##### 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: June 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 £
 R £
  CLASS OF COMMON STOCK
    
    NUMBER OF SHARES OUTSTANDING 8/4/05$.01 Par Value
    
    478,407,109




---



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
    
    
    41Item 4. Controls and Procedures
    
    
    41PART 2. OTHER INFORMATION
    
    
    43Item 1. Legal Proceedings
    
    
    43Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    43Item 4. Submission of Matters to a Vote of Security Holders
    
    
    43Item 6. Exhibits
    
    
    44EX-3.1: RESTATED CERTIFICATE OF INCORPORATION OF NORTHFORK BANCORPEX-11: 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
 
 Consolidated Balance Sheets (Unaudited)
 June 30,
    
    December 31,
    
    June 30,(in thousands except share amounts)
    
    2005
    
    2004
    
    2004Assets:Cash & Due from Banks
    
    $
    826,921
    
    
    $
    972,506
    
    
    $
    528,772Money Market Investments
    
    
    38,023
    
    
    
    90,394
    
    
    
    16,140Securities:Available-for-Sale
($5,313,374, $7,219,173 and $2,290,348 pledged at
June 30, 2005, December 31, 2004 and June 30, 2004, respectively)
    
    
    12,924,780
    
    
    
    15,444,625
    
    
    
    8,762,663Held-to-Maturity ($18,746, $24,114 and $33,710 pledged at June 30,
2005, December 31, 2004 and June 30, 2004, respectively) (Fair Value
$121,437, $145,991 and $154,674 at June 30, 2005, December 31, 2004
and June 30, 2004, respectively)
    
    
    118,429
    
    
    
    142,573
    
    
    
    152,201Total Securities
    
    
    13,043,209
    
    
    
    15,587,198
    
    
    
    8,914,864Loans:Loans Held-for-Sale
    
    
    6,398,119
    
    
    
    5,775,945
    
    
    
    2,902Loans Held-for-Investment
    
    
    32,482,774
    
    
    
    30,453,334
    
    
    
    15,385,568Less: Allowance for Loan Losses
    
    
    217,872
    
    
    
    211,097
    
    
    
    138,008Net Loans Held-for-Investment
    
    
    32,264,902
    
    
    
    30,242,237
    
    
    
    15,247,560Goodwill
    
    
    5,888,195
    
    
    
    5,878,277
    
    
    
    1,003,668Identifiable Intangibles
    
    
    132,468
    
    
    
    150,734
    
    
    
    49,447Premises & Equipment
    
    
    426,099
    
    
    
    416,003
    
    
    
    220,379Mortgage
Servicing Rights, net
    
    
    253,482
    
    
    
    254,857
    
    
    
    Accrued Income Receivable
    
    
    205,678
    
    
    
    205,189
    
    
    
    107,495Other Assets
    
    
    908,593
    
    
    
    1,093,715
    
    
    
    380,632Total Assets
    
    $
    60,385,689
    
    
    $
    60,667,055
    
    
    $
    26,471,859Liabilities and Stockholders Equity:Deposits:Demand
    
    $
    7,586,939
    
    
    $
    6,738,302
    
    
    $
    5,259,052NOW & Money Market
    
    
    15,848,473
    
    
    
    14,265,395
    
    
    
    6,321,943Savings
    
    
    5,811,417
    
    
    
    6,333,599
    
    
    
    4,494,251Time
    
    
    5,152,330
    
    
    
    4,932,302
    
    
    
    2,300,540Certificates of Deposit, $100,000 & Over
    
    
    3,067,187
    
    
    
    2,542,830
    
    
    
    1,460,671Total Deposits
    
    
    37,466,346
    
    
    
    34,812,428
    
    
    
    19,836,457Federal Funds Purchased & Collateralized Borrowings
    
    
    11,387,571
    
    
    
    14,593,027
    
    
    
    3,138,935Other Borrowings
    
    
    1,506,337
    
    
    
    1,506,318
    
    
    
    724,166Accrued Expenses & Other Liabilities
    
    
    809,155
    
    
    
    874,203
    
    
    
    460,714Total Liabilities
    
    $
    51,169,409
    
    
    $
    51,785,976
    
    
    $
    24,160,272Stockholders 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
479,207,610 Shares at June 30, 2005
    
    
    4,792
    
    
    
    4,745
    
    
    
    1,931Additional Paid in Capital
    
    
    7,007,286
    
    
    
    6,968,493
    
    
    
    1,121,040Retained Earnings
    
    
    2,354,784
    
    
    
    2,064,148
    
    
    
    1,930,379Accumulated Other Comprehensive (Loss)/Income
    
    
    (21,076
    )
    
    
    240
    
    
    
    (61,784
    )Deferred Compensation
    
    
    (115,160
    )
    
    
    (125,174
    )
    
    
    (84,294
    )Treasury Stock at Cost; 623,892 Shares at June 30, 2005
    
    
    (14,346
    )
    
    
    (31,373
    )
    
    
    (595,685
    )Total Stockholders Equity
    
    
    9,216,280
    
    
    
    8,881,079
    
    
    
    2,311,587Total Liabilities and Stockholders Equity
    
    $
    60,385,689
    
    
    $
    60,667,055
    
    
    $
    26,471,859
 See accompanying notes to consolidated financial statements
 3




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##### Table of Contents



Consolidated Statements of Income (Unaudited)
 Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,
    
    June 30,
    
    June 30,(in thousands, except per share amounts)
    
    2005
    
    2004
    
    2005
    
    2004Interest Income:Loans Held-for-Investment
    
    $
    472,218
    
    
    $
    213,002
    
    
    $
    924,435
    
    
    $
    407,202Loans Held-for-Sale
    
    
    73,065
    
    
    
    
    
    
    
    139,913
    
    
    
    Mortgage-Backed Securities
    
    
    133,375
    
    
    
    72,031
    
    
    
    275,382
    
    
    
    131,168Other Securities
    
    
    30,124
    
    
    
    17,874
    
    
    
    59,531
    
    
    
    31,997Money Market Investments
    
    
    662
    
    
    
    467
    
    
    
    1,395
    
    
    
    670Total Interest Income
    
    
    709,444
    
    
    
    303,374
    
    
    
    1,400,656
    
    
    
    571,037Interest Expense:Savings, NOW & Money Market Deposits
    
    
    82,455
    
    
    
    19,108
    
    
    
    152,051
    
    
    
    34,119Time Deposits
    
    
    40,391
    
    
    
    12,311
    
    
    
    73,857
    
    
    
    23,047Federal Funds Purchased & Collateralized Borrowings
    
    
    105,238
    
    
    
    31,308
    
    
    
    204,245
    
    
    
    59,911Other Borrowings
    
    
    19,287
    
    
    
    6,552
    
    
    
    37,111
    
    
    
    13,036Total Interest Expense
    
    
    247,371
    
    
    
    69,279
    
    
    
    467,264
    
    
    
    130,113Net Interest Income
    
    
    462,073
    
    
    
    234,095
    
    
    
    933,392
    
    
    
    440,924Provision for Loan Losses
    
    
    9,000
    
    
    
    6,500
    
    
    
    18,000
    
    
    
    13,000Net Interest Income after Provision for Loan Losses
    
    
    453,073
    
    
    
    227,595
    
    
    
    915,392
    
    
    
    427,924Non-Interest Income:Gain on Sale of Loans Held-for-Sale
    
    
    120,575
    
    
    
    302
    
    
    
    225,944
    
    
    
    591Customer Related Fees & Service Charges
    
    
    41,902
    
    
    
    23,417
    
    
    
    83,908
    
    
    
    45,188Mortgage
Servicing Fees
    
    
    4,035
    
    
    
    1,016
    
    
    
    9,611
    
    
    
    1,888Temporary
Impairment Charge  Mortgage Servicing Rights
    
    
    (34,971
    )
    
    
    
    
    
    
    (34,971
    )
    
    
    Investment Management, Commissions & Trust Fees
    
    
    10,287
    
    
    
    4,099
    
    
    
    21,358
    
    
    
    8,023Other Operating Income
    
    
    12,126
    
    
    
    6,817
    
    
    
    26,354
    
    
    
    13,802Securities
Gains/(Losses), net
    
    
    10,884
    
    
    
    (475
    )
    
    
    15,519
    
    
    
    7,413Gain on Sale of Loans Held-for-Investment
    
    
    4,293
    
    
    
    
    
    
    
    4,293
    
    
    
    Total Non-Interest Income
    
    
    169,131
    
    
    
    35,176
    
    
    
    352,016
    
    
    
    76,905Non-Interest Expense:Employee Compensation & Benefits
    
    
    139,014
    
    
    
    55,224
    
    
    
    274,383
    
    
    
    106,301Occupancy & Equipment, net
    
    
    46,949
    
    
    
    20,074
    
    
    
    92,903
    
    
    
    37,699Amortization of Identifiable Intangibles
    
    
    9,133
    
    
    
    1,889
    
    
    
    18,266
    
    
    
    2,670Other Operating Expenses
    
    
    54,697
    
    
    
    21,181
    
    
    
    110,894
    
    
    
    39,127Total Non-Interest Expense
    
    
    249,793
    
    
    
    98,368
    
    
    
    496,446
    
    
    
    185,797Income Before Income Taxes
    
    
    372,411
    
    
    
    164,403
    
    
    
    770,962
    
    
    
    319,032Provision for Income Taxes
    
    
    130,345
    
    
    
    55,404
    
    
    
    269,861
    
    
    
    107,514Net Income
    
    $
    242,066
    
    
    $
    108,999
    
    
    $
    501,101
    
    
    $
    211,518Earnings Per Share:Basic
    
    $
    0.52
    
    
    $
    0.46
    
    
    $
    1.07
    
    
    $
    0.92Diluted
    
    $
    0.51
    
    
    $
    0.45
    
    
    $
    1.06
    
    
    $
    0.91
 See accompanying notes to consolidated financial statements
 4




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##### Table of Contents



Consolidated Statements of Cash Flows (unaudited)
 For the Six Months Ended June 30,
    
    2005
    
    2004(in thousands)Cash Flows from Operating Activities:Net Income
    
    $
    501,101
    
    
    $
    211,518Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:Provision for Loan Losses
    
    
    18,000
    
    
    
    13,000Depreciation
    
    
    20,617
    
    
    
    8,792Net Amortization/(Accretion):Securities
    
    
    13,681
    
    
    
    18,851Loans
    
    
    2,119
    
    
    
    (15,576
    )Borrowings & Time Deposits
    
    
    (64,637
    )
    
    
    (3,519
    )Intangibles
    
    
    18,266
    
    
    
    2,670Deferred Compensation
    
    
    11,357
    
    
    
    6,962Gain on Sale of Loans Held-for-Investment
    
    
    (4,293
    )
    
    
    Securities Gains
    
    
    (15,519
    )
    
    
    (7,413
    )Capitalization of Mortgage Servicing Rights
    
    
    (81,154
    )
    
    
    Amortization of Mortgage Servicing Rights
    
    
    40,580
    
    
    
    Temporary
Impairment Charge  Mortgage Servicing Rights
    
    
    34,971
    
    
    
    Loans Held-for-Sale:Originations
    
    
    (22,455,917
    )
    
    
    (58,166
    )Proceeds from Sale (1)
    
    
    21,299,375
    
    
    
    57,586Gains on Sale of Loans
    
    
    (225,944
    )
    
    
    (592
    )Other
    
    
    760,312
    
    
    
    Purchases of Trading Assets
    
    
    
    
    
    
    (13,911
    )Sale of Trading Assets
    
    
    
    
    
    
    14,015Other, Net
    
    
    59,422
    
    
    
    (11,459
    )Net Cash (Used in)/Provided by Operating Activities
    
    
    (67,663
    )
    
    
    222,758Cash Flows from Investing Activities:Purchases of Securities Held-to-Maturity
    
    
    (1,000
    )
    
    
    Maturities, Redemptions, Calls and Principal Repayments on Securities Held-to-Maturity
    
    
    24,737
    
    
    
    37,736Purchases of Securities Available-for-Sale
    
    
    (1,537,330
    )
    
    
    (2,882,982
    )Proceeds from Sale of Securities Available-for-Sale
    
    
    1,983,910
    
    
    
    917,045Maturities, Redemptions, Calls and Principal Repayments on Securities Available-for-Sale
    
    
    2,097,417
    
    
    
    1,742,003Loans Held-for-Investment Originated, Net of Principal Repayments and Charge-offs
    
    
    (2,984,916
    )
    
    
    (929,825
    )Proceeds from Sale of Loans Held-for-Investment
    
    
    960,503
    
    
    
    Purchases of Premises and Equipment, net
    
    
    (30,713
    )
    
    
    (29,164
    )Purchase Acquisition, net of cash acquired
    
    
    
    
    
    
    246,209Net Cash Provided by/(Used in) Investing Activities
    
    $
    512,608
    
    
    $
    (898,978
    )
 See accompanying notes to consolidated financial statements
 5




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##### Table of Contents



Consolidated
Statements of Cash Flows (unaudited)  continued
 For the Six Months Ended June 30,
    
    2005
    
    2004(in thousands)Cash Flows from Financing Activities:Net Increase in Customer Deposit Liabilities
    
    $
    2,672,497
    
    
    $
    1,549,940Net Decrease in Borrowings
    
    
    (3,162,063
    )
    
    
    (771,282
    )Exercise of Options and Common Stock Sold for Cash
    
    
    55,867
    
    
    
    2,815Cash Dividends Paid
    
    
    (209,202
    )
    
    
    (91,732
    )Net Cash (Used in)/Provided by Financing Activities
    
    
    (642,901
    )
    
    
    689,741Net (Decrease)/Increase in Cash and Cash Equivalents
    
    
    (197,956
    )
    
    
    13,521Cash and Cash Equivalents at Beginning of the Period
    
    
    1,062,900
    
    
    
    531,391Cash and Cash Equivalents at End of the Period
    
    $
    864,944
    
    
    $
    544,912Supplemental Disclosures of Cash Flow Information:Cash Paid During the Period for:Interest Expense
    
    $
    520,294
    
    
    $
    127,007Income Taxes
    
    $
    86,662
    
    
    $
    73,400During the
Period, the Company Purchased Various Securities which Settled in the Subsequent Period
    
    $
    70,166
    
    
    $
    86,769During the
Period, the Company Sold Various Securities which Settled in the Subsequent Period
    
    $
    
    
    
    $
    29,913Non-cash activity related to the TCNJ acquisition not reflected above
for the period are as follows: (2)Fair Value of Assets Acquired
    
    $
    
    
    
    $
    4,028,089Goodwill & Identifiable Intangible Assets
    
    
    
    
    
    
    632,525Common Stock Issued and Fair Value of Options, net of taxes
    
    
    
    
    
    
    (744,125
    )Liabilities Assumed
    
    $

    
    
    
    $
    3,916,489
 
 (1)
    
    Includes loans originated of $3.6 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 consolidated financial statements
 6




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##### Table of Contents








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
    
    
    
    
    
    
    
    
    
    
    211,518
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    211,518Cash Dividends ($.40 per share)
    
    
    
    
    
    
    
    
    
    
    (97,597
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (97,597
    )Issuance of
Stock  TCNJ (27,791,384 shares)
    
    
    185
    
    
    
    714,609
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    714,794Fair Value of Options  TCNJ
    
    
    
    
    
    
    33,364
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    33,364Issuance of Stock (105,579 shares)
    
    
    
    
    
    
    822
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,993
    
    
    
    2,815Restricted Stock Activity, net
    
    
    
    
    
    
    148
    
    
    
    
    
    
    
    
    
    
    
    7,495
    
    
    
    (908
    )
    
    
    6,735Stock Based Compensation Activity, net
    
    
    
    
    
    
    (6,696
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    27,905
    
    
    
    21,209Other Comprehensive Loss, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (59,740
    )
    
    
    
    
    
    
    
    
    
    
    (59,740
    )Balance, June 30, 2004
    
    $
    1,931
    
    
    $
    1,121,040
    
    
    $
    1,930,379
    
    
    ($
    61,784
    )
    
    ($
    84,294
    )
    
    ($
    595,685
    )
    
    $
    2,311,587Balance, December 31, 2004
    
    $
    4,745
    
    
    $
    6,968,493
    
    
    $
    2,064,148
    
    
    $
    240
    
    
    ($
    125,174
    )
    
    ($
    31,373
    )
    
    $
    8,881,079Net Income
    
    
    
    
    
    
    
    
    
    
    501,101
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    501,101Cash Dividends ($.44 per share)
    
    
    
    
    
    
    
    
    
    
    (210,465
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (210,465
    )Issuance of Stock (147,590 shares)
    
    
    47
    
    
    
    1,072
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,119
    
    
    
    4,238Restricted Stock Activity, net
    
    
    
    
    
    
    4,733
    
    
    
    
    
    
    
    
    
    
    
    10,014
    
    
    
    (4,723
    )
    
    
    10,024Stock Based Compensation Activity, net
    
    
    
    
    
    
    32,988
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18,631
    
    
    
    51,619Other Comprehensive Loss, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (21,316
    )
    
    
    
    
    
    
    
    
    
    
    (21,316
    )Balance, June 30, 2005
    
    $
    4,792
    
    
    $
    7,007,286
    
    
    $
    2,354,784
    
    
    (
    $21,076
    )
    
    (
    $115,160
    )
    
    (
    $14,346
    )
    
    $
    9,216,280


(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 consolidated financial statements
 7




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Consolidated Statements of Comprehensive Income (Unaudited)
 Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,
    
    June 30,
    
    June 30,(in thousands)
    
    2005
    
    2004
    
    2005
    
    2004Net Income
    
    $
    242,066
    
    
    $
    108,999
    
    
    $
    501,101
    
    
    $
    211,518Other Comprehensive IncomeUnrealized (Losses)/Gains On Securities:Changes in Unrealized (Losses)/Gains Arising During The Period
    
    $
    127,453
    
    
    $
    (170,600
    )
    
    $
    (33,371
    )
    
    $
    (103,501
    )Less: Reclassification Adjustment For (Gains)/Losses Included in Net Income
    
    
    (10,884
    )
    
    
    475
    
    
    
    (15,519
    )
    
    
    (7,413
    )Changes in Unrealized (Losses)/Gains Arising During the Period
    
    
    116,569
    
    
    
    (170,125
    )
    
    
    (48,890
    )
    
    
    (110,914
    )Related Tax Effect on Unrealized (Losses)/Gains During the Period
    
    
    (50,095
    )
    
    
    73,154
    
    
    
    21,019
    
    
    
    47,692Net Change in Unrealized (Losses)/Gains Arising During the Period
    
    
    66,474
    
    
    
    (96,971
    )
    
    
    (27,871
    )
    
    
    (63,222
    )Unrealized Gains/(Losses) On Derivative Instruments:Changes in Unrealized Gains/(Losses) Arising During the Period
    
    $
    (1,131
    )
    
    $
    3,462
    
    
    $
    9,707
    
    
    $
    998Add: Reclassification Adjustment for Expenses/Losses Included in
Net Income
    
    
    690
    
    
    
    2,383
    
    
    
    1,790
    
    
    
    5,108Changes in Unrealized Gains/(Losses) Arising During the Period
    
    
    (441
    )
    
    
    5,845
    
    
    
    11,497
    
    
    
    6,106Related Tax Effect on Unrealized Gains/(Losses) During the Period
    
    
    191
    
    
    
    (2,513
    )
    
    
    (4,942
    )
    
    
    (2,624
    )Net Change
in Unrealized (Losses)/Gains Arising During the Period
    
    
    (250
    )
    
    
    3,332
    
    
    
    6,555
    
    
    
    3,482Net Other Comprehensive (Loss)/Income
    
    $
    66,224
    
    
    $
    (93,639
    )
    
    $
    (21,316
    )
    
    $
    (59,740
    )Comprehensive Income
    
    $
    308,290
    
    
    $
    15,360
    
    
    $
    479,785
    
    
    $
    151,778
 See accompanying notes to consolidated financial statements
 8




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##### Table of Contents



North Fork Bancorporation, Inc.
 
 CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
June 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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Accounting for Derivative Financial Instruments
     11




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Representation and Warranty Reserve
   Mortgage Servicing Rights
    12




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##### Table of Contents



NOTE 2  SECURITIES
  June 30, 2005
    
    December 31, 2004
    
    June 30, 2004Available-for-Sale
    
    Amortized
    
    Fair
    
    Amortized
    
    Fair
    
    Amortized
    
    Fair(in thousands)
    
    Cost
    
    Value
    
    Cost
    
    Value
    
    Cost
    
    ValueCMO Agency Issuances
    
    $
    4,269,559
    
    
    $
    4,231,390
    
    
    $
    5,121,001
    
    
    $
    5,098,243
    
    
    $
    3,318,464
    
    
    $
    3,241,617CMO Private Issuances
    
    
    3,941,709
    
    
    
    3,926,929
    
    
    
    4,723,080
    
    
    
    4,721,813
    
    
    
    1,693,712
    
    
    
    1,665,125Agency Pass-Through Certificates
    
    
    2,328,213
    
    
    
    2,335,485
    
    
    
    2,715,253
    
    
    
    2,737,067
    
    
    
    2,172,586
    
    
    
    2,165,407State & Municipal Obligations
    
    
    768,793
    
    
    
    771,349
    
    
    
    916,239
    
    
    
    920,112
    
    
    
    592,798
    
    
    
    594,466Equity Securities (1) (2)
    
    
    685,873
    
    
    
    693,509
    
    
    
    790,042
    
    
    
    794,005
    
    
    
    187,725
    
    
    
    189,681U.S. Treasury & Agency Obligations
    
    
    278,294
    
    
    
    277,806
    
    
    
    361,987
    
    
    
    363,775
    
    
    
    263,069
    
    
    
    265,256Other Securities
    
    
    685,176
    
    
    
    688,312
    
    
    
    800,848
    
    
    
    809,610
    
    
    
    635,293
    
    
    
    641,111Total Available-for-Sale Securities
    
    $
    12,957,617
    
    
    $
    12,924,780
    
    
    $
    15,428,450
    
    
    $
    15,444,625
    
    
    $
    8,863,647
    
    
    $
    8,762,663
 
 (1)
    
    Amortized cost and fair value includes $291.8 million, $351.7 million and $80.5 million in
Federal Home Loan Bank Stock at June 30, 2005, December 31, 2004 and June 30, 2004,
respectively.(2)
    
    Amortized cost and fair value includes $332.3 million and $337.4 million at June 30, 2005,
respectively, $369.6 million and $371.2 million at December 31, 2004, respectively and $50.0
million and $50.2 million at June 30, 2004, respectively of Federal Home Loan Mortgage
Corporation (Freddie Mac) and Federal National Mortgage Association (Fannie Mae) Preferred
Stock, respectively.  June 30, 2005
    
    December 31, 2004
    
    June 30, 2004Held-to-Maturity
    
    Amortized
    
    Fair
    
    Amortized
    
    Fair
    
    Amortized
    
    Fair(in thousands)
    
    Cost
    
    Value
    
    Cost
    
    Value
    
    Cost
    
    ValueAgency Pass-Through Certificates
    
    $
    50,491
    
    
    $
    51,428
    
    
    $
    57,719
    
    
    $
    58,776
    
    
    $
    65,244
    
    
    $
    66,142State & Municipal Obligations
    
    
    41,372
    
    
    
    43,951
    
    
    
    45,303
    
    
    
    47,991
    
    
    
    48,956
    
    
    
    51,005CMO Private Issuances
    
    
    15,356
    
    
    
    14,902
    
    
    
    24,426
    
    
    
    24,151
    
    
    
    26,927
    
    
    
    26,561Other Securities
    
    
    11,210
    
    
    
    11,156
    
    
    
    15,125
    
    
    
    15,073
    
    
    
    11,074
    
    
    
    10,966Total Held-to-Maturity Securities
    
    $
    118,429
    
    
    $
    121,437
    
    
    $
    142,573
    
    
    $
    145,991
    
    
    $
    152,201
    
    
    $
    154,674
  NOTE 3  LOANS
  Loans Held-for-Sale
    
    June 30,
    
    % of
    
    December 31,
    
    % of
    
    June 30,
    
    % of(dollars in thousands)
    
    2005
    
    Total
    
    2004
    
    Total
    
    2004
    
    TotalResidential Mortgages
    
    $
    5,481,104
    
    
    
    87
    %
    
    $
    4,339,581
    
    
    
    76
    %
    
    $
    2,902
    
    
    
    100
    %Home Equity
    
    
    852,137
    
    
    
    13
    
    
    
    1,380,247
    
    
    
    24
    
    
    
    
    
    
    
    Total
    
    $
    6,333,241
    
    
    
    100
    %
    
    $
    5,719,828
    
    
    
    100
    %
    
    $
    2,902
    
    
    
    100
    %Deferred Origination Costs
    
    
    64,878
    
    
    
    
    
    
    
    56,117
    
    
    
    
    
    
    
    Total Loans Held-for-Sale
    
    $
    6,398,119
    
    
    
    
    
    
    $
    5,775,945
    
    
    
    
    
    
    $
    2,902
 13




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##### Table of Contents



Loans Held-for- Investment
    
    June 30,
    
    % of
    
    December 31,
    
    % of
    
    June 30,
    
    % of(dollars in thousands)
    
    2005
    
    Total
    
    2004
    
    Total
    
    2004
    
    TotalCommercial Mortgages
    
    $
    5,725,316
    
    
    
    18
    %
    
    $
    5,369,656
    
    
    
    18
    %
    
    $
    3,536,517
    
    
    
    23
    %Commercial & Industrial
    
    
    3,879,830
    
    
    
    12
    
    
    
    3,046,820
    
    
    
    10
    
    
    
    2,529,253
    
    
    
    16Total Commercial
    
    
    9,605,146
    
    
    
    30
    %
    
    
    8,416,476
    

    
    
    28
    %
    
    
    6,065,770
    
    
    
    39
    %Residential Mortgages
    
    
    16,176,829
    
    
    
    49
    
    
    
    15,668,938
    
    
    
    51
    
    
    
    3,327,047
    
    
    
    22Multi-Family Mortgages
    
    
    4,485,420
    
    
    
    14
    
    
    
    4,254,405
    
    
    
    14
    
    
    
    3,824,615
    
    
    
    25Consumer
    
    
    1,521,869
    
    
    
    5
    
    
    
    1,604,863
    
    
    
    5
    
    
    
    1,751,240
    
    
    
    11Construction & Land
    
    
    653,002
    
    
    
    2
    
    
    
    480,162
    
    
    
    2
    
    
    
    453,922
    
    
    
    3Total
    
    $
    32,442,266
    
    
    
    100
    %
    
    $
    30,424,844
    
    
    
    100
    %
    
    $
    15,422,594
    
    
    
    100
    %Unearned Income & Deferred Origination Costs
    
    
    40,508
    
    
    
    
    
    
    
    28,490
    
    
    
    
    
    
    
    (37,026
    )Total Loans
Held-for-Investment
    
    $
    32,482,774
    
    
    
    
    
    
    $
    30,453,334
    
    
    
    
    
    
    $
    15,385,568
  Non-Performing Assets
   June 30,
    
    December 31,
    
    June 30,(in thousands)
    
    2005
    
    2004
    
    2004Commercial Mortgages
    
    $
    6,409
    
    
    $
    16,890
    
    
    $
    2,623Commercial & Industrial
    
    
    7,768
    
    
    
    8,730
    
    
    
    7,256Total Commercial
    
    
    14,177
    
    
    
    25,620
    
    
    
    9,879Residential Mortgages
    
    
    63,979
    
    
    
    103,745
    
    
    
    4,004Multi-Family Mortgages
    
    
    44
    
    
    
    1,290
    
    
    
    Consumer
    
    
    2,179
    
    
    
    3,178
    
    
    
    1,872Construction and Land
    
    
    308
    
    
    
    
    
    
    
    49Non-Performing Loans Held-for-Investment
    
    $
    80,687
    
    
    $
    133,833
    
    
    $
    15,804Non-Performing Loans Held-for-Sale
    
    
    45,377
    
    
    
    60,858
    
    
    
    Other Real Estate
    
    
    14,557
    
    
    
    17,410
    
    
    
    435Total Non-Performing Assets
    
    $
    140,621
    
    
    $
    212,101
    
    
    $
    16,239Allowance for Loan Losses to Non-Performing Loans Held-for-Investment
    
    
    270
    %
    
    
    158
    %
    
    
    873
    %Allowance for Loan Losses to Total Loans Held-for-Investment
    
    
    .67
    
    
    
    .69
    
    
    
    .90Non-Performing Loans to Total Loans Held-for-Investment
    
    
    .25
    
    
    
    .44
    
    
    
    .10Non-Performing Assets to Total Assets
    
    
    .23
    
    
    
    .35
    
    
    
    .06
   14




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##### Table of Contents



NOTE 4  ALLOWANCE FOR LOAN LOSSES
  Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,
    
    June 30,
    
    June 30,(dollars in thousands)
    
    2005
    
    2004
    
    2005
    
    2004Balance at Beginning of Period
    
    $
    215,307
    
    
    $
    124,364
    
    
    $
    211,097
    
    
    $
    122,733Allowance from Acquisitions
    
    
    
    
    
    
    10,251
    
    
    
    
    
    
    
    10,251Provision For Loan Losses
    
    
    9,000
    
    
    
    6,500
    
    
    
    18,000
    
    
    
    13,000Total
    
    
    224,307
    
    
    
    141,115
    
    
    
    229,097
    
    
    
    145,984Recoveries Credited to the Allowance
    
    
    4,141
    
    
    
    3,072
    
    
    
    9,143
    
    
    
    5,686Losses Charged to the Allowance
    
    
    (10,576
    )
    
    
    (6,179
    )
    
    
    (20,368
    )
    
    
    (13,662
    )Balance at End of Period
    
    $
    217,872
    
    
    $
    138,008
    
    
    $
    217,872
    
    
    $
    138,008Annualized Net Charge-offs to Average Loans, net
    
    
    .08
    %
    
    
    .09
    %
    
    
    .07
    %
    
    
    .12
    %
 NOTE 5
 FEDERAL FUNDS PURCHASED AND COLLATERALIZED BORROWINGS
  (dollars in thousands)
    
    FHLB
    
    Average
    
    Repurchase
    
    Average
    
    
    
    
    
    Total AverageMaturity
    
    Advances
    
    Rate (1)
    
    Agreements
    
    Rate (1)
    
    Total (2)
    
    Rate (1)2005
    
    $
    2,175,015
    
    
    
    3.22
    %
    
    $
    2,038,374
    
    
    
    2.78
    %
    
    $
    4,213,389
    
    
    
    3.01
    %2006
    
    
    400,000
    
    
    
    3.40
    
    
    
    1,200,000
    
    
    
    2.91
    
    
    
    1,600,000
    
    
    
    3.042007
    
    
    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
    
    $
    4,075,015
    
    
    
    3.13
    %
    
    $
    5,138,374
    
    
    
    3.18
    %
    
    $
    9,213,389
    
    
    
    3.16
    %
 
 (1)
    
    Reflects the impact of purchase accounting adjustments and interest rate swaps.(2)
    
    Excludes $142.7 million and $73.6 million in purchase accounting adjustments (unamortized
premiums) of FHLB Advances and Repurchase Agreements, respectively.   15




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##### Table of Contents



NOTE 6  OTHER BORROWINGS
  SUBORDINATED NOTES
 June 30,
    
    December 31,
    
    June 30,(in thousands)
    
    2005
    
    2004
    
    2004Parent Company:5.875% Subordinated Notes due August 2012
    
    $
    349,364
    
    
    $
    349,319
    
    
    $
    349,2745.0% Subordinated Notes due August 2012
    
    
    150,000
    
    
    
    150,000
    
    
    
    150,000Subsidiary Bank:9.25% Subordinated Bank Notes due October 2010
    
    
    181,632
    
    
    
    184,474
    
    
    
    Total Subordinated Notes
    
    
    680,996
    
    
    
    683,793
    
    
    
    499,274Fair Value Hedge Adjustment
    
    
    (18,993
    )
    
    
    (22,888
    )
    
    
    (36,466
    )Total Subordinated Notes Carrying Amount
    
    $
    662,003
    
    
    $
    660,905
    
    
    $
    462,808
 (See Note 9 
Derivative Financial Instruments for additional information).
  JUNIOR SUBORDINATED DEBT (related to Trust Preferred Securities):
 June 30,
    
    December 31,
    
    June 30,(in thousands)
    
    2005
    
    2004
    
    20048.70% Junior Subordinated Debt  due December 2026
    
    $
    102,833
    
    
    $
    102,827
    
    
    $
    102,8218.00% Junior Subordinated Debt  due December 2027
    
    
    102,804
    
    
    
    102,798
    
    
    
    102,7918.17% Junior Subordinated Debt  due May 2028
    
    
    46,547
    
    
    
    46,547
    
    
    
    46,5479.10% Junior Subordinated Debt  due June 2027
    
    
    236,560
    
    
    
    237,251
    
    
    
    Total Junior Subordinated Debt
    
    
    488,744
    
    
    
    489,423
    
    
    
    252,159Fair Value Hedge Adjustment
    
    
    15,984
    
    
    
    15,165
    
    
    
    9,199Total Junior Subordinated Debt Carrying Amount
    
    $
    504,728
    
    
    $
    504,588
    
    
    $
    261,358
  (See Note 9  Derivative Financial
Instruments for additional information.)
 16




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##### Table of Contents



SENIOR NOTES:
 June 30,
    
    December 31,(in thousands)
    
    2005
    
    20043.20% Senior Notes  due June 2008
    
    $
    343,907
    
    
    $
    342,869Fair Value Hedge Adjustment
    
    
    (4,301
    )
    
    
    (2,044
    )Total Senior Notes Carrying Amount
    
    $
    339,606
    
    
    $
    340,825
  (See Note 9 
Derivative Financial Instruments for additional information
 NOTE 7
 MORTGAGE SERVICING RIGHTS
  At and for the
    
    At and for theThree Months Ended
    
    Six Months Ended(in thousands )
    
    June 30, 2005
    
    June 30, 2005Balance at Beginning of Period
    
    $
    283,268
    
    
    $
    254,857Additions
    
    
    31,099
    
    
    
    81,154Sales
    
    
    (5,323
    )
    
    
    (6,978
    )Amortization
    
    
    (20,591
    )
    
    
    (40,580
    )Balance at End of Period
    
    $
    288,453
    
    
    $
    288,453Less:
Reserve for Temporary Impairment
    
    
    (34,971
    )
    
    
    (34,971
    )Mortgage Servicing Rights, net
    
    $
    253,482
    
    
    $
    253,482Fair Value at June 30, 2005
    
    $
    253,871
    
    
    $
    253,871
    NOTE 8
 REPRESENTATION AND WARRANTY RESERVE
  17




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##### Table of Contents



At and for the
    
    At and for theThree Months Ended
    
    Six Months Ended(in thousands )
    
    June 30, 2005
    
    June 30, 2005Balance at Beginning of Period
    
    $
    111,701
    
    
    $
    97,066Provisions for Estimated Losses (1)
    
    
    23,879
    
    
    
    47,597Losses Incurred
    
    
    (6,464
    )
    
    
    (15,547
    )Balance at End of Period
    
    $
    129,116
    
    
    $
    129,116
 
 (1)
    
    The provision is reported as a reduction to gain on sale of loans. 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
    %
    
    
    3.22
    %Pay Floating Swaps2007
    
    5.00% Subordinated Notes
    
    $
    150,000
    
    
    
    5.00
    %
    
    
    3.27
    %2008
    
    3.20% Senior Notes
    
    
    350,000
    
    
    
    3.20
    
    
    
    3.352012
    
    5.875% Subordinated Notes
    
    
    350,000
    
    
    
    5.875
    
    
    
    3.272026
    
    8.70% Junior Subordinated Debt
    
    
    100,000
    
    
    
    8.70
    
    
    
    3.412027
    
    8.00% Junior Subordinated Debt
    
    
    100,000
    
    
    
    8.00
    
    
    
    3.412028
    
    8.17% Junior Subordinated Debt
    
    
    45,000
    
    
    
    8.17
    
    
    
    3.21$
    1,095,000
   18




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##### Table of Contents



(in thousands )
    
    For the
    
    For theThree Months Ended
    
    Six Months EndedJune 30, 2005
    
    June 30, 2005Gain on Hedged Mortgage Loans
    
    $
    9,053
    
    
    $
    2,169(Loss) on Derivatives
    
    
    (9,595
    )
    
    
    (3,373
    )Hedge Ineffectiveness
    
    $
    (542
    )
    
    $
    (1,204
    )
 19




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##### Table of Contents



NOTE
10  OTHER COMMITMENTS AND CONTINGENT LIABILITIES
 Credit Related Commitments
  Retail Banking
       (in thousands)
    
    2005Commitments to Extend Credit on Loans Held-for-Investment (2)
    
    $
    3,605,100Standby Letters of Credit (1) (2)
    
    
    403,079Commercial Letters of Credit (2)
    
    
    19,342
 
 (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
June 30, 2005. The fair value of these instruments is recognized as income over the initial term of
the guarantee.(2)
    
    At June 30, 2005, commitments to extend credit on loans held-for-investment with maturities of
less than one year totaled $2.0 billion, while $1.6 billion matures between one to three years.
Standby and commercial letters of credit are issued with original maturity terms of twelve months
or less. Mortgage Banking
   20




---



##### Table of Contents



(in thousands)
    
    2005Commitments to Originate Mortgage Loans Held-for-Sale
    
    $
    7,594,398Commitments to Fund HELOCs
    
    
    851,850
 NOTE
11  RETIREMENT AND OTHER EMPLOYEE BENEFITS
  Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,2005
    
    2004
    
    2005
    
    2004
    
    2005
    
    2004
    
    2005
    
    2004(in thousands)
    
    Pension
    
    Post-Retirement
    
    Pension
    
    Post-RetirementComponents of Net Periodic Benefit Cost:Service Cost
    
    $
    2,563
    
    
    $
    1,222
    
    
    $
    513
    
    
    $
    183
    
    
    $
    5,126
    
    
    $
    2,175
    
    
    $
    1,026
    
    
    $
    366Interest Cost
    
    
    2,600
    
    
    
    1,605
    
    
    
    704
    
    
    
    374
    
    
    
    5,200
    
    
    
    2,995
    
    
    
    1,408
    
    
    
    701Expected Return on Plan Assets
    
    
    (4,974
    )
    
    
    (2,734
    )
    
    
    (64
    )
    
    
    
    
    
    
    (9,948
    )
    
    
    (4,549
    )
    
    
    (128
    )
    
    
    Amortization of Prior Service Cost
    
    
    (66
    )
    
    
    (66
    )
    
    
    (20
    )
    
    
    (20
    )
    
    
    (132
    )
    
    
    (132
    )
    
    
    (40
    )
    
    
    (40
    )Amortization of Transition Asset/Obligation
    
    
    (24
    )
    
    
    (107
    )
    
    
    73
    
    
    
    73
    
    
    
    (131
    )
    
    
    (214
    )
    
    
    146
    
    
    
    146Recognized Actuarial Loss
    
    
    273
    
    
    
    258
    
    
    
    94
    
    
    
    81
    
    
    
    546
    
    
    
    516
    
    
    
    188
    
    
    
    162Net Periodic Benefit Cost
    
    $
    372
    
    
    $
    178
    
    
    $
    1,300
    
    
    $
    691
    
    
    $
    661
    
    
    $
    791
    
    
    $
    2,600
    
    
    $
    1,335
 
 Bank Owned Life Insurance
   NOTE
12  BUSINESS SEGMENTS
    21




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##### Table of Contents




    
    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 Month Ended June 30, 2005Net Interest Income
    
    $
    432,093
    
    
    $
    29,799
    
    
    $
    461,892
    
    
    $
    181
    
    
    $
    462,073Provision for Loan Losses
    
    
    9,000
    
    
    
    
    
    
    
    9,000
    
    
    
    
    
    
    
    9,000Net Interest Income After Provision for Loan Losses
    
    
    423,093
    
    
    
    29,799
    
    
    
    452,892
    
    
    
    181
    
    
    
    453,073Non-Interest Income:Gain on Sale of Loans Held-for-Sale
    
    
    
    
    
    
    134,411
    
    
    
    134,411
    
    
    
    (13,836
    )
    
    
    120,575Gain on Sale of Loans Held-for-Investment
    
    
    4,293
    
    
    
    
    
    
    
    4,293
    
    
    
    
    
    
    
    4,293Customer Related Fees & Service Charges
    
    
    41,902
    
    
    
    
    
    
    
    41,902
    
    
    
    
    
    
    
    41,902Mortgage Servicing Fees
    
    
    
    
    
    
    14,053
    
    
    
    14,053
    
    
    
    (10,018
    )
    
    
    4,035Temporary
Impairment Charge  Mortgage Servicing Rights
    
    
    
    
    
    
    (34,971
    )
    
    
    (34,971
    )
    
    
    
    
    
    
    (34,971
    )Investment Management, Commissions & Trust Fees
    
    
    10,287
    
    
    
    
    
    
    
    10,287
    
    
    
    
    
    
    
    10,287Other Operating Income
    
    
    9,122
    
    
    
    3,004
    
    
    
    12,126
    
    
    
    
    
    
    
    12,126Securities Gains, net
    
    
    10,884
    
    
    
    
    
    
    
    10,884
    
    
    
    
    
    
    
    10,884Total Non-Interest Income
    
    
    76,488
    
    
    
    116,497
    
    
    
    192,985
    
    
    
    (23,854
    )
    
    
    169,131Non-Interest Expense:Employee Compensation & Benefits
    
    
    87,882
    
    
    
    51,132
    
    
    
    139,014
    
    
    
    
    
    
    
    139,014Occupancy & Equipment Expense, net
    
    
    37,374
    
    
    
    9,575
    
    
    
    46,949
    
    
    
    
    
    
    
    46,949Other Operating Expense
    
    
    55,928
    
    
    
    17,738
    
    
    
    73,666
    
    
    
    (9,836
    )
    
    
    63,830Total Non-Interest Expense
    
    
    181,184
    
    
    
    78,445
    
    
    
    259,629
    
    
    
    (9,836
    )
    
    
    249,793Income Before Income Taxes
    
    
    318,397
    
    
    
    67,851
    
    
    
    386,248
    
    
    
    (13,837
    )
    
    
    372,411Provision for Income Taxes
    
    
    107,659
    
    
    
    28,497
    
    
    
    136,156
    
    
    
    (5,811
    )
    
    
    130,345Net Income
    
    $
    210,738
    
    
    $
    39,354
    
    
    $
    250,092
    
    
    $
    (8,026
    )
    
    $
    242,066Total Assets
    
    $
    53,519,909
    
    
    $
    6,865,780
    
    
    $
    60,385,689
    
    
    
    
    
    
    $
    60,385,689
 22




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##### Table of Contents



Retail
    
    Mortgage
    
    Segment
    
    
    
    
    
    Consolidated(in thousands)
    
    Banking
    
    Banking
    
    Totals
    
    Other
    
    OperationsFor the Six Months Ended June 30, 2005Net Interest Income
    
    $
    870,147
    
    
    $
    62,871
    
    
    $
    933,018
    
    
    $
    374
    
    
    $
    933,392Provision for Loan Losses
    
    
    18,000
    
    
    
    
    
    
    
    18,000
    
    
    
    
    
    
    
    18,000Net Interest Income After Provision for Loan Losses
    
    
    852,147
    
    
    
    62,871
    
    
    
    915,018
    
    
    
    374
    
    
    
    915,392Non-Interest Income:Gain on Sale of Loans Held-for-Sale
    
    
    
    
    
    
    254,377
    
    
    
    254,377
    
    
    
    (28,433
    )
    
    
    225,944Gain on Sale of Loans Held-for-Investment
    
    
    4,293
    
    
    
    
    
    
    
    4,293
    
    
    
    
    
    
    
    4,293Customer Related Fees & Service Charges
    
    
    83,908
    
    
    
    
    
    
    
    83,908
    
    
    
    
    
    
    
    83,908Mortgage Servicing Fees
    
    
    
    
    
    
    26,692
    
    
    
    26,692
    
    
    
    (17,081
    )
    
    
    9,611Temporary
Impairment Charge  Mortgage Servicing Rights
    
    
    
    
    
    
    (34,971
    )
    
    
    (34,971
    )
    
    
    
    
    
    
    (34,971
    )Investment Management, Commissions & Trust Fees
    
    
    21,358
    
    
    
    
    
    
    
    21,358
    
    
    
    
    
    
    
    21,358Other Operating Income
    
    
    21,514
    
    
    
    4,840
    
    
    
    26,354
    
    
    
    
    
    
    
    26,354Securities Gains, net
    
    
    15,519
    
    
    
    
    
    
    
    15,519
    
    
    
    
    
    
    
    15,519Total Non-Interest Income
    
    
    146,592
    
    
    
    250,938
    
    
    
    397,530
    
    
    
    (45,514
    )
    
    
    352,016Non-Interest Expense:Employee Compensation & Benefits
    
    
    178,794
    
    
    
    95,589
    
    
    
    274,383
    
    
    
    
    
    
    
    274,383Occupancy & Equipment Expense, net
    
    
    73,693
    
    
    
    19,210
    
    
    
    92,903
    
    
    
    
    
    
    
    92,903Other Operating Expense
    
    
    109,324
    
    
    
    36,542
    
    
    
    145,866
    
    
    
    (16,706
    )
    
    
    129,160Total Non-Interest Expense
    
    
    361,811
    
    
    
    151,341
    
    
    
    513,152
    
    
    
    (16,706
    )
    
    
    496,446Income Before Income Taxes
    
    
    636,928
    
    
    
    162,468
    
    
    
    799,396
    
    
    
    (28,434
    )
    
    
    770,962Provision for Income Taxes
    
    
    213,566
    
    
    
    68,236
    
    
    
    281,802
    
    
    
    (11,941
    )
    
    
    269,861Net Income
    
    $
    423,362
    
    
    $
    94,232
    
    
    $
    517,594
    
    
    $
    (16,493
    )
    
    $
    501,101Total Assets
    
    $
    53,519,909
    
    
    $
    6,865,780
    
    
    $
    60,385,689
    
    
    
    
    
    
    $
    60,385,689
 NOTE
13  RECENT ACCOUNTING PRONOUNCEMENTS
 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




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##### Table of Contents



Summary
 Business Overview
    Retail Banking
  Mortgage Banking
  25




---



##### Table of Contents



Segment Results
 For the
    
    For theThree Months Ended
    
    Six Months EndedSummary Consolidated Net Income
    
    June 30, 2005
    
    June 30, 2005Contribution
    
    Contribution(dollars in thousands)
    
    $
    
    %
    
    $
    
    %Retail Banking
    
    $
    210,738
    
    
    
    87
    %
    
    $
    423,362
    
    
    
    84
    %Mortgage Banking (1)
    
    
    31,328
    
    
    
    13
    
    
    
    77,739
    
    
    
    16Consolidated Net Income
    
    $
    242,066
    
    
    
    100
    %

    
    $
    501,101
    
    
    
    100
    %
 
 (1)
    
    Excludes net inter-company activity of $8.0 million and $16.5 million, after taxes for the
three and six months ended June 30, 2005, respectively. 26




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##### Table of Contents



Financial Overview
  Three Months Ended
    
    Six Months EndedJune 30,
    
    June 30,
    
    June 30,
    
    June 30,(in thousands, except ratios & per share amounts)
    
    2005
    
    2004
    
    2005
    
    2004Earnings:Net Income
    
    $
    242,066
    
    
    $
    108,999
    
    
    $
    501,101
    
    
    $
    211,518Per Share:Earnings Per Share  Basic
    
    $
    .52
    
    
    $
    .46
    
    
    $
    1.07
    
    
    $
    .92Earnings Per Share  Diluted
    
    
    .51
    
    
    
    .45
    
    
    
    1.06
    
    
    
    .91Cash Dividends
    
    
    .22
    
    
    
    .20
    
    
    
    .44
    
    
    
    .40Dividend Payout Ratio
    
    
    44
    %
    
    
    47
    %
    
    
    42
    %
    
    
    46
    %Book Value
    
    $
    19.26
    
    
    $
    8.95
    
    
    $
    19.26
    
    
    $
    8.95Tangible Book Value (2)
    
    $
    6.68
    
    
    $
    4.87
    
    
    $
    6.68
    
    
    $
    4.87Average Equivalent Shares  Basic
    
    
    469,413
    
    
    
    236,984
    
    
    
    467,953
    
    
    
    229,734Average Equivalent Shares  Diluted
    
    
    474,909
    
    
    
    240,474
    
    
    
    474,118
    
    
    
    233,606Selected Ratios:Return on Average Total Assets
    
    
    1.58
    %
    
    
    1.78
    %
    
    
    1.66
    %
    
    
    1.86
    %Return on Average Tangible Assets (1)
    
    
    1.79
    
    
    
    1.86
    
    
    
    1.89
    
    
    
    1.93Return on Average Equity
    
    
    10.59
    
    
    
    22.92
    
    
    
    11.11
    
    
    
    24.56Return on Average Tangible Equity (1)
    
    
    31.61
    
    
    
    38.23
    
    
    
    33.71
    
    
    
    37.49Yield on Interest Earning Assets (3)
    
    
    5.46
    
    
    
    5.49
    
    
    
    5.49
    
    
    
    5.53Cost of Funds
    
    
    2.24
    
    
    
    1.61
    
    
    
    2.14
    
    
    
    1.61Net Interest Margin (3)
    
    
    3.59
    
    
    
    4.26
    
    
    
    3.69
    
    
    
    4.30Efficiency Ratio (4)
    
    
    36.43
    
    
    
    35.56
    
    
    
    36.19
    
    
    
    35.49
 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 impairment charges
on mortgage servicing rights. 27




---



##### Table of Contents



Financial Results
  
    
    122% increase in net income for the second quarter compared to 2004, with a 13% increase in diluted earnings per share
    
    Returns on average tangible equity and tangible assets of 31.6% and 1.79%
    
    27% annualized growth in commercial demand deposits
    
    30% annualized growth in commercial loans
    
    20% decline in non-performing assets
    
    10% annualized growth in total deposits
    
    Mortgage loan originations of $12.4 billion from our mortgage banking subsidiary as gain on sale margins improved
    
    A balance sheet repositioning reducing securities by $2.0 billion and borrowings by $1.5 billion
    
    Declaration of the regular quarterly cash dividend of $.22 per common share
 Net Income
   Net Interest Income
   28




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##### Table of Contents



2005
    
    2004Average
    
    
    
    
    
    Average
    
    Average
    
    
    
    
    
    Averagedollars in thousands )
    
    Balance
    
    Interest
    
    Rate
    
    Balance
    
    Interest
    
    RateInterest Earning Assets:Loans Held-for-Investment (2)
    
    $
    32,631,577
    
    
    $
    473,934
    
    
    
    5.83
    %
    
    $
    13,934,465
    
    
    $
    213,416
    
    
    
    6.16
    %Loans Held-for-Sale (2)
    
    
    5,754,088
    
    
    
    73,065
    
    
    
    5.09
    
    
    
    
    
    
    
    
    
    
    
    Securities (1)
    
    
    14,556,278
    
    
    
    173,698
    
    
    
    4.79
    
    
    
    8,625,227
    
    
    
    96,907
    
    
    
    4.52Money Market Investments
    
    
    87,406
    
    
    
    684
    
    
    
    3.14
    
    
    
    219,728
    
    
    
    481
    
    
    
    0.88Total Interest Earning Assets
    
    $
    53,029,349
    
    
    $
    721,381
    
    
    
    5.46
    %
    
    
    22,779,420
    
    
    $
    310,804
    
    
    
    5.49
    %Non-Interest Earning Assets:Cash and Due from Banks
    
    $
    1,015,667
    
    
    
    
    
    
    
    
    
    
    
    715,814Other Assets (1)
    
    
    7,435,447
    
    
    
    
    
    
    
    
    
    
    
    1,121,796Total Assets
    
    $
    61,480,463
    
    
    
    
    
    
    
    
    
    
    $
    24,617,030Interest Bearing Liabilities:Savings, NOW & Money Market Deposits
    
    $
    21,794,356
    
    
    $
    82,455
    
    
    
    1.52
    %
    
    $
    10,067,881
    
    
    $
    19,108
    
    
    
    .76
    %Time Deposits
    
    
    7,876,539
    
    
    
    40,391
    
    
    
    2.06
    
    
    
    3,323,884
    
    
    
    12,311
    
    
    
    1.49Total Savings and Time Deposits
    
    
    29,670,895
    
    
    
    122,846
    
    
    
    1.66
    
    
    
    13,391,765
    
    
    
    31,419
    
    
    
    .94Federal Funds Purchased & Collateralized Borrowings
    
    
    13,095,195
    
    
    
    105,238
    
    
    
    3.22
    
    
    
    3,182,388
    
    
    
    31,308
    
    
    
    3.96Other Borrowings (4)
    
    
    1,484,336
    
    
    
    19,287
    
    
    
    5.21
    
    
    
    762,358
    
    
    
    6,552
    
    
    
    3.46Total Borrowings
    
    
    14,579,531
    
    
    
    124,525
    
    
    
    3.43
    
    
    
    3,944,746
    
    
    
    37,860
    
    
    
    3.86Total Interest Bearing Liabilities
    
    $
    44,250,426
    
    
    $
    247,371
    
    
    
    2.24
    
    
    $
    17,336,511
    
    
    $
    69,279
    
    
    
    1.61Interest Rate Spread
    
    
    
    
    
    
    
    
    
    
    3.22
    %
    
    
    
    
    
    
    
    
    
    
    3.88
    %Non-Interest Bearing Liabilities:Demand Deposits
    
    $
    7,290,545
    
    
    
    
    
    
    
    
    
    
    $
    4,825,135Other Liabilities
    
    
    768,821
    
    
    
    
    
    
    
    
    
    
    
    542,624Total Liabilities
    
    
    52,309,792
    
    
    
    
    
    
    
    
    
    
    
    22,704,270Stockholders Equity
    
    
    9,170,671
    
    
    
    
    
    
    
    
    
    
    
    1,912,760Total Liabilities and Stockholders Equity
    
    $
    61,480,463
    
    
    
    
    
    
    
    
    
    
    $
    24,617,030Net Interest Income and Net Interest Margin (3)
    
    
    
    
    
    $
    474,010
    
    
    
    3.59
    %
    
    
    
    
    
    $
    241,525
    
    
    
    4.26
    %Less: Tax Equivalent Adjustment
    
    
    
    
    
    
    (11,937
    )
    
    
    
    
    
    
    
    
    
    
    (7,430
    )Net Interest Income
    
    
    
    
    
    $
    462,073
    
    
    
    
    
    
    
    
    
    
    $
    234,095
 
 (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, $1.18, and $1.05 for the three months ended
June 30, 2005; and $1.77, $1.67, $1.55, $1.17, and $1.10 for the three months ended June 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. 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)
    
    $
    31,961,915
    
    
    $
    927,498
    
    
    
    5.85
    %
    
    $
    13,204,601
    
    
    $
    408,030
    
    
    
    6.21
    %Loans Held-for-Sale (2)
    
    
    5,374,595
    
    
    
    139,913
    
    
    
    5.25
    
    
    
    
    
    
    
    
    
    
    
    Securities (1)
    
    
    14,873,921
    
    
    
    354,383
    
    
    
    4.80
    
    
    
    7,913,102
    
    
    
    175,870
    
    
    
    4.47Money Market Investments
    
    
    87,198
    
    
    
    1,431
    
    
    
    3.31
    
    
    
    150,614
    
    
    
    722
    
    
    
    0.96Total Interest Earning Assets
    
    $
    52,297,629
    
    
    $
    1,423,225
    
    
    
    5.49

    %
    
    
    21,268,317
    
    
    $
    584,622
    
    
    
    5.53
    %Non-Interest Earning Assets:Cash and Due from Banks
    
    $
    1,035,913
    
    
    
    
    
    
    
    
    
    
    
    624,608Other Assets (1)
    
    
    7,513,649
    
    
    
    
    
    
    
    
    
    
    
    936,263Total Assets
    
    $
    60,847,191
    
    
    
    
    
    
    
    
    
    
    $
    22,829,188Interest Bearing Liabilities:Savings, NOW & Money Market Deposits
    
    $
    21,488,577
    
    
    $
    152,051
    
    
    
    1.43
    %
    
    $
    9,291,543
    
    
    $
    34,119
    
    
    
    .74
    %Time Deposits
    
    
    7,718,745
    
    
    
    73,857
    
    
    
    1.93
    
    
    
    3,059,124
    
    
    
    23,047
    
    
    
    1.52Total Savings and Time Deposits
    
    
    29,207,322
    
    
    
    225,908
    
    
    
    1.56
    
    
    
    12,350,667
    
    
    
    57,166
    
    
    
    .93Federal Funds Purchased & Collateralized Borrowings
    
    
    13,232,552
    
    
    
    204,245
    
    
    
    3.11
    
    
    
    3,103,921
    
    
    
    59,911
    
    
    
    3.88Other Borrowings (4)
    
    
    1,495,100
    
    
    
    37,111
    
    
    
    5.01
    
    
    
    753,028
    
    
    
    13,036
    
    
    
    3.48Total Borrowings
    
    
    14,727,652
    
    
    
    241,356
    
    
    
    3.30
    
    
    
    3,856,949
    
    
    
    72,947
    
    
    
    3.80Total Interest Bearing Liabilities
    
    $
    43,934,974
    
    
    $
    467,264
    
    
    
    2.14
    
    
    $
    16,207,616
    
    
    $
    130,113
    
    
    
    1.61Interest Rate Spread
    
    
    
    
    
    
    
    
    
    
    3.35
    %
    
    
    
    
    
    
    
    
    
    
    3.92
    %Non-Interest Bearing Liabilities:Demand Deposits
    
    $
    7,073,060
    
    
    
    
    
    
    
    
    
    
    $
    4,451,326Other Liabilities
    
    
    744,719
    
    
    
    
    
    
    
    
    
    
    
    438,293Total Liabilities
    
    
    51,752,753
    
    
    
    
    
    
    
    
    
    
    
    21,097,235Stockholders Equity
    
    
    9,094,438
    
    
    
    
    
    
    
    
    
    
    
    1,731,953Total Liabilities and Stockholders Equity
    
    $
    60,847,191
    
    
    
    
    
    
    
    
    
    
    $
    22,829,188Net Interest Income and Net Interest Margin (3)
    
    
    
    
    
    $
    955,961
    
    
    
    3.69
    %
    
    
    
    
    
    $
    454,509
    
    
    
    4.30
    %Less: Tax Equivalent Adjustment
    
    
    
    
    
    
    (22,569
    )
    
    
    
    
    
    
    
    
    
    
    (13,585
    )Net Interest Income
    
    
    
    
    
    $
    933,392
    
    
    
    
    
    
    
    
    
    
    $
    440,924
 
 (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, $1.22, and $1.04 for the six months ended
June 30, 2005; and $1.77, $1.67, $1.55, $1.17, and $1.13 for the six months ended June 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. 30




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##### Table of Contents



Three Months Ended June 30,
    
    Six Months Ended June 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
    
    $
    272,721
    
    
    ($
    12,203
    )
    
    $
    260,518
    
    
    $
    544,558
    
    
    ($
    25,090
    )
    
    $
    519,468Loans Held-for-Sale
    
    
    73,065
    
    
    
    
    
    
    
    73,065
    
    
    
    139,913
    
    
    
    
    
    
    
    139,913Securities
    
    
    71,086
    
    
    
    5,705
    
    
    
    76,791
    
    
    
    167,367
    
    
    
    11,146
    
    
    
    178,513Money Market Investments
    
    
    (431
    )
    
    
    634
    
    
    
    203
    
    
    
    (412
    )
    
    
    1,121
    
    
    
    709Total Interest Income
    
    $
    416,441
    
    
    ($
    5,864
    )
    
    $
    410,577
    
    
    $
    851,426
    
    
    ($
    12,823
    )
    
    $
    838,603Interest Expense on Liabilities:Savings, NOW & Money Market Deposits
    
    $
    34,274
    
    
    $
    29,073
    
    
    $
    63,347
    
    
    $
    68,956
    
    
    $
    48,976
    
    
    $
    117,932Time Deposits
    
    
    21,401
    
    
    
    6,679
    
    
    
    28,080
    
    
    
    40,597
    
    
    
    10,213
    
    
    
    50,810Federal Funds Purchased and
Collateralized Borrowings
    
    
    80,649
    
    
    
    (6,719
    )
    
    
    73,930
    
    
    
    157,749
    
    
    
    (13,415
    )
    
    
    144,334Other Borrowings
    
    
    7,104
    
    
    
    5,631
    
    
    
    12,735
    
    
    
    14,098
    
    
    
    9,977
    
    
    
    24,075Total Interest Expense
    
    
    143,428
    
    
    
    34,664
    
    
    
    178,092
    
    
    
    281,400
    
    
    
    55,751
    
    
    
    337,151Net Change in Net Interest Income
    
    $
    273,013
    
    
    ($
    40,528
    )
    
    $
    232,485
    
    
    $
    570,026
    
    
    ($
    68,574
    )
    
    $
    501,452
      31




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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).
 32




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##### Table of Contents



Residential &
    
    Commercial &(Dollars in thousands)
    
    Total
    
    Multi-Family
    
    All Other LoansLoans Held-for-Investment
    
    $
    32,442,266
    
    
    $
    20,662,249
    
    
    $
    11,780,017Allowance for Loan Losses
    
    $
    217,872
    
    
    $
    74,304
    
    
    $
    143,568Non-Performing Loans Held-for-Investment
    
    $
    80,687
    
    
    $
    64,023
    
    
    $
    16,664Allowance for Loan Losses to Loans-Held-for Investment
    
    
    0.67
    %
    
    
    0.36
    %
    
    
    1.22
    %Allowance for Loan Losses to Non-Performing Loans Held-for-Investment
    
    
    270
    %
    
    
    116
    %
    
    
    862
    %
  Non-Interest Income
 . (See financial overview section
for additional information).
 Non-Interest Expense
   Income Taxes
  33




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##### Table of Contents



Mortgage Banking
  For the
    
    For theThree Months
    
    Six MonthsEnded
    
    Ended June 30,June 30, 2005
    
    2005Net Interest Income
    
    $
    29,799
    
    
    $
    62,871Non-Interest Income:Gain on Sale of Loans (1)
    
    
    134,411
    
    
    
    254,377Mortgage Servicing Fees (1)
    
    
    14,053
    
    
    
    26,692Temporary
Impairment Charge  Mortgage Servicing Rights
    
    
    (34,971
    )
    
    
    (34,971
    )Other Operating Income
    
    
    3,004
    
    
    
    4,840Total Non-Interest Income
    
    
    116,497
    
    
    
    250,938Non-Interest Expense:Employee Compensation & Benefits
    
    
    51,132
    
    
    
    95,589Occupancy & Equipment Expense, net
    
    
    9,575
    
    
    
    19,210Other Operating Expense
    
    
    17,738
    
    
    
    36,542Total Non-Interest Expense
    
    
    78,445
    
    
    
    151,341Income Before Income Taxes
    
    
    67,851
    
    
    
    162,468Provision for Income Taxes
    
    
    28,497
    
    
    
    68,236Net Income
    
    $
    39,354
    
    
    $
    94,232Total Assets
    
    $
    6,865,780
    
    
    $
    6,865,780
 
 (1)
    
    Includes $13.8 million and $28.4 million of inter-company gains on sale of loans and $10.0
million and $17.1 million of inter-company mortgage servicing fees for the three and six months
ended 2005, respectively.     Gain on Sale of Loans
  34




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##### Table of Contents



For the three months ended June 30, 2005Margin onMortgage Loans
    
    Mortgage Loans
    
    Whole Loan
    
    Gain on Sale(dollars in thousand)
    
    Originated
    
    Sold
    
    Sales
    
    of Loans (1)Loan Type:Specialty Products
    
    $
    5,302,469
    
    
    $
    4,394,898
    
    
    
    1.35
    %
    
    $
    59,455Jumbo
    
    
    4,840,739
    
    
    
    2,643,372
    
    
    
    1.05
    %
    
    
    27,773Home Equity/Seconds
    
    
    1,566,306
    
    
    
    1,466,771
    
    
    
    2.02
    %
    
    
    30,139Agency
    
    
    712,748
    
    
    
    596,805
    
    
    
    0.32
    %
    
    
    1,882Total
    
    $
    12,422,262
    
    
    $
    9,101,846
    
    
    
    1.31
    %
    
    $
    119,249
 For the six months ended June 30, 2005Margin onMortgage Loans
    
    Mortgage Loans
    
    Whole Loan
    
    Gain on Sale(dollars in thousand)
    
    Originated
    
    Sold
    
    Sales
    
    of Loans (1)Loan Type:Specialty Products
    
    $
    9,533,580
    
    
    $
    8,728,682
    
    
    
    1.40
    %
    
    $
    122,205Jumbo
    
    
    8,635,930
    
    
    
    4,611,460
    
    
    
    1.02
    %
    
    
    46,956Home Equity/Seconds
    
    
    3,055,054
    
    
    
    3,047,268
    
    
    
    1.74
    %
    
    
    52,997Agency
    
    
    1,230,615
    
    
    
    1,067,715
    
    
    
    0.30
    %
    
    
    3,250Total
    
    $
    22,455,179
    
    
    $
    17,455,125
    
    
    
    1.29
    %
    
    $
    225,408
 
 (1)
    
    The gain on sale of whole loans for the three and six months ended June 30, 2005, differs from
the amounts reported under accounting principles generally accepted
in the United States of America on the accompanying
Consolidated Income Statement due to a fair value adjustment of
$(1.3) million and $(.5) million,
respectively on loans held-for-sale at October 1, 2004 which were sold during 2005. Financial Condition
 Loans Held-for-Investment
  June 30,
    
    % of
    
    December 31,
    
    % of
    
    June 30,
    
    % of(dollars in thousands)
    
    2005
    
    Total
    
    2004
    
    Total
    
    2004
    
    TotalCommercial Mortgages
    
    $
    5,725,316
    
    
    
    18
    %
    
    $
    5,369,656
    
    
    
    18
    %
    
    $
    3,536,517
    
    
    
    23
    %Commercial & Industrial
    
    
    3,879,830
    
    
    
    12
    
    
    
    3,046,820
    
    
    
    10
    
    
    
    2,529,253
    
    
    
    16Total Commercial
    
    
    9,605,146
    
    
    
    30
    %
    
    
    8,416,476
    
    
    
    28
    %
    
    
    6,065,770
    
    
    
    39
    %Residential Mortgages
    
    
    16,176,829
    
    
    
    49
    
    
    
    15,668,938
    
    
    
    51
    
    
    
    3,327,047
    
    
    
    22Multi-Family Mortgages
    
    
    4,485,420
    
    
    
    14
    
    
    
    4,254,405
    
    
    
    14
    
    
    
    3,824,615
    
    
    
    25Consumer
    
    
    1,521,869
    
    
    
    5
    
    
    
    1,604,863
    
    
    
    5
    
    
    
    1,751,240
    
    
    
    11Construction & Land
    
    
    653,002
    
    
    
    2
    
    
    
    480,162
    
    
    
    2
    
    
    
    453,922
    
    
    
    3Total
    
    $
    32,442,266
    
    
    
    100
    %
    
    $
    30,424,844
    
    
    
    100
    %
    
    $
    15,422,594
    
    
    
    100
    %
   35




---



##### Table of Contents



Securities
  36




---



##### Table of Contents



(See
financial overview section for additional information)
 Item 1, Notes to the Consolidated
Financial Statements Note 2, Securities for additional information
     Deposits
  June 30,
    
    December 31,
    
    June 30,(in thousands)
    
    2005
    
    2004
    
    2004Deposits:Demand
    
    $
    7,586,939
    
    
    $
    6,738,302
    
    
    $
    5,259,052NOW & Money Market
    
    
    15,848,473
    
    
    
    14,265,395
    
    
    
    6,321,943Savings
    
    
    5,811,417
    
    
    
    6,333,599
    
    
    
    4,494,251Time
    
    
    5,152,330
    
    
    
    4,932,302
    
    
    
    2,300,540Certificates of Deposit, $100,000 & Over
    
    
    3,067,187
    
    
    
    2,542,830
    
    
    
    1,460,671Total Deposits
    
    $
    37,466,346
    
    
    $
    34,812,428
    
    
    $
    19,836,457
  37




---



##### Table of Contents



Asset/Liability Management
       
    
    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.
 38




---



##### Table of Contents



Changes in Net Interest Income(dollars in thousands)
    
    $ Change
    
    % ChangeChange in Interest Rates+ 200 Basis Points
    
    $
    (26,855
    )
    
    
    (1.5
    )%+ 100 Basis Points
    
    
    (10,113
    )
    
    
    (0.6
    )- 100 Basis Points
    
    
    29,521
    
    
    
    1.7Policy Limit
    
    
    
    
    
    
    (10.0
    )
   Market Value of Equity(dollars in thousands)
    
    $ Change
    
    % ChangeChange in Interest Rates+ 200 Basis Points
    
    $
    (400,384
    )
    
    
    (3.4
    )%- 200 Basis Points
    
    $
    (409,409
    )
    
    
    (3.4
    )Policy Limit
    
    
    
    
    
    
    (25.0
    )
 Liquidity Risk Management
      Capital
  39




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##### Table of Contents



June 30, 2005
    
    June 30, 2004(dollars in thousands)
    
    Amount
    
    Ratio
    
    Amount
    
    RatioTier 1 Capital
    
    $
    3,635,796
    
    
    
    10.50
    %
    
    $
    1,561,021
    
    
    
    9.86
    %Regulatory Requirement
    
    
    1,385,310
    
    
    
    4.00
    %
    
    
    633,005
    
    
    
    4.00
    %Excess
    
    $
    2,250,486
    
    
    
    6.50
    %
    
    $
    928,016
    
    
    
    5.86
    %Total Risk Adjusted Capital
    
    $
    4,506,469
    
    
    
    13.01
    %
    
    $
    2,199,075
    
    
    
    13.90
    %Regulatory Requirement
    
    
    2,770,620
    
    
    
    8.00
    %
    
    
    1,266,009
    
    
    
    8.00
    %Excess
    
    $
    1,735,849
    
    
    
    5.01
    %
    
    $
    933,066
    
    
    
    5.90
    %Risk Weighted Assets
    
    $
    34,632,749
    
    
    
    
    
    
    $
    15,825,114
   Capital Ratios:
    
    North Fork
    
    SuperiorTier 1 Capital
    
    
    11.94
    %
    
    
    21.00
    %Total Risk Adjusted
    
    
    13.02
    
    
    
    21.68Leverage Ratio
    
    
    7.47
    
    
    
    7.63
      40




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##### Table of Contents



Regulatory Matters
  Sarbanes-Oxley Act of 2002
  Future Legislation
  
 Item 3. Quantitative and Qualitative Disclosures About Market Risk
  
 Item 4. Controls and Procedures
 15d-15(e)
 41




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##### Table of Contents



42




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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 ofTotal Number of
    
    
    
    
    
    Shares Purchased as
    
    Shares that May YetShares Purchased
    
    Average Price Paid
    
    Part of Publicly
    
    Be Purchased UnderPeriod
    
    (1)
    
    Per Share
    
    Announced Program
    
    the Program (2)April 1, 2005  April 30, 2005
    
    
    
    
    
    
    n/a
    
    
    
    
    
    
    4,243,650 SharesMay 1, 2005  May 31, 2005
    
    
    
    
    
    
    n/a
    
    
    
    
    
    
    4,243,650 SharesJune 1, 2005  June 30, 2005
    
    
    
    
    
    
    n/a
    
    
    
    
    
    
    4,243,650 Shares
 
 (1)
    
    We did not repurchase shares of our common stock during the second quarter of 2005,
pursuant to the repurchase program (the Program) that we publicly announced in June 2003.(2)
    
    In June 2003, the board of directors approved the repurchase of up to 12 million shares of
our common stock, which represented 5% of the shares outstanding at such time. 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 4. Submission of Matters to a Vote of Security Holders
  1)

The election of four directors for a term of three years expiring
in 2008. The vote tabulation for each director is as follows: Name of Director

For


    WithheldJohn Bohlsen

  418,817,675

    8,659,477Daniel M. Healy

411,604,514

15,872,638Katherine Heaviside

    422,321,757

5,155,394Thomas S. Johnson

    417,522,664

9,954,488
  2)

Amendment of North Forks
Certificate of Incorporation to increase the number of authorized shares of common stock from
500 million shares to 1 billion shares. The tabulation of
votes for that amendment is as follows: For
    
Against
    
Abstain381,356,240
    
42,565,900
    

3,555,012
 3)


Ratification of KPMG LLP as the Companys independent auditor for the
fiscal year ending December 31, 2005. The tabulation of votes
for that ratification is as follows:  For
    
Against
    
Abstain416,978,686
    
7,556,012
    

2,942,454




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##### Table of Contents



Item 6. Exhibits
  Exhibit Number
    
    Description of Exhibit(3.1)
    
    Restated Certificate of Incorporation of North Fork Bancorporation, Inc.(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(99.1)
    
    Supplemental Performance Measurements
 44




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##### Table of Contents



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