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EXHIBIT 99.2
LONG ISLAND BANCORP, INC.
AND SUBSIDIARY
UNAUDITED CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
AS OF SEPTEMBER 30, 1998
(IN THOUSANDS, EXCEPT SHARE DATA)
A S S E T S
Cash and cash equivalents (including interest-earning assets of $77,344) $ 119,390
Investment in debt and equity securities, net:
Available-for-sale ................................................. 298,977
Mortgage-backed securities, net:
Held-to-maturity (estimated fair value of $18,742) ................. 20,582
Available-for-sale ................................................. 2,156,872
Stock in Federal Home Loan Bank of New York, at cost .................... 50,548
Loans held for sale ..................................................... 308,250
Loans receivable held for investment, net:
Real estate loans, net ............................................. 3,240,205
Commercial loans, net .............................................. 9,089
Other loans, net ................................................... 179,401
-----------
Loans, net ......................................................... 3,428,695
Less allowance for possible loan losses ............................ (37,938)
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Total loans receivable held for investment, net .................... 3,390,757
Mortgage servicing rights, net .......................................... 43,613
Office properties and equipment, net .................................... 82,748
Accrued interest receivable, net ........................................ 39,754
Investment in real estate and premises, net ............................. 4,718
Deferred taxes .......................................................... 3,626
Excess of cost over fair value of net assets acquired ................... 3,971
Prepaid expenses and other assets ....................................... 58,840
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Total assets ............................................................ $ 6,582,646
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L I A B I L I T I E S A N D S T O C K H O L D E R S ' E Q U I T Y
Liabilities:
Deposits ........................................................... $ 3,583,048
Official checks outstanding ........................................ 33,128
Borrowed funds, net ................................................ 2,256,697
Mortgagors' escrow payments ........................................ 74,330
Accrued expenses and other liabilities ............................. 54,401
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Total liabilities ....................................................... 6,001,604
Stockholders' equity:
Preferred stock ($0.01 par value, 5,000,000 shares authorized;
none issued) ..................................................... --
Common stock ($0.01 par value, 130,000,000 shares authorized;
26,816,464 issued and 24,333,904 outstanding) .................... 268
Additional paid-in capital ....................................... 317,049
Unallocated Employee Stock Ownership Plan .......................... (17,423)
Unearned Management Recognition & Retention Plan ................... (1,069)
Unrealized gain on securities available-for-sale, net of tax ....... 6,644
Retained income-partially restricted ............................... 344,159
Treasury stock, at cost (2,482,560 shares) ......................... (68,586)
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Total stockholders' equity .............................................. 581,042
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Total liabilities and stockholders' equity .............................. $ 6,582,646
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See accompanying notes to unaudited consolidated financial statements.
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2
LONG ISLAND BANCORP, INC.
AND SUBSIDIARY
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
For the Nine Months
Ended September 30,
1998 1997
--------- ---------
Interest income:
Real estate loans ..................................................... $ 192,282 $ 190,684
Commercial loans ...................................................... 572 426
Other loans ........................................................... 12,990 11,913
Mortgage-backed securities ............................................ 91,832 88,111
Debt and equity securities ............................................ 22,768 11,945
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Total interest income ............................................... 320,444 303,079
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Interest expense:
Deposits .............................................................. 116,296 120,369
Borrowed funds ........................................................ 84,031 63,405
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Total interest expense .............................................. 200,327 183,774
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Net interest income ................................................. 120,117 119,305
Provision for possible loan losses ....................................... 7,900 4,500
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Net interest income after provision for possible loan losses ........ 112,217 114,805
Non-interest income:
Fees and other income:
Loan fees and service charges ....................................... 3,106 2,715
Loan servicing (costs) fees ......................................... (2,467) 8,649
Income from insurance and securities commissions .................... 2,233 1,992
Deposit service fees ................................................ 5,188 4,031
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Total fee income .................................................. 8,060 17,387
Other income ........................................................ 3,779 2,849
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Total fees and other income ....................................... 11,839 20,236
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Net gain on sale activity:
Net gains on loans and mortgage-backed securities ................... 7,037 9,089
Net gains on investment in debt and equity securities ............... 870 236
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Total net gain on sale activity ................................... 7,907 9,325
Net gain (loss) on investment in real estate and premises ........... 1,805 (690)
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Total non-interest income ......................................... 21,551 28,871
Non-interest expense:
General and administrative expense
Compensation, payroll taxes and fringe benefits ..................... 39,408 43,600
Advertising ......................................................... 1,961 3,772
Office occupancy and equipment ...................................... 15,625 16,349
Federal insurance premiums .......................................... 2,396 2,353
Other general and administrative expense ............................ 24,574 15,062
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Total general and administrative expense .......................... 83,964 81,136
Litigation expense - goodwill lawsuit ............................... 1,120 742
Amortization of excess of cost over fair value of net assets acquired 290 348
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Total non-interest expense ........................................ 85,374 82,226
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Income before income taxes ............................................... 48,394 61,450
Provision for income taxes ............................................... 19,140 23,964
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Net income ............................................................... $ 29,254 $ 37,486
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Basic earnings per common share .......................................... $ 1.31 $ 1.67
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Diluted earnings per common share ........................................ $ 1.26 $ 1.61
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See accompanying notes to unaudited consolidated financial statements.
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3
LONG ISLAND BANCORP, INC.
AND SUBSIDIARY
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
For the Nine Months
Ended September 30,
1998 1997
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Operating activities:
Net income ........................................................................... $ 29,254 $ 37,486
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for possible loan losses ................................................... 7,900 4,500
Write-off of real estate owned and investment in real estate ......................... 409 325
Gains on sale of real estate owned and investment in real estate, net ................ (721) (254)
Depreciation and amortization ........................................................ 18,516 13,206
Amortization of premiums, net of discount accretion - debt, equity and mortgage-backed
securities ......................................................................... 6,350 (298)
Accretion of discounts, net of amortization of premiums - purchase accounting &
goodwill amortization .............................................................. 164 433
Employee Stock Ownership Plan/Management Recognition & Retention Plan Expense ........ 3,081 3,587
Gains on sales of loans and mortgage-backed securities, net .......................... (7,037) (9,089)
Originations of loans held-for-sale, net of proceeds from sales ...................... (134,923) (73,312)
Gains on sales of debt and equity securities, net .................................... (870) (236)
Increase in accrued interest receivable .............................................. (6,455) (2,287)
Decrease in accrued expenses and other liabilities ................................... (2,802) (14,883)
Decrease in official checks outstanding .............................................. (32,981) (29,117)
(Decrease) increase in deferred taxes, prepaid expenses and other assets ............. (18,576) 3,647
Net decrease (increase) in unearned income ........................................... 4,326 (5,373)
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Net cash used by operating activities .............................................. (134,365) (71,665)
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Investing activities:
Proceeds from sales of debt and equity securities, available-for-sale ................ 103,780 11,144
Proceeds from sales of mortgage-backed securities, available-for-sale ................ 549,726 394,197
Proceeds from maturities of and principal payments on debt and equity securities ..... 580,839 139,589
Principal payments on mortgage-backed securities ..................................... 411,919 269,363
Purchases of debt and equity securities, available-for-sale .......................... (683,181) (122,935)
Purchases of Federal Home Loan Bank stock ............................................ (1,824) (7,970)
Purchases of mortgage-backed securities, available-for-sale .......................... (1,018,804) (252,556)
Originations and purchases of loans held-for-investment, net of principal payments ... (302,766) (652,771)
Proceeds from sale of real estate owned, office properties and equipment ............. 503 9,151
Purchases of office properties and equipment ......................................... (3,602) (6,025)
Purchase of mortgage servicing rights ................................................ -- (21)
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Net cash used by investing activities .............................................. (363,410) (218,834)
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Financing activities:
Net decrease in demand deposits, NOW accounts and savings accounts ................... (20,082) (64,287)
Net increase in mortgagors' escrow accounts .......................................... 26,161 24,937
Net (decrease) increase in certificates of deposit ................................... (139,302) 133,665
Costs to repurchase common stock ..................................................... (6,894) (18,025)
Proceeds from the exercise of stock options .......................................... 5,481 1,369
Cash dividends paid on common stock .................................................. (11,990) (10,783)
Net decrease in short-term borrowings ................................................ (154,725) (231,486)
Net increase in long-term borrowings ................................................. 797,488 331,992
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Net cash provided by financing activities .......................................... 496,137 167,382
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Decrease in cash and cash equivalents .............................................. (1,638) (123,117)
Cash and cash equivalents at the beginning of the period ............................. 121,028 166,822
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Cash and cash equivalents at the end of the period ................................... $ 119,390 $ 43,705
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Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest on deposits and borrowed funds ............................................ $ 194,966 $ 181,559
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Income taxes ....................................................................... $ 4,294 $ 27,722
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Non-cash investing activities:
Additions to real estate owned, net ................................................ $ 2,957 $ 6,586
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Securitization of loans ............................................................ $ 387,071 $ 489,583
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See accompanying notes to unaudited consolidated financial statements.
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Long Island Bancorp, Inc. and Subsidiary
Notes to Unaudited Consolidated Financial Statements
1. GENERAL
The unaudited consolidated financial statements of Long Island Bancorp, Inc. and
Subsidiary ("LIB") in this report have not been audited, as they have been
prepared as of and for the nine months ended September 30, 1998 and 1997 and
presented to coincide with the reporting period of Astoria Financial Corporation
("AFC"). These statements should be read in conjunction with the audited
consolidated financial statements and related notes thereto included in LIB's
Annual Report to Shareholders and in the related Annual Report on Form 10-K for
the year ended September 30, 1997, which have been filed as Exhibits to AFC's
Registration Statement on Form S-4 as amended (File No. 333-58897) filed with
the Commission on July 14, 1998, pursuant to the Securities Act, and are
incorporated by reference in this Form 8-K/A.
The results of operations for the nine months ended September 30, 1998 and 1997
are not necessarily indicative of the results that may be expected for the
entire year or any other interim period. In preparing the unaudited consolidated
financial statements, management is required to make estimates and assumptions
that affect the reported amounts of assets, liabilities, revenues and expenses.
Actual results could differ from those estimates.
2. MERGER WITH AFC
Following the close of business on September 30, 1998, LIB was acquired by and
merged with and into AFC, and LIB's subsidiary, Long Island Savings Bank, FSB
("LISB"), a federally chartered savings bank, was merged with and into the
subsidiary of AFC, Astoria Federal Savings and Loan Association. The transaction
was accounted for as a pooling of interests. Under the terms of the merger
agreement, holders of LIB common stock, par value $.01 per share, received 1.15
shares of AFC's common stock for each share of LIB stock.
3. ADJUSTMENTS TO UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
Prior to the close of the merger with AFC, certain significant adjustments were
recorded by LIB. Included in the unaudited consolidated statement of operations
for the nine months ended September 30, 1998 were the following significant
adjustments:
a) Provision for possible loan losses - an additional $4.0 million provision
for possible loan losses was recorded, primarily due to increased
delinquencies experienced in the consumer loan portfolio.
b) Loan servicing costs - LIB recorded a $7.4 million provision for
impairment on its mortgage servicing rights, due to increased mortgage
refinance activity and accelerating prepayment speeds during
September 1998.
c) Other general and administrative expense - LIB recorded approximately $8.4
million for various accruals for expenses incurred during their quarter
ended September 30, 1998 and for differences between the general ledger
and various subsidiary ledgers.
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