-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BGSz7hVlN//MhFlTfP8TdjIW5BlAyn1avh+vRpcRr461JZHVLpmcsUqa3JH+glDu QIMuqzTBE49rf+wSBIxZbQ== 0001145443-04-001765.txt : 20041112 0001145443-04-001765.hdr.sgml : 20041111 20041112162341 ACCESSION NUMBER: 0001145443-04-001765 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20040930 FILED AS OF DATE: 20041112 DATE AS OF CHANGE: 20041112 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ATLANTIC LIBERTY FINANCIAL CORP CENTRAL INDEX KEY: 0001172095 STANDARD INDUSTRIAL CLASSIFICATION: SAVINGS INSTITUTION, FEDERALLY CHARTERED [6035] IRS NUMBER: 161615014 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-49967 FILM NUMBER: 041139658 MAIL ADDRESS: STREET 1: 186 MONTAGUE ST CITY: BROOKLYN STATE: NY ZIP: 11201 10QSB 1 d15691.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 10-QSB QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2004 Commission file number 000-49967 Atlantic Liberty Financial Corp. Delaware 16-1615014 186 Montague Street, Brooklyn, New York 12201 (718) 855-3555 Check whether the issuer: (1); filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirement for the past 90 days. Yes [X] No [ ] State the number of shares outstanding of each of the issuer's classes of common equity as of the latest practicable date. As of September 30, 2004, the Registrant had outstanding 1,681,094 shares of common stock. Transitional Small Business Disclosure format Yes [X] No [ ] ATLANTIC LIBERTY FINANCIAL CORP. Form 10-QSB Quarterly Report Index
Page ---- PART I - Financial Information Item 1. Financial Statements 1 Item 2. Management's Discussion and Analysis of 9 Financial Condition and Results of Operations Item 3. Controls and Procedures 17 PART II - Other Information Item 1. Legal Proceedings 18 Item 2. Changes in Securities and Small Business Issuer 18 Purchases of Equity Securities Item 3. Defaults Upon Senior Securities 18 Item 4. Submission of Matters to a Vote of Security Holders 18 Item 5. Other Information 19 Item 6. Exhibits and Reports on Form 8-K 19 SIGNATURES 20
ITEM 1. FINANCIAL STATEMENTS Atlantic Liberty Financial Corp. Consolidated Statements of Financial Condition (in thousands of dollars) (unaudited)
At At September 30, March 31, 2004 2004 ASSETS Cash and cash equivalents Cash and amounts due from depository Institutions $ 1,309 $ 1,276 Interest earning deposits 5,407 2,284 -------- -------- Total cash and cash equivalents 6,716 3,560 -------- -------- Investment securities: Available for sale 1,284 2,333 Held to maturity 1,012 2,016 Mortgage-backed securities: Available for sale 810 1,088 Held to maturity 45,978 30,691 Loans receivable 119,565 113,059 Investment in real estate 78 78 Premises and equipment 1,539 1,513 Federal Home Loan Bank of New York Stock 2,268 1,160 Interest receivable 808 722 Deferred income tax 470 370 Other assets 4,136 3,413 -------- -------- Total Assets $184,664 $160,003 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities Deposits $109,124 $107,861 Federal Home Loan Bank of New York Advances 45,350 23,200 Advance payments by borrowers for taxes and insurance 977 945 Other liabilities 1,987 1,766 -------- -------- Total Liabilities 157,438 133,772 Commitments & Contingencies - - Stockholders' equity - Preferred Stock $.10 par value, 500,000 shares authorized; none outstanding - - Common Stock $.10 par value, 6,000,000 shares authorized 1,710,984 Shares Issued-shares outstanding-1,681,094(9/04);1,691,584(3/04) 171 171 Paid in Capital 16,581 16,366 Retained Earnings-substantially restricted 12,059 11,115 Unearned ESOP Shares (992) (1,061) Accumulated other comprehensive income (19) 24 Treasury stock, at cost;29,890 shares (9/04);19,400 shares (3/04) (574) (384) -------- -------- Total Stockholders' Equity 27,226 26,231 -------- -------- Total liabilities and Stockholders' Equity $184,664 $160,003 ======== ========
See notes to consolidated financial statements. 1 Atlantic Liberty Financial Corp. Statements of Income (in thousands of dollars) (unaudited)
Three Months Six Months Ended September 30, Ended September 30, ------------------------- -------------------------- 2004 2003 2004 2003 ---------- ---------- ---------- ---------- Interest and dividend income Loans $ 1,897 $ 1,763 $ 3,747 $ 3,550 Mortgage backed securities 479 213 932 373 Investment Securities 58 24 123 40 Other interest-earning assets 18 28 29 50 ---------- ---------- ---------- ---------- Total interest income 2,452 2,028 4,831 4,013 ---------- ---------- ---------- ---------- Interest expense Deposits 417 446 830 902 Advances 300 75 549 94 Escrow 3 2 7 7 ---------- ---------- ---------- ---------- Total interest expense 720 523 1,386 1,003 ---------- ---------- ---------- ---------- Net interest income 1,732 1,505 3,445 3,010 Provision for loan losses 125 0 125 0 ---------- ---------- ---------- ---------- Net interest income after provision for loan losses 1,607 1,505 3,320 3,010 ---------- ---------- ---------- ---------- Non-interest income Service fees 90 53 198 103 Miscellaneous 868 49 914 105 ---------- ---------- ---------- ---------- Total non-interest income 958 102 1,112 208 ---------- ---------- ---------- ---------- Non-interest expenses Salaries and employee benefits 662 528 1,345 1,117 Directors Compensation 86 44 117 72 Net occupancy expenses 42 38 75 80 Equipment 101 93 201 167 Advertising 8 7 17 15 Federal Insurance Premium 4 4 8 9 Legal fees 136 43 262 73 Miscellaneous 192 208 379 380 ---------- ---------- ---------- ---------- Total non-interest expenses 1,231 965 2,404 1,913 ---------- ---------- ---------- ---------- Income before income taxes 1,334 642 2,028 1,305 Income tax expense 572 286 861 580 ---------- ---------- ---------- ---------- Net income $762 $356 $1,167 $725 ========== ========== =========== ========== Earnings per share Basic and diluted $0.48 $0.22 $0.74 $0.46 Weighted average shares 1,585,455 1,595,803 1,584,872 1,594,097 Fully diluted average shares 1,585,455 1,595,803 1,584,872 1,594,097
See notes to financial statements. 2 Atlantic Liberty Financial Corp. Consolidated Statements of Changes in Stockholders Equity
Retained Accumulated Additional Earnings- Unearned Other Common Paid In Substantially ESOP Comprehensive Treasury Stock Capital Restricted Shares Income Stock Total Balance - March 31, 2004 $ 171 $ 16,366 $ 11,115 $ (1,061) $ 24 $ (384) $ 26,231 -------- Net Income 1,167 1,167 Unrealized loss on securities available for sale (43) (43) -------- Comprehensive income 1,124 -------- Cash dividends (223) (223) ESOP shares committed to be released 57 69 126 Amortization of unearned MRP shares 158 158 Treasury stock, at cost (190) (190) ------------------------------------------------------------------------------------------ Balance - September 30, 2004 $ 171 $ 16,581 $ 12,059 $ (992) $ (19) $ (574) $ 27,226 ==========================================================================================
See notes to consolidated financial statements. 3 Atlantic Liberty Financial Corp. Consolidated Statements of Cash Flow (in thousands of dollars) (unaudited)
Six Months Ended Cash flows from operating activities September 30, 2004 2003 ------- ------- Net income $ 1,167 $ 725 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 80 83 Provision for loan losses 125 - Net accretion of premiums, discounts and deferred loan fees 79 190 Deferred income taxes (100) (176) ESOP compensation expense 125 123 Recognition and Retention Plan expense 158 - (Increase) in interest receivable (86) (92) (Increase) in other assets (723) (164) Increase (decrease) in other liabilities 221 (103) ------- ------- Net cash provided by operating activities 1,046 586 ------- ------- Cash flows from investing activities: Purchases of: Investment securities held to maturity (1,000) Investment securities available for sale (1,000) Mortgage-backed securities held to maturity (20,043) (19,816) Proceeds of maturities, calls and principal repayments on: Investment securities held to maturity 1,000 0 Investment securities available for sale 1,000 0 Mortgage-backed securities held to maturity 4,722 6,075 Mortgage-backed securities available for sale 277 350 (Increase) in loans receivable (6,665) (5697) Additions to premises and equipment (106) (24) Purchase of Federal Home Loan Bank of New York Stock (1,107) (178) ------- ------- Net cash (used in) investing activities (20,922) (21,290) ------- ------- Cash flows from financing activities: Increase in deposits 1,263 1,844 Increase in advance payments by borrowers for taxes and insurance 32 (236) Increase in Federal Home Loan Bank advances 22,150 19,600 Net proceeds from stock conversion - - Cash dividends paid (223) (86) Purchase of Treasury Stock (190) 0 ------- ------- Net cash provided by financing activities 23,032 21,122 ------- ------- Net increase in cash and cash equivalents 3,156 418 Cash and cash equivalents at beginning of period 3,560 6,237 ------- ------- Cash and cash equivalents at end of period $ 6,716 $ 6,655 ======= ======= Supplemental disclosures of cash flow information Cash paid for: Interest $ 1,386 $ 1,003 ------- ------- Federal, state and city income taxes $ 742 $ 483 ------- -------
See notes to consolidated financial statements. 4 Atlantic Liberty Financial Corp. Notes to Consolidated Financial Statements September 30, 2004 (Unaudited) Note 1- Basis of Presentation - ----------------------------- Principles of Consolidation: The accompanying Consolidated Interim financial Statements include the accounts of Atlantic Liberty Financial Corp. ("The Company") and its wholly owned subsidiary Atlantic Liberty Savings, F.A. ("The Association"). All significant inter-company balances and transactions have been eliminated. The Company began operations on October 22, 2002 following the completion of Atlantic Liberty Savings F.A.'s conversion from mutual to stock form. The accompanying unaudited interim consolidated financial statements have been prepared pursuant to the rules and regulations for reporting on Form 10-QSB. Accordingly, certain disclosures required by accounting principles generally accepted in the United States of America are not included herein. These interim statements should be read in conjunction with the Association's audited financial statements and notes thereto included in the Company's Annual Report on Form 10-KSB filed with the Securities and Exchange Commission by the Company. Interim statements are subject to possible adjustment in connection with the annual audit of the Company for the year ending March 31, 2005. In the opinion of management of the Company, the accompanying unaudited interim consolidated financial statements reflect all adjustments (consisting of normal recurring adjustments) necessary for a fair presentation of the consolidated financial position and consolidated results of operations for the periods presented. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Note 2- Summary of Significant Accounting Policies - -------------------------------------------------- Nature of Operations: The Association is a federally chartered stock savings and loan association, which maintains insurance on deposit accounts with the Savings Association Insurance Fund (SAIF) of the Federal Deposit Insurance Corporation. The Association is engaged in the business of retail banking with operations conducted through its main office and one branch, both of which are located in Brooklyn, New York. Use of Estimates in the Preparation of Financial Statements: The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and 5 assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expense during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for loan losses and the amount of deferred taxes, which are more likely than not to be realized. Management believes that the allowance for loan losses is adequate and that all deferred taxes are more likely than not to be realized. While management uses available information to recognize losses on loans, future additions to the allowance for loan losses may be necessary based on changes in economic conditions in the Association's market area. The assessment of the amount of deferred tax assets more likely than not to be realized is based upon projected future taxable income, which is subject to continual revisions for updated information. Note 3- Employee Stock Ownership Plan - ------------------------------------- As part of its conversion to stock form, the Association established an employee stock ownership plan (ESOP) for the benefit of eligible employees. The ESOP borrowed $1,368,790 from the Company and used those funds to acquire 136,879 shares of the Company's common stock at $10 per share. Shares held by the ESOP are released to ESOP participants based on principal and interest repayments made by the ESOP on the loan from the Company. The loan is secured by shares purchased with the loan proceeds and will be repaid by the ESOP with funds from the Association's discretionary contributions to the ESOP and earnings on the ESOP's assets. Principal and interest payments are scheduled to occur over a ten-year period. However, in the event the Company's contributions exceed the minimum debt service requirements, additional principal payment will be made. Principal and interest payments took place on December 31, 2002 and December 29, 2003 resulting in 13,688 shares being released to eligible employees in each year. Note 4- 2003 Incentive Stock Benefit Plan - ----------------------------------------- In November 2003, the Company's stockholders approved, and the Company implemented, the 2003 Incentive Stock Benefit Plan. Under the Stock Benefit Plan, employees and directors of the Company and its subsidiary may be awarded shares of Company common stock (the "Stock Awards") and issued options to purchase shares of Company common stock (the "Stock Options") covering up to 256,648 shares in the aggregate. Stock Awards Stock Awards under the Stock Benefit Plan are granted in the form of Company common stock, which are held by a Plan trustee, and vest over a period of five years (20% annually from the date of grant). The Stock Awards become fully vested upon the death or disability of the holder. On December 8, 2003, the Company awarded 85,550 shares of its common stock. At September 30, 2004, no Stock Awards were vested. During the quarter and six month periods ended September 30, 2004, approximately $79,000 and $158,000 respectively, in expense related to the Stock Awards was recorded. There was no similar expense recorded 6 during the three and six months periods ended September 30, 2003. The amount of expense recorded for the Stock Awards is based upon the number of shares awarded, the market price of the Company's common stock at the grant date ($18.50 per share) and the period over which the Stock Awards are earned (60 months). Stock Options Stock Options granted under the Stock Benefit Plan may be either options that qualify as incentive stock options as defined in Section 422 of the Internal Revenue Code of 1986, as amended, or non-statutory options. Options granted will vest and will be exercisable on a cumulative basis in equal installments at the rate of 20% per year commencing on December 8, 2003. All options granted will be exercisable in the event the optionee terminates his employment due to death or disability. The options expire ten years from the date of grant. On December 8, 2003, options to purchase 171,098 shares of Company common stock were granted, which include non-incentive stock options to directors and incentive stock options to officers and employees. The options granted, none of which were exercised or forfeited during the quarter ended September 30, 2004, are summarized as follows:
Shares - ----------------------------------------------------- Weighted Non- Exercise Average Exercise Incentive Incentive Total Exercisable Price Price - --------- --------- ----- ----------- -------- ---------------- 46,196 124,902 171,098 34,220 $18.50 $18.50 ====== ======= ======= ====== ====== ======
At September 30, 2004, 34,220 options were exercisable. The Company, as permitted by SFAS No. 123, recognizes compensation cost for stock options granted based on the intrinsic value method instead of the fair value based method. The weighted-average grant-date fair value of the stock options granted during fiscal 2004, which have an exercise price equal to the market price of the Company's common stock at the grant date, is estimated using the Black-Scholes option-pricing model. Such fair value and the assumptions used for estimating fair value are as follows: Weighted average grant-date fair value per share $ 6.40 Expected common stock dividend yield 1.08% Expected volatility 29.74% Expected option life 7.0 years Risk-free interest rate 3.81%
Note 5- Earnings Per Share - -------------------------- Amounts reported as basic earnings per share of common stock reflect earnings available to stockholders for the period divided by the weighted average number of common shares outstanding during the period. Diluted earnings per share, which did not differ from 7 basic earnings per share, give effect to stock awards and option securities exercisable into common stock, which would have a dilutive effect. Note-6 Dividend Declaration - ---------------------------- On October 20, 2004, the Company's Board of Directors declared a quarterly cash dividend of $0.07 per share to be paid on November 18, 2004 to shareholders of record on November 4, 2004 . Note 7- Share Repurchase Program - -------------------------------- In January 2004, the Company's Board of Directors approved a Stock Repurchase Program to acquire up to 85,550 shares of the Company's common stock, which represents approximately 5% of the outstanding common stock. As of September 30, 2004, the Company has purchased 29,890 shares of its common stock at an average cost of $19.21 per share. Note 8- Settlement of Litigation - -------------------------------- Earnings for the quarter and six months ended September 30, 2004 include non-recurring non-interest income of $825,000 received in connection with the settlement of litigation commenced in 1999. After taxes and legal fees, the settlement resulted in $395,000 or $0.25 per share in net income for the three months ended September 30, 2004 and $340,000 or $0.22 per share for the six months ended September 30, 2004. 8 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. This report contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The company intends such forward-looking statements to be covered by the safe harbor provision for forward-looking statements contained in the Private Securities Reform Act of 1995 as amended and is including these statements for purposes of these safe harbor provisions. Forward-looking statements, which are based on certain assumptions and describe future plans, strategies, and expectations of the Company, are generally identifiable by use of the words "believe", "expect", "intend", "anticipate", "estimate", "project", or similar expressions. The Company's ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors that could have a material adverse affect on the operation and future prospects of the Company and its wholly-owned subsidiaries include, but are not limited to, changes in: interest rates; general economic conditions; legislative/regulatory provision; monetary and fiscal policies of the U.S. Government, including policies of the U.S. Treasury and the Federal Reserve Board; the quality or composition of the loan or investment portfolios; demand for loan products; deposit flows; competition; demand for financial services in the Company's market area; and accounting principles, policies and guidelines. These risks and uncertainties should be considered in evaluating forward-looking statements, and undue reliance should not be placed on such statements. Further information concerning the Company and its business, including additional factors that could materially affect the Company's financial results, is included in the company's filings with the Securities and Exchange Commission. The following discussion compares the consolidated financial condition of Atlantic Liberty Financial Corp. at September 30, 2004 to the financial condition at March 31, 2004 and the consolidated results of operations for the three-month and six-month periods ended September 30, 2004 and September 30, 2003. This discussion should be read in conjunction with the interim financial statements and footnotes included herein. Comparison of Financial Condition at September 30, 2004 and March 31, 2004 The Company's assets increased $24.7 million or 15.4% to $184.7 million at September 30, 2004 from $160.0 million at March 31, 2004. The increase principally reflects increases in mortgage-backed securities held to maturity and loans receivable, funded by increases in advances from the Federal Home Loan Bank of New York (FHLB) and deposits. During the six-months ended September 30, 2004, mortgage-backed securities held to maturity increased $15.3 million or 49.8% to $46.0 million from $30.7 million at March 31, 2004. The increase reflects purchases of $20.0 million, partially offset by prepayments and amortization of $4.7 million. The increase in mortgage-backed securities held to maturity reflects management's decision to implement a leveraged growth strategy at a positive interest rate spread. During the six-months ended September 30, 2004, net loans receivable increased $6.5 million or 5.7% to $119.6 million from $113.1 million at March 31, 2004. The increase resulted principally from new commercial mortgages of $8.7 million, $4.4 million of which were purchased from other financial institutions, as well as new originations of one-to-four family mortgage loans of $3.8 million. Investment securities held to maturity and available for sale decreased $2.0 million or 9 46.5% to $2.3 million at September 30, 2004 from $4.3 million at March 31, 2004. Cash and cash equivalents increased $3.1 million or 86.1% to $6.7 million at September 30, 2004 from $3.6 million at March 31, 2004. Advances from the FHLB increased by $22.2 million to $45.4 million at September 30, 2004 from $23.2 million at March 31, 2004. Total deposits of $109.1 million at September 30, 2004 increased $1.2 million or 1.1% from $107.9 million at March 31, 2004. Stockholders' equity increased $1 million or 3.8% to $27.2 million at September 30, 2004 from $26.2 million at March 31, 2004, primarily the result of including net income of $1.2 million for the six-months ended September 30,2004, partially offset by treasury stock purchases of $200,000. Comparison of Results of Operations for the three-months ended September 30, 2004 and September 30, 2003. General. Net income for the three months ended September 30, 2004 was $762,000, an increase of $406,000 or 114.1% from $356,000 for the three months ended September 30, 2003. The increase in net income was primarily due to increases of $227,000 in net interest income and $856,000 in non-interest income, principally from the settlement of litigation, partially offset by increases of $266,000 in non-interest expense, $125,000 in the provision for loan losses and $286,000 in income tax expense. Interest Income. Interest income increased $424,000 during the comparative three months ended September 30, 2004 and 2003. The increase in interest income resulted primarily from increases of $266,000 in interest received on mortgage backed securities, $134,000 in interest received on loans and $34,000 in interest received on investment securities, partially offset by a $10,000 decrease in interest on other interest earning assets. Interest income from mortgage-backed securities increased $266,000 or 124.9% to $479,000 for the three months ended September 30, 2004 from $213,000 for the same period in 2003. The increase was due to an increase of $22.7 million or 88.3% in average mortgage-backed securities to $48.4 million for the three-months ended September 30, 2004 from $25.7 million for the three-months ended September 30, 2003 as well as an increase in the average yield on mortgage-backed securities of 64 basis points to 3.96% for the three-months ended September 30, 2004 from 3.32% for the three-months ended September 30, 2003. Interest income from loans increased $134,000 or 7.6% to $1.9 million for the three months ended September 30, 2004 from $1.8 million for the three months ended September 30, 2003. The average balance of loans outstanding increased by $14.6 million to $118.6 million for the quarter ended September 30, 2004 from $104.0 million for the quarter ended September 30, 2003. The average yield on loans decreased 38 basis points to 6.40% for the three months ended September 30, 2004 from 6.78% for the three months ended September 30, 2003. Interest income on investment securities increased $34,000 or 141.7% to $58,000 for the three-months ended September 30, 2004 from $24,000 for the three-months ended September 30, 2003. The increase was due to an increase of $2.3 million in the average balance of investment securities to $3.8 million for the three-months ended September 30, 2004 from $1.5 million in the comparable period in 2003, partially offset by a decrease in the average yield of 25 basis points to 6.08% from 6.33% for the respective periods. 10 Interest income on other interest earning assets decreased $10,000 or 35.7% to $18,000 for the three-months ended September 30, 2004 from $28,000 for the same period in 2003. The decrease was due to a decrease in the average balance of other interest earning assets of $1.9 million or 27.1% to $5.1 million from $7.0 million as well as a decrease of 20 basis points in the average yield to 1.40% from 1.60%. Interest Expense. Total interest expense increased by $197,000 or 37.7% to $720,000 for the three-months ended September 30, 2004 from $523,000 for the three months ended September 30, 2003. The increase in interest expense resulted primarily from a $37.1 million increase in the average balance of interest bearing liabilities to $152.6 million from $115.5 million as well as an increase in the average cost of interest bearing liabilities of 8 basis points to 1.89% from 1.81%. Interest expense on deposits decreased $29,000 or 6.5% to $417,000 for the three-months ended September 30, 2004 from $446,000 for the three-months ended September 30, 2003. The average balance of certificate of deposit accounts decreased $3.4 million from $57.6 million for the three months ended September 30, 2003 to $54.2 million for the three-months ended September 30, 2004, and the average cost on such accounts decreased from 2.41% to 2.19%. Partially offsetting the decrease in the average balance of certificate of deposit accounts was an increase in the average balance of transaction and savings deposits of $4.5 million or 9.4% to $52.5 million for the three-months ended September 30, 2004 from $48.0 million for the three-months ended September 30, 2003, together with an increase in the average cost of such accounts of 10 basis points to 0.92% from 0.82%. Interest expense on FHLB advances was $300,000 for the three-months ended September 30, 2004, an increase of $225,000 from the $75,000 recorded in the three-months ended September 30, 2003. Average FHLB advances increased to $45.1 million for the three-months ended September 30, 2004 from $9.5 million in the prior comparative period. The average cost of FHLB advances decreased 48 basis points to 2.67% from 3.15%. Net Interest Income. Net interest income increased $227,000 or 15.1% to $1.7 million for the three-months ended September 30, 2004 from $1.5 million for the three months ended September 30, 2003. The increase in our net interest income for the three-months ended September 30, 2004 compared to the prior quarter is primarily attributable to a $37.8 million increase in average interest earning assets, partially offset by a 38 basis point decrease in our net interest spread to 3.68% from 4.06%. Our net interest margin for the quarter ended September 30, 2004 compared to the prior period decreased 42 basis points to 3.94% from 4.36%. Provision for Loan Losses. We establish provisions for loan losses, which are charged to operations, at a level management believes is appropriate to absorb probable credit losses in the loan portfolio. In evaluating the level of the allowance for loan losses, management considers historical loss experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrower's ability to repay, estimated value of any underlying collateral, peer group information, and prevailing economic conditions. This evaluation is inherently subjective, as it requires estimates that are susceptible to significant revision as more information becomes available or as future events change. Based on our evaluation of these factors, management made a provision for loan losses of $125,000 for the three months ended 11 September 30, 2004. No provision was made during the three-months ended September 30, 2003. We used the same methodology and generally similar assumptions in assessing the adequacy of the allowance for both periods. The allowance for loan losses was $737,000 or 0.61% of loans outstanding at September 30, 2004, as compared with $582,000 or 0.54% of loans outstanding at September 30, 2003. The allowance for loan losses represented 134.5% of non-performing loans at September 30, 2004 and 198.6% of non-performing loans at September 30, 2003. The level of the allowance is based on estimates and the ultimate losses may vary from the estimates. Management assesses the allowance for loan losses on a quarterly basis and makes provisions for loan losses as necessary in order to maintain the adequacy of the allowance. While management uses available information to recognize losses on loans, future loan loss provisions may be necessary based on changes in economic conditions. In addition, various regulatory agencies, as a part of their examination process, periodically will review the allowance for loan losses and may require us to recognize additional provisions based on their judgment of information available to them at the time of their examination. The allowance for loan losses as of September 30, 2004 is maintained at a level that represents management's best estimate of inherent losses in the loan portfolio, and such losses were both probable and reasonably estimable. Non-Interest Income. Non-interest income increased $856,000 or 839.2% to $958,000 for the three months ended September 30, 2004, as compared to $102,000 for the three-months ended September 30, 2003. The increase was attributable to the recognition of $825,000 in non-recurring income received in connection with the settlement of litigation commenced in 1999 and an increase of $32,000 in loan prepayment penalties and other miscellaneous mortgage fees. Non-Interest Expense. Non-interest expense for the three months ended September 30, 2004 was $1,231,000 compared to $965,000 for the three months ended September 30,2003, an increase of $266,000 or 27.6%. The increase was primarily attributable to increases of $134,000 in salaries and employee benefits, $79,000 of which related to management recognition plan expenses for which there was no similar charge in the prior year, $42,000 in directors compensation, $8,000 in equipment expense $93,000 in legal fees and $4,000 in net occupancy expense, partially offset by a decrease of $16,000 in miscellaneous expense. The $93,000 increase in legal fees resulted primarily from fees incurred in connection with the aforementioned litigation settlement. Provision for Income taxes. The provision for income taxes increased to $572,000 for the three- months ended September 30, 2004 from $286,000 for the three months ended September 30, 2003. The increase in the provision for income taxes is primarily due to a higher level of income before taxes of $1,334,000 for the three-months ended September 30, 2004, compared with income before taxes of $642,000 for the comparative 2003 period. 12 Comparison of Results of Operations for the six-months ended September 30, 2004 and September 30, 2003. General. Net income for the six-months ended September 30, 2004 was $1,167,000 , an increase of $442,000 or 61.0% from $725,000 for the six-months ended September 30, 2003. The increase in net income was primarily due to increases of $435,000 in net interest income and $904,000, in non-interest income, principally from the settlement of litigation, partially offset by increases of $491,000 in non-interest expense, $125,000 in the provision for loan losses and $281,000 in income tax expense. Interest Income. Interest income increased $818,000 during the comparative six-months ended September 30, 2004 and 2003. The increase in interest income resulted primarily from increased of $559,000 in interest received on mortgage backed securities, $197,000 in interest received on loans and $83,000 in interest received on investment securities, partially offset by a $21,000 decrease in interest on other interest earning assets. Interest income from mortgage-backed securities increased $559,000 or 149.9% to $932,000 for the six-months ended September 30, 2004 from $373,000 for the same period in 2003. The increase was due to an increase of $23.6 million or 100.4% in average mortgage-backed securities to $47.1 million for the six-months ended September 30, 2004 from $23.5 million for the six-months ended September 30, 2004 as well as an increase in the average yield on mortgage-backed securities of 79 basis points to 3.96% for the six-months ended September 30, 2004 from 3.17% for the six-months ended September 30, 2003. Interest income from loans increased $197,000 or 5.6% to $3.75 million for the six-months ended September 30, 2004 from $3.55 million for the six-months ended September 30, 2003. the average balance of loans outstanding increased by $13.1 million to $116.2 million for the quarter ended September 30, 2004 from $103.1 million for the six-months ended September 30, 2003. The average yield on loans declined 44 basis points to 6.45% for the six-months ended September 30, 2004 from 6.89% for the six-months ended September 30, 2003 reflecting a decrease in market interest rates generally. Interest income on investment securities increased $83,000 or 207.5% to $123,000 for the six-months ended September 30, 2004 from $40,000 for the six-months ended September 30, 2003. The increase was due to an increase of $2.8 million in the average balance of investment securities to $4.1 million for the six-months ended September 30, 2004 from $1.3 million in the comparable period in 2003, partially offset by a decrease in the average yield of 20 basis points to 6.05% from 6.25% for the respective periods. Interest income on other interest earning assets decreased $21,000 or 42.0% to $29,000 for the six-months ended September 30, 2004 from $50,000 for the same period in 2003. The decrease was due to a decrease in the average balance of other interest earning assets of $1.0 million or 16.4% to $5.1 million from $6.1 million as well as a decrease of 54 basis points in the average yield to 1.12% from 1.66%. Interest Expense. Total interest expense increased by $383,000 or 38.2% to $1.38 million for the six-months ended September 30, 2004 from $1.0 million for the six-months ended September 30, 2003. The increase in interest expense resulted primarily from a $37.6 million increase in the average balance of interest bearing liabilities to $149.3 million from $111.7 13 million as well as an increase in the average cost of interest bearing liabilities of 6 basis points to 1.86% from 1.80%. Interest expense on deposits decreased $72,000 or 8.0% to $830,000 for the six-months ended September 30, 2004 from $902,000 for the six-months ended September 30, 2003. The average balance of certificate of deposit accounts decreased $3.2 million from $57.9 million for the six-months ended September 30, 2003 to $54.7 million for the six-months ended September 30, 2004, and the average cost on such accounts decreased from 2.45% to 2.18%. Partially offsetting this decrease was an increase in the average balance of transaction and savings deposits of $4.5 million or 8.6% to $52.1 million for the six-months ended September 30, 2004, from $47.6 million for the six-months ended September 30, 2003, together with an increase in the average cost of such accounts of 8 basis points to 0.90% from 0.82%. Interest expense on Federal Home Loan Bank of New York advances was $549,000 for the six-months ended September 30, 2004, an increase of $455,000 from the $94,000 recorded in the six-months ended September 30, 2003. Average FHLB advances increased to $41.6 million for the six-months ended September 30, 2004 from $5.6 million in the prior comparative period. The average cost of FHLB advances decreased 72 basis points to 2.64% from 3.36%. Net Interest Income. Net interest income increased $435,000 or 14.5% to $3.45 million for the six-months ended September 30, 2004 from $3.0 million for the six-months ended September 30, 2003. The increase in our net interest income for the six-months ended September 30, 2004 compared to the prior six-month period is primarily attributable to a $38.5 million increase in average interest earning assets, partially offset by a 46 basis point decrease in our net interest spread to 3.74% from 4.20%. Our net interest margin for the six-months ended September 30, 2004 compared to the prior period decreased 50 basis points to 3.99% from 4.49%. Provision for Loan Losses. We establish provisions for loan losses, which are charged to operations, at a level management believes is appropriate to absorb probable credit losses in the loan portfolio. In evaluating the level of the allowance for loan losses, management considers historical loss experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrower's ability to repay, estimated value of any underlying collateral, peer group information, and prevailing economic conditions. This evaluation is inherently subjective, as it requires estimates that are susceptible to significant revision as more information becomes available or as future events change. Based on our evaluation of these factors, management made a provision for loan losses of $125,000 for the six-months ended September 30, 2004. No provision was made during the six-months ended September 30, 2003. During the six months ended September 30, 2004 , we also recorded a $29,000 recovery of a previously charged off loan. We used the same methodology and generally similar assumptions in assessing the adequacy of the allowance for both periods. The allowance for loan losses was $737,000 or 0.61% of loans outstanding at September 30, 2004, as compared with $582,000 or 0.54% of loans outstanding at September 30, 2003. The allowance for loan losses represented 134.5% of non-performing loans at September 30, 2004 and 198.6% of non-performing loans at September 30, 2003. The level of the allowance is based on estimates and the ultimate losses may vary from the estimates. 14 Management assesses the allowance for loan losses on a quarterly basis and makes provisions for loan losses as necessary in order to maintain the adequacy of the allowance. While management uses available information to recognize losses on loans, future loan loss provisions may be necessary based on changes in economic conditions. In addition, various regulatory agencies, as a part of their examination process, periodically will review the allowance for loan losses and may require us to recognize additional provisions based on their judgment of information available to them at the time of their examination. The allowance for loan losses as of September 30, 2004 is maintained at a level that represents management's best estimate of inherent losses in the loan portfolio, and such losses were both probable and reasonably estimable. Non-Interest Income. Non-interest income increased $904,000 or 434.6% to $1.1 million for the six-months ended September 30, 2004, as compared to $208,000 for the six-months ended September 30, 2003. The increase was attributable to the recognition of $825,000 in non-recurring income received in connection with the settlement of litigation commenced in 1999 as well as increases of $65,000 in loan prepayment penalties and other miscellaneous mortgage fees and $14,000 in net appraisal fees. Non-Interest Expense. Non-interest expense for the six-months ended September 30, 2004 was $2.4 million compared to $1.9 million for the six-months ended September 30, 2003, an increase of $491,000 or 25.7%. The increase was primarily attributable to increases of $228,000 in salaries and employee benefits, $158,000 of which related to management recognition plan expenses for which there was no similar charge in the prior year, $45,000 in directors compensation, $34,000 in equipment expense and $189,000 in legal fees, partially offset by a decrease of $5,000 in net occupancy expense. The $189,000 increase in legal fees resulted primarily from fees incurred in connection with the aforementioned litigation settlement. Provision for Income taxes. The provision for income taxes increased to $861,000 for the six-months ended September 30, 2004 from $580,000 for the six-months ended September 30, 2003. The increase in the provision for income taxes in primarily due to a higher level of income before taxes of $2,028,000 for the six-months ended September 30, 2004, compared with income before taxes of $1,305,000 for the comparative 2003 period. Liquidity and Capital Resources Liquidity. The Association must maintain an adequate level of liquidity to ensure the availability of sufficient funds to fund loan originations and deposit withdrawals, to satisfy other financial commitments, and to take advantage of investment opportunities. The Association invests excess funds in overnight deposits and other short-term interest-earning assets to provide liquidity to meet these needs. At September 30, 2004, cash and cash equivalents totaled $6.7 million. At September 30, 2004, the Association had commitments to funds loans of $3.4 million. At September 30, 2004, certificates of deposit represented 48.6% of total deposits. The Association expects to retain these deposit accounts. In addition, the Association could borrow up to $10.1 million from the Federal Home Loan Bank of New York without providing additional collateral. The Association considers its liquidity and capital resources sufficient to meet its outstanding short-term and long-term needs. 15 Capital Resources. The Association is subject to various regulatory capital requirements administered by federal regulatory agencies. The following table summarizes the Association's regulatory capital requirements versus actual capital as of September 30, 2004:
ACTUAL REQUIRED EXCESS ------------------ ---------------- ---------------- (Dollars in thousands) AMOUNT % AMOUNT % AMOUNT % ------ --- ------ --- ------ --- Core capital (to adjusted total assets) $ 20.2 11.1% $ 7.3 4.0% $ 12.9 7.1% Risk-based capital To (risk-weighted assets) $ 20.9 20.4% $ 8.2 8.0% $ 12.7 12.4%
Management of Market Risk General. The majority of our assets and liabilities are monetary in nature. Consequently, our most significant form of market risk is interest rate risk. Our assets, consisting primarily of mortgage loans, have longer maturities than our liabilities, consisting primarily of deposits. As a result, a principal part of our business strategy is to manage interest rate risk and reduce the exposure of our net interest income to changes in market interest rates. Accordingly, our board of directors has established an Asset/Liability Management Committee which is responsible for evaluating the interest rate risk inherent in our assets and liabilities, for determining the level of risk that is appropriate given our business strategy, operating environment, capital, liquidity and performance objectives, and for managing the risk consistent with the guidelines approved by the board of directors. Senior management monitors the level of interest rate risk on a regular basis and the Asset/Liability Management Committee, which consists of senior management operating under a policy adopted by the board of directors, meets as needed to review our asset/liability policies and interest rate risk position. We have sought to manage our interest rate risk by more closely matching the maturities of our interest rate sensitive assets and liabilities. In particular, we offer one, three, and five year adjustable rate mortgage loans, a loan product that has a fixed rate of interest for seven years and which adjusts annually thereafter, and three and five year balloon loans. We also invest in mortgage-backed securities the majority of which reprice within one and three years. We do not solicit high-rate jumbo certificates of deposit or brokered funds. Net Portfolio Value. In past years, many savings associations have measured interest rate sensitivity by computing the "gap" between the assets and liabilities which are expected to mature or reprice within certain time periods, based on assumptions regarding loan prepayment and deposit decay rates formerly provided by the Office of Thrift Supervision. However, the Office of Thrift Supervision now requires the computation of amounts by which the net present value of an institution's cash flow from assets, liabilities and off balance sheet items (the institution's net portfolio value or "NPV") would change in the event of a range of assumed changes in market interest rates. The Office of Thrift Supervision provides all institutions that file a Consolidated Maturity/Rate Schedule as a part of their quarterly Thrift Financial Report with an interest rate sensitivity report of net portfolio value. The Office of Thrift Supervision simulation model uses a discounted cash flow analysis and an option-based pricing approach to measure the interest rate sensitivity of net portfolio value. Historically, the Office of Thrift Supervision model estimated the economic value of each type of asset, liability 16 and off-balance sheet contract under the assumption that the United States Treasury yield curve increases or decreases instantaneously by 100 to 300 basis points in 100 basis point increments. However, given the current low level of market interest rates, we did not receive a NPV calculation for an interest rate decrease of greater than 100 basis points. A basis point equals one-hundredth of one percent, and 100 basis points equals one percent. An increase in interest rates from 3% to 4% would mean, for example, a 100 basis point increase in the "Change in Interest Rates" column below. The Office of Thrift Supervision provides us the results of the interest rate sensitivity model, which is based on information we provide to the Office of Thrift Supervision to estimate the sensitivity of our net portfolio value. The table below sets forth, as of June 30, 2004, the latest date for which the Office of Thrift Supervision has provided to Atlantic Liberty Savings, F.A. an interest rate sensitivity report of net portfolio value, the estimated changes in our net portfolio value that would result from the designated instantaneous changes in the United States Treasury yield curve.
Net Portfolio Value as a % of Present Value of Net Portfolio Value Assets/Liabilities - -------------------------------------------------------------- -------------------------------------- Change in Interest Rates Estimated Amount of (basis points) NPV Change Percent NPV Ratio Change - -------------- --------- --------- ------- --------- ----------------- (Dollars in Thousands) +300 $19,934 $(8,130) (29)% 11.43% (363) basis points +200 22,675 (5,390) (19) 12.71 (235) basis points +100 25,432 (2,632) (9) 13.94 (112) basis points 0 28,064 - - 15.06 - basis points -100 30,070 2,006 +7 15.84 +78 basis points
The table above indicates that at June 30, 2004, in the event of a 100 basis point decrease in interest rates, we would experience a 7% increase in net portfolio value. In the event of a 200 basis point increase in interest rates, we would experience a 19% decrease in net portfolio value. Certain shortcomings are inherent in the methodology used in the above interest rate risk measurement. Modeling changes in net portfolio value require making certain assumptions that may or may not reflect the manner in which actual yields and costs respond to changes in market interest rates. In this regard, the net portfolio value table presented assumes that the composition of our interest-sensitive assets and liabilities existing at the beginning of a period remains constant over the period being measured and assumes that a particular change in interest rates is reflected uniformly across the yield curve regardless of the duration or repricing of specific assets and liabilities. Accordingly, although the net portfolio value table provides an indication of our interest rate risk exposure at a particular point in time, such measurements are not intended to and do not provide a precise forecast of the effect of changes in market interest rates on its net interest income and will differ from actual results. ITEM 3. CONTROLS AND PROCEDURES Under the supervision and with the participation of the Company's management, including the Chief Executive Officer and Chief Financial Officer, the Company has evaluated the effectiveness of the design and operation of its disclosure controls and procedures (as 17 defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this quarterly report. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that, as of the end of the period covered by this quarterly report, the Company's disclosure controls and procedures are effective to ensure that information required to be disclosed in the reports that the Company files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms. There has been no change in the Company's internal control over financial reporting during the most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company's internal control over financial reporting. PART II - OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS We are not involved in any pending legal proceedings as a defendant other than routine legal proceedings occurring in the ordinary course of business. At September 30, 2004, we were not involved in any legal proceedings, the outcome of which would be material to our financial condition or results of operations. ITEM 2. CHANGES IN SECURITIES AND SMALL BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES In accordance with the Share Repurchase Program approved by the Board of Directors in January, 2004, the Company has made share repurchases as summarized below:
Total Number of Maximum Number of Shares Purchased as Shares That May Be Total Number of Average Price Paid Part of a Publicly Purchased Under Plan Shares Purchased Per Share Announced Plan (1) ---------------- ------------------ ------------------- -------------------- Total - March 31 ............ 19,400 $ 19.80 19,400 66,150 April 1 - April 30 .......... - - - - May 1 - May 31................ 490 18.25 19,890 65,660 June 1- June 30 .............. 10,000 18.11 29,890 55,660 July 1 - September 30 ....... - - - 55,660 ------ ------- ------ ------ Total September 30, 2004...... 29,890 $ 19.21 29,890 - ====== ======= ====== =======
- ------------------ (1) On January 26, 2004, the Company announced that the Board of Directors, at its January meeting, approved a share repurchase plan to acquire up to 85,550 shares of the Company's common stock, which represents approximately 5% of the outstanding shares of common stock. ITEM 3. DEFAULTS UPON SENIOR SECURITIES None ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. At the annual meeting of stockholders held on August 18, 2004, the following proposals were voted upon and approved by the stockholders: 18 Proposal No. 1: Resolved, that Honorable Guy J. Mangano and George M. Spanakos be elected to serve as directors of the company for a term of three years, or until his successor has been elected and qualified. The voting as to Proposal No. 1 was as follows: For Withheld --------- -------- Hon. Guy J. Mangano: 1,377,350 92,510 George M. Spanakos: 1,374,532 95,328 Proposal No. 2: Resolved, that the appointment of Radics & Co., LLC to act as the Company's auditors for the fiscal year ending March 31, 2005 is hereby ratified. The voting to Proposal No. 2 was as follows: For Against Withheld --------- ------- -------- Radics & Co., LLC 1,444,249 22,034 3,577 ITEM 5. OTHER INFORMATION At its October meeting, the Board of Directors of Atlantic Liberty Financial Corp. declared a quarterly cash dividend of $0.07 per share to be paid on November 18, 2004 to shareholders of record on November 4, 2004. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K Exhibit 31.1 Exhibit 31.2 Exhibit 32 Sarbanes-Oxley Certifications pursuant to Section 906. On July 26, 2004 we filed Form 8-K, which contained our press release of earnings for the quarter ended June 30, 2004. On October 5, 2004 we filed Form 8-K, which contained our press release announcing the settlement of litigation commenced in 1999. On October 21, 2004 we filed Form 8-K, which contained our press release of earnings for the quarter and six months ended September 30, 2004. 19 SIGNATURES Pursuant to the requirement of the securities Exchange Act of 1934. The Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Atlantic Liberty Financial Corp. Date: November 12, 2004 /s/Barry M. Donohue ------------------------------------- Barry M. Donohue President and Chief Executive Officer Date: November 12, 2004 /s/William M. Gilfillan ------------------------------------- William M. Gilfillan Chief Financial Officer and Corporate Secretary 20 EX-31.1 2 d15691ex31-1.txt Exhibit 31.1 Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 I, Barry M. Donohue, President and Chief Executive Officer, certify that: 1. I have reviewed this quarterly report on Form 10-QSB of Atlantic Liberty Financial Corp.; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report; 4. The small business issuer's other certifying officers and I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the small business issuer and have: a) designed such disclosure controls and procedures, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) evaluated the effectiveness of the small business issuer's disclosure controls and procedures as of a date within 90 days prior to the filing date of this report based on such evaluation ; and c) disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; 5. The small business issuer's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of the small business issuer's board of directors (or persons performing the equivalent functions): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control financial reporting. Date: November 12 , 2004 /s/Barry M. Donohue - ------------------------ ----------------------------- Barry M. Donohue, President and Chief Executive Officer 1 EX-31.2 3 d15691ex31-2.txt Exhibit 31.2 Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 I, William M. Gilfillan, Chief Financial Officer, certify that: 1. I have reviewed this quarterly report on Form 10-QSB of Atlantic Liberty Financial Corp.; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report; 4. The small business issuer's other certifying officers and I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the small business issuer and have: a) designed such disclosure controls and procedures, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; b) evaluated the effectiveness of the small business issuer's disclosure controls and procedures as of a date within 90 days prior to the filing date of this report based on such evaluation ; and c) disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; 5. The small business issuer's other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer's auditors and the audit committee of the small business issuer's board of directors (or persons performing the equivalent functions): a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control financial reporting. Date: November 12 , 2004 /s/William M. Gilfillan - ------------------------ ----------------------------------- William M. Gilfillan, Executive Vice President and Chief Financial Officer 1 EX-32 4 d15691ex32.txt Exhibit 32 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Barry M. Donohue, President and Chief Executive Officer, and William M. Gilfillan, Executive Vice President and Chief Financial Officer of Atlantic Liberty Financial Corp. (the "Company"), each certify in his/her capacity as an officer of the Company that he/she has reviewed the Quarterly Report of the Company on Form 10-QSB for the quarter ended June 30, 2004 and that to the best of their knowledge: 1. the report fully complies with the requirements of Sections 13(a) of the Securities Exchange Act of 1934; and 2. the information contained in the report fairly presents, in all material respects, the financial condition and results of operations of the Company. The purpose of this statement is solely to comply with Title 18, Chapter 63, Section 1350 of the United States Code, as amended by Section 906 of the Sarbanes-Oxley Act of 2002. A signed original of this written statement required by Section 906 has been provided to Atlantic Liberty Financial Corp. and will be retained by Atlantic Liberty financial Corp. and furnished to the Securities and Exchange Commission or its staff upon request. November 12, 2004 /s/Barry M. Donohue - ------------------ ------------------------------------- Date Barry M. Donohue President and Chief Executive Officer November 12 , 2004 /s/William M. Gilfillan - ------------------- ------------------------------------- Date William M. Gilfillan Executive Vice President and Chief Financial Officer 1 -----END PRIVACY-ENHANCED MESSAGE-----