LONG ISLAND’S PREMIER COMMUNITY BANK
www.astoriafederal.com
SECOND QUARTER ENDED
JUNE 30, 2003
This presentation may contain forward-looking statements that 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 it believes 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; 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 areas in which we do business, or conditions in the securities markets or the banking industry may be less favorable than we currently anticipate; legislation or regulatory changes may adversely affect our business; 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 other matters before regulatory agencies, whether currently existing or commencing in the future, may delay 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. Corporate Profile $22.3 billion in assets $11.3 billion in deposits, 51% low-cost core deposits(1) 9% deposit market share in Long Island market 3rd largest, just behind Chase and Citibank Serves 700,000 customers/consumers Book value per common share(2): $19.49 Tangible book value per common share(3): $17.05 Insider & ESOP stock ownership: 16% $2.3 billion market cap All figures in this presentation are as of June 30, 2003 and all market data and IBES consensus are as of July 30, 2003, except as noted. NYSE: AF Officers & Directors 6% ESOP 10% Retail 14% Institutions 70% Ownership Profile June 30, 2003 Shares Outstanding: 80,672,623 Our formula for enhancing shareholder value is simple and has been proven successful! Retail Banking – Premier community bank on Long Island Full service provider of financial services and products Keen focus on customer service – Anytime/Anywhere banking, 24/7! Extended hours, Saturday & Sunday banking Multi-channel distribution network- branches, ATMs, telephone and Mortgage Lending – Portfolio lender, not a mortgage banker Single Family, Multifamily and Commercial Real Estate Expertise Top Quality - Low Credit Risk Lending Operating Efficiency Focus on core businesses: Execution excellence is key! Retail Banking/Market Penetration Leading Retail Banking Franchise $11.3 billion in deposits, 86 banking office network Low cost/stable source of funds – average rate: 2.02% Core Deposits represent 51% of Deposits, or $5.8 billion Checking accounts of $1.5 billion, or 26% of core deposits Pro-active sales culture Banking offices with high average deposits Long Island Offices (83) - Nassau (29), Queens (17), Suffolk (25), Westchester Offices (3) - Average Deposits of $126 Million Alternative delivery channels ATMs, telephone and Internet banking Nassau Queens Brooklyn Suffolk Banking Offices and Deposit Share Ranking on Long Island Overall Deposit Share Ranking: #1- all thrifts, #3- all financial institutions Average Deposits Strong Position in Core Market Brooklyn, Queens, Nassau and Suffolk Source: FDIC Deposit Market Share Report. Data as of 6/30/02, most recent available, adjusted for pending acquisitions. 1. Chase 2. Citigroup 3. ASTORIA 4. GreenPoint 5. North Fork 6. HSBC 7. NY Community/RSLN 8. Washington Mutual The combined population of these four counties (7.0 million) exceeds the population $ 19,487 15,676 10,878 9,371 8,932 8,642 8,244 7,914 Total - Core Market $122,391 $2,544 (506) 603 84 1,061 194 828 (1,212) 16% 13 9 8 7 7 7 7 149 142 83 61 132 93 103 73 $131 131 154 68 92 80 108 1,372 (Dollars in millions) Institution Deposits Growth 06/01-06/02 Market Share Branches ($ in millions) Suffolk . Institution Total Well Positioned in Key Markets Source: FDIC Deposit Market Share Report. Deposits Data as of 6/30/02, most recent available, adjusted for pending acquisitions. 1. Citigroup 2. Chase 3. GreenPoint 4. Astoria 5. NYB/RSLN $6,318 5,094 3,858 3,825 3,536 16% 13 10 10 9 58 32 21 29 36 Share Branches Share Branches Total $38,574 411 1. Chase 2. Citigroup 3. Astoria 4. NYB/RSLN 5. North Fork $5,147 3,774 3,172 3,016 2,506 $31,849 Total 16% 12 10 9 8 40 27 19 25 15 12 247 Share Branches 1. Chase 2. North Fork 3. Citigroup 4. Astoria 5. Fleet Total $4,177 3,823 2,428 2,358 1,755 $24,735 17% 16 10 10 7 35 54 29 25 33 383 ($ in millions) Brooklyn . Institution Total Share Branches 1. Chase 2. HSBC 3. Wamu 4. Citigroup 5. GreenPoint Total $5,069 3,421 3,156 2,492 1,522 $27,233 19% 13 12 12 9 6 42 30 17 34 35 331 ($ in millions) Nassau . Institution Total ($ in millions) Queens . Institution Total Deposit Composition Total - $11.3 Billion 51% Core or $5.8 Billion At June 30, 2003 $5.5B @ 3.67% $1.4B @ 0.72% $2.9B @ 0.50% $1.5 B @ 0.14% Average Rate: 2.02% Sales Initiatives – PEAK Process Performance based on Enthusiasm, Actions and Knowledge A “needs” based approach to sales rather than “product” based Highly interactive program – daily and weekly meetings create a Incentives for strong performance, both individual and 2002 results exceeded expectations Checking Account Growth ($ in millions) CAGR = 17% $954 $1,090 $1,262 $1,511 Mortgage Lending Growth Asset Quality Trends Primarily short-term, 3/1 & 5/1 hybrid ARMs for portfolio Minimizes interest rate risk Multiple delivery channels provide flexibility & efficiency Retail* Commissioned representatives/brokers-originations in 19 states* Third party originators – correspondent relationships in 44 states* Secondary marketing capability Sale of 15 year and 30 year fixed rate loans reduces interest rate risk Geographically diversified portfolio Reduces lending concentrations 1-4 Family Mortgage Lending * All loans underwritten to Astoria’s stringent standards. 1-4 Family Mortgage Loan Originations By Delivery Channel $2.4B $4.5B (In Millions) $3.9B $3.4B $2.8B 1-4 Family Mortgage Loan Originations By Product Type $2.4B $3.9B $4.5B (In Millions) $3.4B $2.8B Solid and growing Multifamily/CRE portfolio Multifamily/Commercial Real Estate Lending Note: LTV is based on current principal balances and original appraised values. $2.6 billion in portfolio – Average yield 7.60% Conservative underwriting - Average LTV < 65% Average loan in portfolio < $1 million All loans in local market Portfolio target: 25% of total loan portfolio by year-end 2003 Multifamily/Commercial Real Estate Originations (In Millions) Originations include mixed use property loans. Average loan balance outstanding is < $1 million. All loans originated in local market. Asset Quality Minimal credit risk Strong reserves Low delinquency trends Top quality MBS portfolio Asset Quality Focus Conservative underwriting, top quality loans, low LTVs No sub-prime lending 99+% of all loans secured by real estate Allowance for loan losses/non-performing loans: 232% Primarily agency, agency-backed or ‘AAA’ rated Average LTV: 63.1% Total Portfolio: $12.0 billion Low Credit Risk Loan Portfolio Composition At June 30, 2003 Excludes loans held for sale; LTV based on current principal balance and original appraised value. Commercial R/E - 6% Average LTV: 63.3% Multifamily - 16% Average LTV: 64.4% One-to-Four Family – 74% Average LTV: 62.8% Home Equity & Other – 4% NPA to Total Assets vs Peers * Most recent data available for All US Thrifts and NY Thrifts is as of March 31, 2003. AF data is as of June 30, 2003. Source: SNL Financial – Median Ratios. Net Charge-offs/Average Loans vs. Peers * Most recent data available for All US Thrifts and NY Thrifts is for the quarter ended March 31, 2003. AF is for the six months ended June 30, 2003. Source: SNL Financial – Median Ratios. 1-4 Family Delinquency Ratios: AF vs MBA MBA NY conv MBA US conv AF 1.00 2.00 3.00 4.00 5.00 6.00 Source: MBA National Delinquency Survey. Beginning with 3Q02, MBA statistics for conventional loans excludes sub-prime loans. : Low Credit Risk MBS Portfolio Total MBS Portfolio Classification Available for sale - $ 3.0B Held to maturity - $ 5.6B Total $ 8.6B At June 30, 2003 Average Life: 1.8 years One year gap: +4.65% Key balance sheet components Short-term hybrid adjustable-rate mortgage loan portfolio Short weighted average life MBS portfolio Offset by: Large core deposit base - provides natural hedge against rising Longer-term CDs and borrowings Interest Rate Risk Management Rate 2.63% 5.81% 4.97% 5.80% 4.74% Interest Rate Risk Management Liability repricing opportunities within the next 12 months: CD’s Maturing $965 Million $800 Million $2.8 Billion $500 Million $5.1 Billion Weighted Avg. Rate 2.08% 2.74% 2.84% 2.76% 2.59% Maturing $725 Million $660 Million $752 Million $574 Million $2.7 Billion 3Q03 4Q03 1Q04 2Q04 Total Weighted Avg. 3Q03 4Q03 1Q04 2Q04 Total Balance Sheet Repositioning Balance Sheet Repositioning (In Billions) 12/31/99 6/30/03 12/31/99 6/30/03 Loans vs. MBS 45% 41% 14% 39% 7% 54% Balance Sheet Composition December 31, 1999 June 30, 2003 Other Loans Other MBS Loans MBS Total Assets: $22.7 Billion Total Assets: $22.3 Billion Loan Mix Other 2% Mulitfamily/CRE 10% 1-4 Family 88% 1-4 Family 74% Other 4% Multifamily/CRE 22% 1-4 Family: $9.0 Billion* Multifamily/CRE: $1.0 Billion* Other: $0.2 Billion* Total Loans: $10.3 Billion December 31, 1999 June 30, 2003 * Excludes net unamortized premium/net deferred loan costs. Excludes loans held for sale. 1-4 Family: $8.9 Billion* Multifamily/CRE: $2.6 Billion* Other: $0.5 Billion* Total Loans: $12.0 Billion Deposits Balance Sheet Repositioning $9.6 $11.3 $11.5 $9.2 $8 $9 $10 $11 $12 (In Billions) 12/31/99 6/30/03 vs. Borrowings 6/30/03 12/31/99 Total Liabilities & Equity: $22.3 Billion Total Liabilities & Equity: $22.7 Billion Balance Sheet Composition 42% 51% 2% 5% 1% 51% 7% 41% December 31, 1999 June 30, 2003 Equity Borrowings Equity Deposits Borrowings Other Deposits Other CD's 52% Core 48% Deposit Composition Core 51% CD's 49% 48% Core - $4.6 Billion Total Deposits - $9.6 billion Average Rate: 3.94% December 31, 1999 June 30, 2003 51% Core - $5.8 Billion Total Deposits - $11.3 Billion Average rate: 2.02% Superior Operating Efficiency Efficiency Ratio(4) 10 20 30 40 50 60 70 1999 2000 2001 2002 2003* All U.S. Thrifts NY Thrifts AF * Most recent data available for All US Thrifts and NY Thrifts is for the quarter ended March 31, 2003. AF is for the six months ended June 30, 2003. Source: SNL Financial – Median Ratios Financial Results and Trends Financial Highlights Diluted earnings per common share Return on average assets Return on average equity Return on average tangible equity(5) Annualized dividend yield - 3.07%* Shares repurchased – 2.5 million shares 2Q03; 4.7 million shares 1H03 $0.64 0.88% 13.27% 15.09% 2Q03 1H03 Ninth repurchase program underway – 10 million shares authorized – 4.9 million common shares remain for repurchase** Moody’s upgraded outlook from stable to positive * As of July 30, 2003 ** As of July 15, 2003 $1.33 0.94% 13.94% 15.84% AF Historical EPS Growth Historical GAAP EPS Growth (1) 1996 includes the one-time special assessment of $0.28 per share, after-tax, for the re-capitalization of the Savings Association Insurance Fund. (2) 1998 includes acquisition costs and restructuring charges, extinguishment of debt expense, loss on sale of securities and additional loan loss provision totaling $0.95 per share, after-tax, related to the Long Island Bancorp, Inc. acquisition. * IBES consensus as of July 30, 2003 CAGR = 14% (2) (1) Cumulative Cash Returned to Shareholders (In Millions) $110 $159 $368 $846 $1,121 $501 Over $1.2 billion returned to shareholders in the past 6+ years $1,272 One of the industry’s largest goodwill litigation claims Goodwill Claim Update Outcome unpredictable due to disparity in recent court $785 million of original supervisory goodwill created (LISB = $625 million, Fidelity NY = $160 million) $635 million of supervisory goodwill written off (LISB = $500 million, Fidelity NY = $135 million) Why Invest in Astoria Financial? Strong balance sheet – superior asset quality Attractive banking franchise Financial Performance Superior operating efficiency Well capitalized Active stock repurchase program Dominant deposit market share in core market 14% CAGR in EPS since 1994 19% CAGR in stock price since 1994 Over $1.2 billion returned to shareholders in the past 6+ years Valuation Considerations * IBES as of 07/30/03 $52.09 38.29 28.65 32.69 83.60 18.04 21.48 27.75 32.88 34.87 36.31 30.25 40.27 8.7x 10.9 11.2 12.0 12.1 12.5 12.8 12.8 12.9 13.6 13.9 14.4 16.0 12.8x $32.64 2.8x 2.2 1.7 2.6 2.4 2.9 2.2 3.4 2.4 4.8 4.6 6.2 2.9 2.9x $49.45 25% 2 8 16 17 13 19 18 20 30 20 69 10 18% $42.28 GreenPoint Webster Astoria Financial Charter One Golden West Sovereign Staten Island Bank North Independence North Fork Hudson United New York Community Commerce Bancorp Median Astoria Stock Price at Median Levels Price 07/30/03 2003 P/E* Price/ TBV Implied Deposit Premium Addendum AF: A Record of Enhancing Shareholder Value AF: A Record of Enhancing Shareholder Value Assets of $10 billion by 2000 Improve asset quality Enhance operating efficiency Broaden lending capabilities Generate returns in mid-teen Enhance shareholder value $22.3 billion in assets 0.16% NPA/total assets 39.52% efficiency ratio(4) year to date Origination network now covers 19 15.84% return on average tangible 358% stock appreciation since IPO* 1993 IPO objectives * Through July 30, 2003 The record as of June 30, 2003 Acquisition History Metropolitan Federal Citizens Savings (FSLIC) Hastings-on-Hudson Federal Chenango Federal Oneonta Federal Whitestone Savings (RTC) Fidelity New York The Greater New York Savings Bank Long Island Bancorp, Inc. Total Year 2 5 3 1 4 4 18 14 35 86 $ 50 130 100 25 205 280 1,800 2,400 6,600 $11,590 # Branches Assets (in millions) Thrift 1973 1979 1982 1984 1987 1990 1995 1997 1998 Tangible Book Value/Book Value Growth $8 $10 $12 $14 $16 $18 $20 Dec 31 99 Dec 31 00 Dec 31 01 Dec 31 02 June 30 03 Tangible Book Value Book Value (Dollars per common share) Footnotes/Glossary Core deposits represent total deposits less time deposits. Book value per common share represents common stockholders’ equity divided by outstanding common shares, excluding unallocated Employee Stock Ownership Plan (ESOP) shares. Tangible book value per common share represents common stockholders’ equity less goodwill divided by outstanding common shares, excluding unallocated ESOP shares. Efficiency ratio represents general and administrative expense divided by the sum of net interest income plus non-interest income. Average tangible equity represents average equity less average goodwill. (1) (2) (3) (4) (5) NPA – Non-performing assets MBS – Mortgage-backed securities LTV – Loan-to-value CAGR – Compounded annual growth rate LONG ISLAND’S PREMIER COMMUNITY BANK www.astoriafederal.com
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Brooklyn (12) – Average Deposits of $132 Million
Long Island Powerhouse
of 38 individual U.S. states
110
Astoria (#7)
3,374
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