UPDATE: JP Morgan Lowers Target to $8 on Astoria Financial

JP Morgan reiterates its Underweight rating on Astoria Financial

and lowers its price target by half a dollar to $8 as returns are likely to get squeezed in 2012, despite the company's cost cutting initiatives. JP Morgan says, "2012 NIM is expected to be similar to the 4Q level of 2.20% in 2012. Astoria has $3.5 billion in CDs repricing this year at 1.13%, $1 billion of borrowings at 3.65%, offset by $3.85 billion of residential loans repricing down (at 4.16%). ESOP expense of $3 million is expected in 1Q with this continuing to be a factor until 1H13. AF will petition the FDIC to lower expense for 4Q but is less optimistic they will see any benefit over the next few quarters. The allowance could go down a little but not meaningfully." AF closed at $8.48 a share on Thursday.