Astoria Financial Corporation Announces Third Quarter EPS of $0.43

LAKE SUCCESS, N.Y., Oct. 19 /PRNewswire-FirstCall/ -- Astoria Financial Corporation ("Astoria"), the holding company for Astoria Federal Savings and Loan Association ("Astoria Federal"), today reported net income of $41.1 million, or $0.43 diluted earnings per share ("EPS"), for the quarter ended September 30, 2006, compared to $59.2 million, or $0.57 EPS, for the 2005 third quarter. For the 2006 third quarter, annualized returns on average equity, average tangible equity and average assets were 13.06%, 15.31% and 0.76%, respectively, compared to 17.09%, 19.73% and 1.05%, respectively, for the comparable 2005 period.

For the nine months ended September 30, 2006, net income totaled $137.8 million, or $1.40 EPS, compared to $176.1 million, or $1.69 EPS, for the comparable 2005 period. For the nine months ended September 30, 2006, annualized returns on average equity, average tangible equity and average assets were 14.27%, 16.67% and 0.84%, respectively, compared to 17.06%, 19.71% and 1.02%, respectively, for the comparable 2005 period.

2006 Nine Month Balance Sheet Highlights: -- Deposits increased $367 million, or 4% annualized -- Loan portfolio increased $354 million, or 3% annualized - Multifamily/Commercial Real Estate ("CRE") loan portfolio increased $215 million, or 7% annualized - One-to-four family loan portfolio increased $173 million, or 2% annualized -- Securities portfolio decreased $974 million, or 20% annualized -- Borrowings decreased $1.1 billion, or 19% annualized -- Repurchased 6.5 million shares

Commenting on the 2006 third quarter results, George L. Engelke, Jr., Chairman, President and Chief Executive Officer of Astoria, noted, "The decline in U.S. Treasury bond yields during the third quarter caused a further inversion of the yield curve which continued to exert pressure on our net interest margin and earnings while limiting the opportunities for profitable balance sheet growth. Accordingly, we continued our strategy of shrinking the balance sheet by reducing the securities portfolio and borrowings, growing loans and deposits and repurchasing our stock."

Board Declares Quarterly Cash Dividend of $0.24 Per Share

The Board of Directors of the Company, at their October 18, 2006 meeting, declared a quarterly cash dividend of $0.24 per common share. The dividend is payable on December 1, 2006 to shareholders of record as of November 15, 2006. This is the forty-sixth consecutive quarterly cash dividend declared by the Company.

Eleventh Stock Repurchase Program Continues

During the third quarter, Astoria repurchased 1.8 million shares of its common stock at an average cost of $30.41 per share. During the nine month period ended September 30, 2006, Astoria repurchased a total of 6.5 million shares, completing its tenth stock repurchase program and commencing its eleventh stock repurchase program in the first quarter. Under the current stock repurchase program, 3.7 million shares of the 10 million shares authorized remain available for repurchase.

Third Quarter and Nine Month Earnings Summary

Net interest income for the quarter ended September 30, 2006 totaled $90.7 million compared to $101.3 million for the 2006 second quarter and $118.5 million for the third quarter a year ago. For the nine months ended September 30, 2006, net interest income totaled $303.5 million compared to $365.1 million for the comparable 2005 nine month period.

Astoria's net interest margin for the quarter ended September 30, 2006 declined to 1.75% from 1.92% for the previous quarter and 2.20% for the quarter ended September 30, 2005, primarily due to the cost of interest- bearing liabilities rising more rapidly than the yield on interest-earning assets.

Non-interest income for the quarter ended September 30, 2006 totaled $22.9 million compared to $28.4 million for the 2005 third quarter. The decrease is primarily due to lower mortgage banking income, net, primarily due to the MSR valuation adjustments, as well as lower customer service fees.

For the nine months ended September 30, 2006, non-interest income totaled $67.5 million compared to $75.6 million for the comparable 2005 period. The decline was primarily due to a $5.5 million, pre-tax, charge related to the termination of interest rate swap agreements in the 2006 first quarter, a $1.3 million decrease in mortgage banking income, net, and a $0.9 million decrease in other loan fees, due primarily to the outsourcing of mortgage loan servicing effective December 1, 2005.

The components of mortgage banking income, net, which is included in non- interest income, are detailed below:

(Dollars in millions) 3Q06 3Q05 9 Mos. 06 9 Mos. 05 Loan servicing fees $ 1.1 $ 1.2 $ 3.4 $ 3.8 Amortization of MSR* (0.9) (1.3) (2.8) (4.0) MSR valuation adjustments (0.5) 2.7 1.5 2.6 Net gain on sale of loans 0.5 1.1 1.7 2.7 Mortgage banking income, net $ 0.2 $ 3.7 $3.8 $ 5.1 * Mortgage servicing rights

General and administrative expense ("G&A") for the quarter ended September 30, 2006 declined $4.6 million to $53.3 million from $57.9 million for the comparable 2005 period due primarily to a $3.5 million reduction in compensation and benefits expense and a reduction in other expense due to an $850,000 reimbursement for certain legal fees. The decrease in compensation and benefits expense is primarily a result of the outsourcing of mortgage servicing and further reductions in incentive compensation accruals, partially offset by increases in stock-based compensation.

For the nine months ended September 30, 2006, G&A declined $11.2 million to $164.8 million from $176.0 million for the comparable 2005 period. The decrease was predominantly due to a $5.4 million decrease in compensation and benefits expense, a $5.2 million decrease in other expense due primarily to lower goodwill litigation expense, and a $1.9 million decrease in advertising expense, partially offset by a $1.4 million increase in occupancy, equipment and systems expense primarily related to the outsourcing of mortgage servicing.

Balance Sheet Summary

The further inversion of the yield curve during the third quarter continued to narrow spread availability. Accordingly, we continued to reduce our balance sheet through the reduction of non-core business activities. Total securities for the quarter ended September 30, 2006 declined $272.2 million, or 19% annualized, to $5.6 billion at September 30, 2006, representing 26% of total assets. Borrowings declined in the third quarter of 2006 by $378.3 million, or 21% annualized, to $6.8 billion at September 30, 2006, representing 32% of total assets.

For the nine months ended September 30, 2006, total securities declined $973.8 million, or 20% annualized, and borrowings declined $1.1 billion, or 19% annualized. Total assets declined $262.3 million from June 30, 2006 and $781.1 million from December 31, 2005 and total $21.6 billion at September 30, 2006.

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

% Change (Dollars in 12/31/99- millions) 12/31/99 12/31/01 12/31/03 12/31/05 09/30/06 09/30/06 Assets $22,700 $22,672 $22,462 $22,380 $21,599 - 5% Loans $10,286 $12,167 $12,687 $14,392 $14,746 + 43% Securities $10,763 $8,013 $8,448 $6,572 $5,599 - 48% Deposits $9,555 $10,904 $11,187 $12,810 $13,177 + 38% Borrowings $11,528 $9,826 $9,632 $7,938 $6,824 - 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 09/30/06 % Change CAGR Loans $66.28 $89.36 $107.51 $137.11 $148.46 124% 13% Deposits $61.57 $80.09 $ 94.80 $122.04 $132.66 115% 12%

Total loan production for the third quarter and nine months ended September 30, 2006 was $868.6 million and $2.4 billion, respectively, compared to $1.3 billion and $3.3 billion, respectively, for the comparable 2005 periods. The loan pipeline at September 30, 2006 totaled $1.2 billion, an increase of $333.5 million, or 41%, over the pipeline at June 30, 2006.

During the 2006 third quarter, the 1-4 family mortgage loan portfolio increased $107.1 million, or 4% annualized, from the previous quarter and totaled $9.9 billion at September 30, 2006. For the quarter ended September 30, 2006, 1-4 family loan originations and purchases totaled $706.6 million compared to $983.4 million for the 2005 third quarter. Of the 2006 third quarter production, 70% consisted of 3/1 and 5/1 adjustable rate mortgage loans.

For the nine months ended September 30, 2006, the 1-4 family mortgage loan portfolio increased $173.3 million, or 2% annualized. For the nine month period ended September 30, 2006, 1-4 family loan originations and purchases totaled $1.8 billion compared to $2.4 billion in the year-ago nine month period. Of the 2006 nine month loan production, 75% consisted of 3/1 and 5/1 adjustable rate mortgage loans.

During the 2006 third quarter, the multifamily and CRE loan portfolio increased $30.5 million, or 3% annualized, to $4.1 billion, or 28% of total loans, at September 30, 2006. Multifamily and CRE loan originations totaled $158.2 million for the 2006 third quarter compared to $270.6 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 nine month period ended September 30, 2006, the multifamily and CRE loan portfolio increased $215.0 million, or 7% annualized. Multifamily and CRE loan originations totaled $559.4 million for the 2006 nine month period compared to $769.0 million in the comparable year-ago period.

At September 30, 2006, non-performing loans totaled $55.1 million, or 0.25% of total assets, compared to $54.3 million, or 0.25% of total assets, at June 30, 2006 and $65.0 million, or 0.29% of total assets, at December 31, 2005. Net charge-offs for the quarter and nine months ended September 30, 2006 totaled $1.1 million and $1.2 million, respectively, compared to $472,000 and $711,000, respectively, for the comparable 2005 periods. The increase in charge-offs for the three and nine months ended September 30, 2006 was due, for the most part, to a $947,000 charge-off on a non-performing loan in foreclosure that was sold in the 2006 third quarter. The ratio of the allowance for loan losses to non-performing loans at September 30, 2006 was 145%.

Deposits for the 2006 third quarter increased $84.8 million to $13.2 billion at September 30, 2006. During the 2006 third quarter, our efforts to extend deposit liabilities resulted in $1.5 billion of non-Liquid CDs issued or repriced at a weighted average rate of 5.21% with a weighted average maturity of 12 months.

For the nine months ended September 30, 2006, deposits increased $366.6 million, or 4% annualized.

During that period $4.7 billion of non-Liquid CDs were issued or repriced at a weighted average rate of 4.83% with a weighted average maturity of 12 months.

Commenting on the bank's retail activity, Mr. Engelke noted, "Our marketing efforts continue to produce new customers from our communities, creating relationship development opportunities for us. For example, during the nine months ended September 30, 2006, 19% of all new and existing CD customers, and 22% of all new and existing Liquid CD customers, without checking accounts, were cross-sold new, low-cost checking accounts, the linchpin product for building long-term, profitable customer relationships."

Stockholders' equity was $1.3 billion, or 5.84% of total assets at September 30, 2006. Astoria Federal continues to maintain capital ratios in excess of regulatory requirements with core, tangible and risk-based capital ratios of 6.84%, 6.84% and 12.66%, respectively, at September 30, 2006.

Future Outlook

Commenting on the outlook for the remainder of 2006 and 2007, Mr. Engelke stated, "The interest rate environment remains very challenging, characterized by a prolonged flat-to-inverted yield curve that continues to negatively impact our net interest margin and earnings and limits opportunities for profitable growth. We anticipate continued margin compression for the fourth quarter, although the magnitude of the compression will be less than the current quarter. Looking forward, based on our economic forecasting model which currently includes three 25 basis point reductions by the Federal Reserve in 2007 and a gradual flattening of the yield curve, we expect the margin to remain relatively stable in 2007. We will, as a result, continue our strategy of shrinking the balance sheet through reductions in the securities portfolio and borrowings through normal cash flow, while we emphasize deposit and loan growth, all of which will continue to improve the quality of both the balance sheet and earnings. As we reduce the size of the balance sheet, we will continue to focus on the repurchase of our stock as a very desirable use of capital. 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-four states, primarily the East Coast, and the District of Columbia, and through correspondent relationships covering forty- four states and the District of Columbia.

Earnings Conference Call October 20, 2006 at 9:00 a.m. (ET)

The Company, as previously announced, indicated that Mr. Engelke will host an earnings conference call Friday morning October 20, 2006 at 9:00 a.m. (ET). The toll-free dial-in number is (800) 967-7140.

A telephone replay will be available on October 20, 2006 from 12 noon (ET) through Friday, October 27, 2006 11:59 p.m. (ET). The replay number is (888) 203-1112, passcode: 2849847. 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 September 30, December 31, 2006 2005 ASSETS Cash and due from banks $152,735 $169,234 Repurchase agreements 54,660 182,803 Securities available-for-sale 1,617,461 1,841,351 Securities held-to-maturity (fair value of $3,878,082 and $4,627,013, respectively) 3,981,062 4,730,953 Federal Home Loan Bank of New York stock, at cost 139,349 145,247 Loans held-for-sale, net 14,629 23,651 Loans receivable: Mortgage loans, net 14,286,640 13,879,804 Consumer and other loans, net 459,245 512,489 14,745,885 14,392,293 Allowance for loan losses (79,930) (81,159) Total loans receivable, net 14,665,955 14,311,134 Mortgage servicing rights, net 16,167 16,502 Accrued interest receivable 80,341 80,318 Premises and equipment, net 146,077 151,494 Goodwill 185,151 185,151 Bank owned life insurance 381,886 382,613 Other assets 163,655 159,820 TOTAL ASSETS $21,599,128 $22,380,271 LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Deposits $13,177,006 $12,810,455 Reverse repurchase agreements 4,780,000 5,780,000 Federal Home Loan Bank of New York advances 1,628,527 1,724,000 Other borrowings, net 415,832 433,526 Mortgage escrow funds 165,816 124,929 Accrued expenses and other liabilities 170,768 157,134 TOTAL LIABILITIES 20,337,949 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 99,326,924 and 104,967,280 shares outstanding, respectively) 1,665 1,665 Additional paid-in capital 837,567 824,102 Retained earnings 1,839,443 1,774,924 Treasury stock (67,167,964 and 61,527,608 shares, at cost, respectively) (1,350,189) (1,171,604) Accumulated other comprehensive loss (44,421) (49,536) Unallocated common stock held by ESOP (6,246,454 and 6,465,273 shares, respectively) (22,886) (23,688) Deferred compensation - (5,636) TOTAL STOCKHOLDERS' EQUITY 1,261,179 1,350,227 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $21,599,128 $22,380,271 ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (In Thousands, Except Share Data) For the For the Three Months Ended Nine Months Ended September 30, September 30, 2006 2005 2006 2005 Interest income: Mortgage loans: One-to-four family $127,735 $115,118 $378,226 $339,598 Multi-family, commercial real estate and construction 65,933 60,951 192,178 177,447 Consumer and other loans 9,099 8,199 26,918 22,455 Mortgage-backed and other securities 64,946 82,072 205,373 264,520 Repurchase agreements 1,266 1,056 5,205 3,866 Federal Home Loan Bank of New York stock 2,049 1,577 5,535 4,400 Total interest income 271,028 268,973 813,435 812,286 Interest expense: Deposits 102,103 71,903 275,357 203,928 Borrowings 78,258 78,534 234,549 243,262 Total interest expense 180,361 150,437 509,906 447,190 Net interest income 90,667 118,536 303,529 365,096 Provision for loan losses - - - - Net interest income after provision for loan losses 90,667 118,536 303,529 365,096 Non-interest income: Customer service fees 16,170 17,798 49,208 49,049 Other loan fees 983 1,397 2,755 3,643 Mortgage banking income, net 181 3,703 3,810 5,067 Income from bank owned life insurance 3,957 4,070 12,063 12,435 Other 1,573 1,404 (348) 5,446 Total non-interest income 22,864 28,372 67,488 75,640 Non-interest expense: General and administrative: Compensation and benefits 27,584 31,060 86,423 91,817 Occupancy, equipment and systems 16,104 15,978 49,209 47,790 Federal deposit insurance premiums 414 432 1,263 1,327 Advertising 1,839 1,765 5,668 7,540 Other 7,374 8,680 22,280 27,516 Total non-interest expense 53,315 57,915 164,843 175,990 Income before income tax expense 60,216 88,993 206,174 264,746 Income tax expense 19,122 29,814 68,383 88,692 Net income $41,094 $59,179 $137,791 $176,054 Basic earnings per common share $0.44 $0.59 $1.44 $1.72 Diluted earnings per common share $0.43 $0.57 $1.40 $1.69 Basic weighted average common shares 93,944,367 101,058,022 95,563,670 102,149,797 Diluted weighted average common and common equivalent shares 96,489,271 103,088,233 98,137,080 104,069,045 ASTORIA FINANCIAL CORPORATION AND SUBSIDIARIES SELECTED FINANCIAL RATIOS AND OTHER DATA For the At or For the Three Months Ended Nine Months Ended September 30, September 30, 2006 2005 2006 2005 Selected Returns and Financial Ratios (annualized) Return on average stockholders' equity 13.06% 17.09% 14.27% 17.06% Return on average tangible stockholders' equity (1) 15.31 19.73 16.67 19.71 Return on average assets 0.76 1.05 0.84 1.02 General and administrative expense to average assets 0.98 1.02 1.00 1.02 Efficiency ratio (2) 46.96 39.42 44.43 39.93 Net interest rate spread (3) 1.64 2.11 1.83 2.13 Net interest margin (4) 1.75 2.20 1.93 2.21 Selected Non-GAAP Returns and Financial Ratios (annualized) (5) Non-GAAP return on average stockholders' equity 14.65% 17.06% Non-GAAP return on average tangible stockholders' equity (1) 17.11 19.71 Non-GAAP return on average assets 0.86 1.02 Non-GAAP efficiency ratio (2) 43.79 39.93 Asset Quality Data (dollars in thousands) Non-performing loans/total loans 0.37% 0.27% Non-performing loans/total assets 0.25 0.17 Non-performing assets/total assets 0.26 0.17 Allowance for loan losses/non-performing loans 145.16 216.39 Allowance for loan losses/non-accrual loans 146.50 219.22 Allowance for loan losses/total loans 0.54 0.58 Net charge-offs to average loans outstanding (annualized) 0.03% 0.01% 0.01 0.01 Non-performing assets $55,488 $39,213 Non-performing loans 55,063 37,916 Loans 90 days past maturity but still accruing interest 502 490 Non-accrual loans 54,561 37,426 Net charge-offs $1,133 $472 1,229 711 Capital Ratios (Astoria Federal) Tangible 6.84% 6.20% Core 6.84 6.20 Risk-based 12.66 12.11 Other Data Cash dividends paid per common share $0.24 $0.20 $0.72 $0.60 Dividend payout ratio 55.81% 35.09% 51.43% 35.50% Book value per share (6) $13.55 $13.81 Tangible book value per share (7) 11.56 11.97 Average equity/average assets 5.81% 6.12% 5.86% 5.97% Mortgage loans serviced for others (in thousands) $1,394,240 $1,548,991 Full time equivalent employees 1,597 1,760 (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 nine months ended September 30, 2006 represents pro forma calculations which are not in conformity with U.S. generally accepted accounting principles, or GAAP. The 2006 information excludes the $3.6 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 nine months ended September 30, 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 September 30, 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 $9,952,037 $127,735 5.13% $9,471,378 $115,118 4.86% Multi-family, commercial real estate and construction 4,268,318 65,933 6.18 3,930,711 60,951 6.20 Consumer and other loans(1) 468,436 9,099 7.77 529,622 8,199 6.19 Total loans 14,688,791 202,767 5.52 13,931,711 184,268 5.29 Mortgage- backed and other securities(2) 5,774,554 64,946 4.50 7,378,492 82,072 4.45 Repurchase agreements 95,969 1,266 5.28 122,585 1,056 3.45 Federal Home Loan Bank stock 142,998 2,049 5.73 123,199 1,577 5.12 Total interest- earning assets 20,702,312 271,028 5.24 21,555,987 268,973 4.99 Goodwill 185,151 185,151 Other non- interest- earning assets 778,978 878,590 Total assets $21,666,441 $22,619,728 Liabilities and stockholders' equity: Interest- bearing liabilities: Savings $2,277,608 2,309 0.41 $2,710,873 2,744 0.40 Money market 506,959 1,281 1.01 767,711 1,866 0.97 NOW and demand deposit 1,482,642 218 0.06 1,565,633 233 0.06 Liquid certificates of deposit 1,243,914 15,184 4.88 393,735 3,053 3.10 Total core deposits 5,511,123 18,992 1.38 5,437,952 7,896 0.58 Certificates of deposit 7,505,903 83,111 4.43 7,222,728 64,007 3.54 Total deposits 13,017,026 102,103 3.14 12,660,680 71,903 2.27 Borrowings 7,045,962 78,258 4.44 8,247,037 78,534 3.81 Total interest- bearing liabilities 20,062,988 180,361 3.60 20,907,717 150,437 2.88 Non-interest- bearing liabilities 344,467 326,857 Total liabilities 20,407,455 21,234,574 Stockholders' equity 1,258,986 1,385,154 Total liabilities and stockholders' equity $21,666,441 $22,619,728 Net interest income/net interest rate spread $90,667 1.64% $118,536 2.11% Net interest- earning assets/net interest margin $639,324 1.75% $648,270 2.20% 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 Nine Months Ended September 30, 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 $9,921,036 $378,226 5.08% $9,362,018 $339,598 4.84% Multi-family, commercial real estate and construction 4,192,095 192,178 6.11 3,813,944 177,447 6.20 Consumer and other loans(1) 488,223 26,918 7.35 527,298 22,455 5.68 Total loans 14,601,354 597,322 5.45 13,703,260 539,500 5.25 Mortgage- backed and other secur- ities(2) 6,098,527 205,373 4.49 7,962,719 264,520 4.43 Repurchase agreements 145,121 5,205 4.78 184,637 3,866 2.79 Federal Home Loan Bank stock 141,577 5,535 5.21 130,618 4,400 4.49 Total interest- earning assets 20,986,579 813,435 5.17 21,981,234 812,286 4.93 Goodwill 185,151 185,151 Other non- interest- earning assets 788,337 863,831 Total assets $21,960,067 $23,030,216 Liabilities and stockholders' equity: Interest- bearing liabilities: Savings $2,380,057 7,164 0.40 $2,802,298 8,417 0.40 Money market 563,485 4,135 0.98 843,232 5,825 0.92 NOW and demand deposit 1,512,951 662 0.06 1,574,350 698 0.06 Liquid certificates of deposit 981,897 32,636 4.43 288,023 5,998 2.78 Total core deposits 5,438,390 44,597 1.09 5,507,903 20,938 0.51 Certificates of deposit 7,513,758 230,760 4.09 7,054,729 182,990 3.46 Total deposits 12,952,148 275,357 2.83 12,562,632 203,928 2.16 Borrowings 7,375,315 234,549 4.24 8,757,579 243,262 3.70 Total interest- bearing liabilities 20,327,463 509,906 3.34 21,320,211 447,190 2.80 Non-interest- bearing liabilities 345,408 334,032 Total liabilities 20,672,871 21,654,243 Stockholders' equity 1,287,196 1,375,973 Total liabilities and stockholders' equity $21,960,067 $23,030,216 Net interest income/net interest rate spread $303,529 1.83% $365,096 2.13% Net interest- earning assets/net interest margin $659,116 1.93% $661,023 2.21% 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 September At June At September 30, 2006 30, 2006 30, 2005 Weighted Weighted Weighted Average Average Average Balance Balance Balance Rate(1) Rate(1) Rate(1) Selected interest- earning assets: Mortgage loans, gross(2): One-to-four family $9,931,184 5.40% $9,824,066 5.32% $9,509,514 5.13% Multi-family, commercial real estate and construction 4,268,679 5.96 4,245,697 5.95 3,991,029 5.85 Mortgage-backed and other securities(3) 5,598,523 4.34 5,870,733 4.34 7,088,515 4.35 Interest-bearing liabilities: Savings 2,209,535 0.40 2,352,923 0.40 2,636,201 0.40 Money market 478,932 1.00 537,602 1.01 729,552 0.97 NOW and demand deposit 1,466,725 0.06 1,535,833 0.06 1,547,769 0.06 Liquid certificates of deposit 1,402,562 5.05 1,117,478 4.54 479,372 3.29 Total core deposits 5,557,754 1.54 5,543,836 1.20 5,392,894 0.64 Certificates of deposit 7,619,252 4.54 7,548,396 4.26 7,412,756 3.58 Total deposits 13,177,006 3.27 13,092,232 2.96 12,805,650 2.34 Borrowings, net 6,824,359 4.38 7,202,662 4.29 8,099,498 3.84 (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 Nine Months Ended September 30, 2006 GAAP Adjustments(4) Non-GAAP Net interest income after provision for loan losses $303,529 $ - $303,529 Non-interest income 67,488 5,456 72,944 Non-interest expense 164,843 - 164,843 Income before income tax expense 206,174 5,456 211,630 Income tax expense 68,383 1,810 70,193 Net income $137,791 $3,646 $141,437 Basic earnings per common share $1.44 $0.04 $1.48 Diluted earnings per common share $1.40 $0.04 $1.44 (4) Adjustments relate to the $5.5 million charge for the termination of our interest rate swap agreements and the related tax effects.