Atlantic Bank of New York Reports 45% Increase in Earnings for the Third Quarter of 2004 and Announces Plans for Branch Network

Business Wire, Nov 10, 2004

NEW YORK -- Atlantic Bank of New York today announced the results of its operations for the third quarter of 2004. Net income for the quarter was $10.7 million, which was $3.3 million or 45.1% greater than the $7.4 million posted for the same period last year. Net income for the year to date rose to $25.9 million reflecting a $4.1 million or 18.6% increase over the $21.8 million reported for the comparable nine-month period of the prior year.

Net interest income was $26.4 million for the third quarter and $74.7 million for the year to date, representing an increase of $7.2 million and $12.8 million respectively over the comparable prior year periods. The net interest margin for the quarter and nine month period increased to 3.34% and 3.29% respectively, reflecting continued improvement compared with the same periods last year. The provision for loan losses for the third quarter and year to date reflects a credit of $2.4 million and $1.3 million respectively, versus a provision of $.2 million and $.3 million for the comparable periods last year. The credit in the quarterly and year to date provision is attributable to a substantial recovery on a previously charged off loan as well as continuing improvement in the quality of the company's overall credit portfolios.

Non-interest income for the third quarter and year to date was $6.7 million and $19.9 million respectively, compared with $8.7 million and $21.5 million for the comparable prior year periods. The variances from the previous quarter and prior year reporting periods are primarily attributable to decreases in recognized securities gains and reductions in commercial real estate loan prepayment fees resulting from diminished refinancing activity, partially offset by favorable increases in trading income and loan fees in the Bank's corporate lending business.

Non-Interest expense for the third quarter was $17.7 million, an increase of $2.2 million or 14.4% over the comparable quarter last year. For the nine months of 2004, non-interest expense was $52.7 million, an increase of $6.0 million or 12.9% compared with the same period last year. The increase in non-interest expense for both periods is primarily attributable to the amortization of intangible assets associated with the acquisition of the Allied Irish Bank, plc (AIB) Park Avenue branch operation as well as higher salary, benefit, facilities and equipment costs pertaining to the AIB branch and the two additional new Manhattan branches opened in the fourth quarter of 2003.

Total loans, net of unearned income, were $1,354.1 million at September 30, 2004, compared with $1,283.7 million at June 30, 2004 and $1,209.2 million at September 30, 2003. The $70.4 million or 5.5% increase in loans during the third quarter was primarily attributable to the Bank's continued expansion of its commercial real estate, multifamily lending and corporate loan portfolios as well as growth in the Commercial Insurance Premium Financing business offered through its wholly-owned subsidiary, Standard Funding Corp., partially offset by managed runoff of fixed rate residential mortgages.

Total deposits were $1,954.2 million at September 30, 2004, remaining essentially flat from the prior quarter and reflecting an increase of $394.3 million or 25.3% compared with September 30, 2003. The increase from the prior year is primarily due to continued growth in Atlantic's core deposit portfolio as the Bank pursues its emphasis on relationship banking and its branch network expansion activities, including the acquisition of the AIB retail branch and related business.

As of September 30, 2004, total assets were $3.3 billion, reflecting a decrease of 3.4% or $114.7 million compared with the prior quarter and an increase of 13.5% or $391.0 million for the comparable prior year to date period.

Atlantic Bank's return on average total assets for the third quarter and year to date was 1.27% and 1.06% respectively compared with .99% and 1.00% for the same periods last year. Return on average tangible equity increased to 24.87% for the quarter and 21.50% for the nine months ended September 30, 2004. The Bank's efficiency ratio improved for both the quarter and the year to date to 53.36% and 55.73% respectively. The Bank's Tier I leverage ratio was 6.13% and 6.10% at September 30, 2004 and 2003, respectively. This ratio is substantially in excess of the current regulatory guidelines for a well-capitalized institution. The allowance for loan losses as a percentage of total loans was 1.22% at both September 30, 2004 and the prior year. The allowance for loan losses represents 217.2% of non-performing assets as of September 30, 2004, versus 129.7% for the prior year. Non-performing assets declined to $7.6 million as of September 30, 2004 from $11.4 million reported the prior year.

In addition to reporting on its financial performance, Atlantic Bank announced a number of initiatives to support its continued branch expansion strategy in its core market. The Bank is currently finalizing plans for the establishment of a new branch in The Bronx. This location will serve as Atlantic's first step toward filling the current geographic void in its branch network between its Manhattan and Westchester branches. The Bank has decided to close and consolidate three unprofitable in-store branches it acquired in Dutchess and Westchester Counties as part of its 2002 purchase of Yonkers Financial Corporation into its Central Park Avenue branch office in Yonkers.