CONTACTS: PETER J. CUNNINGHAM ROGER TEURFS
VICE PRESIDENT, INVESTOR RELATIONS CORPORATE SECRETARY
ASTORIA FINANCIAL CORPORATION LONG ISLAND BANCORP, INC.
(516) 327-7877 (516) 547-2607
FOR IMMEDIATE RELEASE
ASTORIA FINANCIAL CORPORATION AND LONG ISLAND BANCORP, INC.
TO MERGE
STRATEGIC ALLIANCE CREATES $17 BILLION FINANCIAL INSTITUTION;
NO. 2 DEPOSIT MARKET SHARE RANKING ON LONG ISLAND
LAKE SUCCESS, NEW YORK, APRIL 3, 1998 -- Astoria Financial Corporation (Nasdaq:
ASFC) ("Astoria"), and Long Island Bancorp, Inc. (Nasdaq: LISB) ("LISB") jointly
announced today that they have signed a definitive agreement for Astoria and
LISB to merge in a tax-free exchange of common stock. Astoria Financial
Corporation, the holding company for Astoria Federal Savings and Loan
Association ("Astoria Federal"), with assets of $10.5 billion and deposits of
$6.2 billion at December 31, 1997, is the third largest thrift institution in
New York and tenth largest in the United States. Astoria Federal operates 61
banking offices, of which 53 are located in Brooklyn, Queens, Nassau and Suffolk
Counties on Long Island, and eight are located in Westchester County and upstate
New York. LISB is the parent company of The Long Island Savings Bank, FSB ("Long
Island Savings"), a federally chartered thrift institution with assets of $6.1
billion and deposits of $3.7 billion at December 31, 1997, headquartered in
Melville, Long Island. Long Island Savings operates 35 banking offices
throughout Queens, Nassau and Suffolk Counties and 22 loan production offices
located in 7 states. Upon completion of the transaction, LISB will merge into
Astoria and Long Island Savings will merge into Astoria Federal. The
transaction, which received the unanimous approval of the boards of directors of
Astoria and LISB, will be accounted for as a pooling of interests and will be
accretive to Astoria's earnings per common share in
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1999. The transaction is expected to close at the end of the third quarter of
1998.
Under the terms of the agreement, holders of LISB common stock will
receive 1.15 shares of the common stock of Astoria for each share of LISB common
stock. Using Astoria's average closing stock price for the last five business
days ending April 2, 1998, of $61.78, the exchange represents a price of $71.04
for each LISB share, approximately 3.09 times LISB's tangible book value at
December 31, 1997. The total transaction value is estimated to be $1.8 billion
based on LISB's diluted shares including ESOP shares at Astoria's average stock
price for the last five business days. The pro forma combined company will
receive the proceeds, if any, from the supervisory goodwill lawsuits of LISB and
Astoria. As a result, in addition to the value of the Astoria common stock
received, LISB shareholders, as shareholders of Astoria, will retain an interest
in the LISB supervisory goodwill lawsuit, which if valued consistent with
currently traded market instruments, would approximate $9-$12 per LISB share,
and gain an interest in the Astoria supervisory goodwill lawsuit. Astoria
shareholders, in addition to current market value, will gain an interest in the
LISB supervisory goodwill lawsuit valued, consistent with currently traded
market instruments, at $8 - $11 per share. Based upon the currently outstanding
LISB shares of common stock, it is expected that approximately 27.6 million new
shares of Astoria common stock will be issued in conjunction with the
transaction, bringing the pro forma market capitalization of the combined
company to $3.25 billion, the sixth largest thrift market capitalization
nationally.
The pro forma combined company, as of December 31, 1997, reflects total
assets of $16.6 billion, ranking Astoria the second largest publicly traded
thrift institution in New York and sixth largest nationally. It also includes
strong mortgage origination capabilities in 7 states, deposits totaling $10.0
billion and shareholders' equity of $1.5 billion. The pro forma company will
operate 96 banking offices, including 88 in the New York City metropolitan area:
31 in Nassau, 20 in Queens, 11 in Brooklyn, and 26 in Suffolk, as well as 3 in
Westchester County and 5 in the upstate counties of Chenango and Otsego.
Subsequent to the closing of the transaction, management anticipates that it
will consolidate six banking offices in communities in which both Astoria and
LISB have a presence.
Commenting on the transaction, George L. Engelke, Jr., Chairman,
President and Chief Executive Officer of Astoria said, "This strategic alliance
between two strong Long Island financial institutions forms the premier
consumer-oriented community bank on Long Island. The pro forma deposits of the
88 Long Island banking offices total $9.4 billion, or an average of $107 million
per
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banking office, resulting in a pro forma #2 market share of deposits and a 8.7%
market share in a market larger in population than 39 states in the United
States. We are confident that the transaction will not only enhance shareholder
value, but also provide long-term benefits for our customers and, particularly,
our communities. We are also delighted that John J. Conefry, Jr., whose
leadership has successfully guided LISB to its current well-capitalized and
prominent position in the Long Island market, will be joining the Board of
Directors of both Astoria Financial Corporation and Astoria Federal Savings and
Loan Association as a Vice Chairman and will also join our executive management
team. His broad knowledge and experience will serve Astoria well as we continue
to implement strategies to build our franchise, strengthen efforts in our
communities, particularly in providing banking and home mortgage expertise to
better serve the financial needs of low-to-moderate income families and
individuals, and enhance shareholder value. We also look forward to adding many
other talented Long Island Savings officers and employees to the already strong
team at Astoria. Four other current directors of LISB will also join both boards
of Astoria."
Mr. Conefry commented, "We are very excited to be partnering with
Astoria, a premier community-oriented financial services institution. The
combination of our two strong companies will create a powerful retail banking
franchise in Long Island that will provide greater potential for its
shareholders, customers and communities than either institution would provide
alone."
Astoria estimates that operational efficiencies generated as a result
of the transaction will produce cost savings equal to 50%, or approximately
$52.0 million, pre-tax, of LISB's estimated 1998 general and administrative
expense. Mr. Engelke, commenting on the estimated cost savings said, "We have a
proven track record of rapidly consolidating back office systems and quickly
recognizing all anticipated cost savings, as evidenced by the speed with which
we successfully integrated The Greater New York Savings Bank (1997) and Fidelity
New York, FSB (1995) into Astoria, allowing us to recognize a substantial part
of all cost savings in the 90 days following the closing of those transactions.
We expect to approach this transaction in the same manner as our past successes
by effecting at least 75% of all anticipated cost savings by the end of the
fourth quarter of 1998 and the balance during the first half of 1999." One-time
charges in conjunction with this transaction, anticipated to be recorded in the
fourth quarter, are expected to approximate $75 million, after-tax.
In connection with the transaction, there is a provision for a
termination fee of $60 million
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payable to Astoria if the transaction is not completed under certain
circumstances. In addition, LISB and Astoria have granted cross options to
purchase shares equal to 19.9% of each other's currently outstanding common
stock under certain conditions. Stock repurchase plans have been terminated by
both companies.
The transaction is subject to approval of the shareholders of both LISB
and Astoria, approval of the Office of Thrift Supervision and the satisfaction
of certain other conditions.
ASTORIA FINANCIAL CORPORATION/ LONG ISLAND BANCORP, INC.
SELECTED FINANCIAL INFORMATION
QUARTER ENDED DECEMBER 31, 1997
($ IN MILLIONS, EXCEPT PER SHARE DATA)
ASFC LISB PRO FORMA (COMBINED)
---- ---- --------------------
Total assets $10,528.4 $6,072.5 $16,600.9
Total deposits 6,220.9 3,742.4 9,963.3
Total loans 4,345.0 3,520.7 7,865.7
Total Borrowings 3,272.8 1,614.0 4,886.8
Shareholders' Equity 899.4 557.3 1,456.7
Shareholders' Equity to Assets 8.54% 9.18% 8.77%
Net income (3 months ended) $20.9 $13.2 $34.1
Cash earnings (3 months ended) 30.8 14.5 48.9*
Non-performing assets 59.1 53.8 112.9
Non-performing assets/total assets 0.56% 0.89% 0.68%
Reserves $40.0 $33.7 $73.7
Book value per share** 32.42 23.19 26.13
Tangible book value per share** 22.57 22.98 21.24
* Adjusted for fully phased-in cost savings
** Before transaction related charges
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NOTE: ASTORIA AND LISB PLAN TO HOST A JOINT CONFERENCE CALL ON FRIDAY MORNING,
APRIL 3, 1998, AT 11:00 AM (EST). INTERESTED INVESTORS AND ANALYSTS MAY
PARTICIPATE EITHER IN PERSON OR VIA CONFERENCE CALL. INVESTORS WISHING TO
PARTICIPATE BY TELEPHONE SHOULD CALL:
DOMESTIC CALLERS: 1-888-282-0380
INTERNATIONAL CALLERS: 630-395-0200
THE CONFERENCE CALL WILL BE HOSTED AT THE ST. REGIS HOTEL, 2 EAST 55TH STREET,
NEW YORK, IN THE VERSAILLES ROOM FOR THOSE INVESTORS/ANALYSTS WISHING TO ATTEND
IN PERSON.
A RECORDED PLAYBACK OF THE INVESTOR CALL WILL BE AVAILABLE THROUGH APRIL 7, 1998
AT 1-888-566-0686 (DOMESTIC CALLERS) AND 402-998-0107 (INTERNATIONAL CALLERS)
RESERVATION #4823
THIS RELEASE MAY CONTAIN CERTAIN FORWARD-LOOKING STATEMENTS REGARDING THE
MERGER WITH LONG ISLAND BANCORP, INC., INCLUDING COST SAVINGS TO BE REALIZED,
EARNINGS ACCRETION, TRANSACTION CHARGES AND OTHER OPPORTUNITIES FOLLOWING THE
ACQUISITION WHICH ARE BASED ON MANAGEMENT'S CURRENT EXPECTATIONS REGARDING
ECONOMIC, LEGISLATIVE, AND REGULATORY ISSUES. THE FACTORS WHICH MAY CAUSE FUTURE
RESULTS TO VARY MATERIALLY INCLUDE, BUT ARE NOT LIMITED TO GENERAL ECONOMIC
CONDITIONS, CHANGES IN INTEREST RATES, DEPOSIT FLOWS, LOAN DEMAND, REAL ESTATE
VALUES, AND COMPETITION; CHANGES IN ACCOUNTING PRINCIPLES, POLICIES, OR
GUIDELINES; CHANGES IN LEGISLATION OR REGULATION; AND OTHER ECONOMIC,
COMPETITIVE, GOVERNMENTAL, REGULATORY, AND TECHNOLOGICAL FACTORS AFFECTING EACH
COMPANY'S OPERATIONS, PRICING, PRODUCTS AND SERVICES.
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