Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of bank holding company Astoria Financial (NYSE: AF) dropped as much as 10% in early Thursday trading. (They've since recovered somewhat.)

So what: Astoria reported second-quarter earnings last night that missed Wall Street estimates pretty badly. Analysts had been hoping for $0.23 per share, but Astoria fell a nickel shy of that mark. Management further warned that this year's net interest margin (the difference between the interest rate Astoria pays its depositors and the interest rate it charges on its loans) will shrink in comparison to last year, hurting profitability.

Now what: I wouldn't be too worried about this, though. While the stock's not exactly "cheap" at 13 times earnings, with long-term growth pegged at 7.5% per year, Astoria pays a nice 4% dividend that helps to make up the difference. I also like the conservative moves I'm seeing in yesterday's news: higher provisions against potential loan losses, increasing attraction of deposits from individuals, fewer delinquencies, and improved tangible common equity and tier-1 capital ratios.

Seems to me, Astoria is being punished for making moves to secure itself against an uncertain economy. If the overreaction continues, and the shares get a bit cheaper, I might want to take advantage of that overreaction.

Will Astoria's efforts pay off in the long run? Add it to your Watchlist and find out.

Fool contributor Rich Smith holds no position in any company mentioned. Click here to see his holdings and a short bio. Try any of our Foolish newsletter services free for 30 days.

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