##### 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, 2005
 NORTH FORK BANCORPORATION, INC.
  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
  R £
 þ o
 o þ
  CLASS OF COMMON STOCK
    
    NUMBER OF SHARES OUTSTANDING
 11/2/05$.01 Par Value
    
    475,680,033




---



North Fork Bancorporation, Inc.
 Form 10-Q
 INDEX
 PagePART 1. FINANCIAL INFORMATION (Unaudited)Item 1. Financial StatementsConsolidated Balance Sheets
    
    
    3Consolidated Statements of Income
    
    
    4Consolidated Statements of Cash Flows
    
    
    5Consolidated Statements of Changes in Stockholders Equity
    
    
    7Consolidated Statements of Comprehensive Income
    
    
    8Condensed Notes to Consolidated Financial Statements
    
    
    9Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    24Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    43Item 4. Controls and Procedures
    
    
    43PART 2. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    44Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    44Item 6. Exhibits
    
    
    44EX-11: STATEMENT RE: COMPUTATION OF NET INCOME PER COMMON AND COMMON EQUIVALENT SHAREEX-31.1: CERTIFICATIONEX-31.2: CERTIFICATIONEX-32.1: CERTIFICATIONEX-32.2: CERTIFICATIONEX-99.1: SUPPLEMENTAL PERFORMANCE MEASUREMENTS
  2




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##### Table of Contents



Item 1. Financial Statements
 North Fork Bancorporation, Inc.
 
 Consolidated Balance Sheets
 (Unaudited)
 September 30,
    
    
    December 31,
    
    
    September 30,(in thousands except share amounts)
    
    2005
    
    
    2004
    
    
    2004Assets:Cash & Due from Banks
    
    $
    740,251
    
    
    $
    972,506
    
    
    $
    456,458Money Market Investments
    
    
    17,808
    
    
    
    90,394
    
    
    
    768,580Securities:Available-for-Sale ($4,923,115, $7,219,173 and $2,149,333 pledged
at September 30, 2005, December 31, 2004 and September 30, 2004,
respectively)
    
    
    11,989,260
    
    
    
    15,444,625
    
    
    
    8,648,172Held-to-Maturity ($16,531, $24,114 and $27,652 pledged at
September 30, 2005, December 31, 2004 and September 30, 2004,
respectively) (Fair Value $116,002, $145,991 and $152,583 at
September 30, 2005, December 31, 2004 and September 30, 2004,
respectively)
    
    
    114,505
    
    
    
    142,573
    
    
    
    149,103Total Securities
    
    
    12,103,765
    
    
    
    15,587,198
    
    
    
    8,797,275Loans:Loans Held-for-Sale
    
    
    4,701,550
    
    
    
    5,775,945
    
    
    
    2,388Loans Held-for-Investment
    
    
    32,672,962
    
    
    
    30,453,334
    
    
    
    15,871,222Less: Allowance for Loan Losses
    
    
    220,347
    
    
    
    211,097
    
    
    
    138,797Net Loans Held-for-Investment
    
    
    32,452,615
    
    
    
    30,242,237
    
    
    
    15,732,425Goodwill
    
    
    5,914,562
    
    
    
    5,878,277
    
    
    
    1,003,927Identifiable Intangibles
    
    
    123,334
    
    
    
    150,734
    
    
    
    46,452Premises & Equipment
    
    
    433,775
    
    
    
    416,003
    
    
    
    227,280Mortgage Servicing Rights, net
    
    
    267,347
    
    
    
    254,857
    
    
    
    Accrued Income Receivable
    
    
    198,909
    
    
    
    205,189
    
    
    
    111,061Other Assets
    
    
    946,477
    
    
    
    1,093,715
    
    
    
    356,962Total Assets
    
    $
    57,900,393
    
    
    $
    60,667,055
    
    
    $
    27,502,808Liabilities and Stockholders Equity:Deposits:Demand
    
    $
    7,478,359
    
    
    $
    6,738,302
    
    
    $
    5,574,161NOW & Money Market
    
    
    15,599,563
    
    
    
    14,265,395
    
    
    
    6,466,290Savings
    
    
    5,515,530
    
    
    
    6,333,599
    
    
    
    4,592,746Time
    
    
    5,414,506
    
    
    
    4,932,302
    
    
    
    2,144,693Certificates of Deposit, $100,000 & Over
    
    
    2,804,128
    
    
    
    2,542,830
    
    
    
    1,370,314Total Deposits
    
    
    36,812,086
    
    
    
    34,812,428
    
    
    
    20,148,204Federal Funds Purchased & Collateralized Borrowings
    
    
    9,572,995
    
    
    
    14,593,027
    
    
    
    3,739,734Other Borrowings
    
    
    1,485,392
    
    
    
    1,506,318
    
    
    
    746,195Accrued Expenses & Other Liabilities
    
    
    765,375
    
    
    
    874,203
    
    
    
    405,876Total Liabilities
    
    $
    48,635,848
    
    
    $
    51,785,976
    
    
    $
    25,040,009Stockholders Equity:Preferred Stock, par value $1.00; authorized 10,000,000 shares, unissued
    
    $
    
    
    
    $
    
    
    
    $
    Common Stock, par value $0.01; authorized 1,000,000,000 shares; issued
479,869,221 shares at September 30, 2005
    
    
    4,799
    
    
    
    4,745
    
    
    
    1,931Additional Paid in Capital
    
    
    7,020,325
    
    
    
    6,968,493
    
    
    
    1,116,841Retained Earnings
    
    
    2,486,847
    
    
    
    2,064,148
    
    
    
    1,992,873Accumulated Other Comprehensive (Loss)/Income
    
    
    (89,052
    )
    
    
    240
    
    
    
    4,806Deferred Compensation
    
    
    (109,111
    )
    
    
    (125,174
    )
    
    
    (84,073
    )Treasury Stock at cost; 1,902,044 shares at September 30, 2005
    
    
    (49,263
    )
    
    
    (31,373
    )
    
    
    (569,579
    )Total Stockholders Equity
    
    
    9,264,545
    
    
    
    8,881,079
    
    
    
    2,462,799Total Liabilities and Stockholders Equity
    
    $
    57,900,393
    
    
    $
    60,667,055
    
    
    $
    27,502,808
 See accompanying notes to the consolidated financial statements
 3




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##### Table of Contents



North Fork Bancorporation, Inc.
 
 Consolidated Statements of Income
 (Unaudited)
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,(in thousands, except per share amounts)
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004Interest Income:Loans Held-for-Investment
    
    $
    469,599
    
    
    $
    238,656
    
    
    $
    1,394,034
    
    
    $
    645,858Loans Held-for-Sale
    
    
    69,840
    
    
    
    
    
    
    
    209,753
    
    
    
    Mortgage-Backed Securities
    
    
    113,921
    
    
    
    79,087
    
    
    
    389,303
    
    
    
    210,255Other Securities
    
    
    28,422
    
    
    
    17,400
    
    
    
    87,953
    
    
    
    49,397Money Market Investments
    
    
    508
    
    
    
    2,186
    
    
    
    1,903
    
    
    
    2,856Total Interest Income
    
    
    682,290
    
    
    
    337,329
    
    
    
    2,082,946
    
    
    
    908,366Interest Expense:Savings, NOW & Money Market Deposits
    
    
    91,316
    
    
    
    22,921
    
    
    
    243,367
    
    
    
    57,040Time Deposits
    
    
    49,397
    
    
    
    13,805
    
    
    
    123,255
    
    
    
    36,852Federal Funds Purchased & Collateralized Borrowings
    
    
    86,343
    
    
    
    33,880
    
    
    
    290,588
    
    
    
    93,791Other Borrowings
    
    
    20,684
    
    
    
    7,248
    
    
    
    57,794
    
    
    
    20,284Total Interest Expense
    
    
    247,740
    
    
    
    77,854
    
    
    
    715,004
    
    
    
    207,967Net Interest Income
    
    
    434,550
    
    
    
    259,475
    
    
    
    1,367,942
    
    
    
    700,399Provision for Loan Losses
    
    
    9,000
    
    
    
    6,500
    
    
    
    27,000
    
    
    
    19,500Net Interest Income after Provision for Loan Losses
    
    
    425,550
    
    
    
    252,975
    
    
    
    1,340,942
    
    
    
    680,899Non-Interest Income:Gain on Sale of Loans Held-for-Sale
    
    
    113,587
    
    
    
    181
    
    
    
    339,532
    
    
    
    772Customer Related Fees & Service Charges
    
    
    41,980
    
    
    
    25,392
    
    
    
    125,888
    
    
    
    70,580Mortgage Servicing Fees
    
    
    3,142
    
    
    
    1,097
    
    
    
    12,754
    
    
    
    2,985Temporary Recovery/(Impairment)  Mortgage Servicing Rights
    
    
    9,540
    
    
    
    
    
    
    
    (25,431
    )
    
    
    Investment Management, Commissions & Trust Fees
    
    
    8,780
    
    
    
    4,306
    
    
    
    30,138
    
    
    
    12,329Other Operating Income
    
    
    11,333
    
    
    
    6,804
    
    
    
    37,688
    
    
    
    20,606Securities Gains, net
    
    
    840
    
    
    
    4,292
    
    
    
    16,358
    
    
    
    11,704Gain on Sale of Loans Held-for-Investment
    
    
    1,532
    
    
    
    
    
    
    
    5,824
    
    
    
    Total Non-Interest Income
    
    
    190,734
    
    
    
    42,072
    
    
    
    542,751
    
    
    
    118,976Non-Interest Expense:Employee Compensation & Benefits
    
    
    136,300
    
    
    
    64,912
    
    
    
    410,684
    
    
    
    171,214Occupancy & Equipment, net
    
    
    49,007
    
    
    
    22,222
    
    
    
    141,910
    
    
    
    59,921Amortization of Identifiable Intangibles
    
    
    9,133
    
    
    
    2,995
    
    
    
    27,400
    
    
    
    5,665Other Operating Expenses
    
    
    59,560
    
    
    
    24,334
    
    
    
    170,454
    
    
    
    63,461Total Non-Interest Expense
    
    
    254,000
    
    
    
    114,463
    
    
    
    750,448
    
    
    
    300,261Income Before Income Taxes
    
    
    362,284
    
    
    
    180,584
    
    
    
    1,133,245
    
    
    
    499,614Provision for Income Taxes
    
    
    124,988
    
    
    
    60,856
    
    
    
    394,848
    
    
    
    168,370Net Income
    
    $
    237,296
    
    
    $
    119,728
    
    
    $
    738,397
    
    
    $
    331,244Earnings Per Share:Basic
    
    $
    0.50
    
    
    $
    0.47
    
    
    $
    1.58
    
    
    $
    1.39Diluted
    
    $
    0.50
    
    
    $
    0.47
    
    
    $
    1.55
    
    
    $
    1.37
 See accompanying notes to the consolidated financial statements
 4




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##### Table of Contents



North Fork Bancorporation, Inc.
 
 Consolidated Statements of Cash Flows
 (Unaudited)
 For the Nine Months Ended September 30,
    
    2005
    
    
    2004(in thousands)Cash Flows from Operating Activities:Net Income
    
    $
    738,397
    
    
    $
    331,244Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:Provision for Loan Losses
    
    
    27,000
    
    
    
    19,500Depreciation
    
    
    31,763
    
    
    
    13,855Net Amortization/(Accretion):Securities
    
    
    19,804
    
    
    
    25,989Loans
    
    
    18,798
    
    
    
    (29,721
    )Borrowings & Time Deposits
    
    
    (96,263
    )
    
    
    (7,822
    )Intangibles
    
    
    27,400
    
    
    
    5,665Deferred Compensation
    
    
    16,899
    
    
    
    10,583Gain on Sale of Loans Held-for-Investment
    
    
    (5,824
    )
    
    
    Securities Gains
    
    
    (16,358
    )
    
    
    (11,704
    )Capitalization of Mortgage Servicing Rights
    
    
    (109,430
    )
    
    
    Amortization of Mortgage Servicing Rights
    
    
    63,763
    
    
    
    Temporary Impairment Charge  Mortgage Servicing Rights
    
    
    25,431
    
    
    
    Loans Held-for-Sale:Originations
    
    
    (32,866,244
    )
    
    
    (84,303
    )Proceeds from Sales (1)
    
    
    33,217,963
    
    
    
    83,389Gains on Sale
    
    
    (339,532
    )
    
    
    (772
    )Other
    
    
    1,062,208
    
    
    
    Purchases of Trading Assets
    
    
    
    
    
    
    (13,911
    )Sales of Trading Assets
    
    
    
    
    
    
    14,015Other, net
    
    
    40,618
    
    
    
    9,082Net Cash Provided by Operating Activities
    
    
    1,856,393
    
    
    
    365,089Cash Flows from Investing Activities:Purchases of Securities Held-to-Maturity
    
    
    (3,010
    )
    
    
    (7,758
    )Maturities, Redemptions, Calls and Principal Repayments on Securities Held-to-Maturity
    
    
    30,556
    
    
    
    48,455Purchases of Securities Available-for-Sale
    
    
    (1,870,631
    )
    
    
    (3,495,804
    )Proceeds from Sales of Securities Available-for-Sale
    
    
    2,110,321
    
    
    
    1,102,263Maturities, Redemptions, Calls and Principal Repayments on Securities Available-for-Sale
    
    
    3,051,344
    
    
    
    2,301,452Loans Held-for-Investment Originated, Net of Principal Repayments and Charge-offs
    
    
    (3,347,902
    )
    
    
    (1,413,541
    )Proceeds from Sales of Loans Held-for-Investment
    
    
    1,125,561
    
    
    
    Purchases of Premises and Equipment, net
    
    
    (49,535
    )
    
    
    (41,128
    )Purchase Acquisition, net of Cash Acquired
    
    
    
    
    
    
    246,209Net Cash Provided by/(Used in) Investing Activities
    
    $
    1,046,704
    
    
    $
    (1,259,852
    )
 See accompanying notes to the consolidated financial statements
 5




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##### Table of Contents



North Fork Bancorporation, Inc.
Consolidated Statements of Cash Flows
(Unaudited)  Continued
 For the Nine Months Ended September 30,
    
    2005
    
    
    2004(in thousands)Cash Flows from Financing Activities:Net Increase in Deposits
    
    $
    2,027,216
    
    
    $
    1,861,687Net Decrease in Borrowings
    
    
    (4,954,580
    )
    
    
    (170,483
    )Purchase of Treasury Stock
    
    
    (35,978
    )
    
    
    Exercise of Options and Common Stock Sold for Cash
    
    
    69,974
    
    
    
    40,702Cash Dividends Paid
    
    
    (314,570
    )
    
    
    (143,496
    )Net Cash (Used in)/Provided by Financing Activities
    
    
    (3,207,938
    )
    
    
    1,588,410Net (Decrease)/Increase in Cash and Cash Equivalents
    
    
    (304,841
    )
    
    
    693,647Cash and Cash Equivalents at Beginning of the Period
    
    
    1,062,900
    
    
    
    531,391Cash and Cash Equivalents at End of the Period
    
    $
    758,059
    
    
    $
    1,225,038Supplemental Disclosures of Cash Flow Information:Cash Paid During the Period for:Interest Expense
    
    $
    789,920
    
    
    $
    197,972Income Taxes
    
    $
    201,653
    
    
    $
    141,867During the Period, Various Securities were purchased which Settled in the Subsequent Period
    
    $
    8,139
    
    
    $
    9,370Non-cash Activity Related to the TCNJ Acquisition not Reflected Above are as Follows: (2)Fair Value of Assets Acquired
    
    $
    
    
    
    $
    4,027,830Goodwill & Identifiable Intangible Assets
    
    
    
    
    
    
    632,784Common Stock Issued and Fair Value of Options, net of taxes
    
    
    
    
    
    
    (744,125
    )Liabilities Assumed
    
    $
    
    
    
    $
    3,916,489
 
 (1)
    
    Includes loans originated of $4.5 billion from GreenPoint Mortgage and retained in the
held-for-investment portfolio during 2005.(2)
    
    See Condensed Notes to the Consolidated Financial Statements  Note 1  Business and Summary
of Significant Accounting Policies for further details. See accompanying notes to the consolidated financial statements
 6




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##### Table of Contents



North Fork Bancorporation, Inc.
 
 Consolidated Statements of Changes in Stockholders Equity
 (Unaudited) (1)
 AccumulatedOther
    
    
    
    
    
    
    
    
    
    
    Total(Dollars in thousands, except share
    
    Common
    
    
    Additional Paid
    
    
    Retained
    
    
    Comprehensive
    
    
    Deferred
    
    
    Treasury
    
    
    Stockholdersamounts)
    
    Stock
    
    
    In Capital
    
    
    Earnings
    
    
    (Loss)/Income
    
    
    Compensation
    
    
    Stock
    
    
    EquityBalance,
December 31, 2003
    
    $
    1,746
    
    
    $
    378,793
    
    
    $
    1,816,458
    
    
    ($
    2,044
    )
    
    ($
    91,789
    )
    
    ($
    624,675
    )
    
    $
    1,478,489Net Income
    
    
    
    
    
    
    
    
    
    
    331,244
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    331,244Cash Dividends
($.62 per share)
    
    
    
    
    
    
    
    
    
    
    (154,829
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (154,829
    )Issuance of Stock 
TCNJ (27,791,384
shares)
    
    
    185
    
    
    
    714,609
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    714,794Fair Value of
Options  TCNJ
    
    
    
    
    
    
    33,364
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    33,364Issuance of Stock
(164,666 shares)
    
    
    
    
    
    
    1,241
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,108
    
    
    
    4,349Restricted Stock
Activity, net
    
    
    
    
    
    
    1,186
    
    
    
    
    
    
    
    
    
    
    
    7,716
    
    
    
    999
    
    
    
    9,901Stock Based
Compensation
Activity, net
    
    
    
    
    
    
    (12,352
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    50,989
    
    
    
    38,637Other Comprehensive
Loss, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,850
    
    
    
    
    
    
    
    
    
    
    
    6,850Balance, September
30, 2004
    
    $
    1,931
    
    
    $
    1,116,841
    
    
    $
    1,992,873
    
    
    $
    4,806
    
    
    ($
    84,073
    )
    
    ($
    569,579
    )
    
    $
    2,462,799Balance, December
31, 2004
    
    $
    4,745
    
    
    $
    6,968,493
    
    
    $
    2,064,148
    
    
    $
    240
    
    
    ($
    125,174
    )
    
    ($
    31,373
    )
    
    $
    8,881,079Net Income
    
    
    
    
    
    
    
    
    
    
    738,397
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    738,397Cash Dividends
($.66 per share)
    
    
    
    
    
    
    
    
    
    
    (315,698
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (315,698
    )Issuance of Stock
(219,603 shares)
    
    
    54
    
    
    
    1,254
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,943
    
    
    
    6,251Restricted Stock
Activity, net
    
    
    
    
    
    
    4,754
    
    
    
    
    
    
    
    
    
    
    
    16,063
    
    
    
    (5,486
    )
    
    
    15,331Stock Based
Compensation
Activity, net
    
    
    
    
    
    
    45,824
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18,631
    
    
    
    64,455Purchase of
Treasury Stock
(1,320,000 shares)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (35,978
    )
    
    
    (35,978
    )Other Comprehensive
Loss, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (89,292
    )
    
    
    
    
    
    
    
    
    
    
    (89,292
    )Balance, September
30, 2005
    
    $
    4,799
    
    
    $
    7,020,325
    
    
    $
    2,486,847
    
    
    ($
    89,052
    )
    
    ($
    109,111
    )
    
    ($
    49,263
    )
    
    $
    9,264,545
 
 (1)
    
    All share amounts presented for 2004 have been adjusted to reflect the 3-for-2 common stock
split that occurred in November 2004. See accompanying notes to the consolidated financial statements
 7




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##### Table of Contents



North Fork Bancorporation, Inc.
 
 Consolidated Statements of Comprehensive Income
 (Unaudited)
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,(in thousands)
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004Net Income
    
    $
    237,296
    
    
    $
    119,728
    
    
    $
    738,397
    
    
    $
    331,244Other Comprehensive IncomeUnrealized (Losses)/Gains On Securities:Changes in Unrealized (Losses)/Gains Arising
During the Period
    
    $
    (119,816
    )
    
    $
    121,574
    
    
    $
    (153,188
    )
    
    $
    18,072Less: Reclassification Adjustment For (Gains)
Included in Net Income
    
    
    (840
    )
    
    
    (4,292
    )
    
    
    (16,358
    )
    
    
    (11,704
    )Changes in Unrealized (Losses) /Gains
Arising During the Period
    
    
    (120,656
    )
    
    
    117,282
    
    
    
    (169,546
    )
    
    
    6,368Related Tax Effect on Unrealized (Losses)
/Gains During the Period
    
    
    51,881
    
    
    
    (50,431
    )
    
    
    72,900
    
    
    
    (2,739
    )Net Change in Unrealized (Losses) /Gains
Arising During the Period
    
    
    (68,775
    )
    
    
    66,851
    
    
    
    (96,646
    )
    
    
    3,629Unrealized Gains/(Losses) On Derivative Instruments:Changes in Unrealized Gains/(Losses) Arising
During the Period
    
    $
    929
    
    
    $
    (1,996
    )
    
    $
    10,636
    
    
    $
    (998
    )Add: Reclassification Adjustment for
Expenses/Losses Included in Net Income
    
    
    471
    
    
    
    1,538
    
    
    
    2,261
    
    
    
    6,646Changes in Unrealized Gains/(Losses)
Arising During the Period
    
    
    1,400
    
    
    
    (458
    )
    
    
    12,897
    
    
    
    5,648Related Tax Effect on Unrealized
Gains/(Losses) During the Period
    
    
    (601
    )
    
    
    195
    
    
    
    (5,543
    )
    
    
    (2,427
    )Net Change in Unrealized Gains/(Losses)
Arising During the Period
    
    
    799
    
    
    
    (263
    )
    
    
    7,354
    
    
    
    3,221Net Other Comprehensive (Loss)/Income
    
    $
    (67,976
    )
    
    $
    66,588
    
    
    $
    (89,292
    )
    
    $
    6,850Comprehensive Income
    
    $
    169,320
    
    
    $
    186,316
    
    
    $
    649,105
    
    
    $
    338,094
 See accompanying notes to the consolidated financial statements
 8




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##### Table of Contents



North Fork Bancorporation, Inc.
 
 Condensed Notes to Consolidated Financial Statements
 (Unaudited)
September 30, 2005 and 2004
  Note 1  Business and Summary of Significant Accounting Policies
     Basis of Presentation
    9




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Accounting for Stock-Based Compensation
  Critical Accounting Policies
  Provision and Allowance for Loan Losses
     
 
  10




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##### Table of Contents



Accounting for Derivative Financial Instruments
     11




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##### Table of Contents



Representation and Warranty Reserve
   Mortgage Servicing Rights
    12




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##### Table of Contents



NOTE 2  SECURITIES
  September 30, 2005
    
    
    December 31, 2004
    
    
    September 30, 2004Available-for-Sale
    
    Amortized
    
    
    Fair
    
    
    Amortized
    
    
    Fair
    
    
    Amortized
    
    
    Fair(in thousands)
    
    Cost
    
    
    Value
    
    
    Cost
    
    
    Value
    
    
    Cost
    
    
    ValueCMO Agency Issuances
    
    $
    3,876,702
    
    
    $
    3,798,645
    
    
    $
    5,121,001
    
    
    $
    5,098,243
    
    
    $
    3,169,479
    
    
    $
    3,151,438CMO Private Issuances
    
    
    3,652,571
    
    
    
    3,592,462
    
    
    
    4,723,080
    
    
    
    4,721,813
    
    
    
    1,588,229
    
    
    
    1,585,019Agency Pass-Through
Certificates
    
    
    2,159,341
    
    
    
    2,138,524
    
    
    
    2,715,253
    
    
    
    2,737,067
    
    
    
    2,046,913
    
    
    
    2,066,500State & Municipal Obligations
    
    
    845,531
    
    
    
    844,866
    
    
    
    916,239
    
    
    
    920,112
    
    
    
    791,527
    
    
    
    797,701Equity Securities (1) (2)
    
    
    664,662
    
    
    
    669,072
    
    
    
    790,042
    
    
    
    794,005
    
    
    
    187,759
    
    
    
    189,656U.S. Treasury & Agency
Obligations
    
    
    274,940
    
    
    
    272,247
    
    
    
    361,987
    
    
    
    363,775
    
    
    
    206,329
    
    
    
    209,869Other Securities
    
    
    668,884
    
    
    
    673,444
    
    
    
    800,848
    
    
    
    809,610
    
    
    
    641,638
    
    
    
    647,989Total
Available-for-Sale
Securities
    
    $
    12,142,631
    
    
    $
    11,989,260
    
    
    $
    15,428,450
    
    
    $
    15,444,625
    
    
    $
    8,631,874
    
    
    $
    8,648,172
 
 (1)
    
    Amortized cost and fair value includes $269.3 million, $351.7 million and $80.5 million
in Federal Home Loan Bank Stock at September 30, 2005, December 31, 2004 and September 30,
2004, respectively.(2)
    
    Amortized cost and fair value includes $332.3 million and $335.4 million at September 30,
2005, respectively, $369.6 million and $371.2 million at December 31, 2004, respectively and
$50.0 million and $50.5 million at September 30, 2004, respectively of Federal Home Loan
Mortgage Corporation (Freddie Mac) and Federal National Mortgage Association (Fannie Mae)
Preferred Stock, respectively.  September 30, 2005
    
    
    December 31, 2004
    
    
    September 30, 2004Held-to-Maturity
    
    Amortized
    
    
    Fair
    
    
    Amortized
    
    
    Fair
    
    
    Amortized
    
    
    Fair(in thousands)
    
    Cost
    
    
    Value
    
    
    Cost
    
    
    Value
    
    
    Cost
    
    
    ValueAgency Pass-Through Certificates
    
    $
    48,913
    
    
    $
    48,976
    
    
    $
    57,719
    
    
    $
    58,776
    
    
    $
    62,254
    
    
    $
    63,512State & Municipal Obligations
    
    
    40,610
    
    
    
    42,651
    
    
    
    45,303
    
    
    
    47,991
    
    
    
    47,173
    
    
    
    49,447CMO Private Issuances
    
    
    14,287
    
    
    
    13,772
    
    
    
    24,426
    
    
    
    24,151
    
    
    
    26,182
    
    
    
    26,158Other Securities
    
    
    10,695
    
    
    
    10,603
    
    
    
    15,125
    
    
    
    15,073
    
    
    
    13,494
    
    
    
    13,466Total Held-to-Maturity Securities
    
    $
    114,505
    
    
    $
    116,002
    
    
    $
    142,573
    
    
    $
    145,991
    
    
    $
    149,103
    
    
    $
    152,583
  NOTE 3  LOANS
  Loans Held-for-Sale
    
    September 30,
    
    
    % of
    
    
    December 31,
    
    
    % of
    
    
    September 30,
    
    
    % of(dollars in thousands)
    
    2005
    
    
    Total
    
    
    2004
    
    
    Total
    
    
    2004
    
    
    TotalResidential Mortgages
    
    $
    4,225,128
    
    
    
    91
    %
    
    $
    4,339,581
    
    
    
    76
    %
    
    $
    2,388
    
    
    
    100
    %Home Equity
    
    
    434,824
    
    
    
    9
    
    
    
    1,380,247
    
    
    
    24
    
    
    
    
    
    
    
    Total
    
    $
    4,659,952
    
    
    
    100
    %
    
    $
    5,719,828
    
    
    
    100
    %
    
    $
    2,388
    
    
    
    100
    %Deferred Origination Costs
    
    
    41,598
    
    
    
    
    
    
    
    56,117
    
    
    
    
    
    
    
    Total Loans Held-for-Sale
    
    $
    4,701,550
    
    
    
    
    
    
    $
    5,775,945
    
    
    
    
    
    
    $
    2,388
 13




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##### Table of Contents



Loans Held-for- Investment
    
    September 30,
    
    
    % of
    
    
    December 31,
    
    
    % of
    
    
    September 30,
    
    
    % of(dollars in thousands)
    
    2005
    
    
    Total
    
    
    2004
    
    
    Total
    
    
    2004
    
    
    TotalCommercial Mortgages
    
    $
    5,896,835
    
    
    
    18
    %
    
    $
    5,369,656
    
    
    
    18
    %
    
    $
    3,606,650
    
    
    
    23
    %Commercial & Industrial
    
    
    4,324,758
    
    
    
    13
    
    
    
    3,046,820
    
    
    
    10
    
    
    
    2,679,759
    
    
    
    16Total Commercial
    
    
    10,221,593
    
    
    
    31
    %
    
    
    8,416,476
    
    
    
    28
    %
    
    
    6,286,409
    
    
    
    39
    %Residential Mortgages
    
    
    15,508,008
    
    
    
    48
    
    
    
    15,668,938
    
    
    
    51
    
    
    
    3,485,009
    
    
    
    22Multi-Family Mortgages
    
    
    4,626,777
    
    
    
    14
    
    
    
    4,254,405
    
    
    
    14
    
    
    
    3,945,171
    
    
    
    25Consumer
    
    
    1,569,386
    
    
    
    5
    
    
    
    1,604,863
    
    
    
    5
    
    
    
    1,686,614
    
    
    
    11Construction & Land
    
    
    716,049
    
    
    
    2
    
    
    
    480,162
    
    
    
    2
    
    
    
    501,296
    
    
    
    3Total
    
    $
    32,641,813
    
    
    
    100
    %
    
    $
    30,424,844
    
    
    
    100
    %
    
    $
    15,904,499
    
    
    
    100
    %(Unearned Income) & Deferred Origination Costs
    
    
    31,149
    
    
    
    
    
    
    
    28,490
    
    
    
    
    
    
    
    (33,277
    )Total Loans Held-for -Investment
    
    $
    32,672,962
    
    
    
    
    
    
    $
    30,453,334
    
    
    
    
    
    
    $
    15,871,222
  Non-Performing Assets
   September 30,
    
    
    December 31,
    
    
    September 30,(dollars in thousands)
    
    2005
    
    
    2004
    
    
    2004Commercial Mortgages
    
    $
    5,451
    
    
    $
    16,890
    
    
    $
    228Commercial & Industrial
    
    
    8,137
    
    
    
    8,730
    
    
    
    10,032Total Commercial
    
    
    13,588
    
    
    
    25,620
    
    
    
    10,260Residential Mortgages
    
    
    48,257
    
    
    
    103,745
    
    
    
    3,783Multi-Family Mortgages
    
    
    335
    
    
    
    1,290
    
    
    
    Consumer
    
    
    2,399
    
    
    
    3,178
    
    
    
    2,986Construction and Land
    
    
    600
    
    
    
    
    
    
    
    Non-Performing Loans Held-for-Investment
    
    $
    65,179
    
    
    $
    133,833
    
    
    $
    17,029Non-Performing Loans Held-for-Sale
    
    
    33,137
    
    
    
    60,858
    
    
    
    Other Real Estate
    
    
    7,149
    
    
    
    17,410
    
    
    
    222Total Non-Performing Assets
    
    $
    105,465
    
    
    $
    212,101
    
    
    $
    17,251Allowance for Loan Losses to Non-Performing Loans Held-for-Investment
    
    
    338
    %
    
    
    158
    %
    
    
    815
    %Allowance for Loan Losses to Total Loans Held-for-Investment
    
    
    .67
    
    
    
    .69
    
    
    
    .87Non-Performing Loans to Total Loans Held-for-Investment
    
    
    .20
    
    
    
    .44
    
    
    
    .11Non-Performing Assets to Total Assets
    
    
    .18
    
    
    
    .35
    
    
    
    .06
    14




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##### Table of Contents



NOTE 4  ALLOWANCE FOR LOAN LOSSES
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,(dollars in thousands)
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004Balance at Beginning of Period
    
    $
    217,872
    
    
    $
    138,008
    
    
    $
    211,097
    
    
    $
    122,733Allowance from Acquisition
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,251Provision For Loan Losses
    
    
    9,000
    
    
    
    6,500
    
    
    
    27,000
    
    
    
    19,500Total
    
    
    226,872
    
    
    
    144,508
    
    
    
    238,097
    
    
    
    152,484Recoveries Credited to the Allowance
    
    
    3,477
    
    
    
    3,894
    
    
    
    12,621
    
    
    
    9,580Losses Charged to the Allowance
    
    
    (10,002
    )
    
    
    (9,605
    )
    
    
    (30,371
    )
    
    
    (23,267
    )Balance at End of Period
    
    $
    220,347
    
    
    $
    138,797
    
    
    $
    220,347
    
    
    $
    138,797Annualized Net Charge-offs to Average Loans, net
    
    
    .08
    %
    
    
    .15
    %
    
    
    .07
    %
    
    
    .13
    %
 NOTE 5  FEDERAL FUNDS PURCHASED AND COLLATERALIZED BORROWINGS
  (dollars in thousands)
    
    FHLB
    
    
    Average
    
    
    Repurchase
    
    
    Average
    
    
    
    
    
    
    Total AverageMaturity/Repricing
    
    Advances
    
    
    Rate (1)
    
    
    Agreements
    
    
    Rate (1)
    
    
    Total (2)
    
    
    Rate (1)2005
    
    $
    2,225,015
    
    
    
    3.71
    %
    
    $
    1,553,781
    
    
    
    3.61
    %
    
    $
    3,778,796
    
    
    
    3.67
    %2006
    
    
    300,000
    
    
    
    3.86
    
    
    
    1,200,000
    
    
    
    2.96
    
    
    
    1,500,000
    
    
    
    3.142007
    
    
    150,000
    
    
    
    3.77
    
    
    
    700,000
    
    
    
    3.05
    
    
    
    850,000
    
    
    
    3.182008
    
    
    1,050,000
    
    
    
    2.50
    
    
    
    800,000
    
    
    
    4.13
    
    
    
    1,850,000
    
    
    
    3.212009
    
    
    200,000
    
    
    
    2.93
    
    
    
    
    
    
    
    
    
    
    
    200,000
    
    
    
    2.93Thereafter
    
    
    100,000
    
    
    
    5.90
    
    
    
    400,000
    
    
    
    4.38
    
    
    
    500,000
    
    
    
    4.68Total
    
    $
    4,025,015
    
    
    
    3.42
    %
    
    $
    4,653,781
    
    
    
    3.51
    %
    
    $
    8,678,796
    
    
    
    3.47
    %
 
 (1)
    
    Reflects the impact of purchase accounting adjustments and interest rate swaps.(2)
    
    Excludes $129.3 million and $64.9 million in purchase accounting discounts on FHLB Advances
and Repurchase Agreements, respectively.   NOTE 6  OTHER BORROWINGS
  SUBORDINATED NOTES
 September 30,
    
    
    December 31,
    
    
    September 30,(in thousands)
    
    2005
    
    
    2004
    
    
    2004Parent Company:5.875% Subordinated Notes due August 2012
    
    $
    349,386
    
    
    $
    349,319
    
    
    $
    349,2965.0% Subordinated Notes due August 2012
    
    
    150,000
    
    
    
    150,000
    
    
    
    150,000Subsidiary Bank:9.25% Subordinated Bank Notes due October 2010
    
    
    180,127
    
    
    
    184,474
    
    
    
    Total Subordinated Notes
    
    
    679,513
    
    
    
    683,793
    
    
    
    499,296Fair Value Hedge Adjustment
    
    
    (28,519
    )
    
    
    (22,888
    )
    
    
    (20,461
    )Total Subordinated Notes Carrying Amount
    
    $
    650,994
    
    
    $
    660,905
    
    
    $
    478,835
 15




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##### Table of Contents



(See Note 9  Derivative Financial Instruments for additional information).
  JUNIOR SUBORDINATED DEBT (related to Trust Preferred Securities):
 September 30,
    
    
    December 31,
    
    
    September 30,(in thousands)
    
    2005
    
    
    2004
    
    
    20048.70% Junior Subordinated Debt  due December 2026
    
    $
    102,836
    
    
    $
    102,827
    
    
    $
    102,8248.00% Junior Subordinated Debt  due December 2027
    
    
    102,807
    
    
    
    102,798
    
    
    
    102,7958.17% Junior Subordinated Debt  due May 2028
    
    
    46,547
    
    
    
    46,547
    
    
    
    46,5479.10% Junior Subordinated Debt  due June 2027
    
    
    236,214
    
    
    
    237,251
    
    
    
    Total Junior Subordinated Debt
    
    
    488,404
    
    
    
    489,423
    
    
    
    252,166Fair Value Hedge Adjustment
    
    
    10,300
    
    
    
    15,165
    
    
    
    15,194Total Junior Subordinated Debt Carrying Amount
    
    $
    498,704
    
    
    $
    504,588
    
    
    $
    267,360
   (See Note 9  Derivative Financial Instruments for additional
information.)
 SENIOR NOTES:
 September 30,
    
    
    December 31,(in thousands)
    
    2005
    
    
    20043.20% Senior Notes  due June 2008
    
    $
    344,426
    
    
    $
    342,869Fair Value Hedge Adjustment
    
    
    (8,732
    )
    
    
    (2,044
    )Total Senior Notes Carrying Amount
    
    $
    335,694
    
    
    $
    340,825
  16




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##### Table of Contents



(See Note 9 
Derivative Financial Instruments for additional information
 NOTE 7  MORTGAGE SERVICING RIGHTS
  At and for the
    
    
    At and for theThree Months Ended
    
    
    Nine Months Ended(in thousands)
    
    September 30, 2005
    
    
    September 30, 2005Mortgage Servicing Rights:Balance at Beginning of Period
    
    $
    288,453
    
    
    $
    254,857Originations
    
    
    28,276
    
    
    
    108,770Purchases
    
    
    
    
    
    
    660Amortization
    
    
    (23,183
    )
    
    
    (63,763
    )Sales
    
    
    (768
    )
    
    
    (7,746
    )Balance at End of Period
    
    $
    292,778
    
    
    $
    292,778Valuation Allowance:Balance at Beginning of Period
    
    $
    (34,971
    )
    
    $
    Temporary
Recovery/(Impairment) on Mortgage Servicing Rights
    
    
    9,540
    
    
    
    (25,431
    )Balance at End of Period
    
    $
    (25,431
    )
    
    $
    (25,431
    )Mortgage Servicing Rights, net
    
    $
    267,347
    
    
    $
    267,347Fair Value at September 30, 2005
    
    $
    269,804
    
    
    $
    269,804Ratio of mortgage servicing rights to related loans serviced for others
    
    
    0.78
    %
    
    
    0.78
    %
  (in thousands)
    
    September 30, 2005Loans serviced for others
    
    $
    34,231,926Owned loans serviced
    
    $
    16,531,034Total managed servicing portfolio
    
    $
    50,762,960
    NOTE 8  REPRESENTATION AND WARRANTY RESERVE
  17




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##### Table of Contents



At and for the
    
    
    At and for theThree Months Ended
    
    
    Nine Months Ended(in thousands)
    
    September 30, 2005
    
    
    September 30, 2005Balance at Beginning of Period
    
    $
    129,116
    
    
    $
    97,066Provisions for Estimated Losses (1)
    
    
    18,647
    
    
    
    66,244Losses Incurred
    
    
    (12,695
    )
    
    
    (28,242
    )Balance at End of Period
    
    $
    135,068
    
    
    $
    135,068
 
 (1)
    
    The provision is recognized as a reduction to the gain on sale of loans recorded in the
accompanying consolidated statements of income. NOTE 9  DERIVATIVE FINANCIAL INSTRUMENTS
   (dollars in thousands)
    
    Hedged
    
    Notional
    
    
    Fixed
    
    
    VariableMaturity
    
    Liability
    
    Amount
    
    
    Interest Rate
    
    
    Interest RatePay Fixed Swaps2008
    
    Repurchase Agreements
    
    $
    75,000
    
    
    
    6.14
    %
    
    
    3.75
    %Pay Floating Swaps2007
    
    5.00% Subordinated Notes
    
    $
    150,000
    
    
    
    5.00
    %
    
    
    3.79
    %2008
    
    3.20% Senior Notes
    
    
    350,000
    
    
    
    3.20
    
    
    
    3.762012
    
    5.875% Subordinated Notes
    
    
    350,000
    
    
    
    5.88
    
    
    
    3.792026
    
    8.70% Junior Subordinated Debt
    
    
    100,000
    
    
    
    8.70
    
    
    
    3.872027
    
    8.00% Junior Subordinated Debt
    
    
    100,000
    
    
    
    8.00
    
    
    
    3.872028
    
    8.17% Junior Subordinated Debt
    
    
    45,000
    
    
    
    8.17
    
    
    
    3.69$
    1,095,000
   18




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##### Table of Contents



19




---



##### Table of Contents



For the
    
    
    For theThree Months Ended
    
    
    Nine Months Ended(in thousands)
    
    September 30, 2005
    
    
    September 30, 2005Loss on Hedged Mortgage Loans
    
    $
    (8,559
    )
    
    $
    (6,390
    )Gain on Derivatives
    
    
    8,218
    
    
    
    4,845Hedge Ineffectiveness
    
    $
    (341
    )
    
    $
    (1,545
    )
 NOTE 10  OTHER COMMITMENTS AND CONTINGENT LIABILITIES
 Credit Related Commitments
  Retail Banking
       (in thousands)
    
    2005Commitments to Extend Credit on Loans Held-for-Investment (2)
    
    $
    3,912,397Standby Letters of Credit (1) (2)
    
    
    482,327Commercial Letters of Credit (2)
    
    
    23,061
 
 (1)
    
    Standby letters of credit are considered guarantees and are reflected in other
liabilities in the accompanying Consolidated Balance Sheet at their estimated fair value of
$1.5 million as of September 30, 2005. The fair value of these instruments is recognized as
income over the initial term of the guarantee.(2)
    
    At September 30, 2005, commitments to extend credit on loans held-for-investment with
maturities of less than one year totaled $2.3 billion, while $1.6 billion mature between one
to three years. Standby and commercial letters of credit are issued with original maturity
terms of twelve months or less. 
 20




---



##### Table of Contents



Mortgage Banking
    (in thousands)
    
    2005Commitments to Originate Mortgage Loans Held-for-Sale
    
    $
    6,376,081Commitments to Fund HELOCs
    
    
    628,343
 NOTE 11  RETIREMENT AND OTHER EMPLOYEE BENEFITS
  Three Months Ended
    
    
    Nine Months EndedSeptember
30,
    
    
    September
30,2005
    
    
    2004
    
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004(in thousands)
    
    Pension
    
    
    Post-Retirement
    
    
    Pension
    
    
    Post-RetirementComponents of Net
Periodic Benefit Cost:Service Cost
    
    $
    2,114
    
    
    $
    1,531
    
    
    $
    365
    
    
    $
    178
    
    
    $
    7,240
    
    
    $
    3,706
    
    
    $
    1,391
    
    
    $
    544Interest Cost
    
    
    2,689
    
    
    
    1,802
    
    
    
    220
    
    
    
    409
    
    
    
    7,889
    
    
    
    4,797
    
    
    
    1,628
    
    
    
    1,110Expected Return on Plan Assets
    
    
    (5,306
    )
    
    
    (3,626
    )
    
    
    (63
    )
    
    
    (64
    )
    
    
    (15,254
    )
    
    
    (8,175
    )
    
    
    (191
    )
    
    
    (64
    )Amortization of Prior Service
Cost
    
    
    (40
    )
    
    
    (66
    )
    
    
    (20
    )
    
    
    (20
    )
    
    
    (172
    )
    
    
    (198
    )
    
    
    (60
    )
    
    
    (60
    )Amortization of Transition
Asset/Obligation
    
    
    
    
    
    
    (107
    )
    
    
    73
    
    
    
    73
    
    
    
    (131
    )
    
    
    (321
    )
    
    
    219
    
    
    
    219Recognized Actuarial
Loss/(Gain)
    
    
    217
    
    
    
    255
    
    
    
    (170
    )
    
    
    67
    
    
    
    763
    
    
    
    771
    
    
    
    18
    
    
    
    229Net Periodic Benefit Cost
    
    $
    (326
    )
    
    $
    (211
    )
    
    $
    405
    
    
    $
    643
    
    
    $
    335
    
    
    $
    580
    
    
    $
    3,005
    
    
    $
    1,978
  Bank Owned Life Insurance
   21




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##### Table of Contents



NOTE 12  BUSINESS SEGMENTS
     
    
    Revenues and expenses directly associated with each segment are included in determining net income.
    
    Transactions between segments are based on specific criteria or appropriate third party rates.
    
    Inter-company eliminations are reflected in the Other column.
  Retail
    
    
    Mortgage
    
    
    Segment
    
    
    
    
    
    
    Consolidated(in thousands)
    
    Banking
    
    
    Banking
    
    
    Totals
    
    
    Other
    
    
    OperationsThree Months Ended September 30, 2005Net Interest Income
    
    $
    411,481
    
    
    $
    22,919
    
    
    $
    434,400
    
    
    $
    150
    
    
    $
    434,550Provision for Loan Losses
    
    
    9,000
    
    
    
    
    
    
    
    9,000
    
    
    
    
    
    
    
    9,000Net Interest Income After Provision for Loan Losses
    
    
    402,481
    
    
    
    22,919
    
    
    
    425,400
    
    
    
    150
    
    
    
    425,550Non-Interest Income:Gain on Sale of Loans Held-for-Sale
    
    
    
    
    
    
    125,249
    
    
    
    125,249
    
    
    
    (11,662
    )
    
    
    113,587Gain on Sale of Loans Held-for-Investment
    
    
    1,532
    
    
    
    
    
    
    
    1,532
    
    
    
    
    
    
    
    1,532Customer Related Fees & Service Charges
    
    
    41,980
    
    
    
    
    
    
    
    41,980
    
    
    
    
    
    
    
    41,980Mortgage Servicing Fees
    
    
    
    
    
    
    16,177
    
    
    
    16,177
    
    
    
    (13,035
    )
    
    
    3,142Temporary Recovery  Mortgage Servicing Rights
    
    
    
    
    
    
    9,540
    
    
    
    9,540
    
    
    
    
    
    
    
    9,540Investment Management, Commissions & Trust
Fees
    
    
    8,780
    
    
    
    
    
    
    
    8,780
    
    
    
    
    
    
    
    8,780Other Operating Income
    
    
    9,989
    
    
    
    1,344
    
    
    
    11,333
    
    
    
    
    
    
    
    11,333Securities Gains, net
    
    
    840
    
    
    
    
    
    
    
    840
    
    
    
    
    
    
    
    840Total Non-Interest Income
    
    
    63,121
    
    
    
    152,310
    
    
    
    215,431
    
    
    
    (24,697
    )
    
    
    190,734Non-Interest Expense:Employee Compensation & Benefits
    
    
    89,456
    
    
    
    46,844
    
    
    
    136,300
    
    
    
    
    
    
    
    136,300Occupancy & Equipment Expense, net
    
    
    39,066
    
    
    
    9,941
    
    
    
    49,007
    
    
    
    
    
    
    
    49,007Other Operating Expense
    
    
    59,542
    
    
    
    22,036
    
    
    
    81,578
    
    
    
    (12,885
    )
    
    
    68,693Total Non-Interest Expense
    
    
    188,064
    
    
    
    78,821
    
    
    
    266,885
    
    
    
    (12,885
    )
    
    
    254,000Income Before Income Taxes
    
    
    277,538
    
    
    
    96,408
    
    
    
    373,946
    
    
    
    (11,662
    )
    
    
    362,284Provision for Income Taxes
    
    
    89,409
    
    
    
    40,477
    
    
    
    129,886
    
    
    
    (4,898
    )
    
    
    124,988Net Income
    
    $
    188,129
    
    
    $
    55,931
    
    
    $
    244,060
    
    
    $
    (6,764
    )
    
    $
    237,296Total Assets
    
    $
    52,790,476
    
    
    $
    5,109,917
    
    
    $
    57,900,393
    
    
    $
    
    
    
    $
    57,900,393
 22




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##### Table of Contents



Retail
    
    
    Mortgage
    
    
    Segment
    
    
    
    
    
    
    Consolidated(in thousands)
    
    Banking
    
    
    Banking
    
    
    Totals
    
    
    Other
    
    
    OperationsFor the Nine Months Ended September 30, 2005Net Interest Income
    
    $
    1,281,628
    
    
    $
    85,790
    
    
    $
    1,367,418
    
    
    $
    524
    
    
    $
    1,367,942Provision for Loan Losses
    
    
    27,000
    
    
    
    
    
    
    
    27,000
    
    
    
    
    
    
    
    27,000Net Interest Income After Provision for Loan Losses
    
    
    1,254,628
    
    
    
    85,790
    
    
    
    1,340,418
    
    
    
    524
    
    
    
    1,340,942Non-Interest Income:Gain on Sale of Loans Held-for-Sale
    
    
    
    
    
    
    379,627
    
    
    
    379,627
    
    
    
    (40,095
    )
    
    
    339,532Gain on Sale of Loans Held-for-Investment
    
    
    5,824
    
    
    
    
    
    
    
    5,824
    
    
    
    
    
    
    
    5,824Customer Related Fees & Service Charges
    
    
    125,888
    
    
    
    
    
    
    
    125,888
    
    
    
    
    
    
    
    125,888Mortgage Servicing Fees
    
    
    
    
    
    
    42,870
    
    
    
    42,870
    
    
    
    (30,116
    )
    
    
    12,754Temporary Impairment  Mortgage Servicing
Rights
    
    
    
    
    
    
    (25,431
    )
    
    
    (25,431
    )
    
    
    
    
    
    
    (25,431
    )Investment Management, Commissions & Trust
Fees
    
    
    30,138
    
    
    
    
    
    
    
    30,138
    
    
    
    
    
    
    
    30,138Other Operating Income
    
    
    31,504
    
    
    
    6,184
    
    
    
    37,688
    
    
    
    
    
    
    
    37,688Securities Gains, net
    
    
    16,358
    
    
    
    
    
    
    
    16,358
    
    
    
    
    
    
    
    16,358Total Non-Interest Income
    
    
    209,712
    
    
    
    403,250
    
    
    
    612,962
    
    
    
    (70,211
    )
    
    
    542,751Non-Interest Expense:Employee Compensation & Benefits
    
    
    268,251
    
    
    
    142,433
    
    
    
    410,684
    
    
    
    
    
    
    
    410,684Occupancy & Equipment Expense, net
    
    
    112,759
    
    
    
    29,151
    
    
    
    141,910
    
    
    
    
    
    
    
    141,910Other Operating Expense
    
    
    168,867
    
    
    
    58,578
    
    
    
    227,445
    
    
    
    (29,591
    )
    
    
    197,854Total Non-Interest Expense
    
    
    549,877
    
    
    
    230,162
    
    
    
    780,039
    
    
    
    (29,591
    )
    
    
    750,448Income Before Income Taxes
    
    
    914,463
    
    
    
    258,878
    
    
    
    1,173,341
    
    
    
    (40,096
    )
    
    
    1,133,245Provision for Income Taxes
    
    
    302,974
    
    
    
    108,713
    
    
    
    411,687
    
    
    
    (16,839
    )
    
    
    394,848Net Income
    
    $
    611,489
    
    
    $
    150,165
    
    
    $
    761,654
    
    
    $
    (23,257
    )
    
    $
    738,397
 NOTE 13  RECENT ACCOUNTING PRONOUNCEMENTS
 Accounting Changes and Error Corrections
  Accounting for Stock Based Compensation
 
 23




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##### Table of Contents



Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Forward-Looking Statements
   
    
    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, the representation and warranty reserve or other reserves;
    
    descriptions of plans or objectives of management for future operations, products, or services;
    
    forecasts of future economic performance; and
    
    descriptions of assumptions underlying or relating to any of the foregoing.
   
    
    general business and economic conditions on both a regional and national level;
    
    worldwide political and social unrest, including acts of war and terrorism;
    
    competitive pressures among financial services companies which may increase significantly;
    
    competitive pressures in the mortgage origination business which could have an adverse effect on gain on sale profit margins;
    
    changes in the interest rate environment may negatively affect interest margins,
mortgage loan originations and the valuation of mortgage servicing rights;
    
    changes in the securities and bond markets;
    
    changes in real estate markets, including possible erosion in values, which may negatively affect loan origination and portfolio quality;
    
    legislative or regulatory changes, including increased regulation of our businesses, including enforcement of the U.S. Patriot Act;
    
    accounting principles, policies, practices or guidelines;
    
    monetary and fiscal policies of the U.S. Government, including policies of the U.S. Treasury and the Federal Reserve Board and;
    
    technological changes, including increasing dependence on the Internet
  24




---



##### Table of Contents



Summary
 Business Overview
    Retail Banking
  Mortgage Banking
 25




---



##### Table of Contents



Segment Results
 For the
    
    
    For theThree Months Ended
    
    
    Nine Months EndedSeptember 30, 2005
    
    
    September 30, 2005Summary Consolidated Net Income
    
    Contribution
    
    
    Contribution(dollars in thousands)
    
    $
    
    
    %
    
    
    $
    
    
    %Retail Banking
    
    $
    188,129
    
    
    
    79
    %
    
    $
    611,489
    
    
    
    83
    %Mortgage Banking (1)
    
    
    49,167
    
    
    
    21
    
    
    
    126,908
    
    
    
    17Consolidated Net Income
    
    $
    237,296
    
    
    
    100
    %
    
    $
    738,397
    
    
    
    100
    %
 
 (1)
    
    Excludes net inter-company activity of $6.8 million and $23.3 million, after taxes for the
three and nine months ended September 30, 2005, respectively. 26




---



##### Table of Contents



Financial Overview
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,
    
    
    September 30,
    
    
    September 30,(in thousands, except ratios & per share amounts)
    
    2005
    
    
    2004
    
    
    2005
    
    
    2004Earnings:Net Income
    
    $
    237,296
    
    
    $
    119,728
    
    
    $
    738,397
    
    
    $
    331,244Per Share:Earnings Per Share  Basic
    
    $
    .50
    
    
    $
    .47
    
    
    $
    1.58
    
    
    $
    1.39Earnings Per Share  Diluted
    
    
    .50
    
    
    
    .47
    
    
    
    1.55
    
    
    
    1.37Cash Dividends
    
    
    .22
    
    
    
    .22
    
    
    
    .66
    
    
    
    .62Dividend Payout Ratio
    
    
    44
    %
    
    
    48
    %
    
    
    43
    %
    
    
    47
    %Book Value
    
    $
    19.38
    
    
    $
    9.49
    
    
    $
    19.38
    
    
    $
    9.49Tangible Book Value (2)
    
    $
    6.75
    
    
    $
    5.44
    
    
    $
    6.75
    
    
    $
    5.44Average Equivalent Shares  Basic
    
    
    470,004
    
    
    
    252,162
    
    
    
    468,644
    
    
    
    237,398Average Equivalent Shares  Diluted
    
    
    475,627
    
    
    
    255,485
    
    
    
    474,957
    
    
    
    241,082Selected Ratios:Return on Average Total Assets
    
    
    1.60
    %
    
    
    1.75
    %
    
    
    1.64
    %
    
    
    1.82
    %Return on Average Tangible Assets (1)
    
    
    1.83
    
    
    
    1.85
    
    
    
    1.87
    
    
    
    1.90Return on Average Equity
    
    
    10.13
    
    
    
    19.66
    
    
    
    10.78
    
    
    
    22.53Return on Average Tangible Equity (1)
    
    
    29.43
    
    
    
    35.32
    
    
    
    32.21
    
    
    
    36.67Yield on Interest Earning Assets (3)
    
    
    5.47
    
    
    
    5.47
    
    
    
    5.48
    
    
    
    5.51Cost of Funds
    
    
    2.39
    
    
    
    1.63
    
    
    
    2.22
    
    
    
    1.62Net Interest Margin (3)
    
    
    3.52
    
    
    
    4.23
    
    
    
    3.63
    
    
    
    4.27Efficiency Ratio (4)
    
    
    39.15
    
    
    
    37.62
    
    
    
    37.14
    
    
    
    36.27
 This document contains certain supplemental financial information, described in the following
notes, which has been determined by methods other than accounting principles generally accepted
in the United States of America (GAAP) that management uses in its analysis of the Companys
performance. Management believes these non-GAAP financial measures provide information useful to
investors in understanding the underlying operational performance of the Company, its business
and performance trends and facilitates comparisons with the performance of others in the
financial services industry.
 
 (1)
    
    Return on average tangible assets and return on average tangible equity which represent
non-GAAP measures are computed, on an annualized basis as follows:- Return on average tangible assets is computed by dividing net income, as reported plus
amortization of identifiable intangible assets, net of taxes by average total assets less
average goodwill and average identifiable intangible assets. (See detailed schedule on exhibit
99.1)- Return on average tangible equity is computed by dividing net income, as reported plus
amortization of identifiable intangible assets, net of taxes by average total equity less
average goodwill and average identifiable intangible assets. (See detailed schedule on exhibit
99.1)(2)
    
    Tangible book value is calculated by dividing period-end stockholders equity, less
period-end goodwill and identifiable intangible assets, by period end shares outstanding. (See
detailed schedule on exhibit 99.1).(3)
    
    Presented on a tax equivalent basis.(4)
    
    The efficiency ratio, which represents a non-GAAP measure, is defined as the ratio of
non-interest expense net of amortization of identifiable intangibles and other real estate
expenses to net interest income on a tax equivalent basis and non-interest income net of
securities gains, gains on sale of loans held-for-investment and temporary
recovery/(impairment) on mortgage servicing rights. 
 27




---



##### Table of Contents



Financial Results
  
    
    98% increase in net income for the third quarter compared to 2004, with a 6% increase in diluted earnings per share
    
    Returns on average tangible equity and tangible assets of 29.4% and 1.83%
    
    26% annualized growth in commercial loans
    
    25% decline in non-performing assets
    
    A $1.8 billion reduction in borrowings as the balance sheet repositioning
continued during the quarter (See Balance Sheet Repositioning Section below for additional
information)
    
    Strong mortgage loan originations of $10.4 billion from our mortgage banking subsidiary
    
    Declaration of a regular quarterly cash dividend of $.22 per common share
    
    An increase in the common share repurchase program to 15.7 million shares
 Balance Sheet Repositioning
    28




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##### Table of Contents



Net Income
   Net Interest Income
   29




---



##### Table of Contents



2005
    
    
    2004Average
    
    
    
    
    
    
    Average
    
    
    Average
    
    
    
    
    
    
    Average(dollars in thousands)
    
    Balance
    
    
    Interest
    
    
    Rate
    
    
    Balance
    
    
    Interest
    
    
    RateInterest Earning Assets:Loans Held-for-Investment (2)(5)
    
    $
    32,361,793
    
    
    $
    471,627
    
    
    
    5.78
    %
    
    $
    15,659,594
    
    
    $
    239,080
    
    
    
    6.07
    %Loans Held-for-Sale (2)
    
    
    5,401,495
    
    
    
    69,840
    
    
    
    5.13
    
    
    
    
    
    
    
    
    
    
    
    Securities (1)
    
    
    12,531,822
    
    
    
    152,447
    
    
    
    4.83
    
    
    
    8,823,732
    
    
    
    103,113
    
    
    
    4.65Money Market Investments
    
    
    38,668
    
    
    
    529
    
    
    
    5.43
    
    
    
    574,036
    
    
    
    2,210
    
    
    
    1.53Total Interest Earning Assets
    
    
    50,333,778
    
    
    $
    694,443
    
    
    
    5.47
    %
    
    
    25,057,362
    
    
    $
    344,403
    
    
    
    5.47
    %Non-Interest Earning Assets:Cash and Due from Banks
    
    
    1,012,515
    
    
    
    
    
    
    
    
    
    
    
    612,732Other Assets (1)
    
    
    7,385,622
    
    
    
    
    
    
    
    
    
    
    
    1,515,319Total Assets
    
    $
    58,731,915
    
    
    
    
    
    
    
    
    
    
    $
    27,185,413Interest Bearing Liabilities:Savings, NOW & Money Market Deposits
    
    $
    21,419,573
    
    
    $
    91,316
    
    
    
    1.69
    %
    
    $
    11,017,089
    
    
    $
    22,921
    
    
    
    .83
    %Time Deposits
    
    
    8,223,189
    
    
    
    49,397
    
    
    
    2.38
    
    
    
    3,685,260
    
    
    
    13,805
    
    
    
    1.49Total Savings and Time Deposits
    
    
    29,642,762
    
    
    
    140,713
    
    
    
    1.88
    
    
    
    14,702,349
    
    
    
    36,726
    
    
    
    .99Federal Funds Purchased & Collateralized Borrowings
    
    
    10,057,604
    
    
    
    86,343
    
    
    
    3.41
    
    
    
    3,534,757
    
    
    
    33,880
    
    
    
    3.81Other Borrowings (4)
    
    
    1,505,651
    
    
    
    20,684
    
    
    
    5.45
    
    
    
    724,181
    
    
    
    7,248
    
    
    
    3.98Total Borrowings
    
    
    11,563,255
    
    
    
    107,027
    
    
    
    3.67
    
    
    
    4,258,938
    
    
    
    41,128
    
    
    
    3.84Total Interest Bearing Liabilities
    
    $
    41,206,017
    
    
    $
    247,740
    
    
    
    2.39
    
    
    $
    18,961,287
    
    
    $
    77,854
    
    
    
    1.63Interest Rate Spread
    
    
    
    
    
    
    
    
    
    
    3.08
    %
    
    
    
    
    
    
    
    
    
    
    3.84
    %Non-Interest Bearing Liabilities:Demand Deposits
    
    $
    7,547,759
    
    
    
    
    
    
    
    
    
    
    $
    5,444,217Other Liabilities
    
    
    684,278
    
    
    
    
    
    
    
    
    
    
    
    357,793Total Liabilities
    
    
    49,438,054
    
    
    
    
    
    
    
    
    
    
    
    24,763,297Stockholders Equity
    
    
    9,293,861
    
    
    
    
    
    
    
    
    
    
    
    2,422,116Total Liabilities and Stockholders Equity
    
    $
    58,731,915
    
    
    
    
    
    
    
    
    
    
    $
    27,185,413Net Interest Income and Net Interest Margin (3)
    
    
    
    
    
    $
    446,703
    
    
    
    3.52
    %
    
    
    
    
    
    $
    266,549
    
    
    
    4.23
    %Less: Tax Equivalent Adjustment
    
    
    
    
    
    
    (12,153
    )
    
    
    
    
    
    
    
    
    
    
    (7,074
    )Net Interest Income
    
    
    
    
    
    $
    434,550
    
    
    
    
    
    
    
    
    
    
    $
    259,475
 
 (1)
    
    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. Average
loans held-for-sale and related interest income during 2004, was not meaningful.(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 $1.78, $1.72, $1.57, $1.12, and $1.07, respectively, for the
three months ended September 30, 2005; and $1.77, $1.67, $1.55, $1.17, and $1.10,
respectively, for the three months ended September 30, 2004.(4)
    
    For purposes of these computations, the fair value adjustments from hedging activities are
included in the average balance of the related hedged item and the impact of the hedge is
included as an adjustment to interest expense.(5)
    
    The average rate on residential loans and all other loans was approximately 5.0% and 6.5%,
respectively, for the three months ended September 30, 2005, 30




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##### Table of Contents



2005
    
    
    2004Average
    
    
    
    
    
    
    Average
    
    
    Average
    
    
    
    
    
    
    Average(dollars in thousands)
    
    Balance
    
    
    Interest
    
    
    Rate
    
    
    Balance
    
    
    Interest
    
    
    RateInterest Earning Assets:Loans Held-for-Investment (2)
    
    $
    32,096,673
    
    
    $
    1,399,125
    
    
    
    5.83
    %
    
    $
    14,028,748
    
    
    $
    647,110
    
    
    
    6.16
    %Loans Held-for-Sale (2)
    
    
    5,383,660
    
    
    
    209,753
    
    
    
    5.21
    
    
    
    
    
    
    
    
    
    
    
    Securities (1)
    
    
    14,084,642
    
    
    
    506,831
    
    
    
    4.81
    
    
    
    8,218,882
    
    
    
    278,983
    
    
    
    4.53Money Market Investments
    
    
    70,844
    
    
    
    1,959
    
    
    
    3.70
    
    
    
    292,804
    
    
    
    2,932
    
    
    
    1.34Total Interest Earning Assets
    
    
    51,635,819
    
    
    $
    2,117,668
    
    
    
    5.48
    %
    
    
    22,540,434
    
    
    $
    929,025
    
    
    
    5.51
    %Non-Interest Earning Assets:Cash and Due from Banks
    
    
    1,028,028
    
    
    
    
    
    
    
    
    
    
    
    620,626Other Assets (1)
    
    
    7,470,504
    
    
    
    
    
    
    
    
    
    
    
    1,130,841Total Assets
    
    $
    60,134,351
    
    
    
    
    
    
    
    
    
    
    $
    24,291,901Interest Bearing Liabilities:Savings, NOW & Money Market Deposits
    
    $
    21,465,322
    
    
    $
    243,367
    
    
    
    1.52
    %
    
    $
    9,870,924
    
    
    $
    57,040
    
    
    
    .77
    %Time Deposits
    
    
    7,888,741
    
    
    
    123,255
    
    
    
    2.09
    
    
    
    3,269,359
    
    
    
    36,852
    
    
    
    1.51Total Savings and Time Deposits
    
    
    29,354,063
    
    
    
    366,622
    
    
    
    1.67
    
    
    
    13,140,283
    
    
    
    93,892
    
    
    
    .95Federal Funds Purchased & Collateralized
Borrowings
    
    
    12,162,606
    
    
    
    290,588
    
    
    
    3.19
    
    
    
    3,248,571
    
    
    
    93,791
    
    
    
    3.86Other Borrowings (4)
    
    
    1,498,656
    
    
    
    57,794
    
    
    
    5.16
    
    
    
    743,203
    
    
    
    20,284
    
    
    
    3.65Total Borrowings
    
    
    13,661,262
    
    
    
    348,382
    
    
    
    3.41
    
    
    
    3,991,774
    
    
    
    114,075
    
    
    
    3.82Total Interest Bearing Liabilities
    
    $
    43,015,325
    
    
    $
    715,004
    
    
    
    2.22
    
    
    $
    17,132,057
    
    
    $
    207,967
    
    
    
    1.62Interest Rate Spread
    
    
    
    
    
    
    
    
    
    
    3.26
    %
    
    
    
    
    
    
    
    
    
    
    3.89
    %Non-Interest Bearing Liabilities:Demand Deposits
    
    $
    7,233,032
    
    
    
    
    
    
    
    
    
    
    $
    4,784,597Other Liabilities
    
    
    724,351
    
    
    
    
    
    
    
    
    
    
    
    411,653Total Liabilities
    
    
    50,972,708
    
    
    
    
    
    
    
    
    
    
    
    22,328,307Stockholders Equity
    
    
    9,161,643
    
    
    
    
    
    
    
    
    
    
    
    1,963,594Total Liabilities and Stockholders Equity
    
    $
    60,134,351
    
    
    
    
    
    
    
    
    
    
    $
    24,291,901Net Interest Income and Net Interest Margin (3)
    
    
    
    
    
    $
    1,402,664
    
    
    
    3.63
    %
    
    
    
    
    
    $
    721,058
    
    
    
    4.27
    %Less: Tax Equivalent Adjustment
    
    
    
    
    
    
    (34,722
    )
    
    
    
    
    
    
    
    
    
    
    (20,659
    )Net Interest Income
    
    
    
    
    
    $
    1,367,942
    
    
    
    
    
    
    
    
    
    
    $
    700,399
 
 (1)
    
    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. Average
loans held-for-sale and related interest income during 2004, was not meaningful.(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 $1.78, $ 1.72, $ 1.57, $ 1.19, and $ 1.05, respectively, for the
nine months ended September 30, 2005; and $1.77, $1.67, $1.55, $1.17, and $1.13, respectively,
for the nine months ended September 30, 2004.(4)
    
    For purposes of these computations, the fair value adjustments from hedging activities are
included in the average balance of the related hedged item and the impact of the hedge is
included as an adjustment to interest expense. 31




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##### Table of Contents



Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2005 vs. 2004
    
    
    2005 vs. 2004Change in
    
    
    Change inAverage
    
    
    Average
    
    
    Net Interest
    
    
    Average
    
    
    Average
    
    
    Net Interest(in thousands)
    
    Volume
    
    
    Rate
    
    
    Income
    
    
    Volume
    
    
    Rate
    
    
    IncomeInterest Income from Earning Assets:Loans-Held-for-Investment
    
    $
    244,545
    
    
    ($
    11,998
    )
    
    $
    232,547
    
    
    $
    788,565
    
    
    ($
    36,550
    )
    
    $
    752,015Loans Held-for-Sale
    
    
    69,840
    
    
    
    
    
    
    
    69,840
    
    
    
    209,753
    
    
    
    
    
    
    
    209,753Securities
    
    
    45,243
    
    
    
    4,091
    
    
    
    49,334
    
    
    
    209,766
    
    
    
    18,082
    
    
    
    227,848Money Market Investments
    
    
    (3,476
    )
    
    
    1,795
    
    
    
    (1,681
    )
    
    
    (3,405
    )
    
    
    2,432
    
    
    
    (973
    )Total Interest Income
    
    $
    356,152
    
    
    ($
    6,112
    )
    
    $
    350,040
    
    
    $
    1,204,679
    
    
    ($
    16,036
    )
    
    $
    1,188,643Interest Expense on Liabilities:Savings, NOW & Money Market Deposits
    
    $
    32,489
    
    
    $
    35,906
    
    
    $
    68,395
    
    
    $
    102,250
    
    
    $
    84,077
    
    
    $
    186,327Time Deposits
    
    
    23,942
    
    
    
    11,650
    
    
    
    35,592
    
    
    
    67,773
    
    
    
    18,630
    
    
    
    86,403Federal Funds Purchased and
Collateralized Borrowings
    
    
    56,478
    
    
    
    (4,015
    )
    
    
    52,463
    
    
    
    215,433
    
    
    
    (18,636
    )
    
    
    196,797Other Borrowings
    
    
    10,011
    
    
    
    3,425
    
    
    
    13,436
    
    
    
    26,648
    
    
    
    10,862
    
    
    
    37,510Total Interest Expense
    
    
    122,920
    
    
    
    46,966
    
    
    
    169,886
    
    
    
    412,104
    
    
    
    94,933
    
    
    
    507,037Net Change in Net Interest Income
    
    $
    233,232
    
    
    ($
    53,078
    )
    
    $
    180,154
    
    
    $
    792,575
    
    
    ($
    110,969
    )
    
    $
    681,606
      32




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##### Table of Contents



(See Item 1, Notes to the Consolidated Financial
Statements, Note 9  Derivative Financial Instruments for additional information).
 Provision and Allowance for Loan Losses
 (See Notes to the
Consolidated Financial Statements Note 1  Business and Summary of Significant Accounting Policies
 Critical Accounting Policies for additional information).
 33




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##### Table of Contents



Residential &
    
    Commercial &(Dollars in thousands)
    
    Total
    
    Multi-Family
    
    All Other LoansLoans Held-for-Investment
    
    $
    32,641,813
    
    
    $
    20,134,785
    
    
    $
    12,507,028Allowance for Loan Losses
    
    
    220,347
    
    
    
    73,724
    
    
    
    146,623Non-Performing Loans Held-for-Investment
    
    
    65,179
    
    
    
    48,592
    
    
    
    16,587Allowance for Loan Losses to Loans-Held-for Investment
    
    
    0.67
    %
    
    
    0.37
    %
    
    
    1.17
    %Allowance for Loan Losses to Non-Performing Loans Held-for-Investment
    
    
    338
    %
    
    
    152
    %
    
    
    884
    %
   Non-Interest Income
 .( See financial
overview section for additional information).
 Non-Interest Expense
   34




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##### Table of Contents



Income Taxes
  Mortgage Banking
  For the
    
    
    For theThree Months
    
    
    Nine MonthsEnded September 30,
    
    
    Ended September 30,2005
    
    
    2005Net Interest Income
    
    $
    22,919
    
    
    $
    85,790Non-Interest Income:Gain on Sale of Loans (1)
    
    
    125,249
    
    
    
    379,627Mortgage Servicing Fees (1)
    
    
    16,177
    
    
    
    42,870Temporary Recovery/(Impairment)  Mortgage Servicing Rights
    
    
    9,540
    
    
    
    (25,431
    )Other Operating Income
    
    
    1,344
    
    
    
    6,184Total Non-Interest Income
    
    
    152,310
    
    
    
    403,250Non-Interest Expense:Employee Compensation & Benefits
    
    
    46,844
    
    
    
    142,433Occupancy & Equipment Expense, net
    
    
    9,941
    
    
    
    29,151Other Operating Expense
    
    
    22,036
    
    
    
    58,578Total Non-Interest Expense
    
    
    78,821
    
    
    
    230,162Income Before Income Taxes
    
    
    96,408
    
    
    
    258,878Provision for Income Taxes
    
    
    40,477
    
    
    
    108,713Net Income
    
    $
    55,931
    
    
    $
    150,165Total Assets
    
    $
    5,109,917
    
    
    $
    5,109,917
 
 (1)
    
    Includes $11.7 million and $40.1 million of inter-company gains on sale of loans and $13.0
million and $30.1 million of inter-company mortgage servicing fees for the three and nine
months ended September 30, 2005, respectively.     35




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##### Table of Contents



Gain on Sale of Loans
   For the three months ended September 30, 2005Margin onMortgage Loans
    
    
    Mortgage Loans
    
    
    Whole Loan
    
    
    Gain on Sale(dollars in thousand)
    
    Originated
    
    
    Sold
    
    
    Sales
    
    
    of LoansLoan Type:Specialty Products
    
    $
    4,827,831
    
    
    $
    5,061,097
    
    
    
    1.13
    %
    
    $
    56,956Jumbo
    
    
    3,419,675
    
    
    
    3,486,176
    
    
    
    0.71
    %
    
    
    24,906Home Equity/Seconds
    
    
    1,280,684
    
    
    
    1,500,767
    
    
    
    1.88
    %
    
    
    28,172Agency
    
    
    882,875
    
    
    
    895,784
    
    
    
    0.40
    %
    
    
    3,553Total
    
    $
    10,411,065
    
    
    $
    10,943,824
    
    
    
    1.04
    %
    
    $
    113,587
 For the nine months ended September 30, 2005Margin onMortgage Loans
    
    
    Mortgage Loans
    
    
    Whole Loan
    
    
    Gain on Sale(dollars in thousand)
    
    Originated
    
    
    Sold
    
    
    Sales
    
    
    of Loans (1)Loan Type:Specialty Products
    
    $
    14,361,411
    
    
    $
    13,789,779
    
    
    
    1.30
    %
    
    $
    179,161Jumbo
    
    
    12,055,605
    
    
    
    8,097,636
    
    
    
    0.89
    %
    
    
    71,862Home Equity/Seconds
    
    
    4,335,738
    
    
    
    4,548,035
    
    
    
    1.78
    %
    
    
    81,169Agency
    
    
    2,113,490
    
    
    
    1,963,499
    
    
    
    0.35
    %
    
    
    6,803Total
    
    $
    32,866,244
    
    
    $
    28,398,949
    
    
    
    1.19
    %
    
    $
    338,995
 
 (1)
    
    The gain on sale for the nine months ended September 30, 2005 differs from the amount
reported under generally accepted accounting principles on the accompanying Consolidated Statement
of Income due to a fair value adjustment of $(.5) million on loans held-for-sale at October 1, 2004
which were sold during 2005. Financial Condition
 Loans Held-for-Investment
  September 30,
    
    
    % of
    
    
    December 31,
    
    
    % of
    
    
    September 30,
    
    
    % of(dollars in thousands)
    
    2005
    
    
    Total
    
    
    2004
    
    
    Total
    
    
    2004
    
    
    TotalCommercial Mortgages
    
    $
    5,896,835
    
    
    
    18
    %
    
    $
    5,369,656
    
    
    
    18
    %
    
    $
    3,606,650
    
    
    
    23
    %Commercial & Industrial
    
    
    4,324,758
    
    
    
    13
    
    
    
    3,046,820
    
    
    
    10
    
    
    
    2,679,759
    
    
    
    16Total Commercial
    
    
    10,221,593
    
    
    
    31
    %
    
    
    8,416,476
    
    
    
    28
    %
    
    
    6,286,409
    
    
    
    39
    %Residential Mortgages
    
    
    15,508,008
    
    
    
    48
    
    
    
    15,668,938
    
    
    
    51
    
    
    
    3,485,009
    
    
    
    22Multi-Family Mortgages
    
    
    4,626,777
    
    
    
    14
    
    
    
    4,254,405
    
    
    
    14
    
    
    
    3,945,171
    
    
    
    25Consumer
    
    
    1,569,386
    
    
    
    5
    
    
    
    1,604,863
    
    
    
    5
    
    
    
    1,686,614
    
    
    
    11Construction & Land
    
    
    716,049
    
    
    
    2
    
    
    
    480,162
    
    
    
    2
    
    
    
    501,296
    
    
    
    3Total
    
    $
    32,641,813
    
    
    
    100
    %
    
    $
    30,424,844
    
    
    
    100
    %
    
    $
    15,904,499
    
    
    
    100
    %
 36




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##### Table of Contents



37




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##### Table of Contents



Securities
 (See financial overview section for additional information)
 Item 1, Notes to the
Consolidated Financial Statements Note 2, Securities for additional information
     38




---



##### Table of Contents



Deposits
  September 30,
    
    
    June 30,
    
    
    December 31,
    
    
    September 30,(in thousands)
    
    2005
    
    
    2005
    
    
    2004
    
    
    2004Deposits:Demand
    
    $
    7,478,359
    
    
    $
    7,586,939
    
    
    $
    6,738,302
    
    
    $
    5,574,161NOW & Money Market
    
    
    15,599,563
    
    
    
    15,848,473
    
    
    
    14,265,395
    
    
    
    6,466,290Savings
    
    
    5,515,530
    
    
    
    5,811,417
    
    
    
    6,333,599
    
    
    
    4,592,746Time
    
    
    5,414,506
    
    
    
    5,152,330
    
    
    
    4,932,302
    
    
    
    2,144,693Certificates of Deposit, $100,000 & Over
    
    
    2,804,128
    
    
    
    3,067,187
    
    
    
    2,542,830
    
    
    
    1,370,314Total Deposits
    
    $
    36,812,086
    
    
    $
    37,466,346
    
    
    $
    34,812,428
    
    
    $
    20,148,204
  Asset/Liability Management
      39




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##### Table of Contents




    
    The balance sheet composition remains static.
    
    Parallel yield curve shifts for market rates (i.e. treasuries, LIBOR, swaps, etc.) with an assumed floor of 50 basis points.
    
    Maintaining our current asset or liability spreads to market interest rates.
    
    The model considers the magnitude and timing of the repricing of financial
instruments, loans and deposit products, including the effect of changing interest rates on
expected prepayments and maturities.
    
    NOW deposit rates experience a 15% impact of market rate movements immediately
and have a floor of 10 basis points.
  Changes in Net Interest Income(dollars in thousands)
    
    $ Change
    
    
    % ChangeChange in Interest Rates+ 200 Basis Points
    
    $
    (37,493
    )
    
    
    (2.2
    )%+ 100 Basis Points
    
    
    (13,521
    )
    
    
    (.8
    )%- 100 Basis
Points
    
    
    11,488
    
    
    
    .7
    %Policy Limit
    
    
    
    
    
    
    (10.0
    )
   Market Value of Equity(dollars in thousands)
    
    $ Change
    
    
    % ChangeChange in Interest Rates+ 200 Basis Points
    
    $
    (585,317
    )
    
    
    (4.8
    )%- 200 Basis Points
    
    $
    (206,253
    )
    
    
    (1.7
    )Policy Limit
    
    
    
    
    
    
    (25.0
    )
 Liquidity Risk Management
   40




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##### Table of Contents



Capital
     September 30, 2005
    
    
    September 30, 2004(dollars in thousands)
    
    Amount
    
    
    Ratio
    
    
    Amount
    
    
    RatioTier 1 Capital
    
    $
    3,733,178
    
    
    
    11.00
    %
    
    $
    1,652,047
    
    
    
    10.12
    %Regulatory Requirement
    
    
    1,357,178
    
    
    
    4.00
    %
    
    
    652,820
    
    
    
    4.00
    %Excess
    
    $
    2,376,000
    
    
    
    7.00
    %
    
    $
    999,227
    
    
    
    6.12
    %Total Risk Adjusted Capital
    
    $
    4,604,896
    
    
    
    13.57
    %
    
    $
    2,290,769
    
    
    
    14.04
    %Regulatory Requirement
    
    
    2,714,355
    
    
    
    8.00
    %
    
    
    1,305,640
    
    
    
    8.00
    %Excess
    
    $
    1,890,541
    
    
    
    5.57
    %
    
    $
    985,129
    
    
    
    6.04
    %Risk Weighted Assets
    
    $
    33,929,443
    
    
    
    
    
    
    $
    16,320,501
   Capital Ratios:
    
    North Fork
    
    SuperiorTier 1 Capital
    
    
    12.87
    %
    
    
    22.44
    %Total Risk Adjusted
    
    
    13.97
    
    
    
    23.15Leverage Ratio
    
    
    8.30
    
    
    
    7.96
 41




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##### Table of Contents



Regulatory Matters
  Sarbanes-Oxley Act of 2002
  Future Legislation
  42




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##### Table of Contents



Item 3. Quantitative and Qualitative Disclosures About Market Risk
  
 Item 4. Controls and Procedures
   43




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##### Table of Contents



PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
  Total Number of
    
    Maximum Number ofShares Purchased as
    
    Shares that May YetTotal Number of
    
    Average Price Paid
    
    Part of a Publicly
    
    Be Purchased UnderPeriod
    
    Shares Purchased
    
    Per Share
    
    Announced Program
    
    the Program (1)July 1, 2005  July 31, 2005
    
    
    595,000
    
    
    $
    27.81
    
    
    
    595,000
    
    
    
    3,648,650August 1, 2005  August 31, 2005
    
    
    475,000
    
    
    $
    27.55
    
    
    
    475,000
    
    
    
    3,173,650September 1, 2005  September 30, 2005
    
    
    250,000
    
    
    $
    25.38
    
    
    
    250,000
    
    
    
    2,923,650
 
 (1)
    
    On October 7, 2005, the board of directors approved an increase to its previously announced
(June 2003) share repurchase program by 13 million shares bringing the total authorized for
repurchase to 15.7 million shares. Unless terminated earlier by resolutions of our
board of directors, the Program will expire when we have repurchased all shares authorized for
repurchase under the program. 
 Item 6. Exhibits
  Exhibit Number
    
    Description of Exhibit(11)
    
    Statement Re: Computation of Net Income Per Common and Common Equivalent Share(3.1)
    
    Restated Certificate of
Incorporation of North Fork Bancorporation, Inc. Previously filed on
Form 10-Q for the period ended June 30, 2005, dated August 9, 2005,
as Exhibit 3.1 and incorporated herein by reference.(3.2)
    
    By-Laws of North Fork
Bancorporation, Inc. as amended, effective July 23, 2002. Previously
filed on Form 10-Q for the period ended June 30, 2002 as Exhibit 3.2
and incorporated herein by reference.(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 the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002(32.2)
    
    Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002(99.1)
    
    Supplemental Performance Measurements
 44




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##### Table of Contents



SIGNATURES
  Date:November 9, 2005
    
    
    
    North Fork Bancorporation, Inc./s/ Daniel M. HealyDaniel M. HealyExecutive Vice President and Chief Financial Officer
 45