TABLE OF CONTENTS




| |                                                                                               |  |  |  |  |  |  | 
| | --------------------------------------------------------------------------------------------- |  |  |  |  |  |  | 
| | PART I  FINANCIAL INFORMATION                                                               
| | ITEM 1. Financial Statements
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION                  
| | CONSOLIDATED STATEMENTS OF INCOME                                                            
| | CONSOLIDATED STATEMENT OF SHAREHOLDERS EQUITY                                               
| | 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                                                                                   



---



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 March 31, 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
(State or other jurisdiction of incorporation
or organization) |  | 34-1567092
(I.R.S. Employer Identification No.)

|                                                                               |  |                 
|------------------------------------------------------------------------------ |  | ----------------
|1215 Superior Avenue, Cleveland, Ohio
(Address of principal executive offices) |  | 44114
(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 April 30, 2000 was
209,546,621.





---



##### Table of Contents



TABLE OF CONTENTS

|                                                               |                                                  |                                            |                                |   |      |  | 
|-------------------------------------------------------------- | ------------------------------------------------ | ------------------------------------------ | ------------------------------ | - | ---- |  | 
|Item                                                          
|Number                                                         |                                                  |                                            |                                |   | Page
|                                                               |                                                  |                                            |                                |   |      |  | 
|                                                               |                                                  |                                            | PART I  FINANCIAL INFORMATION
|                                                              
|                                                              
|                                                              
|                                                              
|1. Financial Statements                                       
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               | Consolidated Statements of Financial Condition 
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               |                                                  | March 31, 2000 and December 31, 1999       |                                |   | 1    | 
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               | Consolidated Statements of Income              
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               |                                                  | Three months ended March 31, 2000 and 1999 |                                |   | 2    | 
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               | Consolidated Statement of Shareholders Equity 
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               |                                                  | Three months ended March 31, 2000          |                                |   | 3    | 
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               | Consolidated Statements of Cash Flows          
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               |                                                  | Three months ended March 31, 2000 and 1999 |                                |   | 4    | 
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               | Notes to Consolidated Financial Statements       |                                            |                                | 5 |     
|                                                              
|                                                              
|                                                              
|                                                              
|2. Managements Discussion and Analysis of Financial Condition
|and Results of Operations                                      |                                                  |                                            | 6                             
|                                                              
|                                                              
|                                                              
|                                                              
|3. Quantitative and Qualitative Disclosure About Market Risk   |                                                  |                                            | 20                             |  
|                                                              
|                                                              
|                                                              
|                                                              
|                                                               |                                                  |                                            | PART II  OTHER INFORMATION   
|                                                              
|                                                              
|                                                              
|                                                              
|5. Other Information                                           |                                                  |                                            | 20                             |  
|                                                              
|                                                              
|                                                              
|                                                              
|6. Exhibits and Reports on Form 8-K                            |                                                  |                                            | 20                             |  
|                                                              
|                                                              
|                                                              
|                                                              
|Signatures                                                     |                                                  |                                            | 21                             |  

i



---



##### Table of Contents






PART I  FINANCIAL INFORMATION




ITEM 1. Financial Statements

CHARTER ONE FINANCIAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(unaudited)

|                                                      |                                                                                                                   |                                 |                                            |            |                        |            |            |            |            |            | 
|----------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------- | ------------------------------- | ------------------------------------------ | ---------- | ---------------------- | ---------- | ---------- | ---------- | ---------- | ---------- | 
|                                                      |                                                                                                                   |                                 |                                            |            | 3/31/00                |            | 12/31/99  
|                                                      |                                                                                                                   |                                 |                                            |            |                        |            |           
|                                                      |                                                                                                                   |                                 |                                            |            | (Dollars in thousands,
|                                                      |                                                                                                                   |                                 |                                            |            | except per share data)
|                                                      |                                                                                                                   |                                 | ASSETS                                    
|                                                     
|                                                     
|                                                     
|                                                     
|Cash and deposits with banks                          |                                                                                                                   | $                               | 421,555                                    |            |                        | $          | 689,082    |           
|                                                     
|                                                     
|                                                     
|                                                     
|Federal funds sold and other                          |                                                                                                                   |                                 | 44,587                                     |            |                        |            | 4,450      |           
|                                                      |                                                                                                                   |                                 |                                            |            |                        |            |            |           
|                                                      |                                                                                                                   | Total cash and cash equivalents |                                            |            | 466,142                |            |            |            | 693,532    |           
|                                                     
|                                                     
|                                                     
|                                                     
|Investments securities:                              
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Trading                                                                                                           |                                 |                                            |           |                        |            |            | 13,380     |           
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Available for sale, at fair value                                                                                 |                                 |                                            | 473,209    |                        |            |            | 482,695    |           
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Held to maturity (fair value of $29,890 and $52,858)                                                              |                                 |                                            | 30,231     |                        |            |            | 46,006     |           
|                                                     
|                                                     
|                                                     
|                                                     
|Mortgage-backed securities:                          
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Available for sale, at fair value                                                                                 |                                 |                                            | 2,405,117  |                        |            |            | 4,193,134  |           
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Held to maturity (fair value of $1,808,881 and $1,909,313)                                                        |                                 |                                            | 1,814,376  |                        |            |            | 1,907,246  |           
|                                                     
|                                                     
|                                                     
|                                                     
|Loans and leases, net                                 |                                                                                                                   |                                 | 23,185,170                                 |            |                        |            | 22,276,862 |           
|                                                     
|                                                     
|                                                     
|                                                     
|Loans held for sale                                   |                                                                                                                   |                                 | 43,441                                     |            |                        |            | 35,988     |           
|                                                     
|                                                     
|                                                     
|                                                     
|Bank owned life insurance                             |                                                                                                                   |                                 | 719,294                                    |            |                        |            | 709,173    |           
|                                                     
|                                                     
|                                                     
|                                                     
|Federal Home Loan Bank stock                          |                                                                                                                   |                                 | 466,678                                    |            |                        |            | 471,191    |           
|                                                     
|                                                     
|                                                     
|                                                     
|Premises and equipment                                |                                                                                                                   |                                 | 316,021                                    |            |                        |            | 317,205    |           
|                                                     
|                                                     
|                                                     
|                                                     
|Accrued interest receivable                           |                                                                                                                   |                                 | 152,219                                    |            |                        |            | 156,244    |           
|                                                     
|                                                     
|                                                     
|                                                     
|Real estate and other collateral owned                |                                                                                                                   |                                 | 36,220                                     |            |                        |            | 36,358     |           
|                                                     
|                                                     
|                                                     
|                                                     
|Loan servicing assets                                 |                                                                                                                   |                                 | 118,540                                    |            |                        |            | 118,792    |           
|                                                     
|                                                     
|                                                     
|                                                     
|Goodwill                                              |                                                                                                                   |                                 | 185,914                                    |            |                        |            | 188,826    |           
|                                                     
|                                                     
|                                                     
|                                                     
|Other assets                                          |                                                                                                                   |                                 | 207,119                                    |            |                        |            | 172,431    |           
|                                                      |                                                                                                                   |                                 |                                            |            |                        |            |            |           
|                                                      |                                                                                                                   | Total assets                    |                                            | $          | 30,619,691             |            |            | $          | 31,819,063 |           
|                                                      |                                                                                                                   |                                 |                                            |            |                        |            |            |           
|                                                      |                                                                                                                   |                                 | LIABILITIES AND SHAREHOLDERS EQUITY      
|                                                     
|                                                     
|                                                     
|                                                     
|Deposits:                                            
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Checking accounts                                                                                                 |                                 | $                                          | 3,661,051  |                        |            | $          | 3,329,743  |           
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Money market accounts                                                                                             |                                 |                                            | 3,370,626  |                        |            |            | 3,170,435  |           
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Savings accounts                                                                                                  |                                 |                                            | 1,943,207  |                        |            |            | 2,065,127  |           
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Certificates of deposit                                                                                           |                                 |                                            | 10,022,712 |                        |            |            | 10,508,670 |           
|                                                      |                                                                                                                   |                                 |                                            |            |                        |            |            |           
|                                                      |                                                                                                                   |                                 | Total deposits                             |            |                        | 18,997,596 |            |            |            | 19,073,975 | 
|                                                     
|                                                     
|                                                     
|                                                     
|Federal Home Loan Bank advances                       |                                                                                                                   |                                 | 8,271,887                                  |            |                        |            | 9,226,150  |           
|                                                     
|                                                     
|                                                     
|                                                     
|Reverse repurchase agreements                         |                                                                                                                   |                                 | 37,179                                     |            |                        |            | 283,297    |           
|                                                     
|                                                     
|                                                     
|                                                     
|Other borrowings                                      |                                                                                                                   |                                 | 268,899                                    |            |                        |            | 232,277    |           
|                                                     
|                                                     
|                                                     
|                                                     
|Advance payments by borrowers for taxes and insurance |                                                                                                                   |                                 | 73,706                                     |            |                        |            | 80,309     |           
|                                                     
|                                                     
|                                                     
|                                                     
|Accrued interest payable                              |                                                                                                                   |                                 | 75,495                                     |            |                        |            | 95,323     |           
|                                                     
|                                                     
|                                                     
|                                                     
|Accrued expenses and other liabilities                |                                                                                                                   |                                 | 436,883                                    |            |                        |            | 430,032    |           
|                                                      |                                                                                                                   |                                 |                                            |            |                        |            |            |           
|                                                      |                                                                                                                   |                                 | Total liabilities                          |            |                        | 28,161,645 |            |            |            | 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; 212,676,730 and 212,397,685 shares issued |                                 |                                            | 2,127      |                        |            |            | 2,124      |           
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Additional paid-in capital                                                                                        |                                 |                                            | 1,739,238  |                        |            |            | 1,736,726  |           
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Retained earnings                                                                                                 |                                 |                                            | 811,048    |                        |            |            | 734,510    |           
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Less 3,172,498 and 3,140,000 shares of common stock held in treasury at cost                                      |                                 |                                            | (65,948    | )                      |            |            | (65,502    | )         
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Borrowings of employee investment and stock ownership plan                                                        |                                 |                                            | (2,595     | )                      |            |            | (3,138     | )         
|                                                     
|                                                     
|                                                     
|                                                     
|                                                      | Accumulated other comprehensive income                                                                            |                                 |                                            | (25,824    | )                      |            |            | (7,020     | )         
|                                                      |                                                                                                                   |                                 |                                            |            |                        |            |            |           
|                                                      |                                                                                                                   |                                 | Total shareholders equity                 |            |                        | 2,458,046  |            |            |            | 2,397,700  | 
|                                                      |                                                                                                                   |                                 |                                            |            |                        |            |            |           
|                                                      |                                                                                                                   |                                 | Total liabilities and shareholders equity |            | $                      | 30,619,691 |            |            | $          | 31,819,063 | 
|                                                      |                                                                                                                   |                                 |                                            |            |                        |            |            |           

See Notes to Consolidated Financial Statements

1



---



##### Table of Contents






CHARTER ONE FINANCIAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME

(unaudited)

|                                                        |                                    |                                                               |             |                        |         |         |             |         |         | 
|------------------------------------------------------- | ---------------------------------- | ------------------------------------------------------------- | ----------- | ---------------------- | ------- | ------- | ----------- | ------- | ------- | 
|                                                        |                                    |                                                               |             | Three months ended    
|                                                        |                                    |                                                               |             |                       
|                                                        |                                    |                                                               |             | 3/31/00                |         | 3/31/99
|                                                        |                                    |                                                               |             |                        |         |        
|                                                        |                                    |                                                               |             | (Dollars in thousands,
|                                                        |                                    |                                                               |             | except per share data)
|                                                        |                                    |                                                               |             |                       
|Interest income:                                       
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Loans and leases                   |                                                               | $           | 428,110                |         |         | $           | 421,789 |        
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Mortgage-backed securities:       
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        |                                    | Available for sale                                            |             |                        | 55,474  |         |             |         | 40,326  | 
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        |                                    | Held to maturity                                              |             |                        | 32,354  |         |             |         | 46,072  | 
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Investment securities:            
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        |                                    | Trading                                                       |             |                        | 38      |         |             |         |        | 
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        |                                    | Available for sale                                            |             |                        | 9,011   |         |             |         | 6,923   | 
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        |                                    | Held to maturity                                              |             |                        | 424     |         |             |         | 812     | 
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Other interest-earning assets      |                                                               |             | 8,659                  |         |         |             | 9,471   |        
|                                                        |                                    |                                                               |             |                        |         |         |             |        
|                                                        |                                    | Total interest income                                         |             |                        | 534,070 |         |             |         | 525,393 | 
|                                                        |                                    |                                                               |             |                        |         |         |             |        
|Interest expense:                                      
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Deposits                           |                                                               |             | 180,255                |         |         |             | 181,726 |        
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | FHLB advances                      |                                                               |             | 113,699                |         |         |             | 94,840  |        
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Other borrowings                   |                                                               |             | 7,113                  |         |         |             | 13,278  |        
|                                                        |                                    |                                                               |             |                        |         |         |             |        
|                                                        |                                    | Total interest expense                                        |             |                        | 301,067 |         |             |         | 289,844 | 
|                                                        |                                    |                                                               |             |                        |         |         |             |        
|                                                        |                                    | Net interest income                                           |             |                        | 233,003 |         |             |         | 235,549 | 
|                                                       
|                                                       
|                                                       
|                                                       
|Provision for loan and lease losses                     |                                    |                                                               | 8,598       |                        |         |         | 6,770       |        
|                                                        |                                    |                                                               |             |                        |         |         |             |        
|                                                        |                                    | Net interest income after provision for loan and lease losses |             |                        | 224,405 |         |             |         | 228,779 | 
|                                                        |                                    |                                                               |             |                        |         |         |             |        
|Other income:                                          
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Retail banking                     |                                                               |             | 51,738                 |         |         |             | 43,591  |        
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Mortgage banking                   |                                                               |             | 13,715                 |         |         |             | 11,369  |        
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Leasing operations                 |                                                               |             | 1,598                  |         |         |             | 2,048   |        
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Net gains                          |                                                               |             | 3,547                  |         |         |             | 6,817   |        
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Other                              |                                                               |             | 12,020                 |         |         |             | 3,403   |        
|                                                        |                                    |                                                               |             |                        |         |         |             |        
|                                                        |                                    | Total other income                                            |             |                        | 82,618  |         |             |         | 67,228  | 
|                                                        |                                    |                                                               |             |                        |         |         |             |        
|Administrative expenses:                               
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Compensation and employee benefits |                                                               |             | 70,264                 |         |         |             | 68,514  |        
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Net occupancy and equipment        |                                                               |             | 24,564                 |         |         |             | 23,720  |        
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Federal deposit insurance premiums |                                                               |             | 1,005                  |         |         |             | 2,101   |        
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Merger expenses                    |                                                               |             | 3,258                  |         |         |             | 2,200   |        
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Amortization of goodwill           |                                                               |             | 4,044                  |         |         |             | 3,389   |        
|                                                       
|                                                       
|                                                       
|                                                       
|                                                        | Other administrative expenses      |                                                               |             | 39,593                 |         |         |             | 43,238  |        
|                                                        |                                    |                                                               |             |                        |         |         |             |        
|                                                        |                                    | Total administrative expenses                                 |             |                        | 142,728 |         |             |         | 143,162 | 
|                                                        |                                    |                                                               |             |                        |         |         |             |        
|Income before income taxes                              |                                    |                                                               | 164,295     |                        |         |         | 152,845     |        
|                                                       
|                                                       
|                                                       
|                                                       
|Income taxes                                            |                                    |                                                               | 52,586      |                        |         |         | 49,899      |        
|                                                        |                                    |                                                               |             |                        |         |         |             |        
|                                                        |                                    | Net income                                                    |             | $                      | 111,709 |         |             | $       | 102,946 | 
|                                                        |                                    |                                                               |             |                        |         |         |             |        
|Basic earnings per share                                |                                    | $                                                             | .53         |                        |         | $       | .48         |        
|                                                        |                                    |                                                               |             |                        |         |         |             |        
|Diluted earnings per share                              |                                    | $                                                             | .53         |                        |         | $       | .47         |        
|                                                        |                                    |                                                               |             |                        |         |         |             |        
|Average common shares outstanding                       |                                    |                                                               | 209,425,108 |                        |         |         | 214,167,501 |        
|                                                        |                                    |                                                               |             |                        |         |         |             |        
|Average common and common equivalent shares outstanding |                                    |                                                               | 212,083,768 |                        |         |         | 219,672,612 |        
|                                                        |                                    |                                                               |             |                        |         |         |             |        
|Cash dividends declared per share                       |                                    | $                                                             | .16         |                        |         | $       | .13         |        
|                                                        |                                    |                                                               |             |                        |         |         |             |        

See Notes to Consolidated Financial Statements

2



---



##### Table of Contents






CHARTER ONE FINANCIAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF SHAREHOLDERS EQUITY

(unaudited)

|                                                                                |                                           |   |        |   |         |   |            |   |          |   |               |         |           |   |                                               |   |       |   |             |         |            |   |            |   |  |   |           |         |  
|------------------------------------------------------------------------------- | ----------------------------------------- | - | ------ | - | ------- | - | ---------- | - | -------- | - | ------------- | ------- | --------- | - | --------------------------------------------- | - | ----- | - | ----------- | ------- | ---------- | - | ---------- | - |  | - | --------- | ------- | -
|                                                                                |                                           |   |        |   |         |   |            |   |          |   |               |         |           |   |                                               |   |       |   |             |         |            |   | Borrowings
|                                                                                |                                           |   |        |   |         |   |            |   |          |   |               |         |           |   |                                               |   |       |   |             |         |            |   | of        
|                                                                                |                                           |   |        |   |         |   |            |   |          |   |               |         |           |   |                                               |   |       |   |             |         |            |   | Employee  
|                                                                                |                                           |   |        |   |         |   |            |   |          |   |               |         |           |   |                                               |   |       |   | Accumulated |         | Investment |   | Total     
|                                                                                |                                           |   |        |   |         |   | Additional |   |          |   |               |         |           |   |                                               |   | Other |   | and Stock   |         | Share-    
|                                                                                |                                           |   | Common |   | Paid-In |   | Retained   |   | Treasury |   | Comprehensive |         | Ownership |   | holders'                                     
|                                                                                |                                           |   | Stock  |   | Capital |   | Earnings   |   | Stock    |   | Income        |         | Plan      |   | Equity                                       
|                                                                                |                                           |   |        |   |         |   |            |   |          |   |               |         |           |   |                                              
|                                                                                |                                           |   |        |   |         |   |            |   |          |   |               |         |           |   | (Dollars in thousands, except per share data)
|Balance, January 1, 2000                                                        |                                           | $ | 2,124  |   |         | $ | 1,736,726  |   |          | $ | 734,510       |         |           | $ | (65,502                                       | ) |       | $ | (7,020      | )       |            | $ | (3,138     | ) |  | $ | 2,397,700 |         |  
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|Comprehensive income:                                                          
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Net unrealized holding loss
on securities |   |        |  |         |   |            |  |          |   |               |        |           |   |                                               |  |       |   |             | (18,804 | )          |   |            |  |  |   |           | (18,804 | )
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|                                                                                | Net income                                |   |        |  |         |   |            |  |          |   |               | 111,709 |           |   |                                               |  |       |   |             |        |            |   |            |  |  |   |           | 111,709 |  
|                                                                                |                                           |   |        |   |         |   |            |   |          |   |               |         |           |   |                                               |   |       |   |             |         |            |   |            |   |  |   |           |        
|Comprehensive income                                                            |                                           |   |       |   |         |   |           |   |          |   | 111,709       |         |           |   |                                              |   |       |   | (18,804     | )       |            |   |           |   |  |   | 92,905    |        
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|Treasury stock purchased
160,000 shares                                         |                                           |   |       |   |         |   |           |   |          |   |              |         |           |   | (3,094                                        | ) |       |   |            |         |            |   |           |   |  |   | (3,094    | )      
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|EISOP loan payment                                                              |                                           |   |       |   |         |   |           |   |          |   |              |         |           |   |                                              |   |       |   |            |         |            |   | 543        |   |  |   | 543       |        
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|Issuance of common shares in
connection with stock option
plans, 406,547 shares |                                           |   | 3      |   |         |   | 2,512      |   |          |   | (1,660        | )       |           |   | 2,648                                         |   |       |   |            |         |            |   |           |   |  |   | 3,503     |        
|                                                                               
|                                                                               
|                                                                               
|                                                                               
|Dividends paid ($.16 per
share)                                                 |                                           |   |       |   |         |   |           |   |          |   | (33,511       | )       |           |   |                                              |   |       |   |            |         |            |   |           |   |  |   | (33,511   | )      
|                                                                                |                                           |   |        |   |         |   |            |   |          |   |               |         |           |   |                                               |   |       |   |             |         |            |   |            |   |  |   |           |        
|Balance, March 31, 2000                                                         |                                           | $ | 2,127  |   |         | $ | 1,739,238  |   |          | $ | 811,048       |         |           | $ | (65,948                                       | ) |       | $ | (25,824     | )       |            | $ | (2,595     | ) |  | $ | 2,458,046 |        
|                                                                                |                                           |   |        |   |         |   |            |   |          |   |               |         |           |   |                                               |   |       |   |             |         |            |   |            |   |  |   |           |         |  



See Notes to Consolidated Financial
Statements

3



---



##### Table of Contents






CHARTER ONE FINANCIAL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

|                                                   |                                                                                   |                                                                                                  |                                                     |          |                        |         |          |           |          |          |  
|-------------------------------------------------- | --------------------------------------------------------------------------------- | ------------------------------------------------------------------------------------------------ | --------------------------------------------------- | -------- | ---------------------- | ------- | -------- | --------- | -------- | -------- | -
|                                                   |                                                                                   |                                                                                                  |                                                     |          | Three months ended    
|                                                   |                                                                                   |                                                                                                  |                                                     |          |                       
|                                                   |                                                                                   |                                                                                                  |                                                     |          | 3/31/00                |         | 3/31/99 
|                                                   |                                                                                   |                                                                                                  |                                                     |          |                        |         |         
|                                                   |                                                                                   |                                                                                                  |                                                     |          | (Dollars in thousands)
|Cash Flows from Operating Activities              
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Net income                                                                        |                                                                                                  | $                                                   | 111,709  |                        |         | $        | 102,946   |         
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Adjustments to reconcile net income to net cash provided by
operating activities:
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   |                                                                                   | Provision for loan and lease losses                                                              |                                                     |          | 8,598                  |         |          |           | 6,770    |         
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   |                                                                                   | Net gains                                                                                        |                                                     |          | (3,531                 | )       |          |           | (4,609   | )       
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   |                                                                                   | Accretion of discounts, amortization of premiums, amortization of
goodwill and depreciation, net |                                                     |          | 21,328                 |         |          |           | 25,363   |         
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   |                                                                                   | Origination of real estate loans held for sale                                                   |                                                     |          | (330,118               | )       |          |           | (491,338 | )       
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   |                                                                                   | Proceeds from sale of loans held for sale                                                        |                                                     |          | 330,123                |         |          |           | 521,058  |         
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   |                                                                                   | Proceeds from investment securities held for trading                                             |                                                     |          | 13,418                 |         |          |           |         |         
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   |                                                                                   | Other                                                                                            |                                                     |          | (51,459                | )       |          |           | 40,436   |         
|                                                   |                                                                                   |                                                                                                  |                                                     |          |                        |         |          |          
|                                                   |                                                                                   |                                                                                                  | Net cash provided by operating activities           |          |                        | 100,068 |          |           |          | 200,626  |  
|                                                   |                                                                                   |                                                                                                  |                                                     |          |                        |         |          |          
|Cash Flows from Investing Activities              
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Net principal disbursed on loans and leases                                       |                                                                                                  |                                                     | (921,630 | )                      |         |          | (551,067  | )       
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Proceeds from principal repayments and maturities of:                            
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   |                                                                                   | Mortgage-backed securities held to maturity                                                      |                                                     |          | 92,807                 |         |          |           | 406,104  |         
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   |                                                                                   | Investment securities held to maturity                                                           |                                                     |          | 908                    |         |          |           | 125      |         
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   |                                                                                   | Mortgage-backed securities available for sale                                                    |                                                     |          | 69,522                 |         |          |           | 188,484  |         
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   |                                                                                   | Investment securities available for sale                                                         |                                                     |          | 32,265                 |         |          |           | 169,720  |         
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Proceeds from sale of:                                                           
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   |                                                                                   | Mortgage-backed securities available for sale                                                    |                                                     |          | 1,695,204              |         |          |           | 371,374  |         
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   |                                                                                   | Investment securities available for sale                                                         |                                                     |          | 29                     |         |          |           | 178,778  |         
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   |                                                                                   | Federal Home Loan Bank stock                                                                     |                                                     |          | 11,750                 |         |          |           | 500      |         
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Purchase of:                                                                     
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   |                                                                                   | Mortgage-backed securities held to maturity                                                      |                                                     |          |                       |         |          |           | (90,984  | )       
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   |                                                                                   | Investment securities held to maturity                                                           |                                                     |          | (235                   | )       |          |           | (21,900  | )       
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   |                                                                                   | Investment securities available for sale                                                         |                                                     |          | (10,671                | )       |          |           | (195,625 | )       
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   |                                                                                   | Loans                                                                                            |                                                     |          | (3,764                 | )       |          |           | (259,754 | )       
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   |                                                                                   | Federal Home Loan Bank stock                                                                     |                                                     |          |                       |         |          |           | (8,516   | )       
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   |                                                                                   | Loan servicing assets, including those originated                                                |                                                     |          | (110                   | )       |          |           | (9,582   | )       
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   |                                                                                   | Bank owned life insurance                                                                        |                                                     |          |                       |         |          |           | (480,500 | )       
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   |                                                                                   | Other                                                                                            |                                                     |          | (14,616                | )       |          |           | (8,898   | )       
|                                                   |                                                                                   |                                                                                                  |                                                     |          |                        |         |          |          
|                                                   |                                                                                   |                                                                                                  | Net cash provided by (used in) investing activities |          |                        | 951,459 |          |           |          | (311,741 | )
|                                                   |                                                                                   |                                                                                                  |                                                     |          |                        |         |          |          
|Cash Flows from Financing Activities              
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Net decrease in short-term borrowings                                             |                                                                                                  |                                                     | (335,603 | )                      |         |          | (94,941   | )       
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Proceeds from long-term borrowings                                                |                                                                                                  |                                                     | 51,959   |                        |         |          | 407,453   |         
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Repayments of long-term borrowings                                                |                                                                                                  |                                                     | (879,019 | )                      |         |          | (234,829  | )       
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Decrease in deposits                                                              |                                                                                                  |                                                     | (76,549  | )                      |         |          | (127,493  | )       
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Decrease in advance payments by borrowers for taxes and insurance                 |                                                                                                  |                                                     | (6,603   | )                      |         |          | (9,646    | )       
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Payment of dividends on common stock                                              |                                                                                                  |                                                     | (33,511  | )                      |         |          | (31,207   | )       
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Proceeds from issuance of common stock                                            |                                                                                                  |                                                     | 3,503    |                        |         |          | 8,999     |         
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Purchase of treasury stock                                                        |                                                                                                  |                                                     | (3,094   | )                      |         |          | (22,298   | )       
|                                                   |                                                                                   |                                                                                                  |                                                     |          |                        |         |          |          
|                                                   |                                                                                   | Net cash used in financing activities                                                            |                                                     |          | (1,278,917             | )       |          |           | (103,962 | )       
|                                                   |                                                                                   |                                                                                                  |                                                     |          |                        |         |          |          
|Net decrease in cash and cash equivalents          |                                                                                   |                                                                                                  | (227,390                                            | )        |                        |         | (215,077 | )        
|                                                  
|                                                  
|                                                  
|                                                  
|Cash and cash equivalents, beginning of the period |                                                                                   |                                                                                                  | 693,532                                             |          |                        |         | 722,260  |          
|                                                   |                                                                                   |                                                                                                  |                                                     |          |                        |         |          |          
|Cash and cash equivalents, end of the period       |                                                                                   | $                                                                                                | 466,142                                             |          |                        | $       | 507,183  |          
|                                                   |                                                                                   |                                                                                                  |                                                     |          |                        |         |          |          
|Supplemental disclosure of cash flow information: 
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Cash paid for interest on deposits and borrowings                                 |                                                                                                  | $                                                   | 321,064  |                        |         | $        | 227,718   |         
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Cash paid for income taxes                                                        |                                                                                                  |                                                     |         |                        |         |          |          |         
|                                                  
|                                                  
|                                                  
|                                                  
|Supplemental schedule of noncash activities:      
|                                                  
|                                                  
|                                                  
|                                                  
|                                                   | Loans exchanged for mortgage-backed securities                                    |                                                                                                  |                                                     |         |                        |         |          | 1,148,373 |         

See Notes to Consolidated Financial Statements

4



---



##### Table of Contents



CHARTER ONE FINANCIAL, INC. AND SUBSIDIARIES




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)



|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. 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 a strategic alliance with 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
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 has 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. Early application is still permitted. Management
has not completed the process of evaluating SFAS No. 133 and therefore has
not determined the impact that adopting this statement will have on the
financial position and results of operations.
|  
|6. |  | 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 (formerly
ALBANK 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 and New York, and in some markets of
Massachusetts and Vermont. As of March 31, 2000, the Bank and its subsidiaries
were doing business through 418 full-service branches and 36 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 $111.7 million, or $0.53 per diluted share,
for the three months ended March 31, 2000. This was an $8.8 million, or 8.5%,
increase over the results of the first quarter of 1999 when net income was
$102.9 million, or $0.47 per diluted share. This increase was primarily
attributable to increases in retail banking income and Bank Owned Life
Insurance (BOLI) income. Our net income, excluding the after-tax impact of
merger-related charges resulted in a return on average equity of 18.60% and a
return on average assets of 1.47% for the three months ended March 31, 2000.
The comparable returns for the first quarter of 1999 were 17.22% and 1.38%,
respectively.

Figure 1 sets forth selected annualized performance ratios for the three months
ended March 31, 2000 and 1999, respectively. The table reflects these ratios
on both an actual and operating return basis. Operating returns are computed
using net income, excluding the after-tax impact of merger-related charges for
each of the periods presented.

6



---



##### Table of Contents



Selected Ratios(Figure 1)

|           |                                                |  |                    |       |         |  |  |       |  
|---------- | ---------------------------------------------- |  | ------------------ | ----- | ------- |  |  | ----- | -
|           |                                                |  | Three months ended
|           |                                                |  |                   
|           |                                                |  | 3/31/00            |       | 3/31/99
|           |                                                |  |                    |       |        
|Actual:   
|          
|          
|          
|          
|           | Return on average assets                       |  |                    | 1.45  | %       |  |  | 1.36  | %
|          
|          
|          
|          
|           | Return on average equity                       |  |                    | 18.25 |         |  |  | 16.98 |  
|          
|          
|          
|          
|           | Average equity to average assets               |  |                    | 7.93  |         |  |  | 7.99  |  
|          
|          
|          
|          
|           | Net interest income to administrative expenses |  |                    | 1.63  | x       |  |  | 1.65  | x
|          
|          
|          
|          
|           | Administrative expenses to average assets      |  |                    | 1.85  | %       |  |  | 1.89  | %
|          
|          
|          
|          
|           | Efficiency ratio                               |  |                    | 44.44 |         |  |  | 47.23 |  
|          
|          
|          
|          
|Operating:
|          
|          
|          
|          
|           | Return on average assets                       |  |                    | 1.47  | %       |  |  | 1.38  | %
|          
|          
|          
|          
|           | Return on average equity                       |  |                    | 18.60 |         |  |  | 17.22 |  
|          
|          
|          
|          
|           | Net interest income to administrative expenses |  |                    | 1.67  | x       |  |  | 1.67  | x
|          
|          
|          
|          
|           | Administrative expenses to average assets      |  |                    | 1.81  | %       |  |  | 1.86  | %
|          
|          
|          
|          
|           | Efficiency ratio                               |  |                    | 43.40 |         |  |  | 46.48 |  

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,
|                                                                        |                                  |                         |                                            |            |                    
|                                                                        |                                  |                         |                                            |            | 3/31/00             |            | 3/31/99 
|                                                                        |                                  |                         |                                            |            |                     |            |         
|                                                                        |                                  |                         |                                            |            |                     |            |          |         |         |         |         |      | Avg.                   |      |           |            |            |            |         |         |         |         | Avg.  
|                                                                        |                                  |                         |                                            |            | Average             |            |          |         |         |         | Yield/  |      | Average                |      |           |            |            |            | Yield/ 
|                                                                        |                                  |                         |                                            |            | Balance             |            | Interest |         | Cost    |         | Balance |      | Interest               |      | Cost     
|                                                                        |                                  |                         |                                            |            |                     |            |          |         |         |         |         |      |                        |      |          
|                                                                        |                                  |                         |                                            |            |                     |            |          |         |         |         |         |      | (Dollars in thousands)
|Interest-earning assets:                                               
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|                                                                        | Loans and leases                 |                         | $                                          | 22,900,394 |                     |            | $        | 428,110 |         |         |         | 7.49 | %                      |      | $         | 22,618,026 |            |            | $       | 421,789 |         |         |        | 7.48 | %   
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|                                                                        | Mortgage-backed securities:     
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|                                                                        |                                  | Available for sale      |                                            |            | 3,140,126           |            |          |         | 55,474  |         |         |      | 7.07                   |      |           |            | 2,435,343  |            |         |         | 40,326  |         |        |      | 6.62 |     
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|                                                                        |                                  | Held to maturity        |                                            |            | 1,844,515           |            |          |         | 32,354  |         |         |      | 7.02                   |      |           |            | 2,662,771  |            |         |         | 46,072  |         |        |      | 6.92 |     
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|                                                                        | Investment securities:          
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|                                                                        |                                  | Trading                 |                                            |            | 735                 |            |          |         | 38      |         |         |      | 20.56                  |      |           |            |           |            |         |         |        |         |        |      |     |     
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|                                                                        |                                  | Available for sale      |                                            |            | 485,117             |            |          |         | 9,011   |         |         |      | 7.43                   |      |           |            | 490,019    |            |         |         | 6,923   |         |        |      | 5.65 |     
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|                                                                        |                                  | Held to maturity        |                                            |            | 35,682              |            |          |         | 424     |         |         |      | 4.75                   |      |           |            | 52,015     |            |         |         | 812     |         |        |      | 6.25 |     
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|                                                                        | Other interest-earning assets    |                         |                                            | 501,319    |                     |            |          | 8,659   |         |         |         | 6.83 |                        |      |           | 638,578    |            |            |         | 9,471   |         |         |        | 5.93 |     
|                                                                        |                                  |                         |                                            |            |                     |            |          |         |         |         |         |      |                        |      |           |            |            |            |         |        
|                                                                        |                                  |                         | Total interest-earning assets              |            |                     | 28,907,888 |          |         |         | 534,070 |         |      |                        | 7.40 |           |            |            | 28,896,752 |         |         |         | 525,393 |        |      |      | 7.29 | 
|                                                                        |                                  |                         |                                            |            |                     |            |          |         |         |         |         |      |                        |      |           |            |            |            |         |        
|Allowance for loan and lease losses                                     |                                  |                         | (185,146                                   | )          |                     |            |          |         |         |         |         |      |                        |      | (183,193  | )         
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|Noninterest-earning assets                                              |                                  |                         | 2,162,762                                  |            |                     |            |          |         |         |         |         |      |                        |      | 1,614,118 |           
|                                                                        |                                  |                         |                                            |            |                     |            |          |         |         |         |         |      |                        |      |           |           
|                                                                        |                                  |                         | Total assets                               |            | $                   | 30,885,504 |          |         |         |         |         |      |                        |      |           |            | $          | 30,327,677 |        
|                                                                        |                                  |                         |                                            |            |                     |            |          |         |         |         |         |      |                        |      |           |           
|Interest-bearing liabilities:                                          
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|                                                                        | Deposits:                       
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|                                                                        |                                  | Checking accounts       |                                            | $          | 3,429,346           |            |          |         | 11,586  |         |         |      | 1.36                   | %    |           | $          | 2,879,090  |            |         |         | 5,114   |         |        |      | .72  | %   
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|                                                                        |                                  | Savings accounts        |                                            |            | 2,047,032           |            |          |         | 7,943   |         |         |      | 1.56                   |      |           |            | 2,565,536  |            |         |         | 13,036  |         |        |      | 2.06 |     
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|                                                                        |                                  | Money market accounts   |                                            |            | 3,229,621           |            |          |         | 27,876  |         |         |      | 3.47                   |      |           |            | 2,729,363  |            |         |         | 23,028  |         |        |      | 3.42 |     
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|                                                                        |                                  | Certificates of deposit |                                            |            | 10,276,908          |            |          |         | 132,850 |         |         |      | 5.20                   |      |           |            | 10,707,284 |            |         |         | 140,548 |         |        |      | 5.32 |     
|                                                                        |                                  |                         |                                            |            |                     |            |          |         |         |         |         |      |                        |      |           |            |            |            |         |        
|                                                                        |                                  |                         | Total deposits                             |            |                     | 18,982,907 |          |         |         | 180,255 |         |      |                        | 3.82 |           |            |            | 18,881,273 |         |         |         | 181,726 |        |      |      | 3.90 | 
|                                                                        |                                  |                         |                                            |            |                     |            |          |         |         |         |         |      |                        |      |           |            |            |            |         |        
|                                                                        | FHLB advances                    |                         |                                            | 8,549,562  |                     |            |          | 113,699 |         |         |         | 5.34 |                        |      |           | 7,652,085  |            |            |         | 94,840  |         |         |        | 5.02 |     
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|                                                                        | Other borrowings                 |                         |                                            | 383,685    |                     |            |          | 7,113   |         |         |         | 7.39 |                        |      |           | 851,530    |            |            |         | 13,278  |         |         |        | 6.24 |     
|                                                                        |                                  |                         |                                            |            |                     |            |          |         |         |         |         |      |                        |      |           |            |            |            |         |        
|                                                                        |                                  |                         | Total borrowings                           |            |                     | 8,933,247  |          |         |         | 120,812 |         |      |                        | 5.43 |           |            |            | 8,503,615  |         |         |         | 108,118 |        |      |      | 5.14 | 
|                                                                        |                                  |                         |                                            |            |                     |            |          |         |         |         |         |      |                        |      |           |            |            |            |         |        
|                                                                        |                                  |                         | Total interest-bearing liabilities         |            |                     | 27,916,154 |          |         |         | 301,067 |         |      |                        | 4.33 |           |            |            | 27,384,888 |         |         |         | 289,844 |        |      |      | 4.29 | 
|                                                                        |                                  |                         |                                            |            |                     |            |          |         |         |         |         |      |                        |      |           |            |            |            |         |        
|                                                                        | Non interest-bearing liabilities |                         |                                            | 521,055    |                     |            |          |         |         |         |         |      |                        |      |           | 518,228    |           
|                                                                        |                                  |                         |                                            |            |                     |            |          |         |         |         |         |      |                        |      |           |           
|                                                                        |                                  |                         | Total liabilities                          |            |                     | 28,437,209 |          |         |         |         |         |      |                        |      |           |            |            | 27,903,116 |        
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|Shareholders equity                                                    |                                  |                         | 2,448,295                                  |            |                     |            |          |         |         |         |         |      |                        |      | 2,424,561 |           
|                                                                        |                                  |                         |                                            |            |                     |            |          |         |         |         |         |      |                        |      |           |           
|                                                                        |                                  |                         | Total liabilities and shareholders
equity |            | $                   | 30,885,504 |          |         |         |         |         |      |                        |      |           |            | $          | 30,327,677 |        
|                                                                        |                                  |                         |                                            |            |                     |            |          |         |         |         |         |      |                        |      |           |           
|Net interest income                                                     |                                  |                         |                                            |            |                     | $          | 233,003  |         |         |         |         |      |                        |      |           |            |            | $          | 235,549 |        
|                                                                        |                                  |                         |                                            |            |                     |            |          |         |         |         |         |      |                        |      |           |            |            |            |         |        
|Interest rate spread                                                    |                                  |                         |                                            |            |                     |            |          |         |         |         | 3.07    |      |                        |      |           |            |            |            |         |         |         |         | 3.00   |     
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|Net yield on average interest-earning
assets                            |                                  |                         |                                            |            |                     |            |          |         |         |         | 3.22    |      |                        |      |           |            |            |            |         |         |         |         | 3.26   |     
|                                                                       
|                                                                       
|                                                                       
|                                                                       
|Average interest-earning assets to average
interest-bearing liabilities |                                  |                         |                                            |            |                     |            |          |         |         |         | 103.55  | %    |                        |      |           |            |            |            |         |         |         |         | 105.52 | %   

8



---



##### 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 March 31,
|                              |                               |                    |       |        |                             
|                              |                               |                    |       |        | 2000 v. 1999                
|                              |                               |                    |       |        |                             
|                              |                               |                    |       |        | Increase (decrease) due to  
|                              |                               |                    |       |        |                             
|                              |                               |                    |       |        | Rate                         |       | Volume |        | Total                 
|                              |                               |                    |       |        |                              |       |        |        |                       
|                              |                               |                    |       |        |                              |       |        |        | (Dollars in thousands)
|Interest income:             
|                             
|                             
|                             
|                             
|                              | Loans and leases              |                    | $     | (1,194 | )                            |       | $      | 7,515  |                        |       | $      | 6,321  |        
|                             
|                             
|                             
|                             
|                              | Mortgage-backed securities:  
|                             
|                             
|                             
|                             
|                              |                               | Available for sale |       |        | 2,844                        |       |        |        | 12,304                 |       |        |        | 15,148  |       
|                             
|                             
|                             
|                             
|                              |                               | Held to maturity   |       |        | 627                          |       |        |        | (14,345                | )     |        |        | (13,718 | )     
|                             
|                             
|                             
|                             
|                              | Investment securities:       
|                             
|                             
|                             
|                             
|                              |                               | Trading            |       |        |                             |       |        |        | 38                     |       |        |        | 38      |       
|                             
|                             
|                             
|                             
|                              |                               | Available for sale |       |        | 2,158                        |       |        |        | (70                    | )     |        |        | 2,088   |       
|                             
|                             
|                             
|                             
|                              |                               | Held to maturity   |       |        | (168                         | )     |        |        | (220                   | )     |        |        | (388    | )     
|                             
|                             
|                             
|                             
|                              | Other interest-earning assets |                    |       | 1,368  |                              |       |        | (2,180 | )                      |       |        | (812   | )      
|                              |                               |                    |       |        |                              |       |        |        |                        |       |        |       
|                              |                               |                    | Total |        |                              | 5,635 |        |        |                        | 3,042 |        |        |         | 8,677  | 
|                              |                               |                    |       |        |                              |       |        |        |                        |       |        |       
|Interest expense:            
|                             
|                             
|                             
|                             
|                              | Checking accounts             |                    |       | 5,322  |                              |       |        | 1,150  |                        |       |        | 6,472  |        
|                             
|                             
|                             
|                             
|                              | Savings accounts              |                    |       | (2,779 | )                            |       |        | (2,314 | )                      |       |        | (5,093 | )      
|                             
|                             
|                             
|                             
|                              | Money market accounts         |                    |       | 357    |                              |       |        | 4,491  |                        |       |        | 4,848  |        
|                             
|                             
|                             
|                             
|                              | Certificates of deposit       |                    |       | (2,828 | )                            |       |        | (4,870 | )                      |       |        | (7,698 | )      
|                             
|                             
|                             
|                             
|                              | FHLB advances                 |                    |       | 6,465  |                              |       |        | 12,394 |                        |       |        | 18,859 |        
|                             
|                             
|                             
|                             
|                              | Other borrowings              |                    |       | 52     |                              |       |        | (6,217 | )                      |       |        | (6,165 | )      
|                              |                               |                    |       |        |                              |       |        |        |                        |       |        |       
|                              |                               |                    | Total |        |                              | 6,589 |        |        |                        | 4,634 |        |        |         | 11,223 | 
|                              |                               |                    |       |        |                              |       |        |        |                        |       |        |       
|Change in net interest income |                               | $                  | (954  | )      |                              | $     | (1,592 | )      |                        | $     | (2,546 | )     
|                              |                               |                    |       |        |                              |       |        |        |                        |       |        |       

Our net interest income for the three months ended March 31, 2000 was $233.0
million, a decrease of $2.5 million from the three months ended March 31, 1999.
Although the interest rate spread increased by seven basis points in the first
quarter of 2000 to 3.07% from 3.00% in the first quarter of 1999, the net yield
on average interest-earning assets decreased by four basis points in the first
quarter of 2000 to 3.22% from 3.26% in the first quarter of 1999. The
year-over-year comparison was affected by an increase of $548.6 million in
non-interest earning assets primarily attributable to our BOLI program
initiated in 1999. Management estimates that if the net yield for each of the
three month periods was adjusted for BOLI, the pro forma result would have been
3.35% during the first quarter of 2000, compared with 3.28% during the first
quarter of 1999. See Other Income below for further discussion regarding our
BOLI program.

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.

9



---



##### Table of Contents



Yields and Costs at End of Period(Figure 4)

|                                     |                         |                               |                        |                                    |      |         |      |          |      |      |      | 
|------------------------------------ | ----------------------- | ----------------------------- | ---------------------- | ---------------------------------- | ---- | ------- | ---- | -------- | ---- | ---- | ---- | 
|                                     |                         |                               |                        |                                    |      | 3/31/00 |      | 12/31/99
|                                     |                         |                               |                        |                                    |      |         |      |         
|                                     | Weighted average yield:
|                                    
|                                    
|                                    
|                                    
|                                     |                         | Real estate loans             |                        |                                    | 7.31 | %       |      |          | 7.28 | %   
|                                    
|                                    
|                                    
|                                    
|                                     |                         | Automobile loans              |                        |                                    | 8.58 |         |      |          | 8.52 |     
|                                    
|                                    
|                                    
|                                    
|                                     |                         | Retail consumer loans         |                        |                                    | 7.90 |         |      |          | 7.93 |     
|                                    
|                                    
|                                    
|                                    
|                                     |                         | Leases                        |                        |                                    | 6.15 |         |      |          | 6.08 |     
|                                    
|                                    
|                                    
|                                    
|                                     |                         | Corporate banking loans       |                        |                                    | 8.70 |         |      |          | 8.58 |     
|                                    
|                                    
|                                    
|                                    
|                                     |                         |                               | Total loans and leases |                                    |      | 7.54    |      |          |      | 7.53 |     
|                                    
|                                    
|                                    
|                                    
|                                     |                         | Mortgage-backed securities    |                        |                                    | 7.10 |         |      |          | 7.04 |     
|                                    
|                                    
|                                    
|                                    
|                                     |                         | Investment securities         |                        |                                    | 7.26 |         |      |          | 7.26 |     
|                                    
|                                    
|                                    
|                                    
|                                     |                         | Other interest-earning assets |                        |                                    | 6.89 |         |      |          | 6.97 |     
|                                    
|                                    
|                                    
|                                    
|                                     |                         |                               |                        | Total interest-earning assets      |      |         | 7.46 |          |      |      | 7.41 | 
|                                    
|                                    
|                                    
|                                    
|                                     | Weighted average cost: 
|                                    
|                                    
|                                    
|                                    
|                                     |                         | Checking                      |                        |                                    | 1.40 |         |      |          | 1.27 |     
|                                    
|                                    
|                                    
|                                    
|                                     |                         | Money market                  |                        |                                    | 3.70 |         |      |          | 3.41 |     
|                                    
|                                    
|                                    
|                                    
|                                     |                         | Savings                       |                        |                                    | 1.60 |         |      |          | 1.61 |     
|                                    
|                                    
|                                    
|                                    
|                                     |                         | Certificates of deposit       |                        |                                    | 5.20 |         |      |          | 5.13 |     
|                                    
|                                    
|                                    
|                                    
|                                     |                         |                               | Total deposits         |                                    |      | 3.83    |      |          |      | 3.79 |     
|                                    
|                                    
|                                    
|                                    
|                                     |                         | FHLB advances                 |                        |                                    | 5.45 |         |      |          | 5.32 |     
|                                    
|                                    
|                                    
|                                    
|                                     |                         | Other borrowings              |                        |                                    | 8.00 |         |      |          | 6.99 |     
|                                    
|                                    
|                                    
|                                    
|                                     |                         |                               |                        | Total interest-bearing liabilities |      |         | 4.37 |          |      |      | 4.34 | 
|                                    
|                                    
|                                    
|                                    
|Interest rate spread                 |                         |                               | 3.09                   |                                    |      |         | 3.07 |         
|                                    
|                                    
|                                    
|                                    
|Net yield on interest-earning assets |                         |                               | 3.26                   | %                                  |      |         | 3.19 | %       

Other Income

Other income for the three months ended March 31, 2000 was $82.6 million, an
increase of $15.4 million, or 22.9%, over the $67.2 million for the three
months ended March 31, 1999. The increase was primarily attributable to retail
banking income and income from the BOLI program. Retail banking income
increased $8.1 million, or 18.7%, primarily due to increases in checking
account fee income. Checking account fee income increased as a result of
increases in the number of checking accounts and the effort to increase the
revenues per account as we continue to introduce our products in new markets.
The increase in other income was 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 is recorded in other income and
is the primary reason for the $8.6 million increase in other income over the
comparable period in 1999.

Administrative Expenses

Administrative expenses were $142.7 million for the three months ended March
31, 2000, as compared to $143.2 million for the three months ended March 31,
1999. Each year included merger-related expenses. There were $3.3 million in
merger-related expenses recorded in the three months ended March 31, 2000, and
$2.2 million for the three months ended March 31, 1999. Excluding these
merger-related charges, our administrative expenses were $139.5 million for the
three months ended March 31, 2000 and $141.0 million for the three months ended
March 31, 1999. This resulted in a ratio of administrative expenses to average
assets (excluding the merger-related charges) of 1.81% and 1.86% for the three
months ended March 31, 2000 and 1999, respectively. Our efficiency ratio
(excluding the merger-related charges) was 43.40% for the three months ended
March 31, 2000, an improvement when compared to 46.48% for the three months
ended March 31, 1999. See the above discussion in Other Income regarding
additional factors that contributed to the improvement in our efficiency ratio.

10



---



##### Table of Contents



Federal Income Taxes

Federal income tax expense for the three months ended March 31, 2000 was $52.6
million as compared to $49.9 million for the same period in 1999. The primary
reason for this 5.4% increase in the provision for federal income taxes was a
7.5% increase in pre-tax book income. The effective tax rates were 32.0% and
32.6% for the 2000 and 1999 periods, respectively.

FINANCIAL CONDITION

Overview

At March 31, 2000, total assets were $30.6 billion, as compared to total assets
of $31.8 billion at December 31, 1999. The decrease in total assets of $1.2
billion is primarily attributed to our fourth quarter 1999 commitment to sell
$2.1 billion in seasoned, fixed-rate mortgage-backed securities, $1.5 billion
of which settled during the first quarter of 2000.

Loans and Leases

Composition of Loans and Leases(Figure 5)

|                                       |                                                              |                   |                       |            |                        |            |            |            |           |            | 
|-------------------------------------- | ------------------------------------------------------------ | ----------------- | --------------------- | ---------- | ---------------------- | ---------- | ---------- | ---------- | --------- | ---------- | 
|                                       |                                                              |                   |                       |            | 3/31/00                |            | 12/31/99  
|                                       |                                                              |                   |                       |            |                        |            |           
|                                       |                                                              |                   |                       |            | (Dollars in thousands)
|Loan and lease portfolio, net         
|                                      
|                                      
|                                      
|                                      
|                                       | One-to-four family:                                         
|                                      
|                                      
|                                      
|                                      
|                                       |                                                              | Permanent:       
|                                      
|                                      
|                                      
|                                      
|                                       |                                                              |                   | Fixed rate            |            | $                      | 6,098,844  |            |            | $         | 5,755,393  | 
|                                      
|                                      
|                                      
|                                      
|                                       |                                                              |                   | Adjustable rate       |            |                        | 6,006,653  |            |            |           | 5,703,042  | 
|                                      
|                                      
|                                      
|                                      
|                                       |                                                              | Construction      |                       |            | 283,410                |            |            |            | 276,172   |           
|                                       |                                                              |                   |                       |            |                        |            |            |           
|                                       |                                                              |                   | 12,388,907            |            |                        |            | 11,734,607 |           
|                                       |                                                              |                   |                       |            |                        |            |            |           
|                                       | Commercial real estate:                                     
|                                      
|                                      
|                                      
|                                      
|                                       |                                                              | Multifamily       |                       |            | 1,263,011              |            |            |            | 1,276,004 |           
|                                      
|                                      
|                                      
|                                      
|                                       |                                                              | Other             |                       |            | 722,768                |            |            |            | 673,972   |           
|                                       |                                                              |                   |                       |            |                        |            |            |           
|                                       |                                                              |                   | 1,985,779             |            |                        |            | 1,949,976  |           
|                                       |                                                              |                   |                       |            |                        |            |            |           
|                                       | Consumer:                                                   
|                                      
|                                      
|                                      
|                                      
|                                       |                                                              | Retail            |                       |            | 4,666,282              |            |            |            | 4,502,023 |           
|                                      
|                                      
|                                      
|                                      
|                                       |                                                              | Automobile        |                       |            | 2,506,848              |            |            |            | 2,497,956 |           
|                                       |                                                              |                   |                       |            |                        |            |            |           
|                                       |                                                              |                   | 7,173,130             |            |                        |            | 6,999,979  |           
|                                       |                                                              |                   |                       |            |                        |            |            |           
|                                       | Business:                                                   
|                                      
|                                      
|                                      
|                                      
|                                       |                                                              | Leasing           |                       |            | 1,198,907              |            |            |            | 1,137,895 |           
|                                      
|                                      
|                                      
|                                      
|                                       |                                                              | Corporate banking |                       |            | 667,155                |            |            |            | 676,793   |           
|                                       |                                                              |                   |                       |            |                        |            |            |           
|                                       |                                                              |                   | 1,866,062             |            |                        |            | 1,814,688  |           
|                                       |                                                              |                   |                       |            |                        |            |            |           
|                                       | Loans and leases before allowance for loan and leases losses |                   |                       | 23,413,878 |                        |            |            | 22,499,250 |          
|                                       |                                                              |                   |                       |            |                        |            |            |           
|                                       | Allowance for loan and lease losses                          |                   |                       | (185,267   | )                      |            |            | (186,400   | )        
|                                       |                                                              |                   |                       |            |                        |            |            |           
|                                       |                                                              |                   | Loans and leases, net |            | $                      | 23,228,611 |            |            | $         | 22,312,850 | 
|                                       |                                                              |                   |                       |            |                        |            |            |           
|Portfolio of loans serviced for others |                                                              | $                 | 10,526,595            |            |                        | $          | 10,798,563 |           
|                                       |                                                              |                   |                       |            |                        |            |            |           

11



---



##### Table of Contents



Loan and Lease Activity(Figure 6)

|                                |                                                |               |                    |                                      |   |                        |           |           |   |           |           |  
|------------------------------- | ---------------------------------------------- | ------------- | ------------------ | ------------------------------------ | - | ---------------------- | --------- | --------- | - | --------- | --------- | -
|                                |                                                |               |                    |                                      |   | Three Months Ended    
|                                |                                                |               |                    |                                      |   |                       
|                                |                                                |               |                    |                                      |   | 3/31/00                |           | 3/31/99  
|                                |                                                |               |                    |                                      |   |                        |           |          
|                                |                                                |               |                    |                                      |   | (Dollars in thousands)
|Originations:                  
|                               
|                               
|                               
|                               
|Real estate:                   
|                               
|                               
|                               
|                               
|                                |                                                | Permanent:   
|                               
|                               
|                               
|                               
|                                |                                                |               | One-to-four family |                                      | $ | 1,020,269              |           |           | $ | 1,378,438 |          
|                               
|                               
|                               
|                               
|                                |                                                |               | Multifamily        |                                      |   | 4,882                  |           |           |   | 98,875    |          
|                               
|                               
|                               
|                               
|                                |                                                |               | Commercial         |                                      |   | 56,924                 |           |           |   | 81,648    |          
|                                |                                                |               |                    |                                      |   |                        |           |          
|                                |                                                |               |                    | Total permanent loans                |   |                        | 1,082,075 |           |   |           | 1,558,961 |  
|                                |                                                |               |                    |                                      |   |                        |           |          
|                                |                                                | Construction:
|                               
|                               
|                               
|                               
|                                |                                                |               | One-to-four family |                                      |   | 99,398                 |           |           |   | 104,409   |          
|                               
|                               
|                               
|                               
|                                |                                                |               | Multifamily        |                                      |   | 9,564                  |           |           |   | 13,302    |          
|                               
|                               
|                               
|                               
|                                |                                                |               | Commercial         |                                      |   | 33,654                 |           |           |   | 14,552    |          
|                                |                                                |               |                    |                                      |   |                        |           |          
|                                |                                                |               |                    | Total construction loans             |   |                        | 142,616   |           |   |           | 132,263   |  
|                                |                                                |               |                    |                                      |   |                        |           |          
|                                |                                                |               |                    | Total real estate loans originated   |   |                        | 1,224,691 |           |   |           | 1,691,224 |  
|                                |                                                |               |                    |                                      |   |                        |           |          
|Retail consumer                 |                                                |               | 490,532            |                                      |   |                        | 617,355   |          
|                               
|                               
|                               
|                               
|Automobile                      |                                                |               | 280,002            |                                      |   |                        | 347,460   |          
|                               
|                               
|                               
|                               
|Leases                          |                                                |               | 104,362            |                                      |   |                        | 50,267    |          
|                               
|                               
|                               
|                               
|Corporate banking               |                                                |               | 147,961            |                                      |   |                        | 126,551   |          
|                                |                                                |               |                    |                                      |   |                        |           |          
|                                |                                                |               |                    | Total loans and leases originated    |   |                        | 2,247,548 |           |   |           | 2,832,857 |  
|                                |                                                |               |                    |                                      |   |                        |           |          
|Loans purchased                 |                                                |               | 3,764              |                                      |   |                        | 259,754   |          
|                                |                                                |               |                    |                                      |   |                        |           |          
|Sales and principal reductions:
|                               
|                               
|                               
|                               
|                                | Loans sold                                     |               |                    | 330,118                              |   |                        |           | 573,970   |  
|                               
|                               
|                               
|                               
|                                | Loans exchanged for mortgage-backed securities |               |                    |                                     |   |                        |           | 1,148,373 |  
|                               
|                               
|                               
|                               
|                                | Principal reductions                           |               |                    | 997,869                              |   |                        |           | 1,737,194 |  
|                                |                                                |               |                    |                                      |   |                        |           |          
|                                |                                                |               |                    | Total sales and principal reductions |   |                        | 1,327,987 |           |   |           | 3,459,537 |  
|                                |                                                |               |                    |                                      |   |                        |           |          
|                                |                                                |               |                    | Increase (decrease) before net items |   | $                      | 923,325   |           |   | $         | (366,926  | )
|                                |                                                |               |                    |                                      |   |                        |           |          

Investment Securities

Figure 7 summarizes our investment portfolios at March 31, 2000 and December
31, 1999. The amounts reflected represent the fair values of investment
securities held for trading and available for sale and the amortized cost of
investment securities held to maturity.

Investment Securities(Figure 7)

|                   |                                      |                                                |       |         |                        |         |          |         |         |         | 
|------------------ | ------------------------------------ | ---------------------------------------------- | ----- | ------- | ---------------------- | ------- | -------- | ------- | ------- | ------- | 
|                   |                                      |                                                |       |         | 3/31/00                |         | 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  |                                                |       | 366,408 |                        |         |          | 339,687 |        
|                  
|                  
|                  
|                  
|                   | Corporate notes and commercial paper |                                                |       | 90,592  |                        |         |          | 88,368  |        
|                  
|                  
|                  
|                  
|                   | Other                                |                                                |       | 16,209  |                        |         |          | 54,640  |        
|                   |                                      |                                                |       |         |                        |         |          |        
|                   |                                      | Total investment securities available for sale |       |         | 473,209                |         |          |         | 482,695 |        
|                   |                                      |                                                |       |         |                        |         |          |        
|Held to Maturity  
|                  
|                  
|                  
|                  
|                   | U.S. Treasury and agency securities  |                                                |       | 17,294  |                        |         |          | 17,058  |        
|                  
|                  
|                  
|                  
|                   | Corporate notes and commercial paper |                                                |       |        |                        |         |          | 15,659  |        
|                  
|                  
|                  
|                  
|                   | Other                                |                                                |       | 12,937  |                        |         |          | 13,289  |        
|                   |                                      |                                                |       |         |                        |         |          |        
|                   |                                      | Total investment securities held to maturity   |       |         | 30,231                 |         |          |         | 46,006  |        
|                   |                                      |                                                |       |         |                        |         |          |        
|                   |                                      |                                                | Total |         | $                      | 503,440 |          |         | $       | 542,081 | 
|                   |                                      |                                                |       |         |                        |         |          |        
|                   | Weighted average rate                |                                                |       | 7.26    | %                      |         |          | 7.26    | %      
|                   |                                      |                                                |       |         |                        |         |          |        

12



---



##### Table of Contents



Mortgage-Backed Securities

Figure 8 summarizes our mortgage-backed securities portfolios at March 31, 2000
and December 31, 1999.
The amounts reflected represent the fair values of mortgage-backed securities
available for sale and the amortized cost of securities held to maturity.

Mortgage-Backed Securities(Figure 8)

|                   |                                      |                                                     |       |       |           |                        |           |          |           |           |           | 
|------------------ | ------------------------------------ | --------------------------------------------------- | ----- | ----- | --------- | ---------------------- | --------- | -------- | --------- | --------- | --------- | 
|                   |                                      |                                                     |       |       |           | 3/31/00                |           | 12/31/99
|                   |                                      |                                                     |       |       |           |                        |           |         
|                   |                                      |                                                     |       |       |           | (Dollars in thousands)
|Available for Sale
|                  
|                  
|                  
|                  
|                   | Participation certificates:         
|                  
|                  
|                  
|                  
|                   |                                      | Government agency issues:                          
|                  
|                  
|                  
|                  
|                   |                                      |                                                     | FNMA  |       | $         | 1,284,746              |           |          | $         | 3,023,228 |          
|                  
|                  
|                  
|                  
|                   |                                      |                                                     | FHLMC |       |           | 69,614                 |           |          |           | 95,034    |          
|                  
|                  
|                  
|                  
|                   |                                      |                                                     | GNMA  |       |           | 2,505                  |           |          |           | 2,608     |          
|                  
|                  
|                  
|                  
|                   | Collateralized mortgage obligations:
|                  
|                  
|                  
|                  
|                   |                                      | Government agency issues:                          
|                  
|                  
|                  
|                  
|                   |                                      |                                                     | FHLMC |       |           | 294,575                |           |          |           | 232,906   |          
|                  
|                  
|                  
|                  
|                   |                                      |                                                     | FNMA  |       |           | 227,918                |           |          |           | 304,018   |          
|                  
|                  
|                  
|                  
|                   |                                      |                                                     | GNMA  |       |           | 7,039                  |           |          |           | 7,349     |          
|                  
|                  
|                  
|                  
|                   |                                      | Private issues                                      |       |       | 518,720   |                        |           |          | 527,991   |          
|                   |                                      |                                                     |       |       |           |                        |           |         
|                   |                                      | Total mortgage-backed securities available for sale |       |       | 2,405,117 |                        |           |          | 4,193,134 |          
|                   |                                      |                                                     |       |       |           |                        |           |         
|Held to Maturity  
|                  
|                  
|                  
|                  
|                   | Participation certificates:         
|                  
|                  
|                  
|                  
|                   |                                      | Government agency issues:                          
|                  
|                  
|                  
|                  
|                   |                                      |                                                     | FNMA  |       |           | 520,890                |           |          |           | 549,866   |          
|                  
|                  
|                  
|                  
|                   |                                      |                                                     | FHLMC |       |           | 186,566                |           |          |           | 196,704   |          
|                  
|                  
|                  
|                  
|                   |                                      |                                                     | GNMA  |       |           | 97,498                 |           |          |           | 101,468   |          
|                  
|                  
|                  
|                  
|                   |                                      | Private issues                                      |       |       | 154,716   |                        |           |          | 162,485   |          
|                  
|                  
|                  
|                  
|                   | Collateralized mortgage obligations:
|                  
|                  
|                  
|                  
|                   |                                      | Government agency issues:                          
|                  
|                  
|                  
|                  
|                   |                                      |                                                     | FNMA  |       |           | 219,564                |           |          |           | 221,934   |          
|                  
|                  
|                  
|                  
|                   |                                      |                                                     | FHLMC |       |           | 79,733                 |           |          |           | 82,838    |          
|                  
|                  
|                  
|                  
|                   |                                      | Private issues                                      |       |       | 555,409   |                        |           |          | 591,951   |          
|                   |                                      |                                                     |       |       |           |                        |           |         
|                   |                                      | Total mortgage-backed securities held to maturity   |       |       | 1,814,376 |                        |           |          | 1,907,246 |          
|                   |                                      |                                                     |       |       |           |                        |           |         
|                   |                                      |                                                     |       | Total |           | $                      | 4,219,493 |          |           | $         | 6,100,380 | 
|                   |                                      |                                                     |       |       |           |                        |           |         
|                   |                                      | Weighted average rate                               |       |       | 7.10      | %                      |           |          | 7.04      | %        
|                   |                                      |                                                     |       |       |           |                        |           |         

13



---



##### Table of Contents



Asset Quality

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

|                                     |                                                          |                   |                   |                                |        |                        |        |         |        |         |         |  
|------------------------------------ | -------------------------------------------------------- | ----------------- | ----------------- | ------------------------------ | ------ | ---------------------- | ------ | ------- | ------ | ------- | ------- | -
|                                     |                                                          |                   |                   |                                |        | Three months ended    
|                                     |                                                          |                   |                   |                                |        |                       
|                                     |                                                          |                   |                   |                                |        | 3/31/00                |        | 3/31/99
|                                     |                                                          |                   |                   |                                |        |                        |        |        
|                                     |                                                          |                   |                   |                                |        | (Dollars in thousands)
|Allowance for loans and lease losses
|                                    
|                                    
|                                    
|                                    
|                                     | Balance, beginning of period                             |                   | $                 | 186,400                        |        |                        | $      | 184,989 |       
|                                    
|                                    
|                                    
|                                    
|                                     | Provision for loan and lease losses                      |                   |                   | 8,598                          |        |                        |        | 6,770   |       
|                                    
|                                    
|                                    
|                                    
|                                     | Loans and leases charged off:                           
|                                    
|                                    
|                                    
|                                    
|                                     |                                                          | Mortgage          |                   |                                | (1,886 | )                      |        |         | (1,076 | )      
|                                    
|                                    
|                                    
|                                    
|                                     |                                                          | Automobile        |                   |                                | (7,095 | )                      |        |         | (8,126 | )      
|                                    
|                                    
|                                    
|                                    
|                                     |                                                          | Retail consumer   |                   |                                | (2,723 | )                      |        |         | (1,537 | )      
|                                    
|                                    
|                                    
|                                    
|                                     |                                                          | Leases            |                   |                                |       |                        |        |         | (900   | )      
|                                    
|                                    
|                                    
|                                    
|                                     |                                                          | Corporate banking |                   |                                | (123   | )                      |        |         | (448   | )      
|                                     |                                                          |                   |                   |                                |        |                        |        |        
|                                     |                                                          |                   | Total charge-offs |                                |        | (11,827                | )      |         |        | (12,087 | )      
|                                     |                                                          |                   |                   |                                |        |                        |        |        
|                                     | Recoveries:                                             
|                                    
|                                    
|                                    
|                                    
|                                     |                                                          | Mortgage          |                   |                                | 249    |                        |        |         | 254    |        
|                                    
|                                    
|                                    
|                                    
|                                     |                                                          | Automobile        |                   |                                | 1,585  |                        |        |         | 1,373  |        
|                                    
|                                    
|                                    
|                                    
|                                     |                                                          | Retail consumer   |                   |                                | 200    |                        |        |         | 189    |        
|                                    
|                                    
|                                    
|                                    
|                                     |                                                          | Leases            |                   |                                |       |                        |        |         |       |        
|                                    
|                                    
|                                    
|                                    
|                                     |                                                          | Corporate banking |                   |                                | 62     |                        |        |         | 96     |        
|                                     |                                                          |                   |                   |                                |        |                        |        |        
|                                     |                                                          |                   | Total recoveries  |                                |        | 2,096                  |        |         |        | 1,912   |        
|                                     |                                                          |                   |                   |                                |        |                        |        |        
|                                     |                                                          |                   |                   | Net loan and lease charge-offs |        |                        | (9,731 | )       |        |         | (10,175 | )
|                                     |                                                          |                   |                   |                                |        |                        |        |        
|                                     | Balance, end of period                                   |                   | $                 | 185,267                        |        |                        | $      | 181,584 |       
|                                     |                                                          |                   |                   |                                |        |                        |        |        
|                                     | Net charge-offs to average loans and leases (annualized) |                   |                   | .17                            | %      |                        |        | .18     | %     

Figure 10 sets forth information concerning nonperforming assets and additional
information on the allowance for loan and lease losses. At March 31, 2000, we
had no outstanding commitments to lend additional funds to borrowers whose
loans were on nonaccrual or restructured status.

14



---



##### Table of Contents



Nonperforming Assets(Figure 10)

|                                                     |                                                          |                                          |                                                         |     |                        |         |          |       |        |         | 
|---------------------------------------------------- | -------------------------------------------------------- | ---------------------------------------- | ------------------------------------------------------- | --- | ---------------------- | ------- | -------- | ----- | ------ | ------- | 
|                                                     |                                                          |                                          |                                                         |     | 3/31/00                |         | 12/31/99
|                                                     |                                                          |                                          |                                                         |     |                        |         |         
|                                                     |                                                          |                                          |                                                         |     | (Dollars in thousands)
|Nonperforming loans and leases:                     
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Nonaccrual loans and leases:                            
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                          | Real estate mortgage loans:             
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                          |                                          | One-to-four family(1)                                   |     | $                      | 73,661  |          |       | $      | 75,682  | 
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                          |                                          | Multifamily and commercial                              |     |                        | 14,027  |          |       |        | 3,369   | 
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                          |                                          | Construction and land                                   |     |                        | 584     |          |       |        | 1,095   | 
|                                                     |                                                          |                                          |                                                         |     |                        |         |          |      
|                                                     |                                                          |                                          | Total real estate mortgage loans                        |     |                        | 88,272  |          |       |        | 80,146  | 
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                          | Retail consumer                          |                                                         |     | 49,838                 |         |          |       | 39,638 |        
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                          | Automobile                               |                                                         |     | 305                    |         |          |       | 482    |        
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                          | Corporate banking                        |                                                         |     | 9,070                  |         |          |       | 6,037  |        
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                          | Leases                                   |                                                         |     |                       |         |          |       |       |        
|                                                     |                                                          |                                          |                                                         |     |                        |         |          |      
|                                                     |                                                          |                                          | Total nonaccrual loans and leases                       |     |                        | 147,485 |          |       |        | 126,303 | 
|                                                     |                                                          |                                          |                                                         |     |                        |         |          |      
|                                                     | Accruing loans and leases delinquent
more than 90 days: 
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                          | Real estate mortgage loans               |                                                         |     |                       |         |          |       |       |        
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                          | Retail consumer                          |                                                         |     | 2,408                  |         |          |       | 2,562  |        
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                          | Automobile                               |                                                         |     | 3,903                  |         |          |       | 4,973  |        
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                          | Leases                                   |                                                         |     | 2,759                  |         |          |       |       |        
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                          | Corporate banking                        |                                                         |     | 5,510                  |         |          |       | 2,463  |        
|                                                     |                                                          |                                          |                                                         |     |                        |         |          |      
|                                                     |                                                          |                                          | Total accruing loans and leases                        
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                          |                                          | delinquent more than 90 days                            |     |                        | 14,580  |          |       |        | 9,998   | 
|                                                     |                                                          |                                          |                                                         |     |                        |         |          |      
|                                                     | Restructured real estate mortgage loans                  |                                          |                                                         | 953 |                        |         |          | 1,009 |       
|                                                     |                                                          |                                          |                                                         |     |                        |         |          |      
|                                                     |                                                          |                                          | Total nonperforming loans and leases                    |     |                        | 163,018 |          |       |        | 137,310 | 
|                                                    
|                                                    
|                                                    
|                                                    
|Real estate acquired through foreclosure and other   |                                                          |                                          | 24,761                                                  |     |                        |         | 24,453   |      
|                                                     |                                                          |                                          |                                                         |     |                        |         |          |      
|                                                     |                                                          |                                          | Total nonperforming assets                              |     |                        | 187,779 |          |       |        | 161,763 | 
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                          |                                          | Less government guaranteed loans                        |     |                        | 19,037  |          |       |        | 18,841  | 
|                                                     |                                                          |                                          |                                                         |     |                        |         |          |      
|                                                     |                                                          |                                          | Nonperforming assets net of government guaranteed loans |     | $                      | 168,742 |          |       | $      | 142,922 | 
|                                                     |                                                          |                                          |                                                         |     |                        |         |          |      
|Ratio of:                                           
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Nonperforming loans and leases to total loans and leases |                                          |                                                         | .70 | %                      |         |          | .62   | %     
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Nonperforming assets to total assets                     |                                          |                                                         | .61 |                        |         |          | .51   |       
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Allowance for loan and lease losses to:                 
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                          | Nonperforming loans and leases           |                                                         |     | 113.65                 |         |          |       | 135.75 |        
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                          | Total loans and leases before allowance  |                                                         |     | .79                    |         |          |       | .83    |        
|                                                    
|                                                    
|                                                    
|                                                    
|Ratio of (excluding guaranteed nonperforming loans):
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Nonperforming loans and leases to total loans and leases |                                          |                                                         | .62 |                        |         |          | .53   |       
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Nonperforming assets to total assets                     |                                          |                                                         | .55 |                        |         |          | .45   |       
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     | Allowance for loan and lease losses to:                 
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                          | Nonperforming loans and leases           |                                                         |     | 128.67                 |         |          |       | 157.34 |        
|                                                    
|                                                    
|                                                    
|                                                    
|                                                     |                                                          | Total loans and leases before allowances |                                                         |     | .79                    | %       |          |       | .83    | %      



---

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

At March 31, 2000, there were $77.5 million of loans 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 loan repayment terms and that may result in disclosure of such
loans in the future.

15



---



##### 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. At
March 31, 2000 and December 31, 1999, 68% and 69% of interest-bearing
liabilities were in the form of deposits and 32% and 31% were in the form of
borrowings, respectively.

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)

|                                                                                        |                     |                     |            |           |            |          |      |                        |      |      |            |           |            |          |      |      |      | 
|--------------------------------------------------------------------------------------- | ------------------- | ------------------- | ---------- | --------- | ---------- | -------- | ---- | ---------------------- | ---- | ---- | ---------- | --------- | ---------- | -------- | ---- | ---- | ---- | 
|                                                                                        |                     |                     |            | 3/31/00   |            | 12/31/99
|                                                                                        |                     |                     |            |           |            |         
|                                                                                        |                     |                     |            |           |            |          |      | Weighted               |      |      |            |           |            | Weighted
|                                                                                        |                     |                     |            |           |            |          |      | Average                |      |      |            |           |            | Average 
|                                                                                        |                     |                     |            | Amount    |            | Rate     |      | Amount                 |      | Rate
|                                                                                        |                     |                     |            |           |            |          |      |                        |      |     
|                                                                                        |                     |                     |            |           |            |          |      | (Dollars in thousands)
|Checking accounts:                                                                     
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                        | Interest-bearing    |                     | $          | 2,305,717 |            |          |      | 2.22                   | %    |      | $          | 2,066,453 |            |          |      | 2.05 | %   
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                        | Noninterest-bearing |                     |            | 1,355,334 |            |          |      |                       |      |      |            | 1,263,290 |            |          |      |     |     
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|Savings accounts                                                                        |                     |                     | 1,943,207  |           |            |          | 1.60 |                        |      |      | 2,065,127  |           |            |          | 1.61 |     
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|Money market accounts                                                                   |                     |                     | 3,370,626  |           |            |          | 3.70 |                        |      |      | 3,170,435  |           |            |          | 3.41 |     
|                                                                                       
|                                                                                       
|                                                                                       
|                                                                                       
|Certificates of deposit                                                                 |                     |                     | 10,022,712 |           |            |          | 5.42 |                        |      |      | 10,508,670 |           |            |          | 5.31 |     
|                                                                                        |                     |                     |            |           |            |          |      |                        |      |      |            |          
|                                                                                        |                     | Total deposits, net |            | $         | 18,997,596 |          |      |                        | 3.95 |      |            | $         | 19,073,975 |          |      |      | 3.89 | 
|                                                                                        |                     |                     |            |           |            |          |      |                        |      |      |            |          
|Including the annualized effect
of applicable interest rate
risk management instruments |                     |                     |            |           |            |          | 3.83 | %                      |      |      |            |           |            |          | 3.79 | %   

Investment securities and mortgage-backed securities with a book value of
$512.9 million at March 31, 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 March 31, 2000, borrowings primarily consisted of FHLB advances. These
positions were secured by our investment in the stock of the FHLB, as well as
$11.8 billion in certain real estate loans and $1.9 billion in mortgage-backed
securities.

Federal Home Loan Bank Advances(Figure 12)

|           |                        |                     |           |           |           |          |      |                        |      |      |           |           |           |          |  |  |  |  |      |      |      |  
|---------- | ---------------------- | ------------------- | --------- | --------- | --------- | -------- | ---- | ---------------------- | ---- | ---- | --------- | --------- | --------- | -------- |  |  |  |  | ---- | ---- | ---- | -
|           |                        |                     |           | 3/31/00   |           | 12/31/99
|           |                        |                     |           |           |           |         
|           |                        |                     |           |           |           |          |      | Weighted               |      |      |           |           |           | Weighted
|           |                        |                     |           |           |           |          |      | Average                |      |      |           |           |           | Average 
|           |                        |                     |           | Amount    |           | Rate     |      | Amount                 |      | Rate
|           |                        |                     |           |           |           |          |      |                        |      |     
|           |                        |                     |           |           |           |          |      | (Dollars in thousands)
|Short-term |                        | $                   | 4,425,000 |           |           |          | 5.77 | %                      |      | $    | 4,115,000 |           |           |          |  |  |  |  | 5.43 | %   
|          
|          
|          
|          
|Long-term:
|          
|          
|          
|          
|           | Fixed-rate advances    |                     |           | 3,437,283 |           |          |      | 5.00                   |      |      |           | 4,512,941 |           |          |  |  |  |  |      | 5.10 |     
|          
|          
|          
|          
|           | Variable-rate advances |                     |           | 409,604   |           |          |      | 5.93                   |      |      |           | 598,209   |           |          |  |  |  |  |      | 6.21 |     
|           |                        |                     |           |           |           |          |      |                        |      |      |           |          
|           |                        | Total advances, net |           | $         | 8,271,887 |          |      |                        | 5.45 | %    |           | $         | 9,226,150 |          |  |  |  |  |      |      | 5.32 | %
|           |                        |                     |           |           |           |          |      |                        |      |      |           |          

16



---



##### Table of Contents



Interest Rate Risk Management

We utilize various types of interest rate contracts in managing our interest
rate risk profile. We utilize fixed receipt swaps to convert certain of our
longer term callable certificates of deposit into short-term variable
instruments. Under these agreements we have agreed to receive interest from
the counterparty on a notional amount at a fixed rate defined in the agreement,
and to pay interest at a floating rate indexed to LIBOR. We utilize fixed
payment swaps to convert certain of our floating-rate or short-term, fixed-rate
liabilities into longer term, fixed-rate instruments. Under these agreements
we have agreed to pay interest to the counterparty on a notional principal
amount at a fixed rate defined in the agreement, and receive interest at a
floating rate indexed to LIBOR. The amounts of interest exchanged are
calculated on the basis of notional principal amounts.

Interest Rate Swaps(Figure 13)

|                           |                      |      |       |   |           |           |           |  |          |      |           |  |                        |      |          |   |         |           |  |  |      |      |   |  |      |      |     
|-------------------------- | -------------------- | ---- | ----- | - | --------- | --------- | --------- |  | -------- | ---- | --------- |  | ---------------------- | ---- | -------- | - | ------- | --------- |  |  | ---- | ---- | - |  | ---- | ---- | ----
|                           |                      |      |       |   | 3/31/00   |           | 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    |           |           |  | 6.22     | %(1) |           |  | 6.44                   | %    |          | $ | 25,000  |           |  |  | 5.58 | %(1) |   |  | 6.44 | %   
|                           |                      |      |       |   |           |           |           |  |          |      |           |  |                        |      |          |  
|Variable Payment and Fixed
|                          
|                          
|                          
|                          
|                           | Receipt Maturing in:
|                          
|                          
|                          
|                          
|                           |                      | 2000 |       | $ | 40,000    |           |           |  | 5.55     | %    |           |  | 6.17                   | %    |          |   | 40,000  |           |  |  | 5.55 | %    |   |  | 6.16 | %   
|                          
|                          
|                          
|                          
|                           |                      | 2001 |       |   | 420,000   |           |           |  | 6.38     |      |           |  | 6.08                   |      |          |   | 420,000 |           |  |  | 6.38 |      |   |  | 6.14 |     
|                          
|                          
|                          
|                          
|                           |                      | 2002 |       |   | 55,000    |           |           |  | 7.16     |      |           |  | 6.09                   |      |          |   |        |           |  |  |     |      |   |  |     |     
|                          
|                          
|                          
|                          
|                           |                      | 2003 |       |   | 120,000   |           |           |  | 6.14     |      |           |  | 6.12                   |      |          |   | 120,000 |           |  |  | 6.14 |      |   |  | 6.14 |     
|                          
|                          
|                          
|                          
|                           |                      | 2004 |       |   | 580,000   |           |           |  | 7.01     |      |           |  | 6.06                   |      |          |   | 580,000 |           |  |  | 7.01 |      |   |  | 6.15 |     
|                          
|                          
|                          
|                          
|                           |                      | 2005 |       |   | 170,000   |           |           |  | 7.76     |      |           |  | 6.09                   |      |          |   | 25,000  |           |  |  | 7.00 |      |   |  | 5.87 |     
|                          
|                          
|                          
|                          
|                           |                      | 2006 |       |   | 40,000    |           |           |  | 7.00     |      |           |  | 5.95                   |      |          |   | 40,000  |           |  |  | 7.00 |      |   |  | 6.37 |     
|                          
|                          
|                          
|                          
|                           |                      | 2009 |       |   | 65,000    |           |           |  | 7.32     |      |           |  | 6.00                   |      |          |   | 65,000  |           |  |  | 7.32 |      |   |  | 6.16 |     
|                           |                      |      |       |   |           |           |           |  |          |      |           |  |                        |      |          |  
|                           |                      |      | Total |   | $         | 1,490,000 |           |  |          | 6.83 | %         |  |                        | 6.07 | %(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    
|                           |                               |                   |   |                       
|                           |                               |                   |   | 3/31/00                |        | 3/31/99
|                           |                               |                   |   |                        |        |        
|                           |                               |                   |   | (Dollars in thousands)
|Interest expense (income):
|                          
|                          
|                          
|                          
|                           | Deposits                      |                   | $ | (2,981                 | )      |         | $ | (2,119 | )     
|                          
|                          
|                          
|                          
|                           | FHLB advances                 |                   |   |                       |        |         |   | 86     |       
|                          
|                          
|                          
|                          
|                           | Reverse repurchase agreements |                   |   |                       |        |         |   | (122   | )     
|                          
|                          
|                          
|                          
|                           | Mortgage loans                |                   |   |                       |        |         |   | 82     |       
|                           |                               |                   |   |                        |        |         |   |       
|                           |                               | Total net benefit |   | $                      | (2,981 | )       |   | $      | (2,073 | )
|                           |                               |                   |   |                        |        |         |   |       

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

17



---



##### Table of Contents



FHLB advances and reverse repurchase agreements. Management also considers our
interest-sensitivity profile when deciding on alternative sources of funds. At
March 31, 2000, our one-year gap was a negative 13.52% of total assets. See
Item 3 Quantitative and Qualitative Disclosure About Market Risk regarding
further information on our interest rate risk profile.

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 first quarter of 2000 was 4.97%.

We anticipate that we will have sufficient funds available to meet our
commitments. At March 31, 2000, we had outstanding commitments to originate
loans and leases of $1.4 billion, unfunded consumer lines of credit totaling
$2.4 billion and unfunded corporate banking lines of credit totaling $173.3
million. We do not expect all of these lines to be used by the borrowers.
Outstanding letters of credit totaled $54.2 million as of March 31, 2000.
Certificates of deposit scheduled to mature in one year or less at March 31,
2000 totaled $8.4 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 purchases. As of March 31, 2000, we had
purchased all of the shares authorized under this buyback. The repurchased
shares are reserved in treasury for later reissue in connection with 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. The repurchased
shares will be reserved in treasury for later reissue in connection with future
stock dividends as well as 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
(FDIC) 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.

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.

Each regulator of Charter One requires the institution to meet specific capital
adequacy guidelines and the regulatory framework for prompt corrective action
that involve quantitative measures of an institutions 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.

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:

18



---



##### Table of Contents



Regulatory Capital(Figure 15)

|                          |                                          |  |                        |           |                   |  |                   |       |       |  |             |           |                         |  |  |       |   |  |                          |           |  |  |  |        |  
|------------------------- | ---------------------------------------- |  | ---------------------- | --------- | ----------------- |  | ----------------- | ----- | ----- |  | ----------- | --------- | ----------------------- |  |  | ----- | - |  | ------------------------ | --------- |  |  |  | ------ | -
|                          |                                          |  | As of March 31, 2000  
|                          |                                          |  |                       
|                          |                                          |  |                        |           |                   |  |                   |       |       |  |             |           |                         |  |  |       |   |  | To Be "Well Capitalized"
|                          |                                          |  |                        |           |                   |  |                   |       |       |  | For Capital |           | Under Prompt Corrective
|                          |                                          |  | Actual                 |           | Adequacy Purposes |  | Action Provisions
|                          |                                          |  |                        |           |                   |  |                  
|                          |                                          |  | Amount                 |           | Ratio             |  | Amount            |       | Ratio |  | Amount      |           | Ratio                  
|                          |                                          |  |                        |           |                   |  |                   |       |       |  |             |           |                        
|                          |                                          |  | (Dollars in thousands)
|Charter One:             
|                         
|                         
|                         
|                         
|                          | Total capital to risk-weighted assets    |  | $                      | 2,484,902 |                   |  |                   | 11.16 | %     |  | $           | 1,781,465 |                         |  |  | 8.00 | % |  | $                        | 2,226,831 |  |  |  | 10.00 | %
|                         
|                         
|                         
|                         
|                          | Tier 1 capital to risk-weighted assets   |  |                        | 2,295,931 |                   |  |                   | 10.31 |       |  |             | 890,732   |                         |  |  | 4.00 |   |  |                          | 1,336,098 |  |  |  | 6.00  |  
|                         
|                         
|                         
|                         
|                          | Tier 1 capital to average assets         |  |                        | 2,295,931 |                   |  |                   | 7.48  |       |  |             | 1,228,315 |                         |  |  | 4.00 |   |  |                          | 1,535,393 |  |  |  | 5.00  |  
|                         
|                         
|                         
|                         
|Charter One Commercial:  
|                         
|                         
|                         
|                         
|                          | Total capital to risk-weighted assets    |  |                        | 42,032    |                   |  |                   | 43.40 |       |  |             | 7,748     |                         |  |  | 8.00 |   |  |                          | 9,685     |  |  |  | 10.00 |  
|                         
|                         
|                         
|                         
|                          | Tier 1 capital to risk-weighted assets   |  |                        | 42,032    |                   |  |                   | 43.40 |       |  |             | 3,874     |                         |  |  | 4.00 |   |  |                          | 5,811     |  |  |  | 6.00  |  
|                         
|                         
|                         
|                         
|                          | Tier 1 capital to average assets         |  |                        | 42,032    |                   |  |                   | 14.91 |       |  |             | 11,279    |                         |  |  | 4.00 |   |  |                          | 14,099    |  |  |  | 5.00  |  
|                         
|                         
|                         
|                         
|Charter One Bank, F.S.B.:
|                         
|                         
|                         
|                         
|                          | Total capital to risk-weighted assets    |  |                        | 2,221,634 |                   |  |                   | 10.56 |       |  |             | 1,682,953 |                         |  |  | 8.00 |   |  |                          | 2,103,691 |  |  |  | 10.00 |  
|                         
|                         
|                         
|                         
|                          | Tier 1 capital to risk-weighted assets   |  |                        | 1,713,610 |                   |  |                   | 8.15  |       |  |             | N/A       |                         |  |  | N/A   |   |  |                          | 1,262,214 |  |  |  | 6.00  |  
|                         
|                         
|                         
|                         
|                          | Core capital to adjusted tangible assets |  |                        | 1,727,835 |                   |  |                   | 5.69  |       |  |             | 1,215,370 |                         |  |  | 4.00 |   |  |                          | 1,519,212 |  |  |  | 5.00  |  
|                         
|                         
|                         
|                         
|                          | Tangible capital to tangible assets      |  |                        | 1,726,964 |                   |  |                   | 5.68  |       |  |             | 455,751   |                         |  |  | 1.50 |   |  |                          | N/A       |  |  |  | N/A    |  

|                          |                                          |  |                         |           |                   |  |                   |       |       |  |             |           |                         |  |  |       |   |  |                          |           |  |  |  |        |  
|------------------------- | ---------------------------------------- |  | ----------------------- | --------- | ----------------- |  | ----------------- | ----- | ----- |  | ----------- | --------- | ----------------------- |  |  | ----- | - |  | ------------------------ | --------- |  |  |  | ------ | -
|                          |                                          |  | As of December 31, 1999
|                          |                                          |  |                        
|                          |                                          |  |                         |           |                   |  |                   |       |       |  |             |           |                         |  |  |       |   |  | To Be "Well Capitalized"
|                          |                                          |  |                         |           |                   |  |                   |       |       |  | For Capital |           | Under Prompt 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    |  |                         | 2,115,163 |                   |  |                   | 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    |  

As of June 8, 1998, 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, 1998, 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. There are no conditions or events since that
notification that have changed Charter Ones or Charter One Bank, F.S.B.s
respective category. 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 March 31, 2000, Charter One Commercial had not received a
classification from its respective regulator.

Management believes that, as of March 31, 2000, Charter One, Charter One
Commercial and Charter One Bank, F.S.B., individually met all 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.

19



---



##### Table of Contents



Quarterly Stock Prices and Dividends(Figure 16)

|                              |       |  |                    |       |          |  |         |       |         |  |         |       |  |  |     |       |  |  |     |       | 
|----------------------------- | ----- |  | ------------------ | ----- | -------- |  | ------- | ----- | ------- |  | ------- | ----- |  |  | --- | ----- |  |  | --- | ----- | 
|                              |       |  | Three Months Ended
|                              |       |  |                   
|                              |       |  | 3/31/00            |       | 12/31/99 |  | 9/30/99 |       | 6/30/99 |  | 3/31/99
|                              |       |  |                    |       |          |  |         |       |         |  |        
|Market price of common stock:
|                             
|                             
|                             
|                             
|                              | High  |  | $                  | 21.00 |          |  | $       | 26.44 |         |  | $       | 26.91 |  |  | $   | 30.60 |  |  | $   | 30.53 | 
|                             
|                             
|                             
|                             
|                              | Low   |  |                    | 15.25 |          |  |         | 17.50 |         |  |         | 21.08 |  |  |     | 25.18 |  |  |     | 23.99 | 
|                             
|                             
|                             
|                             
|                              | Close |  |                    | 21.00 |          |  |         | 19.13 |         |  |         | 23.13 |  |  |     | 26.49 |  |  |     | 27.49 | 
|                             
|                             
|                             
|                             
|Dividends declared and paid   |       |  | .16                |       |          |  | .16     |       |         |  | .16     |       |  |  | .15 |       |  |  | .13 |      




ITEM 3. Quantitative and Qualitative Disclosure About Market Risk

A comprehensive qualitative and quantitative analysis regarding market risk was
disclosed in our December 31, 1998 Form 10-K. The assumptions used in our
model have been updated as of March 31, 2000. The table below indicates the
estimated impact on net income under the various interest rate scenarios as a
percentage of base case earnings projections.

|               |                    |                             |  |           |    |  |  |       |   
|-------------- | ------------------ | --------------------------- |  | --------- | -- |  |  | ----- | --
|Changes in     |                    | Estimated Percentage Change
|Interest Rates |                    | in Future Net Income       
|(basis points) |                    | 12 Months                   |  | 24 Months
|               |                    |                             |  |          
|Base Case     
|              
|              
|              
|              
|               | +200 Over one year |                             |  | (5.75     | )% |  |  | (8.44 | )%
|              
|              
|              
|              
|               | +100 Over one year |                             |  | (2.79     | )  |  |  | (4.02 | ) 
|              
|              
|              
|              
|               | -100 Over one year |                             |  | 2.54      |    |  |  | 3.64  |   
|              
|              
|              
|              
|               | -200 Over one year |                             |  | 4.52      |    |  |  | 6.47  |   

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

Dividend

On April 26, 2000, the Board of Directors of Charter One declared a regular
quarterly cash dividend of 18 cents per common share. The dividend is payable
May 22, 2000 to shareholders of record as of May 10, 2000.

Share Repurchase

On April 26, 2000, the Board of Directors of Charter One authorized management
to repurchase up to 7.5 million shares of the Companys outstanding common
stock in a buy back program. The repurchased shares will be reserved in
treasury for later reissue in connection with future stock dividends as well as
employee benefit plans.




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

20



---



##### Table of Contents






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: |  |  | May 11, 2000 |  |  | /s/Richard W. Neu                                                                                                            
|      |  |  |              |  |  |                                                                                                                              
|      |  |  |              |  |  | Richard W. Neu
Executive Vice President and Chief Financial Officer
(Duly Authorized Officer and Principal
Financial Officer)

21