EX-99.1 2 af4595ex991.txt EXHIBIT 99.1 Exhibit 99.1 [LOGO OF ASTORIA FINANCIAL CORPORATION] NEWS RELEASE One Astoria Federal Plaza, Lake Success, NY 11042-1085 (516) 327-3000 FOR IMMEDIATE RELEASE Contact: Peter J. Cunningham First Vice President, Investor Relations (516) 327-7877 ir@astoriafederal.com ASTORIA FINANCIAL CORPORATION ANNOUNCES FOURTH QUARTER EPS OF $0.57; FULL YEAR EPS OF $2.26 QUARTERLY CASH DIVIDEND INCREASED 20% TO $0.24 PER SHARE Lake Success, New York - January 26, 2006 - Astoria Financial Corporation (NYSE: AF) ("Astoria"), the holding company for Astoria Federal Savings and Loan Association ("Astoria Federal"), today reported net income of $57.7 million, or $0.57 diluted earnings per share ("EPS"), for the quarter ended December 31, 2005, compared to $50.5 million ($60.1 million operating earnings), or $0.48 EPS ($0.57 operating EPS), for the 2004 fourth quarter. For the 2005 fourth quarter, annualized returns on average equity, average tangible equity and average assets were 16.97%, 19.64% and 1.03%, respectively, compared to 14.75% (17.54% on an operating basis), 17.05% (20.28% on an operating basis) and 0.87% (1.04% on an operating basis), respectively, for the comparable 2004 period. For the year ended December 31, 2005, net income totaled $233.8 million, or $2.26 EPS, compared to $219.5 million ($229.1 million operating earnings), or $2.00 EPS ($2.09 operating EPS) for the comparable 2004 period. For the year ended December 31, 2005, returns on average equity, average tangible equity and average assets totaled 17.06%, 19.72%, and 1.02%, respectively, compared to 15.81% (16.50% on an operating basis), 18.25% (19.04% on an operating basis) and 0.97% (1.01% on an operating basis), respectively, for the comparable 2004 period. Operating earnings, operating EPS and operating returns for the 2004 fourth quarter and full year reflect net income and EPS determined in accordance with generally accepted accounting principles ("GAAP") adjusted to exclude the effect of a fourth quarter other-than-temporary impairment after-tax non-cash charge of $9.6 million, or $0.09 EPS. For a reconciliation of 2004 operating earnings and operating EPS to 2004 GAAP net income and EPS, please refer to the table on page 13. 1 2005 FOURTH QUARTER FINANCIAL HIGHLIGHTS: o Loan portfolio increased $285 million, or 8% annualized o Multifamily/Commercial Real Estate ("CRE") loan portfolio increased $45 million, or 5% annualized o One-to-Four Family loan portfolio increased $248 million, or 10% annualized o Securities portfolio decreased $516 million, or 29% annualized o Borrowings decreased $162 million, or 8% annualized o Assets decreased $250 million, or 4% annualized o Repurchased 2.5 million shares 2005 FULL YEAR FINANCIAL HIGHLIGHTS: o Loan portfolio increased $1.1 billion, or 9%, to $14.4 billion at December 31, 2005 o Multifamily/CRE loan portfolio increased $399 million, or 11%, to $3.9 billion at December 31, 2005 and represents 27% of total loans o One-to-Four Family loan portfolio increased $703 million, or 8%, to $9.8 billion at December 31, 2005 o Securities portfolio decreased $2.1 billion, or 25%, to $6.6 billion at December 31, 2005 o Deposits increased $487 million, or 4%, to $12.8 billion at December 31, 2005 o Borrowings decreased $1.5 billion, or 16%, to $7.9 billion at December 31, 2005 o Assets decreased $1.0 billion, or 4%, to $22.4 billion at December 31, 2005 o Repurchased 6.6 million shares Commenting on the fourth quarter and full year results, George L. Engelke, Jr., Chairman, President and Chief Executive Officer of Astoria, noted, "While the interest rate environment became increasingly challenging during the fourth quarter with the confluence of rising short-term interest rates and declining long-term interest rates producing an inverted yield curve, Astoria continued to produce strong earnings and returns." BOARD INCREASES QUARTERLY CASH DIVIDEND 20% The Company also announced that the Board of Directors, at their January 25, 2006 meeting, declared a quarterly cash dividend of $0.24 per share, an increase of 20%. The cash dividend is payable on March 1, 2006 to shareholders of record as of February 15, 2006. This is the forty-third consecutive quarterly cash dividend declared by the Company. Commenting on the Board's action, Mr. Engelke said, "The increase in the cash dividend is evidence of the Board's continued confidence in the fundamental strength of the Company and its commitment to enhancing shareholder value." TENTH STOCK REPURCHASE PROGRAM COMPLETED; ELEVENTH PROGRAM COMMENCED During the 2005 fourth quarter, Astoria repurchased 2.5 million shares of its common stock at an average cost of $28.37 per share. For the twelve months ended December 31, 2005, 6.6 million shares were repurchased at an average cost of $27.49 per share. Subsequent to December 31, 2005, the Company completed its tenth stock repurchase program, purchasing the remaining 262,300 shares available under that plan. The eleventh repurchase program, approved by the Board of Directors on December 21, 2005, authorizing the repurchase of up to ten million shares, commenced in the 2006 first quarter immediately following the completion of the tenth repurchase program. 2 BOARD SETS ANNUAL SHAREHOLDERS' MEETING DATE The Board of Directors, at their January 25, 2006 meeting, established May 17, 2006 as the date for the Annual Meeting of Shareholders, with a voting record date of March 24, 2006. FOURTH QUARTER AND FULL YEAR EARNINGS SUMMARY Net interest income for the quarter ended December 31, 2005 totaled $113.7 million compared to $120.9 million for the same period a year ago. For the twelve months ended December 31, 2005, net interest income increased to $478.8 million from $470.6 in the comparable 2004 period. Astoria's net interest margin for the quarter ended December 31, 2005 declined six basis points from the same period a year ago to 2.12%. On a linked quarter basis, the net interest margin decreased eight basis points. The Company's core interest rate spread (the difference between the yield on loans and the cost of deposits) for the 2005 fourth quarter declined eleven basis points on a linked quarter basis to 2.91% and eighteen basis points from the 2004 fourth quarter. For the twelve months ended December 31, 2005, the net interest margin increased two basis points to 2.19% from 2.17% for the 2004 full year period. Commenting on the net interest margin, Mr. Engelke noted, "Clearly, continuing to reduce the lower yielding securities portfolio and borrowings while growing loans and deposits has helped mitigate margin compression in the current yield curve environment. If the current flat to inverted yield curve persists throughout 2006, we expect that the net interest margin will be somewhat lower but should not decline below an average of 2.00% for the full year." Non-interest income for the quarter ended December 31, 2005 totaled $26.6 million compared to $22.6 million for the 2004 fourth quarter, excluding the $16.5 million other-than-temporary impairment charge. The increase is primarily due to an increase of $2.3 million in customer service fees and $1.3 million of non-recurring other income. For the twelve months ended December 31, 2005, non-interest income increased to $102.2 million from $96.6 million for the comparable 2004 period, excluding the $16.5 million impairment charge noted above. The increase was primarily due to a $7.7 million, or 13%, increase in customer service fees and a $1.3 million increase in mortgage banking income, net, partially offset by the absence of gains on sales of securities which totaled $4.7 million in 2004. The components of mortgage banking income, net, included in non-interest income, are detailed below: (Dollars in millions) 4Q05 4Q04 2005 2004 -------------------------------- -------- -------- -------- -------- Loan servicing fees $ 1.2 $ 1.4 $ 5.0 $ 5.8 Amortization of MSR* (1.2) (1.6) (5.2) (6.8) MSR valuation adjustments 0.1 0.3 2.7 2.2 Net gain on sale of loans 0.8 0.7 3.5 3.5 -------- -------- -------- -------- Mortgage banking income, net $ 0.9 $ 0.8 $ 6.0 $ 4.7 ======== ======== ======== ======== * Mortgage servicing rights General and administrative expense ("G&A") for the quarter ended December 31, 2005 declined to $52.7 million from $57.9 million for the 2005 third quarter and $53.4 million for the 2004 fourth quarter. The linked quarter decrease of $5.2 million is primarily due to the $1.9 million of expenses recorded in the 2005 third quarter related to the outsourcing of our mortgage servicing and other company-wide cost saving initiatives, a $1.2 million reduction in ESOP expense in the 2005 fourth quarter related to the annual adjustment of estimated expense to actual, and lower advertising expense in the 2005 fourth quarter. 3 For the twelve months ended December 31, 2005, G&A totaled $228.7 million compared to $225.0 million for the comparable 2004 period. The Company expects the G&A expense level for 2006 to be at or slightly lower than total G&A expenses for 2005 due to the benefit derived from outsourcing mortgage servicing and other company-wide cost-saving initiatives undertaken in the 2005 third quarter, offset by normal annual salary and other expense increases. BALANCE SHEET SUMMARY Due to the further flattening and inversion of the yield curve during the fourth quarter, spread availability continued to narrow. Accordingly, we continued to reduce our balance sheet through the reduction of non-core business activities. Total securities for the quarter ended December 31, 2005 decreased $516.2 million, or 29% annualized, to $6.6 billion at December 31, 2005, or 29% of total assets, of which $1.8 billion, or 8% of total assets, are categorized as available-for-sale. Borrowings decreased $162.0 million in the fourth quarter of 2005, or 8% annualized, to $7.9 billion at December 31, 2005, representing 35% of total assets. For the twelve months ended December 31, 2005, total securities decreased $2.1 billion, or 25%, and borrowings decreased $1.5 billion, or 16%. Total assets decreased $250.4 million from September 30, 2005 and $1.0 billion from December 31, 2004 and total $22.4 billion at December 31, 2005. Key balance sheet highlights, reflecting the improvement in the quality of the Company's balance sheet since December 31, 1999, follow:
CHANGE (DOLLARS IN MILLIONS) 12/31/99 12/31/00 12/31/01 12/31/02 12/31/03 12/31/04 12/31/05 12/31/99-12/31/05 --------------------- -------- -------- -------- -------- -------- -------- -------- ----------------- Assets $ 22,700 $ 22,341 $ 22,672 $ 21,702 $ 22,462 $ 23,416 $ 22,380 - 1% Loans $ 10,286 $ 11,422 $ 12,167 $ 12,059 $ 12,687 $ 13,263 $ 14,392 + 40% Securities $ 10,763 $ 9,415 $ 8,013 $ 7,834 $ 8,448 $ 8,710 $ 6,572 - 39% Deposits $ 9,555 $ 10,072 $ 10,904 $ 11,067 $ 11,187 $ 12,323 $ 12,810 + 34% Borrowings $ 11,528 $ 10,324 $ 9,826 $ 8,825 $ 9,632 $ 9,470 $ 7,938 - 31%
During the 2005 fourth quarter, the 1-4 family mortgage loan portfolio increased $248.4 million, or 10% annualized, to $9.8 billion at December 31, 2005. Originations and purchases totaled $837.6 million for the 2005 fourth quarter compared to $1.0 billion in the year-ago fourth quarter of which 70% and 73%, respectively, consisted of 3/1 and 5/1 hybrid adjustable rate mortgage loans. For the year ended December 31, 2005, the 1-4 family mortgage loan portfolio increased $703.2 million, or 8%. One-to-four family loan originations and purchases for 2005 increased to $3.3 billion from $3.2 billion for the comparable 2004 period of which 76% and 73%, respectively, consisted of 3/1 and 5/1 hybrid adjustable rate mortgage loans. During the 2005 fourth quarter, the multifamily and CRE loan portfolio increased $45.1 million, or 5% annualized, to $3.9 billion at December 31, 2005, or 27% of total loans outstanding. Multifamily and CRE loan originations totaled $183.9 million for the 2005 fourth quarter compared to $190.5 million for the comparable 2004 period. For the year ended December 31, 2005, the multifamily and CRE loan portfolio increased $398.9 million, or 11%. Multifamily and CRE loan originations for 2005 totaled $952.9 million compared to $1.1 billion for 2004. The average loan-to-value ratio of the combined multifamily and CRE loan portfolio continues to be less than 65%, based on current principal balance and original appraised value, and the average loan balance is less than $1 million. 4 At December 31, 2005, non-performing loans increased to $65.0 million, or 0.29% of total assets, from $37.9 million, or 0.17% of total assets, at September 30, 2005. We discontinue accruing interest on mortgage loans when such loans become 90 days delinquent as to the interest due, even though in some instances the borrower has only missed two payments. As of December 31, 2005 and September 30, 2005, $28.1 million and $11.2 million, respectively, of loans classified as non-performing had missed just two payments. As of December 31, 2005, 1-4 family non-performing loans totaled $35.7 million and had an average LTV of 65% and multifamily/CRE non-performing loans totaled $28.8 million and had an average LTV of 68% with an average debt coverage ratio of 1.76. On November 30, 2005, the Company completed the outsourcing of its mortgage servicing operations and systems. Typically, with conversions of this magnitude, some disruptions in payment processing and loan collection efforts occur which usually take up to 90 days after outsourcing to return to normal. Net charge-offs for the quarter and year ended December 31, 2005 totaled $888,000 and $1.6 million, respectively, or an annualized rate of two basis points and one basis point, respectively, of average total loans outstanding. The ratio of the allowance for loan losses to non-performing loans at December 31, 2005 was 125%. Deposits increased $4.8 million from September 30, 2005 and total $12.8 billion at December 31, 2005. For the year ended December 31, 2005, deposits increased $487.2 million, or 4%. These increases are primarily due to increases in medium-term and Liquid CD accounts. During 2005, we have grown our medium-term CD accounts at interest rates significantly below alternative funding sources which, in addition to contributing to the management of interest rate risk, permits us to reduce our borrowing levels and continues to produce new customers from our communities, creating relationship development opportunities. For the year ended December 31, 2005, $4.1 billion of non-Liquid CD accounts were issued or repriced at an average rate of 3.45% and an average maturity of 13 months. Since the introduction of our Liquid CD account in the 2005 first quarter, balances have grown to $619.8 million at December 31, 2005. Core deposits, including Liquid CD accounts, at December 31, 2005 total $5.3 billion, with an average rate of 0.74%. Stockholders' equity was $1.4 billion, or 6.03% of total assets at December 31, 2005. Astoria Federal continues to maintain capital ratios in excess of regulatory requirements with core, tangible and risk-based capital ratios of 6.53%, 6.53% and 12.53%, respectively, at December 31, 2005. 5 FUTURE OUTLOOK Commenting on the outlook for 2006, Mr. Engelke stated, "We expect the operating environment to remain challenging throughout 2006 as rising short-term interest rates and relatively stable long-term interest rates exert further pressure on the net interest margin. As a result, we expect to continue our strategy of shrinking the balance sheet through a reduction in the securities portfolio and borrowings of approximately $1.5 billion each through normal cash flow, while we emphasize deposit and loan growth, all of which will continue to improve both the quality of the balance sheet and earnings. Overall, these activities should result in a further reduction in the balance sheet of approximately $1 billion, similar to the 2005 reduction, and a continued modest compression of the net interest margin throughout 2006. As we continue to reduce the size of the balance sheet during this challenging interest rate environment, we will continue to focus on the repurchase of our stock as a very desirable use of capital." Astoria Financial Corporation, the holding company for Astoria Federal Savings and Loan Association, with assets of $22.4 billion is the sixth largest thrift institution in the United States. Established in 1888, Astoria Federal is the largest thrift depository headquartered in New York with deposits of $12.8 billion and embraces its philosophy of Putting people first by providing the customers and local communities it serves with quality financial products and services through 86 convenient banking office locations and multiple delivery channels, including its enhanced website, www.astoriafederal.com. Astoria Federal commands the fourth largest deposit market share in the attractive Long Island market, which includes Brooklyn, Queens, Nassau and Suffolk counties with a population exceeding that of 38 individual states. Astoria Federal originates mortgage loans through its banking offices and loan production offices in New York, an extensive broker network in twenty-three states, primarily the East Coast, and the District of Columbia, and through correspondent relationships in forty-four states and the District of Columbia. EARNINGS CONFERENCE CALL JANUARY 26, 2006 AT 3:30 P.M. (ET) The Company, as previously announced, indicated that Mr. Engelke will host an earnings conference call Thursday afternoon, January 26, 2006 at 3:30 p.m. (ET). The toll-free dial-in number is (800) 967-7140. A telephone replay will be available on January 26, 2006 from 7:00 p.m. (ET) through February 3, 2006, 11:59 p.m. (ET). The replay number is (888) 203-1112, passcode: 5734845. The conference call will also be simultaneously Fwebcast on the Company's website www.astoriafederal.com and archived for one year. FORWARD LOOKING STATEMENTS This document contains a number of 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. These statements may be identified by the use of such words as "anticipate," "believe," "could," "estimate," "expect," "intend," "outlook," "plan," "potential," "predict," "project," "should," "will," "would" and similar terms and phrases, including references to assumptions. Forward-looking statements are based on various assumptions and analyses made by us in light of our management's experience and its perception of historical trends, current conditions and expected future developments, as well as other factors we believe are appropriate under the circumstances. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors (many of which are beyond our control) that could cause actual results to differ materially from future results expressed or implied by such forward-looking statements. 6 These factors include, without limitation, the following: the timing and occurrence or non-occurrence of events may be subject to circumstances beyond our control; there may be increases in competitive pressure among financial institutions or from non-financial institutions; changes in the interest rate environment may reduce interest margins or affect the value of our investments; changes in deposit flows, loan demand or real estate values may adversely affect our business; changes in accounting principles, policies or guidelines may cause our financial condition to be perceived differently; general economic conditions, either nationally or locally in some or all of the areas in which we do business, or conditions in the securities markets or the banking industry may be less favorable than we currently anticipate; legislative or regulatory changes may adversely affect our business; applicable technological changes may be more difficult or expensive than we anticipate; success or consummation of new business initiatives may be more difficult or expensive than we anticipate; or litigation or matters before regulatory agencies, whether currently existing or commencing in the future, may delay the occurrence or non-occurrence of events longer than we anticipate. We assume no obligation to update any forward-looking statements to reflect events or circumstances after the date of this document. 7 ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION ---------------------------------------------- (In Thousands, Except Share Data)
At At December 31, December 31, 2005 2004 ------------ ------------ ASSETS ------ Cash and due from banks $ 169,234 $ 138,809 Repurchase agreements 182,803 267,578 Mortgage-backed and other securities available-for-sale 1,841,351 2,406,883 Mortgage-backed and other securities held-to-maturity (fair value of $4,627,013 and $6,306,760, respectively) 4,730,953 6,302,936 Federal Home Loan Bank of New York stock, at cost 145,247 163,700 Loans held-for-sale, net 23,651 23,802 Loans receivable: Mortgage loans, net 13,879,804 12,746,134 Consumer and other loans, net 512,489 517,145 ------------ ------------ 14,392,293 13,263,279 Allowance for loan losses (81,159) (82,758) ------------ ------------ Total loans receivable, net 14,311,134 13,180,521 Mortgage servicing rights, net 16,502 16,799 Accrued interest receivable 80,318 79,144 Premises and equipment, net 151,494 157,107 Goodwill 185,151 185,151 Bank owned life insurance 382,613 374,719 Other assets 159,820 118,720 ------------ ------------ TOTAL ASSETS $ 22,380,271 $ 23,415,869 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY ------------------------------------ Liabilities: Deposits $ 12,810,455 $ 12,323,257 Reverse repurchase agreements 5,780,000 7,080,000 Federal Home Loan Bank of New York advances 1,724,000 1,934,000 Other borrowings, net 433,526 455,835 Mortgage escrow funds 124,929 122,088 Accrued expenses and other liabilities 157,134 130,925 ------------ ------------ TOTAL LIABILITIES 21,030,044 22,046,105 ------------ ------------ Stockholders' equity: Preferred stock, $1.00 par value; 5,000,000 shares authorized: Series A (1,800,000 shares authorized and -0- shares issued and outstanding) - - Series B (2,000,000 shares authorized and -0- shares issued and outstanding) - - Common stock, $.01 par value; (200,000,000 shares authorized; 166,494,888 shares issued; and 104,967,280 and 110,304,669 shares outstanding, respectively) 1,665 1,665 Additional paid-in capital 824,102 811,777 Deferred compensation (5,636) - Retained earnings 1,774,924 1,623,571 Treasury stock (61,527,608 and 56,190,219 shares, at cost, respectively) (1,171,604) (1,013,726) Accumulated other comprehensive loss (49,536) (28,592) Unallocated common stock held by ESOP (6,465,273 and 6,802,146 shares, respectively) (23,688) (24,931) ------------ ------------ TOTAL STOCKHOLDERS' EQUITY 1,350,227 1,369,764 ------------ ------------ TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 22,380,271 $ 23,415,869 ============ ============
8 ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME --------------------------------- (In Thousands, Except Share Data)
For the Three Months Ended For the Twelve Months Ended December 31, December 31, ----------------------------- ----------------------------- 2005 2004 2005 2004 ------------- ------------- ------------- ------------- Interest income: Mortgage loans: One-to-four family $ 120,331 $ 107,375 $ 459,929 $ 428,229 Multi-family, commercial real estate and construction 61,672 55,821 239,119 220,703 Consumer and other loans 8,705 6,239 31,160 21,312 Mortgage-backed and other securities 76,106 97,454 340,626 371,044 Federal funds sold and repurchase agreements 2,257 439 6,123 1,140 Federal Home Loan Bank of New York stock 1,630 836 6,030 3,473 ------------- ------------- ------------- ------------- Total interest income 270,701 268,164 1,082,987 1,045,901 ------------- ------------- ------------- ------------- Interest expense: Deposits 77,471 64,181 281,399 237,429 Borrowed funds 79,546 83,104 322,808 337,906 ------------- ------------- ------------- ------------- Total interest expense 157,017 147,285 604,207 575,335 ------------- ------------- ------------- ------------- Net interest income 113,684 120,879 478,780 470,566 Provision for loan losses - - - - ------------- ------------- ------------- ------------- Net interest income after provision for loan losses 113,684 120,879 478,780 470,566 ------------- ------------- ------------- ------------- Non-interest income: Customer service fees 17,207 14,905 66,256 58,524 Other loan fees 1,337 1,169 4,980 4,805 Net gain on sales of securities - - - 4,651 Other-than-temporary impairment write-down of securities - (16,520) - (16,520) Mortgage banking income, net 948 811 6,015 4,715 Income from bank owned life insurance 4,011 4,248 16,446 17,134 Other 3,056 1,430 8,502 6,775 ------------- ------------- ------------- ------------- Total non-interest income 26,559 6,043 102,199 80,084 ------------- ------------- ------------- ------------- Non-interest expense: General and administrative: Compensation and benefits 27,600 27,138 119,417 118,684 Occupancy, equipment and systems 15,905 16,158 63,695 64,592 Federal deposit insurance premiums 433 446 1,760 1,775 Advertising 1,275 1,521 8,815 6,583 Other 7,531 8,177 35,047 33,377 ------------- ------------- ------------- ------------- Total non-interest expense 52,744 53,440 228,734 225,011 ------------- ------------- ------------- ------------- Income before income tax expense 87,499 73,482 352,245 325,639 Income tax expense 29,750 22,966 118,442 106,102 ------------- ------------- ------------- ------------- Net income $ 57,749 $ 50,516 $ 233,803 $ 219,537 ============= ============= ============= ============= Basic earnings per common share $ 0.58 $ 0.48 $ 2.30 $ 2.03 ============= ============= ============= ============= Diluted earnings per common share $ 0.57 $ 0.48 $ 2.26 $ 2.00 ============= ============= ============= ============= Basic weighted average common shares 99,478,069 104,395,014 101,476,376 107,930,909 Diluted weighted average common and common equivalent shares 101,449,368 106,342,848 103,408,637 109,806,855
9 ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES SELECTED FINANCIAL RATIOS AND OTHER DATA ----------------------------------------
At or For the At or For the Three Months Ended Twelve Months Ended December 31, December 31, ----------------------------- ----------------------------- 2005 2004 2005 2004 ------------- ------------- ------------- ------------- (Annualized) SELECTED RETURNS AND FINANCIAL RATIOS ------------------------------------- Return on average stockholders' equity 16.97% 14.75% 17.06% 15.81% Return on average tangible stockholders' equity (1) 19.64 17.05 19.72 18.25 Return on average assets 1.03 0.87 1.02 0.97 General and administrative expense to average assets 0.94 0.92 1.00 0.99 Efficiency ratio (2) 37.61 42.10 39.37 40.86 Net interest rate spread (3) 2.03 2.09 2.11 2.09 Net interest margin (4) 2.12 2.18 2.19 2.17 SELECTED OPERATING RETURNS AND FINANCIAL RATIOS (5) --------------------------------------------------- Operating return on average stockholders' equity 16.97% 17.54% 17.06% 16.50% Operating return on average tangible stockholders' equity (1) 19.64 20.28 19.72 19.04 Operating return on average assets 1.03 1.04 1.02 1.01 Operating efficiency ratio (2) 37.61 37.26 39.37 39.67 ASSET QUALITY DATA (DOLLARS IN THOUSANDS) ----------------------------------------- Non-performing loans/total loans 0.45% 0.25% Non-performing loans/total assets 0.29 0.14 Non-performing assets/total assets 0.30 0.14 Allowance for loan losses/non-performing loans 124.81 254.02 Allowance for loan losses/non-accrual loans 125.15 258.57 Allowance for loan losses/total loans 0.56 0.62 Net charge-offs to average loans outstanding 0.02% 0.00% 0.01 0.00 Non-performing assets $ 66,093 $ 33,499 Non-performing loans 65,027 32,579 Loans 90 days past maturity but still accruing interest 176 573 Non-accrual loans 64,851 32,006 Net charge-offs $ 888 $ 45 1,599 363 CAPITAL RATIOS (ASTORIA FEDERAL) -------------------------------- Tangible 6.53% 5.99% Core 6.53 5.99 Risk-based 12.53 12.44 OTHER DATA ---------- Cash dividends paid per common share $ 0.20 $ 0.17 $ 0.80 $ 0.67 Dividend payout ratio 35.09% 35.42% 35.40% 33.50% Book value per share (6) $ 13.71 $ 13.23 Tangible book value per share (7) 11.83 11.45 Average equity/average assets 6.06% 5.90% 5.99% 6.12% Mortgage loans serviced for others (in thousands) $ 1,502,852 $ 1,670,062 Full time equivalent employees 1,658 1,862
(1) Average tangible stockholders' equity represents average stockholders' equity less average goodwill. (2) The efficiency ratio represents general and administrative expense divided by the sum of net interest income plus non-interest income. (3) Net interest rate spread represents the difference between the average yield on average interest-earning assets and the average cost of average interest-bearing liabilities. (4) Net interest margin represents net interest income divided by average interest-earning assets. (5) Operating returns and financial ratios exclude the other-than-temporary impairment write-down of securities charge of $9.6 million, after tax, recorded in the 2004 fourth quarter. (6) Book value per share represents stockholders' equity divided by outstanding shares, excluding unallocated Employee Stock Ownership Plan, or ESOP, shares. (7) Tangible book value per share represents stockholders' equity less goodwill divided by outstanding shares, excluding unallocated ESOP shares. 10 AVERAGE BALANCE SHEETS ---------------------- (Dollars in Thousands)
For the Three Months Ended December 31, -------------------------------------------------------------------------------------- 2005 2004 ----------------------------------------- ----------------------------------------- Average Average Average Yield/ Average Yield/ Balance Interest Cost Balance Interest Cost ------------ ------------ ---------- ------------ ------------ ---------- (Annualized) (Annualized) Assets: Interest-earning assets: Mortgage loans (1): One-to-four family $ 9,754,809 $ 120,331 4.93% $ 8,957,442 $ 107,375 4.79% Multi-family, commercial real estate and construction 4,005,714 61,672 6.16 3,580,890 55,821 6.24 Consumer and other loans (1) 522,429 8,705 6.67 508,215 6,239 4.91 ------------ ------------ ------------ ------------ Total loans 14,282,952 190,708 5.34 13,046,547 169,435 5.19 Mortgage-backed and other securities (2) 6,807,465 76,106 4.47 8,898,349 97,454 4.38 Federal funds sold and repurchase agreements 229,174 2,257 3.94 92,470 439 1.90 Federal Home Loan Bank stock 131,178 1,630 4.97 153,008 836 2.19 ------------ ------------ ------------ ------------ Total interest-earning assets 21,450,769 270,701 5.05 22,190,374 268,164 4.83 ------------ ------------ Goodwill 185,151 185,151 Other non-interest-earning assets 825,378 834,793 ------------ ------------ Total assets $ 22,461,298 $ 23,210,318 ============ ============ Liabilities and stockholders' equity: Interest-bearing liabilities: Savings $ 2,564,728 2,598 0.41 $ 2,938,663 2,970 0.40 Money market 690,978 1,688 0.98 990,967 1,788 0.72 NOW and demand deposit 1,554,803 230 0.06 1,569,387 237 0.06 Liquid certificates of deposit 537,574 4,710 3.50 - - - ------------ ------------ ------------ ------------ Total core deposits 5,348,083 9,226 0.69 5,499,017 4,995 0.36 Certificates of deposit 7,419,474 68,245 3.68 6,724,096 59,186 3.52 ------------ ------------ ------------ ------------ Total deposits 12,767,557 77,471 2.43 12,223,113 64,181 2.10 Borrowed funds 8,000,733 79,546 3.98 9,281,827 83,104 3.58 ------------ ------------ ------------ ------------ Total interest-bearing liabilities 20,768,290 157,017 3.02 21,504,940 147,285 2.74 ------------ ------------ Non-interest-bearing liabilities 331,989 335,102 ------------ ------------ Total liabilities 21,100,279 21,840,042 Stockholders' equity 1,361,019 1,370,276 ------------ ------------ Total liabilities and stockholders' equity $ 22,461,298 $ 23,210,318 ============ ============ Net interest income/net interest rate spread $ 113,684 2.03% $ 120,879 2.09% ============ ========== ============ ========== Net interest-earning assets/net interest margin $ 682,479 2.12% $ 685,434 2.18% ============ ========== ============ ========== Ratio of interest-earning assets to interest-bearing liabilities 1.03x 1.03x ============ ============
(1) Mortgage loans and consumer and other loans include loans held-for-sale and non-performing loans and exclude the allowance for loan losses. (2) Securities available-for-sale are reported at average amortized cost. 11 ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES AVERAGE BALANCE SHEETS ---------------------- (Dollars in Thousands)
For the Twelve Months Ended December 31, -------------------------------------------------------------------------------------- 2005 2004 ----------------------------------------- ----------------------------------------- Average Average Average Yield/ Average Yield/ Balance Interest Cost Balance Interest Cost ------------ ------------ ---------- ------------ ------------ ---------- Assets: Interest-earning assets: Mortgage loans (1): One-to-four family $ 9,461,023 $ 459,929 4.86% $ 8,894,219 $ 428,229 4.81% Multi-family, commercial real estate and construction 3,862,281 239,119 6.19 3,419,369 220,703 6.45 Consumer and other loans (1) 526,071 31,160 5.92 478,195 21,312 4.46 ------------ ------------ ------------ ------------ Total loans 13,849,375 730,208 5.27 12,791,783 670,244 5.24 Mortgage-backed and other securities (2) 7,671,532 340,626 4.44 8,608,601 371,044 4.31 Federal funds sold and repurchase agreements 195,863 6,123 3.13 86,625 1,140 1.32 Federal Home Loan Bank stock 130,759 6,030 4.61 171,419 3,473 2.03 ------------ ------------ ------------ ------------ Total interest-earning assets 21,847,529 1,082,987 4.96 21,658,428 1,045,901 4.83 ------------ ------------ Goodwill 185,151 185,151 Other non-interest-earning assets 852,475 848,106 ------------ ------------ Total assets $ 22,885,155 $ 22,691,685 ============ ============ Liabilities and stockholders' equity: Interest-bearing liabilities: Savings $ 2,742,417 11,015 0.40 $ 2,973,054 11,920 0.40 Money market 804,855 7,513 0.93 1,088,915 6,379 0.59 NOW and demand deposit 1,569,419 928 0.06 1,534,822 921 0.06 Liquid certificates of deposit 350,923 10,708 3.05 - - - ------------ ------------ ------------ ------------ Total core deposits 5,467,614 30,164 0.55 5,596,791 19,220 0.34 Certificates of deposit 7,146,664 251,235 3.52 6,211,014 218,209 3.51 ------------ ------------ ------------ ------------ Total deposits 12,614,278 281,399 2.23 11,807,805 237,429 2.01 Borrowed funds 8,566,812 322,808 3.77 9,184,928 337,906 3.68 ------------ ------------ ------------ ------------ Total interest-bearing liabilities 21,181,090 604,207 2.85 20,992,733 575,335 2.74 ------------ ------------ ------------ ------------ Non-interest-bearing liabilities 333,522 310,662 ------------ ------------ Total liabilities 21,514,612 21,303,395 Stockholders' equity 1,370,543 1,388,290 ------------ ------------ Total liabilities and stockholders' equity $ 22,885,155 $ 22,691,685 ============ ============ Net interest income/net interest rate spread $ 478,780 2.11% $ 470,566 2.09% ============ ========== ============ ========== Net interest-earning assets/net interest margin $ 666,439 2.19% $ 665,695 2.17% ============ ========== ============ ========== Ratio of interest-earning assets to interest-bearing liabilities 1.03x 1.03x ============ ============
(1) Mortgage loans and consumer and other loans include loans held-for-sale and non-performing loans and exclude the allowance for loan losses. (2) Securities available-for-sale are reported at average amortized cost. 12 ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES END OF PERIOD BALANCES AND RATES -------------------------------- (Dollars in Thousands)
At December 31, 2005 At September 30, 2005 At December 31, 2004 ------------------------- ------------------------- ------------------------- Weighted Weighted Weighted Average Average Average Balance Rate (1) Balance Rate (1) Balance Rate (1) ----------- ----------- ----------- ----------- ----------- ----------- Selected interest-earning assets: Mortgage loans, gross (2): One-to-four family $ 9,757,920 5.19% $ 9,509,514 5.13% $ 9,054,747 5.05% Multi-family, commercial real estate and construction 4,039,733 5.88 3,991,029 5.85 3,621,560 5.90 Mortgage-backed and other securities (3) 6,572,304 4.35 7,088,515 4.35 8,709,819 4.37 Interest-bearing liabilities: Savings 2,510,897 0.40 2,636,201 0.40 2,929,120 0.40 Money market 648,730 0.95 729,552 0.97 965,288 0.80 NOW and demand deposit 1,569,859 0.06 1,547,769 0.06 1,580,714 0.06 Liquid certificates of deposit 619,784 3.66 479,372 3.29 - - ----------- ----------- ----------- Total core deposits 5,349,270 0.74 5,392,894 0.64 5,475,122 0.37 Certificates of deposit 7,461,185 3.73 7,412,756 3.58 6,848,135 3.46 ----------- ----------- ----------- Total deposits 12,810,455 2.48 12,805,650 2.34 12,323,257 2.09 Borrowings, net 7,937,526 3.97 8,099,498 3.84 9,469,835 3.57
(1) Weighted average rates represent stated or coupon interest rates excluding the effect of yield adjustments for premiums, discounts and deferred loan origination fees and costs and the impact of prepayment penalties. (2) Mortgage loans exclude loans held-for-sale and include non-performing loans. (3) Securities available-for-sale are reported at fair value and securities held-to-maturity are reported at amortized cost. RECONCILIATION OF 2004 GAAP NET INCOME TO OPERATING EARNINGS ------------------------------------------------------------ (In Thousands, Except Per Share Data)
For the Three Months Ended For the Twelve Months Ended December 31, 2004 December 31, 2004 --------------------------------------- --------------------------------------- GAAP Adjustments Operating GAAP Adjustments Operating ----------- ----------- ----------- ----------- ----------- ----------- Net interest income after provision for loan losses $ 120,879 $ - $ 120,879 $ 470,566 $ - $ 470,566 Non-interest income 6,043 16,520 22,563 80,084 16,520 96,604 Non-interest expense 53,440 - 53,440 225,011 - 225,011 ----------- ----------- ----------- ----------- ----------- ----------- Income before income tax expense 73,482 16,520 90,002 325,639 16,520 342,159 Income tax expense 22,966 6,945 29,911 106,102 6,945 113,047 ----------- ----------- ----------- ----------- ----------- ----------- Net income $ 50,516 $ 9,575 $ 60,091 $ 219,537 $ 9,575 $ 229,112 ----------- ----------- ----------- ----------- ----------- ----------- Basic earnings per common share $ 0.48 $ 0.09 $ 0.58 $ 2.03 $ 0.09 $ 2.12 ----------- ----------- ----------- ----------- ----------- ----------- Diluted earnings per common share $ 0.48 $ 0.09 $ 0.57 $ 2.00 $ 0.09 $ 2.09 ----------- ----------- ----------- ----------- ----------- -----------
The above adjustments relate to the $16.5 million other-than-temporary impairment write-down on $120.0 million of Freddie Mac preferred stock and the related tax effects. 13