##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION

WASHINGTON D.C. 20549


FORM 10-Q

Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities Exchange
Act of 1934

For the period ended: September 30, 2003

NORTH FORK BANCORPORATION, INC.




(Exact name of Company as specified in its charter)


|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|DELAWARE                                                       |  | 36-3154608                          
|                                                               |  |                                     
|(State or other Jurisdiction of
incorporation or organization) |  | (I.R.S. Employer
Identification No.)
|                                                               |  |                                     
|275 BROADHOLLOW ROAD, MELVILLE, NEW YORK                       |  | 11747                               
|                                                               |  |                                     
|(Address of principal executive offices)                       |  | (Zip Code)                          

(631) 844-1004




(Companys telephone number, including area code)


|                                                                                                                                                                                                                                                                                          |                
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------
|Indicate by check mark whether the Company (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the Company was
required to file such reports), and (2) has been
|subject to such filing
requirements for the past 90 days:                                                                                                                                                                                                                                 | (X) Yes (  ) No

|                                                                                                                      |               
|--------------------------------------------------------------------------------------------------------------------- | --------------
|Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act). | (X)Yes (  ) No

Indicate the number of shares outstanding of each of the issuers classes of
common stock, as of the latest practicable date.

|                      |  |                                        
|--------------------- |  | ---------------------------------------
|CLASS OF COMMON STOCK |  | NUMBER OF SHARES
OUTSTANDING  11/11/03
|                      |  |                                        
|$.01 Par Value        |  | 151,673,008                            

1



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TABLE OF CONTENTS



|                                        |                                                                                               |                                                            |  |  |  |  |  | 
|--------------------------------------- | --------------------------------------------------------------------------------------------- | ---------------------------------------------------------- |  |  |  |  |  | 
|                                        | Item 1. Financial Statements                                                                 
|                                        |                                                                                               | Consolidated Balance Sheets                               
|                                        |                                                                                               | Consolidated Statements of Income                         
|                                        |                                                                                               | Consolidated Statements of Cash Flows                     
|                                        |                                                                                               | Consolidated Statements of Changes in Stockholders Equity
|                                        |                                                                                               | Consolidated Statements of Comprehensive Income           
|                                        |                                                                                               | CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS      
|                                        | Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
|                                        | Item 3. Quantitative and Qualitative Disclosures About Market Risk                           
|                                        | Item 4. Controls and Procedures                                                              
|PART II. OTHER INFORMATION             
|                                        | Item 1. Legal Proceedings                                                                    
|                                        | Item 6. Exhibits and Reports on Form 8-K                                                     
|SIGNATURES                             
|STATEMENT RE: COMPUTATION OF NET INCOME
|302 CERTIFICATION OF CEO               
|302 CERTIFICATION OF CFO               
|906 CERTIFICATION OF CEO               
|906 CERTIFICATION OF CFO               



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##### Table of Contents



North Fork Bancorporation, Inc.

Form 10-Q

INDEX

|                                          |  |  |  |  |                                                                                               |                                                            |  |      |   | 
|----------------------------------------- |  |  |  |  | --------------------------------------------------------------------------------------------- | ---------------------------------------------------------- |  | ---- | - | 
|                                          |  |  |  |  |                                                                                               |                                                            |  | Page
|                                          |  |  |  |  |                                                                                               |                                                            |  |     
|PART 1. FINANCIAL INFORMATION (unaudited) |  |  |  | 
|                                          |  |  |  |  | Item 1. Financial Statements                                                                  |                                                            |  |      |  
|                                          |  |  |  |  |                                                                                               | Consolidated Balance Sheets                                |  |      | 3 | 
|                                          |  |  |  |  |                                                                                               | Consolidated Statements of Income                          |  |      | 4 | 
|                                          |  |  |  |  |                                                                                               | Consolidated Statements of Cash Flows                      |  |      | 5 | 
|                                          |  |  |  |  |                                                                                               | Consolidated Statements of Changes in Stockholders Equity |  |      | 6 | 
|                                          |  |  |  |  |                                                                                               | Consolidated Statements of Comprehensive Income            |  |      | 7 | 
|                                          |  |  |  |  |                                                                                               | Condensed Notes to Consolidated Financial Statements       |  |      | 8 | 
|                                          |  |  |  |  | Item 2. Managements Discussion and Analysis of Financial Condition
and Results of Operations |                                                            |  | 10   |  
|                                          |  |  |  |  | Item 3. Quantitative and Qualitative Disclosures About Market Risk                            |                                                            |  | 29   |  
|                                          |  |  |  |  | Item 4. Controls and Procedures                                                               |                                                            |  | 29   |  
|PART 2. OTHER INFORMATION                 |  |  |  | 
|                                          |  |  |  |  | Item 1. Legal Proceedings                                                                     |                                                            |  | 30   |  
|                                          |  |  |  |  | Item 4. Submission of Matters to a Vote of Security Holders                                   |                                                            |  | 30   |  
|                                          |  |  |  |  | Item 6. Exhibits and Reports on Form 8-K                                                      |                                                            |  | 30   |  

2



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##### Table of Contents






Item 1. Financial Statements




Consolidated Balance Sheets (unaudited)

|                                                                                                              |                                                                                                                                                  |                                            |                                 |           |            |               |            |              |            |               |            |           |            |         |            | 
|------------------------------------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------------------------------ | ------------------------------------------ | ------------------------------- | --------- | ---------- | ------------- | ---------- | ------------ | ---------- | ------------- | ---------- | --------- | ---------- | ------- | ---------- | 
|                                                                                                              |                                                                                                                                                  |                                            |                                 |           |            | September 30, |            | December 31, |            | September 30,
|(in thousands, except per share amounts)                                                                      |                                                                                                                                                  | 2003                                       |                                 | 2002      |            | 2002         
|                                                                                                              |                                                                                                                                                  |                                            |                                 |           |            |              
|Assets:                                                                                                       |                                                                                                                                                  |                                            |                                 |           |            |               |            |              |            |               |            |          
|Cash & Due from Banks                                                                                         |                                                                                                                                                  | $                                          | 421,845                         |           |            | $             | 396,725    |              |            | $             | 310,525    |          
|Money Market Investments                                                                                      |                                                                                                                                                  |                                            | 259,487                         |           |            |               | 27,613     |              |            |               | 67,687     |          
|Securities:                                                                                                   |                                                                                                                                                  |                                            |                                 |           |            |               |            |              |            |               |            |          
|                                                                                                              | Available-for-Sale ($1,932,951, $3,639,853 and $3,634,438 pledged at
September 30, 2003, December 31, 2002 and September 30, 2002, respectively) |                                            |                                 | 6,809,675 |            |               |            | 8,555,892    |            |               |            | 7,996,879 |           
|                                                                                                              | Held-to-Maturity ($66,381, $167,829 and $273,135 pledged at
September 30, 2003, December 31, 2002 and September 30, 2002, respectively)          |                                            |                                 | 210,808   |            |               |            | 307,878      |            |               |            | 435,726   |           
|                                                                                                              |                                                                                                                                                  |                                            |                                 |           |            |               |            |              |            |               |            |          
|                                                                                                              |                                                                                                                                                  | Total Securities                           |                                 |           | 7,020,483  |               |            |              | 8,863,770  |               |            |           | 8,432,605  |        
|                                                                                                              |                                                                                                                                                  |                                            |                                 |           |            |               |            |              |            |               |            |          
|Loans, Net of Unearned Income                                                                                 |                                                                                                                                                  |                                            | 12,021,477                      |           |            |               | 11,369,139 |              |            |               | 11,299,675 |          
|                                                                                                              |                                                                                                                                                  |                                            | Less: Allowance for Loan Losses |           |            | 119,907       |            |              |            | 114,995       |            |           |            | 112,649 |           
|                                                                                                              |                                                                                                                                                  |                                            |                                 |           |            |               |            |              |            |               |            |          
|                                                                                                              |                                                                                                                                                  |                                            |                                 | Net Loans |            |               | 11,901,570 |              |            |               | 11,254,144 |           |            |         | 11,187,026 | 
|                                                                                                              |                                                                                                                                                  |                                            |                                 |           |            |               |            |              |            |               |            |          
|Goodwill                                                                                                      |                                                                                                                                                  |                                            | 410,494                         |           |            |               | 407,132    |              |            |               | 406,577    |          
|Identifiable Intangibles                                                                                      |                                                                                                                                                  |                                            | 13,657                          |           |            |               | 16,332     |              |            |               | 17,284     |          
|Premises & Equipment                                                                                          |                                                                                                                                                  |                                            | 144,457                         |           |            |               | 132,529    |              |            |               | 123,017    |          
|Accrued Income Receivable                                                                                     |                                                                                                                                                  |                                            | 89,568                          |           |            |               | 104,719    |              |            |               | 107,614    |          
|Other Assets                                                                                                  |                                                                                                                                                  |                                            | 207,037                         |           |            |               | 210,137    |              |            |               | 172,199    |          
|                                                                                                              |                                                                                                                                                  |                                            |                                 |           |            |               |            |              |            |               |            |          
|                                                                                                              |                                                                                                                                                  | Total Assets                               |                                 | $         | 20,468,598 |               |            | $            | 21,413,101 |               |            | $         | 20,824,534 |        
|                                                                                                              |                                                                                                                                                  |                                            |                                 |           |            |               |            |              |            |               |            |          
|Liabilities and Stockholders Equity:                                                                         |                                                                                                                                                  |                                            |                                 |           |            |               |            |              |            |               |            |          
|Deposits:                                                                                                     |                                                                                                                                                  |                                            |                                 |           |            |               |            |              |            |               |            |          
|                                                                                                              | Demand                                                                                                                                           |                                            | $                               | 3,943,506 |            |               | $          | 3,417,534    |            |               | $          | 3,093,616 |           
|                                                                                                              | Savings                                                                                                                                          |                                            |                                 | 3,759,923 |            |               |            | 3,440,573    |            |               |            | 3,382,698 |           
|                                                                                                              | NOW & Money Market                                                                                                                               |                                            |                                 | 4,273,197 |            |               |            | 3,347,385    |            |               |            | 2,906,905 |           
|                                                                                                              | Time                                                                                                                                             |                                            |                                 | 1,841,826 |            |               |            | 1,949,559    |            |               |            | 2,048,991 |           
|                                                                                                              | Certificates of Deposit, $100,000 & Over                                                                                                         |                                            |                                 | 998,786   |            |               |            | 1,037,479    |            |               |            | 1,140,171 |           
|                                                                                                              |                                                                                                                                                  |                                            |                                 |           |            |               |            |              |            |               |            |          
|                                                                                                              |                                                                                                                                                  | Total Deposits                             |                                 |           | 14,817,238 |               |            |              | 13,192,530 |               |            |           | 12,572,381 |        
|                                                                                                              |                                                                                                                                                  |                                            |                                 |           |            |               |            |              |            |               |            |          
|Federal Funds Purchased & Securities Sold Under
Agreements to Repurchase                                      |                                                                                                                                                  |                                            | 1,904,000                       |           |            |               | 3,851,000  |              |            |               | 3,757,300  |          
|Federal Home Loan Bank Advances                                                                               |                                                                                                                                                  |                                            | 1,050,000                       |           |            |               | 1,550,000  |              |            |               | 1,550,000  |          
|Subordinated Debt                                                                                             |                                                                                                                                                  |                                            | 481,282                         |           |            |               | 499,140    |              |            |               | 499,117    |          
|Capital Securities                                                                                            |                                                                                                                                                  |                                            | 265,184                         |           |            |               | 268,926    |              |            |               | 266,678    |          
|Due To Brokers                                                                                                |                                                                                                                                                  |                                            | 115,132                         |           |            |               | 105,227    |              |            |               | 105,425    |          
|Accrued Expenses & Other Liabilities                                                                          |                                                                                                                                                  |                                            | 396,804                         |           |            |               | 432,225    |              |            |               | 420,260    |          
|                                                                                                              |                                                                                                                                                  |                                            |                                 |           |            |               |            |              |            |               |            |          
|                                                                                                              |                                                                                                                                                  | Total Liabilities                          |                                 | $         | 19,029,640 |               |            | $            | 19,899,048 |               |            | $         | 19,171,161 |        
|                                                                                                              |                                                                                                                                                  |                                            |                                 |           |            |               |            |              |            |               |            |          
|Stockholders Equity:                                                                                         |                                                                                                                                                  |                                            |                                 |           |            |               |            |              |            |               |            |          
|Preferred Stock, par value $1.00; authorized 10,000,000 shares, unissued                                      |                                                                                                                                                  |                                            |                                |           |            |               |           |              |            |               |           |          
|Common Stock, par value $0.01; authorized 500,000,000 shares;
issued 174,580,778 shares at September 30, 2003 |                                                                                                                                                  |                                            | 1,746                           |           |            |               | 1,746      |              |            |               | 1,746      |          
|Additional Paid in Capital                                                                                    |                                                                                                                                                  |                                            | 372,458                         |           |            |               | 377,311    |              |            |               | 371,288    |          
|Retained Earnings                                                                                             |                                                                                                                                                  |                                            | 1,759,876                       |           |            |               | 1,590,594  |              |            |               | 1,525,950  |          
|Accumulated Other Comprehensive Income                                                                        |                                                                                                                                                  |                                            | 22,026                          |           |            |               | 17,991     |              |            |               | 38,820     |          
|Deferred Compensation                                                                                         |                                                                                                                                                  |                                            | (63,290                         | )         |            |               | (70,562    | )            |            |               | (51,962    | )        
|Treasury Stock at cost; 23,096,774 shares at September 30, 2003                                               |                                                                                                                                                  |                                            | (653,858                        | )         |            |               | (403,027   | )            |            |               | (232,469   | )        
|                                                                                                              |                                                                                                                                                  |                                            |                                 |           |            |               |            |              |            |               |            |          
|                                                                                                              |                                                                                                                                                  | Total Stockholders Equity                 |                                 |           | 1,438,958  |               |            |              | 1,514,053  |               |            |           | 1,653,373  |        
|                                                                                                              |                                                                                                                                                  |                                            |                                 |           |            |               |            |              |            |               |            |          
|                                                                                                              |                                                                                                                                                  | Total Liabilities and Stockholders Equity |                                 | $         | 20,468,598 |               |            | $            | 21,413,101 |               |            | $         | 20,824,534 |        
|                                                                                                              |                                                                                                                                                  |                                            |                                 |           |            |               |            |              |            |               |            |          

See accompanying notes to consolidated financial statements

3



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##### Table of Contents






Consolidated Statements of Income (unaudited)

|                                                                         |                                                     |      |                    |         |                   |      |         |         |  |   |         |         |  |   |         |         | 
|------------------------------------------------------------------------ | --------------------------------------------------- | ---- | ------------------ | ------- | ----------------- | ---- | ------- | ------- |  | - | ------- | ------- |  | - | ------- | ------- | 
|                                                                         |                                                     |      | Three Months Ended |         | Nine Months Ended
|                                                                         |                                                     |      | September 30,      |         | September 30,    
|(in thousands, except per share amounts)                                 |                                                     | 2003 |                    | 2002    |                   | 2003 |         | 2002   
|                                                                         |                                                     |      |                    |         |                   |      |         |        
|Interest Income:                                                         |                                                     |      |                    |         |                   |      |         |         |  |   |         |         |  |   |         |        
|Loans                                                                    |                                                     | $    | 198,932            |         |                   | $    | 203,711 |         |  | $ | 591,679 |         |  | $ | 598,300 |        
|Mortgage-Backed Securities                                               |                                                     |      | 49,695             |         |                   |      | 88,705  |         |  |   | 202,278 |         |  |   | 249,324 |        
|Other Securities                                                         |                                                     |      | 10,482             |         |                   |      | 8,795   |         |  |   | 34,786  |         |  |   | 25,900  |        
|U.S. Treasury & Government Agency Securities                             |                                                     |      | 243                |         |                   |      | 321     |         |  |   | 1,363   |         |  |   | 1,115   |        
|State & Municipal Obligations                                            |                                                     |      | 4,057              |         |                   |      | 3,203   |         |  |   | 11,836  |         |  |   | 8,653   |        
|Money Market Investments                                                 |                                                     |      | 89                 |         |                   |      | 167     |         |  |   | 358     |         |  |   | 568     |        
|Trading Account Income                                                   |                                                     |      | 309                |         |                   |      |        |         |  |   | 400     |         |  |   |        |        
|                                                                         |                                                     |      |                    |         |                   |      |         |         |  |   |         |         |  |   |         |        
|                                                                         | Total Interest Income                               |      |                    | 263,807 |                   |      |         | 304,902 |  |   |         | 842,700 |  |   |         | 883,860 | 
|                                                                         |                                                     |      |                    |         |                   |      |         |         |  |   |         |         |  |   |         |        
|Interest Expense:                                                        |                                                     |      |                    |         |                   |      |         |         |  |   |         |         |  |   |         |        
|Savings, NOW & Money Market Deposits                                     |                                                     |      | 14,435             |         |                   |      | 16,797  |         |  |   | 43,671  |         |  |   | 47,481  |        
|Time Deposits                                                            |                                                     |      | 8,642              |         |                   |      | 12,681  |         |  |   | 28,114  |         |  |   | 46,802  |        
|Certificates of Deposit, $100,000 & Over                                 |                                                     |      | 4,400              |         |                   |      | 6,207   |         |  |   | 14,304  |         |  |   | 20,429  |        
|Federal Funds Purchased & Securities Sold
Under Agreements to Repurchase |                                                     |      | 17,368             |         |                   |      | 26,515  |         |  |   | 73,666  |         |  |   | 68,203  |        
|Federal Home Loan Bank Advances                                          |                                                     |      | 12,981             |         |                   |      | 19,340  |         |  |   | 48,657  |         |  |   | 58,476  |        
|Subordinated Debt                                                        |                                                     |      | 4,636              |         |                   |      | 4,333   |         |  |   | 18,981  |         |  |   | 4,333   |        
|Capital Securities                                                       |                                                     |      | 1,845              |         |                   |      | 2,632   |         |  |   | 6,485   |         |  |   | 12,461  |        
|                                                                         |                                                     |      |                    |         |                   |      |         |         |  |   |         |         |  |   |         |        
|                                                                         | Total Interest Expense                              |      |                    | 64,307  |                   |      |         | 88,505  |  |   |         | 233,878 |  |   |         | 258,185 | 
|                                                                         |                                                     |      |                    |         |                   |      |         |         |  |   |         |         |  |   |         |        
|                                                                         | Net Interest Income                                 |      |                    | 199,500 |                   |      |         | 216,397 |  |   |         | 608,822 |  |   |         | 625,675 | 
|Provision for Loan Losses                                                |                                                     |      | 6,500              |         |                   |      | 6,250   |         |  |   | 19,250  |         |  |   | 18,750  |        
|                                                                         |                                                     |      |                    |         |                   |      |         |         |  |   |         |         |  |   |         |        
|                                                                         | Net Interest Income after Provision for Loan Losses |      |                    | 193,000 |                   |      |         | 210,147 |  |   |         | 589,572 |  |   |         | 606,925 | 
|                                                                         |                                                     |      |                    |         |                   |      |         |         |  |   |         |         |  |   |         |        
|Non-Interest Income:                                                     |                                                     |      |                    |         |                   |      |         |         |  |   |         |         |  |   |         |        
|Customer Related Fees & Service Charges                                  |                                                     |      | 20,736             |         |                   |      | 19,894  |         |  |   | 61,362  |         |  |   | 57,198  |        
|Investment Management, Commissions & Trust Fees                          |                                                     |      | 3,207              |         |                   |      | 3,882   |         |  |   | 10,223  |         |  |   | 13,476  |        
|Mortgage Banking Operations                                              |                                                     |      | 2,769              |         |                   |      | 1,790   |         |  |   | 8,786   |         |  |   | 4,419   |        
|Check Cashing Fees                                                       |                                                     |      | 1,191              |         |                   |      | 696     |         |  |   | 3,452   |         |  |   | 2,172   |        
|Other Operating Income                                                   |                                                     |      | 5,746              |         |                   |      | 2,909   |         |  |   | 14,256  |         |  |   | 8,934   |        
|Securities Gains, net                                                    |                                                     |      | 381                |         |                   |      | 2,689   |         |  |   | 6,677   |         |  |   | 4,070   |        
|Gain on Sale of Facilities                                               |                                                     |      |                   |         |                   |      |        |         |  |   | 10,980  |         |  |   |        |        
|                                                                         |                                                     |      |                    |         |                   |      |         |         |  |   |         |         |  |   |         |        
|                                                                         | Total Non-Interest Income                           |      |                    | 34,030  |                   |      |         | 31,860  |  |   |         | 115,736 |  |   |         | 90,269  | 
|                                                                         |                                                     |      |                    |         |                   |      |         |         |  |   |         |         |  |   |         |        
|Non-Interest Expense:                                                    |                                                     |      |                    |         |                   |      |         |         |  |   |         |         |  |   |         |        
|Employee Compensation & Benefits                                         |                                                     |      | 48,396             |         |                   |      | 45,551  |         |  |   | 144,811 |         |  |   | 129,364 |        
|Occupancy & Equipment, net                                               |                                                     |      | 17,116             |         |                   |      | 14,398  |         |  |   | 49,026  |         |  |   | 41,278  |        
|Other Operating Expenses                                                 |                                                     |      | 18,350             |         |                   |      | 17,981  |         |  |   | 52,061  |         |  |   | 51,027  |        
|Amortization of Identifiable Intangibles                                 |                                                     |      | 891                |         |                   |      | 952     |         |  |   | 2,675   |         |  |   | 2,856   |        
|Debt Restructuring Costs                                                 |                                                     |      |                   |         |                   |      |        |         |  |   | 11,955  |         |  |   |        |        
|                                                                         |                                                     |      |                    |         |                   |      |         |         |  |   |         |         |  |   |         |        
|                                                                         | Total Non-Interest Expense                          |      |                    | 84,753  |                   |      |         | 78,882  |  |   |         | 260,528 |  |   |         | 224,525 | 
|                                                                         |                                                     |      |                    |         |                   |      |         |         |  |   |         |         |  |   |         |        
|Income Before Income Taxes                                               |                                                     |      | 142,277            |         |                   |      | 163,125 |         |  |   | 444,780 |         |  |   | 472,669 |        
|Provision for Income Taxes                                               |                                                     |      | 47,947             |         |                   |      | 56,278  |         |  |   | 150,798 |         |  |   | 163,071 |        
|                                                                         |                                                     |      |                    |         |                   |      |         |         |  |   |         |         |  |   |         |        
|                                                                         | Net Income                                          |      | $                  | 94,330  |                   |      | $       | 106,847 |  |   | $       | 293,982 |  |   | $       | 309,598 | 
|                                                                         |                                                     |      |                    |         |                   |      |         |         |  |   |         |         |  |   |         |        
|Earnings Per Share - Basic                                               |                                                     | $    | 0.63               |         |                   | $    | 0.67    |         |  | $ | 1.94    |         |  | $ | 1.93    |        
|Earnings Per Share - Diluted                                             |                                                     | $    | 0.63               |         |                   | $    | 0.66    |         |  | $ | 1.92    |         |  | $ | 1.91    |        

See accompanying notes to consolidated financial statements

4



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##### Table of Contents






Consolidated Statements of Cash Flows (unaudited)

|                                                                                                  |                                  |                                                     |            |      |            |   |            |   |            |  
|------------------------------------------------------------------------------------------------- | -------------------------------- | --------------------------------------------------- | ---------- | ---- | ---------- | - | ---------- | - | ---------- | -
|(in thousands)                                                                                    |                                  | 2003                                                |            | 2002
|                                                                                                  |                                  |                                                     |            |     
|For the Nine Months Ended September 30,                                                           |                                  |                                                     |            |      |            |   |            |  
|Cash Flows from Operating Activities:                                                             |                                  |                                                     |            |      |            |   |            |  
|Net Income                                                                                        |                                  | $                                                   | 293,982    |      |            | $ | 309,598    |  
|Adjustments to Reconcile Net Income to
Net Cash Provided by Operating Activities:                 |                                  |                                                     |            |      |            |   |            |  
|Provision for Loan Losses                                                                         |                                  |                                                     | 19,250     |      |            |   | 18,750     |  
|Depreciation                                                                                      |                                  |                                                     | 11,288     |      |            |   | 9,945      |  
|Amortization of Deferred Compensation                                                             |                                  |                                                     | 7,413      |      |            |   | 6,652      |  
|Amortization of Identifiable Intangibles                                                          |                                  |                                                     | 2,675      |      |            |   | 2,856      |  
|Amortization of Premiums                                                                          |                                  |                                                     | 75,752     |      |            |   | 20,680     |  
|Accretion of Discounts and Net Deferred Loan Fees                                                 |                                  |                                                     | (20,773    | )    |            |   | (36,747    | )
|Securities Gains, Net                                                                             |                                  |                                                     | (6,677     | )    |            |   | (4,070     | )
|Gain on Sale of Facilities                                                                        |                                  |                                                     | (10,980    | )    |            |   |           |  
|Debt Restructuring Costs                                                                          |                                  |                                                     | 11,955     |      |            |   |           |  
|Purchases of Trading Assets                                                                       |                                  |                                                     | (24,938    | )    |            |   | (16,685    | )
|Sales of Trading Assets                                                                           |                                  |                                                     | 27,355     |      |            |   | 18,091     |  
|Other, Net                                                                                        |                                  |                                                     | (1,358     | )    |            |   | 64,336     |  
|                                                                                                  |                                  |                                                     |            |      |            |   |            |  
|                                                                                                  |                                  | Net Cash Provided by Operating Activities           |            |      | 384,944    |   |            |   | 393,406    |  
|                                                                                                  |                                  |                                                     |            |      |            |   |            |  
|Cash Flows from Investing Activities:                                                             |                                  |                                                     |            |      |            |   |            |  
|Purchases of Securities Held-to-Maturity                                                          |                                  |                                                     | (50,998    | )    |            |   | (551       | )
|Maturities, Redemptions, Calls and Principal Repayments on
Securities Held-to-Maturity            |                                  |                                                     | 146,819    |      |            |   | 274,041    |  
|Purchases of Securities Available-for-Sale                                                        |                                  |                                                     | (5,074,853 | )    |            |   | (5,193,723 | )
|Proceeds from Sales of Securities Available-for-Sale (1)                                          |                                  |                                                     | 1,345,058  |      |            |   | 120,530    |  
|Maturities, Redemptions, Calls and Principal Repayments on
Securities Available-for-Sale          |                                  |                                                     | 5,401,812  |      |            |   | 2,100,964  |  
|Loans Originated, Net of Principal Repayments and Charge-offs                                     |                                  |                                                     | (960,190   | )    |            |   | (1,070,126 | )
|Proceeds from the Sale of Loans                                                                   |                                  |                                                     | 306,374    |      |            |   | 172,859    |  
|Transfers to Other Real Estate, Net of Sales                                                      |                                  |                                                     | (193       | )    |            |   | 20         |  
|Purchases of Premises and Equipment, Net                                                          |                                  |                                                     | (25,064    | )    |            |   | (22,184    | )
|                                                                                                  |                                  |                                                     |            |      |            |   |            |  
|                                                                                                  |                                  | Net Cash Provided by/(Used in) Investing Activities |            |      | 1,088,765  |   |            |   | (3,618,170 | )
|                                                                                                  |                                  |                                                     |            |      |            |   |            |  
|Cash Flows from Financing Activities:                                                             |                                  |                                                     |            |      |            |   |            |  
|Net Increase in Customer Deposits Liabilities                                                     |                                  |                                                     | 1,624,708  |      |            |   | 1,269,075  |  
|Net (Decrease)/Increase in Borrowings                                                             |                                  |                                                     | (2,458,955 | )    |            |   | 1,615,118  |  
|Purchase of Treasury Stock                                                                        |                                  |                                                     | (264,193   | )    |            |   | (21,088    | )
|Exercise of Options and Common Stock Sold for Cash                                                |                                  |                                                     | 8,389      |      |            |   | 12,439     |  
|Proceeds from the Issuance of Subordinated Debt                                                   |                                  |                                                     |           |      |            |   | 495,929    |  
|Cash Dividends Paid                                                                               |                                  |                                                     | (126,664   | )    |            |   | (119,431   | )
|                                                                                                  |                                  |                                                     |            |      |            |   |            |  
|                                                                                                  |                                  | Net Cash (Used in)/Provided by Financing Activities |            |      | (1,216,715 | ) |            |   | 3,252,042  |  
|                                                                                                  |                                  |                                                     |            |      |            |   |            |  
|                                                                                                  |                                  | Net Increase in Cash and Cash Equivalents           |            |      | 256,994    |   |            |   | 27,278     |  
|Cash and Cash Equivalents at Beginning of the Period                                              |                                  |                                                     | 424,338    |      |            |   | 350,934    |  
|                                                                                                  |                                  |                                                     |            |      |            |   |            |  
|Cash and Cash Equivalents at End of the Period                                                    |                                  | $                                                   | 681,332    |      |            | $ | 378,212    |  
|                                                                                                  |                                  |                                                     |            |      |            |   |            |  
|Supplemental Disclosures of Cash Flow Information:                                                |                                  |                                                     |            |      |            |   |            |  
|                                                                                                  | Cash Paid During the Period for: |                                                     |            |      |            |   |            |   |           
|                                                                                                  |                                  | Interest Expense                                    |            | $    | 247,723    |   |            | $ | 261,088    |  
|                                                                                                  |                                  |                                                     |            |      |            |   |            |  
|                                                                                                  |                                  | Income Taxes                                        |            |      | 157,263    |   |            |   | 95,453     |  
|                                                                                                  |                                  |                                                     |            |      |            |   |            |  
|During the Period the Company Purchased Various Securities which
Settled in the Subsequent Period |                                  |                                                     | 115,132    |      |            |   | 105,425    |  
|                                                                                                  |                                  |                                                     |            |      |            |   |            |  

See accompanying notes to consolidated financial statements

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Consolidated Statements of Changes in Stockholders Equity (unaudited)

|                                                 |  |        |       |         |  |            |         |               |  |              |           |          |  |             |        |  |  |    |        |   |  |    |          |   |  |   |           |  
|------------------------------------------------ |  | ------ | ----- | ------- |  | ---------- | ------- | ------------- |  | ------------ | --------- | -------- |  | ----------- | ------ |  |  | -- | ------ | - |  | -- | -------- | - |  | - | --------- | -
|                                                 |  |        |       |         |  |            |         |               |  |              |           |          |  | Accumulated |        |  |  |    |        |   |  |    |          |   |  |  
|                                                 |  |        |       |         |  | Additional |         |               |  |              |           | Other    |  |             |        |  |  |    |        |   |  |    |          |  
|                                                 |  | Common |       | Paid in |  | Retained   |         | Comprehensive |  | Deferred     |           | Treasury |  |             |        | 
|(Dollars in thousands, except per share amounts) |  | Stock  |       | Capital |  | Earnings   |         | Income        |  | Compensation |           | Stock    |  | Total      
|                                                 |  |        |       |         |  |            |         |               |  |              |           |          |  |            
|Balance, December 31, 2001                       |  | $      | 1,746 |         |  | $          | 364,345 |               |  | $            | 1,337,564 |          |  | $           | 10,341 |  |  | ($ | 42,535 | ) |  | ($ | 234,453  | ) |  | $ | 1,437,008 |  
|Net Income                                       |  |        |      |         |  |            |        |               |  |              | 309,598   |          |  |             |       |  |  |    |       |   |  |    |         |   |  |   | 309,598   |  
|Cash Dividends ($.74 per share)                  |  |        |      |         |  |            |        |               |  |              | (121,212  | )        |  |             |       |  |  |    |       |   |  |    |         |   |  |   | (121,212  | )
|Issuance of Stock (103,265 shares)               |  |        |      |         |  |            | 1,844   |               |  |              |          |          |  |             |       |  |  |    |       |   |  |    | 2,097    |   |  |   | 3,941     |  
|Restricted Stock Activity, net                   |  |        |      |         |  |            | 7,470   |               |  |              |          |          |  |             |       |  |  |    | (9,427 | ) |  |    | 7,719    |   |  |   | 5,762     |  
|Stock Based Compensation Activity, net           |  |        |      |         |  |            | (2,371  | )             |  |              |          |          |  |             |       |  |  |    |       |   |  |    | 13,256   |   |  |   | 10,885    |  
|Purchases of Treasury Stock (600,000 shares)     |  |        |      |         |  |            |        |               |  |              |          |          |  |             |       |  |  |    |       |   |  |    | (21,088  | ) |  |   | (21,088   | )
|Accumulated Other Comprehensive Income           |  |        |      |         |  |            |        |               |  |              |          |          |  |             | 28,479 |  |  |    |       |   |  |    |         |   |  |   | 28,479    |  
|                                                 |  |        |       |         |  |            |         |               |  |              |           |          |  |             |        |  |  |    |        |   |  |    |          |   |  |   |           |  
|Balance, September 30, 2002                      |  | $      | 1,746 |         |  | $          | 371,288 |               |  | $            | 1,525,950 |          |  | $           | 38,820 |  |  | ($ | 51,962 | ) |  | ($ | 232,469  | ) |  | $ | 1,653,373 |  
|                                                 |  |        |       |         |  |            |         |               |  |              |           |          |  |             |        |  |  |    |        |   |  |    |          |   |  |   |           |  
|Balance, December 31, 2002                       |  | $      | 1,746 |         |  | $          | 377,311 |               |  | $            | 1,590,594 |          |  | $           | 17,991 |  |  | ($ | 70,562 | ) |  | ($ | 403,027  | ) |  | $ | 1,514,053 |  
|Net Income                                       |  |        |      |         |  |            |        |               |  |              | 293,982   |          |  |             |       |  |  |    |       |   |  |    |         |   |  |   | 293,982   |  
|Cash Dividends ($.81 per share)                  |  |        |      |         |  |            |        |               |  |              | (124,700  | )        |  |             |       |  |  |    |       |   |  |    |         |   |  |   | (124,700  | )
|Issuance of Stock (124,383 shares)               |  |        |      |         |  |            | 771     |               |  |              |          |          |  |             |       |  |  |    |       |   |  |    | 3,400    |   |  |   | 4,171     |  
|Restricted Stock Activity, net                   |  |        |      |         |  |            | 162     |               |  |              |          |          |  |             |       |  |  |    | 7,272  |   |  |    | (41      | ) |  |   | 7,393     |  
|Stock Based Compensation Activity, net           |  |        |      |         |  |            | (5,786  | )             |  |              |          |          |  |             |       |  |  |    |       |   |  |    | 10,003   |   |  |   | 4,217     |  
|Purchases of Treasury Stock (7,776,400 shares)   |  |        |      |         |  |            |        |               |  |              |          |          |  |             |       |  |  |    |       |   |  |    | (264,193 | ) |  |   | (264,193  | )
|Accumulated Other Comprehensive Income           |  |        |      |         |  |            |        |               |  |              |          |          |  |             | 4,035  |  |  |    |       |   |  |    |         |   |  |   | 4,035     |  
|                                                 |  |        |       |         |  |            |         |               |  |              |           |          |  |             |        |  |  |    |        |   |  |    |          |   |  |   |           |  
|Balance, September 30, 2003                      |  | $      | 1,746 |         |  | $          | 372,458 |               |  | $            | 1,759,876 |          |  | $           | 22,026 |  |  | ($ | 63,290 | ) |  | ($ | 653,858  | ) |  | $ | 1,438,958 |  
|                                                 |  |        |       |         |  |            |         |               |  |              |           |          |  |             |        |  |  |    |        |   |  |    |          |   |  |   |           |  

See accompanying notes to consolidated financial statements

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##### Table of Contents






Consolidated Statements of
Comprehensive Income (unaudited)

|                                                                             |  |                    |         |                   |  |               |         |               |  |   |         |   |  |   |         |  
|---------------------------------------------------------------------------- |  | ------------------ | ------- | ----------------- |  | ------------- | ------- | ------------- |  | - | ------- | - |  | - | ------- | -
|                                                                             |  | Three Months Ended |         | Nine Months Ended
|                                                                             |  | September 30,      |         | September 30,     |  | September 30, |         | September 30,
|(in thousands)                                                               |  | 2003               |         | 2002              |  | 2003          |         | 2002         
|                                                                             |  |                    |         |                   |  |               |         |              
|Net Income                                                                   |  | $                  | 94,330  |                   |  | $             | 106,847 |               |  | $ | 293,982 |   |  | $ | 309,598 |  
|Other Comprehensive Income:                                                  |  |                    |         |                   |  |               |         |               |  |   |         |   |  |   |         |  
|Unrealized (Losses)/Gains On Securities:                                     |  |                    |         |                   |  |               |         |               |  |   |         |   |  |   |         |  
|Changes in Unrealized (Losses)/Gains Arising During The Period               |  |                    | (38,646 | )                 |  |               | 8,257   |               |  |   | (8,096  | ) |  |   | 72,080  |  
|Less: Reclassification Adjustment For Gains Included in Net Income           |  |                    | (381    | )                 |  |               | (2,689  | )             |  |   | (6,677  | ) |  |   | (4,070  | )
|                                                                             |  |                    |         |                   |  |               |         |               |  |   |         |   |  |   |         |  
|                                                                             |  |                    | (39,027 | )                 |  |               | 5,568   |               |  |   | (14,773 | ) |  |   | 68,010  |  
|                                                                             |  |                    |         |                   |  |               |         |               |  |   |         |   |  |   |         |  
|Unrealized Gains/(Losses) On Derivative Instruments:                         |  |                    |         |                   |  |               |         |               |  |   |         |   |  |   |         |  
|Changes in Unrealized Gains/(Losses) Arising During the Period               |  |                    | 1,276   |                   |  |               | (21,933 | )             |  |   | (5,950  | ) |  |   | (41,533 | )
|Plus: Reclassification Adjustment for Expenses/Losses Included in Net Income |  |                    | 2,675   |                   |  |               | 8,675   |               |  |   | 27,801  |   |  |   | 23,486  |  
|                                                                             |  |                    |         |                   |  |               |         |               |  |   |         |   |  |   |         |  
|                                                                             |  |                    | 3,951   |                   |  |               | (13,258 | )             |  |   | 21,851  |   |  |   | (18,047 | )
|                                                                             |  |                    |         |                   |  |               |         |               |  |   |         |   |  |   |         |  
|Other Comprehensive (Loss)/Income, Before Income Taxes                       |  | ($                 | 35,076  | )                 |  | ($            | 7,690   | )             |  | $ | 7,078   |   |  | $ | 49,963  |  
|Benefit/(Provision) for Income Taxes on Items of Other Comprehensive Income  |  |                    | 15,083  |                   |  |               | 3,306   |               |  |   | (3,043  | ) |  |   | (21,484 | )
|                                                                             |  |                    |         |                   |  |               |         |               |  |   |         |   |  |   |         |  
|Net Other Comprehensive (Loss)/Income                                        |  | ($                 | 19,993  | )                 |  | ($            | 4,384   | )             |  | $ | 4,035   |   |  | $ | 28,479  |  
|                                                                             |  |                    |         |                   |  |               |         |               |  |   |         |   |  |   |         |  
|Comprehensive Income                                                         |  | $                  | 74,337  |                   |  | $             | 102,463 |               |  | $ | 298,017 |   |  | $ | 338,077 |  
|                                                                             |  |                    |         |                   |  |               |         |               |  |   |         |   |  |   |         |  

See accompanying notes to consolidated financial statements

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North Fork Bancorporation, Inc.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
September 30, 2003 and 2002

In this quarterly report filed on Form 10-Q, where the context requires,
the Company, North Fork, we, us, and our refer to North Fork
Bancorporation, Inc. and its subsidiaries.

Basis of Presentation

Our accounting and reporting policies are in conformity with accounting
principles generally accepted in the United States of America. The preparation
of financial statements, in conformity with accounting principles generally
accepted in the United States of America, requires that management make
estimates and assumptions that affect the reported amounts of assets and
liabilities, the disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of income and expenses during
the reporting period. Such estimates are subject to change in the future as
additional information becomes available or previously existing circumstances
are modified. Actual results could differ from those estimates. In our opinion,
all adjustments have been made for a fair presentation of the results of
operations in these financial statements. We have no unconsolidated
subsidiaries or unconsolidated special purpose entities.

You should read these consolidated financial statements and related
managements discussion and analysis together with the financial information in
our 2002 Annual Report on Form 10-K, previously filed with the SEC. In
reviewing and understanding our financial information, you are encouraged to
read the significant accounting policies (See Note 1 - Summary of Significant
Accounting Policies of our 2002 Annual Report) which are used in preparing our
consolidated financial statements. There have not been any significant changes
in the factors or methodology used in determining our accounting estimates or
applied in our critical accounting policies since December 2002 that are
material in relation to our financial condition or results of operations. Of
these policies, we believe the most critical is the accounting for the
allowance for loan losses.

Results of operations for the three and nine months ended September 30,
2003, are not necessarily indicative of the results of operations which may be
expected for the full year 2003 or any future interim period.

Recent Accounting Developments

Accounting for Costs Associated with Exit or Disposal Activities

On January 1, 2003, we adopted the accounting provisions of SFAS No. 146,
Accounting for Costs Associated with Exit or Disposal Activities (SFAS
146). SFAS 146 requires that a liability for costs associated with an exit or
disposal activity be recognized when the liability is incurred and be measured
at fair value. Previous guidance required the recognition of such costs be at
the date of managements commitment to an exit plan. SFAS 146 was effective
for exit or disposal activities initiated after December 31, 2002. The adoption
of SFAS 146 had no impact on our financial statements.

Guarantors Accounting and Disclosure Requirements for Guarantees

On January 1, 2003, we adopted the recognition and measurement provisions
of FASB Interpretation No. 45, Guarantors Accounting and Disclosure
Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of
Others (FIN 45). It requires that a guarantor recognize, at the inception
of a guarantee, a liability for the fair value of the obligation undertaken in
issuing the guarantee. We adopted the disclosure provisions of FIN 45 in our
December 31, 2002 consolidated financial statements. FIN 45 requires
additional disclosures by a guarantor about its obligations under certain
guarantees that it has issued. The most significant instruments impacted for
us are financial and performance standby letters of credit. The required
disclosure has been incorporated into Managements Discussion and Analysis -
Credit Related Commitments. The adoption of FIN 45 was not material to our
financial statements.

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Consolidation of Variable Interest Entities

In January 2003, the FASB released Interpretation No. 46, Consolidation
of Variable Interest Entities (FIN 46). FIN 46 changes the method of
determining whether certain entities, including securitization entities, should
be included in our financial statements. An entity is subject to FIN 46 and is
called a variable interest entity (VIE) if it has (1) equity that is
insufficient to permit the entity to finance its activities without additional
subordinated financial support from other parties, or (2) equity investors that
cannot make significant decisions about the entitys operations, or that do not
absorb the expected losses or receive the expected returns of the entity. A
VIE is consolidated by its primary beneficiary, which is the party involved
with the VIE that has a majority of the expected losses or a majority of the
expected residual returns or both.

The provisions of FIN 46 were effective immediately for VIEs created
after January 31, 2003. For VIEs in which a public enterprise holds a variable
interest that it acquired before February 1, 2003, FIN 46s original effective
date was July 1, 2003. However, the effective date was delayed as FASB issued
a proposed interpretation to clarify and modify certain issues arising in the
implementation of FIN 46. The proposed clarifications and modifications would
apply in financial statements for the first period ending after December 15,
2003. In its current form, FIN 46 may require bank holding companies, such as
North Fork, that have used controlled business trusts to raise financing by
issuing trust preferred securities (Capital Securities), to deconsolidate their
investments in those trusts and to exclude the trust preferred securities from
their financial statements.

Deconsolidation would result in the re-characterization of the liability
currently reflected as Capital Securities in the consolidated balance sheets
as a liability to the trusts that have issued the securities. There
would be
no change in the carrying amount of the liability and there should be no income
statement impact upon adoption. In July 2003, the Board of Governors of the
Federal Reserve System issued a supervisory letter instructing bank holding
companies to continue to include the trust preferred securities (Capital
Securities) in Tier I capital for regulatory capital purposes until further
notice. The Federal Reserve intends to review the regulatory implications of
any accounting treatment changes and, if necessary, provide further appropriate
guidance. However, there can be no assurance that the Federal Reserve will
continue to allow institutions to include trust preferred securities in Tier I
capital for regulatory capital purposes. As of September 30, 2003, assuming we
were not allowed to include the Capital Securities issued by North Fork Capital
Trust I, North Fork Capital Trust II, and Reliance Capital Trust I in Tier I
capital, we would still exceed the regulatory threshold for capital adequacy.

Accounting for Stock Based Compensation

In December 2002, the FASB issued SFAS No. 148, Accounting for
Stock-Based Compensation  Transition and Disclosure (SFAS 148). SFAS 148
amends SFAS No. 123, Accounting for Stock-Based Compensation (SFAS 123) to
provide alternative transition methods for voluntary a change to the fair value
method of accounting for stock-based employee compensation. It also amended
SFAS 123 disclosure provisions to require prominent disclosure in annual and
interim financial statements about the method used and the effect on reported
results. The transitional requirements of SFAS 148 were effective for fiscal
years ending after December 15, 2002. We continue to account for our
stock-based compensation plans using the intrinsic value method, as permitted
under SFAS 123. Compensation expense has not been recognized in the
accompanying statements of income for stock-based compensation plans, other
than for restricted stock awards. Restricted stock awards are recorded as
deferred compensation, a component of stockholders equity, at fair value at
the date of grant and are amortized to compensation expense over the awards
specified vesting periods. Under SFAS 148 and SFAS 123, issuers electing to
apply the intrinsic value method, are also required to disclose the pro-forma
impact on net income and earnings per share that the fair value-based method
would have had if applied rather than the intrinsic value method (See Footnote
14 - Common Stock Plans in our 2002 annual report for additional disclosure).
Stock options are typically awarded at year end and contain a nominal vesting
period. Since the pro forma effect on net income of expensing stock options
during the three and nine months ended September 30, 2003 is nominal, we have
not included such pro forma compensation expense and it related effect on net
income. There would be no related effect on pro forma earnings per share for
the three and nine months ended September 30, 2003.

Accounting for Derivative Instruments and Hedging Activities

In April 2003, the FASB issued SFAS No. 149, Amendment of Statement 133
on Derivative Instruments and Hedging Activities (SFAS 149). SFAS 149 amends
and clarifies financial accounting and reporting for derivative instruments,
including certain derivative instruments embedded in other contracts
(collectively referred to as derivatives), and for hedging activities under
SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities.
In particular, SFAS 149 clarifies under what circumstances a contract with an
initial net investment meets the characteristic of a derivative and clarifies
when a derivative contains a financing component that warrants special
reporting in the statement of cash flows. SFAS No. 149 was effective for
contracts entered into or modified after June 30, 2003. Adoption of SFAS 149
did not have a material effect on our financial statements.

Accounting for Certain Financial Instruments with Characteristics of Both
Liabilities and Equity

In May 2003, the FASB issued SFAS No. 150, Accounting for Certain
Financial Instruments with Characteristics of Both Liabilities and Equity
(SFAS 150). SFAS 150 establishes standards for how an issuer classifies and
measures certain financial instruments with characteristics of both liabilities
and equity. It requires that an issuer classify a financial instrument that is
within its scope as a liability (or an asset in some circumstances). Many of
those instruments were previously classified as equity. SFAS 150 is effective
for financial instruments entered into or modified after May 31, 2003;
otherwise it is effective at the beginning of the first interim period beginning
after June 15, 2003. However, the effective date of the statement's provisions related to
the classification and measurement of certain mandatorily redeemable
non-controlling interests has been deferred indefinitely by the FASB,
pending further Board action. Adoption of SFAS 150 is
not expected to have a material effect on our financial statements.

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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations

Forward-Looking Statement

This document, including information incorporated by reference, contains
forward-looking statements (as that term is defined in the Private Securities
Litigation Reform Act of 1995). In addition, senior management may make
forward-looking statements orally to analysts, investors, the media, and
others. These forward looking statements may be identified by the use of such
words as: believe, expect, anticipate, intend, plan, estimate, or
words of similar meaning, or future or conditional terms such as will,
would, should, could, may, likely, probably, or possibly.

Examples of forward-looking statements include, but are not limited to,
estimates with respect to our financial condition, expected or anticipated
revenues, results of operations and our business, with respect to:



| |  |  | projections of revenues, income, earnings per share, capital
expenditures, assets, liabilities, dividends, capital structure, or
other financial items;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | statements regarding the adequacy of the allowance for loan losses or
other reserves;                                                                  
|
| |  |  | descriptions of plans or objectives of management for future
operations, products, or services, including pending acquisition
transactions;            
|
| |  |  | forecasts of future economic performance; and                                                                                                          
|
| |  |  | descriptions of assumptions underlying or relating to any of the foregoing.                                                                            

By their nature, forward-looking statements are subject to risks and
uncertainties. There are a number of factors, many of which are beyond our
control, that could cause actual conditions, events, or results to differ
significantly from those described in the forward-looking statements.

Factors which could cause or contribute to such differences include, but are
not limited to:



| |  |  | general business and economic conditions on both a regional and national level                                                                                         
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | worldwide political and social unrest, including acts of war and terrorism                                                                                             
|
| |  |  | increased competition in the products and services we offer and the markets in which we conduct our business                                                           
|
| |  |  | unanticipated developments in the interest rate environment                                                                                                            
|
| |  |  | fluctuations in the capital and bond markets, which may directly or indirectly affect our asset portfolio                                                              
|
| |  |  | legislative or regulatory developments, including changes in laws
concerning taxes, banking, securities, insurance and other aspects of
the financial services industry
|
| |  |  | technological changes, including the impact of the Internet                                                                                                            
|
| |  |  | monetary and fiscal policies of the U.S. Government, including policies of the U.S. Treasury and the Federal Reserve Board                                             
|
| |  |  | accounting principles, policies, practices or guidelines                                                                                                               
|
| |  |  | changes in corporate law and best practices                                                                                                                            

Any forward-looking statements made in this report or incorporated by
reference in this report are made as of the date of this report, and, except as
required by applicable law, we assume no obligation to update the
forward-looking statements or to update the reasons why actual results could
differ from those projected in the forward-looking statements. You should
consider these risks and uncertainties in evaluating forward-looking statements
and you should not place undue reliance on these statements.

Company Description

We are a multi-bank holding company headquartered in Melville, New York.
We operate 173 retail banking branches in the New York Metropolitan area with
one branch in New Jersey and another in Connecticut. North Fork Bank, a New York
chartered trust company, is our primary subsidiary and branch network outlet.
At September 30, 2003, North Fork Banks assets and revenues represented
approximately 95% of our consolidated assets and revenues. North Fork Bank
provides banking and financial services to middle market and small businesses,
local government units, not-for-profit entities and consumers in the greater
New York Metropolitan area. Our non-bank subsidiaries offer financial services
such as asset management, trust, and securities brokerage and related annuity
and mutual fund products. Our other banking subsidiary, Superior Savings of New
England, N.A., is a nationally chartered bank that focuses on gathering
deposits throughout the northeast United States.

We operate in a densely populated area encompassing the New York City
boroughs of Manhattan, Queens, Brooklyn and the Bronx and the four neighboring
New York counties of Nassau, Suffolk, Westchester and Rockland. This geographic
area has a population exceeding 12 million people comprising over 4 million
households and commercial banking deposits approaching $400 billion. A
significant portion of these deposits are controlled by a few multi-national
banking organizations. This competitively attractive environment provides
multiple opportunities to gain market share through internal growth, branch
expansion and strategic acquisitions.

10



---



##### Table of Contents



Financial Summary

Overview

Selected financial highlights for the three and nine months ended
September 30, 2003 and 2002 are set forth in the table below. The succeeding
discussion and analysis describes the changes in components of operating
results.

|                                                  |                                        |      |                    |         |                   |      |   |         |   |  |   |         |   |  |   |         |  
|------------------------------------------------- | -------------------------------------- | ---- | ------------------ | ------- | ----------------- | ---- | - | ------- | - |  | - | ------- | - |  | - | ------- | -
|                                                  |                                        |      | Three Months Ended |         | Nine Months Ended
|                                                  |                                        |      | September 30,      |         | September 30,    
|                                                  |                                        |      |                    |         |                  
|(in thousands, except ratios & per share amounts) |                                        | 2003 |                    | 2002    |                   | 2003 |   | 2002   
|                                                  |                                        |      |                    |         |                   |      |   |        
|Earnings:                                         |                                        |      |                    |         |                   |      |   |         |   |  |   |         |   |  |   |        
|                                                  | Net Income                             |      | $                  | 94,330  |                   |      | $ | 106,847 |   |  | $ | 293,982 |   |  | $ | 309,598 |  
|                                                  |                                        |      |                    |         |                   |      |   |         |   |  |   |         |   |  |   |         |  
|Per Share:                                        |                                        |      |                    |         |                   |      |   |         |   |  |   |         |   |  |   |        
|                                                  | Earnings Per Share - Basic             |      | $                  | 0.63    |                   |      | $ | 0.67    |   |  | $ | 1.94    |   |  | $ | 1.93    |  
|                                                  | Earnings Per Share - Diluted           |      | $                  | 0.63    |                   |      | $ | 0.66    |   |  | $ | 1.92    |   |  | $ | 1.91    |  
|                                                  | Cash Dividends                         |      | $                  | 0.27    |                   |      | $ | 0.25    |   |  | $ | 0.81    |   |  | $ | 0.74    |  
|                                                  | Dividend Payout Ratio                  |      |                    | 42.66   | %                 |      |   | 38.13   | % |  |   | 42.42   | % |  |   | 39.15   | %
|                                                  | Book Value                             |      | $                  | 9.50    |                   |      | $ | 10.11   |   |  | $ | 9.50    |   |  | $ | 10.11   |  
|                                                  | Average Equivalent Shares - Basic      |      |                    | 148,853 |                   |      |   | 160,307 |   |  |   | 151,879 |   |  |   | 160,398 |  
|                                                  | Average Equivalent Shares - Diluted    |      |                    | 150,510 |                   |      |   | 162,248 |   |  |   | 153,464 |   |  |   | 162,305 |  
|                                                  |                                        |      |                    |         |                   |      |   |         |   |  |   |         |   |  |   |         |  
|Selected Ratios:                                  |                                        |      |                    |         |                   |      |   |         |   |  |   |         |   |  |   |        
|                                                  | Return on Average Total Assets         |      |                    | 1.80    | %                 |      |   | 2.18    | % |  |   | 1.82    | % |  |   | 2.28    | %
|                                                  | Return on Average Stockholders Equity |      |                    | 25.59   | %                 |      |   | 25.49   | % |  |   | 26.11   | % |  |   | 25.66   | %
|                                                  | Yield on Interest Earning Assets       |      |                    | 5.56    | %                 |      |   | 6.81    | % |  |   | 5.76    | % |  |   | 7.11    | %
|                                                  | Cost of Funds                          |      |                    | 1.67    | %                 |      |   | 2.44    | % |  |   | 1.93    | % |  |   | 2.58    | %
|                                                  | Net Interest Margin                    |      |                    | 4.23    | %                 |      |   | 4.87    | % |  |   | 4.20    | % |  |   | 5.07    | %
|                                                  | Core Efficiency Ratio (1)              |      |                    | 35.38   | %                 |      |   | 31.37   | % |  |   | 34.25   | % |  |   | 30.80   | %
|                                                  |                                        |      |                    |         |                   |      |   |         |   |  |   |         |   |  |   |         |  



|(1) |  | The core efficiency ratio is used by the financial services industry to
measure an organizations operating efficiency. It represents the ratio of
non-interest expense, excluding debt restructuring costs, to net interest
income on a tax equivalent basis and non-interest income, excluding
facilities and securities gains.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Balance Sheet Restructuring and Capital Management

During the past several years, we have periodically taken advantage of the
prevailing economic conditions to leverage our excess capital through the
purchase of mortgage-backed securities, funded principally with short-term
borrowings, generating approximately $150 million in additional capital since
2000. Between the latter half of 2002 and May 2003, we accelerated our
leveraging strategy, adding approximately $3 billion in mortgage-backed
securities funded principally with short-term borrowings and $500 million in
subordinated debt proceeds. This decision capitalized on attractive spreads
between these assets and liabilities due in part to a weak economic environment
and the interest rate environment during that period. As rates continued to
decline in the first half of 2003, the yields available to reinvest portfolio
cash flows were at historically low levels. During this time period,
prepayment activity also accelerated, shortening the anticipated lives of our
mortgage-backed securities and accelerating premium amortization, which reduced
net interest income and applied additional pressure on our net interest margin.
These facts coupled with the prospect of a near term economic recovery led us
to reevaluate our strategy. In the second quarter of 2003, we decided to
restructure our balance sheet by reducing the securities portfolio by
approximately $2.5-$3.0 billion with proceeds used to liquidate short-term
borrowings. We also restructured $1 billion in longer-term borrowings and
redeployed excess capital through our share repurchase program.

As of September 30, 2003, we had completed the balance sheet restructuring
and strengthened our interest rate risk profile by reducing our securities
portfolio. This mitigated our exposure to extension risk and reduced the
potential for significant unrealized losses. The portfolio was reduced by $2.4
billion on a linked quarter basis and approximately $3 billion from an interim
period high, through $1.1 billion in sales, at a gain of $0.4 million, and
portfolio cash flows. The sales proceeds, received in July 2003, and monthly
portfolio cash flows were used to reduce short-term borrowings through
September 2003. Our borrowing portfolio should approximate $4.0 billion while
our securities portfolio should range between $7.0-$7.5 billion dollars in the
near future. These anticipated levels are dependent upon loan demand, deposit
growth, securities portfolio cash flows and the movement of market interest
rates in prospective quarters.

11



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##### Table of Contents



The $1 billion in longer-term borrowings were restructured as follows:



| |  |  | $300 million of variable rate term-borrowings were
prepaid and their underlying pay fixed swaps maturing in 2004 were
canceled, resulting in a $6.6 million charge in June 2003.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | $200 million of fixed rate term-borrowings maturing in
2004 were prepaid, resulting in a $5.3 million charge in June
2003.                                                      
|
| |  |  | $500 million of Subordinated Debt was converted from fixed to floating using interest rate swaps.                                                                               
|
| |  |  | $45 million of 8.17% Capital Securities was converted from fixed to floating using interest rate swaps.                                                                         

(For further details regarding the above swaps and related borrowings, see
the Derivative Financial Instruments section.)

As part of this plan, the Board of Directors approved an increase in our
share repurchase program, authorizing the repurchase of up to 8 million shares,
or 5% of the shares outstanding. As of September 30, 2003, we had repurchased
5.2 million shares (4.9 million shares were repurchased in the third quarter)
at an average per share price of $34.58.

The restructuring, although reducing net interest income and net income,
improved our net interest margin by approximately 15 basis points on a linked
quarter basis. Our share repurchase program mitigated the restructurings
negative impact on earnings per share. Based upon our anticipated security and
borrowing levels and expected loan and deposit growth, we do not disagree with
the current fourth quarter I/B/E/S mean earnings per share estimates. However,
it is important to note that future net interest income, margin trends and
earnings per share trends will continue to be dependent on loan demand, deposit
growth, the timing and extent of future share repurchases and the movement of
market interest rates. Future operating results will also be impacted by
trends in the overall economy.

Net Income

Net income for the current quarter was $94.3 million or diluted earnings
per share of $ .63 compared to $106.8 million or $.66 diluted earnings per
share in 2002. Returns on average equity and assets during the quarter were
25.6% and 1.80%, respectively, compared to 25.5% and 2.18% in 2002.

Net income for the first nine months of 2003 totaled $294 million or
diluted earnings per share of $1.92 compared to $309.6 million or diluted
earnings per share $1.91 for the nine month period ended September 30, 2002.
Returns on average equity and assets for the nine month period in 2003 were
26.1% and 1.82%, respectively, compared to 25.7% and 2.28% in 2002. Net income
in the current year included gains from sale of certain facilities totaling $11
million and a charge of $12 million associated with restructuring $1 billion in
longer-term borrowings, both recognized during second quarter 2003.

Net Interest Income

Net interest income is the difference between interest earned on assets
and interest incurred on liabilities and constituted 85% of total revenue for
the period. Net interest income is affected by the level and composition of
assets, liabilities and equity, as well as changes in market interest rates.

Net interest margin is determined by dividing tax equivalent net interest
income by average interest-earning assets. The interest rate spread is the
difference between the average equivalent yield earned on interest-earning
assets and the average rate paid on interest-bearing liabilities. The net
interest margin is generally greater than the interest rate spread due to the
additional income earned on those assets funded by non-interest-bearing
liabilities, primarily demand deposits and stockholders equity.

12



---



##### Table of Contents



The following table presents an analysis of net interest income (on a tax
equivalent basis) by each major category of interest earning assets and
interest-bearing liabilities for the three months ended September 30:

|                                                                         |                                            |                                    |            |            |            |      |         |         |         |          |      |         |      |   |            |            |            |         |         |         |         |  |      |      |      |  
|------------------------------------------------------------------------ | ------------------------------------------ | ---------------------------------- | ---------- | ---------- | ---------- | ---- | ------- | ------- | ------- | -------- | ---- | ------- | ---- | - | ---------- | ---------- | ---------- | ------- | ------- | ------- | ------- |  | ---- | ---- | ---- | -
|                                                                         |                                            |                                    |            | 2003       |            | 2002
|                                                                         |                                            |                                    |            |            |            |     
|                                                                         |                                            |                                    |            | Average    |            |      |         |         |         | Average  |      | Average |      |   |            |            |            | Average
|(dollars in thousands )                                                  |                                            | Balance                            |            | Interest   |            | Rate |         | Balance |         | Interest |      | Rate   
|                                                                         |                                            |                                    |            |            |            |      |         |         |         |          |      |        
|Interest Earning Assets:                                                 |                                            |                                    |            |            |            |      |         |         |         |          |      |         |      |   |            |            |            |         |         |         |         |  |      |     
|Securities (1)                                                           |                                            | $                                  | 7,310,088  |            |            | $    | 70,683  |         |         |          | 3.84 | %       |      | $ | 6,919,935  |            |            | $       | 106,345 |         |         |  | 6.10 | %   
|Loans, net (2)                                                           |                                            |                                    | 11,947,125 |            |            |      | 199,344 |         |         |          | 6.62 | %       |      |   | 11,149,624 |            |            |         | 204,043 |         |         |  | 7.26 | %   
|Money Market Investments                                                 |                                            |                                    | 36,348     |            |            |      | 123     |         |         |          | 1.34 | %       |      |   | 37,275     |            |            |         | 236     |         |         |  | 2.51 | %   
|                                                                         |                                            |                                    |            |            |            |      |         |         |         |          |      |         |      |   |            |            |            |         |         |         |         |  |      |     
|                                                                         | Total Interest Earning Assets (3)          |                                    |            | 19,293,561 |            |      |         | 270,150 |         |          |      | 5.56    | %    |   |            | 18,106,834 |            |         |         | 310,624 |         |  |      | 6.81 | %   
|                                                                         |                                            |                                    |            |            |            |      |         |         |         |          |      |         |      |   |            |            |            |         |         |         |         |  |      |     
|Non Interest Earning Assets:                                             |                                            |                                    |            |            |            |      |         |         |         |          |      |         |      |   |            |            |            |         |         |         |         |  |      |     
|Cash and Due from Banks                                                  |                                            |                                    | 425,619    |            |            |      |         |         |         |          |      |         |      |   | 362,328    |            |            |         |         |         |         |  |      |     
|Other Assets (1)                                                         |                                            |                                    | 1,117,611  |            |            |      |         |         |         |          |      |         |      |   | 980,012    |            |            |         |         |         |         |  |      |     
|                                                                         |                                            |                                    |            |            |            |      |         |         |         |          |      |         |      |   |            |            |            |         |         |         |         |  |      |     
|                                                                         | Total Assets                               |                                    | $          | 20,836,791 |            |      |         |         |         |          |      |         |      |   | $          | 19,449,174 |            |         |         |         |         |  |      |      |     
|                                                                         |                                            |                                    |            |            |            |      |         |         |         |          |      |         |      |   |            |            |            |         |         |         |         |  |      |     
|Interest Bearing Liabilities:                                            |                                            |                                    |            |            |            |      |         |         |         |          |      |         |      |   |            |            |            |         |         |         |         |  |      |     
|Savings, NOW & Money Market Deposits                                     |                                            | $                                  | 7,880,067  |            |            | $    | 14,435  |         |         |          | 0.73 | %       |      | $ | 6,241,761  |            |            | $       | 16,797  |         |         |  | 1.07 | %   
|Time Deposits                                                            |                                            |                                    | 2,945,503  |            |            |      | 13,042  |         |         |          | 1.76 | %       |      |   | 3,150,981  |            |            |         | 18,888  |         |         |  | 2.38 | %   
|                                                                         |                                            |                                    |            |            |            |      |         |         |         |          |      |         |      |   |            |            |            |         |         |         |         |  |      |     
|                                                                         | Total Savings and Time Deposits            |                                    |            | 10,825,570 |            |      |         | 27,477  |         |          |      | 1.01    | %    |   |            | 9,392,742  |            |         |         | 35,685  |         |  |      | 1.51 | %   
|Federal Funds Purchased & Securities Sold
Under Agreements to Repurchase |                                            |                                    | 2,448,722  |            |            |      | 17,368  |         |         |          | 2.81 | %       |      |   | 2,909,503  |            |            |         | 26,515  |         |         |  | 3.62 | %   
|Federal Home Loan Bank Advances                                          |                                            |                                    | 1,227,717  |            |            |      | 12,981  |         |         |          | 4.19 | %       |      |   | 1,550,000  |            |            |         | 19,340  |         |         |  | 4.95 | %   
|Subordinated Debt (4)                                                    |                                            |                                    | 493,801    |            |            |      | 4,636   |         |         |          | 3.72 | %       |      |   | 298,382    |            |            |         | 4,333   |         |         |  | 5.76 | %   
|Capital Securities (4)                                                   |                                            |                                    | 273,291    |            |            |      | 1,845   |         |         |          | 2.68 | %       |      |   | 252,378    |            |            |         | 2,632   |         |         |  | 4.14 | %   
|                                                                         |                                            |                                    |            |            |            |      |         |         |         |          |      |         |      |   |            |            |            |         |         |         |         |  |      |     
|                                                                         | Total Borrowings                           |                                    |            | 4,443,531  |            |      |         | 36,830  |         |          |      | 3.29    | %    |   |            | 5,010,263  |            |         |         | 52,820  |         |  |      | 4.18 | %   
|                                                                         |                                            |                                    |            |            |            |      |         |         |         |          |      |         |      |   |            |            |            |         |         |         |         |  |      |     
|                                                                         |                                            | Total Interest Bearing Liabilities |            |            | 15,269,101 |      |         |         | 64,307  |          |      |         | 1.67 | % |            |            | 14,403,005 |         |         |         | 88,505  |  |      |      | 2.44 | %
|                                                                         |                                            |                                    |            |            |            |      |         |         |         |          |      |         |      |   |            |            |            |         |         |         |         |  |      |     
|Rate Spread                                                              |                                            |                                    |            |            |            |      |         |         |         |          | 3.89 | %       |      |   |            |            |            |         |         |         |         |  | 4.37 | %   
|Non-Interest Bearing Liabilities                                         |                                            |                                    |            |            |            |      |         |         |         |          |      |         |      |   |            |            |            |         |         |         |         |  |      |     
|Demand Deposits                                                          |                                            |                                    | 3,775,735  |            |            |      |         |         |         |          |      |         |      |   | 2,956,411  |            |            |         |         |         |         |  |      |     
|Other Liabilities                                                        |                                            |                                    | 324,586    |            |            |      |         |         |         |          |      |         |      |   | 379,160    |            |            |         |         |         |         |  |      |     
|                                                                         |                                            |                                    |            |            |            |      |         |         |         |          |      |         |      |   |            |            |            |         |         |         |         |  |      |     
|Total Liabilities                                                        |                                            |                                    | 19,369,422 |            |            |      |         |         |         |          |      |         |      |   | 17,738,576 |            |            |         |         |         |         |  |      |     
|Stockholders Equity                                                     |                                            |                                    | 1,467,369  |            |            |      |         |         |         |          |      |         |      |   | 1,710,598  |            |            |         |         |         |         |  |      |     
|                                                                         |                                            |                                    |            |            |            |      |         |         |         |          |      |         |      |   |            |            |            |         |         |         |         |  |      |     
|                                                                         | Total Liabilities and Stockholders Equity |                                    | $          | 20,836,791 |            |      |         |         |         |          |      |         |      |   | $          | 19,449,174 |            |         |         |         |         |  |      |      |     
|                                                                         |                                            |                                    |            |            |            |      |         |         |         |          |      |         |      |   |            |            |            |         |         |         |         |  |      |     
|Net Interest Income and Net Interest Margin                              |                                            |                                    |            |            |            |      | 205,843 |         |         |          | 4.23 | %       |      |   |            |            |            |         | 222,119 |         |         |  | 4.87 | %   
|Less: Tax Equivalent Adjustment (3)                                      |                                            |                                    |            |            |            |      | (6,343  | )       |         |          |      |         |      |   |            |            |            |         | (5,722  | )       |         |  |      |     
|                                                                         |                                            |                                    |            |            |            |      |         |         |         |          |      |         |      |   |            |            |            |         |         |         |         |  |      |     
|                                                                         |                                            | Net Interest Income                |            |            |            |      |         | $       | 199,500 |          |      |         |      |   |            |            |            |         |         | $       | 216,397 |  |      |      |      |  
|                                                                         |                                            |                                    |            |            |            |      |         |         |         |          |      |         |      |   |            |            |            |         |         |         |         |  |      |     



|(1) |  | For purposes of these computations, unrealized gains/(losses) on
available-for-sale securities are recorded in other assets.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | For purposes of these computations, non-accrual loans are included in
average loans.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   
|(3) |  | Interest income on a tax equivalent basis includes the additional amount
of income that would have been earned if investments in tax exempt money
market investments and securities, state and municipal obligations,
non-taxable loans, public equity and debt securities, and U.S. Treasuries
had been made in securities and loans subject to Federal, State, and Local
income taxes yielding the same after-tax income. The tax equivalent
amount for $1.00 of those aforementioned categories was $1.77, $1.67,
$1.55, $1.25, and $1.06 for the three months ended September 30, 2003; and
$1.77, $1.68, $1.55, $1.23, and $1.35 for the three months ended September
30, 2002.
|   
|(4) |  | For purposes of these computations, the fair value adjustments from
hedging activities are included in the average balance of the related
hedged item.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

13



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##### Table of Contents



The following table presents an analysis of net interest income (on a tax
equivalent basis) by each major category of interest earning assets and
interest-bearing liabilities for the nine months ended September 30:

|                                                                         |                                   |                                            |                     |            |            |      |         |         |         |          |         |      |         |   |            |            |            |   |         |         |         |         |      |      |      |   | 
|------------------------------------------------------------------------ | --------------------------------- | ------------------------------------------ | ------------------- | ---------- | ---------- | ---- | ------- | ------- | ------- | -------- | ------- | ---- | ------- | - | ---------- | ---------- | ---------- | - | ------- | ------- | ------- | ------- | ---- | ---- | ---- | - | 
|                                                                         |                                   |                                            |                     |            | 2003       |      | 2002   
|                                                                         |                                   |                                            |                     |            |            |      |        
|                                                                         |                                   |                                            |                     |            | Average    |      |         |         |         |          | Average |      | Average |   |            |            |            |   | Average
|(dollars in thousands )                                                  |                                   | Balance                                    |                     | Interest   |            | Rate |         | Balance |         | Interest |         | Rate
|                                                                         |                                   |                                            |                     |            |            |      |         |         |         |          |         |     
|Interest Earning Assets:                                                 |                                   |                                            |                     |            |            |      |         |         |         |          |         |      |         |   |            |            |            |   |         |         |         |         |      |     
|Securities (1)                                                           |                                   | $                                          | 8,266,752           |            |            | $    | 267,995 |         |         |          | 4.33    | %    |         | $ | 6,059,830  |            |            | $ | 300,145 |         |         |         | 6.62 | %   
|Loans, net (2)                                                           |                                   |                                            | 11,682,451          |            |            |      | 592,833 |         |         |          | 6.78    | %    |         |   | 10,823,088 |            |            |   | 599,274 |         |         |         | 7.40 | %   
|Money Market Investments                                                 |                                   |                                            | 43,973              |            |            |      | 519     |         |         |          | 1.58    | %    |         |   | 45,066     |            |            |   | 705     |         |         |         | 2.09 | %   
|                                                                         |                                   |                                            |                     |            |            |      |         |         |         |          |         |      |         |   |            |            |            |   |         |         |         |         |      |     
|                                                                         | Total Interest Earning Assets (3) |                                            |                     | 19,993,176 |            |      |         | 861,347 |         |          |         | 5.76 | %       |   |            | 16,927,984 |            |   |         | 900,124 |         |         |      | 7.11 | %   
|                                                                         |                                   |                                            |                     |            |            |      |         |         |         |          |         |      |         |   |            |            |            |   |         |         |         |         |      |     
|Non Interest Earning Assets:                                             |                                   |                                            |                     |            |            |      |         |         |         |          |         |      |         |   |            |            |            |   |         |         |         |         |      |     
|Cash and Due from Banks                                                  |                                   |                                            | 418,980             |            |            |      |         |         |         |          |         |      |         |   | 355,476    |            |            |   |         |         |         |         |      |     
|Other Assets (1)                                                         |                                   |                                            | 1,182,289           |            |            |      |         |         |         |          |         |      |         |   | 906,352    |            |            |   |         |         |         |         |      |     
|                                                                         |                                   |                                            |                     |            |            |      |         |         |         |          |         |      |         |   |            |            |            |   |         |         |         |         |      |     
|                                                                         | Total Assets                      |                                            | $                   | 21,594,445 |            |      |         |         |         |          |         |      |         |   | $          | 18,189,812 |            |   |         |         |         |         |      |      |     
|                                                                         |                                   |                                            |                     |            |            |      |         |         |         |          |         |      |         |   |            |            |            |   |         |         |         |         |      |     
|Interest Bearing Liabilities:                                            |                                   |                                            |                     |            |            |      |         |         |         |          |         |      |         |   |            |            |            |   |         |         |         |         |      |     
|Savings, NOW & Money Market Deposits                                     |                                   | $                                          | 7,320,577           |            |            | $    | 43,671  |         |         |          | 0.80    | %    |         | $ | 5,857,233  |            |            | $ | 47,481  |         |         |         | 1.08 | %   
|Time Deposits                                                            |                                   |                                            | 3,030,722           |            |            |      | 42,418  |         |         |          | 1.87    | %    |         |   | 3,263,754  |            |            |   | 67,231  |         |         |         | 2.75 | %   
|                                                                         |                                   |                                            |                     |            |            |      |         |         |         |          |         |      |         |   |            |            |            |   |         |         |         |         |      |     
|                                                                         | Total Savings and Time Deposits   |                                            |                     | 10,351,299 |            |      |         | 86,089  |         |          |         | 1.11 | %       |   |            | 9,120,987  |            |   |         | 114,712 |         |         |      | 1.68 | %   
|Federal Funds Purchased & Securities Sold
Under Agreements to Repurchase |                                   |                                            | 3,637,107           |            |            |      | 73,666  |         |         |          | 2.71    | %    |         |   | 2,356,337  |            |            |   | 68,203  |         |         |         | 3.87 | %   
|Federal Home Loan Bank Advances                                          |                                   |                                            | 1,407,326           |            |            |      | 48,657  |         |         |          | 4.62    | %    |         |   | 1,550,000  |            |            |   | 58,476  |         |         |         | 5.04 | %   
|Subordinated Debt (4)                                                    |                                   |                                            | 497,336             |            |            |      | 18,981  |         |         |          | 5.10    | %    |         |   | 100,554    |            |            |   | 4,333   |         |         |         | 5.76 | %   
|Capital Securities (4)                                                   |                                   |                                            | 270,419             |            |            |      | 6,485   |         |         |          | 3.21    | %    |         |   | 247,156    |            |            |   | 12,461  |         |         |         | 6.74 | %   
|                                                                         |                                   |                                            |                     |            |            |      |         |         |         |          |         |      |         |   |            |            |            |   |         |         |         |         |      |     
|                                                                         | Total Borrowings                  |                                            |                     | 5,812,188  |            |      |         | 147,789 |         |          |         | 3.40 | %       |   |            | 4,254,047  |            |   |         | 143,473 |         |         |      | 4.51 | %   
|                                                                         |                                   |                                            |                     |            |            |      |         |         |         |          |         |      |         |   |            |            |            |   |         |         |         |         |      |     
|                                                                         |                                   | Total Interest Bearing Liabilities         |                     |            | 16,163,487 |      |         |         | 233,878 |          |         |      | 1.93    | % |            |            | 13,375,034 |   |         |         | 258,185 |         |      |      | 2.58 | %
|                                                                         |                                   |                                            |                     |            |            |      |         |         |         |          |         |      |         |   |            |            |            |   |         |         |         |         |      |     
|Rate Spread                                                              |                                   |                                            |                     |            |            |      |         |         |         |          | 3.83    | %    |         |   |            |            |            |   |         |         |         |         | 4.53 | %   
|Non-Interest Bearing Liabilities                                         |                                   |                                            |                     |            |            |      |         |         |         |          |         |      |         |   |            |            |            |   |         |         |         |         |      |     
|Demand Deposits                                                          |                                   |                                            | 3,536,737           |            |            |      |         |         |         |          |         |      |         |   | 2,813,337  |            |            |   |         |         |         |         |      |     
|Other Liabilities                                                        |                                   |                                            | 362,909             |            |            |      |         |         |         |          |         |      |         |   | 355,764    |            |            |   |         |         |         |         |      |     
|                                                                         |                                   |                                            |                     |            |            |      |         |         |         |          |         |      |         |   |            |            |            |   |         |         |         |         |      |     
|                                                                         | Total Liabilities                 |                                            |                     | 20,063,133 |            |      |         |         |         |          |         |      |         |   |            | 16,544,135 |            |   |         |         |         |         |      |      |     
|                                                                         | Stockholders Equity              |                                            |                     | 1,531,312  |            |      |         |         |         |          |         |      |         |   |            | 1,645,677  |            |   |         |         |         |         |      |      |     
|                                                                         |                                   |                                            |                     |            |            |      |         |         |         |          |         |      |         |   |            |            |            |   |         |         |         |         |      |     
|                                                                         |                                   | Total Liabilities and Stockholders Equity |                     | $          | 21,594,445 |      |         |         |         |          |         |      |         |   |            | $          | 18,189,812 |   |         |         |         |         |      |      |      |  
|                                                                         |                                   |                                            |                     |            |            |      |         |         |         |          |         |      |         |   |            |            |            |   |         |         |         |         |      |     
|Net Interest Income and Net Interest Margin                              |                                   |                                            |                     |            |            |      | 627,469 |         |         |          | 4.20    | %    |         |   |            |            |            |   | 641,939 |         |         |         | 5.07 | %   
|Less: Tax Equivalent Adjustment (3)                                      |                                   |                                            |                     |            |            |      | (18,647 | )       |         |          |         |      |         |   |            |            |            |   | (16,264 | )       |         |         |      |     
|                                                                         |                                   |                                            |                     |            |            |      |         |         |         |          |         |      |         |   |            |            |            |   |         |         |         |         |      |     
|                                                                         |                                   |                                            | Net Interest Income |            |            |      |         |         | $       | 608,822  |         |      |         |   |            |            |            |   |         |         | $       | 625,675 |      |      |      |   | 
|                                                                         |                                   |                                            |                     |            |            |      |         |         |         |          |         |      |         |   |            |            |            |   |         |         |         |         |      |     



|(1) |  | For purposes of these computations, unrealized gains/(losses) on
available-for-sale securities are recorded in other assets.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | For purposes of these computations, non-accrual loans are included in
average loans.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   
|(3) |  | Interest income on a tax equivalent basis includes the additional amount
of income that would have been earned if investments in tax exempt money
market investments and securities, state and municipal obligations,
non-taxable loans, public equity and debt securities, and U.S. Treasuries
had been made in securities and loans subject to Federal, State, and Local
income taxes yielding the same after-tax income. The tax equivalent
amount for $1.00 of those aforementioned categories was $1.77, $1.66,
$1.55, $1.24 and $1.07 for the nine months ended September 30, 2003; and
$1.77, $1.66, $1.55, $1.24 and $1.12 for the nine months ended September
30, 2002.
|   
|(4) |  | For purposes of these computations, the fair value adjustments from
hedging activities are included in the average balance of the related
hedged item.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          

14



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##### Table of Contents



The following table highlights the relative impact on net interest income
brought about by changes in average interest earning assets and interest
bearing liabilities as well as changes in average rates on such assets and
liabilities. Due to the numerous simultaneous volume and rate changes during
the periods analyzed, it is not possible to precisely allocate changes to
volume or rate. For presentation purposes, changes which are not solely due to
changes in volume or rate have been allocated to these categories based on the
respective percentage changes in average volume and average rates as they
compare to each other.

|                                                                           |                        |        |                    |        |         |        |                   |         |         |      |         |         |              |   |        |         |           |    |         |          |   |    |         |         |  
|-------------------------------------------------------------------------- | ---------------------- | ------ | ------------------ | ------ | ------- | ------ | ----------------- | ------- | ------- | ---- | ------- | ------- | ------------ | - | ------ | ------- | --------- | -- | ------- | -------- | - | -- | ------- | ------- | -
|                                                                           |                        |        | Three Months Ended |        |         |        | Nine Months Ended |        
|                                                                           |                        |        | 2003 vs. 2002     
|                                                                           |                        |        |                   
|                                                                           |                        |        |                    |        |         |        | Change in         |         |         |      |         |         |              |   |        |         | Change in |    |         |          |  
|                                                                           |                        |        | Average            |        | Average |        | Net Interest      |         | Average |      | Average |         | Net Interest
|(in thousands)                                                             |                        | Volume |                    | Rate   |         | Income |                   | Volume  |         | Rate |         | Income 
|                                                                           |                        |        |                    |        |         |        |                   |         |         |      |         |        
|Interest Income from Earning Assets:                                       |                        |        |                    |        |         |        |                   |         |         |      |         |         |              |   |        |         |           |    |         |          |   |    |         |        
|Securities                                                                 |                        | $      | 4,550              |        |         | ($     | 40,212            | )       |         | ($   | 35,662  | )       |              | $ | 90,999 |         |           | ($ | 123,149 | )        |   | ($ | 32,150  | )      
|Loans, net                                                                 |                        |        | 14,018             |        |         |        | (18,717           | )       |         |      | (4,699  | )       |              |   | 45,646 |         |           |    | (52,087 | )        |   |    | (6,441  | )      
|Money Market Investments                                                   |                        |        | (6                 | )      |         |        | (107              | )       |         |      | (113    | )       |              |   | (17    | )       |           |    | (169    | )        |   |    | (186    | )      
|                                                                           |                        |        |                    |        |         |        |                   |         |         |      |         |         |              |   |        |         |           |    |         |          |   |    |         |        
|                                                                           | Total Interest Income  |        |                    | 18,562 |         |        |                   | (59,036 | )       |      |         | (40,474 | )            |   |        | 136,628 |           |    |         | (175,405 | ) |    |         | (38,777 | )
|                                                                           |                        |        |                    |        |         |        |                   |         |         |      |         |         |              |   |        |         |           |    |         |          |   |    |         |        
|Interest Expense on Liabilities:                                           |                        |        |                    |        |         |        |                   |         |         |      |         |         |              |   |        |         |           |    |         |          |   |    |         |        
|Savings, NOW & Money Market Deposits                                       |                        |        | 3,774              |        |         |        | (6,136            | )       |         |      | (2,362  | )       |              |   | 10,340 |         |           |    | (14,150 | )        |   |    | (3,810  | )      
|Time Deposits                                                              |                        |        | (1,169             | )      |         |        | (4,677            | )       |         |      | (5,846  | )       |              |   | (4,607 | )       |           |    | (20,206 | )        |   |    | (24,813 | )      
|Federal Funds Purchased and Securities Sold
Under Agreements to Repurchase |                        |        | (3,900             | )      |         |        | (5,247            | )       |         |      | (9,147  | )       |              |   | 29,716 |         |           |    | (24,253 | )        |   |    | 5,463   |        
|Other Borrowings                                                           |                        |        | (5,491             | )      |         |        | (868              | )       |         |      | (6,359  | )       |              |   | (8,223 | )       |           |    | (1,596  | )        |   |    | (9,819  | )      
|Subordinated Debt                                                          |                        |        | 2,186              |        |         |        | (1,883            | )       |         |      | 303     |         |              |   | 15,199 |         |           |    | (551    | )        |   |    | 14,648  |        
|Capital Securities                                                         |                        |        | 203                |        |         |        | (990              | )       |         |      | (787    | )       |              |   | 1,079  |         |           |    | (7,055  | )        |   |    | (5,976  | )      
|                                                                           |                        |        |                    |        |         |        |                   |         |         |      |         |         |              |   |        |         |           |    |         |          |   |    |         |        
|                                                                           | Total Interest Expense |        |                    | (4,397 | )       |        |                   | (19,801 | )       |      |         | (24,198 | )            |   |        | 43,504  |           |    |         | (67,811  | ) |    |         | (24,307 | )
|                                                                           |                        |        |                    |        |         |        |                   |         |         |      |         |         |              |   |        |         |           |    |         |          |   |    |         |        
|Net Change in Net Interest Income                                          |                        | $      | 22,959             |        |         | ($     | 39,235            | )       |         | ($   | 16,276  | )       |              | $ | 93,124 |         |           | ($ | 107,594 | )        |   | ($ | 14,470  | )      
|                                                                           |                        |        |                    |        |         |        |                   |         |         |      |         |         |              |   |        |         |           |    |         |          |   |    |         |        



|(1) |  | The above table is presented on a tax equivalent basis.                             
|--- |  | ------------------------------------------------------------------------------------
|   
|(2) |  | For purposes of these computations, non-accrual loans are included in
average loans.

The following table summarizes the net interest margin components over the last
several quarters. Factors contributing to the net interest margin are outlined
in the succeeding discussion and analysis.

|                                   |                               |  |         |      |         |  |         |      |         |  |         |      |         |  |      |      |      |  |      |      |   |  |      |      |  
|---------------------------------- | ----------------------------- |  | ------- | ---- | ------- |  | ------- | ---- | ------- |  | ------- | ---- | ------- |  | ---- | ---- | ---- |  | ---- | ---- | - |  | ---- | ---- | -
|                                   |                               |  |         |      |         |  | 2003    |      |         |  |         |      |         |  |      |      | 2002 |  |      |      |  
|                                   |                               |  | 3rd Qtr |      | 2nd Qtr |  | 1st Qtr |      | 4th Qtr |  | 3rd Qtr |      | 2nd Qtr
|                                   |                               |  |         |      |         |  |         |      |         |  |         |      |        
|Interest Earning Assets:           |                               |  |         |      |         |  |         |      |         |  |         |      |         |  |      |      |      |  |      |      |   |  |      |     
|Securities                         |                               |  | 3.84    | %    |         |  | 4.14    | %    |         |  | 4.96    | %    |         |  | 5.45 | %    |      |  | 6.10 | %    |   |  | 6.72 | %   
|Loans, net                         |                               |  | 6.62    | %    |         |  | 6.73    | %    |         |  | 7.02    | %    |         |  | 7.12 | %    |      |  | 7.26 | %    |   |  | 7.42 | %   
|Money Market Investments           |                               |  | 1.34    | %    |         |  | 1.54    | %    |         |  | 1.77    | %    |         |  | 1.96 | %    |      |  | 2.51 | %    |   |  | 2.13 | %   
|                                   |                               |  |         |      |         |  |         |      |         |  |         |      |         |  |      |      |      |  |      |      |   |  |      |     
|                                   | Total Interest Earning Assets |  |         | 5.56 | %       |  |         | 5.60 | %       |  |         | 6.12 | %       |  |      | 6.42 | %    |  |      | 6.81 | % |  |      | 7.16 | %
|                                   |                               |  |         |      |         |  |         |      |         |  |         |      |         |  |      |      |      |  |      |      |   |  |      |     
|Interest Bearing Liabilities:      |                               |  |         |      |         |  |         |      |         |  |         |      |         |  |      |      |      |  |      |      |   |  |      |     
|Total Savings and Time Deposits    |                               |  | 1.01    | %    |         |  | 1.12    | %    |         |  | 1.22    | %    |         |  | 1.30 | %    |      |  | 1.51 | %    |   |  | 1.63 | %   
|Total Borrowings                   |                               |  | 3.29    | %    |         |  | 3.30    | %    |         |  | 3.58    | %    |         |  | 3.89 | %    |      |  | 4.18 | %    |   |  | 4.69 | %   
|                                   |                               |  |         |      |         |  |         |      |         |  |         |      |         |  |      |      |      |  |      |      |   |  |      |     
|Total Interest Bearing Liabilities |                               |  | 1.67    | %    |         |  | 1.97    | %    |         |  | 2.15    | %    |         |  | 2.29 | %    |      |  | 2.44 | %    |   |  | 2.55 | %   
|                                   |                               |  |         |      |         |  |         |      |         |  |         |      |         |  |      |      |      |  |      |      |   |  |      |     
|Interest Rate Spread               |                               |  | 3.89    | %    |         |  | 3.63    | %    |         |  | 3.97    | %    |         |  | 4.13 | %    |      |  | 4.37 | %    |   |  | 4.61 | %   
|Net Interest Margin                |                               |  | 4.23    | %    |         |  | 4.00    | %    |         |  | 4.36    | %    |         |  | 4.58 | %    |      |  | 4.87 | %    |   |  | 5.18 | %   

15



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##### Table of Contents



During the current quarter, net interest income declined $16.9 million
from the third quarter 2002 and net interest margin dropped 64 basis points
from 4.87% to 4.23%. The margin compressions effect on net interest income was
partially offset by $1.2 billion of average interest earning asset growth
between the comparable quarters concentrated in the loan portfolio. During the
nine months ended September 30, 2003, net interest income also declined $16.9
million from the prior year period and the net interest margin declined 87
basis points from 5.07% to 4.20%. The margin compressions effect on net
interest income was partially offset by $3.1 billion of average interest
earning asset growth concentrated in the securities portfolio. These
contradictory interest earning asset trends between the comparable quarters and
nine month periods principally reflect the timing of our 2002 leverage strategy
and the June 2003 balance sheet restructuring strategy (See Balance Sheet
Restructuring and Capital Management section). During the first half of 2002,
the impact of declining rates was initially positive on our net interest
margin, as our liabilities repriced at an accelerated pace. However, the
sustained nature of low interest rates reduced our asset yields, and this
coupled with our leveraging strategy, compressed our net interest margin while
increasing net interest income through June 2003. On a linked quarter basis,
the net interest margin has improved 23 basis points and should continue to
modestly improve in the near term due to the successful restructuring, strong
commercial loan and deposit growth, lower deposit costs and the stabilization
of market interest rates.

Interest income in this quarter declined $41.1 million to $263.8 million
compared to $304.9 million in 2002. During this same period, the yield on
average interest earning assets declined 125 basis points from 6.81% to 5.56%.

Loans averaged $11.9 billion in the current quarter representing an $800
million increase or 7.2% when compared to 2002, while yields declined 64 basis
points to 6.62%. This yield compression offset the positive effects of higher
loan balances during these periods. Loan growth has been concentrated in
higher yielding commercial loans, generating core commercial deposit growth and
mitigating our exposure to rising interest rates. We have experienced loan
growth in all categories, with the exception of residential mortgages. Due to
historically low market interest rates, fixed rate residential mortgage
origination and refinancing activity was strong. To lessen our exposure to
rising interest rates, we have sold substantially all fixed rate originations
into the secondary markets. Factors contributing to the overall decline in
yields include new originations and refinancing activity occurring at market
rates, increased prepayment levels, and adjustable rate loans resetting
downward. As of September 30, 2003, the loans-to-deposits ratio was 81%,
demonstrating that sufficient liquidity exists to fund further loan growth with
deposits. Loan growth should approximate the prior years growth rate for the
balance of 2003.

Securities averaged $7.3 billion in the current quarter representing a
$390 million increase from 2002 as yields declined 226 basis points to 3.84%.
During the nine months ended September 30, 2003, securities averaged $8.3
billion or an increase of $2.2 billion from 2002 while yields declined 229
basis points to 4.33%. The decrease in average security growth between the
nine month and three month periods is a direct result of our June 2003
restructuring strategy (See Balance Sheet Restructuring and Capital Management
section). Portfolio yields and interest income were negatively impacted as
cash flows and purchases were invested at market yields. To mitigate extension
risk, we purchased short duration securities that by their nature have lower
yields. Additionally, yields and income were negatively impacted by prepayment
activity, which shortened the anticipated lives and accelerated premium
amortization, reducing security yields by 118 basis points compared to 28 basis
points in third quarter 2002. As market interest rates begin to stabilize,
prepayment activity should decline, extending the mortgage backed securities
anticipated lives and related premium amortization. These factors should have
a positive effect on portfolio yields in the near future. We anticipate
portfolio cash flows to approximate $150-$200 million per month for the balance
of 2003 as compared to $500-$600 million per month for 2002 and the first half
of 2003.

Average interest bearing liabilities rose $866 million to $15.3 billion,
while overall funding costs declined 77 basis points to 1.67% during the
quarter. During the nine months ended September 30, 2003, average interest
bearing liabilities rose $2.8 billion to $16.2 billion, while overall funding
costs declined 65 basis points to 1.93%. The slow down in average interest
bearing liability growth, specifically borrowings, for the quarter is a direct
result of our June 2003 restructuring strategy. For both the three and nine
months ended September 30, 2003, interest expense declined $24 million compared
to the comparable prior periods. The decline in average funding costs has been
positively impacted by the sustained growth in lower cost customer deposits,
especially interest free demand deposits, our short-term borrowings during the
nine month period ended 2003, and the repayment of these short-term borrowings
commencing in the second quarter 2003.

Average demand deposits grew $819 million or 28% to $3.8 billion in the
third quarter 2003 and had a positive impact on our net interest margin. At
period end, these deposits represented 27% of total deposits. Average Savings,
NOW and Money Market deposits increased $1.6 billion or 26% to $7.9 billion
while the corresponding cost of funds declined 34 basis points to 0.73%. These
core deposits have traditionally provided us with low cost funding, positively
benefiting our net interest margin and income. The benefits of growing core
deposits have been mitigated by the sustained low interest rate environment.
However, these deposits have
enhanced the value of our franchise and should further enhance our net interest
income and the margin in the eventuality of rising interest rates. Average
time deposits and their related cost declined $205 million and 62 basis points
from the prior year quarter. We believe that certain time deposit customers
are only attracted by rate and not customer service. We do not actively
compete for these time deposits since their average costs are significantly
higher than our average core deposit costs.

16



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##### Table of Contents



Average total borrowings declined $567 million to $4.4 billion in the
third quarter 2003 compared to 2002, and the related costs declined 89 basis
points to 3.29%. Average borrowings represented 29% of total interest bearing
liabilities as compared to 35% during the third quarter 2002. By contrast,
during the nine months ended September 30, 2003, average total borrowings rose
$1.6 billion from the prior year period to $5.8 billion, while overall funding
costs declined 111 basis points to 3.40%. These conflicting trends were a
direct result of our leveraging and restructuring strategies as previously
described. At September 30, 2003, collateralized borrowings (repurchase
agreements and FHLB advances) maturing or repricing in less than one year
totaled $1.3 billion and had a weighted average cost of 1.41%. Collateralized
borrowings with a weighted average maturity of 3.7 years totaled $1.7 billion
and had a weighted average cost of 5.50%. Certain collateralized borrowings
were extended and their costs fixed through the use of interest rate swaps,
which increased interest expense by approximately $2.7 million and $8.7 million
for the third quarters of 2003 and 2002, respectively. During the nine months
ended September 30, 2003 and 2002, these swaps increased interest expense by
approximately $21.2 million and $23.5 million, respectively. In June 2003,
$850 million of these interest rate swaps matured and an additional $300
million, with 2004 maturity dates, were canceled and the underlying borrowings
repaid (See Balance Sheet Restructuring and Capital Management section).

Also contributing to the increase in average total borrowings was the
issuance of $500 million in Subordinated Debt in August 2002 with an original
weighted average cost of 5.79%. In late June 2003, we used interest rate swaps
to convert $350 million of Subordinated Debt from fixed to floating indexed to
3 month LIBOR. In July 2003, the remaining $150 million in Subordinated Debt
was also converted to a floating rate indexed to 3 month LIBOR. For the three
and nine months ended September 30, 2003, these swaps decreased interest
expense by approximately $2.6 million.

In June 2002, interest rate swaps were used to convert $200 million in
Capital Securities from fixed to floating indexed to 3 month LIBOR. In July
2003, we used interest rate swaps to convert the remaining $45 million of our
Capital Securities from fixed to floating, indexed to 3 month LIBOR. For the
three and nine months ended September 30, 2003, these swaps decreased interest
expense by approximately $3.3 million and $8.9 million, respectively. For the
three and nine months ended September 30, 2002, these swaps decreased interest
expense by approximately $2.5 million and $3.0 million, respectively.

Provision and Allowance for Loan Losses

In the third quarter of 2003, we increased our provision for loan losses
to $6.5 million, as compared to $6.3 million for the same period of 2002.
Provisioning levels remained approximately consistent with loan growth. As of
September 30, 2003, the ratio of the allowance for loan losses to
non-performing loans was 939% and the allowance for loan losses to total loans
was 1.0%. Net charge-offs, as an annualized percentage of average loans, was
14 basis points in the 2003 third quarter.

The evaluation process for determining the adequacy of the allowance for
loan losses and the periodic provisioning for estimated losses is undertaken on
a quarterly basis, but may increase in frequency should conditions arise that
would require our prompt attention. Conditions giving rise to such action are
business combinations or other acquisitions or dispositions of large quantities
of loans, dispositions of non-performing and marginally performing loans by
bulk sale or any development which may indicate an adverse trend.

Recognition is also given to the changed risk profile resulting from
previous business combinations, customer knowledge, the results of the ongoing
credit-quality monitoring processes and the cyclical nature of economic and
business conditions. An important consideration in applying these methodologies
is our concentration of real estate related loans located in the New York
metropolitan area.

The methodology employed for assessing the appropriateness of the
allowance consists of the following criteria:



| |  |  | Establishment of reserve amounts for all specifically
identified criticized loans, including those arising from business
combinations and those designated as requiring special attention by
our internal loan review program, bank regulatory examinations or
our external auditors.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | Application of an average loss experience factor to smaller
balance homogenous types of loans (residential mortgages and
consumer loans) not subject to specific review.                                                                                                             
|
| |  |  | An allocation to the remaining loans giving effect to
historical loss experience, cyclical trends and current economic
conditions.                                                                                                                                                   

The initial allocation or specific-allowance methodology commences with
loan officers and underwriters grading the quality of their loans on a risk
classification scale ranging from 1 - 8. Loans identified as below investment
grade are referred to our independent Loan Review Department (LRD) for
further analysis and identification of those factors that may ultimately affect
the full recovery or collectibility of principal and/or interest. These loans
are subject to continuous review and monitoring while they remain in the
criticized category. Additionally, LRD is responsible for performing periodic
reviews of the loan portfolio independent from the identification process
employed by loan officers and underwriters. Loans that fall into criticized
categories are further evaluated for impairment in accordance with the
provisions of SFAS No. 114, Accounting by Creditors for Impairment of a Loan.
The portion of the allowance related to loans identified as impaired is based
on whichever is appropriate of the following: discounted cash flows from the
loan using the loans effective interest rate, the fair value of the collateral
for collateral dependent loans, or the observable market price of the impaired
loan.

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The second allocation or loss experience factor approach, which applies to
smaller balance homogenous loans, including residential mortgages and consumer
loans is made by applying the average loss experience factor to the outstanding
balances in each loan category.

The final allocation applies a loss experience factor to all loans which
have not been specifically reviewed for impairment or which were not analyzed
as part of a homogenous portfolio. It gives recognition to our historical loss
experience with such loans, as well as that of acquired businesses, business
cycle changes and the real estate components of loans.

Other evidentiary matter used to evaluate the adequacy of the allowance
for loan losses is the amount and trend of criticized loans, the results of
regulatory examinations, peer group comparisons and economic data associated
with the relevant markets, specifically the local real estate market. This
information may result in an overall allowance level greater than the amount
determined by the allocation process described above.

Since many loans depend upon the sufficiency of collateral, any adverse
trend in the real estate markets could seriously affect underlying values
available to protect us from loss.

Based upon our evaluation process, we consider the allowance for loan
losses to be adequate at September 30, 2003.

The following table is a summary of the changes in the allowance for loan
losses and reflects net charge-offs by loan type for the three and nine months
ended September 30, 2003 and 2002:

|                                                 |                        |      |                    |       |                   |      |         |       |   |   |         |       |   |   |         |       | 
|------------------------------------------------ | ---------------------- | ---- | ------------------ | ----- | ----------------- | ---- | ------- | ----- | - | - | ------- | ----- | - | - | ------- | ----- | 
|                                                 |                        |      | Three Months Ended |       | Nine Months Ended
|(dollars in thousands)                           |                        | 2003 |                    | 2002  |                   | 2003 |         | 2002 
|                                                 |                        |      |                    |       |                   |      |         |      
|Balance at Beginning of Period                   |                        | $    | 117,753            |       |                   | $    | 109,998 |       |   | $ | 114,995 |       |   | $ | 103,801 |      
|Provision for Loan Losses                        |                        |      | 6,500              |       |                   |      | 6,250   |       |   |   | 19,250  |       |   |   | 18,750  |      
|Less: Net Loans Charged-off/(Recoveries):        |                        |      |                    |       |                   |      |         |       |   |   |         |       |   |   |         |      
|                                                 | Commercial Mortgages   |      |                    | (36   | )                 |      |         | 5     |   |   |         | (34   | ) |   |         | 979   | 
|                                                 | Consumer               |      |                    | 1,926 |                   |      |         | 1,829 |   |   |         | 6,769 |   |   |         | 5,728 | 
|                                                 | Commercial             |      |                    | 2,456 |                   |      |         | 1,778 |   |   |         | 7,732 |   |   |         | 2,770 | 
|                                                 | Residential Mortgages  |      |                    |      |                   |      |         | (13   | ) |   |         | (133  | ) |   |         | 422   | 
|                                                 | Multi-Family Mortgages |      |                    |      |                   |      |         |      |   |   |         | 4     |   |   |         | 3     | 
|                                                 | Construction and Land  |      |                    |      |                   |      |         |      |   |   |         |      |   |   |         |      | 
|                                                 |                        |      |                    |       |                   |      |         |       |   |   |         |       |   |   |         |      
|Balance at End of Period                         |                        | $    | 119,907            |       |                   | $    | 112,649 |       |   | $ | 119,907 |       |   | $ | 112,649 |      
|                                                 |                        |      |                    |       |                   |      |         |       |   |   |         |       |   |   |         |      
|Annualized Net Charge-Offs to Average Loans, net |                        |      | 0.14               | %     |                   |      | 0.13    | %     |   |   | 0.16    | %     |   |   | 0.12    | %    

For information on non-performing assets, see Asset Quality below.

Non-Interest Income

Non-interest income, exclusive of securities gains, increased $4.4 million
or 15.4% to $33.6 million when compared to $29.2 million in the third quarter
2002. Contributing to this growth was a $.8 million increase in customer
related fees and service charges to $20.7 million due primarily to continued
growth in core deposits, expansion of both our retail and commercial customer
base and the broadening use of our fee based services. Mortgage banking
revenues were up $1.0 million or 55% as we benefited from record
origination and refinancing activity due to the current interest rate
environment. However, mortgage banking activity was tempered at the end of the
quarter as interest rates stabilized and increased modestly. Check cashing
fees increased $.5 million from the purchase of 7 additional locations during
the first quarter 2003. Other operating income rose $2.8 million when compared
to prior quarter levels primarily due to $2 million in trading gains from the
sale of treasury securities held in our trading portfolio. These improvements
were partially offset by a $.7 million decline in investment management,
commissions and trust fees due to decreased customer demand for mutual funds
and annuity products. During the nine months ended September 30, 2003, we
recognized facility gains of $11 million (the sale of one vacated facility
generated a gain of $9.1 million).

Securities gains recognized in the third quarter 2003 were $.4 million as
compared to $2.7 in the prior year period. Gains recognized during these
periods were derived principally from the sale of mortgage backed securities.

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Non-Interest Expense

Non-interest expense increased $5.9 million or 7.4% to $84.8 million when
compared to $78.9 million in the third quarter 2002. Contributing to the
increase was an additional $2.8 million in employee compensation & benefits and
$2.7 million in occupancy & equipment. Employee compensation & benefits rose
6.2% due to increased employee levels to support new business initiatives and
support systems, annual merit awards, increased health insurance and pension
costs, and the use of incentive based compensation linked to deposit growth.
Total incentive based compensation represented approximately 30% of total
employee compensation and benefits during the 2003. Occupancy & equipment
increases are due to our continued de novo branch expansion and costs
associated with implementing new business initiatives and support systems. We
have made and will continue to make significant investments in technology and
facilities providing our customers with easy to use and competitively priced
products and branch services. For the nine months ended September 30, 2003, we
have invested approximately $11 million in facilities and $14 million in
technology/equipment. As previously discussed, we canceled $300 million of
variable rate term-borrowings and their underlying pay fixed swaps and $200
million of fixed rate term-borrowings at a cost of $11.9 million during the
nine months ended September 30, 2003.

The core efficiency ratio is used by the financial services industry to
measure an organizations operating efficiency. Our core efficiency ratio
represented the ratio of non-interest expense, excluding debt restructuring
costs, to net interest income on a tax equivalent basis and non-interest
income, excluding facilities and securities gains. The core efficiency ratios
were 35.4% and 34.3% for the three and nine months ended September 30, 2003,
respectively.

Income Taxes

Our effective tax rates for the three and nine months ended September 30,
2003 was 33.7% and 33.9% respectively, as compared to 34.5% for the three and
nine months ended September 30, 2002. We anticipate that the effective tax rate
for the remainder of 2003 will remain at the current quarters level.

Financial Condition

Loan Portfolio

Loans grew $722 million or 6.4% to $12.0 billion at September 30, 2003
when compared to $11.3 billion at September 30, 2002. We have experienced
strong loan demand despite a sluggish local economy. We extend loans almost
exclusively within the New York Metropolitan area, and do not participate in
nationally syndicated loan arrangements. Growth occurred in all loan
categories, except for residential mortgages, which declined between period
ends by $257 million. This did not reflect a decline in originations, but a
conscious decision to sell most fixed rate residential mortgage originations
into the secondary market to reduce our interest rate risk exposure.

Mortgage loans are secured by real estate in the New York Metropolitan
area. The segments of the real estate portfolio are diversified in terms of
risk and repayment sources. The underlying collateral includes multi-family
apartment buildings, residential 1-4 family homes and owner occupied/non-owner
occupied commercial properties. The risks inherent in these portfolios are
dependent on both regional and general economic stability, which affect
property values, and our borrowers financial well being and creditworthiness.

We periodically monitor these factors as well as our underwriting
standards to ensure that the quality of the loan portfolio and origination
pipeline is not jeopardized by unrealistic loan to value ratios or debt service
levels. To date, there has been no deterioration in the performance or risk
characteristics of our real estate loan portfolio.

The following table represents the components of the loan portfolio as of the
dates indicated:

|                       |                        |            |           |               |            |      |    |              |     |      |           |               |            |      |    |   |     |   |           |        |            |  |    |   |     |  
|---------------------- | ---------------------- | ---------- | --------- | ------------- | ---------- | ---- | -- | ------------ | --- | ---- | --------- | ------------- | ---------- | ---- | -- | - | --- | - | --------- | ------ | ---------- |  | -- | - | --- | -
|                       |                        |            |           | September 30, |            | % of |    | December 31, |     | % of |           | September 30, |            | % of
|(dollars in thousands) |                        | 2003       |           | Total         |            | 2002 |    | Total        |     | 2002 |           | Total        
|                       |                        |            |           |               |            |      |    |              |     |      |           |              
|Multi-Family Mortgages |                        | $          | 3,684,530 |               |            |      | 31 | %            |     | $    | 3,640,039 |               |            |      | 32 | % |     | $ | 3,616,680 |        |            |  | 32 | %
|Commercial Mortgages   |                        |            | 2,519,184 |               |            |      | 21 | %            |     |      | 2,194,092 |               |            |      | 19 | % |     |   | 2,167,981 |        |            |  | 19 | %
|Commercial             |                        |            | 2,077,084 |               |            |      | 17 | %            |     |      | 1,776,419 |               |            |      | 16 | % |     |   | 1,654,424 |        |            |  | 15 | %
|Construction & Land    |                        |            | 316,782   |               |            |      | 3  | %            |     |      | 232,227   |               |            |      | 2  | % |     |   | 255,797   |        |            |  | 2  | %
|Residential Mortgages  |                        |            | 2,355,467 |               |            |      | 19 | %            |     |      | 2,507,388 |               |            |      | 22 | % |     |   | 2,612,523 |        |            |  | 23 | %
|Consumer               |                        |            | 1,098,193 |               |            |      | 9  | %            |     |      | 1,040,490 |               |            |      | 9  | % |     |   | 1,010,687 |        |            |  | 9  | %
|                       |                        |            |           |               |            |      |    |              |     |      |           |               |            |      |    |   |     |   |           |        |            |  |    |  
|                       |                        | Total      |           | $             | 12,051,240 |      |    |              | 100 | %    |           | $             | 11,390,655 |      |    |   | 100 | % |           | $      | 11,318,092 |  |    |   | 100 | %
|                       |                        |            |           |               |            |      |    |              |     |      |           |               |            |      |    |   |     |   |           |        |            |  |    |  
|Less:                  |                        |            |           |               |            |      |    |              |     |      |           |               |            |      |    |   |     |   |           |        |            |  |    |  
|                       | Unearned Income & Fees |            |           | 29,763        |            |      |    |              |     |      |           | 21,516        |            |      |    |   |     |   |           | 18,417 |            |  |    |   |    
|                       |                        |            |           |               |            |      |    |              |     |      |           |               |            |      |    |   |     |   |           |        |            |  |    |  
|                       |                        | Loans, Net |           | $             | 12,021,477 |      |    |              |     |      |           | $             | 11,369,139 |      |    |   |     |   |           | $      | 11,299,675 |  |    |   |     |  
|                       |                        |            |           |               |            |      |    |              |     |      |           |               |            |      |    |   |     |   |           |        |            |  |    |  

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We are selective in originating loans, emphasizing conservative lending
practices and fostering customer deposit relationships. Our success in
attracting new customers while leveraging our existing customer base, coupled
with over-consolidation within our market area and the current interest rate
environment has contributed to sustained loan demand. We believe loan growth
for 2003 will be consistent with prior years levels. The commercial and
commercial mortgage portfolios have benefited from our expanded presence in the
New York City market, the expansion of small business lending initiatives, and
growth in the equipment and lease financing areas. We continue to emphasize
these higher yielding and interest rate sensitive loans, which also generate
core deposit relationships. Our commercial and commercial mortgage loans
increased $774 million or 20% to $4.6 billion during the twelve months ended
September 30, 2003. These balances grew at an annualized pace of 22% on a
linked quarter basis. Growth in our multi-family portfolio has been tempered
by our decision not to compete with more aggressive pricing and extended terms
while maintaining our historically rigorous underwriting standards. Residential
mortgages have declined, despite record origination volumes, as most fixed rate
originations have been sold into the secondary market, contributing to the
growth in mortgage banking revenues. Consumer loans continue to benefit from
previous initiatives to expand the geographic footprint of our automobile
financing activities.

The risk inherent in the real estate portfolio is minimized by prudent
underwriting standards and diversification in loan collateral type and
location. Multi-family mortgages, collateralized by various types of apartment
complexes located in the New York Metropolitan area, are dependent largely on
sufficient rental income to cover operating expenses. They may be affected by
government regulation, such as rent control regulations, which could impact the
future cash flows of the property. Most multi-family mortgages do not fully
amortize; therefore, the principal outstanding is not significantly reduced
prior to contractual maturity. Residential mortgages represent first liens on
owner occupied 1-4 family residences located primarily in our market area.
Commercial mortgages are secured by professional office buildings, retail
stores, shopping centers and industrial developments.

Real estate underwriting standards include various limits on loan-to-value
ratios based on property types, the real estate location, the property
condition, the quality of the organization managing the property, and the
borrowers creditworthiness. They also include the viability of the project
including occupancy rates, tenants and lease terms. Additionally, underwriting
standards require appraisals, periodic property inspections and ongoing
monitoring of operating results.

Commercial loans are made to small and medium sized businesses and loans
collateralized by security interests in lease finance receivables. The
commercial mortgage and commercial loan portfolios contain no foreign loans to
developing countries (LDC). Consumer loans primarily consist of new and used
automobiles loans originated through a network of automobile dealers. The
credit risk in auto lending is dependent on the borrowers creditworthiness and
collateral values. The average consumer loan is generally between $15-$25
thousand and has a contractual life of approximately 60 months. The consumer
loan portfolio does not contain higher risk credit card or sub prime loans.
Land loans are used to finance the acquisition of vacant land for future
residential and commercial development. Construction loans finance the building
and rehabilitation of residential and multi-family projects, and to a lesser
extent, commercial developments. The construction and land development
portfolios do not contain any high-risk equity participation loans (AD&C
loans).

Related Party Loans

Loans to related parties include loans to directors, their related
companies and our executive officers. These loans are made in the ordinary
course of business and on the same terms as comparable loans to unrelated
individuals and businesses having comparable risks. They are in compliance with
all regulatory guidelines. We do not extend loans to our directors or
executive officers to finance the purchase of our common stock or loans that
are prohibited by the Sarbanes-Oxley Act. Related party loans, comprised
principally of residential mortgages, aggregated $3.3 million and $3.6 million
at September 30, 2003 and 2002, respectively.

Credit Related Commitments

We extend traditional off-balance sheet financial products to meet the
financing needs of our customers. They include commitments to extend credit and
letters of credit. Funded commitments are reflected in the consolidated balance
sheet.

Commitments to extend credit are agreements to lend to customers in
accordance with contractual provisions. These commitments usually have fixed
expiration dates or other termination clauses and may require the payment of a
fee. Total commitments outstanding do not necessarily represent our future cash
flow requirements as many commitments expire without being funded.

We evaluate each customers creditworthiness prior to issuing these
commitments and may also, based on our credit evaluation, require certain
collateral. Collateral varies but may include accounts receivable, inventory,
property, plant and equipment, and income-producing properties. Fixed rate
commitments are subject to interest rate risk based on changes in prevailing
rates during the commitment period. We are subject to credit risk in the event
that the commitments are drawn upon and the customer is unable to repay its
obligation.

Letters of credit are irrevocable commitments issued at the request of
customers. They authorize the beneficiary to draw drafts for payment in
accordance with the stated terms and conditions. Letters of credit substitute
the banks creditworthiness for that of the customer and are issued for a fee
commensurate with the risk.

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We typically issue two types of letters of credit: Commercial
(documentary) Letters of Credit and Standby Letters of Credit. Commercial
Letters of Credit are commonly issued to finance the purchase of goods and are
typically short term in nature. Standby Letters of Credit are issued to back
financial or performance obligations of the banks customer, and are typically
issued for periods of one year or longer. Due to their long-term nature,
Standby Letters of Credit require adequate collateral in the form of cash or
other liquid assets. In most instances, Standby Letters of Credit expire
without being drawn upon. The credit risk involved in issuing letters of
credit is essentially the same as extending credit facilities to comparable
customers.

The following table presents total commitments and letters of credit
outstanding at September 30, 2003:

|                              |  |  |           | 
|----------------------------- |  |  | --------- | 
|(in thousands)                |  |  |           | 
|Commitments to Extend Credit  |  |  | 1,561,930 | 
|Standby Letters of Credit (1) |  |  | 165,478   | 
|Commercial Letters of Credit  |  |  | 19,674    | 

(1)     Standby Letters of Credit are considered guarantees in accordance with the
criteria specified by FIN 45 which was adopted on January 1, 2003. After that
date, we issued or modified Standby Letters of Credit with an aggregate
contract amount of $199.9 million, which are carried at their estimated fair
value of $1 million and included in other liabilities on the accompanying
consolidated balance sheet as of September 30, 2003. The fair value of these
instruments is recognized as income over the initial term of the guarantee.

Asset Quality

Non-performing assets include loans ninety days past due and still
accruing, non-accrual loans and other real estate. Other real estate consists
of property acquired through foreclosure or deed in lieu of foreclosure. The
components of non-performing assets are detailed below:

|                                                  |  |               |        |              |  |               |        |   |  |   |        |  
|------------------------------------------------- |  | ------------- | ------ | ------------ |  | ------------- | ------ | - |  | - | ------ | -
|                                                  |  | September 30, |        | December 31, |  | September 30,
|(in thousands)                                    |  | 2003          |        | 2002         |  | 2002         
|                                                  |  |               |        |              |  |              
|Loans Ninety Days Past Due and Still Accruing     |  | $             | 2,445  |              |  | $             | 4,438  |   |  | $ | 7,218  |  
|Non-Accrual Loans                                 |  |               | 10,328 |              |  |               | 7,778  |   |  |   | 6,901  |  
|                                                  |  |               |        |              |  |               |        |   |  |   |        |  
|Non-Performing Loans                              |  |               | 12,773 |              |  |               | 12,216 |   |  |   | 14,119 |  
|Other Real Estate                                 |  |               | 313    |              |  |               | 295    |   |  |   | 295    |  
|                                                  |  |               |        |              |  |               |        |   |  |   |        |  
|Non-Performing Assets                             |  | $             | 13,086 |              |  | $             | 12,511 |   |  | $ | 14,414 |  
|                                                  |  |               |        |              |  |               |        |   |  |   |        |  
|Allowance for Loan Losses to Non-Performing Loans |  |               | 939    | %            |  |               | 941    | % |  |   | 798    | %
|Allowance for Loan Losses to Total Loans, net     |  |               | 1.00   | %            |  |               | 1.01   | % |  |   | 1.00   | %
|Non-Performing Loans to Total Loans, net          |  |               | 0.11   | %            |  |               | 0.11   | % |  |   | 0.12   | %
|Non-Performing Assets to Total Assets             |  |               | 0.06   | %            |  |               | 0.06   | % |  |   | 0.07   | %

Future levels of non-performing assets will be influenced by prevailing
economic conditions and the impact of those conditions on our customers,
prevailing interest rates, unemployment rates, property values and other
internal and external factors.

The following table represents the components of non-performing loans:

|                       |                            |      |               |        |              |      |               |        |  |   |       |        | 
|---------------------- | -------------------------- | ---- | ------------- | ------ | ------------ | ---- | ------------- | ------ |  | - | ----- | ------ | 
|                       |                            |      | September 30, |        | December 31, |      | September 30,
|(in thousands)         |                            | 2003 |               | 2002   |              | 2002
|                       |                            |      |               |        |              |     
|Commercial             |                            | $    | 5,795         |        |              | $    | 2,958         |        |  | $ | 3,440 |       
|Residential Mortgages  |                            |      | 3,886         |        |              |      | 3,794         |        |  |   | 3,265 |       
|Consumer               |                            |      | 2,384         |        |              |      | 4,723         |        |  |   | 5,813 |       
|Commercial Mortgages   |                            |      | 708           |        |              |      | 637           |        |  |   | 1,432 |       
|Multi-Family Mortgages |                            |      |              |        |              |      | 104           |        |  |   | 15    |       
|Construction and Land  |                            |      |              |        |              |      |              |        |  |   | 154   |       
|                       |                            |      |               |        |              |      |               |        |  |   |       |       
|                       | Total Non-Performing Loans |      | $             | 12,773 |              |      | $             | 12,216 |  |   | $     | 14,119 | 
|                       |                            |      |               |        |              |      |               |        |  |   |       |       

At September 30, 2003, there were no commitments to lend additional funds
to borrowers whose loans are non-performing. Additionally, there were no
restructured, accruing loans outstanding at the dates presented above.

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Securities Portfolio

The amortized cost and estimated fair values of available-for-sale and
held-to-maturity securities were as follows:

|                                      |  |                    |           |                   |  |                    |           |       |  |           |           |       |  |   |           |  |  |   |           |  |  |   |           | 
|------------------------------------- |  | ------------------ | --------- | ----------------- |  | ------------------ | --------- | ----- |  | --------- | --------- | ----- |  | - | --------- |  |  | - | --------- |  |  | - | --------- | 
|                                      |  | September 30, 2003 |           | December 31, 2002 |  | September 30, 2002
|                                      |  |                    |           |                   |  |                   
|Available-for-Sale                    |  | Amortized          |           | Fair              |  | Amortized          |           | Fair  |  | Amortized |           | Fair 
|(in thousands)                        |  | Cost               |           | Value             |  | Cost               |           | Value |  | Cost      |           | Value
|                                      |  |                    |           |                   |  |                    |           |       |  |           |           |      
|CMO Private Issuances                 |  | $                  | 1,076,995 |                   |  | $                  | 1,080,098 |       |  | $         | 2,762,794 |       |  | $ | 2,788,739 |  |  | $ | 3,434,181 |  |  | $ | 3,495,789 | 
|CMO Agency Issuances                  |  |                    | 3,306,849 |                   |  |                    | 3,331,474 |       |  |           | 4,028,157 |       |  |   | 4,053,710 |  |  |   | 2,859,348 |  |  |   | 2,890,136 | 
|Agency Pass-Through Certificates      |  |                    | 831,500   |                   |  |                    | 836,621   |       |  |           | 485,240   |       |  |   | 503,205   |  |  |   | 558,795   |  |  |   | 579,155   | 
|U.S. Government Agencies Obligations |  |                    | 7,616     |                   |  |                    | 7,583     |       |  |           | 32,122    |       |  |   | 32,539    |  |  |   | 30,896    |  |  |   | 31,275    | 
|U.S. Treasury Securities              |  |                    | 54,713    |                   |  |                    | 54,818    |       |  |           | 34,927    |       |  |   | 35,005    |  |  |   | 5,078     |  |  |   | 5,139     | 
|State & Municipal Obligations         |  |                    | 686,550   |                   |  |                    | 693,511   |       |  |           | 376,420   |       |  |   | 383,290   |  |  |   | 367,495   |  |  |   | 374,813   | 
|Equity Securities (1)                 |  |                    | 230,396   |                   |  |                    | 237,845   |       |  |           | 257,898   |       |  |   | 259,092   |  |  |   | 223,210   |  |  |   | 222,858   | 
|Other Securities                      |  |                    | 559,706   |                   |  |                    | 567,725   |       |  |           | 508,209   |       |  |   | 500,312   |  |  |   | 407,390   |  |  |   | 397,714   | 
|                                      |  |                    |           |                   |  |                    |           |       |  |           |           |       |  |   |           |  |  |   |           |  |  |   |           | 
|                                      |  | $                  | 6,754,325 |                   |  | $                  | 6,809,675 |       |  | $         | 8,485,767 |       |  | $ | 8,555,892 |  |  | $ | 7,886,393 |  |  | $ | 7,996,879 | 
|                                      |  |                    |           |                   |  |                    |           |       |  |           |           |       |  |   |           |  |  |   |           |  |  |   |           | 

(1)  Amortized cost and fair value includes $68.2 million, $174.3 million and
$169.3 million at September 30, 2003, December 31, 2002 and September 30, 2002,
respectively in Federal Home Loan Bank Stock.

|                                 |  |                    |         |                   |  |                    |         |       |  |           |         |       |  |   |         |  |  |   |         |  |  |   |         | 
|-------------------------------- |  | ------------------ | ------- | ----------------- |  | ------------------ | ------- | ----- |  | --------- | ------- | ----- |  | - | ------- |  |  | - | ------- |  |  | - | ------- | 
|                                 |  | September 30, 2003 |         | December 31, 2002 |  | September 30, 2002
|                                 |  |                    |         |                   |  |                   
|Held-to-Maturity                 |  | Amortized          |         | Fair              |  | Amortized          |         | Fair  |  | Amortized |         | Fair 
|(in thousands)                   |  | Cost               |         | Value             |  | Cost               |         | Value |  | Cost      |         | Value
|                                 |  |                    |         |                   |  |                    |         |       |  |           |         |      
|CMO Private Issuances            |  | $                  | 43,442  |                   |  | $                  | 43,493  |       |  | $         | 113,501 |       |  | $ | 114,356 |  |  | $ | 208,773 |  |  | $ | 211,911 | 
|Agency Pass-Through Certificates |  |                    | 94,711  |                   |  |                    | 97,746  |       |  |           | 132,205 |       |  |   | 138,026 |  |  |   | 159,935 |  |  |   | 165,447 | 
|State & Municipal Obligations    |  |                    | 56,775  |                   |  |                    | 60,450  |       |  |           | 52,196  |       |  |   | 54,931  |  |  |   | 56,565  |  |  |   | 60,038  | 
|Other Securities                 |  |                    | 15,880  |                   |  |                    | 15,966  |       |  |           | 9,976   |       |  |   | 9,976   |  |  |   | 10,453  |  |  |   | 10,451  | 
|                                 |  |                    |         |                   |  |                    |         |       |  |           |         |       |  |   |         |  |  |   |         |  |  |   |         | 
|                                 |  | $                  | 210,808 |                   |  | $                  | 217,655 |       |  | $         | 307,878 |       |  | $ | 317,289 |  |  | $ | 435,726 |  |  | $ | 447,847 | 
|                                 |  |                    |         |                   |  |                    |         |       |  |           |         |       |  |   |         |  |  |   |         |  |  |   |         | 

As of September 30, 2003, we completed the balance sheet restructuring and
strengthened our interest rate risk profile by reducing our securities
portfolio (See Balance Sheet Restructuring and Capital Management section).
This mitigated our exposure to extension risk and reduced the potential for
significant unrealized losses. The portfolio was reduced by $2.4 billion on a
linked quarter basis and approximately $3 billion from an interim period high
through $1.1 billion in sales, at a gain of $0.4 million, and portfolio cash
flows. We anticipate managing our securities portfolio between $7.0-$7.5
billion in the near future. This anticipated level is dependent upon loan
demand, deposit growth, securities portfolio cash flows and the movement of
market interest rates.

At September 30, 2003, Mortgage Backed Securities (MBS) represented 77%
of total securities and provide continuous sources of cash flow that are
impacted by changes in interest rates. MBSs represent pass-through
certificates guaranteed by FHLMC, GNMA or FNMA and collateralized
mortgage-backed obligations (CMOs) backed by government agency pass-through
certificates or whole loans. CMOs, by virtue of the underlying collateral or
structure, are AAA rated and conservative current pay sequentials or PAC
structures.

Our strategy for managing the current MBS portfolio is to maintain a short
weighted average life and duration. This short average life provides us with
cash flows to proactively manage as market conditions change. Cash flows may be
reinvested in securities at current market rates, utilized to pay off short
term borrowings, and/or fund future loan growth. We anticipate portfolio cash
flows to approximate $150-$200 million per month for the balance of 2003 as
compared to $500-$600 million per month for 2002 and the first half of 2003.
The weighted average life and duration of the MBS portfolio was 2.4 and 2.2
years, respectively at September 30, 2003.

The yields and fair values of securities, specifically MBSs, are impacted
by changes in interest rates and related prepayment activity. Given our
current portfolio composition, in a rising interest rate environment, related
prepayment activity should decrease, extending the weighted average life of the
portfolio. Accordingly, net premiums on the portfolio would be amortized into
income over a longer period of time, thereby increasing MBS yields and net
interest income. Conversely, the opposite would occur in a declining interest
rate environment. At September 30, 2003, net premiums represented approximately
1% of the outstanding balance of MBSs.

Equity securities maintained in the available-for-sale portfolio primarily
include Federal Home Loan Bank common stock, and common and preferred stock of
certain publicly traded companies. Other securities maintained in the
available-for-sale portfolio consist of capital securities (trust preferred
securities) of certain financial institutions and corporate bonds.

We maintain a Bank Owned Life Insurance trust (commonly referred to as
BOLI). We formed the BOLI trust to offset future employee benefit costs and to
provide additional benefits due to its tax-exempt nature. Only officer level
employees who have consented have been insured under the program.
Approximately $204 million in assets support the program and are principally
included in the available-for-sale portfolio. The BOLIs impact on net income
has not been significant.

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When purchasing investment securities, we consider our overall
interest-rate risk profile as well as the adequacy of expected returns relative
to risks assumed, including prepayments. In managing the investment securities
portfolio on a continuous basis, we occasionally sell investment securities as
a result of changes in interest rates and spreads, actual or anticipated
prepayments, credit risk associated with a particular security, and/or
following the completion of a business combination.

At September 30, 2003, securities carried at $3.3 billion were pledged to
secure securities sold under agreements to repurchase, other borrowings, and
for other purposes as required by law. Securities pledged under agreements
pursuant to which the collateral may be sold or repledged by the secured
parties approximated $2 billion, while securities pledged under agreements
pursuant to which the secured parties may not sell or repledge approximated
$1.3 billion at September 30, 2003.

Borrowings

The maturity or repricing frequency of federal funds purchased, repurchase
agreements and FHLB advances and related costs at September 30, 2003 are as
follows:

|                    |       |        |         |           |  |         |      |      |  
|------------------- | ----- | ------ | ------- | --------- |  | ------- | ---- | ---- | -
|Maturity/Repricing  |       |        |         |           |  | Average
|(in
thousands)      |       | Amount |         | Rate     
|                    |       |        |         |          
|2003                |       | $      | 904,000 |           |  |         | 0.96 | %   
|2004                |       |        | 350,000 |           |  |         | 2.55 | %   
|2005                |       |        | 700,000 |           |  |         | 5.52 | %   
|2006                |       |        | 250,000 |           |  |         | 4.68 | %   
|2007 and thereafter |       |        | 750,000 |           |  |         | 5.75 | %   
|                    |       |        |         |           |  |         |      |     
|                    | Total |        | $       | 2,954,000 |  |         |      | 3.76 | %
|                    |       |        |         |           |  |         |      |     

In the current quarter, total federal funds purchased and collateralized
borrowings declined $2.4 billion or 45% from the 2002 third quarter and $3.1
billion or 51% from an interim period high. These borrowings represented 17%
of our funding sources at period end as compared to 30% a year ago. As
previously described, we financed securities growth with short-term repurchase
agreements and FHLB advances during 2002 and the first half of 2003. These
short-term borrowings were repaid as part of the balance sheet restructuring
commencing in late June 2003 (See Balance Sheet Restructuring and Capital
Management section).

Our subordinated debt, which qualifies as Tier II regulatory capital, was
issued in August 2002 and is summarized as follows:

|                                                |  |                    |         |                   |  |                    |         |  |  |   |         | 
|----------------------------------------------- |  | ------------------ | ------- | ----------------- |  | ------------------ | ------- |  |  | - | ------- | 
|Subordinated Debt                               |  |                    |         |                   |  |                    |         |  |  |   |         | 
|(in thousands)                                  |  | September 30, 2003 |         | December 31, 2002 |  | September 30, 2002
|                                                |  |                    |         |                   |  |                   
|5.875% Subordinated Notes due August 15, 2012   |  | $                  | 349,207 |                   |  | $                  | 349,140 |  |  | $ | 349,117 | 
|5.0% Subordinated Notes due August 15, 2007 (1) |  |                    | 150,000 |                   |  |                    | 150,000 |  |  |   | 150,000 | 
|                                                |  |                    |         |                   |  |                    |         |  |  |   |         | 
|                                                |  |                    | 499,207 |                   |  |                    | 499,140 |  |  |   | 499,117 | 
|Fair Value Hedge Adjustment                     |  |                    | (17,925 | )                 |  |                    |        |  |  |   |        | 
|                                                |  |                    |         |                   |  |                    |         |  |  |   |         | 
|                                                |  | $                  | 481,282 |                   |  | $                  | 499,140 |  |  | $ | 499,117 | 
|                                                |  |                    |         |                   |  |                    |         |  |  |   |         | 



| | (1) |  | The fixed rate/floating rate notes bear interest at a fixed rate of
5% per annum for the first five years, and convert to a floating rate
thereafter until maturity based on the US dollar three-month LIBOR plus
1.87%. Beginning in the sixth year, the Company has the right to redeem
the fixed rate/floating rate notes at par plus accrued interest.
| | --- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Our Company Obligated Mandatorily Redeemable Capital Securities of
Subsidiary Trusts (Capital securities or Trust Preferred Securities) are
summarized as follows:

|                                               |  |                    |         |                   |  |                    |         |  |  |   |         | 
|---------------------------------------------- |  | ------------------ | ------- | ----------------- |  | ------------------ | ------- |  |  | - | ------- | 
|Capital Securities                             |  |                    |         |                   |  |                    |         |  |  |   |         | 
|(in thousands)                                 |  | September 30, 2003 |         | December 31, 2002 |  | September 30, 2002
|                                               |  |                    |         |                   |  |                   
|8.70% Capital Securities due December 15, 2026 |  | $                  | 99,718  |                   |  | $                  | 99,710  |  |  | $ | 99,706  | 
|8.00% Capital Securities due December 15, 2027 |  |                    | 99,689  |                   |  |                    | 99,679  |  |  |   | 99,676  | 
|8.17% Capital Securities due May 1, 2028       |  |                    | 45,000  |                   |  |                    | 45,000  |  |  |   | 45,000  | 
|                                               |  |                    |         |                   |  |                    |         |  |  |   |         | 
|                                               |  |                    | 244,407 |                   |  |                    | 244,389 |  |  |   | 244,382 | 
|Fair Value Hedge Adjustment                    |  |                    | 20,777  |                   |  |                    | 24,537  |  |  |   | 22,296  | 
|                                               |  |                    |         |                   |  |                    |         |  |  |   |         | 
|                                               |  | $                  | 265,184 |                   |  | $                  | 268,926 |  |  | $ | 266,678 | 
|                                               |  |                    |         |                   |  |                    |         |  |  |   |         | 

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The Capital Securities are obligations of wholly-owned statutory business
trust subsidiaries (collectively, the Trusts). The Trusts were formed with
initial capitalizations in common stock and for the exclusive purpose of
issuing the Capital Securities and using the proceeds to acquire Junior
Subordinated Debt Securities (Debt Securities) issued by the Company. The
Debt Securities are due concurrently with the Capital Securities and are
non-callable at any time in whole or in part for ten years from the date of
issuance, except in certain circumstances. They may be redeemed annually
thereafter, in whole or in part, at declining premiums to maturity.

The Capital Securities qualify as Tier I capital for regulatory purposes
and are subordinate in repayment to all other company obligations. However, due
to the recent issuance of FIN 46, there can be no assurance that the Federal
Reserve will continue to allow institutions to include Capital Securities in
Tier I Capital. The costs associated with these issuances have been
capitalized and are being amortized to maturity using the straight-line method.

Derivative Financial Instruments

Our use of derivative financial instruments creates exposure to credit
risk. This credit exposure relates to losses that would be recognized if the
counterparties fail to perform their obligations under the contracts. To
mitigate this exposure to non-performance, we deal only with counterparties of
good credit standing and establish counterparty credit limits. In connection
with our interest rate risk management process, we periodically enter into
interest rate derivative contracts. These derivative interest rate contracts
may include interest rate swaps, caps, and floors, which are used to modify the
repricing characteristics of specific assets and liabilities.

The following table details the interest rate swaps and their associated hedged
liability outstanding as of September 30, 2003:

|                             |  |                        |  |          |         |               |         |               |               |               |  |  |               |  |  | 
|---------------------------- |  | ---------------------- |  | -------- | ------- | ------------- | ------- | ------------- | ------------- | ------------- |  |  | ------------- |  |  | 
|                             |  |                        |  |          |         | Swap          |         | Swap Fixed    |               | Swap Variable
|                             |  | Hedged                 |  | Notional |         | Interest Rate |         | Interest Rate
|Maturity                     |  | Liability              |  | Amount   |         | Range         |         | Range        
|                             |  |                        |  |          |         |               |         |              
|(dollars in thousands)       |  |                        |  |          |         |               |         |               |               |               |  |  |               |  |  | 
|PAY FIXED SWAPS-Maturing:    |  |                        |  |          |         |               |         |               |               |               |  |  |               |  |  | 
|2004                         |  | FHLB Advance           |  | $        | 100,000 |               |         |               | 5.23%         |               |  |  | 1.14%         | 
|2005                         |  | Repurchase Agreement   |  |          | 100,000 |               |         |               | 4.24% - 4.26% |               |  |  | 1.11%         | 
|2008                         |  | Repurchase Agreement   |  |          | 75,000  |               |         |               | 6.14%         |               |  |  | 1.14%         | 
|                             |  |                        |  |          |         |               |         |               |               |               |  |  |               |  |  | 
|                             |  |                        |  |          |         | $             | 275,000 |               |               |               |  |  |               |  |  | 
|                             |  |                        |  |          |         |               |         |               |               |               |  |  |               |  |  | 
|PAY FLOATING SWAPS-Maturing: |  |                        |  |          |         |               |         |               |               |               |  |  |               |  |  | 
|2007                         |  | 5.0% Sub Debt          |  | $        | 150,000 |               |         |               | 5.00%         |               |  |  | 3.43% - 3.44% | 
|2012                         |  | 5.875% Sub Debt        |  |          | 350,000 |               |         |               | 5.875%        |               |  |  | 3.43%         | 
|2026                         |  | 8.70% Capital Security |  |          | 100,000 |               |         |               | 8.70%         |               |  |  | 2.84%         | 
|2027                         |  | 8.00% Capital Security |  |          | 100,000 |               |         |               | 8.00%         |               |  |  | 2.21%         | 
|2028                         |  | 8.17% Capital Security |  |          | 45,000  |               |         |               | 8.17%         |               |  |  | 3.90%         | 
|                             |  |                        |  |          |         |               |         |               |               |               |  |  |               |  |  | 
|                             |  |                        |  |          |         | $             | 745,000 |               |               |               |  |  |               |  |  | 
|                             |  |                        |  |          |         |               |         |               |               |               |  |  |               |  |  | 

At September 30, 2003, $275 million in pay fixed swaps, designated as cash
flow hedges, were outstanding. These agreements change the repricing
characteristics of certain term borrowings, requiring us to make periodic fixed
rate payments, and receive periodic variable rate payments indexed to 3 month
LIBOR based on a common notional amount and identical payment and maturity
dates. These swaps had original maturities of up to 10 years and, as of quarter
end, had an unrealized loss of $16.7 million which is recorded as a component
of other liabilities ($9.5 million, net of taxes, is recorded in stockholders
equity as a component of accumulated other comprehensive income). The pay
fixed swaps outstanding increased interest expense by approximately $2.7
million and $8.7 million in the 2003 and 2002 third quarters, respectively. For
the nine months ended September 30, 2003 and 2002, these swaps increased
interest expense by $21.2 million and $23.5 million, respectively. Based upon
the current interest rate environment, the amount of loss expected to be
reclassified from accumulated other comprehensive income during the next twelve
months should approximate $5.5 million. During the 2003 second quarter,
$850 million of pay fixed swaps and their related variable rate term borrowings
matured. In June 2003, an additional $300 million in pay fixed swaps,
designated as cash flow hedges maturing in 2004 were cancelled and the
underlying borrowings repaid as a component of our balance sheet restructuring.
The cancellation of these swaps resulted in a $6.6 million charge to earnings
in the second quarter 2003.

In June 2002, we entered into $200 million in pay floating swaps
designated as fair value hedges. These swaps changed the repricing
characteristics from fixed to variable of a comparable amount of Capital
Securities with identical payment and maturity dates. The swaps contain
imbedded call options held by the counterparty and are exercisable in
approximately four years, which are identical to the call provisions contained
in the Capital Securities. At September 30, 2003, the fair value adjustment on
these agreements totaled $21.7 million and is reflected as a component of other
assets and increased the carrying amount of the Capital Securities by an
identical amount. In July 2003, the remaining $45 million in Capital
Securities were converted from a fixed rate to a variable rate indexed to 3
month LIBOR with identical terms and structure as the above Capital Securities.
At September 30, 2003, the fair value adjustment on this
agreement was $1 million and is reflected as a component of other liabilities and decreased the
carrying amount of the $45 million Capital Securities by an identical amount.
The swaps decreased interest expense by approximately $3.3 million and

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$2.5
million in the 2003 and 2002 third quarters, respectively. For the nine months
ended September 30, 2003 and 2002, these swaps decreased interest expense by
$8.9 million and $3.0 million, respectively. There was no hedge
ineffectiveness recorded in the income statement on these transactions.

In June 2003, we entered into $350 million in pay floating swaps
designated as fair value hedges. These swaps changed the repricing
characteristics from fixed to variable of a comparable amount of our 5.875%
subordinated debt. The swap term and payment dates match the related terms of
the subordinated notes. In July 2003, we entered into $150 million in pay
floating swaps designated as fair value hedges. These swaps changed the
repricing characteristics from fixed to variable of a comparable amount of
fixed rate/floating rate subordinated notes. The swap term is for five years,
matching the fixed leg of the subordinated notes with a floating rate based on
the 3 month LIBOR rate. Beginning in the sixth year, we have the right to
redeem the fixed rate/floating rate notes at par plus accrued interest or the
interest rate converts to a spread over 3 month LIBOR. At September 30, 2003,
the fair value adjustment on these agreements was $17.9 million and is
reflected as a component of other liabilities and decreased the carrying amount
of the $500 million in subordinated notes by an identical amount. For the
three and nine months ended September 30, 2003, these swaps decreased interest
expense by approximately $2.6 million. There was no hedge ineffectiveness
recorded in the income statement on these transactions.

Deposits

Customer deposits represent our primary funding source. Total deposits at
September 30, 2003 increased $2.2 billion or 18% to $14.8 billion when compared
to the same period in 2002 despite a $348.6 million decline in time deposits.
We believe that certain time deposits customers are only attracted by rate and
not customer service. Generally, we do not actively compete for these time
deposits since their average costs are significantly higher than our core
deposits. Excluding time deposits, our core deposits at period end increased
$2.6 billion or 28% from September 30, 2002 (21% on an annualized linked
quarter basis). The primary factors contributing to the overall core deposit
growth include the continued expansion of our retail branch network, our
ongoing branch upgrade program providing for greater marketplace identity,
accessibility and convenience, commercial loan growth, and incentive based
compensation linked to deposit growth.

At September 30, 2003, Manhattan deposits comprised 21% of total deposits
as compared to 16% a year ago. The following table presents the composition of
total deposits, and highlights Manhattan activity, at the dates indicated:

|                          |                |      |               |            |          |      |              |            |               |   |           |            |  |   |           |            | 
|------------------------- | -------------- | ---- | ------------- | ---------- | -------- | ---- | ------------ | ---------- | ------------- | - | --------- | ---------- |  | - | --------- | ---------- | 
|                          |                |      | September 30, |            | June 30, |      | December 31, |            | September 30,
|(in thousands)            |                | 2003 |               | 2003       |          | 2002 |              | 2002      
|                          |                |      |               |            |          |      |              |           
|Manhattan Deposits        |                |      |               |            |          |      |              |            |               |   |           |            |  |   |           |           
|Demand Deposits           |                | $    | 889,349       |            |          | $    | 811,565      |            |               | $ | 703,290   |            |  | $ | 593,907   |           
|Interest Bearing Deposits |                |      | 2,251,929     |            |          |      | 1,950,365    |            |               |   | 1,725,925 |            |  |   | 1,408,367 |           
|                          |                |      |               |            |          |      |              |            |               |   |           |            |  |   |           |           
|                          | Total Deposits |      |               | 3,141,278  |          |      |              | 2,761,930  |               |   |           | 2,429,215  |  |   |           | 2,002,274  | 
|All Other Locations       |                |      |               |            |          |      |              |            |               |   |           |            |  |   |           |           
|Demand Deposits           |                |      | 3,054,157     |            |          |      | 2,935,176    |            |               |   | 2,714,244 |            |  |   | 2,499,709 |           
|Interest Bearing Deposits |                |      | 8,621,803     |            |          |      | 8,775,188    |            |               |   | 8,049,071 |            |  |   | 8,070,398 |           
|                          |                |      |               |            |          |      |              |            |               |   |           |            |  |   |           |           
|                          | Total Deposits |      |               | 11,675,960 |          |      |              | 11,710,364 |               |   |           | 10,763,315 |  |   |           | 10,570,107 | 
|Total Deposits            |                |      |               |            |          |      |              |            |               |   |           |            |  |   |           |           
|Demand Deposits           |                |      | 3,943,506     |            |          |      | 3,746,741    |            |               |   | 3,417,534 |            |  |   | 3,093,616 |           
|Interest Bearing Deposits |                |      | 10,873,732    |            |          |      | 10,725,553   |            |               |   | 9,774,996 |            |  |   | 9,478,765 |           
|                          |                |      |               |            |          |      |              |            |               |   |           |            |  |   |           |           
|                          | Total Deposits |      | $             | 14,817,238 |          |      | $            | 14,472,294 |               |   | $         | 13,192,530 |  |   | $         | 12,572,381 | 
|                          |                |      |               |            |          |      |              |            |               |   |           |            |  |   |           |           

Commercial demand deposit balances increased $661.7 million or 34% to $2.6
billion, representing 66% of total demand deposits at September 30, 2003, when
compared to the same period last year. Total commercial deposits represent
approximately 35% of total deposits at September 30, 2003. Once again, these
advances were fueled by our expanded branch network, especially the New York
City locations, and our strong commercial loan growth.

As of September 30, 2003, we had 173 branches (25 located in Manhattan)
and plan to open an additional 14 in the succeeding 18 months. During the
past twelve months, we opened 7 new branches including our first in New Jersey.
This expansion strategy coupled with the continued maturation of existing
branches and our commercial loan growth should result in continued deposit
growth during the remainder of 2003.

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Asset/Liability Management

The net interest margin is directly affected by changes in the level of
interest rates, the shape of the yield curve, the relationship between rates,
the impact of interest rate fluctuations on asset prepayments, the level and
composition of assets and liabilities, and the credit quality of the loan
portfolio. Our asset/liability objectives are to maintain a strong net interest
margin, to utilize our capital effectively without taking undue risks, and to
maintain adequate liquidity.

The risk assessment program includes a coordinated approach to the
management of liquidity, capital, and interest rate risk. This process is
governed by policies and limits established by senior management, which are
reviewed at least annually by the Board of Directors. The Asset/Liability
Committee of the Board of Directors (ALCO) provides guidance for
asset/liability activities. ALCO periodically evaluates the impact of changes
in market interest rates on interest earning assets and interest bearing
liabilities, net interest margin, capital and liquidity, and evaluates
managements strategic plan. The balance sheet structure is primarily
short-term with most assets and liabilities repricing or maturing in less than
five years. We monitor the sensitivity of net interest income by utilizing a
dynamic simulation model complemented by a traditional gap analysis.

The simulation model measures the volatility of net interest income to
changes in market interest rates. Simulation modeling involves a degree of
estimation based on certain assumptions we believe to be reasonable. Factors
considered include contractual maturities, prepayments, repricing
characteristics, deposit retention and the relative sensitivity of assets and
liabilities to changes in market interest rates and cash flows from derivative
instruments.

The Board has established certain policy limits for the potential
volatility of net interest income, as projected by the simulation model.
Volatility is measured from a base case where rates are assumed to be flat and
is expressed as the percentage change, from the base case, in net interest
income over a 12-month period. As of September 30, 2003, we were operating
within the policy limits.

The simulation model is kept static with respect to the composition of the
balance sheet and, therefore does not reflect our ability to proactively manage
in changing market conditions as demonstrated by our June 2003 balance sheet
restructuring completed in September 2003 (See Balance Sheet Restructuring and
Capital Management section). We may choose to extend or shorten the maturities
of our funding sources and redirect cash flows into assets with shorter or
longer durations or utilize these cash flows to repay certain borrowings. We
may also use certain derivative instruments to reduce the repricing mismatches
of our assets and liabilities, including interest rate swaps, interest rate
caps/floors, and interest rate collars.

The assumptions used are inherently uncertain and, as a result, we cannot
precisely predict the impact of changes in interest rates on net interest
income. Actual results may differ significantly from those presented due to the
timing, magnitude and frequency of interest rate changes, changes in market
conditions, interest rate differentials (spreads) between maturity/repricing
categories, prepayments, and any actions which we may take to counter such
changes.

The following table reflects the estimated change in projected net
interest income for the next twelve months assuming a gradual increase or
decrease in interest rates over this twelve month period:

|                         |  |                               |       |          |  |  |       |  
|------------------------ |  | ----------------------------- | ----- | -------- |  |  | ----- | -
|(dollars in millions)    |  | Change in Net Interest Income
|                         |  |                              
|Change in Interest Rates |  | $ Change                      |       | % Change
|                         |  |                               |       |         
|+ 200 Basis Points       |  | $                             | 1.7   |          |  |  | .20   | %
|+ 100 Basis Points       |  |                               | 3.9   |          |  |  | .47   |  
|- 100 Basis Points       |  |                               | (12.7 | )        |  |  | (1.54 | )

At June 30, 2003, the percentage change in net interest income to changes
in interest rates at +200, +100 and -100 basis points was 3.36%, 2.34% and
(0.88%), respectively. The decline in volatility on a linked quarter basis is
primarily due to changes in base case assumptions. These changes primarily
relate to the shift in the yield curve from July 2003 to September 2003 and
related prepayment assumptions on our assets, primarily our securities
portfolio.

Liquidity Risk Management

The objective of liquidity risk management is to meet our financial
obligations and capitalize on new business opportunities. These obligations
include the payment of deposits on demand or at their contractual maturity, the
repayment of borrowings as they mature and the ability to fund new and existing
loans and investments as opportunities arise.

The Companys principal funding source is dividends from its primary
subsidiary, North Fork Bank. There are various legal and regulatory limitations
under applicable federal and state banking law on the extent to which banking
subsidiaries can finance or otherwise supply funds to their holding companies.
At September 30, 2003, total legal dividend capability from our banking
subsidiaries was $660.6 million. From a regulatory standpoint, North Fork Bank,
with its current balance sheet structure, had the ability to dividend
approximately $350 million, while still meeting the criteria for a
well-capitalized institution under existing regulatory capital guidelines.
Additional sources of liquidity for the Company include borrowings, the sale of
available-for-sale securities, and funds available through the capital markets.

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Customer deposits are the primary source of liquidity for our banking
subsidiaries. Other sources of liquidity at the bank level include loan and
security principal repayments and maturities, lines-of-credit with certain
financial institutions, the ability to borrow under repurchase agreements,
Federal Home Loan Bank (FHLB) advances utilizing unpledged mortgage backed
securities and certain mortgage loans, the sale of available-for-sale
securities and the securitization or sale of loans.

Our banking subsidiaries have the ability to borrow an additional $5.9
billion on a secured basis, utilizing mortgage related loans and securities as
collateral. As of September 30, 2003, $1.3 billion in advances and short-term
repurchase agreements were outstanding with the FHLB.

We also maintain arrangements with correspondent banks to provide
short-term credit for purposes of meeting regulatory liquidity requirements.
These lines of credit aggregated $1.1 billion at September 30, 2003.

We continually monitor our liquidity position as well as the liquidity
positions of our banking subsidiaries and believe that sufficient liquidity
exists to meet all of our operating requirements.

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Capital

We are subject to the risk based capital guidelines administered by bank
regulatory agencies. The guidelines are designed to make regulatory capital
requirements more sensitive to differences in risk profiles among banks and
bank holding companies, to account for off-balance sheet exposure and to
minimize disincentives for holding liquid assets. Under these guidelines,
assets and certain off-balance sheet items are assigned to broad risk
categories, each with appropriate weights. The resulting capital ratios
represent capital as a percentage of total risk weighted assets and certain
off-balance sheet items. The guidelines require all banks and bank holding
companies to maintain a minimum ratio of total risk based capital to total risk
weighted assets (Total Risk Adjusted Capital) of 8%, including Tier 1 capital
to total risk weighted assets (Tier 1 Capital) of 4% and a Tier 1 capital to
average total assets (Leverage Ratio) of at least 4%. Failure to meet minimum
capital requirements can initiate certain mandatory, and possibly additional
discretionary actions by regulators, that, if undertaken, could have a direct
material effect on our consolidated financial statements.

The regulatory agencies have amended the risk-based capital guidelines to
provide for interest rate risk considerations when determining a banking
institutions capital adequacy. The amendments require institutions to
effectively measure and monitor their interest rate risk and to maintain
capital adequate for that risk.

As of September 30, 2003, the most recent notification from the various
regulators categorized the Company and our subsidiary banks as well capitalized
under the regulatory framework for prompt corrective action. Under the capital
adequacy guidelines, a well capitalized institution must maintain a Total Risk
Adjusted Capital ratio of at least 10%, a Tier 1 Capital Ratio of at least 6%,
a Leverage Ratio of at least 5%, and not be subject to any written order,
agreement or directive. Since such notification, there are no conditions or
events that management believes would change this classification. However, due
to the recent issuance of FIN 46, there can be no assurance that the Federal
Reserve will continue to allow institutions to include Trust Preferred
Securities (Capital Securities) in Tier 1 Capital. As of September 30, 2003,
we would still exceed the regulatory threshold for capital adequacy assuming
the exclusion of our Trust Preferred Securities.

The following table sets forth our risk-weighted capital for the periods ended:

|                            |  |                    |            |                    |  |        |       |       |  |   |            |  |  |  |       |  
|--------------------------- |  | ------------------ | ---------- | ------------------ |  | ------ | ----- | ----- |  | - | ---------- |  |  |  | ----- | -
|                            |  | September 30, 2003 |            | September 30, 2002
|                            |  |                    |            |                   
|(dollars in thousands )     |  | Amount             |            | Ratio              |  | Amount |       | Ratio
|                            |  |                    |            |                    |  |        |       |      
|Tier 1 Capital              |  | $                  | 1,237,188  |                    |  |        | 10.19 | %     |  | $ | 1,434,873  |  |  |  | 12.88 | %
|Regulatory Requirement      |  |                    | 485,532    |                    |  |        | 4.00  | %     |  |   | 445,616    |  |  |  | 4.00  | %
|                            |  |                    |            |                    |  |        |       |       |  |   |            |  |  |  |       |  
|Excess                      |  | $                  | 751,656    |                    |  |        | 6.19  | %     |  | $ | 989,257    |  |  |  | 8.88  | %
|                            |  |                    |            |                    |  |        |       |       |  |   |            |  |  |  |       |  
|Total Risk Adjusted Capital |  | $                  | 1,859,718  |                    |  |        | 15.32 | %     |  | $ | 2,046,640  |  |  |  | 18.37 | %
|Regulatory Requirement      |  |                    | 971,063    |                    |  |        | 8.00  | %     |  |   | 891,232    |  |  |  | 8.00  | %
|                            |  |                    |            |                    |  |        |       |       |  |   |            |  |  |  |       |  
|Excess                      |  | $                  | 888,655    |                    |  |        | 7.32  | %     |  | $ | 1,155,408  |  |  |  | 10.37 | %
|                            |  |                    |            |                    |  |        |       |       |  |   |            |  |  |  |       |  
|Risk Weighted Assets        |  | $                  | 12,138,291 |                    |  |        |       |       |  | $ | 11,140,394 |  |  |  |       |  
|                            |  |                    |            |                    |  |        |       |       |  |   |            |  |  |  |       |  

Our Leverage Ratio at September 30, 2003 was 6.06%. North Fork Banks Tier
1, Total Risk Based and Leverage Ratios were 12.04%, 13.06%, and 7.09%,
respectively, at September 30, 2003. Superiors Tier 1, Total Risk Based and
Leverage Ratios were 13.10%, 13.55%, and 6.10%, respectively, at September 30,
2003.

Federal Reserve Board policy provides that, as a matter of prudent
banking, a bank holding company generally should not maintain a rate of cash
dividends unless its net income available to common stockholders is sufficient
to fund the dividends, and the prospective rate of earnings retention appears
to be consistent with the holding companys capital needs, asset quality and
overall financial condition. In addition, among other things, dividends from a
New York-chartered bank, such as North Fork Bank, are limited to the banks net
profits for the current year plus its prior two years retained net profits.

Under federal law, a depository institution is prohibited from paying a
dividend if the depository institution would thereafter be undercapitalized
as determined by the federal bank regulatory agencies. The relevant federal
regulatory agencies and the state regulatory agency, the Banking Department,
also have the authority to prohibit a bank or bank holding company from
engaging in what, in the opinion of such regulatory body, constitutes an unsafe
or unsound practice in conducting its business.

On September 23, 2003, the Board of Directors declared a regular quarterly
cash dividend of $.27 per common share. The dividend is payable November 17,
2003, to shareholders of record at the close of business on October 31, 2003.

In June 2003, the Board of Directors approved an increase in our share
repurchase program from the previously authorized level of 4 million shares to
8 million shares, representing 5% of the shares outstanding at such time. As of
November 7, 2003, we had purchased 5.2 million shares at an average price of
$34.58 per share. Repurchases are made in the open market or through privately
negotiated transactions.

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Sarbanes-Oxley Act of 2002

On July 30, 2002, the Sarbanes-Oxley Act of 2002 was signed into law. The
Act imposes new significant responsibilities on publicly held companies,
particularly in the area of corporate governance. We have carefully reviewed
the Act, and are monitoring and responding to the various regulations that have
been issued, and continue to be issued, by the Securities and Exchange
Commission and The New York Stock Exchange in response thereto. We have already
instituted procedures to address some of the Acts specific concerns and will
continue to adapt our governance structure to the mandates of the law as
interpreted by the regulatory authorities in upcoming periods. We have always
emphasized best practices in corporate governance as the most effective way of
assuring stockholders that their investment is properly managed and their
interests remain paramount.

Future Legislation

From time to time legislation is introduced in Congress and state
legislatures with respect to the regulation of financial institutions. Such
legislation may change our operating environment and the operating environment
of our subsidiaries in substantial and unpredictable ways. We cannot determine
the ultimate effect that potential legislation, if enacted, or implementing
regulations, would have on our financial condition or results of operations or
on our shareholders.




Item 3. Quantitative and Qualitative Disclosures About Market Risk

The information required by this item is contained throughout Item 2,
Managements Discussion and Analysis of Financial Condition and Results of
Operations and is incorporated by reference herein.




Item 4. Controls and Procedures

(a) Disclosure Controls and Procedures. The Companys management, with
the participation of the Companys Chief Executive Officer and Chief Financial
Officer, has evaluated the effectiveness of the Companys disclosure controls
and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under
the Securities Exchange Act of 1934, as amended (the Exchange Act)) as of
the end of the period covered by this report. Based on such evaluation, the
Companys Chief Executive Officer and Chief Financial Officer have concluded
that, as of the end of such period, the Companys disclosure controls and
procedures are effective in recording, processing, summarizing and reporting,
on a timely basis, information required to be disclosed by the Company in the
reports that it files or submits under the Exchange Act, including this report.

(b) Internal Control Over Financial Reporting. There have not been any
changes in the Companys internal control over financial reporting (as such
term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during
the fiscal quarter to which this report relates that have materially affected,
or are reasonably likely to materially affect, the Companys internal control
over financial reporting.

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PART II. OTHER INFORMATION




Item 1. Legal Proceedings

The Company is commonly subject to various pending and threatened legal
actions relating to the conduct of its normal business activities. In the
opinion of management, the ultimate aggregate liability, if any, arising out of
any such pending or threatened legal actions will not be material to the
consolidated financial position or results of operations of the Company.




Item 6. Exhibits and Reports on Form 8-K

(a) The following exhibits are submitted herewith:

|               |        |                        |                                                                                                       
|-------------- | ------ | ---------------------- | ------------------------------------------------------------------------------------------------------
|Exhibit Number |        | Description of Exhibit
|               |        |                       
|               | (11)   |                        | Statement Re: Computation of Net Income Per Common and Common
Equivalent Share                        
|               |        |                        |                                                                                                       
|               | (31.1) |                        | Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|               |        |                        |                                                                                                       
|               | (31.2) |                        | Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
|               |        |                        |                                                                                                       
|               | (32.1) |                        | Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002    
|               |        |                        |                                                                                                       
|               | (32.2) |                        | Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002    

(b) Reports on Form 8-K

We filed the following Current Reports on Form 8-K during the period from
July 1, 2003 to the date of the filing of this Report:



| |  |  | On November 12, 2003, we
filed a Current Report on Form 8-K, dated November 12,
2003, announcing that we will be presenting at Sandler
ONeill & Partners Financial Services Conference on Thursday,
November 13, 2003, at 10:55 am (ET). 
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| |  |  | On November 5, 2003, we filed a Current Report on Form 8-K, dated
November 5, 2003, announcing that we will be presenting at the Banc Analysts
Association of Boston Conference on Thursday, November 6, 2003, at 9:15am (ET).            
|
| |  |  | On October 17, 2003, we filed a Current Report on Form 8-K, dated
October 16, 2003, announcing our operating results for the third quarter ended
September 30, 2003.                                                                      
|
| |  |  | On September 17, 2003, we filed a Current Report on Form 8-K,
dated September 17, 2003, announcing that we will be presenting at
the 2003 RBC Capital Markets Financial Institutions Conference on
Thursday, September 18 at 11:30am (ET).
|
| |  |  | On September 8, 2003, we filed a Current Report on Form 8-K,
dated September 8, 2003, announcing that we will be presenting at the
Lehman Brothers 2003 Financial Services Conference on Tuesday,
September 9 at 11:00am (ET).            
|
| |  |  | On July 16, 2003, we filed a Current Report on Form 8-K, dated
July 16, 2003, announcing our operating results for the second quarter
ended June 30, 2003.                                                                                

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

|                       |  |  |  |                                
|---------------------- |  |  |  | -------------------------------
|Date:November 14, 2003 |  |  |  | North Fork Bancorporation, Inc.
|                       |  |  |  |                                
|                       |  |  |  | /s/ Daniel M. Healy            
|                       |  |  |  |                                
|                       |  |  |  | Daniel M. Healy                
|                       |  |  |  | Executive Vice President and   
|                       |  |  |  | Chief Financial Officer        

31