Atlantic Bank of New York Announces Record 2004 Earnings

Business Wire, Feb 28, 2005

NEW YORK -- Atlantic Bank of New York today announced the results of its operations for the fourth quarter and full year of 2004. Net income for the fourth quarter increased 68.4% to $9.2 million from the $5.5 million posted for the same period last year. Net income for the full year ended December 31, 2004 rose to $35.1 million reflecting a 28.5% increase over the $27.3 million reported for 2003.

Net interest income was $23.5 million for the fourth quarter and $97.2 million for the year, representing an increase of 9.9% and 18.1% respectively over the comparable prior year periods. The net interest margin for the quarter remained essentially flat at 3.09% from the 3.07% reported for the same quarter last year and increased to 3.21% at year-end 2004 from the 3.01% reported year-end 2003. The growth in net interest income for the fourth quarter and full year 2004 is mainly attributable to an increase in average interest-earning assets, primarily commercial real estate loans and investment securities. The benefit for loan losses for the fourth quarter and year-end 2004 was $.7 million and $2.1 million respectively, compared with a provision of $.6 million and $1.0 million for the comparable periods last year. The benefit for the fourth quarter and year-end 2004 is primarily attributable to a substantial recovery on a previously charged off loan, combined with continuing improvement in the quality of the company's credit portfolios.

Non-interest income for the fourth quarter and year ended December 31, 2004 was $6.4 million and $26.3 million respectively, compared with $7.1 million and $28.6 million for the comparable prior year periods. The variances from the 2003 fourth quarter and year-end periods are primarily due to reduced commercial real estate loan pre-payment fees resulting from a decline in refinancing activity and decreases in recognized securities gains, partially offset by favorable increases in trading income.

Non-interest expense for the fourth quarter was $15.2 million, a $3.5 million or 18.6% improvement compared with the same quarter last year. This reduction is primarily due to a significant property tax refund to the Bank and a prior year goodwill impairment charge that had been posted for the Bank's subsidiary, Gramercy Leasing. For the full year 2004, non-interest expense was $67.0 million, an increase of $2.5 million or 3.9% compared with the $64.5 million reported for the full year 2003. The year over year increase in non-interest expense is attributable to costs associated with the Bank's branch expansion activities and its acquisition of the Allied Irish Bank, plc (AIB) Park Avenue Retail Branch operation in the fourth quarter of last year. Due to the Bank's continued emphasis on strategic cost management throughout the company, expenses in the Bank's core businesses remained fairly stable throughout the year.

Commenting on the Bank's 2004 performance, Atlantic Bank's President and CEO, Thomas M. O'Brien, said, "We are very pleased with the Bank's continued posting of quality earnings growth. Our focused marketing and sales activities, combined with our continued company-wide expense management discipline, are moving our business forward in line with our overall plan. We are excited about the increased business potential and growth opportunities yet ahead of us as we enter 2005 with an even more focused approach to pursuing our strategic goals in selected markets."

Total loans, net of unearned income, were $1,342.1 million at December 31, 2004, compared with $1,354.1 million at September 30, 2004 and $1,226.1 million at December 31, 2003. These results reflect a slight decrease of .9% over the prior quarter and a 9.5% increase over the comparable prior year-end. The principal sources of loan growth over the past year were in the Bank's commercial real estate and multi-family lending businesses as well as its corporate lending operation. As of December 31, 2004 total assets were $3,182.3 million, reflecting an increase of 2.7% over the prior year-end.

Total deposits were $1,938.6 million at December 31, 2004, down .8% from the previous quarter and up 5.9% compared with the prior year-end. The Bank's year over year deposit growth is attributable to continued success in executing its sales and business development activities. The Bank's continued focus on fostering long term client relationships and core deposit acquisition has resulted in core deposits growing as a proportion of its total deposits to 80.2% at December 31, 2004 from 74.4% the prior year-end.

Atlantic Bank's return on average total assets rose to 1.14% for the fourth quarter and 1.08% for the full year 2004 compared to .74% and .93% for the comparable 2003 periods. Return on average tangible equity increased to 19.77% for the quarter and to 21.05% for the twelve months ended December 31, 2004, compared with 13.89% and 17.14% for the same periods the prior year. The Bank's efficiency ratio reflected continual improvement for both the fourth quarter and the year-end 2004 to 51.03% and 54.27% respectively, compared with 65.76% and 58.08% for the same periods last year. The Bank's Tier I leverage ratio was 6.67% at December 31, 2004, compared with the 5.93% reported last year-end. This ratio significantly exceeds the current regulatory guidelines for a well-capitalized institution. The allowance for loan losses as a percentage of total loans was 1.01% at December 31, 2004 compared with 1.39% for the prior year. The allowance for loan losses represents 267.26% of non-performing assets as of December 31, 2004, versus 196.28% for the prior year. Non-performing assets declined to $5.0 million as of December 31, 2004 from $8.7 million reported for the prior year-end.