##### Table of Contents



SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 FOR
THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2006
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the transition period from                      to
 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) 531-2970
 þ o
  Large accelerated filer þ
    
    Accelerated filer o
    
    Non-accelerated filer o
 o þ
  CLASS OF COMMON STOCK
    
    NUMBER OF SHARES OUTSTANDING 11/3/06$.01 Par Value
    
    466,336,020




---



##### 



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
    
    5-6Consolidated 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
    
    26Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    44Item 4. Controls and Procedures
    
    44PART 2. OTHER INFORMATIONItem 1. Legal Proceedings
    
    45Item 1A. Risk Factors
    
    45Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    45Item 4. Submission of Matters to a Vote of Security Holders
    
    45Item 5. Other Information
    
    46Item 6. Exhibits
    
    46EX-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)
    
    2006
    
    
    2005
    
    
    2005Assets:Cash & Due from Banks
    
    $
    961,425
    
    
    $
    1,037,406
    
    
    $
    740,251Money Market Investments
    
    
    114,832
    
    
    
    24,843
    
    
    
    17,808Securities:Available-for-Sale ($2,252,301,$4,107,473 and $4,923,115 Pledged at
September 30, 2006, December 31, 2005 and September 30, 2005,
respectively)
    
    
    9,500,424
    
    
    
    11,295,977
    
    
    
    11,989,260Held-to-Maturity ($4,351, $13,409 and $16,531 Pledged at September
30, 2006, December 31, 2005 and September 30, 2005, respectively)
(Fair Value $93,468, $105,128 and $116,002 at September 30, 2006,
December 31, 2005 and September 30, 2005, respectively)
    
    
    93,265
    
    
    
    104,210
    
    
    
    114,505Total Securities
    
    
    9,593,689
    
    
    
    11,400,187
    
    
    
    12,103,765Loans:Loans Held-for-Sale
    
    
    4,672,939
    
    
    
    4,359,267
    
    
    
    4,701,550Loans Held-for-Investment
    
    
    36,258,634
    
    
    
    33,232,236
    
    
    
    32,672,962Less: Allowance for Loan Losses
    
    
    228,544
    
    
    
    217,939
    
    
    
    220,347Net Loans Held-for-Investment
    
    
    36,030,090
    
    
    
    33,014,297
    
    
    
    32,452,615Goodwill
    
    
    5,918,116
    
    
    
    5,918,116
    
    
    
    5,914,562Identifiable Intangibles
    
    
    87,513
    
    
    
    114,091
    
    
    
    123,334Premises & Equipment
    
    
    448,762
    
    
    
    438,040
    
    
    
    433,775Mortgage Servicing Rights, net
    
    
    258,190
    
    
    
    267,424
    
    
    
    267,347Accrued Income Receivable
    
    
    218,934
    
    
    
    205,892
    
    
    
    198,909Other Assets
    
    
    584,823
    
    
    
    837,308
    
    
    
    946,477Total Assets
    
    $
    58,889,313
    
    
    $
    57,616,871
    
    
    $
    57,900,393Liabilities and Stockholders Equity:Deposits:Demand
    
    $
    7,300,158
    
    
    $
    7,639,231
    
    
    $
    7,478,359NOW & Money Market
    
    
    16,350,819
    
    
    
    15,606,231
    
    
    
    15,599,563Savings
    
    
    4,778,547
    
    
    
    5,303,930
    
    
    
    5,515,530Time
    
    
    5,234,130
    
    
    
    5,428,920
    
    
    
    5,414,506Certificates of Deposit, $100,000 & Over
    
    
    2,883,915
    
    
    
    2,638,261
    
    
    
    2,804,128Total Deposits
    
    
    36,547,569
    
    
    
    36,616,573
    
    
    
    36,812,086Federal Funds Purchased & Collateralized Borrowings
    
    
    10,732,348
    
    
    
    9,700,621
    
    
    
    9,572,995Other Borrowings
    
    
    1,469,761
    
    
    
    1,477,364
    
    
    
    1,485,392Accrued Expenses & Other Liabilities
    
    
    881,528
    
    
    
    820,072
    
    
    
    765,375Total Liabilities
    
    $
    49,631,206
    
    
    $
    48,614,630
    
    
    $
    48,635,848Stockholders 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
480,682,118 shares at September 30, 2006
    
    
    4,807
    
    
    
    4,806
    
    
    
    4,799Additional Paid in Capital
    
    
    6,881,364
    
    
    
    7,035,314
    
    
    
    7,020,325Retained Earnings
    
    
    2,866,058
    
    
    
    2,581,047
    
    
    
    2,486,847Accumulated Other Comprehensive Loss
    
    
    (114,346
    )
    
    
    (108,898
    )
    
    
    (89,052
    )Deferred Compensation
    
    
    
    
    
    
    (154,772
    )
    
    
    (109,111
    )Treasury Stock at cost; 14,562,066 shares at September 30, 2006
    
    
    (379,776
    )
    
    
    (355,256
    )
    
    
    (49,263
    )Total Stockholders Equity
    
    
    9,258,107
    
    
    
    9,002,241
    
    
    
    9,264,545Total Liabilities and Stockholders Equity
    
    $
    58,889,313
    
    
    $
    57,616,871
    
    
    $
    57,900,393
 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
    
    Nine MonthsEnded September 30,
    
    Ended September 30,(in thousands, except per share amounts)
    
    2006
    
    2005
    
    2006
    
    2005Interest Income:Loans Held-for-Investment
    
    $
    559,017
    
    
    $
    469,599
    
    
    $
    1,596,510
    
    
    $
    1,394,034Loans Held-for-Sale
    
    
    86,885
    
    
    
    69,840
    
    
    
    226,665
    
    
    
    209,753Mortgage-Backed Securities
    
    
    92,009
    
    
    
    113,921
    
    
    
    287,961
    
    
    
    389,303Other Securities
    
    
    25,986
    
    
    
    28,422
    
    
    
    83,804
    
    
    
    87,953Money Market Investments
    
    
    858
    
    
    
    508
    
    
    
    1,971
    
    
    
    1,903Total Interest Income
    
    
    764,755
    
    
    
    682,290
    
    
    
    2,196,911
    
    
    
    2,082,946Interest Expense:Savings, NOW & Money Market Deposits
    
    
    144,400
    
    
    
    91,316
    
    
    
    396,565
    
    
    
    243,367Time Deposits
    
    
    78,378
    
    
    
    49,397
    
    
    
    197,827
    
    
    
    123,255Federal Funds Purchased and Collateralized Borrowings
    
    
    114,591
    
    
    
    86,343
    
    
    
    287,693
    
    
    
    290,588Other Borrowings
    
    
    20,482
    
    
    
    20,684
    
    
    
    60,558
    
    
    
    57,794Total Interest Expense
    
    
    357,851
    
    
    
    247,740
    
    
    
    942,643
    
    
    
    715,004Net Interest Income
    
    
    406,904
    
    
    
    434,550
    
    
    
    1,254,268
    
    
    
    1,367,942Provision for Loan Losses
    
    
    9,000
    
    
    
    9,000
    
    
    
    27,000
    
    
    
    27,000Net Interest Income after Provision for Loan Losses
    
    
    397,904
    
    
    
    425,550
    
    
    
    1,227,268
    
    
    
    1,340,942Non-Interest Income:Mortgage Banking Income
    
    
    111,990
    
    
    
    126,415
    
    
    
    313,831
    
    
    
    328,190Customer Related Fees & Service Charges
    
    
    39,808
    
    
    
    41,980
    
    
    
    121,203
    
    
    
    125,888Investment Management, Commissions & Trust Fees
    
    
    9,085
    
    
    
    8,780
    
    
    
    27,881
    
    
    
    30,138Other Operating Income
    
    
    13,325
    
    
    
    12,719
    
    
    
    48,182
    
    
    
    42,177Securities Gains, net
    
    
    4,461
    
    
    
    840
    
    
    
    15,282
    
    
    
    16,358Trading Gains/(Losses)
    
    
    9,674
    
    
    
    
    
    
    
    (11,396
    )
    
    
    Total Non-Interest Income
    
    
    188,343
    
    
    
    190,734
    
    
    
    514,983
    
    
    
    542,751Non-Interest Expense:Employee Compensation & Benefits
    
    
    148,830
    
    
    
    136,300
    
    
    
    435,390
    
    
    
    410,684Occupancy & Equipment, net
    
    
    51,574
    
    
    
    49,007
    
    
    
    154,121
    
    
    
    141,910Amortization of Identifiable Intangibles
    
    
    8,859
    
    
    
    9,133
    
    
    
    26,578
    
    
    
    27,400Other Operating Expenses
    
    
    60,170
    
    
    
    59,560
    
    
    
    172,195
    
    
    
    170,454Merger Related Charges  Capital One
    
    
    13,668
    
    
    
    
    
    
    
    18,900
    
    
    
    Settlement Recovery
    
    
    
    
    
    
    
    
    
    
    (16,031
    )
    
    
    Total Non-Interest Expense
    
    
    283,101
    
    
    
    254,000
    
    
    
    791,153
    
    
    
    750,448Income Before Income Taxes
    
    
    303,146
    
    
    
    362,284
    
    
    
    951,098
    
    
    
    1,133,245Provision for Income Taxes
    
    
    100,038
    
    
    
    124,988
    
    
    
    317,046
    
    
    
    394,848Net Income
    
    $
    203,108
    
    
    $
    237,296
    
    
    $
    634,052
    
    
    $
    738,397Earnings Per Share:Basic
    
    $
    0.45
    
    
    $
    0.50
    
    
    $
    1.39
    
    
    $
    1.58Diluted
    
    $
    0.44
    
    
    $
    0.50
    
    
    $
    1.38
    
    
    $
    1.55
 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,
    
    2006
    
    
    2005(in thousands)Cash Flows from Operating Activities:Net Income
    
    $
    634,052
    
    
    $
    738,397Adjustments to Reconcile Net Income to
Net Cash Provided by Operating Activities:Provision for Loan Losses
    
    
    27,000
    
    
    
    27,000Depreciation
    
    
    35,892
    
    
    
    31,763Net Amortization/(Accretion):Securities
    
    
    15,930
    
    
    
    19,804Loans
    
    
    11,467
    
    
    
    18,798Borrowings & Time Deposits
    
    
    (117,894
    )
    
    
    (96,263
    )Intangibles
    
    
    26,578
    
    
    
    27,400Deferred Compensation
    
    
    20,985
    
    
    
    16,899Gain on Sale of Loans Held-for-Investment
    
    
    
    
    
    
    (5,824
    )Securities Gains, net
    
    
    (15,282
    )
    
    
    (16,358
    )Trading Gains
    
    
    (11,396
    )
    
    
    Capitalization of Mortgage Servicing Rights
    
    
    (51,149
    )
    
    
    (109,430
    )Amortization of Mortgage Servicing Rights
    
    
    66,939
    
    
    
    63,763Temporary
Impairment (Charge)/Recovery   Mortgage Servicing Rights
    
    
    (7,960
    )
    
    
    25,431Loans Held-for-Sale:Originations (1)
    
    
    (24,776,195
    )
    
    
    (28,386,762
    )Proceeds from Sales
    
    
    24,626,474
    
    
    
    28,738,481Gain on Sales
    
    
    (307,688
    )
    
    
    (339,531
    )Other
    
    
    143,736
    
    
    
    1,062,208Other, Net
    
    
    277,958
    
    
    
    40,617Net Cash Provided by Operating Activities
    
    
    599,447
    
    
    
    1,856,393Cash Flows from Investing Activities:Originations of Loans Held-for-Investment, net of Principal Repayments
and Net Charge-offs
    
    
    (3,084,299
    )
    
    
    (3,347,902
    )Purchases of Securities Available-for-Sale
    
    
    (1,018,628
    )
    
    
    (1,870,631
    )Proceeds from Sales of Securities Available-for-Sale
    
    
    1,176,332
    
    
    
    2,110,321Maturities, Redemptions, Calls and Principal Repayments on
Securities Available-for-Sale
    
    
    1,657,557
    
    
    
    3,051,344Purchases of Securities Held-to-Maturity
    
    
    (1,000
    )
    
    
    (3,010
    )Maturities, Redemptions, Calls and Principal Repayments on
Securities Held-to-Maturity
    
    
    11,766
    
    
    
    30,556Proceeds from the Sale of Loans Held-for-Investment
    
    
    46,436
    
    
    
    1,125,561Purchases of Premises and Equipment, Net
    
    
    (46,615
    )
    
    
    (49,535
    )Net Cash (Used in)/Provided by Investing Activities
    
    $
    (1,258,451
    )
    
    $
    1,046,704
 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,
    
    2006
    
    
    2005(in thousands)Cash Flows from Financing Activities:Net (Decrease)/Increase in Customer Deposits
    
    $
    (47,247
    )
    
    $
    2,027,216Net Increase (Decrease) in Borrowings
    
    
    1,114,678
    
    
    
    (4,954,580
    )Purchase of Treasury Stock
    
    
    (131,839
    )
    
    
    (35,978
    )Exercise of Options and Common Stock Sold for Cash
    
    
    86,685
    
    
    
    69,974Cash Dividends Paid
    
    
    (349,265
    )
    
    
    (314,570
    )Net Cash Provided by/(Used in) Financing Activities
    
    
    673,012
    
    
    
    (3,207,938
    )Net Increase/(Decrease) in Cash and Cash Equivalents
    
    
    14,008
    
    
    
    (304,841
    )Cash and Cash Equivalents at Beginning of Period
    
    
    1,062,249
    
    
    
    1,062,900Cash and Cash Equivalents at End of Period
    
    $
    1,076,257
    
    
    $
    758,059Supplemental Disclosures of Cash Flow Information:Cash Paid During the Period for:Interest Expense
    
    $
    1,028,873
    
    
    $
    789,920Income Taxes
    
    $
    139,262
    
    
    $
    201,653During the Period the Company Purchased Various Securities which
Settled in the Subsequent Period
    
    $
    24,610
    
    
    $
    8,139
 
 (1)
    
    Excludes loans retained in the held-for-investment portfolio totaling $2.3 billion and
$4.5 billion during 2006 and 2005, respectively. 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)
 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, 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
    )
    
    $
    9,264,545Balance, December 31, 2005
    
    $
    4,806
    
    
    $
    7,035,314
    
    
    $
    2,581,047
    
    
    ($
    108,898
    )
    
    ($
    154,772
    )
    
    ($
    355,256
    )
    
    $
    9,002,241Net Income
    
    
    
    
    
    
    
    
    
    
    634,052
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    634,052Cash Dividends ($.75 per share)
    
    
    
    
    
    
    
    
    
    
    (349,041
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (349,041
    )Issuance of Stock (218,012 shares)
    
    
    1
    
    
    
    348
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,692
    
    
    
    6,041Reclassification of Deferred
Compensation to Additional Paid
Capital upon adoption of SFAS. No.
123(R)
    
    
    
    
    
    
    (154,772
    )
    
    
    
    
    
    
    
    
    
    
    154,772
    
    
    
    
    
    
    
    Restricted Stock Activity, net
    
    
    
    
    
    
    21,518
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (110
    )
    
    
    21,408Stock Based Compensation Activity, net
    
    
    
    
    
    
    (21,044
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    101,737
    
    
    
    80,693Purchase of Treasury Stock (5,101,900
shares)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (131,839
    )
    
    
    (131,839
    )Other Comprehensive Loss, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,448
    )
    
    
    
    
    
    
    
    
    
    
    (5,448
    )Balance, September 30, 2006
    
    $
    4,807
    
    
    $
    6,881,364
    
    
    $
    2,866,058
    
    
    ($
    114,346
    )
    
    ($
    
    )
    
    ($
    379,776
    )
    
    $
    9,258,107
 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,(in thousands)
    
    2006
    
    
    2005
    
    
    2006
    
    
    2005Net Income
    
    $
    203,108
    
    
    $
    237,296
    
    
    $
    634,052
    
    
    $
    738,397Other Comprehensive IncomeUnrealized (Losses)/Gains On Securities:Changes in Unrealized (Losses)/Gains Arising During the Period
    
    $
    167,736
    
    
    $
    (119,816
    )
    
    $
    4,647
    
    
    $
    (153,188
    )Less: Reclassification Adjustment For Gains Included in Net Income
    
    
    (4,461
    )
    
    
    (840
    )
    
    
    (15,282
    )
    
    
    (16,358
    )Changes in Unrealized (Losses)/Gains Arising During the Period
    
    
    163,275
    
    
    
    (120,656
    )
    
    
    (10,635
    )
    
    
    (169,546
    )Related Tax Effect on Unrealized (Losses)/Gains During the Period
    
    
    (70,209
    )
    
    
    51,881
    
    
    
    4,574
    
    
    
    72,900Net Change in Unrealized (Losses)/Gains Arising During the Period
    
    
    93,066
    
    
    
    (68,775
    )
    
    
    (6,061
    )
    
    
    (96,646
    )Unrealized Gains/(Losses) On Derivative Instruments:Changes in Unrealized Gains/(Losses) Arising During the Period
    
    $
    (559
    )
    
    $
    929
    
    
    
    462
    
    
    $
    10,636Add: Reclassification Adjustment for Expenses/Losses Included in Net Income
    
    
    117
    
    
    
    471
    
    
    
    613
    
    
    
    2,261Changes in Unrealized Gains/(Losses) Arising During the Period
    
    
    (442
    )
    
    
    1,400
    
    
    
    1,075
    
    
    
    12,897Related Tax Effect on Unrealized Gains/(Losses) During the Period
    
    
    190
    
    
    
    (601
    )
    
    
    (462
    )
    
    
    (5,543
    )Net Change in Unrealized Gains/(Losses) Arising During the Period
    
    
    (252
    )
    
    
    799
    
    
    
    613
    
    
    
    7,354Net Other Comprehensive Income/(Loss)
    
    $
    92,814
    
    
    $
    (67,976
    )
    
    $
    (5,448
    )
    
    $
    (89,292
    )Comprehensive Income
    
    $
    295,922
    
    
    $
    169,320
    
    
    $
    628,604
    
    
    $
    649,105
 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, 2006 and 2005
  Note 1  Business and Summary of Significant Accounting Policies
  Proposed Plan of Merger with Capital One Financial Corporation
     Basis of Presentation
  9




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##### Table of Contents



Accounting for Stock-Based Compensation
  Critical Accounting Policies
  Provision and Allowance for Loan Losses
     
    
    Establishment of reserve amounts for specifically identified
criticized loans, including those arising from business combinations
and those designated as requiring special attention by our internal
loan review program, or bank regulatory examinations
(specific-allowance method).
 10




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##### Table of Contents




    
    An allocation to the remaining loans giving effect to historical
losses experienced in each loan category, cyclical trends and current
economic conditions which may impact future losses (loss experience
factor method).
    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, 2006
    
    
    December 31, 2005
    
    
    September 30, 2005Available-for-Sale
    
    Amortized
    
    
    Fair
    
    
    Amortized
    
    
    Fair
    
    
    Amortized
    
    
    Fair(in thousands)
    
    Cost
    
    
    Value
    
    
    Cost
    
    
    Value
    
    
    Cost
    
    
    ValueCMO Agency Issuances
    
$
    3,023,004
    
    
$

    2,932,161
    
    
    $
    3,604,117
    
    
    $
    3,511,285
    
    
    $
    3,876,702
    
    
    $
    3,798,645CMO Private Issuances
    
    
    3,173,377
    
    
    
    3,100,693
    
    
    
    3,484,016
    
    
    
    3,409,789
    
    
    
    3,652,571
    
    
    
    3,592,462Agency Pass-Through Certificates
    
    
    1,667,601
    
    
    
    1,638,178
    
    
    
    1,986,388
    
    
    
    1,956,487
    
    
    
    2,159,341
    
    
    
    2,138,524State & Municipal Obligations
    
    
    671,351
    
    
    
    669,488
    
    
    
    884,742
    
    
    
    881,238
    
    
    
    845,531
    
    
    
    844,866Equity Securities (1) (2)
    
    
    617,287
    
    
    
    618,751
    
    
    
    663,371
    
    
    
    675,525
    
    
    
    664,662
    
    
    
    669,072U.S. Treasury & Agency Obligations
    
    
    213,449
    
    
    
    211,113
    
    
    
    233,468
    
    
    
    231,152
    
    
    
    274,940
    
    
    
    272,247Other Securities
    
    
    333,851
    
    
    
    330,040
    
    
    
    628,737
    
    
    
    630,501
    
    
    
    668,884
    
    
    
    673,444Total Available-for-Sale Securities
    
    $
    9,699,920
    
    
    $
    9,500,424
    
    
    $
    11,484,839
    
    
    $
    11,295,977
    
    
    $
    12,142,631
    
    
    $
    11,989,260
 
 (1)
    
    Amortized cost and fair value includes $433.6 million, $265.8 million and $269.3 million in
Federal Home Loan Bank Stock at September 30, 2006, December 31, 2005 and September 30, 2005,
respectively.(2)
    
    Amortized cost and fair value includes $150.7 million and $152.2 million at September 30,
2006, respectively, $332.3 million and $342.8 million at December 31, 2005, respectively and
$332.3 million and $335.4 million at September 30, 2005, respectively of Federal Home Loan
Mortgage Corporation (Freddie Mac) and Federal National Mortgage Association (Fannie Mae)
Preferred Stock.  September 30, 2006
    
    
    December 31, 2005
    
    
    September 30, 2005Held-to-Maturity
    
    Amortized
    
    
    Fair
    
    
    Amortized
    
    
    Fair
    
    
    Amortized
    
    
    Fair(in thousands)
    
    Cost
    
    
    Value
    
    
    Cost
    
    
    Value
    
    
    Cost
    
    
    ValueAgency Pass-Through Certificates
    
    $
    41,080
    
    
    $
    40,323
    
    
    $
    46,155
    
    
    $
    45,814
    
    
    $
    48,913
    
    
    $
    48,976State & Municipal Obligations
    
    
    35,846
    
    
    
    37,226
    
    
    
    38,301
    
    
    
    40,116
    
    
    
    40,610
    
    
    
    42,651CMO Private Issuances
    
    
    8,389
    
    
    
    7,969
    
    
    
    9,430
    
    
    
    8,958
    
    
    
    14,287
    
    
    
    13,772Other Securities
    
    
    7,950
    
    
    
    7,950
    
    
    
    10,324
    
    
    
    10,240
    
    
    
    10,695
    
    
    
    10,603Total Held-to-Maturity Securities
    
    $
    93,265
    
    
    $
    93,468
    
    
    $
    104,210
    
    
    $
    105,128
    
    
    $
    114,505
    
    
    $
    116,002
  NOTE 3  LOANS
  Loans Held-for-Sale
    
    September 30,
    
    
    % of
    
    
    December 31,
    
    
    % of
    
    
    September 30,
    
    
    % of(dollars in thousands)
    
    2006
    
    
    Total
    
    
    2005
    
    
    Total
    
    
    2005
    
    
    TotalResidential Mortgages
    
    $
    4,228,290
    
    
    
    91
    %
    
    $
    3,824,547
    
    
    
    89
    %
    
    $
    4,225,128
    
    
    
    91
    %Home Equity
    
    
    399,629
    
    
    
    9
    
    
    
    496,656
    
    
    
    11
    
    
    
    434,824
    
    
    
    9Total
    
    
    4,627,919
    
    
    
    100
    %
    
    $
    4,321,203
    
    
    
    100
    %
    
    $
    4,659,952
    
    
    
    100
    %Deferred Origination Costs
    
    
    45,020
    
    
    
    
    
    
    
    38,064
    
    
    
    
    
    
    
    41,598Total Loans Held-for-Sale
    
    $
    4,672,939
    
    
    
    
    
    
    $
    4,359,267
    
    
    
    
    
    
    $
    4,701,550
 13




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##### Table of Contents



Loans Held-for- Investment
    
    September 30,
    
    
    % of
    
    
    December 31,
    
    
    % of
    
    
    September 30,
    
    
    % of(dollars in thousands)
    
    2006
    
    
    Total
    
    
    2005
    
    
    Total
    
    
    2005
    
    
    TotalCommercial Mortgages
    
    $
    7,465,052
    
    
    
    21
    %
    
    $
    6,206,416
    
    
    
    19
    %
    
    $
    5,896,835
    
    
    
    18
    %Commercial & Industrial
    
    
    6,073,098
    
    
    
    17
    
    
    
    4,709,440
    
    
    
    14
    
    
    
    4,324,758
    
    
    
    13Total Commercial
    
    
    13,538,150
    
    
    
    38
    
    
    
    10,915,856
    
    
    
    33
    %
    
    
    10,221,593
    
    
    
    31
    %Residential Mortgages
    
    
    14,237,428
    
    
    
    39
    
    
    
    15,068,443
    
    
    
    45
    
    
    
    15,508,008
    
    
    
    48Multi-Family Mortgages
    
    
    5,272,860
    
    
    
    15
    
    
    
    4,821,642
    
    
    
    15
    
    
    
    4,626,777
    
    
    
    14Consumer
    
    
    1,894,712
    
    
    
    5
    
    
    
    1,558,782
    
    
    
    5
    
    
    
    1,569,386
    
    
    
    5Construction & Land
    
    
    1,272,784
    
    
    
    3
    
    
    
    829,273
    
    
    
    2
    
    
    
    716,049
    
    
    
    2Total
    
    
    36,215,934
    
    
    
    100
    %
    
    $
    33,193,996
    
    
    
    100
    %
    
    $
    32,641,813
    
    
    
    100
    %Deferred Origination Costs, net
    
    
    42,700
    
    
    
    
    
    
    
    38,240
    
    
    
    
    
    
    
    31,149Total Loans Held-for -Investment
    
    $
    36,258,634
    
    
    
    
    
    
    $
    33,232,236
    
    
    
    
    
    
    $
    32,672,962
  Non-Performing Assets
   September 30,
    
    
    December 31,
    
    
    September 30,(dollars in thousands)
    
    2006
    
    
    2005
    
    
    2005Commercial Mortgages
    
    $
    2,119
    
    
    $
    498
    
    
    $
    5,451Commercial & Industrial
    
    
    7,338
    
    
    
    7,970
    
    
    
    8,137Total Commercial
    
    
    9,457
    
    
    
    8,468
    
    
    
    13,588Residential Mortgages
    
    
    11,478
    
    
    
    19,315
    
    
    
    48,257Multi-Family Mortgages
    
    
    
    
    
    
    550
    
    
    
    335Consumer
    
    
    2,743
    
    
    
    2,684
    
    
    
    2,399Construction and Land
    
    
    
    
    
    
    
    
    
    
    600Non-Performing Loans Held-for-Investment
    
    
    23,678
    
    
    $
    31,017
    
    
    $
    65,179Non-Performing Loans Held-for-Sale
    
    
    34,753
    
    
    
    13,931
    
    
    
    33,137Other Real Estate
    
    
    4,098
    
    
    
    4,101
    
    
    
    7,149Total Non-Performing Assets
    
    $
    62,529
    
    
    $
    49,049
    
    
    $
    105,465Allowance for Loan Losses to Non-Performing Loans Held-for-Investment
    
    
    965
    %
    
    
    703
    %
    
    
    338
    %Allowance for Loan Losses to Total Loans Held-for-Investment
    
    
    .63
    
    
    
    .66
    
    
    
    .67Non-Performing Loans to Total Loans Held-for-Investment
    
    
    .07
    
    
    
    .09
    
    
    
    .20Non-Performing Assets to Total Assets
    
    
    .11
    
    
    
    .09
    
    
    
    .18
   14




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##### Table of Contents



NOTE 4  ALLOWANCE FOR LOAN LOSSES
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,(dollars in thousands)
    
    2006
    
    
    2005
    
    
    2006
    
    
    2005Balance at Beginning of Period
    
    $
    224,571
    
    
    $
    217,872
    
    
    $
    217,939
    
    
    $
    211,097Provision For Loan Losses
    
    
    9,000
    
    
    
    9,000
    
    
    
    27,000
    
    
    
    27,000Total
    
    
    233,571
    
    
    
    226,872
    
    
    
    244,939
    
    
    
    238,097Recoveries Credited to the Allowance
    
    
    3,627
    
    
    
    3,477
    
    
    
    10,807
    
    
    
    12,621Losses Charged to the Allowance
    
    
    (8,654
    )
    
    
    (10,002
    )
    
    
    (27,202
    )
    
    
    (30,371
    )Balance at End of Period
    
    $
    228,544
    
    
    $
    220,347
    
    
    $
    228,544
    
    
    $
    220,347Annualized Net Charge-offs to Average Loans, net
    
    
    .06
    %
    
    
    .08
    %
    
    
    .06
    %
    
    
    .07
    %
 NOTE 5  FEDERAL FUNDS PURCHASED AND COLLATERALIZED BORROWINGS
  September 30,
    
    
    December 31,
    
    
    September 30,(in thousands)
    
    2006
    
    
    2005
    
    
    2005Federal Funds Purchased
    
    $
    1,166,500
    
    
    $
    2,634,000
    
    
    $
    700,000Securities Sold Under Repurchase Agreements
    
    
    2,029,989
    
    
    
    3,783,017
    
    
    
    4,718,647Federal Home Loan Bank Advances
    
    
    7,535,859
    
    
    
    3,283,604
    
    
    
    4,154,348Total Federal Funds Sold and Collateralized Borrowings
    
    $
    10,732,348
    
    
    $
    9,700,621
    
    
    $
    9,572,995
  (dollars in thousands)
    
    FHLB
    
    Average
    
    
    
    
    
    Average
    
    
    
    
    
    AverageMaturity/Repricing
    
    Advances
    
    Rate (1)
    
    Repos
    
    Rate (1)
    
    Total(2)
    
    Rate (1)2006
    
    $
    6,375,015
    
    
    
    5.32
    %
    
    $
    767,786
    
    
    
    3.59
    %
    
    $
    7,142,801
    
    
    
    5.13
    %2007
    
    
    150,000
    
    
    
    3.77
    %
    
    
    600,000
    
    
    
    3.13
    %
    
    
    750,000
    
    
    
    3.26
    %2008
    
    
    650,000
    
    
    
    2.67
    %
    
    
    275,000
    
    
    
    4.90
    %
    
    
    925,000
    
    
    
    3.33
    %2009
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2010
    
    
    100,000
    
    
    
    5.90
    %
    
    
    275,000
    
    
    
    3.90
    %
    
    
    375,000
    
    
    
    4.44
    %Thereafter
    
    
    200,000
    
    
    
    2.93
    %
    
    
    100,000
    
    
    
    4.39
    %
    
    
    300,000
    
    
    
    3.42
    %Total
    
    $
    7,475,015
    
    
    
    5.00
    %
    
    $
    2,017,786
    
    
    
    3.71
    %
    
    $
    9,492,801
    
    
    
    4.73
    %
 
 (1)
    
    Reflects the impact of purchase accounting adjustments and interest rate swaps.(2)
    
    Excludes $60.8 million and $12.2 million in purchase accounting discounts on FHLB Advances
and Repurchase Agreements, respectively.  15




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##### Table of Contents



NOTE 6  OTHER BORROWINGS
  SUBORDINATED NOTES
 September 30,
    
    
    December 31,
    
    
    September 30,(in thousands)
    
    2006
    
    
    2005
    
    
    2005Parent Company:5.875% Subordinated Notes due August 2012
    
    $
    349,476
    
    
    $
    349,408
    
    
    $
    349,3865.0% Subordinated Notes due August 2012
    
    
    150,000
    
    
    
    150,000
    
    
    
    150,000Subsidiary Bank:9.25% Subordinated Bank Notes due October 2010
    
    
    174,108
    
    
    
    178,622
    
    
    
    180,127Total Subordinated Notes
    
    
    673,584
    
    
    
    678,030
    
    
    
    679,513Fair Value Hedge Adjustment
    
    
    (27,436
    )
    
    
    (31,040
    )
    
    
    (28,519
    )Total Subordinated Notes Carrying Amount
    
    $
    646,148
    
    
    $
    646,990
    
    
    $
    650,994
    JUNIOR SUBORDINATED DEBT (related to Trust Preferred Securities):
 September 30,
    
    
    December 31,
    
    
    September 30,(in thousands)
    
    2006
    
    
    2005
    
    
    20058.70% Junior Subordinated Debt  due December 2026
    
    $
    102,848
    
    
    $
    102,839
    
    
    $
    102,8368.00% Junior Subordinated Debt  due December 2027
    
    
    102,820
    
    
    
    102,811
    
    
    
    102,8078.17% Junior Subordinated Debt  due May 2028
    
    
    46,547
    
    
    
    46,547
    
    
    
    46,5479.10% Junior Subordinated Debt  due June 2027
    
    
    224,896
    
    
    
    235,867
    
    
    
    236,214Total Junior Subordinated Debt
    
    
    477,111
    
    
    
    488,064
    
    
    
    488,404Fair Value Hedge Adjustment
    
    
    
    
    
    
    7,427
    
    
    
    10,300Total Junior Subordinated Debt Carrying Amount
    
    $
    477,111
    
    
    $
    495,491
    
    
    $
    498,704
  16




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##### Table of Contents



SENIOR NOTES:
 September 30,
    
    
    December 31,
    
    
    September 30,(in thousands)
    
    2006
    
    
    2005
    
    
    20053.20% Senior Notes  due June 2008
    
    $
    346,502
    
    
    $
    344,945
    
    
    $
    344,426Fair Value Hedge Adjustment
    
    
    
    
    
    
    (10,062
    )
    
    
    (8,732
    )Total Senior Notes Carrying Amount
    
    $
    346,502
    
    
    $
    334,883
    
    
    $
    335,694
   NOTE 7  MORTGAGE SERVICING RIGHTS
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,(dollars in thousands)
    
    2006
    
    
    2005
    
    
    2006
    
    
    2005Mortgage Servicing Rights:Balance, Beginning of Period
    
    $
    277,077
    
    
    $
    288,453
    
    
    $
    290,550
    
    
    $
    254,857Originations
    
    
    18,310
    
    
    
    28,276
    
    
    
    51,149
    
    
    
    109,430Amortization
    
    
    (21,526
    )
    
    
    (23,183
    )
    
    
    (66,939
    )
    
    
    (63,763
    )Sales
    
    
    (505
    )
    
    
    (768
    )
    
    
    (1,404
    )
    
    
    (7,746
    )Balance, End of Period
    
    $
    273,356
    
    
    $
    292,778
    
    
    $
    273,356
    
    
    $
    292,778Valuation allowance:Balance, Beginning of Period
    
    $
    (4,534
    )
    
    $
    (34,971
    )
    
    $
    (23,126
    )
    
    $
    Temporary
Impairment (Charge)/Recovery on Mortgage
Servicing Rights
    
    
    (10,632
    )
    
    
    9,540
    
    
    
    7,960
    
    
    
    (25,431
    )Balance, End of Period
    
    $
    (15,166
    )
    
    $
    (25,431
    )
    
    $
    (15,166
    )
    
    $
    (25,431
    )Mortgage Servicing Rights, net
    
    $
    258,190
    
    
    $
    267,347
    
    
    $
    258,190
    
    
    $
    267,347Fair Value of Mortgage Servicing Rights
    
    $
    264,195
    
    
    $
    269,804
    
    
    $
    264,195
    
    
    $
    269,804Ratio of Mortgage Servicing Rights to Related Loans
Serviced for Others
    
    
    0.92
    %
    
    
    0.88
    %
    
    
    0.92
    %
    
    
    0.88
    %Weighted Average Service Fee
    
    
    0.28
    %
    
    
    0.28
    %
    
    
    0.28
    %
    
    
    0.28
    %
 17




---



##### Table of Contents



September 30,
    
    September 30,2006
    
    2005Weighted Avg. Prepayment Rate (includes default Rate)
    
    
    27.62
    %
    
    
    28.10Weighted Avg. Life (in years)
    
    
    3.5
    
    
    
    3.3Cash Flows, Discount Rate
    
    
    10.51
    %
    
    
    10.53
    %
   NOTE 8  REPRESENTATION AND WARRANTY RESERVE
   Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,( in thousands)
    
    2006
    
    
    2005
    
    
    2006
    
    
    2005Balance, Beginning of Period
    
    $
    126,947
    
    
    $
    129,116
    
    
    $
    128,620
    
    
    $
    97,066Provisions for Estimated Losses (1)
    
    
    15,899
    
    
    
    18,647
    
    
    
    39,224
    
    
    
    66,244Losses Incurred
    
    
    (11,765
    )
    
    
    (12,695
    )
    
    
    (36,763
    )
    
    
    (28,242
    )Balance, End of Period
    
    $
    131,081
    
    
    $
    135,068
    
    
    $
    131,081
    
    
    $
    135,068
 
 (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 Swaps   2008
    
    Repurchase Agreements
    
    $
    75,000
    
    
    
    6.14
    %
    
    
    5.48
    %Pay Variable Swaps  2012
    
    5.875% Subordinated Notes
    
    
    350,000
    
    
    
    5.88
    
    
    
    7.71
  18




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##### Table of Contents



Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,(in thousands)
    
    2006
    
    
    2005
    
    
    2006
    
    
    2005Gain/(Loss) on Hedged Mortgage Loans
    
    $
    12,432
    
    
    $
    (8,559
    )
    
    $
    3,050
    
    
    $
    (6,390
    )(Loss)/Gain on Derivatives
    
    
    (12,736
    )
    
    
    8,218
    
    
    
    (4,797
    )
    
    
    4,845Hedge Ineffectiveness
    
    $
    (304
    )
    
    $
    (341
    )
    
    $
    (1,747
    )
    
    $
    (1,545
    )
 19




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##### Table of Contents



Trading Instruments
  (dollars in thousands)
    
    Previously Hedged
    
    Notional
    
    Fixed
    
    VariableMaturity
    
    Liability
    
    Amount
    
    Interest Rate
    
    Interest RatePay Variable Swaps2007
    
    5.00% Subordinated Notes
    
    $
    150,000
    
    
    
    5.00
    %
    
    
    7.71
    %2008
    
    3.20% Senior Notes
    
    
    350,000
    
    
    
    3.20
    %
    
    
    5.05
    %2026
    
    8.70% Junior Subordinated Debt
    
    
    100,000
    
    
    
    8.70
    %
    
    
    7.09
    %2027
    
    8.00% Junior Subordinated Debt
    
    
    100,000
    
    
    
    8.00
    %
    
    
    6.46
    %2028
    
    8.17% Junior Subordinated Debt
    
    
    45,000
    
    
    
    8.17
    %
    
    
    8.27
    %
   NOTE 10  OTHER COMMITMENTS AND CONTINGENT LIABILITIES
 Credit Related Commitments
  Retail Banking
      20




---



##### Table of Contents



(in thousands)
    
    2006Commitments to Extend Credit on Loans Held-for-Investment (2)
    
    $
    4,843,931Standby Letters of Credit (1) (2)
    
    
    616,120Commercial Letters of Credit (2)
    
    
    21,022
 
 (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 $2.2 million
as of September 30, 2006. The fair value of these instruments is recognized as income over the
initial term of the guarantee.(2)
    
    At September 30, 2006, commitments to extend credit on loans held-for-investment with
maturities of less than one year totaled $2.4 billion, while $2.4 billion mature between one
to three years. Standby and commercial letters of credit are issued with original maturity
terms of twelve months or less. Mortgage Banking
    (in thousands)
    
    2006Commitments to Originate Mortgage Loans Held-for-Sale
    
    $
    5,887,000Commitments to Fund HELOCs
    
    
    136,889
 NOTE 11  RETIREMENT AND OTHER EMPLOYEE BENEFITS
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,(in thousands)
    
    2006
    
    
    2005
    
    
    2006
    
    
    2005
    
    
    2006
    
    
    2005
    
    
    2006
    
    
    2005Pension
    
    
    Post-Retirement
    
    
    Pension
    
    
    Post-RetirementComponents of Net Periodic Benefit Cost:Service Cost
    
    $
    2,971
    
    
    $
    2,114
    
    
    $
    422
    
    
    $
    365
    
    
    $
    9,239
    
    
    $
    7,240
    
    
    $
    1,406
    
    
    $
    1,391Interest Cost
    
    
    2,654
    
    
    
    2,689
    
    
    
    387
    
    
    
    220
    
    
    
    8,086
    
    
    
    7,889
    
    
    
    1,347
    
    
    
    1,628Expected Return on Plan Assets
    
    
    (5,186
    )
    
    
    (5,306
    )
    
    
    (131
    )
    
    
    (63
    )
    
    
    (15,570
    )
    
    
    (15,254
    )
    
    
    (393
    )
    
    
    (191
    )Amortization of Prior Service Cost
    
    
    109
    
    
    
    (40
    )
    
    
    (20
    )
    
    
    (20
    )
    
    
    290
    
    
    
    (172
    )
    
    
    (60
    )
    
    
    (60
    )Amortization of Net Transition
(Asset)/Obligation
    
    
    
    
    
    
    
    
    
    
    73
    
    
    
    73
    
    
    
    
    
    
    
    (131
    )
    
    
    219
    
    
    
    219Amortization of Net (Gain)/Loss
    
    
    298
    
    
    
    217
    
    
    
    (128
    )
    
    
    (170
    )
    
    
    1,172
    
    
    
    763
    
    
    
    (156
    )
    
    
    18Net Periodic Benefit Cost/(Income):
    
    $
    846
    
    
    
    ($326
    )
    
    $
    603
    
    
    $
    405
    
    
    $
    3,217
    
    
    $
    335
    
    
    $
    2,363
    
    
    $
    3,005
  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 interest rates.
    
    Inter-company eliminations are reflected in the Other column.
  (in thousands)
    
    Retail
    
    Mortgage
    
    Segment
    
    
    
    
    
    ConsolidatedFor the Three Months Ended September 30, 2006
    
    Banking
    
    Banking
    
    Totals
    
    Other
    
    OperationsNet Interest Income
    
    $
    386,453
    
    
    $
    18,412
    
    
    $
    404,865
    
    
    $
    2,039
    
    
    $
    406,904Provision for Loan Losses
    
    
    9,000
    
    
    
    
    
    
    
    9,000
    
    
    
    
    
    
    
    9,000Net Interest Income After Provision for Loan Losses
    
    
    377,453
    
    
    
    18,412
    
    
    
    395,865
    
    
    
    2,039
    
    
    
    397,904Non-Interest Income:Mortgage Banking Income
    
    
    
    
    
    
    133,011
    
    
    
    133,011
    
    
    
    (21,021
    )
    
    
    111,990Customer Related Fees & Service Charges
    
    
    39,492
    
    
    
    
    
    
    
    39,492
    
    
    
    316
    
    
    
    39,808Investment Management, Commissions & Trust
Fees
    
    
    9,085
    
    
    
    
    
    
    
    9,085
    
    
    
    
    
    
    
    9,085Other Operating Income
    
    
    12,372
    
    
    
    953
    
    
    
    13,325
    
    
    
    
    
    
    
    13,325Securities Gains, net
    
    
    4,461
    
    
    
    
    
    
    
    4,461
    
    
    
    
    
    
    
    4,461Trading Gains
    
    
    9,674
    
    
    
    
    
    
    
    9,674
    
    
    
    
    
    
    
    9,674Total Non-Interest Income
    
    
    75,084
    
    
    
    133,964
    
    
    
    209,048
    
    
    
    (20,705
    )
    
    
    188,343Non-Interest Expense:Employee Compensation & Benefits
    
    
    97,630
    
    
    
    51,200
    
    
    
    148,830
    
    
    
    
    
    
    
    148,830Occupancy & Equipment Expense, net
    
    
    40,876
    
    
    
    10,698
    
    
    
    51,574
    
    
    
    
    
    
    
    51,574Other Operating Expense
    
    
    65,902
    
    
    
    16,983
    
    
    
    82,885
    
    
    
    (13,856
    )
    
    
    69,029Merger Related Charges  Capital One
    
    
    13,668
    
    
    
    
    
    
    
    13,668
    
    
    
    
    
    
    
    13,668Total Non-Interest Expense
    
    
    218,076
    
    
    
    78,881
    
    
    
    296,957
    
    
    
    (13,856
    )
    
    
    283,101Income Before Income Taxes
    
    
    234,461
    
    
    
    73,495
    
    
    
    307,956
    
    
    
    (4,810
    )
    
    
    303,146Provision for Income Taxes
    
    
    73,268
    
    
    
    28,791
    
    
    
    102,059
    
    
    
    (2,021
    )
    
    
    100,038Net Income
    
    $
    161,193
    
    
    $
    44,704
    
    
    $
    205,897
    
    
    $
    (2,789
    )
    
    $
    203,108Total Assets
    
    $
    52,920,480
    
    
    $
    5,968,833
    
    
    $
    58,889,313
    
    
    $
    
    
    
    $
    58,889,313
 22




---



##### Table of Contents



(in thousands)
    
    Retail
    
    Mortgage
    
    Segment
    
    
    
    
    
    ConsolidatedFor the Three Months Ended September 30, 2005
    
    Banking
    
    Banking
    
    Totals
    
    Other
    
    OperationsNet 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:Mortgage Banking Income
    
    
    
    
    
    
    151,112
    
    
    
    151,112
    
    
    
    (24,697
    )
    
    
    126,415Customer Related Fees & Service Charges
    
    
    41,980
    
    
    
    
    
    
    
    41,980
    
    
    
    
    
    
    
    41,980Investment Management, Commissions & Trust Fees
    
    
    8,780
    
    
    
    
    
    
    
    8,780
    
    
    
    
    
    
    
    8,780Other Operating Income
    
    
    11,521
    
    
    
    1,198
    
    
    
    12,719
    
    
    
    
    
    
    
    12,719Securities 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
  (in thousands)
    
    Retail
    
    Mortgage
    
    Segment
    
    
    
    
    
    ConsolidatedFor the Nine Months Ended September 30, 2006
    
    Banking
    
    Banking
    
    Totals
    
    Other
    
    OperationsNet Interest Income
    
    $
    1,199,145
    
    
    $
    52,838
    
    
    $
    1,251,983
    
    
    $
    2,285
    
    
    $
    1,254,268Provision for Loan Losses
    
    
    27,000
    
    
    
    
    
    
    
    27,000
    
    
    
    
    
    
    
    27,000Net Interest Income After Provision for Loan Losses
    
    
    1,172,145
    
    
    
    52,838
    
    
    
    1,224,983
    
    
    
    2,285
    
    
    
    1,227,268Non-Interest Income:Mortgage Banking Income
    
    
    
    
    
    
    375,874
    
    
    
    375,874
    
    
    
    (62,043
    )
    
    
    313,831Customer Related Fees & Service Charges
    
    
    120,887
    
    
    
    
    
    
    
    120,887
    
    
    
    316
    
    
    
    121,203Investment Management, Commissions & Trust
Fees
    
    
    27,881
    
    
    
    
    
    
    
    27,881
    
    
    
    
    
    
    
    27,881Other Operating Income
    
    
    42,098
    
    
    
    6,084
    
    
    
    48,182
    
    
    
    
    
    
    
    48,182Securities Gains, net
    
    
    15,282
    
    
    
    
    
    
    
    15,282
    
    
    
    
    
    
    
    15,282Trading Losses
    
    
    (11,396
    )
    
    
    
    
    
    
    (11,396
    )
    
    
    
    
    
    
    (11,396
    )Total Non-Interest Income
    
    
    194,752
    
    
    
    381,958
    
    
    
    576,710
    
    
    
    (61,727
    )
    
    
    514,983Non-Interest Expense:Employee Compensation & Benefits
    
    
    287,680
    
    
    
    147,710
    
    
    
    435,390
    
    
    
    
    
    
    
    435,390Occupancy & Equipment Expense, net
    
    
    121,969
    
    
    
    32,152
    
    
    
    154,121
    
    
    
    
    
    
    
    154,121Other Operating Expense
    
    
    186,865
    
    
    
    52,407
    
    
    
    239,272
    
    
    
    (40,499
    )
    
    
    198,773Merger Related Charges  Capital One
    
    
    18,900
    
    
    
    
    
    
    
    18,900
    
    
    
    
    
    
    
    18,900Settlement Recovery
    
    
    (16,031
    )
    
    
    
    
    
    
    (16,031
    )
    
    
    
    
    
    
    (16,031
    )Total Non-Interest Expense
    
    
    599,383
    
    
    
    232,269
    
    
    
    831,652
    
    
    
    (40,499
    )
    
    
    791,153Income Before Income Taxes
    
    
    767,514
    
    
    
    202,527
    
    
    
    970,041
    
    
    
    (18,943
    )
    
    
    951,098Provision for Income Taxes
    
    
    245,617
    
    
    
    79,387
    
    
    
    325,004
    
    
    
    (7,958
    )
    
    
    317,046Net Income
    
    $
    521,897
    
    
    $
    123,140
    
    
    $
    645,037
    
    
    $
    (10,985
    )
    
    $
    634,052
 23




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##### Table of Contents



(in thousands)
    
    Retail
    
    Mortgage
    
    Segment
    
    
    
    
    
    ConsolidatedFor the Nine Months Ended September 30, 2005
    
    Banking
    
    Banking
    
    Totals
    
    Other
    
    OperationsNet 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:Mortgage Banking Income
    
    
    
    
    
    
    398,401
    
    
    
    398,401
    
    
    
    (70,211
    )
    
    
    328,190Customer Related Fees & Service Charges
    
    
    125,888
    
    
    
    
    
    
    
    125,888
    
    
    
    
    
    
    
    125,888Investment Management, Commissions & Trust
Fees
    
    
    30,138
    
    
    
    
    
    
    
    30,138
    
    
    
    
    
    
    
    30,138Other Operating Income
    
    
    37,328
    
    
    
    4,849
    
    
    
    42,177
    
    
    
    
    
    
    
    42,177Securities 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
  Three Months
    
    Nine MonthsEnded September 30,
    
    Ended September 30,(in thousands)
    
    2006
    
    2005
    
    2006
    
    2005Gain on Sale of Loans Held-for-Sale
    
    $
    123,624
    
    
    $
    113,587
    
    
    $
    307,688
    
    
    $
    339,531Mortgage Banking Fees, net
    
    
    20,524
    
    
    
    26,471
    
    
    
    65,122
    
    
    
    77,853Amortization of Mortgage Servicing Rights
    
    
    (21,526
    )
    
    
    (23,183
    )
    
    
    (66,939
    )
    
    
    (63,763
    )Temporary
Impairment (Charge)/Recovery  Mortgage Servicing Rights
    
    
    (10,632
    )
    
    
    9,540
    
    
    
    7,960
    
    
    
    (25,431
    )Total Mortgage Banking Income
    
    $
    111,990
    
    
    $
    126,415
    
    
    $
    313,831
    
    
    $
    328,190
 NOTE 13  RECENT ACCOUNTING PRONOUNCEMENTS
 Accounting for Defined Benefit Pension and Other Post-retirement Plans
  24




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##### Table of Contents



Accounting for Fair Value Measurements
  Accounting for Uncertainty in Income Taxes
  Accounting for Servicing of Financial Assets
  Accounting for Certain Hybrid Financial Instruments
  25




---



##### 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 management plans or objectives 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 are less favorable than expected;
    
    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 origination volumes and 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 environments, requirements or changes adversely affect businesses in which we are engaged;
    
    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;
    
    technological changes, including increasing dependence on the Internet;
 26




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##### Table of Contents




    
    competition and its effect on pricing, spending, third-party relationships and revenues.Risks related to the proposed plan of merger with Capital One include, but are not limited to:
    
    the ability to obtain regulatory approvals for the contemplated transaction with Capital
One on the proposed terms and schedule;
    
    disruption from the transaction making it more difficult to maintain relationships with
customers, employees or suppliers.
  Summary
 Business Overview
  Proposed Plan of Merger with Capital One Financial Corporation
     27




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##### Table of Contents



Business Segments
  Retail Banking
   Mortgage Banking
   For the
    
    For theSummary Consolidated Net Income
    
    Three Months Ended
    
    Nine Months Ended(dollars in thousand)
    
    September 30, 2006
    
    September 30, 2006Retail Banking
    
    $
    161,193
    
    
    
    79
    %
    
    $
    521,897
    
    
    
    82
    %Mortgage Banking (1)
    
    
    41,915
    
    
    
    21
    %
    
    
    112,155
    
    
    
    18
    %Consolidated Net Income
    
    $
    203,108
    
    
    
    100
    %
    
    $
    634,052
    
    
    
    100
    %-
 
 (1)
    
    Excludes net inter-company activity of $2.8 million and $10.9 million, after taxes for the
three and nine months ended September 30, 2006, respectively. 28




---



##### Table of Contents



Financial Overview
  Three Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,(in thousands, except ratios and per share amounts)
    
    2006
    
    2005
    
    2006
    
    2005EarningsNet Income
    
    $
    203,108
    
    
    $
    237,296
    
    
    $
    634,052
    
    
    $
    738,397Per Share:Earnings Per Share   Basic
    
    $
    0.45
    
    
    $
    0.50
    
    
    $
    1.39
    
    
    $
    1.58Earnings Per Share   Diluted
    
    $
    0.44
    
    
    $
    0.50
    
    
    $
    1.38
    
    
    $
    1.55Cash Dividends
    
    $
    0.25
    
    
    $
    0.22
    
    
    $
    0.75
    
    
    $
    0.66Dividend Payout Ratio
    
    
    57
    %
    
    
    44
    %
    
    
    55
    %
    
    
    43
    %Book Value
    
    $
    19.86
    
    
    $
    19.38
    
    
    $
    19.86
    
    
    $
    19.38Tangible Book Value (2)
    
    $
    6.98
    
    
    $
    6.75
    
    
    $
    6.98
    
    
    $
    6.75Average Equivalent Shares  Basic
    
    
    456,100
    
    
    
    470,004
    
    
    
    455,107
    
    
    
    468,644Average Equivalent Shares  Diluted
    
    
    460,872
    
    
    
    475,627
    
    
    
    460,083
    
    
    
    474,957Selected Ratios:Return on Average Total Assets
    
    
    1.36
    %
    
    
    1.60
    %
    
    
    1.45
    %
    
    
    1.64
    %Return on Average Tangible Assets (1)
    
    
    1.56
    %
    
    
    1.83
    %
    
    
    1.67
    %
    
    
    1.87
    %Return on Average Equity
    
    
    8.77
    %
    
    
    10.13
    %
    
    
    9.35
    %
    
    
    10.78
    %Return on Average Tangible Equity (1)
    
    
    26.12
    %
    
    
    29.43
    %
    
    
    28.59
    %
    
    
    32.21
    %Yield on Interest Earning Assets
    
    
    6.03
    %
    
    
    5.47
    %
    
    
    5.96
    %
    
    
    5.48
    %Cost of Funds
    
    
    3.38
    %
    
    
    2.39
    %
    
    
    3.06
    %
    
    
    2.22
    %Net Interest Margin (3)
    
    
    3.26
    %
    
    
    3.52
    %
    
    
    3.45
    %
    
    
    3.63
    %Efficiency Ratio (4)
    
    
    42.13
    %
    
    
    39.15
    %
    
    
    42.03
    %
    
    
    37.14
    %
 This document contains certain supplemental financial information, described in the following
notes, which has been determined by methods other than U.S generally accepted accounting
principles 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 less amortization of identifiable intangibles, recourse settlement and
merger charges to net interest income on a tax equivalent basis plus other non-interest
income net of securities gains, temporary (impairment)/recovery on mortgage servicing right
and trading gains/(losses) on derivative instruments. 29




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##### Table of Contents



Financial Results
   
    
    32% growth in commercial loan and 28% growth in total loans, excluding residential mortgages.
    
    Reduced non-performing assets by $42.9 million or 41%.
    
    Mortgage loan originations of $9.5 billion from our mortgage banking subsidiary.
    
    Continued reduction in the securities and residential mortgages held-for-investment portfolios.
    
    Declaration of our regular quarterly cash dividend of $.25 per common share.
 Balance Sheet Repositioning
    Net Interest Income
   30




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##### Table of Contents



2006


    
    2005Average
    
    
    
    
    
    
    Average
    
    
    Average
    
    
    
    
    
    
    Average(dollars in thousands )
    
    Balance
    
    
    Interest
    
    
    Rate
    
    
    Balance
    
    
    Interest
    
    
    RateInterest Earning Assets:Loans Held-for-Investment (2)
    
    $
    35,788,526
    
    
    $
    563,239
    
    
    
    6.24
    %
    
    $
    32,361,793
    
    
    $
    471,627
    
    
    
    5.78
    %Loans Held-for-Sale (2)
    
    
    5,329,621
    
    
    
    86,885
    
    
    
    6.47
    %
    
    
    5,401,495
    
    
    
    69,840
    
    
    
    5.13
    %Securities (1)
    
    
    10,066,545
    
    
    
    127,599
    
    
    
    5.03
    %
    
    
    12,531,822
    
    
    
    152,447
    
    
    
    4.83
    %Money Market Investments
    
    
    68,730
    
    
    
    1,054
    
    
    
    6.08
    %
    
    
    38,668
    
    
    
    529
    
    
    
    5.43
    %Total Interest Earning Assets
    
    
    51,253,422
    
    
    
    778,777
    
    
    
    6.03
    %
    
    
    50,333,778
    
    
    
    694,443
    
    
    
    5.47
    %Non-Interest Earning Assets:Cash and Due from Banks
    
    $
    980,630
    
    
    
    
    
    
    
    
    
    
    $
    1,012,515Other Assets (1)
    
    
    6,959,699
    
    
    
    
    
    
    
    
    
    
    
    7,385,622Total Assets
    
    $
    59,193,751
    
    
    
    
    
    
    
    
    
    
    $
    58,731,915Interest Bearing Liabilities:Savings, NOW & Money Market Deposits
    
    $
    21,117,805
    
    
    $
    144,400
    
    
    
    2.71
    %
    
    $
    21,419,573
    
    
    $
    91,316
    
    
    
    1.69
    %Time Deposits
    
    
    8,111,745
    
    
    
    78,378
    
    
    
    3.83
    %
    
    
    8,223,189
    
    
    
    49,397
    
    
    
    2.38
    %Total Savings and Time Deposits
    
    
    29,229,550
    
    
    
    222,778
    
    
    
    3.02
    %
    
    
    29,642,762
    
    
    
    140,713
    
    
    
    1.88
    %Fed. Funds Purchased & Collateralized Borrowings
    
    
    11,299,427
    
    
    
    114,591
    
    
    
    4.02
    %
    
    
    10,057,604
    
    
    
    86,343
    
    
    
    3.41
    %Other Borrowings (4)
    
    
    1,461,561
    
    
    
    20,482
    
    
    
    5.56
    %
    
    
    1,505,651
    
    
    
    20,684
    
    
    
    5.45
    %Total Borrowings
    
    
    12,760,988
    
    
    
    135,073
    
    
    
    4.20
    %
    
    
    11,563,255
    
    
    
    107,027
    
    
    
    3.67
    %Total Interest Bearing Liabilities
    
    
    41,990,538
    
    
    
    357,851
    
    
    
    3.38
    %
    
    
    41,206,017
    
    
    
    247,740
    
    
    
    2.39
    %Interest Rate Spread
    
    
    
    
    
    
    
    
    
    
    2.65
    %
    
    
    
    
    
    
    
    
    
    
    3.08
    %Non-Interest Bearing Liabilities:Demand Deposits
    
    $
    7,315,287
    
    
    
    
    
    
    
    
    
    
    $
    7,547,759Other Liabilities
    
    
    701,013
    
    
    
    
    
    
    
    
    
    
    
    684,278Total Liabilities
    
    
    50,006,838
    
    
    
    
    
    
    
    
    
    
    
    49,438,054Stockholders Equity
    
    
    9,186,913
    
    
    
    
    
    
    
    
    
    
    
    9,293,861Total Liabilities and Stockholders Equity
    
    $
    59,193,751
    
    
    
    
    
    
    
    
    
    
    $
    58,731,915Net Interest Income and Net Interest Margin (3)
    
    
    
    
    
    $
    420,926
    
    
    
    3.26
    %
    
    
    
    
    
    $
    446,703
    
    
    
    3.52
    %Less: Tax Equivalent Adjustment
    
    
    
    
    
    
    (14,022
    )
    
    
    
    
    
    
    
    
    
    
    (12,153
    )Net Interest Income
    
    
    
    
    
    $
    406,904
    
    
    
    
    
    
    
    
    
    
    $
    434,550
 
 (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.(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, $1.73, $1.57, $1.28, and $1.07 for the three months ended
September 30, 2006; and $1.78, $1.72, $1.57, $1.12, and $1.07 for the three months ended
September 30, 2005.(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



2006
    
    
    2005Average
    
    
    
    
    
    
    Average
    
    
    Average
    
    
    
    
    
    
    Average(dollars in thousands )
    
    Balance
    
    
    Interest
    
    
    Rate
    
    
    Balance
    
    
    Interest
    
    
    RateInterest Earning Assets:Loans Held-for-Investment (2)
    
    $
    34,703,676
    
    
    $
    1,606,697
    
    
    
    6.19
    %
    
    $
    32,096,673
    
    
    $
    1,399,125
    
    
    
    5.83
    %Loans Held-for-Sale (2)
    
    
    4,871,941
    
    
    
    226,665
    
    
    
    6.22
    %
    
    
    5,383,660
    
    
    
    209,753
    
    
    
    5.21
    %Securities (1)
    
    
    10,629,485
    
    
    
    403,438
    
    
    
    5.07
    %
    
    
    14,084,642
    
    
    
    506,831
    
    
    
    4.81
    %Money Market Investments
    
    
    53,913
    
    
    
    2,325
    
    
    
    5.77
    %
    
    
    70,844
    
    
    
    1,959
    
    
    
    3.70
    %Total Interest Earning Assets
    
    
    50,259,015
    
    
    
    2,239,125
    
    
    
    5.96
    %
    
    
    51,635,819
    
    
    
    2,117,668
    
    
    
    5.48
    %Non-Interest Earning Assets:Cash and Due from Banks
    
    $
    1,011,558
    
    
    
    
    
    
    
    
    
    
    $
    1,028,028Other Assets (1)
    
    
    7,059,187
    
    
    
    
    
    
    
    
    
    
    
    7,470,504Total Assets
    
    $
    58,329,760
    
    
    
    
    
    
    
    
    
    
    $
    60,134,351Interest Bearing Liabilities:Savings, NOW & Money Market Deposits
    
    $
    21,440,428
    
    
    $
    396,565
    
    
    
    2.47
    %
    
    $
    21,465,322
    
    
    $
    243,367
    
    
    
    1.52
    %Time Deposits
    
    
    8,139,246
    
    
    
    197,827
    
    
    
    3.25
    %
    
    
    7,888,741
    
    
    
    123,255
    
    
    
    2.09
    %Total Savings and Time Deposits
    
    
    29,579,674
    
    
    
    594,392
    
    
    
    2.69
    %
    
    
    29,354,063
    
    
    
    366,622
    
    
    
    1.67
    %Fed. Funds Purchased & Collateralized Borrowings
    
    
    10,166,329
    
    
    
    287,693
    
    
    
    3.78
    %
    
    
    12,162,606
    
    
    
    290,588
    
    
    
    3.19
    %Other Borrowings (4)
    
    
    1,463,907
    
    
    
    60,558
    
    
    
    5.53
    %
    
    
    1,498,656
    
    
    
    57,794
    
    
    
    5.16
    %Total Borrowings
    
    
    11,630,236
    
    
    
    348,251
    
    
    
    4.00
    %
    
    
    13,661,262
    
    
    
    348,382
    
    
    
    3.41
    %Total Interest Bearing Liabilities
    
    
    41,209,910
    
    
    
    942,643
    
    
    
    3.06
    %
    
    
    43,015,325
    
    
    
    715,004
    
    
    
    2.22
    %Interest Rate Spread
    
    
    
    
    
    
    
    
    
    
    2.90
    %
    
    
    
    
    
    
    
    
    
    
    3.26
    %Non-Interest Bearing Liabilities:Demand Deposits
    
    $
    7,355,611
    
    
    
    
    
    
    
    
    
    
    $
    7,233,032Other Liabilities
    
    
    695,824
    
    
    
    
    
    
    
    
    
    
    
    724,351Total Liabilities
    
    
    49,261,345
    
    
    
    
    
    
    
    
    
    
    
    50,972,708Stockholders Equity
    
    
    9,068,415
    
    
    
    
    
    
    
    
    
    
    
    9,161,643Total Liabilities and Stockholders Equity
    
    $
    58,329,760
    
    
    
    
    
    
    
    
    
    
    $
    60,134,351Net Interest Income and Net Interest Margin (3)
    
    
    
    
    
    $
    1,296,482
    
    
    
    3.45
    %
    
    
    
    
    
    $
    1,402,664
    
    
    
    3.63
    %Less: Tax Equivalent Adjustment
    
    
    
    
    
    
    (42,214
    )
    
    
    
    
    
    
    
    
    
    
    (34,722
    )Net Interest Income
    
    
    
    
    
    $
    1,254,268
    
    
    
    
    
    
    
    
    
    
    $
    1,367,942
 
 (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.(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, $1.73, $1.57, $1.27, and $1.09 for the nine months ended
September 30, 2006; and $1.78, $1.72, $1.57, $1.19, and $1.05 for the nine months ended
September 30, 2005.(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. 32




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##### Table of Contents



Three Months Ended September 30,
    
    Nine Months Ended September 30,2006 vs. 2005
    
    2006 vs. 2005Change 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
    
    $
    52,212
    
    
    $
    39,400
    
    
    $
    91,612
    
    
    $
    117,638
    
    
    $
    89,934
    
    
    $
    207,572Loans Held-For-Sale
    
    
    (941
    )
    
    
    17,986
    
    
    
    17,045
    
    
    
    (21,209
    )
    
    
    38,121
    
    
    
    16,912Securities
    
    
    (31,029
    )
    
    
    6,181
    
    
    
    (24,848
    )
    
    
    (129,899
    )
    
    
    26,506
    
    
    
    (103,393
    )Money Market Investments
    
    
    454
    
    
    
    71
    
    
    
    525
    
    
    
    (547
    )
    
    
    913
    
    
    
    366Total Interest Income
    
    $
    20,696
    
    
    $
    63,638
    
    
    $
    84,334
    
    
    ($
    34,017
    )
    
    $
    155,474
    
    
    $
    121,457Interest Expense on Liabilities:Savings, NOW & Money Market Deposits
    
    ($
    1,304
    )
    
    $
    54,388
    
    
    $
    53,084
    
    
    ($
    283
    )
    
    $
    153,481
    
    
    $
    153,198Time Deposits
    
    
    (678
    )
    
    
    29,659
    
    
    
    28,981
    
    
    
    4,031
    
    
    
    70,541
    
    
    
    74,572Federal Funds Purchased &
Collateralized Borrowings
    
    
    11,416
    
    
    
    16,832
    
    
    
    28,248
    
    
    
    (51,869
    )
    
    
    48,974
    
    
    
    (2,895
    )Other Borrowings
    
    
    (614
    )
    
    
    412
    
    
    
    (202
    )
    
    
    (1,351
    )
    
    
    4,115
    
    
    
    2,764Total Interest Expense
    
    
    8,820
    
    
    
    101,291
    
    
    
    110,111
    
    
    
    (49,472
    )
    
    
    277,111
    
    
    
    227,639Net Change in Net Interest Income
    
    $
    11,876
    
    
    ($
    37,653
    )
    
    ($
    25,777
    )
    
    $
    15,455
    
    
    ($
    121,637
    )
    
    ($
    106,182
    )
    (See Financial Condition  Loans Held-For-Investment section for additional
information).
  33




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##### Table of Contents



(See Item 1, Condensed Notes to the Consolidated Financial Statements, Note 9  Derivative
Financial Instruments for additional information).
 (See Item 1, Condensed 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).
 34




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##### Table of Contents



Residential &
    
    Commercial &(dollars in thousands)
    
    Total
    
    Multi-Family
    
    All Other LoansLoans Held-for-Investment
    
    $
    36,258,634
    
    
    $
    19,552,988
    
    
    $
    16,705,646Allowance for Loan Losses
    
    
    228,544
    
    
    
    60,526
    
    
    
    168,018Non-Performing Loans Held-for-Investment
    
    
    23,678
    
    
    
    11,478
    
    
    
    12,200Allowance for Loan Losses to Loans-Held-for-Investment
    
    
    0.63
    %
    
    
    0.31
    %
    
    
    1.01
    %Allowance for Loan Losses to Non-Performing Loans
Held-for-Investment
    
    
    965
    %
    
    
    527
    %
    
    
    1377
    %
  Non-Interest Income
  Non-Interest Expense
   Income Taxes
  35




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##### Table of Contents



Mortgage Banking
  For the
    
    For theThree Months Ended
    
    Nine Months EndedSeptember 30,
    
    September 30,(in thousands)
    
    2006
    
    2005
    
    2006
    
    2005Net Interest Income
    
    $
    18,412
    
    
    $
    22,919
    
    
    $
    52,838
    
    
    $
    85,790Non-Interest Income:Gain on Sale of Loans (1)
    
    $
    130,680
    
    
    $
    125,249
    
    
    $
    328,877
    
    
    $
    379,627Mortgage Fees, net (2)
    
    
    34,489
    
    
    
    39,506
    
    
    
    105,976
    
    
    
    107,968Amortization of Mortgage Servicing Rights
    
    
    (21,526
    )
    
    
    (23,183
    )
    
    
    (66,939
    )
    
    
    (63,763
    )Temporary (Impairment)/Recovery- Mortgage Servicing Rights
    
    
    (10,632
    )
    
    
    9,540
    
    
    
    7,960
    
    
    
    (25,431
    )Other Income
    
    
    953
    
    
    
    1,198
    
    
    
    6,084
    
    
    
    4,849Total Non-Interest Income
    
    $
    133,964
    
    
    $
    152,310
    
    
    $
    381,958
    
    
    $
    403,250Non-Interest Expense:Employee Compensation & Benefits
    
    
    51,200
    
    
    
    46,844
    
    
    
    147,710
    
    
    
    142,433Occupancy & Equipment Expense, net
    
    
    10,698
    
    
    
    9,941
    
    
    
    32,152
    
    
    
    29,151Other Operating Expense
    
    
    16,983
    
    
    
    22,036
    
    
    
    52,407
    
    
    
    58,578Total Non-Interest Expense
    
    
    78,881
    
    
    
    78,821
    
    
    
    232,269
    
    
    
    230,162Income Before Income Taxes
    
    
    73,495
    
    
    
    96,408
    
    
    
    202,527
    
    
    
    258,878Provision for Income Taxes
    
    
    28,791
    
    
    
    40,477
    
    
    
    79,387
    
    
    
    108,713Net Income
    
    $
    44,704
    
    
    $
    55,931
    
    
    $
    123,140
    
    
    $
    150,165Total Assets
    
    $
    5,968,833
    
    
    $
    5,109,917
    
    
    $
    5,968,833
    
    
    $
    5,109,917
 
 (1)
    
    Includes $7.0 million, $21.2 million,$11.7 million and $40.1 million of inter-company
activity for the three and nine months ended September 30, 2006 and 2005, respectively.(2)
    
    Includes $14.0 million,$40.9 million, $13.0 million and $30.1 million of inter-company
activity for the three and nine months ended September 30, 2006 and 2005, respectively.  (See Gain on Sale of Loans in this
section for further details)
  36




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##### Table of Contents



Gain on Sale of Loans
   For the Three Months Ended
    
    For the Nine Months Ended(Dollars in thousands)
    
    September 30,
    
    September 30,Comparative Mortgage Loan Volumes
    
    2006
    
    2005
    
    2006
    
    2005Loans Originated:Specialty Products
    
    $
    4,717,198
    
    
    $
    4,827,831
    
    
    $
    13,613,262
    
    
    $
    14,361,411Jumbo
    
    
    2,827,594
    
    
    
    3,419,675
    
    
    
    8,255,704
    
    
    
    12,055,605Home Equity/Seconds
    
    
    1,219,465
    
    
    
    1,280,684
    
    
    
    3,503,401
    
    
    
    4,335,738Agency
    
    
    696,490
    
    
    
    882,875
    
    
    
    1,749,828
    
    
    
    2,113,490Total Loans Originated
    
    $
    9,460,747
    
    
    $
    10,411,065
    
    
    $
    27,122,195
    
    
    $
    32,866,244Loans Sales:Specialty Products
    
    $
    4,224,073
    
    
    $
    5,061,097
    
    
    $
    12,418,672
    
    
    $
    13,789,779Jumbo
    
    
    2,852,361
    
    
    
    3,486,176
    
    
    
    6,979,631
    
    
    
    8,097,636Home Equity/Seconds
    
    
    1,664,800
    
    
    
    1,500,767
    
    
    
    3,336,430
    
    
    
    4,548,035Agency
    
    
    597,138
    
    
    
    895,784
    
    
    
    1,584,053
    
    
    
    1,963,499Total Loan Sales
    
    $
    9,338,372
    
    
    $
    10,943,824
    
    
    $
    24,318,786
    
    
    $
    28,398,949Average Margin on Loan Sales:Specialty Products
    
    
    1.76
    %
    
    
    1.13
    %
    
    
    1.55
    %
    
    
    1.30
    %Jumbo
    
    
    1.00
    %
    
    
    0.71
    %
    
    
    0.95
    %
    
    
    0.89
    %Home Equity/Seconds
    
    
    1.23
    %
    
    
    1.88
    %
    
    
    1.36
    %
    
    
    1.78
    %Agency
    
    
    0.03
    %
    
    
    0.40
    %
    
    
    0.23
    %
    
    
    0.35
    %Average Margin on Loan Sales
    
    
    1.32
    %
    
    
    1.04
    %
    
    
    1.27
    %
    
    
    1.19
    %Gain on Sale of Loans:Specialty Products
    
    $
    74,477
    
    
    $
    56,956
    
    
    $
    192,322
    
    
    $
    179,161Jumbo
    
    
    28,565
    
    
    
    24,906
    
    
    
    66,403
    
    
    
    71,862Home Equity/Seconds
    
    
    20,399
    
    
    
    28,172
    
    
    
    45,311
    
    
    
    81,169Agency
    
    
    183
    
    
    
    3,553
    
    
    
    3,652
    
    
    
    6,803Total Gain on Sale of Loans (1) (2)
    
    $
    123,624
    
    
    $
    113,587
    
    
    $
    307,688
    
    
    $
    338,995
 37




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##### Table of Contents



(1)
    
    The gain on sale of loans for the nine months ended September 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
$(.5) million on loans held-for-sale at October 1, 2004 sold during 2005.(2)
    
    Does not include $7.0 million, $21.2 million,$11.7 million and $40.1 million of
inter-company gains on sale of loans for the three and nine months ended September 30, 2006
and 2005, respectively. Financial Condition
 Loans Held-for-Investment
  September 30,
    
    % of
    
    December 31,
    
    % of
    
    September 30,
    
    % of(dollars in thousands)
    
    2006
    
    Total
    
    2005
    
    Total
    
    2005
    
    TotalLoans Held-For-Investment:Commercial Mortgages
    
    $
    7,465,052
    
    
    
    21
    %
    
    $
    6,206,416
    
    
    
    19
    %
    
    $
    5,896,835
    
    
    
    18
    %Commercial & Industrial
    
    
    6,073,098
    
    
    
    17
    %
    
    
    4,709,440
    
    
    
    14
    %
    
    
    4,324,758
    
    
    
    13
    %Total Commercial
    
    
    13,538,150
    
    
    
    38
    %
    
    
    10,915,856
    
    
    
    33
    %
    
    
    10,221,593
    
    
    
    31
    %Residential Mortgages
    
    
    14,237,428
    
    
    
    39
    %
    
    
    15,068,443
    
    
    
    45
    %
    
    
    15,508,008
    
    
    
    48
    %Multi-Family Mortgages
    
    
    5,272,860
    
    
    
    15
    %
    
    
    4,821,642
    
    
    
    15
    %
    
    
    4,626,777
    
    
    
    14
    %Consumer
    
    
    1,894,712
    
    
    
    5
    %
    
    
    1,558,782
    
    
    
    5
    %
    
    
    1,569,386
    
    
    
    5
    %Construction and Land
    
    
    1,272,784
    
    
    
    3
    %
    
    
    829,273
    
    
    
    2
    %
    
    
    716,049
    
    
    
    2
    %Total
    
    $
    36,215,934
    
    
    
    100
    %
    
    $
    33,193,996
    
    
    
    100
    %
    
    $
    32,641,813
    
    
    
    100
    %Deferred Origination Costs, net
    
    
    42,700
    
    
    
    
    
    
    
    38,240
    
    
    
    
    
    
    
    31,149Total Loans Held-For-Investment
    
    $
    36,258,634
    
    
    
    
    
    
    $
    33,232,236
    
    
    
    
    
    
    $
    32,672,962
       38




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##### Table of Contents



Securities
 (See Balance Sheet Repositioning section for further details)
 Item 1, Notes to the
Consolidated Financial Statements Note 2, Securities for additional information
   39




---



##### Table of Contents



Deposits
  September 30,
    
    December 31,
    
    September 30,(in thousands)
    
    2006
    
    2005
    
    2005Demand
    
    $
    7,300,158
    
    
    $
    7,639,231
    
    
    $
    7,478,359NOW & Money Market
    
    
    16,350,819
    
    
    
    15,606,231
    
    
    
    15,599,563Savings
    
    
    4,778,547
    
    
    
    5,303,930
    
    
    
    5,515,530Time
    
    
    5,234,130
    
    
    
    5,428,920
    
    
    
    5,414,506Certificate of Deposits, $100,000 & Over
    
    
    2,883,915
    
    
    
    2,638,261
    
    
    
    2,804,128Total Deposits
    
    $
    36,547,569
    
    
    $
    36,616,573
    
    
    $
    36,812,086
  Asset/Liability Management
     40




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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
    
    $
    (90,962
    )
    
    
    (6.02
    )%+ 100 Basis Points
    
    
    (41,727
    )
    
    
    (2.76
    )- 100 Basis Points
    
    
    37,475
    
    
    
    2.48- 200 Basis Points
    
    
    58,081
    
    
    
    3.84
   Market Value of Equity(dollars in thousands)
    
    $ Change
    
    % ChangeChange in Interest Rates+ 200 Basis Points
    
    $
    (701,878
    )
    
    
    (5.3
    )%- 200 Basis Points
    
    $
    239,019
    
    
    
    1.8Policy Limit
    
    
    N/A
    
    
    
    (25.0
    )%
 41




---



##### Table of Contents



Liquidity Risk Management
      Capital
    42




---



##### Table of Contents



September 30, 2006
    
    
    September 30, 2005(dollars in thousands)
    
    Amount
    
    
    Ratio
    
    
    Amount
    
    
    RatioTier 1 Capital
    
    $
    3,795,205
    
    
    
    10.60
    %
    
    $
    3,733,178
    
    
    
    11.00
    %Regulatory Requirement
    
    
    1,431,547
    
    
    
    4.00
    %
    
    
    1,357,178
    
    
    
    4.00
    %Excess
    
    $
    2,363,658
    
    
    
    6.60
    %
    
    $
    2,376,000
    
    
    
    7.00
    %Total Risk Adjusted
    
    $
    4,643,883
    
    
    
    12.98
    %
    
    $
    4,604,896
    
    
    
    13.57
    %Regulatory Requirement
    
    
    2,863,093
    
    
    
    8.00
    %
    
    
    2,714,355
    
    
    
    8.00
    %Excess
    
    $
    1,780,790
    
    
    
    4.98
    %
    
    $
    1,890,541
    
    
    
    5.57
    %Risk Weighted Assets
    
    $
    35,788,663
    
    
    
    
    
    
    $
    33,929,443
   Capital Ratios:
    
    North Fork
    
    SuperiorTier 1 Capital
    
    
    12.07
    %
    
    
    12.97
    %Total Risk Adjusted
    
    
    13.06
    
    
    
    13.26Leverage Ratio
    
    
    8.11
    
    
    
    6.60
     43




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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
 ((a) Disclosure Controls and Procedures) 
 ((b) Internal Control Over Financial Reporting)
 44




---



##### Table of Contents



PART II. OTHER INFORMATION
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  
 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 Publicly
    
    Be Purchased UnderPeriod
    
    Shares Purchased
    
    Per Share
    
    Announced Program
    
    the ProgramJuly 1, 2006  July 31, 2006
    
    
    
    
    
    
    n/a
    
    
    
    
    
    
    9,269,550 SharesAugust 1, 2006  August 31, 2006
    
    
    
    
    
    
    n/a
    
    
    
    
    
    
    9,269,550 SharesSeptember 1, 2006  September 30, 2006
    
    
    
    
    
    
    n/a
    
    
    
    
    
    
    9,269,550 Shares
 
 Item 4. Submission of Matters to a Vote of Security Holders
  1)
    
    The election of five directors for a term of three years expiring in 2009. The vote
tabulation for each director was as follows:
 Name of Director
    
    For
    
    WithheldJosiah T. Austin
    
    
    364,093,613
    
    
    
    10,756,520Karen Garrison
    
    
    363,953,926
    
    
    
    10,896,207John Adam Kanas
    
    
    359,911,166
    
    
    
    14,938,967Raymond A. Nielsen
    
    
    334,383,536
    
    
    
    40,466,597A. Robert Towbin
    
    
    348,202,586
    
    
    
    26,647,547
 2)
    
    Vote upon a proposal to adopt the Agreement and Plan of Merger, dated March 12, 2006,
by and between Capital One and North Fork, pursuant to which North Fork would merge with
and into Capital One. The tabulation of votes for the proposal was as follows:
 For
    
    Against
    
    Abstain290,560,311
    
    14,342,615
    
    69,947,207
 3)
    
    Ratification of KPMG LLP as the Companys independent auditor for the fiscal year
ending December 31, 2006. The tabulation of votes for that ratification was as follows:
 For
    
    Against
    
    Abstain365,196,026
    
    5,372,425
    
    4,281,682
 4)
    
    Vote upon an adjournment or postponement of the North Fork annual meeting, if
necessary, to solicit additional proxies, the proposal received the following vote:
 For
    
    Against
    
    Abstain272,072,525
    
    98,676,839
    
    4,100,769
 45




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##### Table of Contents



Item 5. Other Information
 Recent Developments
  
 Item 6. Exhibits
  Exhibit Number
    
    Description of Exhibit(11)
    
    Statement Re: Computation of Net Income Per Common and Common Equivalent Share(31.1)
    
    Certification of the Chief Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002(31.2)
    
    Certification of the Chief Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002(32.1)
    
    Certification of Chief Executive Officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002(32.2)
    
    Certification of Chief Financial Officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002(99.1)
    
    Supplemental Performance Measurements
 46




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##### Table of Contents



SIGNATURES
  Date:November 9, 2006
    North Fork Bancorporation, Inc./s/ Daniel M. HealyDaniel M. HealyExecutive Vice President and Chief Financial Officer 47