FOR IMMEDIATE RELEASE January 21,2005 Contact: William M. Gilfillan Executive Vice President and Chief Financial Officer Phone: (718) 855-3555 Atlantic Liberty Financial Corp. Reports Earnings for Quarter and Nine Months Ended December 31, 2004 And Declares Quarterly Dividend. BROOKLYN, NY Atlantic Liberty Financial Corp,(Nasdaq:ALFC), the holding company of Atlantic Liberty Savings, F.A. (the Bank) announced earnings of $486,000 or $0.31 per share ($0.30 fully diluted) for the quarter ended December 31, 2004 as compared to $346,000 or $0.22 per share, basic and fully diluted, for the quarter ended December 31, 2003, an increase of 40%. Earnings for the nine months ended December 31, 2004 increased 54% to $1.7 million or $1.04 per share, basic and fully diluted, from $1.1 million or $0.67 per share, basic and fully diluted, for the same period in 2003. Earnings for the nine months ended December 31, 2004 include $340,000 or $0.22 per share of non-recurring income received in connection with the settlement of litigation. At its January meeting, the Board of Directors declared a quarterly cash dividend of $0.07 per share to be paid on February 7, 2005 to shareholders of record on January 26, 2005. The increase in earnings for the quarter ended December 31, 2004 was primarily due to increases of $186,000 in net interest income and $112,000 in non interest income, partially offset by increases of $110,000 in non-interest expense, and $48,000 in income tax expense. The increase in net interest income for the quarter ended December 31, 2004 compared to the comparable quarter in 2003 was attributable to a $25.6 million increase in average interest earning assets, partially offset by an 18 basis point decrease in our net interest spread to 3.73% from 3.91%. Our net interest margin for the quarter ended December 31, 2004 compared to the comparable quarter in 2003 decreased 19 basis points to 4.00% from 4.19%. Non-interest income increased $112,000 due principally to increases of $70,000 in loan prepayment penalty and other mortgage fees, $10,000 in savings and checking account fees, and the receipt of $33,000 in life insurance proceeds from a policy covering a retired director. The increase in non interest expense for the quarter ended December 31, 2004 of $110,000 included increases of $86,000 in salaries and employee benefits, $10,000 in directors compensation,$8,000 in net occupancy expense, $25,000 in miscellaneous expense, and $2,000 in advertising expense, partially offset by decreases of $20,000 in legal fees and $2,000 in equipment expense. There was no provision for loan losses for the quarters ended December 31, 2004 and December 31, 2003. The allowance for loan losses was $737,000 or 0.62% of loans outstanding at December 31, 2004 as compared with $582,000 or 0.53% of loans outstanding at December 31, 2003. The allowance for loan losses as a percentage of non performing loans was 810.5% at December 31, 2004 and 481.7% at December 31, 2003. Non performing loans represented 0.08% of total loans at December 31, 2004 and 0.11% of total loans at December 31, 2003. The increase in earnings for the nine months ended December 31, 2004 was primarily due to increases of $621,000 in net interest income and $1,015,000 in non-interest income, partially offset by increases of $600,000 in non-interest expense, $125,000 in the provision for loan losses and $329,000 in income tax expense. The increase in net interest income of $621,000 for the nine months ended December 31, 2004 as compared to the prior period resulted from an increase of $34.2 million in average interest earnings assets, partially offset by a decrease in our net interest spread of 36 basis points to 3.74% from 4.10%. Our net interest margin for the nine months ended December 31, 2004 decreased 38 basis points to 4.00% from 4.38% in the prior period. Non-interest income for the nine months ended December 31, 2004, increased $1,015,000 as compared to the nine months ended December 31, 2003, primarily due to a non-recurring litigation settlement of $825,000 and the receipt of life insurance proceeds of $33,000 as well as increases of $133,000 in loan prepayment penalty and other mortgage fees, $6,000 in net appraisal fees and $15,000 in savings and checking account fees. The increase in non interest expense of $600,000 was primarily due to increases of $314,000 in salaries and benefits, $56,000 in directors compensation, $32,000 in equipment expense, $169,000 in legal fees, $3,000 in occupancy expense, $3,000 in advertising expense and $23,000 in miscellaneous expenses. There was a provision for loan losses of $125,000 for the nine months ended December 31, 2004. No provision was recorded during the nine months ended September 30, 2003. The Companys assets increased $25.4 million or 15.9% to $185.4 million at December 31, 2004 from $160.0 million at March 31, 2004. During the nine months ended December 31, 2004, net loans receivable increased $6.3 million or 5.6% to $119.4 million from $113.1 million. The increase resulted principally from new commercial mortgages of $9.4 million $4.4 million of which were purchased from other financial institutions as well as new originations of $10.8 million in one to four family mortgage loans. During the nine months ended December 31, 2004 mortgage backed securities held to maturity increased $13.0 million or 42.3% to $43.7 million from $30.7 million at March 31, 2004. The increase in mortgage backed securities held to maturity reflects managements decision to implement a leveraged growth strategy at a positive interest rate spread. The increase in assets was primarily funded by a net increase in advances from the Federal Home Loan Bank of New York (FHLB) of $20.2 million to $43.4 million at December 31, 2004 from $23.2 million at March 31, 2004. Deposits of $111.0 million at December 31,2004 increased $3.1 million or 2.9% from $107.9 million at March 31, 2004. Stockholders equity increased $1.5 million or 5.7% to $27.7 million at December 31, 2004, primarily the result of including net income for the nine months ended December 31, 2004 of $1.7 million, partially offset by dividends paid of $300,000. This press release contains certain 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. The company intends such forward looking statements to be covered by the safe harbor provision for forwardlooking statements contained in the Private Securities Reform Act of 1995 as amended and is including these statements for purposes of these safe harbor provisions. Forward-looking statements, which are based on certain assumptions and describe future plans, strategies, and expectations of the Company are generally identifiable by use of the words believe expect intend anticipate estimate project or similar expressions. The Companys ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors that could have a material adverse affect on the operation and future prospects of the Company and its wholly owned subsidiaries include but are not limited to changes in interest rates general economic conditions legislative regulatory provision monetary and fiscal policies of the U.S. Government, including policies of the U.S. Treasury and the Federal Reserve Board the quality or composition of the loan or investment portfolios demand for loan products deposit flows; competition demand for financial services in the Companys market area and accounting principles, policies and guidelines. These risks and uncertainties should be considered in evaluating forward looking statements, and undue reliance should not be placed on such statements. Further information concerning the Company and its business, including additional factors that could materially affect the Companys financial results, is included in the companys filings with the Securities and Exchange Commission.