TABLE OF CONTENTS




|                                |                                                                                               |                                                |  |  |  |  |  | 
|------------------------------- | --------------------------------------------------------------------------------------------- | ---------------------------------------------- |  |  |  |  |  | 
|PART I -- FINANCIAL INFORMATION
|                                | ITEM 1. Financial Statements                                                                 
|                                |                                                                                               | CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
|                                |                                                                                               | CONSOLIDATED STATEMENTS OF INCOME             
|                                |                                                                                               | CONSOLIDATED STATEMENTS OF CASH FLOWS         
|                                |                                                                                               | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS    
|                                | ITEM 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
|                                | ITEM 3.  Quantitative and Qualitative Disclosure
About Market Risk                           
|PART II  OTHER INFORMATION    
|                                | ITEM 5.  Other Information                                                                   
|                                | ITEM 6.  Exhibits and Reports on Form 8-K                                                    
|SIGNATURES                     
|Exhibit 11                     
|Exhibit 27                     



---









UNITED STATES

SECURITIES AND EXCHANGE COMMISSION


Washington, D.C. 20549




---

FORM 10-Q

[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE

SECURITIES EXCHANGE ACT OF 1934


For the quarterly period ended September 30, 2000

OR

[  ]  TRANSITION REPORT PURSUANT TO SECTION 13
OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934


Commission file number 0-16311

CHARTER ONE FINANCIAL, INC.




(Exact name of registrant as specified in its
charter)


|                                                                       |  |                                             
|---------------------------------------------------------------------- |  | --------------------------------------------
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|Delaware                                                               |  | 34-1567092                                  
|                                                                       |  |                                             
|(State or other jurisdiction of incorporation
        or organization) |  | (I.R.S. Employer
        Identification No.)
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|                                                                      
|1215 Superior Avenue, Cleveland, Ohio                                  |  | 44114                                       
|                                                                       |  |                                             
|(Address of principal executive offices)                               |  | (Zip Code)                                  

(216) 566-5300




(Registrants telephone number, including
area code)


NOT APPLICABLE




(Former name, former address and former fiscal
year, if changed since report)


Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.

Yes X  No

The number of shares outstanding of the registrants sole
class of common stock as of November 3, 2000 was
207,875,519.



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##### Table of Contents



TABLE OF CONTENTS

|                               |    |  |    |                                                                                                                      |  |  |    | 
|------------------------------ | -- |  | -- | -------------------------------------------------------------------------------------------------------------------- |  |  | -- | 
|Item                           |    |  |    |                                                                                                                     
|Number                         |    |  |    | Page                                                                                                                
|                               |    |  |    |                                                                                                                     
|PART I  FINANCIAL INFORMATION
|                               | 1. |  |    | Financial Statements                                                                                                 |  |  |    | 
|                              
|                              
|                              
|                              
|                               |    |  |    | Consolidated Statements of Financial
        Condition  September 30, 2000
          and December 31, 1999          |  |  | 1  | 
|                              
|                              
|                              
|                              
|                               |    |  |    | Consolidated Statements of Income  Three
        months and nine months
          ended September 30, 2000 and 1999 |  |  | 2  | 
|                              
|                              
|                              
|                              
|                               |    |  |    | Consolidated Statements of Cash Flows 
        Nine months ended
          September 30, 2000 and 1999              |  |  | 3  | 
|                              
|                              
|                              
|                              
|                               |    |  |    | Notes to Consolidated Financial Statements                                                                           |  |  | 4  | 
|                              
|                              
|                              
|                              
|                               | 2. |  |    | Managements Discussion and Analysis of Financial Condition
        and Results of Operations                        |  |  | 6  | 
|                              
|                              
|                              
|                              
|                               | 3. |  |    | Quantitative and Qualitative Disclosure About Market Risk                                                            |  |  | 21 | 
|PART II  OTHER INFORMATION   
|                              
|                              
|                              
|                              
|                               | 5. |  |    | Other Information                                                                                                    |  |  | 21 | 
|                              
|                              
|                              
|                              
|                               | 6. |  |    | Exhibits and Reports on Form 8-K                                                                                     |  |  | 21 | 
|                              
|                              
|                              
|                              
|Signatures                     |    |  | 21 |                                                                                                                     



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##### Table of Contents






PART I  FINANCIAL INFORMATION






ITEM 1.  Financial Statements


CHARTER ONE FINANCIAL, INC. AND SUBSIDIARIES




CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION




|                                                      |                                                                                                                           |                                            |            |           |            |   |            |            |            | 
|----------------------------------------------------- | ------------------------------------------------------------------------------------------------------------------------- | ------------------------------------------ | ---------- | --------- | ---------- | - | ---------- | ---------- | ---------- | 
|                                                      |                                                                                                                           | 9/30/00                                    |            | 12/31/99 
|                                                      |                                                                                                                           |                                            |            |          
|                                                      |                                                                                                                           |                                           
|                                                      |                                                                                                                           | (Dollars in thousands, except             
|                                                      |                                                                                                                           | per share data)                           
|                                                     
|                                                     
|                                                     
|                                                     
|ASSETS                                                |                                                                                                                           |                                            |            |           |            |   |            |           
|                                                     
|                                                     
|                                                     
|                                                     
|Cash and deposits with banks                          |                                                                                                                           | $                                          | 518,425    |           |            | $ | 689,082    |           
|                                                     
|                                                     
|                                                     
|                                                     
|Federal funds sold and other                          |                                                                                                                           |                                            | 428        |           |            |   | 4,450      |           
|                                                      |                                                                                                                           |                                            |            |           |            |   |            |           
|                                                      |                                                                                                                           | Total cash and cash equivalents            |            |           | 518,853    |   |            |            | 693,532    | 
|                                                     
|                                                     
|                                                     
|                                                     
|Investments securities:                               |                                                                                                                           |                                            |            |           |            |   |            |           
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Trading                                                                                                                   |                                            |            |          |            |   |            | 13,380     |           
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Available for sale                                                                                                        |                                            |            | 437,842   |            |   |            | 482,695    |           
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Held to maturity (fair value of $23,433 and $52,858)                                                                      |                                            |            | 23,484    |            |   |            | 46,006     |           
|                                                     
|                                                     
|                                                     
|                                                     
|Mortgage-backed securities:                           |                                                                                                                           |                                            |            |           |            |   |            |           
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Available for sale                                                                                                        |                                            |            | 3,930,862 |            |   |            | 4,193,134  |           
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Held to maturity (fair value of $1,612,124 and $1,909,313)                                                                |                                            |            | 1,601,627 |            |   |            | 1,907,246  |           
|                                                     
|                                                     
|                                                     
|                                                     
|Loans and leases, net                                 |                                                                                                                           |                                            | 23,900,935 |           |            |   | 22,276,862 |           
|                                                     
|                                                     
|                                                     
|                                                     
|Loans held for sale                                   |                                                                                                                           |                                            | 36,386     |           |            |   | 35,988     |           
|                                                     
|                                                     
|                                                     
|                                                     
|Bank owned life insurance                             |                                                                                                                           |                                            | 734,158    |           |            |   | 709,173    |           
|                                                     
|                                                     
|                                                     
|                                                     
|Federal Home Loan Bank stock                          |                                                                                                                           |                                            | 559,802    |           |            |   | 471,191    |           
|                                                     
|                                                     
|                                                     
|                                                     
|Premises and equipment                                |                                                                                                                           |                                            | 324,932    |           |            |   | 317,205    |           
|                                                     
|                                                     
|                                                     
|                                                     
|Accrued interest receivable                           |                                                                                                                           |                                            | 165,649    |           |            |   | 156,244    |           
|                                                     
|                                                     
|                                                     
|                                                     
|Real estate and other collateral owned                |                                                                                                                           |                                            | 26,685     |           |            |   | 36,358     |           
|                                                     
|                                                     
|                                                     
|                                                     
|Loan servicing assets                                 |                                                                                                                           |                                            | 147,473    |           |            |   | 118,792    |           
|                                                     
|                                                     
|                                                     
|                                                     
|Goodwill                                              |                                                                                                                           |                                            | 176,510    |           |            |   | 188,826    |           
|                                                     
|                                                     
|                                                     
|                                                     
|Other assets                                          |                                                                                                                           |                                            | 193,275    |           |            |   | 172,431    |           
|                                                      |                                                                                                                           |                                            |            |           |            |   |            |           
|                                                      |                                                                                                                           | Total assets                               |            | $         | 32,778,473 |   |            | $          | 31,819,063 | 
|                                                      |                                                                                                                           |                                            |            |           |            |   |            |           
|LIABILITIES AND SHAREHOLDERS EQUITY                  |                                                                                                                           |                                            |            |           |            |   |            |           
|                                                     
|                                                     
|                                                     
|                                                     
|Deposits:                                             |                                                                                                                           |                                            |            |           |            |   |            |           
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Checking accounts                                                                                                         |                                            | $          | 3,806,721 |            |   | $          | 3,329,743  |           
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Money market accounts                                                                                                     |                                            |            | 3,963,608 |            |   |            | 3,170,435  |           
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Savings accounts                                                                                                          |                                            |            | 1,450,104 |            |   |            | 2,065,127  |           
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Certificates of deposit                                                                                                   |                                            |            | 9,501,825 |            |   |            | 10,508,670 |           
|                                                      |                                                                                                                           |                                            |            |           |            |   |            |           
|                                                      |                                                                                                                           | Total deposits                             |            |           | 18,722,258 |   |            |            | 19,073,975 | 
|                                                     
|                                                     
|                                                     
|                                                     
|Federal Home Loan Bank advances                       |                                                                                                                           |                                            | 9,765,956  |           |            |   | 9,226,150  |           
|                                                     
|                                                     
|                                                     
|                                                     
|Reverse repurchase agreements                         |                                                                                                                           |                                            | 58,588     |           |            |   | 283,297    |           
|                                                     
|                                                     
|                                                     
|                                                     
|Other borrowings                                      |                                                                                                                           |                                            | 1,192,450  |           |            |   | 232,277    |           
|                                                     
|                                                     
|                                                     
|                                                     
|Advance payments by borrowers for taxes and insurance |                                                                                                                           |                                            | 55,005     |           |            |   | 80,309     |           
|                                                     
|                                                     
|                                                     
|                                                     
|Accrued interest payable                              |                                                                                                                           |                                            | 80,638     |           |            |   | 95,323     |           
|                                                     
|                                                     
|                                                     
|                                                     
|Accrued expenses and other liabilities                |                                                                                                                           |                                            | 569,461    |           |            |   | 430,032    |           
|                                                      |                                                                                                                           |                                            |            |           |            |   |            |           
|                                                      |                                                                                                                           | Total liabilities                          |            |           | 30,444,356 |   |            |            | 29,421,363 | 
|                                                      |                                                                                                                           |                                            |            |           |            |   |            |           
|Shareholders equity:                                 |                                                                                                                           |                                            |            |           |            |   |            |           
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Preferred stock  $.01 par value per share; 20,000,000
        shares authorized and unissued                             |                                            |            |          |            |   |            |           |           
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Common stock  $.01 par value per share; 360,000,000
        shares authorized; 212,681,105 and 212,397,685 shares issued |                                            |            | 2,127     |            |   |            | 2,124      |           
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Additional paid-in capital                                                                                                |                                            |            | 1,742,188 |            |   |            | 1,736,726  |           
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Retained earnings                                                                                                         |                                            |            | 720,738   |            |   |            | 734,510    |           
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Less 4,964,365 and 3,140,000 shares of common stock held in
        treasury at cost                                      |                                            |            | (110,768  | )          |   |            | (65,502    | )         
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Borrowings of employee investment and stock ownership plan                                                                |                                            |            | (1,569    | )          |   |            | (3,138     | )         
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Accumulated other comprehensive income                                                                                    |                                            |            | (18,599   | )          |   |            | (7,020     | )         
|                                                      |                                                                                                                           |                                            |            |           |            |   |            |           
|                                                      |                                                                                                                           | Total shareholders equity                 |            |           | 2,334,117  |   |            |            | 2,397,700  | 
|                                                      |                                                                                                                           |                                            |            |           |            |   |            |           
|                                                      |                                                                                                                           | Total liabilities and shareholders equity |            | $         | 32,778,473 |   |            | $          | 31,819,063 | 
|                                                      |                                                                                                                           |                                            |            |           |            |   |            |           

See Notes to Consolidated Financial Statements

1



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##### Table of Contents



CHARTER ONE FINANCIAL, INC. AND SUBSIDIARIES




CONSOLIDATED STATEMENTS OF INCOME




|                                                           |                                    |                                                               |             |                   |         |         |             |         |         |   |             |           |           |   |             |           |           | 
|---------------------------------------------------------- | ---------------------------------- | ------------------------------------------------------------- | ----------- | ----------------- | ------- | ------- | ----------- | ------- | ------- | - | ----------- | --------- | --------- | - | ----------- | --------- | --------- | 
|                                                           |                                    |                                                               |             |                  
|                                                           |                                    | Three Months Ended                                            |             | Nine Months Ended
|                                                           |                                    |                                                               |             |                  
|                                                           |                                    | 9/30/00                                                       |             | 9/30/99           |         | 9/30/00 |             | 9/30/99
|                                                           |                                    |                                                               |             |                   |         |         |             |        
|                                                           |                                    |                                                              
|                                                           |                                    | (Dollars in thousands, except per share data)                
|                                                          
|                                                          
|                                                          
|                                                          
|Interest income:                                           |                                    |                                                               |             |                   |         |         |             |         |         |   |             |           |           |   |             |          
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           | Loans and leases                   |                                                               | $           | 462,766           |         |         | $           | 420,295 |         |   | $           | 1,337,985 |           |   | $           | 1,257,160 |          
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           | Mortgage-backed securities:        |                                                               |             |                   |         |         |             |         |         |   |             |           |           |   |             |           |          
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           |                                    | Available for sale                                            |             |                   | 66,222  |         |             |         | 58,909  |   |             |           | 171,761   |   |             |           | 151,903   | 
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           |                                    | Held to maturity                                              |             |                   | 29,442  |         |             |         | 35,629  |   |             |           | 92,704    |   |             |           | 121,459   | 
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           | Investment securities:             |                                                               |             |                   |         |         |             |         |         |   |             |           |           |   |             |           |          
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           |                                    | Trading                                                       |             |                   |        |         |             |         | 147     |   |             |           | 38        |   |             |           | 205       | 
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           |                                    | Available for sale                                            |             |                   | 8,142   |         |             |         | 14,177  |   |             |           | 25,355    |   |             |           | 27,100    | 
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           |                                    | Held to maturity                                              |             |                   | 417     |         |             |         | 510     |   |             |           | 1,261     |   |             |           | 1,883     | 
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           | Other interest-earning assets      |                                                               |             | 10,529            |         |         |             | 9,171   |         |   |             | 28,082    |           |   |             | 27,346    |          
|                                                           |                                    |                                                               |             |                   |         |         |             |         |         |   |             |           |           |   |             |          
|                                                           |                                    | Total interest income                                         |             |                   | 577,518 |         |             |         | 538,838 |   |             |           | 1,657,186 |   |             |           | 1,587,056 | 
|                                                           |                                    |                                                               |             |                   |         |         |             |         |         |   |             |           |           |   |             |          
|Interest expense:                                          |                                    |                                                               |             |                   |         |         |             |         |         |   |             |           |           |   |             |          
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           | Deposits                           |                                                               |             | 192,399           |         |         |             | 178,278 |         |   |             | 554,322   |           |   |             | 538,087   |          
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           | FHLB advances                      |                                                               |             | 151,549           |         |         |             | 114,539 |         |   |             | 390,673   |           |   |             | 311,535   |          
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           | Other borrowings                   |                                                               |             | 10,401            |         |         |             | 12,912  |         |   |             | 23,986    |           |   |             | 35,603    |          
|                                                           |                                    |                                                               |             |                   |         |         |             |         |         |   |             |           |           |   |             |          
|                                                           |                                    | Total interest expense                                        |             |                   | 354,349 |         |             |         | 305,729 |   |             |           | 968,981   |   |             |           | 885,225   | 
|                                                           |                                    |                                                               |             |                   |         |         |             |         |         |   |             |           |           |   |             |          
|                                                           |                                    | Net interest income                                           |             |                   | 223,169 |         |             |         | 233,109 |   |             |           | 688,205   |   |             |           | 701,831   | 
|                                                          
|                                                          
|                                                          
|                                                          
|Provision for loan and lease losses                        |                                    |                                                               | 13,178      |                   |         |         | 7,366       |         |         |   | 33,285      |           |           |   | 21,979      |          
|                                                           |                                    |                                                               |             |                   |         |         |             |         |         |   |             |           |           |   |             |          
|                                                           |                                    | Net interest income after provision for loan and lease losses |             |                   | 209,991 |         |             |         | 225,743 |   |             |           | 654,920   |   |             |           | 679,852   | 
|                                                           |                                    |                                                               |             |                   |         |         |             |         |         |   |             |           |           |   |             |          
|Other income:                                              |                                    |                                                               |             |                   |         |         |             |         |         |   |             |           |           |   |             |          
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           | Retail banking                     |                                                               |             | 64,401            |         |         |             | 49,271  |         |   |             | 177,899   |           |   |             | 143,687   |          
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           | Mortgage banking                   |                                                               |             | 13,994            |         |         |             | 11,810  |         |   |             | 41,947    |           |   |             | 34,662    |          
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           | Leasing operations                 |                                                               |             | 2,022             |         |         |             | 4,093   |         |   |             | 14,014    |           |   |             | 7,797     |          
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           | Net gains (losses)                 |                                                               |             | 5,522             |         |         |             | (1,856  | )       |   |             | 12,133    |           |   |             | 11,950    |          
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           | Other                              |                                                               |             | 13,850            |         |         |             | 8,768   |         |   |             | 35,311    |           |   |             | 20,443    |          
|                                                           |                                    |                                                               |             |                   |         |         |             |         |         |   |             |           |           |   |             |          
|                                                           |                                    | Total other income                                            |             |                   | 99,789  |         |             |         | 72,086  |   |             |           | 281,304   |   |             |           | 218,539   | 
|                                                           |                                    |                                                               |             |                   |         |         |             |         |         |   |             |           |           |   |             |          
|Administrative expenses:                                   |                                    |                                                               |             |                   |         |         |             |         |         |   |             |           |           |   |             |          
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           | Compensation and employee benefits |                                                               |             | 67,507            |         |         |             | 67,814  |         |   |             | 208,986   |           |   |             | 204,195   |          
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           | Net occupancy and equipment        |                                                               |             | 26,076            |         |         |             | 23,567  |         |   |             | 75,991    |           |   |             | 70,581    |          
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           | Federal deposit insurance premiums |                                                               |             | 1,066             |         |         |             | 1,998   |         |   |             | 3,072     |           |   |             | 6,147     |          
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           | Merger expenses                    |                                                               |             | 1,961             |         |         |             | 1,921   |         |   |             | 26,064    |           |   |             | 7,640     |          
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           | Amortization of goodwill           |                                                               |             | 4,045             |         |         |             | 3,326   |         |   |             | 12,135    |           |   |             | 10,040    |          
|                                                          
|                                                          
|                                                          
|                                                          
|                                                           | Other administrative expenses      |                                                               |             | 47,962            |         |         |             | 45,345  |         |   |             | 132,626   |           |   |             | 133,733   |          
|                                                           |                                    |                                                               |             |                   |         |         |             |         |         |   |             |           |           |   |             |          
|                                                           |                                    | Total administrative expenses                                 |             |                   | 148,617 |         |             |         | 143,971 |   |             |           | 458,874   |   |             |           | 432,336   | 
|                                                           |                                    |                                                               |             |                   |         |         |             |         |         |   |             |           |           |   |             |          
|Income before income taxes                                 |                                    |                                                               | 161,163     |                   |         |         | 153,858     |         |         |   | 477,350     |           |           |   | 466,055     |          
|                                                          
|                                                          
|                                                          
|                                                          
|Income taxes                                               |                                    |                                                               | 51,571      |                   |         |         | 49,356      |         |         |   | 152,762     |           |           |   | 150,231     |          
|                                                           |                                    |                                                               |             |                   |         |         |             |         |         |   |             |           |           |   |             |          
|                                                           |                                    | Net income                                                    |             | $                 | 109,592 |         |             | $       | 104,502 |   |             | $         | 324,588   |   |             | $         | 315,824   | 
|                                                           |                                    |                                                               |             |                   |         |         |             |         |         |   |             |           |           |   |             |          
|Basic earnings per share(1)                                |                                    | $                                                             | .52         |                   |         | $       | .47         |         |         | $ | 1.50        |           |           | $ | 1.41        |          
|                                                           |                                    |                                                               |             |                   |         |         |             |         |         |   |             |           |           |   |             |          
|Diluted earnings per share(1)                              |                                    | $                                                             | .51         |                   |         | $       | .46         |         |         | $ | 1.48        |           |           | $ | 1.38        |          
|                                                           |                                    |                                                               |             |                   |         |         |             |         |         |   |             |           |           |   |             |          
|Average common shares outstanding(1)                       |                                    |                                                               | 209,379,604 |                   |         |         | 223,149,954 |         |         |   | 215,626,442 |           |           |   | 224,314,019 |          
|                                                           |                                    |                                                               |             |                   |         |         |             |         |         |   |             |           |           |   |             |          
|Average common and common equivalent shares outstanding(1) |                                    |                                                               | 213,766,432 |                   |         |         | 227,952,229 |         |         |   | 219,366,122 |           |           |   | 229,699,256 |          
|                                                           |                                    |                                                               |             |                   |         |         |             |         |         |   |             |           |           |   |             |          
|Cash dividends declared per share(1)                       |                                    | $                                                             | .17         |                   |         | $       | .15         |         |         | $ | .49         |           |           | $ | .42         |          
|                                                           |                                    |                                                               |             |                   |         |         |             |         |         |   |             |           |           |   |             |          



---

|    |                                                                             
|--- | ----------------------------------------------------------------------------
|(1) | Restated to reflect the 5% stock dividend issued
        September 30, 2000.

See Notes to Consolidated Financial Statements

2



---



##### Table of Contents



CHARTER ONE FINANCIAL, INC. AND SUBSIDIARIES




CONSOLIDATED STATEMENTS OF CASH FLOWS




|                                                   |                                                                                           |                                                                                                          |                                           |            |           |            |          |            |          |            |  
|-------------------------------------------------- | ----------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------- | ----------------------------------------- | ---------- | --------- | ---------- | -------- | ---------- | -------- | ---------- | -
|                                                   |                                                                                           |                                                                                                         
|                                                   |                                                                                           | Nine Months Ended                                                                                       
|                                                   |                                                                                           |                                                                                                         
|                                                   |                                                                                           | 9/30/00                                                                                                  |                                           | 9/30/99   
|                                                   |                                                                                           |                                                                                                          |                                           |           
|                                                   |                                                                                           |                                                                                                         
|                                                   |                                                                                           | (Dollars in thousands)                                                                                  
|                                                  
|                                                  
|                                                  
|                                                  
|Cash flows from operating activities:              |                                                                                           |                                                                                                          |                                           |            |           |            |          |           
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Net income                                                                                |                                                                                                          | $                                         | 324,588    |           |            | $        | 315,824    |         
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Adjustments to reconcile net income to net cash provided by
        operating activities: |                                                                                                          |                                           |            |           |            |          |            |         
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   |                                                                                           | Provision for loan and lease losses                                                                      |                                           |            | 33,285    |            |          |            | 21,979   |           
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   |                                                                                           | Net gains                                                                                                |                                           |            | (10,551   | )          |          |            | (8,003   | )         
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   |                                                                                           | Accretion of discounts, amortization of premiums, amortization
        of goodwill and depreciation, net |                                           |            | 70,421    |            |          |            | 87,553   |           
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   |                                                                                           | Origination of real estate loans held for sale                                                           |                                           |            | (327,375  | )          |          |            | (852,520 | )         
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   |                                                                                           | Proceeds from sale of loans held for sale                                                                |                                           |            | 325,884   |            |          |            | 848,890  |           
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   |                                                                                           | Proceeds from (purchases of) investment securities held for
        trading                              |                                           |            | 13,418    |            |          |            | (18,748  | )         
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   |                                                                                           | Other                                                                                                    |                                           |            | 68,313    |            |          |            | (16,259  | )         
|                                                   |                                                                                           |                                                                                                          |                                           |            |           |            |          |           
|                                                   |                                                                                           |                                                                                                          | Net cash provided by operating activities |            |           | 497,983    |          |            |          | 378,716    |  
|                                                   |                                                                                           |                                                                                                          |                                           |            |           |            |          |           
|Cash flows from investing activities:              |                                                                                           |                                                                                                          |                                           |            |           |            |          |           
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Net principal disbursed on loans and leases                                               |                                                                                                          |                                           | (4,434,899 | )         |            |          | (2,313,236 | )       
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Proceeds from principal repayments and maturities of:                                     |                                                                                                          |                                           |            |           |            |          |            |         
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   |                                                                                           | Mortgage-backed securities held to maturity                                                              |                                           |            | 305,291   |            |          |            | 917,687  |           
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   |                                                                                           | Investment securities held to maturity                                                                   |                                           |            | 8,286     |            |          |            | 21,503   |           
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   |                                                                                           | Mortgage-backed securities available for sale                                                            |                                           |            | 207,147   |            |          |            | 514,227  |           
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   |                                                                                           | Investment securities available for sale                                                                 |                                           |            | 57,091    |            |          |            | 203,132  |           
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Proceeds from sale of:                                                                    |                                                                                                          |                                           |            |           |            |          |            |         
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   |                                                                                           | Mortgage-backed securities available for sale                                                            |                                           |            | 2,978,762 |            |          |            | 937,063  |           
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   |                                                                                           | Investment securities available for sale                                                                 |                                           |            | 13,301    |            |          |            | 175,355  |           
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   |                                                                                           | Federal Home Loan Bank stock                                                                             |                                           |            | 18,346    |            |          |            | 1,809    |           
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Purchase of:                                                                              |                                                                                                          |                                           |            |           |            |          |            |         
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   |                                                                                           | Investment securities held to maturity                                                                   |                                           |            | (869      | )          |          |            | (2,515   | )         
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   |                                                                                           | Mortgage-backed securities available for sale                                                            |                                           |            | (149,429  | )          |          |            | (210,390 | )         
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   |                                                                                           | Investment securities available for sale                                                                 |                                           |            | (10,696   | )          |          |            | (668,626 | )         
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   |                                                                                           | Loans                                                                                                    |                                           |            | (16,890   | )          |          |            | (376,770 | )         
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   |                                                                                           | Federal Home Loan Bank stock                                                                             |                                           |            | (80,838   | )          |          |            | (74,632  | )         
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   |                                                                                           | Loan servicing assets, including those originated                                                        |                                           |            | (30,495   | )          |          |            | (24,193  | )         
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   |                                                                                           | Bank owned life insurance                                                                                |                                           |            |          |            |          |            | (497,296 | )         
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   |                                                                                           | Other                                                                                                    |                                           |            | (57,989   | )          |          |            | (58,349  | )         
|                                                   |                                                                                           |                                                                                                          |                                           |            |           |            |          |           
|                                                   |                                                                                           |                                                                                                          | Net cash used in investing activities     |            |           | (1,193,881 | )        |            |          | (1,455,231 | )
|                                                   |                                                                                           |                                                                                                          |                                           |            |           |            |          |           
|Cash flows from financing activities:              |                                                                                           |                                                                                                          |                                           |            |           |            |          |           
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Net increase (decrease) in short-term borrowings                                          |                                                                                                          |                                           | (209,739   | )         |            |          | 1,394,793  |         
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Proceeds from long-term borrowings                                                        |                                                                                                          |                                           | 2,497,567  |           |            |          | 780,662    |         
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Repayments of long-term borrowings                                                        |                                                                                                          |                                           | (1,011,046 | )         |            |          | (675,520   | )       
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Net decrease in deposits                                                                  |                                                                                                          |                                           | (352,099   | )         |            |          | (387,198   | )       
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Increase (decrease) in advance payments by borrowers for
        taxes and insurance      |                                                                                                          |                                           | (25,304    | )         |            |          | 13         |         
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Payment of dividends on common stock                                                      |                                                                                                          |                                           | (107,242   | )         |            |          | (100,404   | )       
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Proceeds from issuance of common stock                                                    |                                                                                                          |                                           | 18,083     |           |            |          | 19,350     |         
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Purchase of treasury stock                                                                |                                                                                                          |                                           | (289,001   | )         |            |          | (94,925    | )       
|                                                   |                                                                                           |                                                                                                          |                                           |            |           |            |          |           
|                                                   |                                                                                           | Net cash provided by financing activities                                                                |                                           |            | 521,219   |            |          |            | 936,771  |           
|                                                   |                                                                                           |                                                                                                          |                                           |            |           |            |          |           
|Net decrease in cash and cash equivalents          |                                                                                           |                                                                                                          | (174,679                                  | )          |           |            | (139,744 | )         
|                                                  
|                                                  
|                                                  
|                                                  
|Cash and cash equivalents, beginning of the period |                                                                                           |                                                                                                          | 693,532                                   |            |           |            | 722,260  |           
|                                                   |                                                                                           |                                                                                                          |                                           |            |           |            |          |           
|Cash and cash equivalents, end of the period       |                                                                                           | $                                                                                                        | 518,853                                   |            |           | $          | 582,516  |           
|                                                   |                                                                                           |                                                                                                          |                                           |            |           |            |          |           
|Supplemental disclosure of cash flow information:  |                                                                                           |                                                                                                          |                                           |            |           |            |          |           
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Cash paid for interest on deposits and borrowings                                         |                                                                                                          | $                                         | 984,047    |           |            | $        | 874,556    |         
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Cash paid for income taxes                                                                |                                                                                                          |                                           | 28,296     |           |            |          | 60,445     |         
|                                                  
|                                                  
|                                                  
|                                                  
|Supplemental schedule of noncash activities:       |                                                                                           |                                                                                                          |                                           |            |           |            |          |           
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Loans exchanged for mortgage-backed securities                                            |                                                                                                          |                                           | 2,781,889  |           |            |          | 2,513,605  |         

See Notes to Consolidated Financial Statements

3



---



##### Table of Contents



CHARTER ONE FINANCIAL, INC. AND SUBSIDIARIES




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS






|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|1. | These interim consolidated financial statements
        should be read in conjunction with the consolidated financial
        statements and notes thereto included in the Charter One
        Financial, Inc. (the Company or Charter
        One) Annual Report on Form  10-K for the year ended
        December 31, 1999. The interim financial statements reflect
        all adjustments which are, in the opinion of management,
        necessary for a fair presentation of the results for the periods
        presented. Such adjustments are of a normal recurring nature.
        The results of operations for the interim periods disclosed
        herein are not necessarily indicative of the results that may be
        expected for a full year.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|  
|2. | On October 1, 1999, Charter One completed
        its acquisition of St. Paul Bancorp, Inc. (St.
        Paul), which was accounted for as a pooling of interests.
        Headquartered in Chicago, Illinois, St. Paul was the holding
        company of St. Paul Federal Bank for Savings, a
        $6.2 billion savings bank that operated 58 branch offices
        in the metropolitan Chicago area. The merger was effected
        through the issuance of .99225 shares of Charter One common
        stock for each share of St. Pauls common stock, resulting
        in the issuance of 39,892,023 shares (as adjusted for the 5%
        stock dividend issued September 30, 1999).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|  
|3. | On November 5, 1999, the Company completed
        its acquisition of 14 Vermont National Bank offices from
        Chittenden Corporation (Chittenden), which was
        accounted for as a purchase. The acquisition was related to the
        branch divestiture required by federal regulators relative to
        Chittendens pending merger with Vermont Financial Services
        Corp., the parent company of Vermont National Bank and United
        Bank in Massachusetts. Charter One acquired $84.7 million
        in commercial real estate and business loans and assumed
        $357.5 million in deposits at fair value. The purchase
        resulted in $43.6 million in tax-deductible goodwill, which
        will be amortized over 15 years.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|  
|4. | The Company has identified one reportable
        segment: consumer banking. Consumer banking includes retail
        banking, mortgage banking, and other related financial services
        that provide a full range of deposit products, consumer loans,
        business lending, and commercial real estate lending.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|  
|5. | In June 1998, the Financial Accounting
        Standards Board (FASB) issued Statement of Financial
        Accounting Standards (SFAS) No. 133,
        Accounting for Derivative Instruments and Hedging
        Activities. This statement establishes accounting and
        reporting standards for derivative instruments, including
        certain derivative instruments embedded in other contracts, and
        for hedging activities. It requires that an entity recognize all
        derivatives as either assets or liabilities in the statement of
        financial position and measure those instruments at fair value.
        The FASB delayed the effective date of SFAS No. 133 for one
        year, to fiscal years beginning after June 15, 2000. The
        delay, published as SFAS No. 137, applies to quarterly and
        annual financial statements. In June 2000, the FASB issued
        SFAS No. 138, Accounting for Certain Derivative
        Instruments and Certain Hedging Activities, an amendment of FASB
        Statement No. 133. SFAS No. 138 amends the
        accounting and reporting standards of SFAS No. 133 for
        certain derivative instruments and certain hedging activities.
        It also amends SFAS No. 133 for decisions made by the FASB
        relating to the Derivatives Implementation Group process. Early
        application is still permitted. Management has not completed the
        process of evaluating SFAS No. 133 and SFAS No. 138
        and therefore has not determined the impact that adopting these
        statements will have on the Companys financial position
        and results of operations.
|  
|6. | In September 2000, the FASB issued SFAS
        No. 140, Accounting for Transfers and Servicing of
        Financial Assets and Extinguishments of Liabilities, a
        replacement of FASB Statement No. 125. SFAS
        No. 140 provides accounting and reporting standards for
        transfers and servicing of financial assets and extinguishments
        of liabilities. Those standards are based on consistent
        application of a financial-components approach that focuses on
        control.Under that approach, after a transfer of
        financial assets, an entity recognizes the financial and
        servicing assets it controls and the liabilities it has
        incurred, derecognizes financial assets when control has been
        surrendered, and derecognizes liabilities when extinguished.
        SFAS No. 140 provides consistent standards for
        distinguishing transfers of financial assets that are sales from
        transfers that are secured borrowings. In addition to replacing
        SFAS No.  125, Accounting for Transfers and Servicing
        of Financial Assets and Extinguishments of Liabilities,
        SFAS No. 140 rescinds SFAS No. 127, Deferral of
        the Effective Date of Certain Provisions of FASB Statement
        No. 125. SFAS No. 140 is effective for transfers
        and servicing of financial assets and extinguishments of
        liabilities occurring after March 31, 2001. It is effective for
        recognition and reclassification of collateral and for
        disclosures relating to securitization transactions and
        collateral for                                            

4



---



##### Table of Contents



|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   | fiscal years ending after December 15, 2000.
Disclosures about securitization and collateral accepted need
not be reported for periods ending on or before
December 15, 2000, for which financial statements are
presented for comparative purposes. SFAS No. 140 is to be
applied prospectively with certain exceptions. Other than those
exceptions, earlier or retroactive application of its accounting
provisions is not permitted. Management has not completed the
process of evaluating SFAS No. 140 and therefore has not
determined the impact that adopting this statement will have on
the Companys financial position and results of
operations.
|  
|7. | Certain items in the consolidated financial
        statements for 1999 have been reclassified to conform to the
        2000 presentation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

5



---



##### Table of Contents






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

HOLDING COMPANY BUSINESS

The following financial review presents an
analysis of the asset and liability structure of Charter One
Financial, Inc. and a discussion of the results of operations
for each of the periods presented.

General

Headquartered in Cleveland, Ohio, Charter One
Financial, Inc., hereafter referred to as Charter
One or the Company, is a financial holding
company. Charter One is a Delaware corporation and owns all of
the outstanding capital stock of Charter Michigan Bancorp, Inc.
and Charter One Commercial. Charter Michigan Bancorp, Inc. owns
all of the outstanding capital stock of Charter One Bank,
F.S.B., a federally chartered thrift. The primary business of
Charter One is operating these financial institutions which we
sometimes refer to in this document collectively as the
Bank. The Banks primary business is providing
consumer banking services to certain major markets in Ohio,
Michigan, Illinois, New York, Vermont and in some markets of
Massachusetts. As of September 30, 2000, the Bank and its
subsidiaries were doing business through 421 full-service
branches and 35 loan production offices.

Forward-Looking Statements

This document, including information included or
incorporated by reference, contains, and future filings by the
Company on Form 10-K, Form 10-Q and Form 8-K and
future oral and written statements by the Company and its
management may contain, forward-looking statements about Charter
One and its subsidiaries which we believe are within the meaning
of the Private Securities Litigation Reform Act of 1995. These
forward-looking statements include, without limitation,
statements with respect to anticipated future operating and
financial performance, growth opportunities, interest rates,
acquisition and divestiture opportunities, and synergies,
efficiencies, cost savings and funding advantages expected to be
realized from prior acquisitions. Words such as may,
could, should, would,
believe, anticipate,
estimate, expect, intend,
plan, and similar expressions are intended to
identify these forward-looking statements. Forward-looking
statements by the Company and its management are based on
beliefs, plans, objectives, goals, expectations, anticipations,
estimates and intentions of management and are not guarantees of
future performance. The Company disclaims any obligation to
update or revise any forward-looking statements based on the
occurrence of future events, the receipt of new information, or
otherwise. The factors we discuss in this document and
identified in our filings with the Securities and Exchange
Commission and those presented elsewhere by our management from
time to time, could cause actual results to differ materially
from those indicated by the forward-looking statements made in
this document.

RESULTS OF OPERATIONS

Performance Overview

Charter One reported net income of
$109.6 million, or $.51 per diluted share, for the three
months ended September 30, 2000. This was a
$5.1 million, or 4.9%, increase over the results of the
third quarter of 1999 when net income was $104.5 million,
or $.46 per diluted share. Both periods included merger-related
charges. Excluding the after-tax impact of merger-related
charges, our net income resulted in a return on average equity
of 18.96% and a return on average assets of 1.37% for the three
months ended September 30, 2000. The comparable returns for
the third quarter of 1999 were 17.03% and 1.34%, respectively.
The increase in our operating returns was primarily attributable
to increases in income from retail banking. See Other
Income for further discussion regarding income from retail
banking.

For the nine months ended September 30,
2000, Charter One reported net income of $324.6 million, or
$1.48 per diluted share. This was an $8.8 million, or 2.8%,
increase over the results for the same period in 1999. Both
periods included merger-related charges. Our net income,
excluding the after-tax impact of merger-related charges,
resulted in a return on average equity of 18.88% and a return on
average assets of 1.46% for the nine months ended
September 30, 2000. The comparable returns for the 1999
period were 17.32% and 1.39%, respectively. The increase in our
operating returns, just as with the third quarter results, was
primarily attributable to increases in income from retail
banking. Additionally, the year-over-year comparison was
affected by an increase in income from leasing operations as
well as income from our Bank Owned Life Insurance
(BOLI) program. See Other

6



---



##### Table of Contents



Income for further discussion regarding income from retail
banking, leasing operations and the BOLI program.

Figure 1 sets forth selected financial results and annualized
performance ratios for the three and nine months ended
September 30, 2000 and 1999, respectively. The table
reflects these financial results and ratios on both an actual
and operating return basis. Operating earnings and returns are
computed using net income excluding the after-tax impact of
merger-related charges for each of the periods presented. We
believe that presentation of operating earnings and returns will
provide comparability and insight into the operations of Charter
One.

Selected Financial Results and Ratios(Figure 1)

|           |                                                |                                               |   |                   |   |         |   |         |   |  |   |         |   |  |   |         |  
|---------- | ---------------------------------------------- | --------------------------------------------- | - | ----------------- | - | ------- | - | ------- | - |  | - | ------- | - |  | - | ------- | -
|           |                                                |                                               |   |                  
|           |                                                | Three Months Ended                            |   | Nine Months Ended
|           |                                                |                                               |   |                  
|           |                                                | 9/30/00                                       |   | 9/30/99           |   | 9/30/00 |   | 9/30/99
|           |                                                |                                               |   |                   |   |         |   |        
|           |                                                | (Dollars in thousands, except
per share data)
|Actual:    |                                                |                                               |   |                   |   |         |   |         |   |  |   |         |   |  |   |        
|          
|          
|          
|          
|           | Net income                                     |                                               | $ | 109,592           |   |         | $ | 104,502 |   |  | $ | 324,588 |   |  | $ | 315,824 |  
|          
|          
|          
|          
|           | Diluted earnings per share                     |                                               |   | .51               |   |         |   | .46     |   |  |   | 1.48    |   |  |   | 1.38    |  
|          
|          
|          
|          
|           | Return on average assets                       |                                               |   | 1.35              | % |         |   | 1.33    | % |  |   | 1.38    | % |  |   | 1.37    | %
|          
|          
|          
|          
|           | Return on average equity                       |                                               |   | 18.73             |   |         |   | 16.83   |   |  |   | 17.91   |   |  |   | 17.05   |  
|          
|          
|          
|          
|           | Average equity to average assets               |                                               |   | 7.21              |   |         |   | 7.89    |   |  |   | 7.71    |   |  |   | 8.01    |  
|          
|          
|          
|          
|           | Net interest income to administrative expenses |                                               |   | 1.50              | x |         |   | 1.62    | x |  |   | 1.50    | x |  |   | 1.62    | x
|          
|          
|          
|          
|           | Administrative expenses to average assets      |                                               |   | 1.83              | % |         |   | 1.83    | % |  |   | 1.95    | % |  |   | 1.87    | %
|          
|          
|          
|          
|           | Efficiency ratio                               |                                               |   | 45.54             |   |         |   | 45.81   |   |  |   | 46.66   |   |  |   | 46.49   |  
|          
|          
|          
|          
|Operating: |                                                |                                               |   |                   |   |         |   |         |   |  |   |         |   |  |   |        
|          
|          
|          
|          
|           | Operating earnings                             |                                               | $ | 110,925           |   |         | $ | 105,751 |   |  | $ | 342,214 |   |  | $ | 320,866 |  
|          
|          
|          
|          
|           | Operating earnings per share                   |                                               |   | .52               |   |         |   | .46     |   |  |   | 1.56    |   |  |   | 1.40    |  
|          
|          
|          
|          
|           | Return on average assets                       |                                               |   | 1.37              | % |         |   | 1.34    | % |  |   | 1.46    | % |  |   | 1.39    | %
|          
|          
|          
|          
|           | Return on average equity                       |                                               |   | 18.96             |   |         |   | 17.03   |   |  |   | 18.88   |   |  |   | 17.32   |  
|          
|          
|          
|          
|           | Net interest income to administrative expenses |                                               |   | 1.52              | x |         |   | 1.64    | x |  |   | 1.59    | x |  |   | 1.65    | x
|          
|          
|          
|          
|           | Administrative expenses to average assets      |                                               |   | 1.81              | % |         |   | 1.81    | % |  |   | 1.84    | % |  |   | 1.84    | %
|          
|          
|          
|          
|           | Efficiency ratio                               |                                               |   | 44.93             |   |         |   | 45.18   |   |  |   | 43.94   |   |  |   | 45.65   |  

Net Interest Income

Net interest income is the difference between the interest and
dividend income earned on our loans and investments and the
interest expense on our deposits and borrowings. Net interest
income is our principal source of earnings. Net interest income
is affected by a number of factors including the level, pricing
and maturity of interest-earning assets and interest-bearing
liabilities, interest rate fluctuations and asset quality, as
well as general economic conditions and regulatory policies.

The following table shows average balances, interest earned or
paid, and average interest rates for the periods indicated.
Average balances are calculated on a daily basis. Nonaccrual
loans are included in the average balance of loans. The
mark-to-market adjustments on securities available for sale are
included in noninterest-earning assets. The cost of liabilities
includes the annualized effect of interest rate risk management
instruments.

7



---



##### Table of Contents



Average Balances, Interest Rates and Yields/ Costs(Figure 2)

|                                                                                |                               |                         |                                            |            |           |            |         |         |         |          |        |        |      |      |           |            |            |            |         |         |         |         |        |      |      |      | 
|------------------------------------------------------------------------------- | ----------------------------- | ----------------------- | ------------------------------------------ | ---------- | --------- | ---------- | ------- | ------- | ------- | -------- | ------ | ------ | ---- | ---- | --------- | ---------- | ---------- | ---------- | ------- | ------- | ------- | ------- | ------ | ---- | ---- | ---- | 
|                                                                                |                               |                        
|                                                                                |                               | Three Months Ended     
|                                                                                |                               |                        
|                                                                                |                               |                         |                                            |           
|                                                                                |                               | 9/30/00                 |                                            | 9/30/99   
|                                                                                |                               |                         |                                            |           
|                                                                                |                               |                         |                                            | Avg.       |           |            |         | Avg.   
|                                                                                |                               | Average                 |                                            |            |           | Yield/     |         | Average |         |          |        | Yield/
|                                                                                |                               | Balance                 |                                            | Interest   |           | Cost       |         | Balance |         | Interest |        | Cost  
|                                                                                |                               |                         |                                            |            |           |            |         |         |         |          |        |       
|                                                                                |                               |                        
|                                                                                |                               | (Dollars in thousands) 
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|Interest-earning assets:                                                        |                               |                         |                                            |            |           |            |         |         |         |          |        |        |      |      |           |            |            |            |         |         |         |         |        |     
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Loans and leases              |                         | $                                          | 24,185,872 |           |            | $       | 462,766 |         |          |        | 7.64   | %    |      | $         | 22,656,483 |            |            | $       | 420,295 |         |         |        | 7.41 | %   
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Mortgage-backed securities:   |                         |                                            |            |           |            |         |         |         |          |        |        |      |      |           |            |            |            |         |         |         |         |        |      |     
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                |                               | Available for sale      |                                            |            | 3,631,734 |            |         |         | 66,222  |          |        |        | 7.29 |      |           |            | 3,491,780  |            |         |         | 58,909  |         |        |      | 6.75 |     
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                |                               | Held to maturity        |                                            |            | 1,634,755 |            |         |         | 29,442  |          |        |        | 7.20 |      |           |            | 2,083,367  |            |         |         | 35,629  |         |        |      | 6.84 |     
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Investment securities:        |                         |                                            |            |           |            |         |         |         |          |        |        |      |      |           |            |            |            |         |         |         |         |        |      |     
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                |                               | Trading                 |                                            |            |          |            |         |         |        |          |        |        |     |      |           |            | 14,040     |            |         |         | 147     |         |        |      | 4.19 |     
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                |                               | Available for sale      |                                            |            | 441,466   |            |         |         | 8,142   |          |        |        | 7.38 |      |           |            | 888,428    |            |         |         | 14,177  |         |        |      | 6.38 |     
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                |                               | Held to maturity        |                                            |            | 28,090    |            |         |         | 417     |          |        |        | 5.94 |      |           |            | 33,525     |            |         |         | 510     |         |        |      | 6.09 |     
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Other interest-earning assets |                         |                                            | 554,356    |           |            |         | 10,529  |         |          |        | 7.43   |      |      |           | 533,142    |            |            |         | 9,171   |         |         |        | 6.73 |     
|                                                                                |                               |                         |                                            |            |           |            |         |         |         |          |        |        |      |      |           |            |            |            |         |         |         |         |        |     
|                                                                                |                               |                         | Total interest-earning assets              |            |           | 30,476,273 |         |         |         | 577,518  |        |        |      | 7.57 |           |            |            | 29,700,765 |         |         |         | 538,838 |        |      |      | 7.24 | 
|                                                                                |                               |                         |                                            |            |           |            |         |         |         |          |        |        |      |      |           |            |            |            |         |         |         |         |        |     
|Allowance for loan and lease losses                                             |                               |                         | (186,036                                   | )          |           |            |         |         |         |          |        |        |      |      | (181,580  | )          |            |            |         |         |         |         |        |     
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|Noninterest-earning assets                                                      |                               |                         | 2,184,945                                  |            |           |            |         |         |         |          |        |        |      |      | 1,955,911 |            |            |            |         |         |         |         |        |     
|                                                                                |                               |                         |                                            |            |           |            |         |         |         |          |        |        |      |      |           |            |            |            |         |         |         |         |        |     
|                                                                                |                               |                         | Total assets                               |            | $         | 32,475,182 |         |         |         |          |        |        |      |      |           |            | $          | 31,475,096 |         |         |         |         |        |      |      |      | 
|                                                                                |                               |                         |                                            |            |           |            |         |         |         |          |        |        |      |      |           |            |            |            |         |         |         |         |        |     
|Interest-bearing liabilities:                                                   |                               |                         |                                            |            |           |            |         |         |         |          |        |        |      |      |           |            |            |            |         |         |         |         |        |     
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Deposits:                     |                         |                                            |            |           |            |         |         |         |          |        |        |      |      |           |            |            |            |         |         |         |         |        |      |     
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                |                               | Checking accounts       |                                            | $          | 3,708,654 |            |         |         | 15,516  |          |        |        | 1.66 | %    |           | $          | 2,950,726  |            |         |         | 7,934   |         |        |      | 1.07 | %   
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                |                               | Savings accounts        |                                            |            | 1,521,419 |            |         |         | 5,877   |          |        |        | 1.54 |      |           |            | 2,252,240  |            |         |         | 10,845  |         |        |      | 1.91 |     
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                |                               | Money market accounts   |                                            |            | 3,959,127 |            |         |         | 39,554  |          |        |        | 3.97 |      |           |            | 3,278,637  |            |         |         | 26,474  |         |        |      | 3.20 |     
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                |                               | Certificates of deposit |                                            |            | 9,321,115 |            |         |         | 131,452 |          |        |        | 5.61 |      |           |            | 10,268,028 |            |         |         | 133,025 |         |        |      | 5.14 |     
|                                                                                |                               |                         |                                            |            |           |            |         |         |         |          |        |        |      |      |           |            |            |            |         |         |         |         |        |     
|                                                                                |                               |                         | Total deposits                             |            |           | 18,510,315 |         |         |         | 192,399  |        |        |      | 4.14 |           |            |            | 18,749,631 |         |         |         | 178,278 |        |      |      | 3.77 | 
|                                                                                |                               |                         |                                            |            |           |            |         |         |         |          |        |        |      |      |           |            |            |            |         |         |         |         |        |     
|                                                                                | FHLB advances                 |                         |                                            | 10,336,097 |           |            |         | 151,549 |         |          |        | 5.83   |      |      |           | 8,887,304  |            |            |         | 114,539 |         |         |        | 5.11 |     
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Other borrowings              |                         |                                            | 550,075    |           |            |         | 10,401  |         |          |        | 7.53   |      |      |           | 826,138    |            |            |         | 12,912  |         |         |        | 6.17 |     
|                                                                                |                               |                         |                                            |            |           |            |         |         |         |          |        |        |      |      |           |            |            |            |         |         |         |         |        |     
|                                                                                |                               |                         | Total borrowings                           |            |           | 10,886,172 |         |         |         | 161,950  |        |        |      | 5.91 |           |            |            | 9,713,442  |         |         |         | 127,451 |        |      |      | 5.20 | 
|                                                                                |                               |                         |                                            |            |           |            |         |         |         |          |        |        |      |      |           |            |            |            |         |         |         |         |        |     
|                                                                                |                               |                         | Total interest-bearing liabilities         |            |           | 29,396,487 |         |         |         | 354,349  |        |        |      | 4.79 |           |            |            | 28,463,073 |         |         |         | 305,729 |        |      |      | 4.26 | 
|                                                                                |                               |                         |                                            |            |           |            |         |         |         |          |        |        |      |      |           |            |            |            |         |         |         |         |        |     
|Noninterest-bearing liabilities                                                 |                               |                         | 738,021                                    |            |           |            |         |         |         |          |        |        |      |      | 528,320   |            |            |            |         |         |         |         |        |     
|                                                                                |                               |                         |                                            |            |           |            |         |         |         |          |        |        |      |      |           |            |            |            |         |         |         |         |        |     
|                                                                                |                               |                         | Total liabilities                          |            |           | 30,134,508 |         |         |         |          |        |        |      |      |           |            |            | 28,991,393 |         |         |         |         |        |      |      |      | 
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|Shareholders equity                                                            |                               |                         | 2,340,674                                  |            |           |            |         |         |         |          |        |        |      |      | 2,483,703 |            |            |            |         |         |         |         |        |     
|                                                                                |                               |                         |                                            |            |           |            |         |         |         |          |        |        |      |      |           |            |            |            |         |         |         |         |        |     
|                                                                                |                               |                         | Total liabilities and shareholders equity |            | $         | 32,475,182 |         |         |         |          |        |        |      |      |           |            | $          | 31,475,096 |         |         |         |         |        |      |      |      | 
|                                                                                |                               |                         |                                            |            |           |            |         |         |         |          |        |        |      |      |           |            |            |            |         |         |         |         |        |     
|Net interest income                                                             |                               |                         |                                            |            |           | $          | 223,169 |         |         |          |        |        |      |      |           |            |            | $          | 233,109 |         |         |         |        |     
|                                                                                |                               |                         |                                            |            |           |            |         |         |         |          |        |        |      |      |           |            |            |            |         |         |         |         |        |     
|Interest rate spread                                                            |                               |                         |                                            |            |           |            |         |         |         |          | 2.78   |        |      |      |           |            |            |            |         |         |         |         | 2.98   |     
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|Net yield on average interest-earning assets                                    |                               |                         |                                            |            |           |            |         |         |         |          | 2.93   |        |      |      |           |            |            |            |         |         |         |         | 3.14   |     
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|Average interest-earning assets to average interest-bearing
        liabilities |                               |                         |                                            |            |           |            |         |         |         |          | 103.67 | %      |      |      |           |            |            |            |         |         |         |         | 104.35 | %   

8



---



##### Table of Contents



|                                                                                |                               |                         |                                            |            |           |            |         |           |         |           |        |        |       |      |           |            |            |            |         |           |         |           |        |      |      |      | 
|------------------------------------------------------------------------------- | ----------------------------- | ----------------------- | ------------------------------------------ | ---------- | --------- | ---------- | ------- | --------- | ------- | --------- | ------ | ------ | ----- | ---- | --------- | ---------- | ---------- | ---------- | ------- | --------- | ------- | --------- | ------ | ---- | ---- | ---- | 
|                                                                                |                               |                        
|                                                                                |                               | Nine Months Ended      
|                                                                                |                               |                        
|                                                                                |                               |                         |                                            |           
|                                                                                |                               | 9/30/00                 |                                            | 9/30/99   
|                                                                                |                               |                         |                                            |           
|                                                                                |                               |                         |                                            | Avg.       |           |            |         | Avg.     
|                                                                                |                               | Average                 |                                            |            |           | Yield/     |         | Average   |         |           |        | Yield/
|                                                                                |                               | Balance                 |                                            | Interest   |           | Cost       |         | Balance   |         | Interest  |        | Cost  
|                                                                                |                               |                         |                                            |            |           |            |         |           |         |           |        |       
|                                                                                |                               |                        
|                                                                                |                               | (Dollars in thousands) 
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|Interest-earning assets:                                                        |                               |                         |                                            |            |           |            |         |           |         |           |        |        |       |      |           |            |            |            |         |           |         |           |        |     
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Loans and leases              |                         | $                                          | 23,605,514 |           |            | $       | 1,337,985 |         |           |        | 7.56   | %     |      | $         | 22,556,299 |            |            | $       | 1,257,160 |         |           |        | 7.44 | %   
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Mortgage-backed securities:   |                         |                                            |            |           |            |         |           |         |           |        |        |       |      |           |            |            |            |         |           |         |           |        |      |     
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                |                               | Available for sale      |                                            |            | 3,180,808 |            |         |           | 171,761 |           |        |        | 7.20  |      |           |            | 3,036,018  |            |         |           | 151,903 |           |        |      | 6.67 |     
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                |                               | Held to maturity        |                                            |            | 1,741,174 |            |         |           | 92,704  |           |        |        | 7.10  |      |           |            | 2,352,585  |            |         |           | 121,459 |           |        |      | 6.88 |     
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Investment securities:        |                         |                                            |            |           |            |         |           |         |           |        |        |       |      |           |            |            |            |         |           |         |           |        |      |     
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                |                               | Trading                 |                                            |            | 244       |            |         |           | 38      |           |        |        | 20.63 |      |           |            | 7,240      |            |         |           | 205     |           |        |      | 3.77 |     
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                |                               | Available for sale      |                                            |            | 461,581   |            |         |           | 25,355  |           |        |        | 7.32  |      |           |            | 601,009    |            |         |           | 27,100  |           |        |      | 6.01 |     
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                |                               | Held to maturity        |                                            |            | 30,961    |            |         |           | 1,261   |           |        |        | 5.43  |      |           |            | 40,612     |            |         |           | 1,883   |           |        |      | 6.18 |     
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Other interest-earning assets |                         |                                            | 520,611    |           |            |         | 28,082    |         |           |        | 7.09   |       |      |           | 569,330    |            |            |         | 27,346    |         |           |        | 6.33 |     
|                                                                                |                               |                         |                                            |            |           |            |         |           |         |           |        |        |       |      |           |            |            |            |         |           |         |           |        |     
|                                                                                |                               |                         | Total interest-earning assets              |            |           | 29,540,893 |         |           |         | 1,657,186 |        |        |       | 7.48 |           |            |            | 29,163,093 |         |           |         | 1,587,056 |        |      |      | 7.26 | 
|                                                                                |                               |                         |                                            |            |           |            |         |           |         |           |        |        |       |      |           |            |            |            |         |           |         |           |        |     
|Allowance for loan and lease losses                                             |                               |                         | (184,903                                   | )          |           |            |         |           |         |           |        |        |       |      | (182,181  | )          |            |            |         |           |         |           |        |     
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|Noninterest-earning assets                                                      |                               |                         | 1,987,550                                  |            |           |            |         |           |         |           |        |        |       |      | 1,866,285 |            |            |            |         |           |         |           |        |     
|                                                                                |                               |                         |                                            |            |           |            |         |           |         |           |        |        |       |      |           |            |            |            |         |           |         |           |        |     
|                                                                                |                               |                         | Total assets                               |            | $         | 31,343,540 |         |           |         |           |        |        |       |      |           |            | $          | 30,847,197 |         |           |         |           |        |      |      |      | 
|                                                                                |                               |                         |                                            |            |           |            |         |           |         |           |        |        |       |      |           |            |            |            |         |           |         |           |        |     
|Interest-bearing liabilities:                                                   |                               |                         |                                            |            |           |            |         |           |         |           |        |        |       |      |           |            |            |            |         |           |         |           |        |     
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Deposits:                     |                         |                                            |            |           |            |         |           |         |           |        |        |       |      |           |            |            |            |         |           |         |           |        |      |     
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                |                               | Checking accounts       |                                            | $          | 3,600,759 |            |         |           | 40,479  |           |        |        | 1.50  | %    |           | $          | 2,933,106  |            |         |           | 20,255  |           |        |      | .92  | %   
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                |                               | Savings accounts        |                                            |            | 1,753,507 |            |         |           | 20,205  |           |        |        | 1.54  |      |           |            | 2,420,372  |            |         |           | 36,077  |           |        |      | 1.99 |     
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                |                               | Money market accounts   |                                            |            | 3,661,626 |            |         |           | 103,023 |           |        |        | 3.76  |      |           |            | 3,031,878  |            |         |           | 74,509  |           |        |      | 3.29 |     
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                |                               | Certificates of deposit |                                            |            | 9,733,695 |            |         |           | 390,615 |           |        |        | 5.36  |      |           |            | 10,470,567 |            |         |           | 407,246 |           |        |      | 5.20 |     
|                                                                                |                               |                         |                                            |            |           |            |         |           |         |           |        |        |       |      |           |            |            |            |         |           |         |           |        |     
|                                                                                |                               |                         | Total deposits                             |            |           | 18,749,587 |         |           |         | 554,322   |        |        |       | 3.95 |           |            |            | 18,855,923 |         |           |         | 538,087   |        |      |      | 3.82 | 
|                                                                                |                               |                         |                                            |            |           |            |         |           |         |           |        |        |       |      |           |            |            |            |         |           |         |           |        |     
|                                                                                | FHLB advances                 |                         |                                            | 9,285,482  |           |            |         | 390,673   |         |           |        | 5.61   |       |      |           | 8,239,890  |            |            |         | 311,535   |         |           |        | 5.05 |     
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Other borrowings              |                         |                                            | 414,585    |           |            |         | 23,986    |         |           |        | 7.68   |       |      |           | 742,448    |            |            |         | 35,603    |         |           |        | 6.35 |     
|                                                                                |                               |                         |                                            |            |           |            |         |           |         |           |        |        |       |      |           |            |            |            |         |           |         |           |        |     
|                                                                                |                               |                         | Total borrowings                           |            |           | 9,700,067  |         |           |         | 414,659   |        |        |       | 5.70 |           |            |            | 8,982,338  |         |           |         | 347,138   |        |      |      | 5.16 | 
|                                                                                |                               |                         |                                            |            |           |            |         |           |         |           |        |        |       |      |           |            |            |            |         |           |         |           |        |     
|                                                                                |                               |                         | Total interest-bearing liabilities         |            |           | 28,449,654 |         |           |         | 968,981   |        |        |       | 4.55 |           |            |            | 27,838,261 |         |           |         | 885,225   |        |      |      | 4.25 | 
|                                                                                |                               |                         |                                            |            |           |            |         |           |         |           |        |        |       |      |           |            |            |            |         |           |         |           |        |     
|Noninterest-bearing liabilities                                                 |                               |                         | 476,946                                    |            |           |            |         |           |         |           |        |        |       |      | 538,742   |            |            |            |         |           |         |           |        |     
|                                                                                |                               |                         |                                            |            |           |            |         |           |         |           |        |        |       |      |           |            |            |            |         |           |         |           |        |     
|                                                                                |                               |                         | Total liabilities                          |            |           | 28,926,600 |         |           |         |           |        |        |       |      |           |            |            | 28,377,003 |         |           |         |           |        |      |      |      | 
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|Shareholders equity                                                            |                               |                         | 2,416,940                                  |            |           |            |         |           |         |           |        |        |       |      | 2,470,194 |            |            |            |         |           |         |           |        |     
|                                                                                |                               |                         |                                            |            |           |            |         |           |         |           |        |        |       |      |           |            |            |            |         |           |         |           |        |     
|                                                                                |                               |                         | Total liabilities and shareholders equity |            | $         | 31,343,540 |         |           |         |           |        |        |       |      |           |            | $          | 30,847,197 |         |           |         |           |        |      |      |      | 
|                                                                                |                               |                         |                                            |            |           |            |         |           |         |           |        |        |       |      |           |            |            |            |         |           |         |           |        |     
|Net interest income                                                             |                               |                         |                                            |            |           | $          | 688,205 |           |         |           |        |        |       |      |           |            |            | $          | 701,831 |           |         |           |        |     
|                                                                                |                               |                         |                                            |            |           |            |         |           |         |           |        |        |       |      |           |            |            |            |         |           |         |           |        |     
|Interest rate spread                                                            |                               |                         |                                            |            |           |            |         |           |         |           | 2.93   |        |       |      |           |            |            |            |         |           |         |           | 3.01   |     
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|Net yield on average interest-earning assets                                    |                               |                         |                                            |            |           |            |         |           |         |           | 3.11   |        |       |      |           |            |            |            |         |           |         |           | 3.21   |     
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|Average interest-earning assets to average interest-bearing
        liabilities |                               |                         |                                            |            |           |            |         |           |         |           | 103.84 | %      |       |      |           |            |            |            |         |           |         |           | 104.76 | %   

9



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##### Table of Contents



Figure 3 sets forth the approximate relative contribution of
changes in average interest rates and volume to changes in net
interest income for the periods indicated. Changes not solely
attributable to volume or rate have been allocated in proportion
to the changes due to volume and rate.

Rate/ Volume Analysis (Figure 3)

|                              |                               |                                  |         |                                 |       |        |       |                            |        |        |        |        |        |        |         |        |        |        |        |         |         |        |         |         |         |        | 
|----------------------------- | ----------------------------- | -------------------------------- | ------- | ------------------------------- | ----- | ------ | ----- | -------------------------- | ------ | ------ | ------ | ------ | ------ | ------ | ------- | ------ | ------ | ------ | ------ | ------- | ------- | ------ | ------- | ------- | ------- | ------ | 
|                              |                               |                                  |         |                                
|                              |                               | Three Months Ended September 30, |         | Nine Months Ended September 30,
|                              |                               |                                  |         |                                
|                              |                               |                                  |         |                                
|                              |                               | 2000 v. 1999                     |         | 2000 v. 1999                   
|                              |                               |                                  |         |                                
|                              |                               |                                  |         |                                
|                              |                               | Increase (decrease) due to       |         |                                 |       |        |       | Increase (decrease) due to
|                              |                               |                                  |         |                                 |       |        |       |                           
|                              |                               | Rate                             |         | Volume                          |       | Total  |       | Rate                       |        | Volume |        | Total 
|                              |                               |                                  |         |                                 |       |        |       |                            |        |        |        |       
|                              |                               |                                 
|                              |                               | (Dollars in thousands)          
|                             
|                             
|                             
|                             
|Interest income:              |                               |                                  |         |                                 |       |        |       |                            |        |        |        |        |        |        |         |        |        |        |        |         |         |        |         |        
|                             
|                             
|                             
|                             
|                              | Loans and leases              |                                  | $       | 12,131                          |       |        | $     | 30,340                     |        |        | $      | 42,471 |        |        | $       | 17,900 |        |        | $      | 62,925  |         |        | $       | 80,825  |        
|                             
|                             
|                             
|                             
|                              | Mortgage-backed securities:   |                                  |         |                                 |       |        |       |                            |        |        |        |        |        |        |         |        |        |        |        |         |         |        |         |         |        
|                             
|                             
|                             
|                             
|                              |                               | Available for sale               |         |                                 | 4,889 |        |       |                            | 2,424  |        |        |        | 7,313  |        |         |        | 12,397 |        |        |         | 7,461   |        |         |         | 19,858  |       
|                             
|                             
|                             
|                             
|                              |                               | Held to maturity                 |         |                                 | 1,812 |        |       |                            | (7,999 | )      |        |        | (6,187 | )      |         |        | 3,692  |        |        |         | (32,447 | )      |         |         | (28,755 | )     
|                             
|                             
|                             
|                             
|                              | Investment securities:        |                                  |         |                                 |       |        |       |                            |        |        |        |        |        |        |         |        |        |        |        |         |         |        |         |         |        
|                             
|                             
|                             
|                             
|                              |                               | Trading                          |         |                                 | (89   | )      |       |                            | (58    | )      |        |        | (147   | )      |         |        | 915    |        |        |         | (1,082  | )      |         |         | (167    | )     
|                             
|                             
|                             
|                             
|                              |                               | Available for sale               |         |                                 | 1,945 |        |       |                            | (7,980 | )      |        |        | (6,035 | )      |         |        | 5,249  |        |        |         | (6,994  | )      |         |         | (1,745  | )     
|                             
|                             
|                             
|                             
|                              |                               | Held to maturity                 |         |                                 | (12   | )      |       |                            | (81    | )      |        |        | (93    | )      |         |        | (211   | )      |        |         | (411    | )      |         |         | (622    | )     
|                             
|                             
|                             
|                             
|                              | Other interest-earning assets |                                  |         | 982                             |       |        |       | 376                        |        |        |        | 1,358  |        |        |         | 3,200  |        |        |        | (2,464  | )       |        |         | 736     |        
|                              |                               |                                  |         |                                 |       |        |       |                            |        |        |        |        |        |        |         |        |        |        |        |         |         |        |         |        
|                              |                               |                                  | Total   |                                 |       | 21,658 |       |                            |        | 17,022 |        |        |        | 38,680 |         |        |        | 43,142 |        |         |         | 26,988 |         |         |         | 70,130 | 
|                              |                               |                                  |         |                                 |       |        |       |                            |        |        |        |        |        |        |         |        |        |        |        |         |         |        |         |        
|Interest expense:             |                               |                                  |         |                                 |       |        |       |                            |        |        |        |        |        |        |         |        |        |        |        |         |         |        |         |        
|                             
|                             
|                             
|                             
|                              | Checking accounts             |                                  |         | 5,190                           |       |        |       | 2,392                      |        |        |        | 7,582  |        |        |         | 14,840 |        |        |        | 5,384   |         |        |         | 20,224  |        
|                             
|                             
|                             
|                             
|                              | Savings accounts              |                                  |         | (1,885                          | )     |        |       | (3,083                     | )      |        |        | (4,968 | )      |        |         | (7,165 | )      |        |        | (8,707  | )       |        |         | (15,872 | )      
|                             
|                             
|                             
|                             
|                              | Money market accounts         |                                  |         | 6,987                           |       |        |       | 6,093                      |        |        |        | 13,080 |        |        |         | 11,711 |        |        |        | 16,803  |         |        |         | 28,514  |        
|                             
|                             
|                             
|                             
|                              | Certificates of deposit       |                                  |         | 11,232                          |       |        |       | (12,805                    | )      |        |        | (1,573 | )      |        |         | 12,665 |        |        |        | (29,296 | )       |        |         | (16,631 | )      
|                             
|                             
|                             
|                             
|                              | FHLB advances                 |                                  |         | 16,913                          |       |        |       | 20,097                     |        |        |        | 37,010 |        |        |         | 36,630 |        |        |        | 42,508  |         |        |         | 79,138  |        
|                             
|                             
|                             
|                             
|                              | Other borrowings              |                                  |         | (558                            | )     |        |       | (1,953                     | )      |        |        | (2,511 | )      |        |         | (173   | )      |        |        | (11,444 | )       |        |         | (11,617 | )      
|                              |                               |                                  |         |                                 |       |        |       |                            |        |        |        |        |        |        |         |        |        |        |        |         |         |        |         |        
|                              |                               |                                  | Total   |                                 |       | 37,879 |       |                            |        | 10,741 |        |        |        | 48,620 |         |        |        | 68,508 |        |         |         | 15,248 |         |         |         | 83,756 | 
|                              |                               |                                  |         |                                 |       |        |       |                            |        |        |        |        |        |        |         |        |        |        |        |         |         |        |         |        
|Change in net interest income |                               | $                                | (16,221 | )                               |       | $      | 6,281 |                            |        | $      | (9,940 | )      |        | $      | (25,366 | )      |        | $      | 11,740 |         |         | $      | (13,626 | )      
|                              |                               |                                  |         |                                 |       |        |       |                            |        |        |        |        |        |        |         |        |        |        |        |         |         |        |         |        

Our net interest income for the three months ended
September 30, 2000 was $223.2 million, a decrease of
$9.9 million from the three months ended September 30,
1999. The net yield on interest-earning assets during the third
quarter of 2000 declined to 2.93% from 3.14% for the comparable
period of 1999, reflecting in part, our stock buyback program.
Additionally, as reflected in Figure 4, the net yield on
interest-earning assets at September 30, 2000 declined to
2.85% from 3.19% at December 31, 1999. The compression in
the net yield on interest-earning assets is primarily attributed
to the fact that our liabilities have repriced more quickly than
our assets. Interest rates have risen considerably over the past
year. This increase has been accompanied by a flattening of the
yield curve. Given this interest rate environment, management
has decided to slow balance sheet growth, with particular
emphasis on accelerating the shift away from residential loans
and securities by selling more of those portfolios. Instead,
balance sheet capacity will be preserved for a more favorable
interest rate environment, and existing capital will be
allocated to our stock buyback program. Based on the current
interest rate environment and repricing trends, management
anticipates the net interest margin will stabilize by the end of
the fourth quarter of 2000. Our production level of higher
yielding and shorter term consumer and commercial loans has
reached the level where it can provide for future balance sheet
growth and improvement in net interest income. See Figure 6 for
a summary of our loan and lease originations.

Our net interest income for the nine months ended
September 30, 2000 was $688.2 million, a decrease of
$13.6 million from the nine months ended September 30,
1999. The net yield on average interest-earning assets decreased
by ten basis points during the nine months ended
September 30, 2000 to 3.11% from 3.21% in the comparable
period of 1999. The reasons for the decrease in the net yield on
average interest-earning assets are substantially the same as
for the third quarter results discussed in the above paragraph.

Figure 4 sets forth Charter Ones yields and costs at
period end for the dates indicated. The yields on leases
excludes the impact of the related tax benefit. The cost of
liabilities includes the annualized effect of interest rate risk
management instruments.

10



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##### Table of Contents



Yields and Costs at End of Period(Figure 4)

|                                     |                               |                               |                                    |          |      |      |      |      |      |      | 
|------------------------------------ | ----------------------------- | ----------------------------- | ---------------------------------- | -------- | ---- | ---- | ---- | ---- | ---- | ---- | 
|                                     |                               | 9/30/00                       |                                    | 12/31/99
|                                     |                               |                               |                                    |         
|Weighted average yield:              |                               |                               |                                    |          |      |      |      |     
|                                    
|                                    
|                                    
|                                    
|                                     | Real estate loans             |                               |                                    | 7.41     | %    |      |      | 7.28 | %   
|                                    
|                                    
|                                    
|                                    
|                                     | Automobile loans              |                               |                                    | 8.62     |      |      |      | 8.52 |     
|                                    
|                                    
|                                    
|                                    
|                                     | Retail consumer loans         |                               |                                    | 7.99     |      |      |      | 7.93 |     
|                                    
|                                    
|                                    
|                                    
|                                     | Leases                        |                               |                                    | 6.28     |      |      |      | 6.08 |     
|                                    
|                                    
|                                    
|                                    
|                                     | Corporate banking loans       |                               |                                    | 8.91     |      |      |      | 8.58 |     
|                                    
|                                    
|                                    
|                                    
|                                     |                               | Total loans and leases        |                                    |          | 7.66 |      |      |      | 7.53 |     
|                                    
|                                    
|                                    
|                                    
|                                     | Mortgage-backed securities    |                               |                                    | 7.24     |      |      |      | 7.04 |     
|                                    
|                                    
|                                    
|                                    
|                                     | Investment securities         |                               |                                    | 7.39     |      |      |      | 7.26 |     
|                                    
|                                    
|                                    
|                                    
|                                     | Other interest-earning assets |                               |                                    | 7.44     |      |      |      | 6.97 |     
|                                    
|                                    
|                                    
|                                    
|                                     |                               | Total interest-earning assets |                                    |          | 7.58 |      |      |      | 7.41 |     
|                                    
|                                    
|                                    
|                                    
|Weighted average cost:               |                               |                               |                                    |          |      |      |      |     
|                                    
|                                    
|                                    
|                                    
|                                     | Checking                      |                               |                                    | 1.66     |      |      |      | 1.27 |     
|                                    
|                                    
|                                    
|                                    
|                                     | Money market                  |                               |                                    | 4.26     |      |      |      | 3.41 |     
|                                    
|                                    
|                                    
|                                    
|                                     | Savings                       |                               |                                    | 1.54     |      |      |      | 1.61 |     
|                                    
|                                    
|                                    
|                                    
|                                     | Certificates of deposit       |                               |                                    | 5.73     |      |      |      | 5.13 |     
|                                    
|                                    
|                                    
|                                    
|                                     |                               | Total deposits                |                                    |          | 4.27 |      |      |      | 3.79 |     
|                                    
|                                    
|                                    
|                                    
|                                     | FHLB advances                 |                               |                                    | 5.77     |      |      |      | 5.32 |     
|                                    
|                                    
|                                    
|                                    
|                                     | Other borrowings              |                               |                                    | 7.06     |      |      |      | 6.99 |     
|                                    
|                                    
|                                    
|                                    
|                                     |                               |                               | Total interest-bearing liabilities |          |      | 4.88 |      |      |      | 4.34 | 
|                                    
|                                    
|                                    
|                                    
|Interest rate spread                 |                               |                               | 2.70                               |          |      |      | 3.07 |     
|                                    
|                                    
|                                    
|                                    
|Net yield on interest-earning assets |                               |                               | 2.85                               | %        |      |      | 3.19 | %   

Other Income

Other income for the three months ended September 30, 2000
was $99.8 million, an increase of $27.7 million, or
38.4%, over the $72.1 million for the three months ended
September 30, 1999. The increase was primarily attributable
to income from retail banking. Retail banking income increased
$15.1 million, or 30.7%, over the comparable period in
1999. Growth in income from retail banking continues to be
driven by recent mergers, account acquisition in mature markets
and continual product development.

Other income for the nine months ended September 30, 2000
was $281.3 million, an increase of $62.8 million, or
28.7%, over the $218.5 million for the nine months ended
September 30, 1999. The increase was primarily attributable
to income from retail banking, leasing operations, and the BOLI
program. The reasons for the increase in income from retail
banking are substantially the same as for the third quarter
results discussed in the above paragraph. Income from leasing
operations increased $6.2 million, primarily driven by
residual values on underlying equipment realized upon
termination of leases. The increase in the line item
other was primarily attributable to the BOLI
program. During the year ended December 31, 1999, we
increased our BOLI portfolio by $630.0 million. The related
income on the BOLI asset increased $12.3 million over the
comparable period in 1999 and is the primary reason for the
increase in the line item other.

Administrative Expenses

Administrative expenses were $148.6 million for the three
months ended September 30, 2000, an increase of
$4.6 million, or 3.2%, as compared to the third quarter of
1999. Each year included merger-related expenses. There were
$2.0 million of merger-related expenses recorded in the
three months ended September 30, 2000, and
$1.9 million for the three months ended September 30,
1999. Excluding these merger-related charges, our administrative
expenses were $146.7 million for the three months ended
September 30, 2000 and $142.1 million for the three
months ended September 30, 1999. This resulted in a
comparable ratio of administrative expenses to average assets
(excluding the merger-related charges) of 1.81% for both the
three months ended September 30, 2000 and 1999,
respectively. Our efficiency ratio (excluding the merger-related
charges) was 44.93% for the three months ended
September 30, 2000, an improvement when compared to 45.18%
for the three months ended September 30, 1999. See the
above discussion in Other Income regarding
additional factors that contributed to the improvement in our
efficiency ratio.

11



---



##### Table of Contents



Administrative expenses were $458.9 million for the nine
months ended September 30, 2000, an increase of
$26.5 million, or 6.1%, as compared to the nine months
ended September 30, 1999. Each year included merger-related
expenses. There were $26.1 million of merger-related
expenses recorded in the nine months ended September 30,
2000, and $7.6 million for the nine months ended
September 30, 1999. Excluding these merger-related charges,
our administrative expenses were $432.8 million for the
nine months ended September 30, 2000 and
$424.7 million for the nine months ended September 30,
1999. This resulted in a comparable ratio of administrative
expenses to average assets (excluding the merger-related
charges) of 1.84% for both the nine months ended
September 30, 2000 and 1999, respectively. Our efficiency
ratio (excluding the merger-related charges) was 43.94% for the
nine months ended September 30, 2000, an improvement when
compared to 45.65% for the nine months ended September 30,
1999. See the above discussion in Other Income
regarding additional factors that contributed to the improvement
in our efficiency ratio.

Federal Income Taxes

Federal income tax expense for the three months ended
September 30, 2000 was $51.6 million, as compared to
$49.4 million for the same period in 1999. The primary
reason for this 4.5% increase in the provision for federal
income taxes was a 4.7% increase in pre-tax book income. The
effective tax rate was 32.0% for the 2000 period and 32.1% for
the comparable 1999 period.

Federal income tax expense for the nine months ended
September 30, 2000 was $152.8 million, as compared to
$150.2 million for the same period in 1999. The effective
tax rates were 32.0% and 32.2% for the 2000 and 1999 periods,
respectively.

FINANCIAL CONDITION

Overview

At September 30, 2000, total assets were
$32.8 billion, as compared to total assets of
$31.8 billion at December 31, 1999. Contributing to
the increase in total assets was the growth in our loan
portfolio since December 31, 1999. Figure 5 illustrates our
continued emphasis in originating consumer and commercial loans
due to the higher yields and shorter terms provided by these
types of loans.

12



---



##### Table of Contents



Loans and Leases

Composition of Loans and Leases(Figure 5)

|                                       |                                                             |                        |                       |            |           |            |            |            |           |            | 
|-------------------------------------- | ----------------------------------------------------------- | ---------------------- | --------------------- | ---------- | --------- | ---------- | ---------- | ---------- | --------- | ---------- | 
|                                       |                                                             | 9/30/00                |                       | 12/31/99  
|                                       |                                                             |                        |                       |           
|                                       |                                                             |                       
|                                       |                                                             | (Dollars in thousands)
|                                      
|                                      
|                                      
|                                      
|Loan and lease portfolio, net          |                                                             |                        |                       |            |           |            |            |           
|                                      
|                                      
|                                      
|                                      
|                                       | One-to-four family:                                         |                        |                       |            |           |            |            |            |          
|                                      
|                                      
|                                      
|                                      
|                                       |                                                             | Permanent:             |                       |            |           |            |            |            |           |           
|                                      
|                                      
|                                      
|                                      
|                                       |                                                             |                        | Fixed rate            |            | $         | 4,666,771  |            |            | $         | 5,755,393  | 
|                                      
|                                      
|                                      
|                                      
|                                       |                                                             |                        | Adjustable rate       |            |           | 6,373,274  |            |            |           | 5,703,042  | 
|                                      
|                                      
|                                      
|                                      
|                                       |                                                             | Construction           |                       |            | 325,385   |            |            |            | 276,172   |           
|                                       |                                                             |                        |                       |            |           |            |            |           
|                                       |                                                             |                        | 11,365,430            |            |           |            | 11,734,607 |           
|                                       |                                                             |                        |                       |            |           |            |            |           
|                                       | Commercial real estate:                                     |                        |                       |            |           |            |            |            |          
|                                      
|                                      
|                                      
|                                      
|                                       |                                                             | Multifamily            |                       |            | 1,181,941 |            |            |            | 1,276,004 |           
|                                      
|                                      
|                                      
|                                      
|                                       |                                                             | Other                  |                       |            | 849,999   |            |            |            | 673,972   |           
|                                       |                                                             |                        |                       |            |           |            |            |           
|                                       |                                                             |                        | 2,031,940             |            |           |            | 1,949,976  |           
|                                       |                                                             |                        |                       |            |           |            |            |           
|                                       | Consumer:                                                   |                        |                       |            |           |            |            |            |          
|                                      
|                                      
|                                      
|                                      
|                                       |                                                             | Retail                 |                       |            | 5,411,900 |            |            |            | 4,502,023 |           
|                                      
|                                      
|                                      
|                                      
|                                       |                                                             | Automobile             |                       |            | 3,002,714 |            |            |            | 2,497,956 |           
|                                       |                                                             |                        |                       |            |           |            |            |           
|                                       |                                                             |                        | 8,414,614             |            |           |            | 6,999,979  |           
|                                       |                                                             |                        |                       |            |           |            |            |           
|                                       | Business:                                                   |                        |                       |            |           |            |            |            |          
|                                      
|                                      
|                                      
|                                      
|                                       |                                                             | Leasing                |                       |            | 1,583,840 |            |            |            | 1,137,895 |           
|                                      
|                                      
|                                      
|                                      
|                                       |                                                             | Corporate banking      |                       |            | 731,080   |            |            |            | 676,793   |           
|                                       |                                                             |                        |                       |            |           |            |            |           
|                                       |                                                             |                        | 2,314,920             |            |           |            | 1,814,688  |           
|                                       |                                                             |                        |                       |            |           |            |            |           
|                                       | Loans and leases before allowance for loan and lease losses |                        |                       | 24,126,904 |           |            |            | 22,499,250 |          
|                                      
|                                      
|                                      
|                                      
|                                       | Allowance for loan and lease losses                         |                        |                       | (189,583   | )         |            |            | (186,400   | )        
|                                       |                                                             |                        |                       |            |           |            |            |           
|                                       |                                                             |                        | Loans and leases, net |            | $         | 23,937,321 |            |            | $         | 22,312,850 | 
|                                       |                                                             |                        |                       |            |           |            |            |           
|Portfolio of loans serviced for others |                                                             | $                      | 12,568,760            |            |           | $          | 10,798,563 |           
|                                       |                                                             |                        |                       |            |           |            |            |           

Loan and Lease Activity(Figure 6)

|                                |                                                |                    |                                      |                                    |           |           |           |           |           |           |           |           |           |           |           |           |           |           |           | 
|------------------------------- | ---------------------------------------------- | ------------------ | ------------------------------------ | ---------------------------------- | --------- | --------- | --------- | --------- | --------- | --------- | --------- | --------- | --------- | --------- | --------- | --------- | --------- | --------- | --------- | 
|                                |                                                |                    |                                      |                                   
|                                |                                                | Three Months Ended |                                      | Nine Months Ended                 
|                                |                                                |                    |                                      |                                   
|                                |                                                | 9/30/00            |                                      | 9/30/99                            |           | 9/30/00   |           | 9/30/99  
|                                |                                                |                    |                                      |                                    |           |           |           |          
|                                |                                                |                    |                                      |                                    |           |          
|                                |                                                |                    |                                      | (Dollars in thousands)             |           |          
|                               
|                               
|                               
|                               
|Originations:                   |                                                |                    |                                      |                                    |           |           |           |           |           |           |           |           |           |           |           |          
|                               
|                               
|                               
|                               
|Real estate:                    |                                                |                    |                                      |                                    |           |           |           |           |           |           |           |           |           |           |           |          
|                               
|                               
|                               
|                               
|                                | Permanent:                                     |                    |                                      |                                    |           |           |           |           |           |           |           |           |           |           |           |           |          
|                               
|                               
|                               
|                               
|                                |                                                | One-to-four family |                                      | $                                  | 1,381,679 |           |           | $         | 1,305,158 |           |           | $         | 3,796,381 |           |           | $         | 3,997,780 |          
|                               
|                               
|                               
|                               
|                                |                                                | Multifamily        |                                      |                                    | 15,380    |           |           |           | 48,265    |           |           |           | 29,636    |           |           |           | 192,464   |          
|                               
|                               
|                               
|                               
|                                |                                                | Commercial         |                                      |                                    | 61,687    |           |           |           | 51,946    |           |           |           | 171,224   |           |           |           | 186,988   |          
|                                |                                                |                    |                                      |                                    |           |           |           |           |           |           |           |           |           |           |           |          
|                                |                                                |                    | Total permanent loans                |                                    |           | 1,458,746 |           |           |           | 1,405,369 |           |           |           | 3,997,241 |           |           |           | 4,377,232 |          
|                                |                                                |                    |                                      |                                    |           |           |           |           |           |           |           |           |           |           |           |          
|                                | Construction:                                  |                    |                                      |                                    |           |           |           |           |           |           |           |           |           |           |           |           |          
|                               
|                               
|                               
|                               
|                                |                                                | One-to-four family |                                      |                                    | 173,190   |           |           |           | 149,410   |           |           |           | 441,707   |           |           |           | 412,045   |          
|                               
|                               
|                               
|                               
|                                |                                                | Multifamily        |                                      |                                    | 23,494    |           |           |           | 10,742    |           |           |           | 67,357    |           |           |           | 52,692    |          
|                               
|                               
|                               
|                               
|                                |                                                | Commercial         |                                      |                                    | 31,036    |           |           |           | 23,002    |           |           |           | 83,820    |           |           |           | 74,360    |          
|                                |                                                |                    |                                      |                                    |           |           |           |           |           |           |           |           |           |           |           |          
|                                |                                                |                    | Total construction loans             |                                    |           | 227,720   |           |           |           | 183,154   |           |           |           | 592,884   |           |           |           | 539,097   |          
|                                |                                                |                    |                                      |                                    |           |           |           |           |           |           |           |           |           |           |           |          
|                                |                                                |                    |                                      | Total real estate loans originated |           |           | 1,686,466 |           |           |           | 1,588,523 |           |           |           | 4,590,125 |           |           |           | 4,916,329 | 
|                                |                                                |                    |                                      |                                    |           |           |           |           |           |           |           |           |           |           |           |          
|Retail consumer                 |                                                |                    | 690,608                              |                                    |           |           | 605,607   |           |           |           | 1,895,425 |           |           |           | 1,887,073 |          
|                               
|                               
|                               
|                               
|Automobile                      |                                                |                    | 597,303                              |                                    |           |           | 346,391   |           |           |           | 1,341,498 |           |           |           | 1,087,495 |          
|                               
|                               
|                               
|                               
|Leases                          |                                                |                    | 258,647                              |                                    |           |           | 190,814   |           |           |           | 566,146   |           |           |           | 323,334   |          
|                               
|                               
|                               
|                               
|Corporate banking               |                                                |                    | 211,515                              |                                    |           |           | 171,127   |           |           |           | 569,747   |           |           |           | 468,345   |          
|                                |                                                |                    |                                      |                                    |           |           |           |           |           |           |           |           |           |           |           |          
|                                |                                                |                    | Total loans and leases originated    |                                    |           | 3,444,539 |           |           |           | 2,902,462 |           |           |           | 8,962,941 |           |           |           | 8,682,576 |          
|                                |                                                |                    |                                      |                                    |           |           |           |           |           |           |           |           |           |           |           |          
|Loans purchased                 |                                                |                    | 8,984                                |                                    |           |           | 4,767     |           |           |           | 16,890    |           |           |           | 376,770   |          
|                                |                                                |                    |                                      |                                    |           |           |           |           |           |           |           |           |           |           |           |          
|Sales and principal reductions: |                                                |                    |                                      |                                    |           |           |           |           |           |           |           |           |           |           |           |          
|                               
|                               
|                               
|                               
|                                | Loans sold                                     |                    |                                      | 125,852                            |           |           |           | 212,486   |           |           |           | 327,375   |           |           |           | 852,520   |          
|                               
|                               
|                               
|                               
|                                | Loans exchanged for mortgage-backed securities |                    |                                      | 1,310,813                          |           |           |           | 647,560   |           |           |           | 2,781,889 |           |           |           | 2,513,605 |          
|                               
|                               
|                               
|                               
|                                | Principal reductions                           |                    |                                      | 1,532,501                          |           |           |           | 1,794,709 |           |           |           | 4,154,534 |           |           |           | 5,442,896 |          
|                                |                                                |                    |                                      |                                    |           |           |           |           |           |           |           |           |           |           |           |          
|                                |                                                |                    | Total sales and principal reductions |                                    |           | 2,969,166 |           |           |           | 2,654,755 |           |           |           | 7,263,798 |           |           |           | 8,809,021 |          
|                                |                                                |                    |                                      |                                    |           |           |           |           |           |           |           |           |           |           |           |          
|                                |                                                |                    |                                      | Increase before net items          |           | $         | 484,357   |           |           | $         | 252,474   |           |           | $         | 1,716,033 |           |           | $         | 250,325   | 
|                                |                                                |                    |                                      |                                    |           |           |           |           |           |           |           |           |           |           |           |          

13



---



##### Table of Contents



Investment and Mortgage-Backed Securities

Figures 7 and 8 summarize our investment and mortgage-backed
securities portfolios at September 30, 2000 and
December 31, 1999. The amounts reflected represent the fair
values of securities held for trading and available for sale and
the amortized cost of securities held to maturity.

Investment Securities(Figure 7)

|                   |                                      |                        |                                                |          |   |         |   |         |   |         | 
|------------------ | ------------------------------------ | ---------------------- | ---------------------------------------------- | -------- | - | ------- | - | ------- | - | ------- | 
|                   |                                      | 9/30/00                |                                                | 12/31/99
|                   |                                      |                        |                                                |         
|                   |                                      |                       
|                   |                                      | (Dollars in thousands)
|                  
|                  
|                  
|                  
|Trading            |                                      |                        |                                                |          |   |         |   |        
|                  
|                  
|                  
|                  
|                   | Other                                |                        | $                                              |         |   |         | $ | 13,380  |  
|                   |                                      |                        |                                                |          |   |         |   |        
|                   |                                      |                        | Total investment securities held for trading   |          |   |        |   |         |   | 13,380  | 
|                   |                                      |                        |                                                |          |   |         |   |        
|Available for Sale |                                      |                        |                                                |          |   |         |   |        
|                  
|                  
|                  
|                  
|                   | U.S. Treasury and agency securities  |                        |                                                | 334,935  |   |         |   | 339,687 |  
|                  
|                  
|                  
|                  
|                   | Corporate notes and commercial paper |                        |                                                | 67,125   |   |         |   | 88,368  |  
|                  
|                  
|                  
|                  
|                   | Other                                |                        |                                                | 35,782   |   |         |   | 54,640  |  
|                   |                                      |                        |                                                |          |   |         |   |        
|                   |                                      |                        | Total investment securities available for sale |          |   | 437,842 |   |         |   | 482,695 | 
|                   |                                      |                        |                                                |          |   |         |   |        
|Held to Maturity   |                                      |                        |                                                |          |   |         |   |        
|                  
|                  
|                  
|                  
|                   | U.S. Treasury and agency securities  |                        |                                                | 15,234   |   |         |   | 17,058  |  
|                  
|                  
|                  
|                  
|                   | Corporate notes and commercial paper |                        |                                                |         |   |         |   | 15,659  |  
|                  
|                  
|                  
|                  
|                   | Other                                |                        |                                                | 8,250    |   |         |   | 13,289  |  
|                   |                                      |                        |                                                |          |   |         |   |        
|                   |                                      |                        | Total investment securities held to maturity   |          |   | 23,484  |   |         |   | 46,006  | 
|                   |                                      |                        |                                                |          |   |         |   |        
|                   |                                      |                        | Total                                          |          | $ | 461,326 |   |         | $ | 542,081 | 
|                   |                                      |                        |                                                |          |   |         |   |        
|                   | Weighted average rate                |                        |                                                | 7.39     | % |         |   | 7.26    | %
|                   |                                      |                        |                                                |          |   |         |   |        

Mortgage-Backed Securities(Figure 8)

|                   |                                      |                                                     |                                                   |          |           |           |           |  |           |           |           | 
|------------------ | ------------------------------------ | --------------------------------------------------- | ------------------------------------------------- | -------- | --------- | --------- | --------- |  | --------- | --------- | --------- | 
|                   |                                      | 9/30/00                                             |                                                   | 12/31/99
|                   |                                      |                                                     |                                                   |         
|                   |                                      |                                                    
|                   |                                      | (Dollars in thousands)                             
|                  
|                  
|                  
|                  
|Available for Sale |                                      |                                                     |                                                   |          |           |           |           | 
|                  
|                  
|                  
|                  
|                   | Participation certificates:          |                                                     |                                                   |          |           |           |           |  |          
|                  
|                  
|                  
|                  
|                   |                                      | Government agency issues:                           |                                                   |          |           |           |           |  |           |          
|                  
|                  
|                  
|                  
|                   |                                      |                                                     | FNMA                                              |          | $         | 2,675,901 |           |  | $         | 3,023,228 |          
|                  
|                  
|                  
|                  
|                   |                                      |                                                     | FHLMC                                             |          |           | 205,190   |           |  |           | 95,034    |          
|                  
|                  
|                  
|                  
|                   |                                      |                                                     | GNMA                                              |          |           | 2,314     |           |  |           | 2,608     |          
|                  
|                  
|                  
|                  
|                   | Collateralized mortgage obligations: |                                                     |                                                   |          |           |           |           |  |          
|                  
|                  
|                  
|                  
|                   |                                      | Government agency issues:                           |                                                   |          |           |           |           |  |           |          
|                  
|                  
|                  
|                  
|                   |                                      |                                                     | FHLMC                                             |          |           | 295,842   |           |  |           | 232,906   |          
|                  
|                  
|                  
|                  
|                   |                                      |                                                     | FNMA                                              |          |           | 228,496   |           |  |           | 304,018   |          
|                  
|                  
|                  
|                  
|                   |                                      |                                                     | GNMA                                              |          |           | 6,311     |           |  |           | 7,349     |          
|                  
|                  
|                  
|                  
|                   |                                      | Private issues                                      |                                                   |          | 516,808   |           |           |  | 527,991   |          
|                   |                                      |                                                     |                                                   |          |           |           |           | 
|                   |                                      | Total mortgage-backed securities available for sale |                                                   |          | 3,930,862 |           |           |  | 4,193,134 |          
|                   |                                      |                                                     |                                                   |          |           |           |           | 
|Held to Maturity   |                                      |                                                     |                                                   |          |           |           |           | 
|                  
|                  
|                  
|                  
|                   | Participation certificates:          |                                                     |                                                   |          |           |           |           |  |          
|                  
|                  
|                  
|                  
|                   |                                      | Government agency issues:                           |                                                   |          |           |           |           |  |           |          
|                  
|                  
|                  
|                  
|                   |                                      |                                                     | FNMA                                              |          |           | 461,648   |           |  |           | 549,866   |          
|                  
|                  
|                  
|                  
|                   |                                      |                                                     | FHLMC                                             |          |           | 165,051   |           |  |           | 196,704   |          
|                  
|                  
|                  
|                  
|                   |                                      |                                                     | GNMA                                              |          |           | 88,999    |           |  |           | 101,468   |          
|                  
|                  
|                  
|                  
|                   |                                      | Private issues                                      |                                                   |          | 135,301   |           |           |  | 162,485   |          
|                  
|                  
|                  
|                  
|                   | Collateralized mortgage obligations: |                                                     |                                                   |          |           |           |           |  |          
|                  
|                  
|                  
|                  
|                   |                                      | Government agency issues:                           |                                                   |          |           |           |           |  |           |          
|                  
|                  
|                  
|                  
|                   |                                      |                                                     | FNMA                                              |          |           | 208,766   |           |  |           | 221,934   |          
|                  
|                  
|                  
|                  
|                   |                                      |                                                     | FHLMC                                             |          |           | 71,480    |           |  |           | 82,838    |          
|                  
|                  
|                  
|                  
|                   |                                      | Private issues                                      |                                                   |          | 470,382   |           |           |  | 591,951   |          
|                   |                                      |                                                     |                                                   |          |           |           |           | 
|                   |                                      |                                                     | Total mortgage-backed securities held to maturity |          |           | 1,601,627 |           |  |           | 1,907,246 |          
|                   |                                      |                                                     |                                                   |          |           |           |           | 
|                   |                                      |                                                     |                                                   | Total    |           | $         | 5,532,489 |  |           | $         | 6,100,380 | 
|                   |                                      |                                                     |                                                   |          |           |           |           | 
|                   |                                      | Weighted average rate                               |                                                   |          | 7.24      | %         |           |  | 7.04      | %        
|                   |                                      |                                                     |                                                   |          |           |           |           | 

14



---



##### Table of Contents



Asset Quality

Analysis of the Allowance for Loan and Lease
Losses(Figure 9)

|                                    |                                                          |                    |   |                                |        |         |         |         |        |   |         |         |         |   |         |         |         |   |         |  
|----------------------------------- | -------------------------------------------------------- | ------------------ | - | ------------------------------ | ------ | ------- | ------- | ------- | ------ | - | ------- | ------- | ------- | - | ------- | ------- | ------- | - | ------- | -
|                                    |                                                          |                    |   |                               
|                                    |                                                          | Three Months Ended |   | Nine Months Ended             
|                                    |                                                          |                    |   |                               
|                                    |                                                          | 9/30/00            |   | 9/30/99                        |        | 9/30/00 |         | 9/30/99
|                                    |                                                          |                    |   |                                |        |         |         |        
|                                    |                                                          |                    |   |                                |        |        
|                                    |                                                          |                    |   | (Dollars in thousands)         |        |        
|                                   
|                                   
|                                   
|                                   
|Allowance for loan and lease losses |                                                          |                    |   |                                |        |         |         |         |        |   |         |         |         |   |         |        
|                                   
|                                   
|                                   
|                                   
|                                    | Balance, beginning of period                             |                    | $ | 186,194                        |        |         | $       | 182,349 |        |   | $       | 186,400 |         |   | $       | 184,989 |        
|                                   
|                                   
|                                   
|                                   
|                                    | Provision for loan and lease losses                      |                    |   | 13,178                         |        |         |         | 7,366   |        |   |         | 33,285  |         |   |         | 21,979  |        
|                                   
|                                   
|                                   
|                                   
|                                    | Loans and leases charged off:                            |                    |   |                                |        |         |         |         |        |   |         |         |         |   |         |         |        
|                                   
|                                   
|                                   
|                                   
|                                    |                                                          | Mortgage           |   |                                | (1,117 | )       |         |         | (1,815 | ) |         |         | (4,402  | ) |         |         | (5,539  | )
|                                   
|                                   
|                                   
|                                   
|                                    |                                                          | Automobile         |   |                                | (6,414 | )       |         |         | (6,482 | ) |         |         | (20,295 | ) |         |         | (20,791 | )
|                                   
|                                   
|                                   
|                                   
|                                    |                                                          | Retail consumer    |   |                                | (3,946 | )       |         |         | (577   | ) |         |         | (11,333 | ) |         |         | (2,559  | )
|                                   
|                                   
|                                   
|                                   
|                                    |                                                          | Leases             |   |                                |       |         |         |         |       |   |         |         |        |   |         |         | (900    | )
|                                   
|                                   
|                                   
|                                   
|                                    |                                                          | Corporate banking  |   |                                | (153   | )       |         |         | (1,472 | ) |         |         | (589    | ) |         |         | (2,006  | )
|                                    |                                                          |                    |   |                                |        |         |         |         |        |   |         |         |         |   |         |        
|                                    |                                                          |                    |   | Total charge-offs              |        |         | (11,630 | )       |        |   | (10,346 | )       |         |   | (36,619 | )       |         |   | (31,795 | )
|                                    |                                                          |                    |   |                                |        |         |         |         |        |   |         |         |         |   |         |        
|                                    | Recoveries:                                              |                    |   |                                |        |         |         |         |        |   |         |         |         |   |         |         |        
|                                   
|                                   
|                                   
|                                   
|                                    |                                                          | Mortgage           |   |                                | 179    |         |         |         | 65     |   |         |         | 743     |   |         |         | 827     |  
|                                   
|                                   
|                                   
|                                   
|                                    |                                                          | Automobile         |   |                                | 1,402  |         |         |         | 1,673  |   |         |         | 4,502   |   |         |         | 4,727   |  
|                                   
|                                   
|                                   
|                                   
|                                    |                                                          | Retail consumer    |   |                                | 229    |         |         |         | 255    |   |         |         | 993     |   |         |         | 521     |  
|                                   
|                                   
|                                   
|                                   
|                                    |                                                          | Leases             |   |                                |       |         |         |         |       |   |         |         |        |   |         |         |        |  
|                                   
|                                   
|                                   
|                                   
|                                    |                                                          | Corporate banking  |   |                                | 31     |         |         |         | 79     |   |         |         | 279     |   |         |         | 193     |  
|                                    |                                                          |                    |   |                                |        |         |         |         |        |   |         |         |         |   |         |        
|                                    |                                                          |                    |   | Total recoveries               |        |         | 1,841   |         |        |   | 2,072   |         |         |   | 6,517   |         |         |   | 6,268   |  
|                                    |                                                          |                    |   |                                |        |         |         |         |        |   |         |         |         |   |         |        
|                                    |                                                          |                    |   | Net loan and lease charge-offs |        |         | (9,789  | )       |        |   | (8,274  | )       |         |   | (30,102 | )       |         |   | (25,527 | )
|                                    |                                                          |                    |   |                                |        |         |         |         |        |   |         |         |         |   |         |        
|                                    | Balance, end of period                                   |                    | $ | 189,583                        |        |         | $       | 181,441 |        |   | $       | 189,583 |         |   | $       | 181,441 |        
|                                    |                                                          |                    |   |                                |        |         |         |         |        |   |         |         |         |   |         |        
|                                    | Net charge-offs to average loans and leases (annualized) |                    |   | .16                            | %      |         |         | .15     | %      |   |         | .17     | %       |   |         | .19     | %      

Figure 10 sets forth information concerning nonperforming assets
and additional information on the allowance for loan and lease
losses.

15



---



##### Table of Contents



Nonperforming Assets(Figure 10)

|                                                                |                                                          |                                          |                            |                                                              |        |        |         |       |        |        |         | 
|--------------------------------------------------------------- | -------------------------------------------------------- | ---------------------------------------- | -------------------------- | ------------------------------------------------------------ | ------ | ------ | ------- | ----- | ------ | ------ | ------- | 
|                                                                |                                                          | 9/30/00                                  |                            | 12/31/99                                                    
|                                                                |                                                          |                                          |                            |                                                             
|                                                                |                                                          |                                         
|                                                                |                                                          | (Dollars in thousands)                  
|                                                               
|                                                               
|                                                               
|                                                               
|Nonperforming loans and leases:                                 |                                                          |                                          |                            |                                                              |        |        |         |      
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                | Nonaccrual loans and leases:                             |                                          |                            |                                                              |        |        |         |       |       
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                |                                                          | Real estate mortgage loans:              |                            |                                                              |        |        |         |       |        |       
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                |                                                          |                                          | One-to-four family(1)      |                                                              | $      | 70,692 |         |       | $      | 75,682 |        
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                |                                                          |                                          | Multifamily and commercial |                                                              |        | 6,869  |         |       |        | 3,369  |        
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                |                                                          |                                          | Construction and land      |                                                              |        | 5,606  |         |       |        | 1,095  |        
|                                                                |                                                          |                                          |                            |                                                              |        |        |         |      
|                                                                |                                                          |                                          |                            | Total real estate mortgage loans                             |        |        | 83,167  |       |        |        | 80,146  | 
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                |                                                          | Retail consumer                          |                            |                                                              | 55,903 |        |         |       | 39,638 |       
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                |                                                          | Automobile                               |                            |                                                              | 229    |        |         |       | 482    |       
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                |                                                          | Corporate banking                        |                            |                                                              | 17,973 |        |         |       | 6,037  |       
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                |                                                          | Leases                                   |                            |                                                              |       |        |         |       |       |       
|                                                                |                                                          |                                          |                            |                                                              |        |        |         |      
|                                                                |                                                          |                                          |                            | Total nonaccrual loans and leases                            |        |        | 157,272 |       |        |        | 126,303 | 
|                                                                |                                                          |                                          |                            |                                                              |        |        |         |      
|                                                                | Accruing loans and leases delinquent more than 90 days:  |                                          |                            |                                                              |        |        |         |       |       
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                |                                                          | Real estate mortgage loans               |                            |                                                              |       |        |         |       |       |       
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                |                                                          | Retail consumer(1)                       |                            |                                                              | 2,055  |        |         |       | 2,562  |       
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                |                                                          | Automobile                               |                            |                                                              | 5,842  |        |         |       | 4,973  |       
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                |                                                          | Corporate banking                        |                            |                                                              | 3,808  |        |         |       | 2,463  |       
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                |                                                          | Leases                                   |                            |                                                              | 3,044  |        |         |       |       |       
|                                                                |                                                          |                                          |                            |                                                              |        |        |         |      
|                                                                |                                                          |                                          |                            | Total accruing loans and leases delinquent more than 90 days |        |        | 14,749  |       |        |        | 9,998   | 
|                                                                |                                                          |                                          |                            |                                                              |        |        |         |      
|                                                                | Restructured real estate mortgage loans                  |                                          |                            | 669                                                          |        |        |         | 1,009 |       
|                                                                |                                                          |                                          |                            |                                                              |        |        |         |      
|                                                                |                                                          |                                          |                            | Total nonperforming loans and leases                         |        |        | 172,690 |       |        |        | 137,310 | 
|                                                               
|                                                               
|                                                               
|                                                               
|Real estate acquired through foreclosure and other              |                                                          |                                          | 23,495                     |                                                              |        |        | 24,453  |      
|                                                                |                                                          |                                          |                            |                                                              |        |        |         |      
|                                                                |                                                          |                                          |                            | Total nonperforming assets                                   |        |        | 196,185 |       |        |        | 161,763 | 
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                |                                                          |                                          |                            | Less government guaranteed loans                             |        |        | 20,105  |       |        |        | 18,841  | 
|                                                                |                                                          |                                          |                            |                                                              |        |        |         |      
|                                                                |                                                          |                                          |                            | Nonperforming assets net of government guaranteed loans      |        | $      | 176,080 |       |        | $      | 142,922 | 
|                                                                |                                                          |                                          |                            |                                                              |        |        |         |      
|Ratio of:                                                       |                                                          |                                          |                            |                                                              |        |        |         |      
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                | Nonperforming loans and leases to total loans and leases |                                          |                            | .72                                                          | %      |        |         | .62   | %     
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                | Nonperforming assets to total assets                     |                                          |                            | .60                                                          |        |        |         | .51   |       
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                | Allowance for loan and lease losses to:                  |                                          |                            |                                                              |        |        |         |       |       
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                |                                                          | Nonperforming loans and leases           |                            |                                                              | 109.78 |        |         |       | 135.75 |       
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                |                                                          | Total loans and leases before allowance  |                            |                                                              | .79    |        |         |       | .83    |       
|                                                               
|                                                               
|                                                               
|                                                               
|Ratio of (excluding government guaranteed nonperforming loans): |                                                          |                                          |                            |                                                              |        |        |         |      
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                | Nonperforming loans and leases to total loans and leases |                                          |                            | .64                                                          |        |        |         | .53   |       
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                | Nonperforming assets to total assets                     |                                          |                            | .54                                                          |        |        |         | .45   |       
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                | Allowance for loan and lease losses to:                  |                                          |                            |                                                              |        |        |         |       |       
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                |                                                          | Nonperforming loans and leases           |                            |                                                              | 124.25 |        |         |       | 157.34 |       
|                                                               
|                                                               
|                                                               
|                                                               
|                                                                |                                                          | Total loans and leases before allowances |                            |                                                              | .79    | %      |         |       | .83    | %     



---



|    |                                      
|--- | -------------------------------------
|(1) | Includes government guaranteed loans.

At September 30, 2000, there were $53.7 million of
loans and leases not reflected in the table above, where known
information about possible credit problems of borrowers caused
management to have doubts as to the ability of the borrower to
comply with present repayment terms and that may result in
disclosure of such loans and leases in the future.

16



---



##### Table of Contents



SOURCES OF FUNDS

General

Deposits have historically been the most important source of our
funds for use in lending and for general business purposes. We
also derive funds from FHLB advances, reverse repurchase
agreements and other borrowings, principal repayments on loans
and mortgage-backed securities, funds provided by operations and
proceeds from the sale of loans and loan participations.

Deposits

Deposit inflows and outflows are significantly influenced by
general interest rates, market conditions and competitive
factors. We reprice our deposits primarily based on competitive
conditions. In order to decrease the volatility of our deposits,
we impose stringent early withdrawal penalties on our
certificates of deposit. Consumer and commercial deposits are
attracted principally from within our primary market areas
through the offering of a broad range of deposit instruments.

Composition of Deposits(Figure 11)

|                                                                                                |                     |                     |           |                        |            |        |      |          |      |  |            |           |            |  |      |      |      | 
|----------------------------------------------------------------------------------------------- | ------------------- | ------------------- | --------- | ---------------------- | ---------- | ------ | ---- | -------- | ---- |  | ---------- | --------- | ---------- |  | ---- | ---- | ---- | 
|                                                                                                |                     |                     |           |                       
|                                                                                                |                     | 9/30/00             |           | 12/31/99              
|                                                                                                |                     |                     |           |                       
|                                                                                                |                     |                     |           | Weighted               |            |        |      | Weighted
|                                                                                                |                     |                     |           | Average                |            |        |      | Average 
|                                                                                                |                     | Amount              |           | Rate                   |            | Amount |      | Rate    
|                                                                                                |                     |                     |           |                        |            |        |      |         
|                                                                                                |                     |                     |           |                        |            |       
|                                                                                                |                     |                     |           | (Dollars in thousands) |            |       
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|Checking accounts:                                                                              |                     |                     |           |                        |            |        |      |          |      |  |            |           |            |  |      |     
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                                | Interest-bearing    |                     | $         | 2,416,001              |            |        |      | 2.62     | %    |  | $          | 2,066,453 |            |  |      | 2.05 | %   
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                                | Noninterest-bearing |                     |           | 1,390,720              |            |        |      |         |      |  |            | 1,263,290 |            |  |      |     |     
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|Savings accounts                                                                                |                     |                     | 1,450,104 |                        |            |        | 1.54 |          |      |  | 2,065,127  |           |            |  | 1.61 |     
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|Money market accounts                                                                           |                     |                     | 3,963,608 |                        |            |        | 4.26 |          |      |  | 3,170,435  |           |            |  | 3.41 |     
|                                                                                               
|                                                                                               
|                                                                                               
|                                                                                               
|Certificates of deposit                                                                         |                     |                     | 9,501,825 |                        |            |        | 5.84 |          |      |  | 10,508,670 |           |            |  | 5.31 |     
|                                                                                                |                     |                     |           |                        |            |        |      |          |      |  |            |           |            |  |      |     
|                                                                                                |                     | Total deposits, net |           | $                      | 18,722,258 |        |      |          | 4.32 |  |            | $         | 19,073,975 |  |      |      | 3.89 | 
|                                                                                                |                     |                     |           |                        |            |        |      |          |      |  |            |           |            |  |      |     
|Including the annualized effect of applicable interest rate risk
        management instruments |                     |                     |           |                        |            |        | 4.27 | %        |      |  |            |           |            |  | 3.79 | %   

Investment securities and mortgage-backed securities with a book
value of $515.3 million at September 30, 2000 and
$544.4 million at December 31, 1999, were pledged to
secure public deposits and for other purposes required or
permitted by law.

Borrowings

At September 30, 2000, borrowings primarily consisted of
FHLB advances. These positions were secured by our investment in
the stock of the FHLB, as well as $13.5 billion in certain
real estate loans and $2.3 billion in mortgage-backed
securities.

Federal Home Loan Bank Advances(Figure 12)

|           |                        |                     |           |                        |           |        |      |          |      |   |           |           |           |  |      |      |      |  
|---------- | ---------------------- | ------------------- | --------- | ---------------------- | --------- | ------ | ---- | -------- | ---- | - | --------- | --------- | --------- |  | ---- | ---- | ---- | -
|           |                        |                     |           |                       
|           |                        | 9/30/00             |           | 12/31/99              
|           |                        |                     |           |                       
|           |                        |                     |           | Weighted               |           |        |      | Weighted
|           |                        |                     |           | Average                |           |        |      | Average 
|           |                        | Amount              |           | Rate                   |           | Amount |      | Rate    
|           |                        |                     |           |                        |           |        |      |         
|           |                        |                     |           |                        |           |       
|           |                        |                     |           | (Dollars in thousands) |           |       
|          
|          
|          
|          
|Short-term |                        | $                   | 4,685,247 |                        |           |        | 6.01 | %        |      | $ | 4,115,000 |           |           |  | 5.43 | %   
|          
|          
|          
|          
|Long-term: |                        |                     |           |                        |           |        |      |          |      |   |           |           |           |  |      |     
|          
|          
|          
|          
|           | Fixed-rate advances    |                     |           | 4,656,231              |           |        |      | 5.47     |      |   |           | 4,512,941 |           |  |      | 5.10 |     
|          
|          
|          
|          
|           | Variable-rate advances |                     |           | 424,478                |           |        |      | 6.53     |      |   |           | 598,209   |           |  |      | 6.21 |     
|           |                        |                     |           |                        |           |        |      |          |      |   |           |           |           |  |      |     
|           |                        | Total advances, net |           | $                      | 9,765,956 |        |      |          | 5.77 | % |           | $         | 9,226,150 |  |      |      | 5.32 | %
|           |                        |                     |           |                        |           |        |      |          |      |   |           |           |           |  |      |     

Interest Rate Risk Management

We utilize various types of interest rate contracts in managing
our interest rate risk profile. We utilize fixed receipt

17



---



##### Table of Contents





Interest Rate Swaps(Figure 13)

|                                                |      |           |   |           |           |                        |  |           |      |           |  |          |      |      |   |         |           |  |  |      |      |   |  |      |      |     
|----------------------------------------------- | ---- | --------- | - | --------- | --------- | ---------------------- |  | --------- | ---- | --------- |  | -------- | ---- | ---- | - | ------- | --------- |  |  | ---- | ---- | - |  | ---- | ---- | ----
|                                                |      |           |   |          
|                                                |      | 9/30/00   |   | 12/31/99 
|                                                |      |           |   |          
|                                                |      | Notional  |   | Receiving |           | Paying                 |  | Notional  |      | Receiving |  | Paying  
|                                                |      | Principal |   | Interest  |           | Interest               |  | Principal |      | Interest  |  | Interest
|                                                |      | Amount    |   | Rate      |           | Rate                   |  | Amount    |      | Rate      |  | Rate    
|                                                |      |           |   |           |           |                        |  |           |      |           |  |         
|                                                |      |           |   |           |           |                        |  |           |      |          
|                                                |      |           |   |           |           | (Dollars in thousands) |  |           |      |          
|                                               
|                                               
|                                               
|                                               
|Fixed Payment and Variable Receipt Maturing in: |      |           |   |           |           |                        |  |           |      |           |  |          |      |      |   |         |           |  |  |      |      |   |  |     
|                                               
|                                               
|                                               
|                                               
|                                                | 2002 |           | $ | 25,000    |           |                        |  | 6.94      | %(1) |           |  | 6.44     | %    |      | $ | 25,000  |           |  |  | 5.58 | %(1) |   |  | 6.44 | %   
|                                                |      |           |   |           |           |                        |  |           |      |           |  |          |      |      |   |         |           |  |  |      |      |   |  |     
|Variable Payment and Fixed Receipt Maturing in: |      |           |   |           |           |                        |  |           |      |           |  |          |      |      |   |         |           |  |  |      |      |   |  |     
|                                               
|                                               
|                                               
|                                               
|                                                | 2000 |           | $ | 20,000    |           |                        |  | 5.46      | %    |           |  | 6.70     | %    |      |   | 40,000  |           |  |  | 5.55 | %    |   |  | 6.16 | %   
|                                               
|                                               
|                                               
|                                               
|                                                | 2001 |           |   | 420,000   |           |                        |  | 6.38      |      |           |  | 6.70     |      |      |   | 420,000 |           |  |  | 6.38 |      |   |  | 6.14 |     
|                                               
|                                               
|                                               
|                                               
|                                                | 2002 |           |   | 325,000   |           |                        |  | 7.53      |      |           |  | 6.69     |      |      |   |        |           |  |  |     |      |   |  |     |     
|                                               
|                                               
|                                               
|                                               
|                                                | 2003 |           |   | 120,000   |           |                        |  | 6.14      |      |           |  | 6.69     |      |      |   | 120,000 |           |  |  | 6.14 |      |   |  | 6.14 |     
|                                               
|                                               
|                                               
|                                               
|                                                | 2004 |           |   | 580,000   |           |                        |  | 7.01      |      |           |  | 6.70     |      |      |   | 580,000 |           |  |  | 7.01 |      |   |  | 6.15 |     
|                                               
|                                               
|                                               
|                                               
|                                                | 2005 |           |   | 425,000   |           |                        |  | 7.91      |      |           |  | 6.68     |      |      |   | 25,000  |           |  |  | 7.00 |      |   |  | 5.87 |     
|                                               
|                                               
|                                               
|                                               
|                                                | 2006 |           |   | 60,000    |           |                        |  | 7.08      |      |           |  | 6.53     |      |      |   | 40,000  |           |  |  | 7.00 |      |   |  | 6.37 |     
|                                               
|                                               
|                                               
|                                               
|                                                | 2009 |           |   | 65,000    |           |                        |  | 7.32      |      |           |  | 6.53     |      |      |   | 65,000  |           |  |  | 7.32 |      |   |  | 6.16 |     
|                                               
|                                               
|                                               
|                                               
|                                                | 2010 |           |   | 10,000    |           |                        |  | 7.40      |      |           |  | 6.59     |      |      |   |        |           |  |  |     |      |   |  |     |     
|                                                |      |           |   |           |           |                        |  |           |      |           |  |          |      |      |   |         |           |  |  |      |      |   |  |     
|                                                |      | Total     |   | $         | 2,025,000 |                        |  |           | 7.10 | %         |  |          | 6.58 | %(1) |   | $       | 1,290,000 |  |  |      | 6.69 | % |  |      | 6.15 | %(1)
|                                                |      |           |   |           |           |                        |  |           |      |           |  |          |      |      |   |         |           |  |  |      |      |   |  |     



---



|    |                            
|--- | ---------------------------
|(1) | Rates are based upon LIBOR.

Interest rate risk management instruments reduced interest
expense as follows:

Net Benefit of Interest Rate Risk
Management(Figure 14)

|                           |                               |                    |   |                   |        |         |   |         |        |   |   |        |        |   |   |        |        |  
|-------------------------- | ----------------------------- | ------------------ | - | ----------------- | ------ | ------- | - | ------- | ------ | - | - | ------ | ------ | - | - | ------ | ------ | -
|                           |                               |                    |   |                   |        |        
|                           |                               | Three
Months Ended |   | Nine Months Ended
|                           |                               |                    |   |                  
|                           |                               | 9/30/00            |   | 9/30/99           |        | 9/30/00 |   | 9/30/99
|                           |                               |                    |   |                   |        |         |   |        
|                           |                               |                    |   |                   |        |        
|                           |                               |                    |   | (Dollars in       |        |        
|                           |                               |                    |   | thousands)        |        |        
|                          
|                          
|                          
|                          
|Interest expense (income): |                               |                    |   |                   |        |         |   |         |        |   |   |        |        |   |   |       
|                          
|                          
|                          
|                          
|                           | Deposits                      |                    | $ | (1,548            | )      |         | $ | (2,534  | )      |   | $ | (7,220 | )      |   | $ | (6,841 | )     
|                          
|                          
|                          
|                          
|                           | FHLB advances                 |                    |   |                  |        |         |   |        |        |   |   |       |        |   |   | 86     |       
|                          
|                          
|                          
|                          
|                           | Reverse repurchase agreements |                    |   |                  |        |         |   |        |        |   |   |       |        |   |   | (236   | )     
|                          
|                          
|                          
|                          
|                           | Other borrowings              |                    |   |                  |        |         |   | 58      |        |   |   |       |        |   |   | 227    |       
|                           |                               |                    |   |                   |        |         |   |         |        |   |   |        |        |   |   |       
|                           |                               | Total net benefit  |   | $                 | (1,548 | )       |   | $       | (2,476 | ) |   | $      | (7,220 | ) |   | $      | (6,764 | )
|                           |                               |                    |   |                   |        |         |   |         |        |   |   |        |        |   |   |       

Liquidity

Our principal sources of funds are deposits, advances from the
FHLB of Cincinnati, reverse repurchase agreements, repayments
and maturities of loans and securities, proceeds from the sale
of loans and securities, and funds provided by operations. While
scheduled loan, security and interest-bearing deposit
amortization and maturity are relatively predictable sources of
funds, deposit flows and loan and mortgage-backed securities
repayments are greatly influenced by economic conditions, the
general level of interest rates and competition. We utilize
particular sources of funds based on comparative costs and
availability. We generally manage the pricing of deposits to
maintain a steady deposit balance, but from time to time may
decide not to pay rates on deposits as high as our competition
and, when necessary, to supplement deposits with longer term
and/or lower cost alternative sources of funds such as FHLB
advances and reverse repurchase agreements. Management also
considers our interest-sensitivity profile when deciding on
alternative sources of funds. At September 30, 2000, our
one-year gap was a negative 11.14% of total assets. See
Item 3 Quantitative and Qualitative Disclosure About
Market Risk regarding further information on our interest
rate risk profile.

18



---



##### Table of Contents



We are required by regulation to maintain specific minimum
levels of liquid investments. Regulations currently in effect
require us to maintain average liquid assets at least equal to
4.0% of the sum of the average daily balance of net withdrawable
accounts and borrowed funds due in one year or less. This
regulatory requirement may be changed from time to time to
reflect current economic conditions. Charter One Banks
average regulatory liquidity ratio for the third quarter of 2000
was 4.23%.

We anticipate that we will have sufficient funds available to
meet our commitments. At September 30, 2000, we had
outstanding commitments to originate loans and leases of
$1.6 billion, unfunded consumer lines of credit totaling
$2.8 billion and unfunded corporate banking lines of credit
totaling $173.8 million. We do not expect all of these
lines to be used by the borrowers. Outstanding letters of credit
totaled $78.3 million as of September 30, 2000.
Certificates of deposit scheduled to mature in one year or less
at September 30, 2000 totaled $7.7 billion. We believe
that a significant portion of the amounts maturing will remain
with us because they are retail deposits. We believe we have
significant borrowing capacity with the FHLB and investment
banking firms to meet any need for additional borrowings and
sources of funds.

Capital and Dividends

On October 20, 1999, our Board of Directors authorized a
buyback to repurchase up to 3.3 million shares of Charter
One common stock in a program of open market or privately
negotiated transactions. As of March 31, 2000, we had
purchased all of the shares authorized under this buyback for a
total cost of $68.6 million. The repurchased shares were
later reissued in connection with the 5% stock dividend
distributed September 30, 2000, as well as employee benefit
plans.

On April 26, 2000, our Board of Directors authorized a new
buyback to repurchase up to 7.5 million shares of Charter
One common stock in a program of open market purchases or
privately negotiated transactions. As of June 30, 2000, we
had purchased all of the shares authorized under this buyback
for a total cost of $170.7 million. The repurchased shares
were later reissued in connection with the 5% stock dividend
distributed September 30, 2000, as well as employee benefit
plans.

On July 18, 2000, the Board of Directors of Charter One
authorized management to repurchase up to 10% of the
Companys outstanding common stock in a buyback program of
open market purchases or privately negotiated transactions. As
of September 30, 2000, we had purchased 5.1 million
shares authorized under this buyback for a total cost of
$115.2 million. Of the 5.1 million shares purchased,
152,335 shares were later reissued in connection with the 5%
stock dividend distributed September 30, 2000. The
remaining repurchased shares will be reserved in treasury for
later reissue in connection with employee benefit plans.

As a financial holding company, Charter One is subject to
regulation by the Federal Reserve Board (FRB) under
the Bank Holding Company Act of 1956 as amended, and the
regulations of the FRB, including various capital requirements.
Charter One Commercial and Charter One Bank, F.S.B. are subject
to various regulatory capital requirements administered by the
Federal Deposit Insurance Corporation and the Office of Thrift
Supervision (OTS), respectively. Failure to meet
minimum capital requirements can initiate certain mandatory, and
possibly discretionary, actions by each regulator that, if
undertaken, could have a direct material effect on our financial
statements. Under capital adequacy guidelines and the regulatory
framework for prompt corrective action, specific capital
guidelines must be met that involve quantitative measures of
assets, liabilities, and certain off-balance-sheet items as
calculated under regulatory accounting practices. The
institutions capital classification is also subject to
qualitative judgments by the regulators about components, risk
weightings, and other factors.

Quantitative measures established by regulation to ensure
capital adequacy require Charter One and Charter One Commercial
to individually maintain minimum amounts and ratios (set forth
in the table below) of total and Tier 1 capital to risk-weighted
assets, and of Tier 1 capital to average assets. Charter One
Bank, F.S.B. is required to maintain minimum amounts and ratios
(also set forth in the table below) of total and Tier 1 capital
to risk-weighted assets, of core capital to adjusted tangible
assets, and of tangible capital to tangible assets.

The actual regulatory capital ratios calculated for Charter One,
Charter One Commercial and Charter One Bank, F.S.B., along with
the capital amounts and ratios for capital adequacy purposes and
the amounts required to be categorized as well capitalized under
the regulatory framework for prompt corrective action are as
follows:

19



---



##### Table of Contents



The actual regulatory capital ratios calculated for Charter One,
Charter One Commercial and Charter One Bank, F.S.B., along with
the capital amounts and ratios for capital adequacy purposes and
the amounts required to be categorized as well capitalized under
the regulatory framework for prompt corrective action are as
follows:

Regulatory Capital(Figure 15)

|                          |                                          |         |   |                   |  |                        |  |       |   |        |   |           |  |  |   |      |   |  |   |           |  |  |   |       |  
|------------------------- | ---------------------------------------- | ------- | - | ----------------- |  | ---------------------- |  | ----- | - | ------ | - | --------- |  |  | - | ---- | - |  | - | --------- |  |  | - | ----- | -
|                          |                                          |        
|                          |                                          | 9/30/00
|                          |                                          |        
|                          |                                          |         |   |                  
|                          |                                          |         |   | To Be Well      
|                          |                                          |         |   | Capitalized     
|                          |                                          |         |   |                   |  | Under Prompt          
|                          |                                          |         |   | For Capital       |  | Corrective            
|                          |                                          | Actual  |   | Adequacy Purposes |  | Action Provisions     
|                          |                                          |         |   |                   |  |                       
|                          |                                          | Amount  |   | Ratio             |  | Amount                 |  | Ratio |   | Amount |   | Ratio    
|                          |                                          |         |   |                   |  |                        |  |       |   |        |   |          
|                          |                                          |         |   |                   |  |                        |  |       |   |       
|                          |                                          |         |   |                   |  | (Dollars in thousands) |  |       |   |       
|                         
|                         
|                         
|                         
|Charter One:              |                                          |         |   |                   |  |                        |  |       |   |        |   |           |  |  |   |      |   |  |   |           |  |  |   |      
|                         
|                         
|                         
|                         
|                          | Total capital to risk-weighted assets    |         | $ | 2,369,019         |  |                        |  | 9.99  | % |        | $ | 1,896,624 |  |  | * | 8.00 | % |  | $ | 2,370,780 |  |  | * | 10.00 | %
|                         
|                         
|                         
|                         
|                          | Tier 1 capital to risk-weighted assets   |         |   | 2,174,964         |  |                        |  | 9.17  |   |        |   | 948,312   |  |  | * | 4.00 |   |  |   | 1,422,468 |  |  | * | 6.00  |  
|                         
|                         
|                         
|                         
|                          | Tier 1 capital to average assets         |         |   | 2,174,964         |  |                        |  | 6.72  |   |        |   | 1,294,239 |  |  | * | 4.00 |   |  |   | 1,617,799 |  |  | * | 5.00  |  
|                         
|                         
|                         
|                         
|Charter One Commercial:   |                                          |         |   |                   |  |                        |  |       |   |        |   |           |  |  |   |      |   |  |   |           |  |  |   |      
|                         
|                         
|                         
|                         
|                          | Total capital to risk-weighted assets    |         |   | 39,977            |  |                        |  | 47.37 |   |        |   | 6,752     |  |  | * | 8.00 |   |  |   | 8,440     |  |  | * | 10.00 |  
|                         
|                         
|                         
|                         
|                          | Tier 1 capital to risk-weighted assets   |         |   | 39,977            |  |                        |  | 47.37 |   |        |   | 3,376     |  |  | * | 4.00 |   |  |   | 5,064     |  |  | * | 6.00  |  
|                         
|                         
|                         
|                         
|                          | Tier 1 capital to average assets         |         |   | 39,977            |  |                        |  | 16.59 |   |        |   | 9,638     |  |  | * | 4.00 |   |  |   | 12,048    |  |  | * | 5.00  |  
|                         
|                         
|                         
|                         
|Charter One Bank, F.S.B.: |                                          |         |   |                   |  |                        |  |       |   |        |   |           |  |  |   |      |   |  |   |           |  |  |   |      
|                         
|                         
|                         
|                         
|                          | Total capital to risk-weighted assets    |         |   | 2,360,964         |  |                        |  | 10.11 |   |        |   | 1,867,986 |  |  | * | 8.00 |   |  |   | 2,334,983 |  |  | * | 10.00 |  
|                         
|                         
|                         
|                         
|                          | Tier 1 capital to risk-weighted assets   |         |   | 1,857,023         |  |                        |  | 7.95  |   |        |   | N/A       |  |  |   | N/A  |   |  |   | 1,400,990 |  |  | * | 6.00  |  
|                         
|                         
|                         
|                         
|                          | Core capital to adjusted tangible assets |         |   | 1,879,417         |  |                        |  | 5.77  |   |        |   | 1,302,467 |  |  | * | 4.00 |   |  |   | 1,628,083 |  |  | * | 5.00  |  
|                         
|                         
|                         
|                         
|                          | Tangible capital to tangible assets      |         |   | 1,878,948         |  |                        |  | 5.77  |   |        |   | 488,418   |  |  | * | 1.50 |   |  |   | N/A       |  |  |   | N/A   |  

|                           |                                          |          |   |                   |  |                        |  |       |   |        |   |           |  |  |   |      |   |  |   |           |  |  |   |       |  
|-------------------------- | ---------------------------------------- | -------- | - | ----------------- |  | ---------------------- |  | ----- | - | ------ | - | --------- |  |  | - | ---- | - |  | - | --------- |  |  | - | ----- | -
|                           |                                          |         
|                           |                                          | 12/31/99
|                           |                                          |         
|                           |                                          |          |   |                  
|                           |                                          |          |   | To Be Well      
|                           |                                          |          |   | Capitalized     
|                           |                                          |          |   |                   |  | Under Prompt          
|                           |                                          |          |   | For Capital       |  | Corrective            
|                           |                                          | Actual   |   | Adequacy Purposes |  | Action Provisions     
|                           |                                          |          |   |                   |  |                       
|                           |                                          | Amount   |   | Ratio             |  | Amount                 |  | Ratio |   | Amount |   | Ratio    
|                           |                                          |          |   |                   |  |                        |  |       |   |        |   |          
|                           |                                          |          |   |                   |  |                        |  |       |   |       
|                           |                                          |          |   |                   |  | (Dollars in thousands) |  |       |   |       
|                          
|                          
|                          
|                          
|Charter One:               |                                          |          |   |                   |  |                        |  |       |   |        |   |           |  |  |   |      |   |  |   |           |  |  |   |      
|                          
|                          
|                          
|                          
|                           | Total capital to risk-weighted assets    |          | $ | 2,404,336         |  |                        |  | 11.16 | % |        | $ | 1,722,825 |  |  | * | 8.00 | % |  | $ | 2,153,532 |  |  | * | 10.00 | %
|                          
|                          
|                          
|                          
|                           | Tier 1 capital to risk-weighted assets   |          |   | 2,213,534         |  |                        |  | 10.28 |   |        |   | 861,413   |  |  | * | 4.00 |   |  |   | 1,292,119 |  |  | * | 6.00  |  
|                          
|                          
|                          
|                          
|                           | Tier 1 capital to average assets         |          |   | 2,213,534         |  |                        |  | 7.05  |   |        |   | 1,255,645 |  |  | * | 4.00 |   |  |   | 1,569,567 |  |  | * | 5.00  |  
|                          
|                          
|                          
|                          
|Charter One Commercial:    |                                          |          |   |                   |  |                        |  |       |   |        |   |           |  |  |   |      |   |  |   |           |  |  |   |      
|                          
|                          
|                          
|                          
|                           | Total capital to risk-weighted assets    |          |   | 41,337            |  |                        |  | 40.92 |   |        |   | 8,081     |  |  | * | 8.00 |   |  |   | 10,101    |  |  | * | 10.00 |  
|                          
|                          
|                          
|                          
|                           | Tier 1 capital to risk-weighted assets   |          |   | 41,337            |  |                        |  | 40.92 |   |        |   | 4,040     |  |  | * | 4.00 |   |  |   | 6,061     |  |  | * | 6.00  |  
|                          
|                          
|                          
|                          
|                           | Tier 1 capital to average assets         |          |   | 41,337            |  |                        |  | 13.66 |   |        |   | 12,104    |  |  | * | 4.00 |   |  |   | 15,129    |  |  | * | 5.00  |  
|                          
|                          
|                          
|                          
|Charter One Bank, F.S.B.:  |                                          |          |   |                   |  |                        |  |       |   |        |   |           |  |  |   |      |   |  |   |           |  |  |   |      
|                          
|                          
|                          
|                          
|                           | Total capital to risk-weighted assets    |          |   | 2,115,164         |  |                        |  | 10.00 |   |        |   | 1,691,462 |  |  | * | 8.00 |   |  |   | 2,114,327 |  |  | * | 10.00 |  
|                          
|                          
|                          
|                          
|                           | Tier 1 capital to risk-weighted assets   |          |   | 1,605,506         |  |                        |  | 7.59  |   |        |   | N/A       |  |  |   | N/A  |   |  |   | 1,268,596 |  |  | * | 6.00  |  
|                          
|                          
|                          
|                          
|                           | Core capital to adjusted tangible assets |          |   | 1,619,927         |  |                        |  | 5.10  |   |        |   | 1,270,858 |  |  | * | 4.00 |   |  |   | 1,588,572 |  |  | * | 5.00  |  
|                          
|                          
|                          
|                          
|                           | Tangible capital to tangible assets      |          |   | 1,618,856         |  |                        |  | 5.10  |   |        |   | 476,566   |  |  | * | 1.50 |   |  |   | N/A       |  |  |   | N/A   |  
|                          
|* Greater than or equal to



As of December 31, 1999, the most recent notification from
the OTS categorized Charter One Bank, F.S.B. as well
capitalized under the regulatory framework for Prompt
Corrective Action. As of December 31, 1999, the most recent
notification from the FRB categorized Charter One as well
capitalized under the regulatory framework for Prompt
Corrective Action. To be categorized as well capitalized,
Charter One and Charter One Bank, F.S.B. must maintain minimum
total risk-based, Tier 1 risk-based and Tier 1 leverage ratios
as set forth in the table above. Charter One Commercials capital
ratios exceed  the minimum required to be well capitalized. Management does not
know of any reasons why Charter One Commercial would not be
considered well capitalized; however, as of September 30,
2000, Charter One Commercial had not received a classification
from its regulator. As of September 30, 2000, Charter One's total capital to
risk-weighted assets ratio was 9.99%, which was slightly below the well-capitalized
ratio requirement of 10.00%. Charter One anticipates being in excess of this
well-capitalized ratio requirement at December 31, 2000.

Management believes that, as of September 30, 2000, Charter One,
Charter One Commercial and Charter One Bank, F.S.B. individually met
the capital adequacy requirements to which they were subject. Events
beyond management's control, such as fluctuations in interest rates
or a downturn in the economy in areas in which the institutions
loans and securities are concentrated could adversely affect future
earnings and, consequently, the institution's ability to meet its
future capital requirements.

20



---



##### Table of Contents



Quarterly Stock Prices and
Dividends(Figure 16)

|                                 |       |                    |     |         |  |         |     |          |  |         |     |       |  |  |     |       |  |  |     |       | 
|-------------------------------- | ----- | ------------------ | --- | ------- |  | ------- | --- | -------- |  | ------- | --- | ----- |  |  | --- | ----- |  |  | --- | ----- | 
|                                 |       |                   
|                                 |       | Three Months Ended
|                                 |       |                   
|                                 |       | 9/30/00            |     | 6/30/00 |  | 3/31/00 |     | 12/31/99 |  | 9/30/99
|                                 |       |                    |     |         |  |         |     |          |  |        
|Market price of common stock(1): |       |                    |     |         |  |         |     |          |  |         |     |       |  |  |     |       |  |  |     |      
|                                
|                                
|                                
|                                
|                                 | High  |                    | $   | 25.13   |  |         | $   | 25.71    |  |         | $   | 20.00 |  |  | $   | 25.18 |  |  | $   | 25.63 | 
|                                
|                                
|                                
|                                
|                                 | Low   |                    |     | 21.06   |  |         |     | 17.27    |  |         |     | 14.52 |  |  |     | 16.67 |  |  |     | 20.08 | 
|                                
|                                
|                                
|                                
|                                 | Close |                    |     | 24.38   |  |         |     | 21.90    |  |         |     | 20.00 |  |  |     | 18.22 |  |  |     | 22.03 | 
|                                
|                                
|                                
|                                
|Dividends declared and paid      |       |                    | .17 |         |  |         | .17 |          |  |         | .15 |       |  |  | .15 |       |  |  | .15 |      



---



|    |                                                                             
|--- | ----------------------------------------------------------------------------
|(1) | Restated to reflect the 5% stock dividend issued
        September 30, 2000.




ITEM 3.  Quantitative and Qualitative Disclosure
About Market Risk

A comprehensive qualitative and quantitative analysis regarding
market risk was disclosed in our December 31, 1999
Form 10-K. The assumptions used in our model were updated
as of June 30, 2000 and the results disclosed in our Form
10-Q for the quarterly period ended June 30, 2000. No
material changes in the assumptions used or results obtained
from the model have occurred since June 30, 2000.

Actual results will differ from simulated results due to timing,
magnitude, and frequency of interest rate changes, as well as
changes in market conditions and management strategies.




PART II  OTHER INFORMATION




ITEM 5.  Other Information

Cash Dividend

On October 19, 2000, the Board of Directors of Charter One
declared a regular quarterly cash dividend of 18 cents per
common share. The dividend is payable November 20, 2000 to
shareholders of record as of November 3, 2000.




ITEM 6.  Exhibits and Reports on Form 8-K



|    |                                               
|--- | ----------------------------------------------
|(a) | Exhibit 11  Computation of Per Share Earnings
|    | Exhibit 27  Financial Data Schedule          

(b)  Reports on Form 8-K  None




SIGNATURES

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



| |                            
| | ---------------------------
| | CHARTER ONE FINANCIAL, INC.



|                        |                   
|----------------------- | ------------------
|Date: November 14, 2000 | /s/ Richard W. Neu

| |                                                     
| | ----------------------------------------------------
| |                                                     
| | Richard W. Neu                                      
| | Executive Vice President and Chief Financial Officer
| | (Duly Authorized Officer and Principal              
| | Financial Officer)                                  

21