
$
(10,269
)
 
Non-GSE issuance REMICs and CMOs

 
 

 
 
183

 
 
(6
)
 
 
183

 
 
(6
)
 
GSE pass-through certificates
79,567

 
 
(1,103
)
 
 
58,804

 
 
(1,237
)
 
 
138,371

 
 
(2,340
)
 
Multi-family mortgage-backed securities:
 

 
 
 

 
 
 

 
 
 

 
 
 

 
 
 

 
GSE issuance REMICs
773,614

 
 
(15,565
)
 
 
43,062

 
 
(1,406
)
 
 
816,676

 
 
(16,971
)
 
Obligations of GSEs
344,300

 
 
(13,609
)
 
 

 
 

 
 
344,300

 
 
(13,609
)
 
Corporate debt securities
9,200

 
 
(800
)
 
 
66,674

 
 
(3,326
)
 
 
75,874

 
 
(4,126
)
 
Total temporarily impaired securities
held-to-maturity
$
1,911,815

 
 
$
(37,758
)
 
 
$
288,238

 
 
$
(9,563
)
 
 
$
2,200,053

 
 
$
(47,321
)
 
 
At December 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
$
140,638

 
 
$
(1,886
)
 
 
$
20,026

 
 
$
(820
)
 
 
$
160,664

 
 
$
(2,706
)
 
Non-GSE issuance REMICs and CMOs

 
 

 
 
92

 
 
(1
)
 
 
92

 
 
(1
)
 
GSE pass-through certificates
71

 
 
(1
)
 
 
90

 
 
(1
)
 
 
161

 
 
(2
)
 
Obligations of GSEs
28,875

 
 
(1,125
)
 
 

 
 

 
 
28,875

 
 
(1,125
)
 
Fannie Mae stock

 
 

 
 
4

 
 
(11
)
 
 
4

 
 
(11
)
 
Total temporarily impaired securities
available-for-sale
$
169,584

 
 
$
(3,012
)
 
 
$
20,212

 
 
$
(833
)
 
 
$
189,796

 
 
$
(3,845
)
 
Held-to-maturity:
 

 
 
 

 
 
 

 
 
 

 
 
 

 
 
 

 
Residential mortgage-backed securities:
 

 
 
 

 
 
 

 
 
 

 
 
 

 
 
 

 
GSE issuance REMICs and CMOs
$
515,537

 
 
$
(7,457
)
 
 
$
131,629