Astoria Financial Corporation Announces Fourth Quarter EPS of $0.39; Full Year EPS of $1.80

LAKE SUCCESS, N.Y., Jan. 25 /PRNewswire-FirstCall/ -- Astoria Financial Corporation ("Astoria" or "Company"), the holding company for Astoria Federal Savings and Loan Association ("Astoria Federal"), today reported net income of $37.1 million, or $0.39 diluted earnings per share ("EPS"), for the quarter ended December 31, 2006, compared to $57.7 million, or $0.57 EPS, for the 2005 fourth quarter. For the 2006 fourth quarter, annualized returns on average equity, average tangible equity and average assets were 11.99%, 14.09% and 0.69%, respectively, compared to 16.97%, 19.64% and 1.03%, respectively, for the comparable 2005 period.

For the year ended December 31, 2006, net income totaled $174.9 million, or $1.80 EPS, compared to $233.8 million, or $2.26 EPS, for the comparable 2005 period. For the year ended December 31, 2006, returns on average equity, average tangible equity and average assets were 13.73%, 16.06% and 0.80%, respectively, compared to 17.06%, 19.72% and 1.02%, respectively, for the comparable 2005 period.

2006 Full Year Financial Highlights * Deposits increased $414 million, or 3%, to $13.2 billion at December 31, 2006 * Loan portfolio increased $579 million, or 4%, to $15.0 billion at December 31, 2006 -- One-to-four family loan portfolio increased $456 million, or 5%, to $10.2 billion at December 31, 2006 -- Multifamily/Commercial Real Estate ("CRE") loan portfolio increased $185 million, or 5%, to $4.1 billion, or 27% of total loans, at December 31, 2006 * Securities portfolio decreased $1.2 billion, or 19%, to $5.3 billion at December 31, 2006 * Borrowings decreased $1.1 billion, or 14%, to $6.8 billion at December 31, 2006 * Repurchased 8.4 million shares

Commenting on the 2006 fourth quarter and full year results, George L. Engelke, Jr., Chairman, President and Chief Executive Officer of Astoria noted, "The persistence of an inverted yield curve environment during the fourth quarter and most of the year continued to exert pressure on our net interest margin and earnings while limiting opportunities for profitable balance sheet growth. Therefore, we continued to focus on improving the balance sheet by growing loans and deposits, reducing securities and repurchasing our stock."

Board Increases Quarterly Cash Dividend 8%

The Company also announced that the Board of Directors, at their January 24, 2007 meeting, declared a quarterly cash dividend of $0.26 per share, an increase of 8%. The cash dividend is payable on March 1, 2007 to shareholders of record as of February 15, 2007. This is the forty-seventh consecutive quarterly cash dividend declared by the Company. Commenting on the Board's action, Mr. Engelke said, "The increase in the cash dividend is evidence of the Board's continued confidence in the fundamental strength of the Company and its commitment to enhancing shareholder value."

Eleventh Stock Repurchase Program Continues

During the 2006 fourth quarter, Astoria repurchased 1.9 million shares of its common stock at an average cost of $29.55 per share. For the year ended December 31, 2006, Astoria repurchased a total of 8.4 million shares, completing its tenth stock repurchase program and commencing its eleventh stock repurchase program in the 2006 first quarter. Under the current stock repurchase program, 1.9 million shares of the 10 million shares authorized remain available for repurchase.

Board Sets Annual Shareholders' Meeting Date

The Board of Directors, at their January 24, 2007 meeting, established May 16, 2007 as the date for the Astoria Annual Meeting of Shareholders, with a voting record date of March 26, 2007.

Fourth Quarter and Full Year Earnings Summary

Net interest income for the quarter ended December 31, 2006 totaled $86.9 million compared to $90.7 million for the 2006 third quarter and $113.7 million for the fourth quarter a year ago. For the year ended December 31, 2006, net interest income totaled $390.4 million compared to $478.8 million for the comparable 2005 period.

Astoria's net interest margin for the quarter ended December 31, 2006 declined to 1.69% from 1.75% for the previous quarter and 2.12% for the quarter ended December 31, 2005, primarily due to the cost of interest-bearing liabilities rising more rapidly than the yield on interest-earning assets. For the 2006 fourth quarter, multifamily/CRE loan prepayment penalty income increased to $4.0 million, from $2.1 million for the previous quarter and $3.0 million for the 2005 fourth quarter, primarily due to a $2.0 million prepayment penalty from a single CRE loan in the 2006 fourth quarter. For the year ended December 31, 2006, the net interest margin declined to 1.87% from 2.19% for the 2005 full year period.

Non-interest income for the quarter ended December 31, 2006 totaled $23.9 million compared to $26.6 million for the 2005 fourth quarter. The decrease is primarily due to a decrease of $1.6 million in customer service fees, primarily NSF fees, and the absence of $1.3 million of non-recurring other income recorded in the 2005 fourth quarter.

For the twelve months ended December 31, 2006, non-interest income declined to $91.4 million from $102.2 million for the comparable 2005 period. The decline was due primarily to the following: a $5.5 million charge associated with the termination of interest rate swap agreements in the 2006 first quarter, a $1.4 million decrease in customer service fees, a $1.2 million decrease in mortgage banking income, net, a $0.9 million decrease in other loan fees primarily due to the outsourcing of mortgage servicing and $1.7 million of non-recurring income recorded in 2005. The components of mortgage banking income, net, which is included in non-interest income, are detailed below:

(Dollars in millions) 4Q06 4Q05 2006 2005 Loan servicing fees $ 1.0 $ 1.2 $ 4.4 $5.0 Amortization of MSR* (0.9) (1.2) (3.7) (5.2) MSR valuation adjustments 0.5 0.1 2.0 2.7 Net gain on sale of loans 0.4 0.8 2.1 3.5 Mortgage banking income, net $ 1.0 $ 0.9 $ 4.8 $6.0 * Mortgage servicing rights

General and administrative expense ("G&A") for the quarter ended December 31, 2006 totaled $57.0 million compared to $52.7 million for the comparable 2005 period. The increase was primarily due to a $2.4 million increase in compensation and benefits expense, a $0.9 million increase in occupancy, equipment and systems expense, due, in part, to the outsourcing of mortgage servicing in 2005, and an $0.8 million increase in advertising expense. The increase in compensation and benefits expense is due to the adoption of SFAS 123R, effective January 1, 2006, the granting of restricted stock and an increase in ESOP expense.

For the year ended December 31, 2006, G&A declined $6.9 million to $221.8 million from $228.7 million for the comparable 2005 period. This is due, in part, to a net decrease of $3.0 million in compensation and benefits expense resulting primarily from the outsourcing of mortgage servicing and other company-wide cost saving initiatives undertaken in 2005, partially offset by an increase in stock based compensation of $4.5 million due to the adoption of SFAS 123R and the granting of restricted stock. In addition, there was a decrease of $5.1 million in other expense, primarily lower goodwill litigation expense, and a decrease of $1.1 million in advertising expense, partially offset by a $2.3 million increase in occupancy, equipment and systems expense primarily related to the outsourcing of mortgage servicing in 2005.

Balance Sheet Summary

For the quarter and year ended December 31, 2006, total loans increased $225.8 million and $579.4 million, respectively, to $15.0 billion at December 31, 2006. Total loan production for the fourth quarter and twelve months ended December 31, 2006 was $1.1 billion and $3.4 billion, respectively, compared to $1.0 billion and $4.3 billion, respectively, for the comparable 2005 periods. The loan pipeline at December 31, 2006 totaled $1.0 billion, a decline of $107 million from the 2006 third quarter.

During the 2006 fourth quarter, the 1-4 family mortgage loan portfolio increased $283.0 million, or 11% annualized, from the previous quarter and totaled $10.2 billion at December 31, 2006. 1-4 family loan originations and purchases for the 2006 fourth quarter totaled $948.7 million compared to $837.6 million for the 2005 fourth quarter. Of the 2006 fourth quarter production, 73% consisted of 3/1 and 5/1 adjustable rate mortgage loans.

For the year ended December 31, 2006, the 1-4 family mortgage loan portfolio increased $456.2 million, or 5%, fueled by loan originations and purchases totaling $2.7 billion compared to $3.3 billion for 2005. Of the 2006 full year 1-4 family loan production, 74% consisted of 3/1 and 5/1 adjustable rate mortgage loans.

During the 2006 fourth quarter, the multifamily and CRE loan portfolio decreased slightly and totaled $4.1 billion, or 27% of total loans, at December 31, 2006. Multifamily and CRE loan originations totaled $105.0 million for the 2006 fourth quarter compared to $183.9 million for the comparable 2005 period. The average loan-to-value ratio of the multifamily and CRE loan portfolio continues to be less than 65%, based on current principal balance and original appraised value, and the average loan balance is less than $1 million.

For the year ended December 31, 2006, the multifamily and CRE loan portfolio increased $185.0 million, or 5%. Multifamily and CRE loan originations totaled $664.4 million for the 2006 full year compared to $952.9 million for 2005.

At December 31, 2006, non-performing loans totaled $59.4 million, or 0.28% of total assets, compared to $55.1 million, or 0.25% of total assets, at September 30, 2006 and $65.0 million, or 0.29% of total assets, at December 31, 2005. Net recoveries for the quarter ended December 31, 2006 totaled $12,000 compared to net charge-offs of $888,000 for the 2005 fourth quarter. For the year ended December 31, 2006, net charge-offs totaled $1.2 million compared to $1.6 million for the comparable 2005 period. The ratio of the allowance for loan losses to non-performing loans at December 31, 2006 was 135%.

For the quarter and year ended December 31, 2006, deposits increased $47.0 million and $413.6 million, respectively, to $13.2 billion at December 31, 2006.

The continued inverted yield curve in the 2006 fourth quarter further reduced spread availability. We, therefore, continued to reduce non-core business activities. Total securities for the quarter ended December 31, 2006 declined $258.8 million, or 18% annualized, to $5.3 billion at December 31, 2006, representing 25% of total assets.

For the twelve months ended December 31, 2006, total securities declined $1.2 billion, or 19%, and borrowings declined $1.1 billion, or 14%. Total assets declined $825.8 million from December 31, 2005 and totaled $21.6 billion at December 31, 2006.

Key balance sheet highlights, reflecting the improvement in the quality of the Company's balance sheet since December 31, 1999, follow:

(Dollars in % Change millions) 12/31/99 12/31/01 12/31/03 12/31/05 12/31/06 12/31/99-12/31/06 Assets $22,700 $22,672 $22,462 $22,380 $21,555 - 5% Loans $10,286 $12,167 $12,687 $14,392 $14,972 +46% Securities $10,763 $ 8,013 $ 8,448 $ 6,572 $ 5,340 -50% Deposits $ 9,555 $10,904 $11,187 $12,810 $13,224 +38% Borrowings $11,528 $ 9,826 $ 9,632 $ 7,938 $ 6,836 -41%

The following table illustrates this improvement on an outstanding per share basis:

Amount per share 12/31/99 12/31/01 12/31/03 12/31/05 12/31/06 % Change CAGR Loans $ 66.28 $ 89.36 $107.51 $137.11 $152.44 130% 13% Deposits $ 61.57 $ 80.09 $ 94.80 $122.04 $134.65 119% 12%

Stockholders' equity was $1.2 billion, or 5.64% of total assets at December 31, 2006. Astoria Federal continues to maintain capital ratios in excess of regulatory requirements with core, tangible and risk-based capital ratios of 6.62%, 6.62% and 12.27%, respectively, at December 31, 2006.

Future Outlook

Commenting on the outlook for 2007, Mr. Engelke stated, "The interest rate environment continues to remain very challenging, characterized by a prolonged inversion of the yield curve. During 2007, we continue to expect a gradual flattening of the yield curve and a relatively stable net interest margin, similar to the 2006 fourth quarter margin. We will, therefore, continue our strategy of reducing the securities portfolio while we emphasize deposit and loan growth, all of which will continue to improve the quality of both the balance sheet and earnings. While we will continue to focus on the repurchase of our stock as a very desirable use of capital, the pace of the buyback activity is expected to be slower than in 2006 as we maintain tangible capital levels at or near 4.75%. This strategy should better position us to take advantage of more profitable asset growth opportunities when the yield curve steepens."

Astoria Financial Corporation, the holding company for Astoria Federal Savings and Loan Association, with assets of $21.6 billion is the fifth largest thrift institution in the United States. Established in 1888, Astoria Federal is the largest thrift depository headquartered in New York with deposits of $13.2 billion and embraces its philosophy of Putting people first by providing the customers and local communities it serves with quality financial products and services through 86 convenient banking office locations and multiple delivery channels, including its enhanced website, http://www.astoriafederal.com/. Astoria Federal commands the fourth largest deposit market share in the attractive Long Island market, which includes Brooklyn, Queens, Nassau, and Suffolk counties with a population exceeding that of 38 individual states. Astoria Federal originates mortgage loans through its banking offices and loan production offices in New York, an extensive broker network covering twenty-six states, primarily the East Coast, and the District of Columbia, and through correspondent relationships covering forty-three states and the District of Columbia.

Earnings Conference Call January 25, 2007 at 9:30 a.m. (ET)

The Company, as previously announced, indicated that Mr. Engelke will host an earnings conference call Thursday morning January 25, 2007 at 9:30 a.m. (ET). The toll-free dial-in number is (800) 967-7140.

A telephone replay will be available on January 25, 2007 from 12 noon (ET) through Friday, February 2, 2007, 11:59 pm (ET). The replay number is (888) 203-1112, passcode: 2245521. The conference call will also be simultaneously webcast on the Company's website http://www.astoriafederal.com/ and archived for one year.

Forward Looking Statements

This document contains a number of 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. These statements may be identified by the use of such words as "anticipate," "believe," "could," "estimate," "expect," "intend," "outlook," "plan," "potential," "predict," "project," "should," "will," "would," and similar terms and phrases, including references to assumptions.

Forward-looking statements 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 we believe 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 or affect the value of our investments; 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 of the areas in which we do business, or conditions in the securities markets or the banking industry may be less favorable than we currently anticipate; legislative or regulatory changes may adversely affect our business; applicable 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 matters before regulatory agencies, whether currently existing or commencing in the future, may delay the 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.

ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (In Thousands, Except Share Data) At At December 31, December 31, 2006 2005 ASSETS Cash and due from banks $134,016 $169,234 Repurchase agreements 71,694 182,803 Securities available-for-sale 1,560,325 1,841,351 Securities held-to-maturity (fair value of $3,681,514 and $4,627,013, respectively) 3,779,356 4,730,953 Federal Home Loan Bank of New York stock, at cost 153,640 145,247 Loans held-for-sale, net 16,542 23,651 Loans receivable: Mortgage loans, net 14,532,503 13,879,804 Consumer and other loans, net 439,188 512,489 14,971,691 14,392,293 Allowance for loan losses (79,942) (81,159) Total loans receivable, net 14,891,749 14,311,134 Mortgage servicing rights, net 15,944 16,502 Accrued interest receivable 78,761 80,318 Premises and equipment, net 145,231 151,494 Goodwill 185,151 185,151 Bank owned life insurance 385,952 382,613 Other assets 136,158 159,820 TOTAL ASSETS $21,554,519 $22,380,271 LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Deposits $13,224,024 $12,810,455 Reverse repurchase agreements 4,480,000 5,780,000 Federal Home Loan Bank of New York advances 1,940,000 1,724,000 Other borrowings, net 416,002 433,526 Mortgage escrow funds 132,080 124,929 Accrued expenses and other liabilities 146,659 157,134 TOTAL LIABILITIES 20,338,765 21,030,044 Stockholders' equity: Preferred stock, $1.00 par value; (5,000,000 shares authorized; none issued and outstanding) - - Common stock, $.01 par value; (200,000,000 shares authorized; 166,494,888 shares issued; and 98,211,827 and 104,967,280 shares outstanding, respectively) 1,665 1,665 Additional paid-in capital 828,940 824,102 Retained earnings 1,856,528 1,774,924 Treasury stock (68,283,061 and 61,527,608 shares, at cost, respectively) (1,390,495) (1,171,604) Accumulated other comprehensive loss (58,330) (49,536) Unallocated common stock held by ESOP (6,155,918 and 6,465,273 shares, respectively) (22,554) (23,688) Deferred compensation - (5,636) TOTAL STOCKHOLDERS' EQUITY 1,215,754 1,350,227 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $21,554,519 $22,380,271 ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (In Thousands, Except Share Data) For the Three Months For the Twelve Months Ended December 31, Ended December 31, 2006 2005 2006 2005 Interest income: Mortgage loans: One-to-four family $131,879 $120,331 $510,105 $459,929 Multi-family, commercial real estate and construction 67,064 61,672 259,242 239,119 Consumer and other loans 8,817 8,705 35,735 31,160 Mortgage-backed and other securities 62,162 76,106 267,535 340,626 Repurchase agreements 1,205 2,257 6,410 6,123 Federal Home Loan Bank of New York stock 2,252 1,630 7,787 6,030 Total interest income 273,379 270,701 1,086,814 1,082,987 Interest expense: Deposits 109,413 77,471 384,770 281,399 Borrowings 77,110 79,546 311,659 322,808 Total interest expense 186,523 157,017 696,429 604,207 Net interest income 86,856 113,684 390,385 478,780 Provision for loan losses - - - - Net interest income after provision for loan losses 86,856 113,684 390,385 478,780 Non-interest income: Customer service fees 15,615 17,207 64,823 66,256 Other loan fees 1,303 1,337 4,058 4,980 Mortgage banking income, net 1,035 948 4,845 6,015 Income from bank owned life insurance 4,066 4,011 16,129 16,446 Other 1,843 3,056 1,495 8,502 Total non-interest income 23,862 26,559 91,350 102,199 Non-interest expense: General and administrative: Compensation and benefits 29,985 27,600 116,408 119,417 Occupancy, equipment and systems 16,825 15,905 66,034 63,695 Federal deposit insurance premiums 409 433 1,672 1,760 Advertising 2,079 1,275 7,747 8,815 Other 7,662 7,531 29,942 35,047 Total non-interest expense 56,960 52,744 221,803 228,734 Income before income tax expense 53,758 87,499 259,932 352,245 Income tax expense 16,652 29,750 85,035 118,442 Net income $37,106 $57,749 $174,897 $233,803 Basic earnings per common share $0.40 $0.58 $1.85 $2.30 Diluted earnings per common share $0.39 $0.57 $1.80 $2.26 Basic weighted average common shares 92,354,297 99,478,069 94,754,732 101,476,376 Diluted weighted average common and common equivalent shares 94,735,740 101,449,368 97,280,150 103,408,637 ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES SELECTED FINANCIAL RATIOS AND OTHER DATA For the At or For the Three Months Ended Twelve Months Ended December 31, December 31, 2006 2005 2006 2005 (Annualized) Selected Returns and Financial Ratios Return on average stockholders' equity 11.99 % 16.97 % 13.73 % 17.06 % Return on average tangible stockholders' equity (1) 14.09 19.64 16.06 19.72 Return on average assets 0.69 1.03 0.80 1.02 General and administrative expense to average assets 1.06 0.94 1.01 1.00 Efficiency ratio (2) 51.45 37.61 46.04 39.37 Net interest rate spread (3) 1.57 2.03 1.76 2.11 Net interest margin (4) 1.69 2.12 1.87 2.19 Selected Non-GAAP Returns and Financial Ratios (5) Non-GAAP return on average stockholders' equity 14.01 % 17.06 % Non-GAAP return on average tangible stockholders' equity (1) 16.40 19.72 Non-GAAP return on average assets 0.82 1.02 Non-GAAP efficiency ratio (2) 45.53 39.37 Asset Quality Data (dollars in thousands) Non-performing loans/total loans 0.40 % 0.45 % Non-performing loans/total assets 0.28 0.29 Non-performing assets/total assets 0.28 0.30 Allowance for loan losses/ non-performing loans 134.55 124.81 Allowance for loan losses/ non-accrual loans 135.66 125.15 Allowance for loan losses/ total loans 0.53 0.56 Net charge-offs to average loans outstanding 0.00 % 0.02 % 0.01 0.01 Non-performing assets $60,043 $66,093 Non-performing loans 59,416 65,027 Loans 90 days past maturity but still accruing interest 488 176 Non-accrual loans 58,928 64,851 Net (recoveries) charge-offs $(12) $888 1,217 1,599 Capital Ratios (Astoria Federal) Tangible 6.62 % 6.53 % Core 6.62 6.53 Risk-based 12.27 12.53 Other Data Cash dividends paid per common share $0.24 $0.20 $0.96 $0.80 Dividend payout ratio 61.54 % 35.09 % 53.33 % 35.40 % Book value per share (6) $13.21 $13.71 Tangible book value per share (7) 11.20 11.83 Average equity/average assets 5.74 % 6.06 % 5.83 % 5.99 % Mortgage loans serviced for others (in thousands) $1,363,591 $1,502,852 Full time equivalent employees 1,626 1,658 (1) Average tangible stockholders' equity represents average stockholders' equity less average goodwill. (2) The efficiency ratio represents general and administrative expense divided by the sum of net interest income plus non-interest income. (3) Net interest rate spread represents the difference between the average yield on average interest-earning assets and the average cost of average interest-bearing liabilities. (4) Net interest margin represents net interest income divided by average interest-earning assets. (5) The information presented for the twelve months ended December 31, 2006 represents pro forma calculations which are not in conformity with U.S. generally accepted accounting principles, or GAAP. The 2006 information excludes the $3.7 million, after tax, ($5.5 million, before tax) charge for the termination of our interest rate swap agreements recorded in the 2006 first quarter. See page 12 for a reconciliation of GAAP net income to non-GAAP earnings for the twelve months ended December 31, 2006. (6) Book value per share represents stockholders' equity divided by outstanding shares, excluding unallocated Employee Stock Ownership Plan, or ESOP, shares. (7) Tangible book value per share represents stockholders' equity less goodwill divided by outstanding shares, excluding unallocated ESOP shares. ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES AVERAGE BALANCE SHEETS (Dollars in Thousands) For the Three Months Ended December 31, 2006 2005 Average Average Average Yield/ Average Yield/ Balance Interest Cost Balance Interest Cost (Annual- (Annual- ized) ized) Assets: Interest-earning assets: Mortgage loans (1): One-to-four family $10,173,855 $131,879 5.19% $9,754,809 $120,331 4.93% Multi-family, commercial real estate and construction 4,242,832 67,064 6.32 4,005,714 61,672 6.16 Consumer and other loans (1) 449,440 8,817 7.85 522,429 8,705 6.67 Total loans 14,866,127 207,760 5.59 14,282,952 190,708 5.34 Mortgage-backed and other securities (2) 5,495,739 62,162 4.52 6,807,465 76,106 4.47 Repurchase agreements 90,752 1,205 5.31 229,174 2,257 3.94 Federal Home Loan Bank stock 147,227 2,252 6.12 131,178 1,630 4.97 Total interest- earning assets 20,599,845 273,379 5.31 21,450,769 270,701 5.05 Goodwill 185,151 185,151 Other non- interest-earning assets 782,146 825,378 Total assets $21,567,142 $22,461,298 Liabilities and stockholders' equity: Interest-bearing liabilities: Savings $2,162,998 2,198 0.41 $2,564,728 2,598 0.41 Money market 456,617 1,152 1.01 690,978 1,688 0.98 NOW and demand deposit 1,462,088 215 0.06 1,554,803 230 0.06 Liquid certificates of deposit 1,420,831 17,824 5.02 537,574 4,710 3.50 Total core deposits 5,502,534 21,389 1.55 5,348,083 9,226 0.69 Certificates of deposit 7,617,237 88,024 4.62 7,419,474 68,245 3.68 Total deposits 13,119,771 109,413 3.34 12,767,557 77,471 2.43 Borrowings 6,848,655 77,110 4.50 8,000,733 79,546 3.98 Total interest- bearing liabilities 19,968,426 186,523 3.74 20,768,290 157,017 3.02 Non-interest- bearing liabilities 360,334 331,989 Total liabilities 20,328,760 21,100,279 Stockholders' equity 1,238,382 1,361,019 Total liabilities and stockholders' equity $21,567,142 $22,461,298 Net interest income/ net interest rate spread $86,856 1.57% $113,684 2.03% Net interest-earning assets/net interest margin $631,419 1.69% $682,479 2.12% Ratio of interest- earning assets to interest-bearing liabilities 1.03x 1.03x (1) Mortgage loans and consumer and other loans include loans held-for- sale and non-performing loans and exclude the allowance for loan losses. (2) Securities available-for-sale are included at average amortized cost. ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES AVERAGE BALANCE SHEETS (Dollars in Thousands) For the Twelve Months Ended December 31, 2006 2005 Average Average Average Yield/ Average Yield/ Balance Interest Cost Balance Interest Cost Assets: Interest-earning assets: Mortgage loans (1): One-to-four family $9,984,760 $510,105 5.11% $9,461,023 $459,929 4.86% Multi-family, commercial real estate and construction 4,204,883 259,242 6.17 3,862,281 239,119 6.19 Consumer and other loans (1) 478,447 35,735 7.47 526,071 31,160 5.92 Total loans 14,668,090 805,082 5.49 13,849,375 730,208 5.27 Mortgage-backed and other securities (2) 5,946,591 267,535 4.50 7,671,532 340,626 4.44 Repurchase agreements 131,418 6,410 4.88 195,863 6,123 3.13 Federal Home Loan Bank stock 143,002 7,787 5.45 130,759 6,030 4.61 Total interest- earning assets 20,889,101 1,086,814 5.20 21,847,529 1,082,987 4.96 Goodwill 185,151 185,151 Other non- interest-earning assets 786,062 852,475 Total assets $21,860,314 $22,885,155 Liabilities and stockholders' equity: Interest-bearing liabilities: Savings $2,325,346 9,362 0.40 $2,742,417 11,015 0.40 Money market 536,549 5,287 0.99 804,855 7,513 0.93 NOW and demand deposit 1,500,131 877 0.06 1,569,419 928 0.06 Liquid certificates of deposit 1,092,533 50,460 4.62 350,923 10,708 3.05 Total core deposits 5,454,559 65,986 1.21 5,467,614 30,164 0.55 Certificates of deposit 7,539,840 318,784 4.23 7,146,664 251,235 3.52 Total deposits 12,994,399 384,770 2.96 12,614,278 281,399 2.23 Borrowings 7,242,568 311,659 4.30 8,566,812 322,808 3.77 Total interest- bearing liabilities 20,236,967 696,429 3.44 21,181,090 604,207 2.85 Non-interest- bearing liabilities 349,170 333,522 Total liabilities 20,586,137 21,514,612 Stockholders' equity 1,274,177 1,370,543 Total liabilities and stockholders' equity $21,860,314 $22,885,155 Net interest income/ net interest rate spread $390,385 1.76% $478,780 2.11% Net interest-earning assets/net interest margin $652,134 1.87% $666,439 2.19% Ratio of interest- earning assets to interest-bearing liabilities 1.03x 1.03x (1) Mortgage loans and consumer and other loans include loans held-for- sale and non-performing loans and exclude the allowance for loan losses. (2) Securities available-for-sale are included at average amortized cost. ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES END OF PERIOD BALANCES AND RATES (Dollars in Thousands) At December 31, At September 30, At December 31, 2006 2006 2005 Weighted Weighted Weighted Average Average Average Balance Rate (1) Balance Rate (1) Balance Rate (1) Selected interest- earning assets: Mortgage loans, gross (2): One-to-four family $10,214,146 5.48% $9,931,184 5.40% $9,757,920 5.19% Multi-family, commercial real estate and construction 4,227,931 5.96 4,268,679 5.96 4,039,733 5.88 Mortgage-backed and other securities (3) 5,339,681 4.35 5,598,523 4.34 6,572,304 4.35 Interest-bearing liabilities: Savings 2,129,416 0.40 2,209,535 0.40 2,510,897 0.40 Money market 435,657 0.98 478,932 1.00 648,730 0.95 NOW and demand deposit 1,496,986 0.06 1,466,725 0.06 1,569,859 0.06 Liquid certificates of deposit 1,447,462 4.88 1,402,562 5.05 619,784 3.66 Total core deposits 5,509,521 1.53 5,557,754 1.54 5,349,270 0.74 Certificates of deposit 7,714,503 4.62 7,619,252 4.54 7,461,185 3.73 Total deposits 13,224,024 3.33 13,177,006 3.27 12,810,455 2.48 Borrowings, net 6,836,002 4.45 6,824,359 4.38 7,937,526 3.97 (1) Weighted average rates represent stated or coupon interest rates excluding the effect of yield adjustments for premiums, discounts and deferred loan origination fees and costs and the impact of prepayment penalties. (2) Mortgage loans exclude loans held-for-sale and include non-performing loans. (3) Securities available-for-sale are reported at fair value and securities held-to-maturity are reported at amortized cost. RECONCILIATION OF 2006 GAAP NET INCOME TO NON-GAAP EARNINGS (In Thousands, Except Per Share Data) For the Twelve Months Ended December 31, 2006 GAAP Adjustments (4) Non-GAAP Net interest income after provision for loan losses $390,385 $ - $390,385 Non-interest income 91,350 5,456 96,806 Non-interest expense 221,803 - 221,803 Income before income tax expense 259,932 5,456 265,388 Income tax expense 85,035 1,785 86,820 Net income $174,897 $ 3,671 $178,568 Basic earnings per common share $1.85 $0.04 $1.88 (5) Diluted earnings per common share $1.80 $0.04 $1.84 (4) Adjustments relate to the $5.5 million charge for the termination of our interest rate swap agreements and the related tax effects. (5) Figures do not cross foot due to rounding.