LAKE SUCCESS, N.Y., Jan. 23 /PRNewswire-FirstCall/ -- Astoria Financial Corporation ("Astoria," the "Company"), the holding company for Astoria Federal Savings and Loan Association ("Astoria Federal"), today reported net income of $19.7 million (operating income of $33.0 million), or $0.22 diluted earnings per share ("EPS") (operating EPS of $0.36), for the quarter ended December 31, 2007, compared to $37.1 million, or $0.39 EPS, for the 2006 fourth quarter.
For the year ended December 31, 2007, net income totaled $124.8 million (operating income of $138.1 million), or $1.36 EPS (operating EPS of $1.50), compared to $174.9 million (operating income of $178.6 million), or $1.80 EPS (operating EPS of $1.84), for the year ended December 31, 2006.
Included in the fourth quarter and full year 2007 results is an other- than-temporary impairment, after-tax, non-cash charge of $13.3 million, or $0.15 EPS and $0.14 EPS, respectively, relating to Freddie Mac preferred stock, as reported in the Company's press release dated January 17, 2008. Operating income and operating EPS, representing net income and EPS determined in accordance with generally accepted accounting principles ("GAAP") excluding the effects of the after-tax, non-cash charge noted above and a $3.7 million, after-tax, charge for the termination of our interest rate swap agreements in the 2006 first quarter, provide a meaningful comparison for effectively evaluating Astoria's operating results. For a reconciliation of operating income and operating EPS to GAAP net income and EPS, please refer to the tables titled Reconciliation of GAAP net income to non-GAAP earnings.
Commenting on the quarter and full year results, George L. Engelke, Jr., Chairman and Chief Executive Officer of Astoria, noted, "The 2007 fourth quarter and full year operating results were in line with our expectations and continued to reflect the negative impact of a flat-to-inverted yield curve that persisted through the summer. Subsequently, four interest rate reductions by the Federal Reserve beginning in September, totaling 175 basis points, have produced a positively sloped yield curve and a more favorable interest rate environment for us going forward."
Board Declares Quarterly Cash Dividend of $0.26 Per Share
The Board of Directors of the Company, at their January 23, 2008 meeting, declared a quarterly cash dividend of $0.26 per common share. The dividend is payable on March 3, 2008 to shareholders of record as of February 15, 2008. This represents the fifty-first consecutive quarterly cash dividend declared by the Company.
Twelfth Stock Repurchase Program Continues
During the 2007 fourth quarter, Astoria repurchased 505,000 shares of its common stock at an average cost of $25.12 per share. For the year ended December 31, 2007, Astoria repurchased a total of 3.0 million shares, completing its eleventh stock repurchase program and commencing its twelfth stock repurchase program in the 2007 third quarter. Under the current stock repurchase program, 8.9 million shares remain available for repurchase as of January 1, 2008.
Board Sets Annual Shareholders' Meeting Date
The Board of Directors, at their January 23, 2008 meeting, established May 21, 2008 as the date for the Astoria Annual Meeting of Shareholders, with a voting record date of March 26, 2008.
Supervisory Goodwill Litigation Update
In the case of the Long Island Savings Bank goodwill claim for breach of contract, the U.S. Court of Appeals for the Federal Circuit, on December 28, 2007, denied both Astoria's petition for a panel rehearing and a rehearing en banc and upheld the Court's most recent opinion which reversed an Astoria award of $435.8 million. Management is carefully reviewing its options with respect to any further legal action that may be taken in this matter.
In the case of the Fidelity New York goodwill claim, on January 8, 2008, the U.S. Court of Federal Claims awarded Astoria $16.0 million in damages from the U.S. government for breach of contract. Management is carefully reviewing the decision and anticipates that the U.S. government, given its practice in similar cases, may file an appeal. If so, no assurance can be given as to the timing, content or ultimate outcome of the appeal.
Fourth Quarter and Full Year Earnings Summary
Net interest income, before the provision for loan losses, for the quarter ended December 31, 2007 increased to $81.9 million from $81.2 million for the 2007 third quarter, and declined from $86.9 million for the 2006 fourth quarter. For the year ended December 31, 2007, net interest income, before provision for loan losses, totaled $333.5 million compared to $390.4 million for the year ended December 31, 2006.
Astoria's net interest margin for the quarter ended December 31, 2007 was 1.57% compared to 1.58% for the 2007 third quarter and 1.69% for the quarter ended December 31, 2006. For the year ended December 31, 2007, the net interest margin was 1.62% compared to 1.87% for the year ended December 31, 2006. The year-over-year quarter and full year decreases are due to the cost of interest-bearing liabilities rising more rapidly than the yield on interest-earning assets. Commenting on the net interest margin, Mr. Engelke noted, "The margin for the 2007 fourth quarter, in line with our expectations, represents an inflection point, with gradual improvement expected throughout 2008."
Non-interest income for the quarter ended December 31, 2007 totaled $2.1 million, including the previously announced other-than-temporary impairment non-cash pre-tax charge of $20.5 million, compared to $23.9 million for the comparable 2006 period. The decrease is primarily due to the impairment charge noted above and a decrease of $1.7 million in mortgage banking income, net, as detailed below. For the year ended December 31, 2007, non interest income totaled $75.8 million, including the aforementioned non-cash charge, compared to $91.4 million for 2006, including the $5.5 million pre-tax charge for the termination of interest rate swap agreements as noted earlier.
The components of mortgage banking (loss) income, net, which is included in non-interest income, are detailed below:
(Dollars in millions) 4Q07 4Q06 FY 2007 FY 2006 Loan servicing fees $1.0 $1.0 $4.1 $4.4 Amortization of MSR* (0.9) (0.9) (3.5) (3.7) MSR* valuation adjustments (1.2) 0.5 (1.0) 2.0 Net gain on sale of loans 0.4 0.4 1.7 2.1 Mortgage banking (loss) income, net $(0.7) $1.0 $1.3 $4.8 * Mortgage servicing rights
General and administrative expense ("G&A") for the quarter ended December 31, 2007 increased $2.4 million, to $58.9 million from $56.5 million for the 2007 third quarter, and $1.9 million from $57.0 million for the 2006 fourth quarter. The linked quarter and year-over-year quarter increases are primarily due to increased compensation and benefits expense, including increased ESOP expense, and goodwill litigation expense partially offset by lower advertising expense.
For the full year 2007, G&A increased $9.5 million to $231.3 million from $221.8 million for the full year 2006. The increase was primarily due to increases in compensation and benefits expense and goodwill litigation expense, partially offset by lower advertising expense.
Income tax expense for the quarter ended December 31, 2007 decreased $13.2 million from the 2006 fourth quarter to $3.5 million due primarily to lower net income resulting from the non-cash pre-tax impairment charge of $20.5 million incurred in the 2007 fourth quarter. It is expected that the effective tax rate for 2008 should return to a more normal level of approximately 31%.
Balance Sheet Summary
For the 2007 fourth quarter, the loan portfolio increased $201.7 million from the prior quarter, or 5% on an annualized basis, to $16.2 billion at December 31, 2007. Mortgage loan originations and purchases totaled $882.1 million for the quarter ended December 31, 2007 compared to $1.1 billion for the 2006 fourth quarter.
For the year ended December 31, 2007, the loan portfolio increased $1.2 billion, or 8%, and mortgage loan originations and purchases totaled $4.2 billion compared to $3.4 billion for 2006.
For the 2007 fourth quarter, the one-to-four family mortgage loan portfolio increased $278.6 million from the prior quarter, or 10% annualized, to $11.6 billion at December 31, 2007. One-to-four family loan originations and purchases totaled $816.1 million for the 2007 fourth quarter compared to $948.7 million for the 2006 fourth quarter. Of the 2007 fourth quarter one- to-four family loan production for portfolio, 71% consisted of 3/1 and 5/1 hybrid adjustable rate mortgage loans.
For the year ended December 31, 2007, the one-to-four family mortgage loan portfolio increased $1.4 billion, or 14%. Loan originations and purchases totaled $3.8 billion for 2007 compared to $2.7 billion for 2006. The loan-to- value ratio of the 2007 one-to-four family loan production for portfolio averaged 65% at origination and the loan amount averaged approximately $550,000. Of the 2007 production for portfolio, 78% consisted of 3/1 and 5/1 hybrid adjustable rate mortgage loans.
For the quarter ended December 31, 2007, the multi-family and commercial real estate ("CRE") loan portfolio decreased $56.0 million from the prior quarter, primarily due to lower loan originations which totaled $66.0 million compared to $105.0 million for the 2006 fourth quarter. At December 31, 2007, the combined multi-family and CRE loan portfolio totaled $4.0 billion, or 25% of total loans.
For the year ended December 31, 2007, the multi-family and CRE loan portfolio decreased $110.4 million primarily due to lower loan originations which totaled $410.4 million compared to $664.4 million for the comparable 2006 period. The loan-to-value ratio of the 2007 multi-family/CRE loan production averaged 65% at origination and the loan amount averaged approximately $1.3 million.
Asset Quality
For the quarter ended December 31, 2007, non-performing loans increased $24.0 million from the previous quarter to $106.3 million, or 0.49% of total assets, primarily due to an increase in one-to-four family non-performing loans. Loans that have missed only two payments and are currently included in non-performing loans totaled $38.3 million at December 31, 2007, an increase of $14.2 million from the previous quarter and represent 59% of the total increase in non-performing loans in the 2007 fourth quarter. At December 31, 2007, one-to-four family non-performing loans totaled $89.4 million and multi- family non-performing loans totaled $14.2 million. Mr. Engelke noted, "While we have never actively participated in high-risk residential mortgage lending, as a geographically diversified lender, we are not immune to some negative consequences arising from overall economic weakness and, in particular, a sharp downturn in the housing industry nationally. Accordingly, although our total loan delinquencies remained stable on a linked quarter basis, our non- performing loans increased as noted above; therefore, we anticipate that our non-performing loans and credit costs could increase somewhat during 2008, but our asset quality should remain strong as we maintain conservative underwriting standards."
Net loan charge-offs for the quarter ended December 31, 2007 totaled $1.3 million compared to $1.6 million for the previous quarter and net recoveries of $12,000 for the 2006 fourth quarter. For the year ended December 31, 2007, net loan charge-offs totaled $3.5 million, or just two basis points of average loans, compared to $1.2 million, or one basis point of average loans, for the year ended December 31, 2006.
For the quarter ended December 31, 2007, Astoria recorded a $2.0 million provision for loan losses, up from $500,000 recorded in the previous quarter. For the year ended December 31, 2007, provision for loan losses totaled $2.5 million compared to no provision in 2006.
For the quarter and year ended December 31, 2007, deposits decreased $216.6 million and $174.6 million, respectively, to $13.0 billion. "During the fourth quarter, retail deposit pricing remained very competitive even as short-term market interest rates declined. As a result of our efforts to maintain deposit pricing discipline, we have taken advantage of lower cost borrowings for funding some of our loan growth during this quarter," Mr. Engelke noted.
For the quarter and year ended December 31, 2007, securities decreased $197.7 million and $968.8 million, respectively, to $4.4 billion, or 20% of total assets at December 31, 2007. For the quarter and year ended December 31, 2007, borrowings increased $255.2 million and $348.7 million, respectively, to $7.2 billion, or 33% of total assets at December 31, 2007. Total assets were essentially unchanged from the previous quarter and increased $164.8 million from December 31, 2006 to $21.7 billion at December 31, 2007.
Key balance sheet highlights, reflecting the improvement in the quality of the Company's balance sheet since December 31, 1999, follow:
($ in millions) Cumu- lative 12/31/99 12/31/01 12/31/03 12/31/05 12/31/06 12/31/07 % Change Assets $22,700 $22,672 $22,462 $22,380 $21,555 $21,719 (4%) Loans $10,286 $12,167 $12,687 $14,392 $14,972 $16,155 + 57% Securities $10,763 $8,013 $8,448 $6,572 $5,340 $4,371 (59%) Deposits $9,555 $10,904 $11,187 $12,810 $13,224 $13,049 + 37% Borrowings $11,528 $9,826 $9,632 $7,938 $6,836 $7,185 (38%)
The following table illustrates this improvement on an outstanding per share basis:
Amount 12/31/ 12/31/ 12/31/ 12/31/ 12/31/ 12/31/ % per share 99 01 03 05 06 07 Change CAGR Loans $66.28 $89.36 $107.51 $137.11 $152.44 $168.76 155% 12% Deposits $61.57 $80.09 $94.80 $122.04 $134.65 $136.32 121% 10%
Stockholders' equity was $1.2 billion, or 5.58% of total assets at December 31, 2007. Astoria Federal continues to maintain capital ratios in excess of regulatory requirements with core, tangible and risk-based capital ratios of 6.58%, 6.58% and 12.04%, respectively, at December 31, 2007.
Future Outlook
Commenting on the outlook for 2008, Mr. Engelke stated, "The decrease in short-term interest rates by the Federal Reserve has produced a more positively sloped yield curve and a more favorable interest rate environment for us going forward. We anticipate the yield curve will remain positively sloped and steepen further in 2008 which should result in improved opportunities for earnings growth and an expansion of our net interest margin. Our focus going forward will be to continue to capitalize on residential mortgage market opportunities that result in improved loan volumes and mortgage spreads. Loan growth may be tempered somewhat as we have reduced the number of states in which we will originate residential loans due to the advanced economic declines in those markets. This is evidenced by the loan pipeline at December 31, 2007 which, at $1.1 billion, is $221.4 million lower than the loan pipeline at September 30, 2007. Deposit growth will remain a focus; however, in the near term, if competitive pricing continues, we will fund some of our loan growth with lower cost borrowings. We expect to continue to maintain the Company's tangible capital levels between 4.50% and 4.75%."
Astoria Financial Corporation, with assets of $21.7 billion, is the holding company for Astoria Federal Savings and Loan Association. Established in 1888, Astoria Federal, with deposits in New York totaling $13.0 billion, is the largest thrift depository headquartered in New York 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, http://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 covering twenty-two states, primarily the East Coast, and the District of Columbia, and through correspondent relationships covering twenty-nine states and the District of Columbia.
Earnings Conference Call January 24, 2008 at 10:00 a.m. (ET)
The Company, as previously announced, indicated that Mr. Engelke will host an earnings conference call Thursday morning, January 24, 2008 at 10:00 a.m. (ET). The toll-free dial-in number is (888) 562-3356, conference ID #28876927. A telephone replay will be available on January 24, 2008 from 1:00 p.m. (ET) through Friday, February 1, 2008. The replay number is (800) 642-1687, ID # 28876927. The conference call will also be simultaneously webcast on the Company's website http://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. 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 real estate or 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 be determined adverse to us or 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.
ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (In Thousands, Except Share Data) At At December 31, December 31, 2007 2006 ASSETS Cash and due from banks $93,972 $134,016 Repurchase agreements 24,218 71,694 Securities available-for-sale 1,313,306 1,560,325 Securities held-to-maturity (fair value of $3,013,014 and $3,681,514, respectively) 3,057,544 3,779,356 Federal Home Loan Bank of New York stock, at cost 201,490 153,640 Loans held-for-sale, net 6,306 16,542 Loans receivable: Mortgage loans, net 15,791,962 14,532,503 Consumer and other loans, net 363,052 439,188 16,155,014 14,971,691 Allowance for loan losses (78,946) (79,942) Total loans receivable, net 16,076,068 14,891,749 Mortgage servicing rights, net 12,910 15,944 Accrued interest receivable 79,132 78,761 Premises and equipment, net 139,563 145,231 Goodwill 185,151 185,151 Bank owned life insurance 398,280 385,952 Other assets 131,428 136,158 TOTAL ASSETS $21,719,368 $21,554,519 LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Deposits $13,049,438 $13,224,024 Reverse repurchase agreements 3,730,000 4,480,000 Federal Home Loan Bank of New York advances 3,058,000 1,940,000 Other borrowings, net 396,658 416,002 Mortgage escrow funds 129,412 132,080 Accrued expenses and other liabilities 144,516 146,659 TOTAL LIABILITIES 20,508,024 20,338,765 Stockholders' equity: Preferred stock, $1.00 par value; (5,000,000 shares authorized; none issued and outstanding) - - Common stock, $.01 par value; (200,000,000 shares authorized; 166,494,888 shares issued; and 95,728,562, and 98,211,827 shares outstanding, respectively) 1,665 1,665 Additional paid-in capital 846,227 828,940 Retained earnings 1,883,902 1,856,528 Treasury stock (70,766,326 and 68,283,061 shares, at cost, respectively) (1,459,865) (1,390,495) Accumulated other comprehensive loss (39,476) (58,330) Unallocated common stock held by ESOP (5,761,391 and 6,155,918 shares, respectively) (21,109) (22,554) TOTAL STOCKHOLDERS' EQUITY 1,211,344 1,215,754 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $21,719,368 $21,554,519 ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (In Thousands, Except Share Data) For the Three Months For the Twelve Months Ended Ended December 31, December 31, 2007 2006 2007 2006 Interest income: Mortgage loans: One-to-four family $159,134 $131,879 $587,863 $510,105 Multi-family, commercial real estate and construction 62,376 67,064 254,536 259,242 Consumer and other loans 6,700 8,817 30,178 35,735 Mortgage-backed and other securities 50,913 62,162 219,040 267,535 Federal funds sold and repurchase agreements 259 1,205 2,071 6,410 Federal Home Loan Bank of New York stock 3,388 2,252 11,634 7,787 Total interest income 282,770 273,379 1,105,322 1,086,814 Interest expense: Deposits 114,635 109,413 456,039 384,770 Borrowings 86,202 77,110 315,755 311,659 Total interest expense 200,837 186,523 771,794 696,429 Net interest income 81,933 86,856 333,528 390,385 Provision for loan losses 2,000 - 2,500 - Net interest income after provision for loan losses 79,933 86,856 331,028 390,385 Non-interest income: Customer service fees 15,713 15,615 62,961 64,823 Other loan fees 1,258 1,303 4,739 4,058 Net gain on sales of securities 216 - 2,208 - Other-than-temporary impairment write-down of securities (20,484) - (20,484) - Mortgage banking (loss) income, net (661) 1,035 1,334 4,845 Income from bank owned life insurance 4,381 4,066 17,109 16,129 Other 1,685 1,843 7,923 1,495 Total non-interest income 2,108 23,862 75,790 91,350 Non-interest expense: General and administrative: Compensation and benefits 32,279 29,985 124,036 116,408 Occupancy, equipment and systems 16,580 16,825 65,754 66,034 Federal deposit insurance premiums 393 409 1,595 1,672 Advertising 1,281 2,079 6,563 7,747 Other 8,369 7,662 33,325 29,942 Total non-interest expense 58,902 56,960 231,273 221,803 Income before income tax expense 23,139 53,758 175,545 259,932 Income tax expense 3,466 16,652 50,723 85,035 Net income $19,673 $37,106 $124,822 $174,897 Basic earnings per common share $0.22 $0.40 $1.38 $1.85 Diluted earnings per common share $0.22 $0.39 $1.36 $1.80 Basic weighted average common shares 89,680,349 92,354,297 90,490,118 94,754,732 Diluted weighted average common and common equivalent shares 91,117,693 94,735,740 92,092,725 97,280,150 ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES SELECTED FINANCIAL RATIOS AND OTHER DATA For the At or For the Three Months Ended Twelve Months Ended December 31, December 31, 2007 2006 2007 2006 (Annualized) Selected Returns and Financial Ratios Return on average stockholders' equity 6.55% 11.99% 10.39% 13.73% Return on average tangible stockholders' equity (1) 7.74 14.09 12.28 16.06 Return on average assets 0.36 0.69 0.58 0.80 General and administrative expense to average assets 1.08 1.06 1.07 1.01 Efficiency ratio (2) 70.09 51.45 56.50 46.04 Net interest rate spread (3) 1.45 1.57 1.50 1.76 Net interest margin (4) 1.57 1.69 1.62 1.87 Selected Non-GAAP Returns and Financial Ratios (5) Non-GAAP return on average stockholders' equity 10.98% 11.99% 11.50% 14.01% Non-GAAP return on average tangible stockholders' equity (1) 12.98 14.09 13.59 16.40 Non-GAAP return on average assets 0.61 0.69 0.64 0.82 Non-GAAP efficiency ratio (2) 56.35 51.45 53.81 45.53 Asset Quality Data (dollars in thousands) Non-performing loans/total loans 0.66% 0.40% Non-performing loans/total assets 0.49 0.28 Non-performing assets/ total assets 0.53 0.28 Allowance for loan losses/ non-performing loans 74.25 134.55 Allowance for loan losses/ non-accrual loans 74.58 135.66 Allowance for loan losses/ total loans 0.49 0.53 Net charge-offs to average loans outstanding 0.03% 0.00% 0.02 0.01 Non-performing assets $115,443 $60,043 Non-performing loans 106,328 59,416 Loans 90 days past maturity but still accruing interest 474 488 Non-accrual loans (6) 105,854 58,928 Net charge-offs $1,308 $(12) 3,496 1,217 Capital Ratios (Astoria Federal) Tangible 6.58% 6.61% Core 6.58 6.61 Risk-based 12.04 12.25 Other Data Cash dividends paid per common share $0.26 $0.24 $1.04 $0.96 Dividend payout ratio 118.18% 61.54% 76.47% 53.33% Book value per share (7) $13.46 $13.21 Tangible book value per share (8) $11.41 $11.20 Tangible stockholders' equity/tangible assets (1) (9) 4.77% 4.82% Mortgage loans serviced for others (in thousands) $1,272,220 $1,363,591 Full time equivalent employees 1,615 1,626 (1) Tangible stockholders' equity represents stockholders' equity less goodwill. (2) 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) The information presented for the three and twelve months ended December 31, 2007 and the twelve months ended December 31, 2006 represents pro forma calculations which are not in conformity with U.S. generally accepted accounting principles, or GAAP. The 2007 information excludes the $13.3 million, after tax, ($20.5 million, before tax), other-than-temporary impairment write-down of securities charge recorded in the 2007 fourth quarter. The 2006 information excludes the $3.7 million, after tax, ($5.5 million, before tax), charge for the termination of our interest rate swap agreements recorded in the 2006 first quarter. See page 14 for a reconciliation of GAAP net income to non-GAAP earnings for the three and twelve months ended December 31, 2007 and the twelve months ended December 31, 2006. (6) Non-accrual loans include $38.3 million at December 31, 2007 and $17.3 million at December 31, 2006 of loans which have only missed two payments. (7) Book value per share represents stockholders' equity divided by outstanding shares, excluding unallocated Employee Stock Ownership Plan, or ESOP, shares. (8) Tangible book value per share represents stockholders' equity less goodwill divided by outstanding shares, excluding unallocated ESOP shares. (9) Tangible assets represent assets less goodwill. ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES AVERAGE BALANCE SHEETS (Dollars in Thousands) For the Three Months Ended December 31, 2007 Average Average Yield/ Balance Interest Cost (Annualized) Assets: Interest-earning assets: Mortgage loans (1): One-to-four family $11,660,354 $159,134 5.46% Multi-family, commercial real estate and construction 4,106,141 62,376 6.08 Consumer and other loans (1) 369,314 6,700 7.26 Total loans 16,135,809 228,210 5.66 Mortgage-backed and other securities (2) 4,506,034 50,913 4.52 Repurchase agreements 22,229 259 4.66 Federal Home Loan Bank stock 199,389 3,388 6.80 Total interest-earning assets 20,863,461 282,770 5.42 Goodwill 185,151 Other non-interest-earning assets 744,171 Total assets $21,792,783 Liabilities and stockholders' equity: Interest-bearing liabilities: Savings $1,914,907 1,949 0.41 Money market 340,611 847 0.99 NOW and demand deposit 1,448,161 312 0.09 Liquid certificates of deposit 1,444,935 16,074 4.45 Total core deposits 5,148,614 19,182 1.49 Certificates of deposit 7,919,713 95,453 4.82 Total deposits 13,068,327 114,635 3.51 Borrowings 7,165,719 86,202 4.81 Total interest-bearing liabilities 20,234,046 200,837 3.97 Non-interest-bearing liabilities 356,703 Total liabilities 20,590,749 Stockholders' equity 1,202,034 Total liabilities and stockholders' equity $21,792,783 Net interest income/net interest rate spread $81,933 1.45% Net interest-earning assets/net interest margin $629,415 1.57% Ratio of interest-earning assets to interest-bearing liabilities 1.03x For the Three Months Ended December 31, 2006 Average Average Yield/ Balance Interest Cost (Annualized) Assets: Interest-earning assets: Mortgage loans (1): One-to-four family $10,173,855 $131,879 5.19% Multi-family, commercial real estate and construction 4,242,832 67,064 6.32 Consumer and other loans (1) 449,440 8,817 7.85 Total loans 14,866,127 207,760 5.59 Mortgage-backed and other securities (2) 5,495,739 62,162 4.52 Repurchase agreements 90,752 1,205 5.31 Federal Home Loan Bank stock 147,227 2,252 6.12 Total interest-earning assets 20,599,845 273,379 5.31 Goodwill 185,151 Other non-interest-earning assets 782,146 Total assets $21,567,142 Liabilities and stockholders' equity: Interest-bearing liabilities: Savings $2,162,998 2,198 0.41 Money market 456,617 1,152 1.01 NOW and demand deposit 1,462,088 215 0.06 Liquid certificates of deposit 1,420,831 17,824 5.02 Total core deposits 5,502,534 21,389 1.55 Certificates of deposit 7,617,237 88,024 4.62 Total deposits 13,119,771 109,413 3.34 Borrowings 6,848,655 77,110 4.50 Total interest-bearing liabilities 19,968,426 186,523 3.74 Non-interest-bearing liabilities 360,334 Total liabilities 20,328,760 Stockholders' equity 1,238,382 Total liabilities and stockholders' equity $21,567,142 Net interest income/net interest rate spread $86,856 1.57% Net interest-earning assets/net interest margin $631,419 1.69% Ratio of interest-earning assets to interest-bearing liabilities 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 included at average amortized cost. ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES AVERAGE BALANCE SHEETS (Dollars in Thousands) For the Twelve Months Ended December 31, 2007 Average Average Yield/ Balance Interest Cost Assets: Interest-earning assets: Mortgage loans (1): One-to-four family $10,995,688 $587,863 5.35% Multi-family, commercial real estate and construction 4,171,915 254,536 6.10 Consumer and other loans (1) 397,476 30,178 7.59 Total loans 15,565,079 872,577 5.61 Mortgage-backed and other securities (2) 4,850,753 219,040 4.52 Federal funds sold and repurchase agreements 39,838 2,071 5.20 Federal Home Loan Bank stock 167,651 11,634 6.94 Total interest-earning assets 20,623,321 1,105,322 5.36 Goodwill 185,151 Other non-interest-earning assets 753,377 Total assets $21,561,849 Liabilities and stockholders' equity: Interest-bearing liabilities: Savings $2,014,253 8,126 0.40 Money market 379,634 3,780 1.00 NOW and demand deposit 1,465,463 951 0.06 Liquid certificates of deposit 1,549,774 73,352 4.73 Total core deposits 5,409,124 86,209 1.59 Certificates of deposit 7,823,767 369,830 4.73 Total deposits 13,232,891 456,039 3.45 Borrowings 6,776,394 315,755 4.66 Total interest-bearing liabilities 20,009,285 771,794 3.86 Non-interest-bearing liabilities 351,080 Total liabilities 20,360,365 Stockholders' equity 1,201,484 Total liabilities and stockholders' equity $21,561,849 Net interest income/net interest rate spread $333,528 1.50% Net interest-earning assets/net interest margin $614,036 1.62% Ratio of interest-earning assets to interest-bearing liabilities 1.03x For the Twelve Months Ended December 31, 2006 Average Average Yield/ Balance Interest Cost Assets: Interest-earning assets: Mortgage loans (1): One-to-four family $9,984,760 $510,105 5.11% Multi-family, commercial real estate and construction 4,204,883 259,242 6.17 Consumer and other loans (1) 478,447 35,735 7.47 Total loans 14,668,090 805,082 5.49 Mortgage-backed and other securities (2) 5,946,591 267,535 4.50 Federal funds sold and repurchase agreements 131,418 6,410 4.88 Federal Home Loan Bank stock 143,002 7,787 5.45 Total interest-earning assets 20,889,101 1,086,814 5.20 Goodwill 185,151 Other non-interest-earning assets 786,062 Total assets $21,860,314 Liabilities and stockholders' equity: Interest-bearing liabilities: Savings $2,325,346 9,362 0.40 Money market 536,549 5,287 0.99 NOW and demand deposit 1,500,131 877 0.06 Liquid certificates of deposit 1,092,533 50,460 4.62 Total core deposits 5,454,559 65,986 1.21 Certificates of deposit 7,539,840 318,784 4.23 Total deposits 12,994,399 384,770 2.96 Borrowings 7,242,568 311,659 4.30 Total interest-bearing liabilities 20,236,967 696,429 3.44 Non-interest-bearing liabilities 349,170 Total liabilities 20,586,137 Stockholders' equity 1,274,177 Total liabilities and stockholders' equity $21,860,314 Net interest income/net interest rate spread $390,385 1.76% Net interest-earning assets/net interest margin $652,134 1.87% Ratio of interest-earning assets to interest-bearing liabilities 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 included at average amortized cost. ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES END OF PERIOD BALANCES AND RATES (Dollars in Thousands) At December 31, At September 30, At December 31, 2007 2007 2006 -------------------- ------------------- ----------------- Weighted Weighted Weighted Average Average Average Balance Rate Balance Rate Balance Rate (1) (1) (1) -------------------- ------------------- ----------------- Selected interest- earning assets: Mortgage loans, gross (2): One-to-four family $11,628,270 5.70% $11,349,658 5.65% $10,214,146 5.48% Multi- family, commercial real estate and construc- tion 4,055,081 5.92 4,122,709 5.93 4,227,931 5.96 Mortgage- backed and other securities (3) 4,370,850 4.33 4,568,579 4.33 5,339,681 4.35 Interest-bearing liabilities: Savings 1,891,618 0.40 1,940,322 0.40 2,129,416 0.40 Money market 333,914 0.98 352,858 1.01 435,657 0.98 NOW and demand deposit 1,478,362 0.06 1,442,840 0.06 1,496,986 0.06 Liquid 1,447,341 4.40 1,463,845 4.46 1,447,462 4.88 certificates of deposit Total core deposits 5,151,235 1.46 5,199,865 1.49 5,509,521 1.53 Certificates of deposit 7,898,203 4.79 8,066,130 4.80 7,714,503 4.62 Total deposits 13,049,438 3.48 13,265,995 3.50 13,224,024 3.33 Borrowings, net 7,184,658 4.66 6,929,500 4.68 6,836,002 4.45 (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. ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES RECONCILIATION OF GAAP NET INCOME TO NON-GAAP EARNINGS (1) (In Thousands, Except Per Share Data) For the Three Months Ended For the Twelve Months Ended December 31, 2007 December 31, 2007 Adjust- Adjust- GAAP ments(2) Non-GAAP(1) GAAP ments(2) Non-GAAP(1) Net interest income $81,933 $- $81,933 $333,528 $- $333,528 Provision for loan losses 2,000 - 2,000 2,500 - 2,500 Net interest income after provision for loan losses 79,933 - 79,933 331,028 - 331,028 Non-interest income 2,108 20,484 22,592 75,790 20,484 96,274 Non-interest expense 58,902 - 58,902 231,273 - 231,273 Income before income tax expense 23,139 20,484 43,623 175,545 20,484 196,029 Income tax expense 3,466 7,169 10,635 50,723 7,169 57,892 Net income $19,673 $13,315 $32,988 $124,822 $13,315 $138,137 Basic earnings per common share $0.22 $0.15 $0.37 $1.38 $0.15 $1.53 Diluted earnings per common share $0.22 $0.15 $0.36(3) $1.36 $0.14 $1.50 For the Twelve Months Ended December 31, 2006 Adjust- Non-GAAP GAAP ments(4) (1) Net interest income $390,385 $- $390,385 Provision for loan losses - - - Net interest income after provision for loan losses 390,385 - 390,385 Non-interest income 91,350 5,456 96,806 Non-interest expense 221,803 - 221,803 Income before income tax expense 259,932 5,456 265,388 Income tax expense 85,035 1,785 86,820 Net income $174,897 $3,671 $178,568 Basic earnings per common share $1.85 $0.04 $1.88(3) Diluted earnings per common share $1.80 $0.04 $1.84 (1) Non-GAAP earnings are also referred to as operating income and operating EPS throughout this release. (2) Adjustments relate to the other-than-temporary impairment write-down of securities charge and the related tax effects recorded in the 2007 fourth quarter. (3) Figures do not cross foot due to rounding. (4) Adjustments relate to the charge for the termination of our interest rate swap agreements and the related tax effects recorded in the 2006 first quarter.
