Seeking Alpha
We cover over 5K calls/quarter
Profile| Send Message|
( followers)  

Astoria Financial (NYSE:AF)

Q4 2013 Earnings Call

January 30, 2014 10:00 am ET

Executives

Monte N. Redman - Chief Executive Officer, President, Director, Chief Executive Officer of Astoria Federal Savings & Loan Association and President of Astoria Federal Savings

Frank E. Fusco - Chief Financial Officer, Senior Executive Vice President and Treasurer

Analysts

Casey Haire - Jefferies LLC, Research Division

Brian Kleinhanzl - Keefe, Bruyette, & Woods, Inc., Research Division

Steven A. Alexopoulos - JP Morgan Chase & Co, Research Division

David Darst - Guggenheim Securities, LLC, Research Division

Bob Ramsey - FBR Capital Markets & Co., Research Division

Matthew Brandon Kelley - Sterne Agee & Leach Inc., Research Division

Thomas Alonso - Macquarie Research

Matthew J. Keating - Barclays Capital, Research Division

Operator

Good day, and welcome to Astoria Financial Corporation's Fourth Quarter and Full Year 2013 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

Today's conference call includes several forward-looking statements, which are intended to be covered under the Safe Harbor provision for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are within the meaning of Section 27A of the Securities Act of 1933 as amended and section 21E of the Securities Exchange Act of 1934 as amended. A discussion of the risk factors associated with the use of forward-looking statements is outlined on Page 7 of our fourth quarter 2013 earnings release, which is available on our website or may be obtained from the company upon request.

It is now my pleasure to turn the conference over to Mr. Monte N. Redman, President and Chief Executive Officer of Astoria. Mr. Redman, you may begin.

Monte N. Redman

Thank you, Diego, and good morning, and welcome to our Fourth Quarter and Full Year 2013 Earnings Conference Call. Joining me this morning are Frank Fusco, our Chief Financial Officer; and Ted Ayvas, our Investor Relations officer.

Last night, we reported fourth quarter net income available to common shareholders of $18 million or $0.18 per common share. For the year ended December 31, 2013, net income available to common shareholders totaled $59.4 million or $0.60 per common share. Included in the full year results was a $4.3 million prepayment charge, $2.8 million or $0.03 per common share after-tax for the early extinguishment of debt during the 2013 second quarter in connection with the redemption of $125 million of capital securities.

Net interest income for the quarter ended December 31, 2013, totaled $86.8 million, compared to $86.2 million for the previous quarter and $87.4 million for the 2012 fourth quarter. The net interest margin for the 2013 fourth quarter increased to 2.31% from 2.28% for the previous quarter and 2.21% for the 2012 fourth quarter. For the year ended December 31, 2013, our net interest income margin increased to 2.25% from 2.16% for the 2012 comparable period.

In the 2013 fourth quarter, we recorded a provision for loan losses of $3.4 million, compared to $2.5 million in the prior quarter and $10.9 million for the 2012 fourth quarter. The level of provision is a continued reflection of the improvement in our asset quality metrics, as well as the contraction of the overall loan portfolio. Compared to the year ended December 31, 2012, net loan charge-offs declined 50% to $26.1 million for the 12 months ended December 31, 2013, and nonperforming loans greater than 90 days delinquent declined 17% to $251 million at December 31, 2013. The allowance for loan losses coverage ratio to the total loan portfolio remains strong at 1.12%.

The total loan portfolio decreased $99 million and $782 million from September 30, 2013 and December 31, 2012, respectively, and totaled $12.4 million at December 31, 2013. The multi-family/commercial real estate loan portfolio increased $169 million or 4% from September 30 and $929 million or 29% from December 31, 2012 to $4.1 billion at December 31, 2013, representing 33% of the total loan portfolio, well on its way to our target of 45% by the end of 2015. While the multi-family/commercial real estate loan portfolio grew during 2013, the residential loan portfolio declined $261 million from September 30, 2013 and $1.7 billion from December 31, 2012, representing a 17% contraction in the portfolio for the year ended December 31, 2013.

During the fourth quarter, as longer-term interest rates moved higher, we experienced a more dramatic slowdown in residential loan prepayments, the early signs of which we have begun to see in the 2013 third quarter. At December 31, 2013, core deposits totaled $6.6 billion, with a weighted average rate of just 11 basis points and represented 67% of total deposits, compared to 62% year ago.

Our continued focus on growing our Business Banking operations continues to pay dividends by providing us with low cost core deposits. At December 31 of this year, business deposits totaled $650 million, representing a 32% increase from December 31, 2012.

Operating expense totaled $69 million for the 2013 fourth quarter, compared to $73 million for the previous quarter, primarily due to reduction in advertising expense. However, we remain comfortable with the $72 million to $75 million range going forward that we have previously discussed, especially as we continue to invest in expanding our Business Banking operations.

Looking towards the future. It is clear to us that our strategy to become a full-service community bank is taking hold. As we move forward, we will continue to execute the strategy to further diversify the balance sheet and improve our net interest margin. Business Banking will remain our focus, and we expect to open our first full-service branch in Manhattan by the end of the first quarter. In addition, we plan to open 2 more full-service branches in the second half of the year in prime locations within our market for which to better serve our Business Banking clients. We anticipate that our net interest margin in '14 will be higher than the 2.25% margin we achieved in '13. In addition, we believe, we will experience a growth in earning assets in 2014, as a contraction we have witnessed over the past several years in our residential mortgage portfolio continues to slow down and the growth in our multi-family/commercial real estate portfolio starts to outpace the shrinkage.

And now I'd like to open up the line for questions.

Question-and-Answer Session

Operator

[Operator Instructions] Our first question is coming from Casey Haire with Jefferies.

Casey Haire - Jefferies LLC, Research Division

First question, just on NIM dynamics. The release mentioned it's better than 2.25%. Obviously, we're at the 2.30% starting point. Can you just give us some help on the progression going forward? And some of the drivers, is it -- can loan yields stabilize? And do you expect some more easing on the funding side?

Monte N. Redman

Well, I think it's is a combination of things. As the prepayments in the residential loan portfolio slows down, that means that there is less premium being expensed in the margin from that part. And I think that's a big piece as -- it also means that they have less loans or the higher coupon loans paying off as well. And I think the rates on the multifamily as well as residential has stabilized. So it's a combination that, as we continue to grow core deposits and as our CDs roll off, we have about $900 million of CDs rolling off in the first half of this year at about 82 basis points on average. In December, we rolled matured CDs into new CDs at about 10 basis points. So there's a funding benefit, and I think, as I said on the asset side, there is less premium being expensed as well.

Casey Haire - Jefferies LLC, Research Division

Okay, great. And then on the balance sheet outlook, are we going to get the inflection -- do you feel good about getting an inflection point this quarter with possibly a stickier resi book and continued momentum on the multi-family/CRE side?

Monte N. Redman

It's coming. We had a reduction of only about $99 million on the loan portfolio in the fourth quarter. Whether it be the first quarter or the second quarter this year, we expect that to start then. So it's either late in the first quarter or the beginning of the second quarter, definitely by the end of the year, we expect earning assets and assets to be higher than the start of the year.

Casey Haire - Jefferies LLC, Research Division

Got you. And then just last one, sort of longer term. As you guys continue to mix the asset side of the balance sheet, I know you're targeting that 45% level of multi-family/CRE. Where does that put you guys in terms of the qualified thrift lender test? By my math, you'd be a little bit below that 65% threshold. Is the thought there to manage around that with a bigger securities book, or is there a thought to convert to a commercial charter?

Monte N. Redman

With this, no -- there's no problem in there. We're not looking to -- we are a full-service community bank. The operations we're doing going forward in both Business Banking and multi-family lending are not a problem with the charter.

Operator

Our next question comes from Brian Kleinhanzl with KBW.

Brian Kleinhanzl - Keefe, Bruyette, & Woods, Inc., Research Division

So you did mention that you're expecting earning asset growth in 2014, but could you guys give us an idea of what type of earning asset growth? Is it less than 1%, is it 10%, and what's kind of the mix shift there in the growth?

Monte N. Redman

Somewhere in between. I would think -- I'm hesitant to give numbers at this point since we haven't had the growth here. But as I said, it'll either start in the -- toward the end of the first quarter or the beginning of the second quarter. I would imagine that, as the prepayments have slowed down, as we've shown that we can continue to grow the multi-family portfolio. As the multi-family prepayments from our legacy portfolio slow down, more of the originations from our multi-family operation will be as part of net growth as we lose less and less of the legacy portfolio, which is a slower part of the portfolio. So I think the fact that -- we'll expect growth going forward is a positive thing for us. So we're not really giving targets. We're just looking at -- there will be growth in starting -- at the latest, in the second quarter.

Brian Kleinhanzl - Keefe, Bruyette, & Woods, Inc., Research Division

Okay. And you mentioned that you're adding bankers and also adding branches in 2014. Is there any opportunity elsewhere to cut costs outside of what the ESOP expenses that's rolling off already?

Monte N. Redman

No. I think we've done a very good job in cutting costs and bringing down the efficiency ratios without growing the revenue significantly. Because in my mind, the efficiency ratio's a big part of revenue ratio. In 2012, we went through a review of the entire operation. We constantly look for other expense savings, but quite frankly, there is, in terms of compliance, in terms of regulatory course, in terms of what that -- there's areas that we can't cut. So we feel very good about where we are in terms of actual expenses. And really, the key thing for us is growing revenue, growing top line above our revenue is key. Opening branches, so as you said, we'll open our first branch in Manhattan in the first quarter and we hope to open 2 more branches and to help drive that revenue growth.

Frank E. Fusco

And I think that's also why we commented that we're comfortable on the G&A side in that 72% to 75% range. With opening those branches and the continued push in Business Banking, there's going to be some marketing and branding push there as well. So there's not real -- we've said this before. The savings we get from ESOP and the other savings we've had, we think it makes sense to reinvest that into growing business line.

Monte N. Redman

Yes. The one area that -- in addition to the ESOP is FDIC insurance. We worked very hard at that. As you could see, a significant decrease in the prior year. And as our IO portfolio hits the break targets, we'll actually get some benefit of that hopefully at the end of the year, or we'll start seeing some benefit, if not the end of this year, at least going into 2015.

Brian Kleinhanzl - Keefe, Bruyette, & Woods, Inc., Research Division

And just the last one for me. What was the multi-family prepaid income in the quarter?

Monte N. Redman

Sure. The prepay income for the quarter was $1.6 million, compared to almost $2 million a year ago fourth quarter. And for the year, 2012 prepayment income was $8.4 million, compared to about $6.4 million this year. So as I've said from previous calls, prepayment income of multi-family is not a big piece of our margin.

Operator

Our next question comes from Steven Alexopoulos with JPMorgan.

Steven A. Alexopoulos - JP Morgan Chase & Co, Research Division

Can you help us think about the decline in resi mortgage loans that's underlying the target to get the 45% of CRE and multi-family by year end '15? I know it's not going to be down as much as $1.7 billion this year, but could it go down a $1 billion in 2014, and then flatten out in 2015? What's underlying that target?

Monte N. Redman

Well, I would say that the -- absent interest rates rising significantly, which is not what we project, you need to take a look at the fourth quarter where prepayments were down about -- I mean, residentials were down about by $260 million compared to a significantly higher in the other quarters. So I would say that the fourth quarter would be a high level, and that it would be -- it would work its way down from there on a quarterly basis.

Steven A. Alexopoulos - JP Morgan Chase & Co, Research Division

Okay. And approximately, what's the yield that the resi mortgage loans are coming out of the portfolio?

Monte N. Redman

About 3.5%.

Steven A. Alexopoulos - JP Morgan Chase & Co, Research Division

3.5%, okay. And then, finally, what's the incremental reserve that you're putting on the new commercial real estate and multi-family?

Monte N. Redman

Well, when we take a look at our reserves, let's take a look at all the components in there. I will say this, as we take a look at analysis in the loans we originated into new multi-family portfolio, we haven't even had a single 30-day delinquent. So when you take a look at history, that takes -- that's one piece of our analysis. Clearly, there's a lot of analyses we go through in terms of our entire portfolio and reviewing history and industry analytics, determining what our reserve components are.

Steven A. Alexopoulos - JP Morgan Chase & Co, Research Division

Okay. I mean, I guess, since the portfolio hasn't seasoned, I wouldn't expect you'd have any degradation of the portfolio this early. But I think a lot of banks are sort of 50 to 70 bps, seems to be the range. Would you at least be somewhere in that range?

Frank E. Fusco

Well, the way we work it, as Monte said, is we slice and dice the resi and the multi-family book into a variety of categories. So we look at our total allowance looking at the -- what we refer to as our legacy portfolio. And then, when we review the new portfolio, the new originations we're doing, we look at our historical metrics, as well as peer metrics, as well as other regulatory metrics. So it's a blended number.

Monte N. Redman

And we say that the 1.12% is a very strong number. And I have said previously that, clearly, our target could be somewhere around 1%. And as the analytics go forward in terms of reducing our nonperforming loans, especially the ones that have already been reserved for were charged off as necessary. Clearly, that number may even go a little lower. But we feel it's a good number at this point.

Operator

The next question comes from David Darst with Guggenheim Securities.

David Darst - Guggenheim Securities, LLC, Research Division

So if we -- [indiscernible] to reinvest the savings from the ESOP, but this quarter, you did have lower advertising. So should we kind of rebuild the advertising budget first for starting point for 2014 expenses?

Monte N. Redman

Yes, definitely. As we open our first branch, as we go into supporting both our business and retail operations, we will look at advertising going back to a more normal number. And probably, I would estimate that, on a quarterly basis, it would be probably somewhere in the $3 million range.

David Darst - Guggenheim Securities, LLC, Research Division

Okay, great. And then since you're thinking about the funding and the growth for the second half of the year, you've had the benefit of letting the CDs run off at the same time as the cash flows have picked up in the loan portfolio. Do you have the base today to grow deposits in step with loans and bring down your loan-to-deposit ratio by year-end?

Monte N. Redman

It's interesting. When people take a look at loan-to-deposit ratios, there are less people out there that have broker deposits instead of borrowings. And sometimes, these ratios are a little misleading. The other thing that I'd like to point out is that we saw a positive gap. Despite the fact that our interest, our cash flows on the asset have slowed down as rates have risen, we still have a positive interest rate sensitivity gap of 1 year. And when you take a look at where rates are in trying to get customers go longer term, as we build our core deposits, so we're not quite near to the 80% level we want to be by the end of '15. But in the interim, it is very good to get some borrowings to help protect interest rate risk by going longer term, 2, 3, 4, 5 years. So we think it's a positive thing. I think that we can grow core deposits. We have -- as I said, we are opening a branch, we're looking to open 2 more branches. We're hiring -- we have plans to hire at least 15 more relationship managers and then staff in our Business Banking operations to support that. We have a lot of things going forward. Half of our branch managers of our branches -- or half of our branches are staffed by commercial bankers. So yes, we feel that we can grow our deposits. Will it significantly bring down that loan-to-deposit ratio? I'm not sure that will happen, but I think that we feel good about where we are with that, especially in terms of using outside money to protect against interest rate risk.

Frank E. Fusco

And I think [indiscernible] in the longer term, we see that ratio coming down. As Monte said, you open up a branch, you don't get those deposits right away. Our multi-family book is -- and multi-family team is fully engaged and growing. So I think for -- in the near term, that ratio probably does not come down right away. But we're confident in our ability to grow that deposit base over the long term.

Operator

Your next question comes from Bob Ramsey with FBR.

Bob Ramsey - FBR Capital Markets & Co., Research Division

Wanted to be sure I understood a couple of the expense points correctly. Monte, did you say that advertising goes back to about $3 million in the first quarter? And if that's the right number, is that promotional? Does it come back down for the year on a normalized level because that seems a bit high to me, just relative to where you've been.

Monte N. Redman

It probably stays there or you're wrong and it is promotional because we are looking at, again, expanding our Business Banking operation in general and supporting our branch openings in particular. So I would expect that to be all year long.

Frank E. Fusco

Yes. I think, is it exactly $3 million per quarter? Maybe not, depending on the timing. So if the branch opening is later this quarter, maybe all of that expense is in there. But if you look at the last 2 years, our fourth quarter is always light. If you look at other quarters during the year, we've historically run in the -- just north. So with the additional promotions and the additional branch openings, that's where Monte is looking at normalized $3 million per quarter. But not every quarter will be an equal $3 million.

Monte N. Redman

Which gets back to that $72 million to $75 million range guidance.

Bob Ramsey - FBR Capital Markets & Co., Research Division

Okay. So maybe it's $11 million to $12 million for the year with a little bit of variation in timing, but that's kind of what is it is for the year on advertising, and $72 million to $75 million of total expenses for the year -- per quarter for the year.

Monte N. Redman

Yes.

Bob Ramsey - FBR Capital Markets & Co., Research Division

Then on loan growth, I know you guys have been asked a few different ways and it certainly helps, I guess, that the prepayments are slowing. But I know you all also highlighted in the release that on the commercial side, with a move-up in rates, that's been a factor, and sort of little bit smaller pipeline and loans activity in the fourth quarter. How do you think about commercial loan growth in 2014 in dollar terms? Is it similar to the $900 million plus that you all did in 2013, or do you think that the dollar amount of commercial growth is a little bit lower, just given the environment?

Monte N. Redman

No. I think the originations will be similar to 2013, in fact, 2012. I think that the loan growth, the net growth of our multi-family portfolio, should be similar, if not slightly higher, because I would expect prepayments to slow down. So yes, it's a very competitive market. But I think that we've shown that we are a player in the market and that our operation is very efficient, and it's bringing loans to us from borrowers and brokers alike.

Bob Ramsey - FBR Capital Markets & Co., Research Division

Okay, that's helpful. And then, I was curious, too. I noticed on the resi side, you guys said in the release that the average loan size originated this quarter was about $582,000, which seemed like a pretty significant drop in average loan size from what you're doing earlier in the year. I think you averaged more like $720,000. Was there anything different this quarter on the resi side? And then could you remind me, do you all originate -- I know you don't portfolio any conforming fixed-rate mortgages -- but do you portfolio conforming ARMs?

Monte N. Redman

Yes, we do, but it's not a lot. I think the average size was down in the fourth quarter mostly because the total originations were down and therefore, we did a lot of easy refinances, which were some of our old loans that were jumbos back before they raised the conforming level. And that was one of the reasons why that level was down. So it's not like we went out and did a lot of new conforming ARMs. It was mostly refinancing some of our older loans.

Bob Ramsey - FBR Capital Markets & Co., Research Division

Okay, that helps. And then final question I've got for you, it seems like a pretty favorable swing in AOCI this quarter, which was up about $40 million. That seemed like big swing relative to the size of your securities book, and so I was just kind of curious what else might've been a factor in that favorable swing.

Monte N. Redman

Yes. That had to do with the revaluation of our pension assets in terms of the increase in the assets as well as the increase in the discount rate relating to the negative amount in our OCI.

Frank E. Fusco

It's the unfunded pension obligation that's reflected in your OCI. It's -- you update that on an annual basis, so most institutions should see that across the board with the higher rates. Yes. $30 million.

Monte N. Redman

Yes, a $30 million change. So that's not related to our security portfolio.

Operator

Our next question comes from Mark Fitzgibbon with Sandler O'Neill.

Unknown Analyst

This is actually Matt [ph] filling in for Mark. A question for you. What was your 1-year static GAAP at year end?

Monte N. Redman

It's a positive, about 2%.

Unknown Analyst

Okay. And I apologize if I missed it, but the multi-family loan yield on the pipeline, did you provide that?

Monte N. Redman

The pipeline, no. It's about in the 3.60s. It's slightly lower than it was in September.

Unknown Analyst

Okay. And can you give us a sense of the step-down in premium amortization expense quarter-to-quarter?

Monte N. Redman

Yes. In a linked-quarter basis, it was probably about $2.25 million or maybe $2.4 million.

Unknown Analyst

Okay. And I'm sorry, the absolute level of premium amortization expense in 4Q?

Monte N. Redman

About $6 million.

Unknown Analyst

Okay. And then...

Frank E. Fusco

It includes premiums of the security book as well, Matt [ph].

Monte N. Redman

Yes.

Unknown Analyst

And then just finally, I know there are several moving parts to it, but with the lower FDIC insurance expense, but in particular, you pointed to IO thresholds. Can you remind us what the balance of the IO portfolio is now, and then that threshold level?

Monte N. Redman

Our IO portfolio is about $2.2 billion, and that threshold is somewhere around $1.6 billion, I believe.

Frank E. Fusco

Yes.

Unknown Analyst

Okay. And just for magnitude, kind of what have you been seeing from a quarter-to-quarter step-down in the IO portfolio? What's a reasonable sequential decline?

Monte N. Redman

Well, we reduced the IO portfolio in 2013 by about $700 million. So it's not exactly symmetrical in terms of every quarter, but for the year, it's about $700 million.

Frank E. Fusco

Clearly, as the portfolio shrinks, there's that many less that will transfer over. Additionally, as we move out closer to '15 and '16 is when more of those loans will naturally become amortizing. So the borrow behavior expected there as well. I think, going back to your FDIC premium assessment, I think the -- that there are a lot of components. The improvements that we've made overall financially from an earnings perspective, our balance sheet mix, our capital have reacted favorably to our assessment rate.

Operator

Our next question comes from Matthew Kelley with Sterne Agee.

Matthew Brandon Kelley - Sterne Agee & Leach Inc., Research Division

I was wondering as you're building out the commercial real estate multi-family portfolio, probably doing a little bit more business in the city specifically, what's going to happen with your tax rate over the next year or 2?

Monte N. Redman

Tax rate? Actually, our -- I would expect our effective tax rate to go down slightly as we have less -- we don't have any ESOP expense.

Frank E. Fusco

Yes. Actually, the biggest benefit we're going to get in our overall effective tax rate moving forward was that the majority of our ESOP expense was not tax deductible. So we have an expense without tax benefit. So we would expect our effective tax rate for '16 -- for 2014 to be slightly lower than it is right now.

Matthew Brandon Kelley - Sterne Agee & Leach Inc., Research Division

Okay, got it. And then just to be clear, what was the total stock-based compensation and expense during the fourth quarter? What are we running at now? Is that ESOP that's completely gone? What's left on any other issues -- items?

Monte N. Redman

You want a break down on stock-based compensation?

Matthew Brandon Kelley - Sterne Agee & Leach Inc., Research Division

I was trying to get -- is there any additional benefits going forward or reduction?

Frank E. Fusco

Well, there's always annual benefit expense that we have from stock awards that vest over a period of time. So whenever those are awarded by the board, they're amortized over the vesting period.

Monte N. Redman

Yes, take a look at our proxy. We have our restricted stock awards as well as performance stock awards and -- those details are in our proxy.

Matthew Brandon Kelley - Sterne Agee & Leach Inc., Research Division

Okay. Then another question of your multi-family originations during the quarter, how much was beyond 5 years in maturity? Any activity there?

Monte N. Redman

Beyond 5 years?

Frank E. Fusco

I'm sorry, [indiscernible]?

Monte N. Redman

Yes. I don't have the numbers in front of me. There was a number of underlying coop loans and the usual underlying coop loans are usually about 10 years. So there was a good portion of them that were 10 years, there was a lot of the other lending was mostly 5 years and a little some 7 year. I don't have the breakdown.

Operator

Our next question comes from Tom Alonso with Macquarie.

Thomas Alonso - Macquarie Research

I think I probably missed this earlier, so I'm sorry to make you repeat it. But when you guys are talking about sort of loan growth and the earning asset growth in '14, is that the idea that the 1 to 4 family portfolio kind of stabilizes or it continues to run off at a lower rate, and then the multi-family growth offsets that?

Monte N. Redman

Yes, we're looking at -- we're not looking at the residential portfolio stabilizing and -- we're looking at that runoff to shrink and to be a lot less. If you take a look at -- that portfolio shrunk by $1.7 billion during '13, but only by about $260 million in the fourth quarter. Annualize that, that's about $1 billion, and we expect that to be less than that as we go forward, especially as that portfolio is smaller. So when you look at that -- when you talk about earning asset growth, we're talking about the growth of our multi-family as well as our Business Banking loan to outpace the shrinkage of the residential portfolio.

Thomas Alonso - Macquarie Research

Okay, perfect. And then on the security side, that -- probably, those balances are likely to remain flat. Are you going to use some of that runoff to fund some of this growth?

Monte N. Redman

Yes, flat to slightly up would be for the year. If we're up $100 million this year, it will be something similar.

Operator

Our next question comes from Matthew Keating with Barclays.

Matthew J. Keating - Barclays Capital, Research Division

I was hoping for some more color around the branch expansion strategy, granted there's only 3 branches this year, sort of 3% of your footprint. But if you go back in time, it seems like your branch count has been relatively stable around the 85 range since '02. So maybe you could just talk about, longer term, what you see the benefits from this expansion would be because we are in an environment where a lot of banks live across the U.S. I think branch count last year was down by about 1,500 branches across the nation. So maybe you can just talk about the benefits you see from having a greater physical presence in your footprint.

Monte N. Redman

Well, 2 things. One, I think our branch network versus branches around the country are comparing apples and oranges. Our branch network averages about $120 million a branch. So these are very big, very strong, very successful branches. But they're in majority of residential areas, and our expansion efforts are really in looking at business areas. So our first branch in Manhattan, around Midtown. Our other branches this year would be probably another one in Manhattan, and probably one in business areas in our marketplace, whether it be in Nassau or Suffolk or some of the other counties we are in. So we're not looking to expand in our -- in residential retail areas. We feel that our 85 branches, if you will, cover that very well in our marketplace. We have a really -- we believe we have the best footprint in our marketplace already, but we're looking to expand in business areas. And I think that's what we'll -- that's what you'll see this year and the next couple of years.

Matthew J. Keating - Barclays Capital, Research Division

Okay. And when you open sort of these more business-focused branches, what's the kind of the estimated payback time when they kind of reach breakeven? How long do you guys typically model that happening for branches such as these?

Monte N. Redman

Yes. I would say, in terms of breakeven, it's about 3 years.

Operator

Since there are no further questions, I would like to turn the conference back over to Mr. Monte Redman for any additional or closing remarks.

Monte N. Redman

Okay. Thank you for participating in our conference call this morning. We're very pleased with the progress we are making in repositioning the balance sheet, and we are committed to continuing this strategy to improve the quality of future earnings and enhance the value of our franchise. We look forward to our next earnings conference call in April. Have a good day.

Operator

Thank you. All parties may disconnect.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!

Source: Astoria Financial Management Discusses Q4 2013 Results - Earnings Call Transcript
This Transcript
All Transcripts