Citing a writedown of Freddie Mac preferred stock, Astoria Financial Corp. in Lake Success, N.Y., said late Wednesday that it swung to a third-quarter loss of $16.5 million, or 18 cents a share, from a profit of $35.3 million, or 39 cents a share, a year earlier.
Excluding the $57.9 million other-than-temporary impairment charge on its Freddie stock, Astoria Financial said its operating profit increased 24%, to 46 cents a share, beating the average analyst estimate by 4 cents, according to Thomson Reuters.
The $22 billion-asset company said it would record a $7.4 million tax benefit for its Freddie losses this quarter.
It wrote down the value of the shares to $5.3 million as of Sept. 30 and took a capital loss. But a provision in the Emergence Economic Stabilization Act, enacted a few days after the quarter ended, allows such writedowns to be treated as an ordinary loss, creating a larger tax benefit.
As an ordinary loss, the impairment charge would have been $50.5 million, Astoria Financial said, and the tax benefit to be recorded this quarter will make up the difference.
Overall asset quality remains strong, despite an uptick in chargeoffs and nonperforming loans. Because of the weaker housing market, Astoria Financial's loan-loss provision rose 25-fold from a year earlier and nearly doubled from the second quarter, to $13 million, but nonperforming loans made up just 0.74% of total assets.
