CORRECTED-UPDATE 1-Astoria Financial 2006 4th-qtr profit fell

(Corrects earnings period to fourth quarter, from third quarter, in first paragraph of story that ran in January 2007)

(Adds CEO comment, detail)

NEW YORK, Jan 25 (Reuters) - Astoria Financial Corp. (AF.N), a large New York savings and loan, on Thursday said fourth quarter profit fell, hurt by interest margins.

Net income for the Lake Success, New York-based thrift declined to $37.1 million, or 39 cents per share, from $57.7 million, or 57 cents a share, a year earlier.

Analysts polled by Reuters Estimates, on average, were expecting 39 cents a share.

"The persistence of an inverted yield curve environment during the fourth quarter and most of the year continued to exert pressure on our net interest margin and earnings while limiting opportunities for profitable balance sheet growth," said Chief Executive George Engelke, Jr., in a statement.

The company also declared a quarterly cash dividend of $0.26 per share, an increase of 8 percent, payable on March 1 to shareholders of record as of Feb. 15.

Net income for the year totaled $174.9 million, or $1.80 per share, compared to $233.8 million, or $2.26 per share, for the prior year.

Annual deposits increased 3 percent, over the prior year to $13.2 billion and the company's securities portfolio decreased 19 percent, to $5.3 billion. The company also repurchased 8.4 million shares during the year.