1
EXHIBIT 99.3
PRO FORMA CONDENSED COMBINED CONSOLIDATED
FINANCIAL STATEMENTS
(UNAUDITED)
The following statements set forth certain selected condensed financial
information for Astoria Financial Corporation and Subsidiary ("AFC") and Long
Island Bancorp, Inc. and Subsidiary ("LIB"), on an unaudited pro forma combined
basis giving effect to the Merger as if the Merger had become effective on
September 30, 1998, in the case of financial condition information presented,
and as if the Merger had become effective at the beginning of the periods
indicated, in the case of operations information presented. The pro forma
information in the statements assumes that the Merger is accounted for using the
pooling of interests method of accounting. Financial information for the nine
months ended September 30, 1998 combines AFC and LIB with LIB's interim
results presented to coincide with the reporting period of AFC. AFC utilizes a
fiscal year which ends on December 31 for reporting purposes, whereas LIB uses
a fiscal year which ends on September 30 for such purposes. Financial
information for the year ended December 31, 1997, combines AFC and LIB at their
respective year-end periods. These statements should be read in conjunction
with, and are qualified in their entirety, by the historical financial
statements, including the notes thereto, of AFC and LIB included elsewhere
herein with regard to LIB and included in AFC's Quarterly Report on Form 10-Q
for the three and nine months ended September 30, 1998, which is incorporated
by reference herein.
The pro forma condensed combined consolidated financial statements do not give
effect to anticipated cost savings and revenue enhancement opportunities that
could result from the Merger, or any other items of income or expense which may
result from the Merger. Additionally, the pro forma financial statements do not
give effect to any anticipated leveraging of AFC's pro forma assets. The
unaudited pro forma condensed combined consolidated financial statements are
presented for informational purposes only and are not necessarily indicative of
the combined financial position or results of operations of future periods or
indicative of the results that would have occurred had the Merger been
consummated on September 30, 1998 or at the beginning of the periods indicated
or which may occur in the future.
10
2
ASTORIA FINANCIAL CORPORATION AND SUBSIDIARY
LONG ISLAND BANCORP, INC. AND SUBSIDIARY
PRO FORMA CONDENSED COMBINED
CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
(Unaudited)
At September 30, 1998
Astoria
Financial Long Island Pro Forma Astoria
Corp. Bancorp (7) Adjustments Pro Forma
------------- ------------- ----------- -----------
(Dollars In Thousands)
ASSETS:
Cash and due from banks................................... $ 22,244 $ 62,450 $ $ 84,694
Federal funds sold and repurchase agreements.............. 283,016 56,940 339,956
Securities available-for-sale (at estimated fair value)... 4,488,253 2,455,849 6,944,102
Securities held-to-maturity............................... 2,259,882 20,582 2,280,464
Federal Home Loan Bank of New York stock.................. 98,750 50,548 149,298
Loans held-for-sale....................................... 10,837 308,250 319,087
Loans receivable held-for-investment: 5,036,058 3,428,695 8,464,753
Less allowance for loan losses....................... 38,483 37,938 76,421
------------ ------------ ----------- -----------
Loans receivable held-for-investment, net............ 4,997,575 3,390,757 8,388,332
Mortgage servicing rights................................. - 43,613 43,613
Real estate owned and investments in real estate, net..... 11,542 4,718 16,260
Accrued interest receivable............................... 67,946 39,754 107,700
Premises and equipment, net............................... 122,860 82,748 (49,772) (4) 155,836
Goodwill.................................................. 248,177 3,971 252,148
Other assets.............................................. 101,974 62,466 (26,193) (4) 138,247
------------ ------------ ----------- -----------
TOTAL ASSETS.............................................. $ 12,713,056 $ 6,582,646 (75,965) $19,219,737
============ ============ =========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits............................................. $ 6,093,440 $ 3,583,048 $ $ 9,676,488
Borrowed Funds....................................... 5,490,142 2,256,697 7,746,839
Mortgage escrow funds................................ 59,489 74,330 133,819
Accrued expenses and other liabilities............... 109,062 87,529 16,560 (4) 213,151
------------ ------------ ----------- -----------
TOTAL LIABILITIES........................................ 11,752,133 6,001,604 16,560 17,770,297
------------ ------------ ----------- -----------
Stockholders' equity:
Preferred stock...................................... 2,000 - 2,000
Common stock......................................... 266 268 12 (2) 546
Additional paid-in capital........................... 513,150 317,049 (69,667) (2,5,6) 760,532
Retained earnings - substantially restricted......... 464,270 344,159 (92,525) (4) 715,904
Treasury stock ...................................... (8) (68,586) 68,586 (5) (8)
Accumulated other comprehensive income:
Net unrealized gains on securities, net of taxes.. 1,511 6,644 8,155
Unallocated common stock held by ESOP................ (19,297) (17,423) (36,720)
Unearned common stock held by RRPs................... (969) (1,069) 1,069 (6) (969)
------------ ------------ ----------- -----------
TOTAL STOCKHOLDERS' EQUITY................................ 960,923 581,042 (92,525) $ 1,449,440
------------ ------------ ----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY................ $ 12,713,056 $ 6,582,646 $ (75,965) $19,219,737
============ ============ =========== ===========
See "Notes to Pro Forma Condensed Combined Consolidated Financial Statements
(Unaudited)."
11
3
ASTORIA FINANCIAL CORPORATION AND SUBSIDIARY
LONG ISLAND BANCORP, INC. AND SUBSIDIARY
PRO FORMA CONDENSED COMBINED
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
For the Nine Months Ended September 30, 1998
Astoria
Financial Long Island Astoria
Corp. Bancorp (7) Pro Forma
----- ----------- ---------
(Dollars in Thousands, Except Share Data)
Interest income ....................................... $ 581,817 $ 320,193 $ 902,010
Interest expense ...................................... 368,811 200,040 568,851
------------ ------------ ------------
Net interest income ................................ 213,006 120,153 333,159
Provision for loan losses ............................. 880 7,900 8,780
------------ ------------ ------------
Net interest income after provision for loan losses 212,126 112,253 324,379
------------ ------------ ------------
Non-interest income:
Fees and other income .............................. 17,063 12,734 29,797
Net gain on sales activity ......................... 8,710 7,907 16,617
------------ ------------ ------------
Total non-interest income ............................. 25,773 20,641 46,414
------------ ------------ ------------
Non-interest expense:
General and administrative ......................... 98,033 86,132 184,165
Real estate operations and provision for losses, net 223 (1,922) (1,699)
Amortization of goodwill ........................... 14,519 290 14,809
------------ ------------ ------------
Total non-interest expense ............................ 112,775 84,500 197,275
------------ ------------ ------------
Income before income tax expense ...................... 125,124 48,394 173,518
Income tax expense .................................... 53,789 19,140 72,929
------------ ------------ ------------
Net Income ............................................ $ 71,335 $ 29,254 $ 100,589
============ ============ ============
Net income available to common shareholders ........... $ 66,835 $ 29,254 $ 96,089
============ ============ ============
Basic earnings per common share ....................... $ 2.69 $ 1.31 $ 1.90
============ ============ ============
Diluted earnings per common share ..................... $ 2.56 $ 1.26 $ 1.82
============ ============ ============
Basic weighted average common shares .................. 24,833,081 22,401,747 50,595,090(3)
Diluted weighted average common and common
equivalent shares .................................. 26,088,284 23,244,078 52,818,974(3)
See "Notes to Pro Forma Condensed Combined Consolidated Financial Statements
(Unaudited)."
12
4
ASTORIA FINANCIAL CORPORATION AND SUBSIDIARY
LONG ISLAND BANCORP, INC. AND SUBSIDIARY
PRO FORMA CONDENSED COMBINED
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
For the Year Ended December 31, 1997
Astoria
Financial Long Island Astoria
Corp. Bancorp (7) Pro Forma
----- ----------- ---------
(In Thousands, Except Share Data)
Interest income ................................... $ 579,401 $ 398,754 $ 978,155
Interest expense .................................. 364,350 239,241 603,591
----------- ----------- -----------
Net interest income ............................... 215,051 159,513 374,564
Provision for loan losses ......................... 3,061 6,000 9,061
----------- ----------- -----------
Net interest income after provision for loan losses 211,990 153,513 365,503
----------- ----------- -----------
Non-interest income:
Fees and other income .......................... 15,218 27,815 43,033
Net gain on sales activity ..................... 7,045 11,399 18,444
----------- ----------- -----------
Total non-interest income ......................... 22,263 39,214 61,477
----------- ----------- -----------
Non-interest expense:
General and administrative ..................... 104,075 109,596 213,671
Real estate operations and provision for losses 822 1,041 1,863
Amortization of goodwill ....................... 11,264 458 11,722
----------- ----------- -----------
Total non-interest expense ........................ 116,161 111,095 227,256
Income before income tax expense .................. 118,092 81,632 199,724
Income tax expense ................................ 49,628 32,212 81,840
----------- ----------- -----------
Net Income ........................................ $ 68,464 $ 49,420 $ 117,884
=========== =========== ===========
Net Income available to common shareholders ....... $ 66,964 $ 49,420 $ 116,384
=========== =========== ===========
Basic earnings per common share ................... $ 3.26 $ 2.20 $ 2.51
=========== =========== ===========
Diluted earnings per common share ................. $ 3.04 $ 2.12 $ 2.39
=========== =========== ===========
Basic weighted average common shares ............. 20,552,574 22,443,135 46,362,179(3)
Diluted weighted average common and
common equivalent shares .......................... 21,994,383 23,279,404 48,765,698(3)
Shares and related amounts for prior periods have been restated as a result of
the implementation of SFAS No. 128.
See "Notes to Pro Forma Condensed Combined Consolidated Financial Statements
(Unaudited)."
13
5
ASTORIA FINANCIAL CORPORATION AND SUBSIDIARY
AND LONG ISLAND BANCORP, INC. AND SUBSIDIARY
NOTES TO PRO FORMA CONDENSED COMBINED CONSOLIDATED
FINANCIAL STATEMENTS (UNAUDITED)
(1) The pro forma financial information presented has been prepared in
conformity with generally accepted accounting principles ("GAAP") and
prevailing practices within the financial services industry. Under
GAAP, the assets and liabilities of LIB will be combined with those of
AFC at book value. In addition, the statements of operations for LIB
will be combined with those of AFC as of the earliest period presented.
AFC utilizes a fiscal year which ends on December 31 for reporting
purposes, whereas LIB uses a fiscal year which ends on September 30 for
such purposes. The unaudited pro forma condensed combined consolidated
statement of operations for the year ended December 31, 1997 combines
AFC and LIB at their respective year-end periods. The unaudited pro
forma condensed combined consolidated statement of operations for the
nine months ended September 30, 1998 includes LIB for the nine months
then ended to conform with the reporting period of AFC. Summary
unaudited operating results for LIB for the three months ended
December 31, 1997, have not been included in the unaudited pro forma
condensed combined consolidated financial statements and are
presented in the following table.
Three Months Ended
December 31, 1997
(Unaudited)
------------------
Interest income .......... $104,517
Interest expense ......... 65,550
Net interest income ...... 38,967
Net income ............... 13,182
Diluted earnings per share $ 0.57
(2) Pro forma adjustments to common stock and additional paid-in capital,
at September 30, 1998, reflect the Merger accounted for as a
pooling of interests, through the exchange of 27,983,435 shares of AFC
Common Stock at September 30, 1998 (using the Exchange Ratio of 1.15
and adjusted for fraction shares) for 24,333,904 actual outstanding
shares of LIB.
(3) The pro forma weighted average shares outstanding for the nine months
ended September 30, 1998 and the year ended December 31, 1997 reflect
the Exchange Ratio of 1.15 shares of AFC Common Stock for each share of
LIB Common Stock.
(4) The pro forma condensed combined consolidated statement of financial
condition reflects non-recurring merger costs and restructuring charges
of approximately $92.5 million, net of taxes, which were recognized
upon consummation of the transaction and will be reflected in AFC's
results of operations for the quarter ended December 31, 1998. Of such
amount, $26.2 million represents expenses paid and deferred by both LIB
and AFC, and thus, are reflected as a reduction of other assets. In
addition, $49.8 million of the total facility and system costs,
relates to write-downs of premises and equipment, which, after
consummation of the Merger, will be classified as held-for-sale. The
remaining amount of $16.6 million, net of taxes, represents costs to
be paid, and is reflected as accrued expenses and other liabilities.
These after-tax charges will reduce earnings per share for the period
in which such charges are recognized by approximately $1.75 (based on
pro forma diluted weighted average shares outstanding of 52,818,974
on September 30, 1998). A summary of the estimated merger costs and
restructuring charges follows:
Merger Costs and
Restructuring Charges
(Dollars in Thousands)
----------------------
Merger Costs ......................................... $ 17,888
Restructuring Charges:
Severance and Other Employee Expenses .......... 37,225
Facility and System Costs ...................... 64,794
Other .......................................... 4,261
--------
Total Pre-Tax Merger Costs and Restructuring
Charges ............................................ 124,168
Less: Tax Effect .................................... 31,643
--------
Total After-Tax Merger Costs and Restructuring Charges $ 92,525
========
14
6
The effect of the proposed charge has been reflected in the pro forma
condensed combined consolidated statement of financial condition as of
September 30, 1998; however, since this charge is non-recurring, it has
not been reflected in the pro forma combined statements of operations.
(5) Pro forma adjustments to treasury stock and additional paid-in capital,
at September 30, 1998, reflect the retirement of LIB's treasury stock.
(6) Pro forma adjustments to unearned common stock held by RRPs and
additional paid-in capital, at September 30, 1998, reflect the
cancellation of 93,004 unallocated MRP shares of LIB at a cost of
$11.50 per share.
(7) Certain reclassifications have been made to conform LIB's presentation
with AFC's presentation.
15