Astoria Financial Corp., the Lake Success company that owns Astoria Federal Savings and Loan Association, reported year-end earnings late Wednesday of $73.7 million, more than two and a half times 2009's earnings of $27.7 million.
At the same time, company chairman and chief executive George Engelke Jr., 72, announced that in July, he will give up the chief executive role and remain as chairman. Monte Redman, 60, now Astoria's president and chief operating officer, will become chief executive. (Engelke appears at left.)
"After a wonderful 40-year career at Astoria Federal, including 22 years as chief executive officer, it is the right time to step down as CEO," Engelke said in a statement. He said he was particularly proud of his role in taking the company public in 1993 and its expansion since then. Redman has worked at Astoria for 33 years.
Engelke said Astoria's improved earnings in 2010 are mostly the result of a 4-percent decrease in bad loans to $391 million, which in turn lowered Astoria's credit costs. The bank also benefited from a 13-percent increase in deposits, to $4.6 billion, which provided plenty of cheap capital.
The decrease in bad loans also enabled Astoria to set aside $85 million less in 2010 to cover potential losses in bad loans, further boosting income.
However, the bank's total assets continued to decline, shrinking $2.2 billion in the past year to $18.1 billion. Engelke said Astoria suffered from the federal government's efforts to stimulate loan demand, which has made the bank's primary source of loan income, jumbo hybrid adjustable rate mortgages, less competitive.
Engelke said the bank has chosen to accept the asset shrinkage, rather than loosen credit standards or keep on its books 30-year mortgages, whose value will decrease when interest rates eventually rise.
Astoria Federal has 85 branches on Long Island and in Brooklyn and Queens. It seeks mortgage business throughout the East Coast.
Read more of Inside Long Island Business