Dec. 8--In the midst of the worst financial crisis to hit the United States since the Great Depression, some of Long Island's public banks are either feeling pretty boastful these days or taking their lumps.

The third quarter of 2008, which ended Sept. 30, will probably go down as one of the worst for many businesses nationwide. In September alone, in the wake of the subprime mortgage crisis:

Lehman Brothers filed for bankruptcy;

The federal government seized the housing-market giants Fannie Mae and Freddie Mac and took control of the global insurer American International Group;

And Washington Mutual, once the country's largest savings and loan, was seized by the Federal Deposit Insurance Corp. and sold to JPMorgan Chase.

Investors who held securities in those companies have seen their investments essentially wiped out. The latest quarterly filings of Long Island banks provide a window into how the soured investments affected local earnings.

Half of the eight public banks here had to take charges against earnings in the third quarter, most of them sizable, to account for troubled investments, according to their Securities and Exchange Commission filings. The other half, which includes most of the smallest of the banks, prominently mentioned that they avoided the sour securities.

Strong Island banks

Overall, though, Long Island's banks are strong and faring much better than their considerably larger brethren in Manhattan, said Mark Fitzgibbon, director of research at the securities firm Sandler O'Neill & Partners in Manhattan, who follows most of the Island's public banks.

"While many of the large banks are reporting significant losses, there is a big difference between community banks on Long Island and what we are seeing just down the road in Manhattan," he said.

Astoria Financial Corp., the Lake Success-based parent of Astoria Federal Savings and Loan, took a $77.7-million pretax charge against earnings to account for the declining market value of its Freddie Mac preferred stock. The bank, which had valued the stake at $83.7 million as of June 30, has written it down to $5.3 million.

The other-than-temporary-impairment (OTTI) write-down, as such charges are formally known, reduced per-share earnings by 64 cents in the quarter's three months to a loss of 18 cents

a share, compared with a 39-cent per-share profit a year ago, the bank's SEC filing shows. Astoria, the largest thrift headquartered in New York State, posted a $16.5-million net loss for the quarter, compared with a profit of $35.3 million the year before.

With so many larger banks' lending ability impaired by soured investments, Astoria's president and chief operating officer, Monte Redman, emphasized that his bank isn't one of them.

"Our loan production is actually up by double digits from last year," Redman said.