<PAGE>

                                 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 December 31, 1999
                                               -----------------

                                       OR

[ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934

For the transition period from __________ to __________

Commission file number 1-11515
                       -------

                         COMMERCIAL FEDERAL CORPORATION
                         ------------------------------
            (Exact name of registrant as specified in its charter)

             Nebraska                                        47-0658852
  -------------------------------                   --------------------------
  (State or other jurisdiction of                         (I.R.S Employer
   incorporation or organization)                     Identification Number)

2120 South 72nd Street, Omaha, Nebraska                        68124
---------------------------------------             --------------------------
(Address of principal executive offices)                     (Zip Code)

                                 (402) 554-9200
              ----------------------------------------------------
              (Registrant's telephone number, including area code)


                                 Not Applicable
  --------------------------------------------------------------------------
  (Former name, former address and former fiscal year, if changed since last
                                    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
    -----       -----

                     APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

       Title of Each Class                      Outstanding at February 8, 2000
--------------------------------------          -------------------------------
Common Stock, Par Value $.01 Per Share                 57,620,870 Shares
<PAGE>

                         COMMERCIAL FEDERAL CORPORATION
                         ------------------------------

                                   FORM 10-Q
                                   ---------

                                     INDEX
                                     -----
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------
Part I.      Financial Information                                                          Page Number
             ---------------------                                                          -----------
<S>          <C>                                                                            <C>
             Item 1.      Financial Statements:

                            Consolidated Statement of Financial Condition as of
                              December 31, 1999 and June 30, 1999                                3

                            Consolidated Statement of Operations for the Three
                              and Six Months Ended December 31, 1999 and 1998                   4-5

                            Consolidated Statement of Comprehensive Income for the
                              Three and Six Months Ended December 31, 1999 and 1998              6

                            Consolidated Statement of Cash Flows for the
                               Six Months Ended December 31, 1999 and 1998                      7-8

                            Notes to Consolidated Financial Statements                          9-15

             Item 2.      Management's Discussion and Analysis of Financial
                            Condition and Results of Operations                                16-27

             Item 3.      Quantitative and Qualitative Disclosures About Market Risk            27

Part II.     Other Information
             -----------------

             Item 4.      Submission of Matters to a Vote of Security Holders                   28

             Item 5.      Other Information                                                     29

             Item 6.      Exhibits and Reports on Form 8-K                                      29


Signature Page                                                                                  30

Exhibit Index                                                                                   31
----------------------------------------------------------------------------------------------------------
</TABLE>

                                       2
<PAGE>

                         COMMERCIAL FEDERAL CORPORATION
                 CONSOLIDATED STATEMENT OF FINANCIAL CONDITION

                         PART I. FINANCIAL INFORMATION
                         -----------------------------
                          Item 1. FINANCIAL STATEMENTS
                          ----------------------------
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
(Dollars in Thousands)                                                                             December 31,    June 30,
ASSETS                                                                                                1999           1999
-----------------------------------------------------------------------------------------------------------------------------
                                                                                                   (Unaudited)     (Audited)
<S>                                                                                              <C>            <C>
Cash (including short-term investments of $19,988 and $39,585)                                   $    220,946   $    353,275
Investment securities available for sale, at fair value                                                72,611         83,811
Mortgage-backed securities available for sale, at fair value                                          388,907        419,707
Loans and leases held for sale, net                                                                   137,607        104,347
Investment securities held to maturity (fair value of $906,637 and $846,805)                          933,526        862,760
Mortgage-backed securities held to maturity (fair value of $910,547 and $849,488)                     926,298        862,838
Loans and leases receivable, net of allowances of $79,486 and $80,344                               9,712,839      9,222,046
Federal Home Loan Bank stock                                                                          233,287        194,129
Interest receivable, net of allowances of $185 and $319                                                70,637         77,513
Real estate, net                                                                                       38,496         31,513
Premises and equipment, net                                                                           183,604        185,302
Prepaid expenses and other assets                                                                     186,478        125,544
Intangible assets, net of accumulated amortization of $58,527 and $49,260                             243,897        252,677
-----------------------------------------------------------------------------------------------------------------------------

      Total Assets                                                                               $ 13,349,133   $ 12,775,462
-----------------------------------------------------------------------------------------------------------------------------

LIABILITIES AND STOCKHOLDERS' EQUITY
-----------------------------------------------------------------------------------------------------------------------------

Liabilities:
   Deposits                                                                                      $  7,449,069   $  7,655,415
   Advances from Federal Home Loan Bank                                                             4,523,842      3,632,241
   Securities sold under agreements to repurchase                                                      27,631        128,514
   Other borrowings                                                                                   176,437        225,383
   Interest payable                                                                                    47,945         48,759
   Other liabilities                                                                                  146,033        118,267
-----------------------------------------------------------------------------------------------------------------------------

      Total Liabilities                                                                            12,370,957     11,808,579
-----------------------------------------------------------------------------------------------------------------------------

Commitments and Contingencies                                                                              --             --
-----------------------------------------------------------------------------------------------------------------------------
Stockholders' Equity:
   Preferred stock, $.01 par value; 10,000,000 shares authorized; none issued                              --             --
   Common stock, $.01 par value; 120,000,000 shares authorized;
      58,140,870 and 59,593,849 shares issued and outstanding                                             581            596
   Additional paid-in capital                                                                         336,483        364,320
   Retained earnings                                                                                  656,817        611,529
   Accumulated other comprehensive income (loss), net                                                 (15,705)        (9,562)
-----------------------------------------------------------------------------------------------------------------------------

      Total Stockholders' Equity                                                                      978,176        966,883
-----------------------------------------------------------------------------------------------------------------------------
      Total Liabilities and Stockholders' Equity                                                 $ 13,349,133   $ 12,775,462
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>

See accompanying Notes to Consolidated Financial Statements.

                                       3
<PAGE>

                         COMMERCIAL FEDERAL CORPORATION
                      CONSOLIDATED STATEMENT OF OPERATIONS
                                  (Unaudited)

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
(Dollars in Thousands Except Per Share Data)                                   Three Months Ended             Six Months Ended
                                                                                  December 31,                   December 31,
                                                                             ----------------------        ------------------------
                                                                               1999          1998            1999           1998
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                                                          <C>          <C>              <C>           <C>
Interest Income:
   Loans and leases receivable                                               $ 189,906    $ 172,582        $ 372,044     $ 341,052
   Mortgage-backed securities                                                   21,120       18,897           41,541        35,946
   Investment securities                                                        21,318       12,236           42,296        25,578
-----------------------------------------------------------------------------------------------------------------------------------
     Total interest income                                                     232,344      203,715          455,881       402,576
Interest Expense:
   Deposits                                                                     80,944       80,877          160,695       162,584
   Advances from Federal Home Loan Bank                                         59,712       34,909          110,024        69,018
   Securities sold under agreements to repurchase                                1,359        2,915            3,233         7,876
   Other borrowings                                                              3,991        3,599            7,984         7,063
-----------------------------------------------------------------------------------------------------------------------------------
     Total interest expense                                                    146,006      122,300          281,936       246,541
Net Interest Income                                                             86,338       81,415          173,945       156,035
Provision for Loan and Lease Losses                                             (3,460)      (3,000)          (6,760)       (6,800)
-----------------------------------------------------------------------------------------------------------------------------------
Net Interest Income After Provision for Loan and Lease Losses                   82,878       78,415          167,185       149,235
Other Income (Loss):
   Loan servicing fees                                                           6,180        5,849           12,219        11,285
   Retail fees and charges                                                      10,746        9,552           20,734        18,922
   Real estate operations                                                          362         (218)             138          (379)
   Gain on sales of loans                                                          363        1,674              241         3,579
   Gain on sales of securities                                                      --        1,619               --         3,307
   Other operating income                                                       14,591        6,576           20,684        12,277
-----------------------------------------------------------------------------------------------------------------------------------
     Total other income                                                         32,242       25,052           54,016        48,991
Other Expense:
   General and administrative expenses -
   Compensation and benefits                                                    27,368       22,910           55,448        45,927
   Occupancy and equipment                                                       9,775        9,158           19,972        17,501
   Data processing                                                               4,722        2,529            9,045         5,143
   Regulatory insurance and assessments                                          1,457        1,431            2,903         2,879
   Advertising                                                                   3,822        3,574            7,367         7,248
   Other operating expenses                                                     15,062        9,724           28,729        17,616
   Merger expenses                                                                  --           --               --        15,963
   Restructure costs                                                             4,291           --            4,291            --
-----------------------------------------------------------------------------------------------------------------------------------
        Total general and administrative expenses                               66,497       49,326          127,755       112,277
   Amortization of intangible assets                                             4,634        4,213            9,267         7,468
-----------------------------------------------------------------------------------------------------------------------------------
        Total other expense                                                     71,131       53,539          137,022       119,745
-----------------------------------------------------------------------------------------------------------------------------------
Income Before Income Taxes and Cumulative Effect of Change
   in Accounting Principle                                                      43,989       49,928           84,179        78,481
Provision for Income Taxes                                                      15,230       18,702           29,206        32,132
-----------------------------------------------------------------------------------------------------------------------------------
Income Before Cumulative Effect of Change in Accounting Principle               28,759       31,226           54,973        46,349
Cumulative Effect of Change in
   Accounting Principle, Net of Tax Benefit                                         --           --           (1,776)           --
-----------------------------------------------------------------------------------------------------------------------------------
Net Income                                                                    $ 28,759     $ 31,226         $ 53,197      $ 46,349
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

                                       4
<PAGE>

                         COMMERCIAL FEDERAL CORPORATION
                CONSOLIDATED STATEMENT OF OPERATIONS (Continued)
                                  (Unaudited)
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
(Dollars in Thousands Except Per Share Data)                                 Three Months Ended               Six Months Ended
                                                                                December 31,                    December 31,
                                                                          ----------------------------    -------------------------
                                                                               1999           1998           1999          1998
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                                                        <C>            <C>            <C>           <C>
Weighted Average Number of Common Shares
     Outstanding Used in Basic Earnings Per Share Calculation               58,737,243     59,469,858      59,117,287   59,037,869
Add Assumed Exercise of Outstanding Stock Options
     as Adjustments for Dilutive Securities                                    237,893        588,102         300,718      715,063
-----------------------------------------------------------------------------------------------------------------------------------

Weighted Average Number of Common Shares
     Outstanding Used in Diluted Earnings Per Share Calculation             58,975,136     60,057,960      59,418,005   59,752,932
-----------------------------------------------------------------------------------------------------------------------------------

Basic Earnings Per Common Share:
      Income before cumulative effect of change in accounting principle    $       .49    $       .53    $        .93  $       .79
      Cumulative effect of change in accounting principle                           --             --            (.03)          --
                                                                           -----------    -----------    ------------  -----------
      Net income                                                           $       .49    $       .53    $        .90  $       .79
                                                                           ===========    ===========    ============  ===========
-----------------------------------------------------------------------------------------------------------------------------------

Diluted Earnings Per Common Share:
     Income before cumulative effect of change in accounting principle     $       .49    $       .52    $        .93  $       .78
     Cumulative effect of change in accounting principle                            --             --            (.03)           --
                                                                           -----------    -----------    ------------  -----------
     Net income                                                            $       .49    $       .52    $        .90  $       .78
                                                                           ===========    ===========    ============  ===========
-----------------------------------------------------------------------------------------------------------------------------------
Dividends Declared Per Common Share                                        $       .07    $      .065    $       .135  $      .120
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

See accompanying Notes to Consolidated Financial Statements.

                                       5
<PAGE>

                         COMMERCIAL FEDERAL CORPORATION
                 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
                                  (Unaudited)
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------------
(Dollars in Thousands)                                                           Three Months Ended        Six Months Ended
                                                                                    December 31,             December 31,
                                                                              ------------------------  ------------------------
                                                                                  1999        1998          1999         1998
--------------------------------------------------------------------------------------------------------------------------------
<S>                                                                              <C>        <C>            <C>          <C>
Net Income                                                                       $28,759    $ 31,226       $53,197      $46,349

Other Comprehensive Income (Loss):
    Unrealized holding gains (losses) on securities available for sale            (1,434)       (848)       (9,450)       4,127
    Less net gain on securities included in net income                                --      (1,619)           --       (3,307)
--------------------------------------------------------------------------------------------------------------------------------

Other Comprehensive Income (Loss) Before Income Taxes                             (1,434)     (2,467)       (9,450)         820
Income Tax Provision (Benefit)                                                      (502)       (863)       (3,307)         287
--------------------------------------------------------------------------------------------------------------------------------
Other Comprehensive Income (Loss)                                                   (932)     (1,604)       (6,143)         533
--------------------------------------------------------------------------------------------------------------------------------

Comprehensive Income                                                             $27,827    $ 29,622       $47,054      $46,882
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>

See accompanying Notes to Consolidated Financial Statements.

                                       6
<PAGE>

                        COMMERCIAL FEDERAL CORPORATION
                     CONSOLIDATED STATEMENT OF CASH FLOWS
                                  (Unaudited)

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------------
(Dollars in Thousands)                                                                               Six Months Ended
                                                                                                       December 31,
                                                                                         --------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES                                                          1999                     1998
-------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                      <C>                      <C>
Net income                                                                                   $ 53,197                 $ 46,349
Adjustments to reconcile net income to net cash
    provided (used) by operating activities:
       Amortization of intangible assets                                                        9,267                    7,468
       Provision for losses on loans and leases and real estate                                 6,786                    7,465
       Depreciation and amortization                                                           10,395                    8,013
       Amortization of deferred discounts and fees, net                                        (1,439)                   1,137
       Amortization of mortgage servicing rights                                                5,103                    5,970
       Amortization of deferred compensation on restricted
            stock and deferred compensation plans and premiums on other borrowings                469                    1,091
       Gain on sales of real estate and loans, net                                               (907)                  (4,268)
       Gain on sales of  securities                                                                --                   (3,307)
       Stock dividends from Federal Home Loan Bank                                             (7,379)                  (4,727)
       Proceeds from sales of loans                                                           341,823                1,014,892
       Origination of loans held for sale                                                     (46,176)                (332,954)
       Purchases of loans  held for resale                                                   (205,105)                (772,233)
       Decrease in interest receivable                                                          6,876                      652
       Increase (decrease) in interest payable and other liabilities                           26,763                   (4,919)
       Other items, net                                                                      (101,292)                 (25,270)
                                                                                           ----------               -----------
           Total adjustments                                                                   45,184                 (100,990)
                                                                                           ----------               -----------
                Net cash provided (used) by operating activities                               98,381                  (54,641)
-------------------------------------------------------------------------------------------------------------------------------

CASH FLOWS FROM INVESTING ACTIVITIES
-------------------------------------------------------------------------------------------------------------------------------
      Purchases of loans                                                                     (850,506)                (764,481)
      Repayment of loans, net of originations                                                 210,519                  517,291
      Principal repayments of mortgage-backed securities available for sale                    23,194                   45,576
      Purchases of mortgage-backed securities available for sale                                   --                 (397,502)
      Proceeds from sales of mortgage-backed securities available for sale                         --                  202,582
      Principal repayments of mortgage-backed securities held to maturity                     117,523                  153,938
      Purchases of mortgage-backed securities held to maturity                               (158,154)                (187,406)
      Maturities and repayments of investment securities available for sale                     7,884                  119,869
      Proceeds from sales of investment securities available for sale                              --                   26,845
      Maturities and repayments of investment securities held to maturity                      27,019                  201,419
      Purchases of investment securities held to maturity                                     (97,715)                (296,693)
      Purchases of mortgage loan servicing rights                                              (3,768)                 (11,293)
      Purchases of Federal Home Loan Bank stock                                               (33,916)                 (25,833)
      Proceeds from sale of Federal Home Loan Bank stock                                        2,137                   11,325
      Proceeds from sales of real estate                                                        8,756                    8,403
      Payments to acquire real estate                                                            (177)                    (256)
      Acquisitions, net of cash paid                                                               --                  (11,067)
      Purchases of premises and equipment, net                                                 (8,697)                 (22,287)
      Other items, net                                                                          3,630                   (3,133)
                                                                                           ----------               -----------
                 Net cash used by investing activities                                       (752,271)                (432,703)
-------------------------------------------------------------------------------------------------------------------------------
</TABLE>

                                       7
<PAGE>

                        COMMERCIAL FEDERAL CORPORATION
               CONSOLIDATED STATEMENT OF CASH FLOWS (Continued)
                                  (Unaudited)

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------------
(Dollars in Thousands)                                                                                  Six Months Ended
                                                                                                           December, 31
                                                                                                  ---------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES                                                              1999                    1998
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                             <C>                      <C>
Decrease in deposits                                                                            $ (206,346)              $ (92,793)
Proceeds from Federal Home Loan Bank advances                                                    1,553,100               1,250,000
Repayments of Federal Home Loan Bank advances                                                     (661,175)               (632,525)
Proceeds from securities sold under agreements to repurchase                                         2,678                  25,000
Repayments of securities sold under agreements to repurchase                                      (103,561)               (200,000)
Proceeds from other borrowings                                                                   50,000                  85,000
Repayments of other borrowings                                                                     (76,950)                (18,464)
Payments of cash dividends on common stock                                                          (7,723)                 (9,580)
Repurchases of common stock                                                                        (30,036)                     --
Issuance of common stock                                                                             1,571                  40,176
Other items, net                                                                                         3                  (1,922)
                                                                                              -------------             -----------
             Net cash provided by financing activities                                             521,561                 444,892
-----------------------------------------------------------------------------------------------------------------------------------

CASH AND CASH EQUIVALENTS
-----------------------------------------------------------------------------------------------------------------------------------
Decrease in net cash position                                                                     (132,329)                (42,452)
Balance, beginning of year                                                                         353,275                 217,012
                                                                                              -------------             -----------
Balance, end of period                                                                          $  220,946               $ 174,560
-----------------------------------------------------------------------------------------------------------------------------------

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
-----------------------------------------------------------------------------------------------------------------------------------
Cash paid during the period for:
   Interest expense                                                                             $  282,827               $ 249,281
   Income taxes, net                                                                                 2,689                  24,622
Non-cash investing and financing activities:
   Loans exchanged for mortgage-backed securities                                                   35,804                  15,510
   Loans transferred to real estate                                                                 15,967                   8,013
   Loans to facilitate the sale of real estate                                                          --                     128
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

See accompanying Notes to Consolidated Financial Statements.

                                       8
<PAGE>

                         COMMERCIAL FEDERAL CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
              AS OF AND FOR THE SIX MONTHS ENDED DECEMBER 31, 1999
                                  (Unaudited)

(Columnar Dollars in Footnotes are in Thousands Except Per Share Amounts)
--------------------------------------------------------------------------------

A.   BASIS OF CONSOLIDATION AND PRESENTATION:
     ---------------------------------------

The unaudited consolidated financial statements are prepared on an accrual basis
and include the accounts of Commercial Federal Corporation (the Corporation) and
its wholly-owned subsidiary, Commercial Federal Bank, a Federal Savings Bank
(the Bank), and all majority-owned subsidiaries. All significant intercompany
balances and transactions have been eliminated.

The accompanying interim consolidated financial statements have not been audited
by independent auditors. In the opinion of management, all adjustments
(consisting only of normal recurring adjustments and the restructure costs
recorded in the second quarter of fiscal year 2000 and the cumulative effect of
a change in accounting principle) considered necessary to fairly present the
financial statements have been included. The consolidated financial statements
should be read in conjunction with the audited financial statements and notes
thereto included in the Corporation's June 30, 1999, Annual Report to
Stockholders. The results of operations for the three and six month periods
ended December 31, 1999, are not necessarily indicative of the results which may
be expected for the entire fiscal year 2000. Certain amounts in the prior fiscal
year period have been reclassified for comparative purposes.

B.   RESTRUCTURE COSTS:
     -----------------

Effective November 5, 1999, the Corporation announced a restructuring plan
pursuant to the integration process of the Corporation's most recent seven
acquisitions and new data processing system to support community-banking
operations. This restructuring is aimed at decreasing expenses, increasing
sustainable growth in revenues, and increasing productivity through the
elimination of duplicate or inefficient functions. Major aspects of the plan
include (i) 21 branches to be sold (15) and closed (6), (ii) the elimination of
121 positions and the consolidation of the correspondent loan servicing
operations, (iii) the reorganization of community banking operations as a
separate division with realigned responsibilities and (iv) changes in data
processing for customer transactions. This restructuring plan was approved by
the Corporation's Board of Directors effective December 27, 1999.

Implementation of this plan resulted in restructuring costs totaling $4,291,000
($3,124,000 after-tax or $.05 per diluted share) recorded in the three months
ended December 31, 1999. All aspects of this plan are expected to be completed
by early Summer 2000.

The restructuring plan consolidates operations and organizes the branches by
market size into urban, non-urban and in-store categories. This alignment by
market size allows the Bank to better meet the various customer service and
business needs within its franchise. Retail and corporate lending, as well as
certain sales development and training functions, have also moved under the
responsibility of Community Banking. In order to streamline the branch
franchise, there will be six branches closed and 15 branches sold. The branches
are located in Iowa (15), Kansas (5) and Missouri (1). The branches to be closed
have deposits that management will try to move to other nearby branch locations.
The branches to be sold are located in Iowa (11) and Kansas (4). The branch
closings are expected to be completed by March 31, 2000 and the branch sales
completed by June 30, 2000. Direct and incremental costs associated with this
part of the restructure are estimated at $2,377,000.

                                       9
<PAGE>

B.   RESTRUCTURE COSTS (Continued):
     ------------------------------

The restructuring plan eliminates 121 positions with personnel costs consisting
of severance, benefits and related professional services totaling $1,914,000.
This plan also includes the consolidation of the correspondent loan servicing
functions to Omaha, Nebraska from Wichita, Kansas and Denver, Colorado. The
expected completion of this phase is June 30, 2000.

The data processing component of the restructure plan calls for the processing
of customer transactions from batch processing to on-line real time item
processing. This change will eliminate duplicate handling of transactions and
will create back office efficiencies. It is management's goal to process
approximately 75% of the Bank's customer transactions on an on-line basis. No
restructure costs were recorded from this change in data processing operations.

The following provides details of the restructuring related liabilities at
December 31, 1999:

--------------------------------------------------------------------------------
                                            Personnel       Bank
                                            Expenses     Operations     Total
--------------------------------------------------------------------------------
Balances, September 30, 1999                $     --     $     --     $     --
Restructuring costs                            1,914        2,377        4,291
Cash payments and utilization                 (1,172)      (1,109)      (2,281)
--------------------------------------------------------------------------------
Balances, December 31, 1999                 $    742     $  1,268        2,010
--------------------------------------------------------------------------------

C.   SETTLEMENT AGREEMENT:
     --------------------

On October 29, 1999, the Corporation entered into an agreement (the Settlement
Agreement) with Franklin Mutual Advisers, LLC (Franklin) to settle all pending
litigation and the proxy contest relating to the election of directors at the
Corporation's 1999 Annual Meeting of Stockholders held on November 16, 1999 (the
Annual Meeting).

The Settlement Agreement provided that Franklin would immediately cease its
solicitation of proxies in connection with the Annual Meeting and not vote any
proxies it solicited at the Annual Meeting. Franklin also agreed to vote its
shares in favor of the Corporation's reconfigured slate of directors. The
Corporation agreed to include George R. Zoffinger and Joseph J. Whiteside in
place of two of its previously announced nominees and they, together with Robert
F. Krohn and Michael P. Glinsky, constituted all of the nominees for the four
seats up for election at the Annual Meeting. Two other individuals who had been
named in the Corporation's Proxy Statement did not stand for reelection at the
Annual Meeting.

All pending litigation between the parties was dismissed with prejudice. The
Settlement Agreement also provided for mutual releases by all parties to the
litigation of all claims relating to the proxy solicitation, the Annual Meeting
and all related matters. The parties agreed that the Corporation's By-law
amendment adopted September 28, 1999, which provides that no person who is a
controlling person or management official of a federally insured depository
organization (other than affiliates of the Corporation) that operates branches
in any market in which the Corporation operates branches shall be eligible to be
nominated for service, or to serve, as a director of the Corporation, shall
remain in effect.

Each party agreed to bear its own expenses resulting from the proxy contest and
the related litigation. Through December 31, 1999 the Corporation expensed
$456,000 relating to these issues. The Corporation also represented in the
Settlement Agreement that it had no present intention to increase the size of
the Board of Directors to more than 10 members.

D.   CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE:
     ---------------------------------------------------

Effective July 1, 1999, the Corporation adopted the provisions of Statement of
Position 98-5 "Reporting the Costs of Start-Up Activities" (SOP 98-5), which
requires that costs of start-up activities and organizational costs be expensed
as incurred. Prior to the adoption of this statement, these costs were
capitalized and amortized over periods ranging from five to 25 years. The effect
of adopting the provisions of SOP 98-5 was to record a charge of $1,776,000, net
of an income tax benefit of $978,000, or $.03 per diluted share, as a cumulative
effect of a change in accounting principle in the accompanying consolidated
statement of operations. These costs consist of organizational costs primarily
associated with the creation of a real estate investment trust subsidiary and
start-up costs of the proof of deposit department for processing customer
transactions following the complete conversion of the Corporation's deposit
system.

                                       10
<PAGE>

E.   COMMON STOCK REPURCHASE:
     -----------------------

On April 28, 1999, the Corporation's Board of Directors authorized the
repurchase of up to five percent, or approximately 3,000,000 shares, of the
Corporation's outstanding common stock to be completed over the next 18 months.
This repurchase was completed in full on December 29, 1999. Effective December
27, 1999, the Corporation's Board of Directors authorized a second repurchase of
up to 3,000,000 shares of the Corporation's outstanding stock also over the next
18 months. Repurchases can be made at any time and in any amount, depending upon
market conditions and various other factors. However, the amounts to be expended
for this second repurchase will not exceed 50.0% of the Corporation's cumulative
reported net income beginning October 1, 1999. Any repurchase generally will be
on the open-market, although privately negotiated transactions are also
possible. In compliance with Nebraska law, all repurchased shares will be
cancelled.

During the three months ended December 31, 1999, the Corporation purchased and
cancelled 975,900 shares of its common stock at a cost of $18,111,000. For the
six months ended December 31, 1999, there were 1,514,100 shares purchased and
canceled at a cost of approximately $30,036,000. Since the first repurchase was
announced, the Corporation purchased and cancelled a total of 3,014,100 shares
through December 31, 1999, at a cost of approximately $66,254,000.

F.   COMMITMENTS AND CONTINGENCIES:
     -----------------------------

At December 31, 1999, the Corporation issued commitments, excluding undisbursed
portions of loans in process, of approximately $645,186,000 as follows:
$236,285,000 to originate loans, $65,793,000 to purchase loans and $343,108,000
to provide unused lines of credit for commercial and consumer use. Loan
commitments, which are funded subject to certain limitations, extend over
various periods of time. Generally, unused loan commitments are canceled upon
expiration of the commitment term as outlined in each individual contract. These
outstanding loan commitments to extend credit do not necessarily represent
future cash requirements since many of the commitments may expire without being
drawn upon. In addition, at December 31, 1999, the Corporation had issued
commitments to sell residential mortgage loans totaling $192,231,000. Loans sold
subject to recourse provisions totaled approximately $12,088,000 which
represents the total potential credit risk associated with these particular
loans. Such credit risk would, however, be offset by the value of the single-
family residential properties that collateralize these loans.

The Corporation is subject to a number of lawsuits and claims for various
amounts which arise out of the normal course of its business. In the opinion of
management, the disposition of claims currently pending will not have a material
adverse effect on the Corporation's financial position or results of operations.
See Note C regarding the settlement agreement with Franklin Mutual Advisers, LLC
on October 29, 1999.

On September 12, 1994, the Bank and the Corporation commenced litigation against
the United States in the United States Court of Federal Claims seeking to
recover monetary relief for the government's refusal to honor certain contracts
that it had entered into with the Bank. The suit alleges that such governmental
action constitutes a breach of contract and an unlawful taking of property by
the United States without just compensation or due process in violation of the
Constitution of the United States. The Corporation and the Bank are pursuing
alternative damage claims of up to approximately $230,000,000. The Bank also
assumed a lawsuit in the merger with a 1998 acquisition, Mid Continent
Bancshares, Inc. (Mid Continent), against the United States also relating to a
supervisory goodwill claim filed by the former Mid Continent. The litigation
status and process of these legal actions, as well as that of numerous actions
brought by others alleging similar claims with respect to supervisory goodwill
and regulatory capital credits, make the value of the claims asserted by the
Bank (including the Mid Continent claim) uncertain as to their ultimate outcome,
and contingent on a number of factors and future events which are beyond the
control of the Bank, both as to substance, timing and the dollar amount of
damages that may be awarded to the Bank and the Corporation if they finally
prevail in this litigation.

                                       11
<PAGE>

G.   REGULATORY CAPITAL:
     ------------------

The Bank is subject to various regulatory capital requirements administered by
the federal banking agencies. Failure to meet minimum capital requirements can
initiate certain mandatory and possibly additional discretionary, actions by
regulators that, if undertaken, could have a direct material effect on the
Corporation's financial position and results of operations. The regulations
require the Bank to meet specific capital adequacy guidelines that involve
quantitative measures of the Bank's assets, liabilities, and certain off-
balance-sheet items as calculated under regulatory accounting practices. The
Bank's capital classification is also subject to qualitative judgments by the
regulators about components, risk weightings and other factors.

Quantitative measures established by regulation to ensure capital adequacy
require the Bank to maintain minimum amounts and ratios as set forth in the
following tables of tangible, core and total risk-based capital. Prompt
corrective action provisions pursuant to the Federal Deposit Insurance
Corporation Improvement Act of 1991 (FDICIA) require specific supervisory
actions as capital levels decrease. To be considered well-capitalized under the
regulatory framework for prompt corrective action provisions under FDICIA, the
Bank must maintain minimum Tier I leverage, Tier I risk-based and total risk-
based capital ratios as set forth in the following table. At December 31, 1999,
and June 30, 1999, the Bank exceeded the minimum requirements for the well-
capitalized category.

The following presents the Bank's regulatory capital levels and ratios relative
to its minimum capital requirements:

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
                                                                                      As of December 31, 1999
                                                                     --------------------------------------------------------------
                                                                          Actual Capital                       Required Capital
                                                                     ------------------------              ------------------------
                                                                        Amount        Ratio                    Amount       Ratio
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                                                   <C>              <C>                  <C>              <C>
OTS capital adequacy:
          Tangible capital                                            $ 903,050         6.87%               $ 197,149         1.50%
          Core capital                                                  912,551         6.94                  394,583         3.00
          Risk-based capital                                            979,661        13.38                  585,850         8.00
FDICIA regulations to be
     classified well-capitalized:
          Tier 1 leverage capital                                       912,551         6.94                  657,639         5.00
          Tier 1 risk-based capital                                     912,551        12.46                  439,388         6.00
          Total risk-based capital                                      979,661        13.38                  732,313        10.00
-----------------------------------------------------------------------------------------------------------------------------------

<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
                                                                                        As of June 30, 1999
                                                                     --------------------------------------------------------------
                                                                          Actual Capital                       Required Capital
                                                                     ------------------------              ------------------------
                                                                        Amount        Ratio                    Amount       Ratio
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                                                <C>                 <C>                  <C>              <C>
OTS capital adequacy:
          Tangible capital                                       $      880,400         6.97%               $ 189,412         1.50%
          Core capital                                                  890,967         7.05                  379,142         3.00
          Risk-based capital                                            957,676        13.70                  559,279         8.00
FDICIA regulations to be
     classified well-capitalized:
          Tier 1 leverage capital                                       890,967         7.05                  631,903         5.00
          Tier 1 risk-based capital                                     890,967        12.74                  419,459         6.00
          Total risk-based capital                                      957,676        13.70                  699,099        10.00
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

As of December 31, 1999, the most recent notification from the OTS categorized
the Bank as "well-capitalized" under the regulatory framework for prompt
corrective action provisions under FDICIA.  There are no conditions or events
since such notification that management believes have changed the Bank's
classification.

                                       12
<PAGE>

H.   SEGMENT INFORMATION:
     --------------------

The Corporation has identified two distinct lines of business operations for the
purposes of management reporting: Community Banking and Mortgage Banking. These
segments were determined based on the Corporation's financial accounting and
reporting processes with insurance and securities brokerage operations
aggregated with Community Banking. Management makes operating decisions and
assesses performance based on a continuous review of these two primary
operations.

The Community Banking segment involves a variety of traditional banking and
financial services. These services include retail banking services, consumer
checking and savings accounts, and loans for consumer, commercial real estate,
residential mortgage and business purposes. Also included in this segment is
insurance and securities brokerage services. The Community Banking services are
offered through the Bank's branch network, including traditional offices,
supermarkets and convenience stores, ATMs, 24-hour telephone centers and the
Internet. Community Banking is also responsible for the Corporation's investment
and mortgage-backed securities portfolios and the corresponding management of
deposits, advances from the Federal Home Loan Bank and certain other borrowings.

The Mortgage Banking segment involves the origination and purchase of
residential mortgage loans, the sale of such mortgage loans in the secondary
mortgage market, the servicing of mortgage loans and the purchase and
origination of rights to service mortgage loans. Mortgage Banking operations are
conducted through the Bank's branches, offices of a mortgage banking subsidiary
and a nationwide correspondent network of mortgage loan originators. The Bank
allocates expenses to the Mortgage Banking operation on terms that are not
necessarily indicative of those which would be negotiated between unrelated
parties. The Mortgage Banking segment also originates and sells loans to the
Bank. Effective July 1, 1999, substantially all loans sold to the Bank from the
Mortgage Banking operation are at net book value, resulting in no gains or
losses. Previously, these sales were primarily at par such that the Mortgage
Banking operation recorded losses equal to the origination expenses it incurred
net of fees collected. All of these losses are deferred by the Bank and
amortized over the estimated life of the loans the Bank purchased.

The Parent Company includes interest income earned on intercompany cash balances
and intercompany transactions, interest expense on Parent Company debt and
operating expenses for general corporate purposes.

The contributions of the major business segments to the consolidated results for
the three and six months ended December 31, 1999 and 1998 are summarized in the
following table:

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
                                             Community         Mortgage            Parent          Eliminations/       Consolidated
                                              Banking           Banking           Company           Adjustments            Total
-----------------------------------------------------------------------------------------------------------------------------------

<S>                                          <C>               <C>                <C>              <C>                 <C>
Three Months Ended December 31, 1999:
Net interest income (loss)                    $ 77,298           $ 6,737          $ (3,645)          $   5,948            $ 86,338
Provision for loan and
    lease losses                                 3,312               148                --                  --               3,460
Non-interest income                             34,361            12,321            31,646             (46,086)             32,242
Total other expense                             64,140             6,270               692                  29              71,131
Net income                                      31,446             8,721            28,759             (40,167)             28,759

Total revenue                                  256,089            19,063            31,646             (42,212)            264,586
Intersegment revenue (loss)                     14,656              (380)           31,560             (45,836)                 --
-----------------------------------------------------------------------------------------------------------------------------------

Three Months Ended December 31, 1998:
Net interest income (loss)                    $ 74,782           $ 4,620          $ (3,506)          $   5,519            $ 81,415
Provision for loan and
    lease losses                                 2,895               105                --                  --               3,000
Non-interest income                             26,867            17,481            34,023             (53,319)             25,052
Total other expense                             48,409            10,697               352              (5,919)             53,539
Net income                                      34,441             7,440            31,226             (41,881)             31,226

Total revenue                                  222,539            22,181            33,917             (49,870)            228,767
Intersegment revenue (loss)                      8,780             3,572            33,552             (45,904)                 --
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

                                       13
<PAGE>

H.   SEGMENT INFORMATION (Continued):
     --------------------------------

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
                                             Community         Mortgage            Parent          Eliminations/       Consolidated
                                              Banking           Banking           Company           Adjustments            Total
-----------------------------------------------------------------------------------------------------------------------------------

<S>                                         <C>                <C>                <C>              <C>                 <C>
Six Months Ended December 31, 1999:
Net interest income (loss)                  $ 158,036            $ 11,458         $ (7,130)           $ 11,581           $ 173,945
Provision for loan and
    lease losses                                6,035                 725               --                  --               6,760
Non-interest income                            57,925              23,909           58,556             (86,374)             54,016
Total other expense                           122,764              13,281              980                  (3)            137,022
Net income                                     60,033              14,757           53,197             (74,790)             53,197

Total revenue                                 494,818              35,377           58,556             (78,854)            509,897
Intersegment revenue (loss)                    26,644                (851)          58,487             (84,280)                 --
-----------------------------------------------------------------------------------------------------------------------------------

Six Months Ended December 31, 1998:
Net interest income (loss)                  $ 142,861             $ 9,447         $ (6,450)           $ 10,177           $ 156,035
Provision for loan and
    lease losses                                6,590                 210               --                  --               6,800
Non-interest income                            52,135              28,801           59,128             (91,073)             48,991
Total other expense                           101,573              16,261            8,263              (6,352)            119,745
Net income                                     60,197              14,347           46,349             (74,544)             46,349

Total revenue                                 439,064              38,366           59,237             (85,100)            451,567
Intersegment revenue (loss)                    16,489               7,245           58,600             (82,334)                 --
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>


I.   CURRENT ACCOUNTING PRONOUNCEMENTS:
     ----------------------------------

Accounting for Mortgage-Backed Securities Retained After the Securitization of
Mortgage Loans Held for Sale by a Mortgage Banking Enterprise:

Effective July 1, 1999, the Corporation adopted the provisions of Statement of
Financial Accounting Standards No. 134 entitled "Accounting for Mortgage-Backed
Securities Retained After the Securitization of Mortgage Loans Held for Sale by
a Mortgage Banking Enterprise, an amendment of FASB Statement No. 65" (SFAS No.
134). FASB Statement No. 65, as amended, requires that after the securitization
of a mortgage loan held for sale, an entity engaged in mortgage banking
activities classify the resulting mortgage-backed security as a trading
security. SFAS No. 134 further amends Statement No. 65 to require that after the
securitization of mortgage loans held for sale, an entity engaged in mortgage
banking activities classify the resulting mortgage-backed securities or other
retained interests based on its ability and intent to sell or hold those
investments. This statement conforms the subsequent accounting for securities
retained after the securitization of mortgage loans by a mortgage banking
enterprise with the subsequent accounting for securities retained after the
securitization of other types of assets by a nonmortgage banking enterprise.
Management of the Corporation did not reclassify any mortgage-backed securities
upon initial application, therefore, the adoption of SFAS No. 134 did not have
an effect on the Corporation's financial position, liquidity or results of
operations.

                                       14
<PAGE>

I.  CURRENT ACCOUNTING PRONOUNCEMENTS (Continued):
    ----------------------------------------------

Accounting for Derivative Instruments and Hedging Activities:

In June 1998, the Financial Accounting Standards Board (FASB) issued Statement
of Financial Accounting Standards No. 133 entitled "Accounting for Derivative
Instruments and Hedging Activities" (SFAS No. 133). This statement requires the
recognition of all derivative financial instruments as either assets or
liabilities in the statement of financial position and measurement of those
instruments at fair value. The accounting for gains and losses associated with
changes in the fair value of a derivative and the effect on the consolidated
financial statements will depend on its hedge designation and whether the hedge
is highly effective in achieving offsetting changes in the fair value or cash
flows of the asset or liability hedged. Under the provisions of SFAS No. 133,
the method that will be used for assessing the effectiveness of a hedging
derivative, as well as the measurement approach for determining the ineffective
aspects of the hedge, must be established at the inception of the hedge. The
methods must be consistent with the entity's approach to managing risk.

SFAS No. 133 was effective for all fiscal quarters of fiscal years beginning
after June 15, 1999. However, on July 7, 1999, the FASB issued Statement of
Financial Accounting Standards No. 137 entitled "Accounting for Derivative
Instruments and Hedging Activities - Deferral of the Effective Date of FASB
Statement No. 133" (SFAS No. 137). This statement delays the effective date of
SFAS No. 133 for one year, or for all fiscal quarters of fiscal years beginning
after June 15, 2000, with initial application as of the beginning of any fiscal
quarter that begins after issuance. On that initial application date, hedging
relationships must be designated anew and documented pursuant to the provisions
of SFAS No. 133. Management of the Corporation has not determined the effect, if
any, that the adoption will have on the Corporation's financial position,
liquidity or results of operations. Management of the Corporation will
adopt the provisions of SFAS No. 133 as of July 1, 2000.

Business Combinations and Intangible Assets:

On September 7, 1999 the FASB issued a proposal for public comment that would,
among other items, eliminate the pooling of interests method of accounting for
business combinations. A final statement may be issued by the end of calendar
year 2000. If adopted, this statement would be effective for business
combinations initiated after the statement is published. The main provisions in
the exposure draft are (i) that the purchase method should be the only method
used to account for all business combinations, prohibiting the use of the
pooling-of-interests method; (ii) goodwill should be amortized on a straight-
line basis over its useful (finite) life, not to exceed 20 years; (iii) a review
of goodwill for impairment should be performed no later than two years after the
acquisition date if certain factors are present; and (iv) goodwill amortization
and impairment charges should be displayed on a net-of-tax basis as a separate
line item within income from continuing operations. That line item should be
preceded by a subtotal such as "income before goodwill charges" (which would
follow the income tax provision). A per share amount would be permitted to be
shown on the face of the income statement for goodwill charges and the subtotal
that precedes that amount.

                                       15
<PAGE>

                Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                -----------------------------------------------
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS
                 ---------------------------------------------

The statements in this management's discussion and analysis of financial
condition and results of operations that are not historical fact are forward-
looking statements that involve inherent risks and uncertainties. The
Corporation cautions readers that a number of important factors could cause
actual results to differ materially from those in the forward-looking
statements. Those factors include fluctuations in interest rates, inflation,
government regulations, the effect of pending legislation, the progress of
integrating acquisitions, economic conditions, adequacy of allowance for credit
losses, costs associated with the restructuring, technology changes and
competition in the geographic and business areas in which the Corporation
conducts its operations. These statements are based on management's current
expectations. Actual results in future periods may differ materially from those
currently expected because of various risks and uncertainties.

LIQUIDITY AND CAPITAL RESOURCES:
--------------------------------

The Corporation's principal asset is its investment in the capital stock of the
Bank, and because it does not generate any significant revenues independent of
the Bank, the Corporation's liquidity is dependent on the extent to which it
receives dividends from the Bank. The Bank's ability to pay dividends to the
Corporation is dependent on its ability to generate earnings and is subject to a
number of regulatory restrictions and tax considerations. Pursuant to the
capital distribution regulations of the Office of Thrift Supervision (OTS), the
Bank is permitted to pay capital distributions during a calendar year up to
100.0% of its retained net income (net income determined in accordance with
generally accepted accounting principles less total capital distributions
declared) for the current calendar year combined with the Bank's retained net
income for the preceding two calendar years without requiring an application for
approval to be filed with the OTS. At December 31, 1999, the Bank would be
permitted to pay an aggregate amount approximating $127.3 million in dividends
under this regulation. Should the Bank's regulatory capital fall below certain
levels, applicable law would require approval by the OTS of such proposed
dividends and, in some cases, would prohibit the payment of dividends.

The Corporation manages its liquidity at both the parent company and subsidiary
levels. At December 31, 1999, the cash of Commercial Federal Corporation (the
parent company) totaled $14.6 million. Due to the parent company's limited
independent operations, management believes that its cash balance at December
31, 1999 is sufficient to meet operational needs excluding funds necessary for
interest and principal payments and the repurchase of common stock. The parent
company's ability to make future interest and principal payments on its $50.0
million of 7.95% fixed-rate subordinated extendible notes due December 1, 2006
(the Notes), on its $46.4 million of 9.375% fixed-rate junior subordinated
debentures due May 15, 2027 (the Debentures) and on its promissory notes is
dependent upon its receipt of dividends from the Bank. Accordingly, for the
three and six months ended December 31, 1999, the parent company received cash
dividends totaling $22.2 million and $44.664 million from the Bank. The
dividends received were paid primarily to cover (i) interest payments totaling
$9.425 million on the parent company's debt, (ii) principal payments of $5.438
million on the parent company's variable rate term note, (iii) common stock cash
dividends totaling $7.6 million paid by the parent company to its shareholders
through December 31, 1999, and (iv) the financing, in part, of common stock
repurchases totaling $22.201 million. The Bank will continue to pay dividends to
the parent company, subject to regulatory restrictions, to cover future
principal and interest payments on the parent company's debt and quarterly cash
dividends on common stock when and as declared by the parent company. Dividends
totaling $26.246 million were paid by the Bank to the parent company during the
six months ended December 31, 1998. The parent company also receives cash from
the exercise of stock options and the sale of common stock under its employee
benefit plans, as well as from the Bank for income tax benefits from operating
losses of the parent company as provided in the corporate tax sharing agreement.

On April 28, 1999, the Corporation's Board of Directors authorized the
repurchase up to five percent, or approximately 3,000,000 shares, of its
outstanding common stock during the next 18 months. This repurchase was
completed in full on December 29, 1999. Effective December 27, 1999, the
Corporation's Board of Directors authorized a second repurchase of up to
3,000,000 shares of the Corporation's outstanding also over the next 18 months.
The amounts to be expended for this second repurchase will not exceed 50.0% of
the Corporation's cumulative reported net income beginning October 1, 1999.
During the three and six months ended December 31, 1999, the Corporation
purchased and cancelled 975,900 and 1,514,100 shares, respectively, of its
common stock at a cost of $18.1 million and $30.0 million, respectively. From
April 1999 through December 31, 1999, a total of 3,014,100 shares have been
repurchased and cancelled at a cost of approximately $66.3 million.

The Corporation's primary sources of funds are (i) deposits, (ii) principal
repayments on loans, mortgage-backed and investment securities, (iii) advances
from the Federal Home Loan Bank (FHLB) and (iv) cash generated from operations.
As reflected in the Consolidated Statement of Cash Flows, net cash flows
provided by operating activities totaled $98.4 million for the six months ended
December 31,1999, compared to net cash flows used by operating activities
totaled $54.6 million for the six months ended December 31, 1998. Amounts
fluctuate from period to period primarily as a result of mortgage banking
activity relating to the purchase and origination of loans for resale and the
subsequent sale of such loans.

                                       16
<PAGE>

LIQUIDITY AND CAPITAL RESOURCES (Continued):
--------------------------------------------

Net cash flows used by investing activities totaled $752.3 million and $432.7
million, respectively, for the six months ended December 31, 1999 and 1998.
Amounts fluctuate from period to period primarily as a result of (i) principal
repayments on loans and mortgage-backed securities and (ii) the purchase and
origination of loans, mortgage-backed and investment securities.

Net cash flows provided by financing activities totaled $521.6 million and
$444.9 million, respectively, for the six months ended December 31, 1999 and
1998. Advances from the FHLB and retail deposits have been the primary sources
to balance the Corporation's funding needs during each of the periods presented.
The Corporation experienced net decreases in retail deposits of $206.3 million
and $92.8 million, respectively, for the six months ended December 31, 1999 and
1998, primarily due to depositors leaving for higher interest rates.
However, during the three months ended December 31, 1999, deposits increased by
$96.2 million from September 30, 1999, due to management pricing deposits more
competitively. During the six months ended December 31, 1999, the Corporation
continued to borrow long-term FHLB advances that are callable at the option of
the FHLB. Such advances provide the Corporation with lower interest-bearing
liabilities than other funding alternatives and at December 31, 1999 totaled
$2.7 billion. The one-year notes for $40.0 million from the AmerUs Bank (AmerUs)
acquisition on July 31, 1998 were paid in full on July 30, 1999. The $32.5
million term note due July 31, 2003 was refinanced on July 1, 1999. The proceeds
to pay the $40.0 million AmerUs note in full and the refinancing came from a
term note for $72.5 million due June 30, 2004, unsecured, with quarterly
principal payments of $1.8 million and interest payable quarterly at 100 basis
points below the lender's national base rate. At December 31, 1999, this term
note had a remaining principal balance of $68.9 million. In addition, on August
30, 1999, the Corporation borrowed $10.0 million from the same lender on a
revolving line of credit. This revolving credit note has a balance of $10.0
million as of December 31, 1999 and is unsecured with interest terms the same as
the term note. The proceeds were used to help finance the Corporation's
repurchase of its common stock. During the three and six months ended December
31, 1999, the Corporation repurchased shares at a cost of $18.1 million and
$30.0 million, respectively. See Note E for additional information regarding the
repurchase of common stock.

At December 31, 1999, the Corporation issued commitments totaling approximately
$645.2 million to fund and purchase loans as follows: $167.2 million of single-
family adjustable-rate mortgage loans, $50.2 million of single-family fixed-rate
mortgage loans, $145.5 million of commercial real estate, multi-family and
nonmortgage loans and $282.3 million of unused lines of credit for commercial
and consumer use. These outstanding loan commitments to extend credit in order
to originate loans or fund commercial and consumer loans lines of credit do not
necessarily represent future cash requirements since many of the commitments may
expire without being drawn. The Corporation expects to fund these commitments,
as necessary, from the sources of funds previously described. In addition, at
December 31, 1999, the Corporation had approximately $192.2 million in mandatory
forward delivery commitments to sell residential mortgage loans.

The maintenance of an appropriate level of liquid resources to meet not only
regulatory requirements but also to provide funding necessary to meet the
Corporation's current business activities and obligations is an integral element
in the management of the Corporation's assets. The Bank is required by federal
regulation to maintain a minimum average daily balance of liquid assets in each
calendar quarter of not less than 4.0% of net withdrawable deposits plus short-
term borrowings or 4.0% of the average daily balance of net withdrawable
accounts plus short-term borrowings during the preceding quarter. The Bank's
liquidity ratio was 9.41% at December 31, 1999. Liquidity levels will vary
depending upon savings flows, future loan fundings, cash operating needs,
collateral requirements and general prevailing economic conditions. The Bank
does not foresee any difficulty in meeting its liquidity requirements.

                                       17
<PAGE>

FINANCIAL LEGISLATION:
----------------------

On November 12, 1999, President Clinton signed into law the Gramm-Leach-Bliley
Act (GLB Act) which, effective March 11, 2000, authorizes affiliations between
banking, securities and insurance firms and authorizes bank holding companies
and national banks to engage in a variety of new financial activities. Among the
new activities that will be permitted to bank holding companies are securities
and insurance brokerage, securities underwriting, insurance underwriting and
merchant banking. National bank subsidiaries will be permitted to engage in
similar financial activities but only on an agency basis unless they are one of
the 50 largest banks in the United States. National bank subsidiaries will be
prohibited from insurance underwriting, real estate development and merchant
banking. The Federal Reserve Board, in consultation with the Department of
Treasury, may approve additional financial activities. The GLB Act, however,
prohibits future affiliations between existing unitary savings and loan holding
companies, like the Corporation, and firms which are engaged in commercial
activities and prohibits the formation of new unitary holding companies.

The GLB Act imposes new requirements on financial institutions with respect to
customer privacy. The GLB Act generally prohibits disclosure of customer
information to non-affiliated third parties unless the customer has been given
the opportunity to object and has not objected to such disclosure. Financial
institutions are further required to disclose their privacy policies to
customers annually. Financial institutions, however, will be required to comply
with state law if it is more protective of customer privacy than the GLB Act.

The GLB Act contains significant revisions to the Federal Home Loan Bank System,
among them, making membership in the Federal Home Loan Bank voluntary for
federal savings associations. The GLB Act contains a variety of other provisions
including a prohibition against ATM surcharges unless the customer has first
been provided notice of the imposition and amount of the fee.

The Corporation is unable to predict the effect of the GLB Act on its operations
and competitive environment at this time. Although the GLB Act reduces the range
of companies with which the Corporation may affiliate, it may facilitate
affiliations with companies in the financial services industry.

RESULTS OF OPERATIONS:
----------------------

Net income for the three months ended December 31, 1999, was $28.8 million, or
$.49 per basic and diluted share, compared to net income of $31.2 million, or
$.52 per diluted share ($.53 per basic share) for the three months ended
December 31, 1998. The net decrease in net income for the quarter ended December
31, 1999, compared to the quarter ended December 31, 1998, is primarily due to
net increases of $17.2 million in general and administrative expenses and
$421,000 in amortization of intangible assets partially offset by a net increase
of $4.5 million in net interest income after provision for loan and lease
losses, an increase of $7.2 million in other income and a decrease of $3.5
million in the provision for income taxes.

Net income for the six months ended December 31, 1999, was $53.2 million, or
$.90 per basic and diluted share compared to net income of $46.3 million, or
$.78 per diluted share ($.79 per basic share) for the six months ended December
31, 1998. Such net increase comparing periods is due to net increases of $18.0
million in net interest income after provision for loan and lease losses and
$5.0 million in other income and a decrease of $2.9 million in the provision for
income taxes. Partially offsetting these increases to net income were increases
in general and administrative expenses totaling $15.5 million and $1.8 million
in amortization of intangible assets and the cumulative effect of a change in
accounting principle totaling $1.7 million.

                                       18
<PAGE>

RESULTS OF OPERATIONS (Continued):
----------------------------------

Net Interest Income:
--------------------

Net interest income was $86.3 million for the three months ended December 31,
1999, compared to $81.4 million for the three months ended December 31, 1998,
resulting in an increase of approximately $4.9 million, or 6.0%. Net interest
income was $173.9 million for the six months ended December 31, 1999, compared
to $156.0 million for the six months ended December 31, 1998, resulting in an
increase of approximately $17.9 million, or 11.5%. The interest rate spread was
2.63% at December 31, 1999 compared to 2.94% at December 31, 1998, a decrease of
31 basis points. During the three months ended December 31, 1999 and 1998,
interest rate spreads were 2.75% and 2.93%, respectively, a decrease of 18 basis
points; and the yield on interest-earning assets was 2.79% and 3.06%, down 27
basis points over the same respective periods of time. The interest rate spreads
were flat at 2.82% during the six months ended December 31, 1999, compared to
1998, while the yield on interest-earning assets decreased 12 basis points from
2.98% to 2.86%. The average balances of interest-earning assets increased $1.728
billion and $1.682 billion, respectively, for the three and six months ended
December 31, 1999 compared to the same periods ended December 31, 1998, while
the average balances of interest-bearing liabilities increased $1.833 billion
and $1.851 billion, respectively. The increases in these average balances are
due to the acquisitions of AmerUs on July 31, 1998 and Midland First Financial
Corporation (Midland) on March 1, 1999 both of which were accounted for as
purchases with their account balances reflected as of the respective acquisition
dates. Net interest income increased for the three and six months ended December
31, 1999 compared to 1998 due to the volume increases in these average balances
partially offset by the decrease in interest rate spreads. The future trend in
interest rate spreads and net interest income will be dependent upon such
factors as the composition and balances of the Corporation's interest-earning
assets and interest-bearing liabilities, the interest rate risk exposure of the
Corporation and the maturity and repricing activity of interest-sensitive assets
and liabilities, as influenced by changes in and levels of both short-term and
long-term market interest rates.

The following table presents certain information concerning yields earned on
interest-earning assets and rates paid on interest-bearing liabilities during
and at the end of each of the periods presented:

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
                                                    For the Three                  For the Six
                                                    Months Ended                   Months Ended                         At
                                                    December 31,                   December 31,                    December 31,
                                               ----------------------          --------------------           ---------------------
                                                 1999          1998             1999          1998              1999         1998
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                              <C>           <C>              <C>           <C>               <C>          <C>
Weighted average yield on:
   Loans and leases                               7.72%         7.95%            7.72%         7.97%             7.56%        7.86%
   Mortgage-backed securities                     6.38          6.30             6.31          6.23              6.39         6.30
   Investments                                    6.86          6.33             6.82          6.45              6.71         6.46
-----------------------------------------------------------------------------------------------------------------------------------
      Interest-earning assets                     7.50          7.64             7.48          7.66              7.50         7.57
-----------------------------------------------------------------------------------------------------------------------------------
Weighted average rate paid on:
   Savings deposits                               3.02          2.70             2.99          2.85              3.13         2.62
   Other time deposits                            5.29          5.46             5.19          5.52              5.34         5.43
   Advances from FHLB                             5.30          5.34             5.19          5.54              5.47         5.08
   Securities sold under agreements
      to repurchase                               5.58          5.83             5.66          5.90              4.97         5.86
   Other borrowings                               7.86          7.79             7.63          8.29              8.24         8.02
-----------------------------------------------------------------------------------------------------------------------------------
      Interest-bearing liabilities                4.75          4.71             4.66          4.84              4.87         4.63
-----------------------------------------------------------------------------------------------------------------------------------
Interest rate spread                              2.75%         2.93%            2.82%         2.82%             2.63%        2.94%
-----------------------------------------------------------------------------------------------------------------------------------
Net annualized yield on
   interest-earning assets                        2.79%         3.06%            2.86%         2.98%             2.74%        3.07%
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

                                       19
<PAGE>

Net Interest Income (Continued):
--------------------------------

The table below presents average interest-earning assets and average interest-
bearing liabilities, interest income and interest expense, and average yields
and rates during the three and six months ended December 31, 1999. The following
table includes nonaccruing loans averaging $72.0 million and $74.4 million,
respectively, for the three and six months ended December 31, 1999, as
interest-earning assets at a yield of zero percent:

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------------
                                                      Three Months Ended                              Six Months Ended
                                                       December 31, 1999                              December 31, 1999
                                       ---------------------------------------------  ---------------------------------------------
                                                                          Annualized                                     Annualized
                                             Average                        Yield/          Average                        Yield/
                                             Balance         Interest        Rate           Balance         Interest        Rate
-----------------------------------------------------------------------------------------------------------------------------------
<S>                                    <C>               <C>              <C>           <C>             <C>              <C>
Interest-earning assets:
   Loans and leases                      $  9,819,468    $    189,906          7.72%    $  9,626,839    $    372,044          7.72%
   Mortgage-backed securities               1,312,781          21,120          6.38        1,305,337          41,541          6.31
   Investments                              1,243,664          21,318          6.86        1,239,941          42,296          6.82
-----------------------------------------------------------------------------------------------------------------------------------
      Interest-earning assets              12,375,913         232,344          7.50       12,172,117         455,881          7.48
-----------------------------------------------------------------------------------------------------------------------------------
Interest-bearing liabilities:
   Savings deposits                         3,106,287          23,426          3.02        3,117,274          46,637          2.99
   Other time deposits                      4,314,684          57,518          5.29        4,362,523         114,058          5.19
   Advances from FHLB                       4,412,039          59,712          5.30        4,146,465         110,024          5.19
   Securities sold under
      agreements to repurchase                 95,329           1,359          5.58          111,813           3,233          5.66
   Other borrowings                           203,136           3,991          7.86          209,356           7,984          7.63
-----------------------------------------------------------------------------------------------------------------------------------
      Interest-bearing liabilities         12,131,475         146,006          4.75       11,947,431         281,936          4.66
-----------------------------------------------------------------------------------------------------------------------------------

Net earnings balance                     $    244,438                                   $    224,686
                                         ============                                   ============

Net interest income                                      $     86,338                                   $    173,945
                                                         ============                                   ============

Interest rate spread                                                           2.75%                                          2.82%
-----------------------------------------------------------------------------------------------------------------------------------

Net annualized yield on
   interest-earnings assets                                                    2.79%                                          2.86%
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>

The net earnings balance (the difference between average interest-bearing
liabilities and average interest-earning assets) decreased by $104.7 million and
$168.3 million for the three and six months ended December 31, 1999, compared to
the three and six months ended December 31, 1998. Such decreases are primarily
due to the acquisition of Midland that was financed entirely by existing cash
totaling $83.0 million, the repurchases of the Corporation's common stock
totaling $66.3 million and, in part, to the acquisition of AmerUs requiring the
outlay of cash totaling $53.2 million.

                                       20
<PAGE>

Net Interest Income (Continued):
--------------------------------

The table below presents the dollar amount of changes in interest income and
expense for each major component of interest-earning assets and interest-bearing
liabilities, respectively, and the amount of change in each attributable to: (i)
changes in volume (change in volume multiplied by prior year rate), and (ii)
changes in rate (change in rate multiplied by prior year volume). The net change
attributable to change in both volume and rate, which cannot be segregated, has
been allocated proportionately to the change due to volume and the change due to
rate. The following table demonstrates the effect of the increased volume of
interest-earning assets and interest-bearing liabilities, the changes in
interest rates and the effect on the interest rate spreads previously discussed:

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------------
                                                            Three Months Ended                         Six Months Ended
                                                        December 31, 1999 Compared                December 31, 1999 Compared
                                                           to December 31, 1998                      to December 31, 1998
                                                     ----------------------------------       -----------------------------------
                                                         Increase (Decrease) Due to               Increase (Decrease) Due to
---------------------------------------------------------------------------------------------------------------------------------
                                                       Volume       Rate        Net              Volume      Rate        Net
---------------------------------------------------------------------------------------------------------------------------------
<S>                                                    <C>         <C>        <C>                <C>       <C>          <C>
Interest income:
   Loans and leases                                    $ 20,905    $ (3,581)  $ 17,324           $ 41,216  $ (10,224)   $ 30,992
   Mortgage-backed securities                             1,932         291      2,223              5,075        520       5,595
   Investments                                            7,980       1,102      9,082             15,180      1,538      16,718
---------------------------------------------------------------------------------------------------------------------------------
      Interest income                                    30,817      (2,188)    28,629             61,471     (8,166)     53,305
---------------------------------------------------------------------------------------------------------------------------------

Interest expense:
   Savings deposits                                       2,367       1,603      3,970              5,982        514       6,496
   Other time deposits                                   (2,058)     (1,845)    (3,903)              (975)    (7,410)     (8,385)
   Advances from FHLB                                    25,066        (263)    24,803             45,519     (4,513)     41,006
   Securities sold under agreements to repurchase        (1,437)       (119)    (1,556)            (4,328)      (315)     (4,643)
   Other borrowings                                         358          34        392              1,522       (601)        921
---------------------------------------------------------------------------------------------------------------------------------
      Interest expense                                   24,296        (590)    23,706             47,720    (12,325)     35,395
---------------------------------------------------------------------------------------------------------------------------------
Effect on net interest income                          $  6,521    $ (1,598)  $  4,923           $ 13,751  $   4,159    $ 17,910
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

The net improvement to net interest income for the three months ended December
31, 1999, compared to December 31, 1998, reflects the net growth the Corporation
has experienced, both internally and from acquisitions, partially offset by the
decrease due to interest rates on loans and leases. The net improvement due to
changes in volume and rates for the six months ended December 31, 1999 compared
to 1998 reflect the Corporation's net growth as stated and the decreases in
rates on interest-earning assets that were more than offset by decreases in
rates on interest-bearing liabilities, primarily other time deposits and FHLB
advances.

                                       21
<PAGE>

Provision for Loan and Lease Losses and Real Estate Operations:
---------------------------------------------------------------

The Corporation recorded loan and lease loss provisions totaling $3.5 million
and $6.8 million, respectively, for the three and six months ended December 31,
1999, compared to $3.0 million and $6.8 million, respectively, for the three and
six months ended December 31, 1998. Loss provisions recorded in the three and
six months ended December 31, 1999 covered net loans and leases charged-off,
totaling $3.5 million and $6.6 million, respectively. The provision for the six
months ended December 31, 1998 includes a $1.0 million loss reserve recorded to
conform the reserve positions of First Colorado Bancorp, Inc. (a pooled
acquisition) to the policies of the Corporation. The allowance for loan and
lease losses is based upon management's continuous evaluation of the
collectibility of outstanding loans and leases, which takes into consideration
such factors as changes in the composition of the loan and lease portfolios and
economic conditions that may affect the borrower's ability to pay, regular
examinations by the Corporation's credit review group of specific problem loans
and leases and of the overall portfolio quality and real estate market
conditions in the Corporation's lending areas. The allowance for credit losses
totaled $79.5 million at December 31, 1999, or 114.9% of total nonperforming
loan and leases, compared to $80.4 million, also at 114.9% of total
nonperforming loans and leases at June 30, 1999.

The Corporation recorded net gains from real estate operations totaling $362,000
and $138,000 for the three and six months ended December 31, 1999 compared to
net losses of $218,000 and $379,000, respectively, for the three and six months
ended December 31, 1998. Real estate operations reflect provisions for real
estate losses, net real estate operating activity, and gains and losses on
dispositions of real estate. The net increases in real estate operations for the
three and six months ended December 31, 1999 compared to 1998 is due primarily
to increases in net gains on dispositions of real estate in the current fiscal
year, net decreases in operating expenses and net decreases in provisions for
real estate losses.

Although the Corporation believes that present levels of allowances for loan
losses are adequate to reflect the risks inherent in its portfolios, there can
be no assurance that the Corporation will not experience increases in its
nonperforming assets, that it will not increase the level of its allowances in
the future or that significant provisions for losses will not be required based
on factors such as deterioration in market conditions, changes in borrowers'
financial conditions, delinquencies and defaults.

                                       22
<PAGE>

Provision for Loan and Lease Losses and Real Estate Operations (Continued):
---------------------------------------------------------------------------

Nonperforming assets are monitored on a regular basis by the Corporation's
internal credit review and problem asset groups. Nonperforming assets increased
$2.5 million at December 31, 1999, compared to June 30, 1999, resulting from a
net increase of $7.4 million in real estate partially offset by net decreases of
$4.2 million in troubled debt restructurings and $773,000 in nonperforming loans
and leases. Nonperforming assets as of the dates indicated are summarized as
follows:

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------------
                                                                                                   December 31,         June 30,
                                                                                                       1999               1999
---------------------------------------------------------------------------------------------------------------------------------
<S>                                                                                                  <C>                <C>
Nonperforming loans and leases:
   Residential real estate loans                                                                     $ 49,127           $ 49,061
   Commercial real estate loans                                                                         9,106             12,220
   Consumer loans                                                                                       7,820              4,859
   Leases and other loans                                                                               3,189              3,875
---------------------------------------------------------------------------------------------------------------------------------
       Total                                                                                           69,242             70,015
---------------------------------------------------------------------------------------------------------------------------------

Real estate:
   Commercial                                                                                          13,437              8,880
   Residential                                                                                         17,238             14,384
---------------------------------------------------------------------------------------------------------------------------------
       Total                                                                                           30,675             23,264
---------------------------------------------------------------------------------------------------------------------------------

Troubled debt restructurings:
   Commercial                                                                                           5,389              9,534
   Residential                                                                                            176                195
---------------------------------------------------------------------------------------------------------------------------------
       Total                                                                                            5,565              9,729
---------------------------------------------------------------------------------------------------------------------------------

Total nonperforming assets                                                                          $ 105,482          $ 103,008
---------------------------------------------------------------------------------------------------------------------------------

Nonperforming loans and leases to total loans and leases                                                 .69%               .73%
Nonperforming assets to total assets                                                                     .79%               .81%
---------------------------------------------------------------------------------------------------------------------------------

Allowance for loan and lease losses (1)                                                              $ 79,536           $ 80,419
---------------------------------------------------------------------------------------------------------------------------------

Allowance for loan and lease losses to total loans and leases                                            .79%               .84%
Allowance for loan and lease losses to total nonperforming assets                                      75.40%             78.07%
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1)  Includes $50,000 and $75,000 at December 31, 1999 and June 30, 1999,
     respectively, in general allowance for losses established primarily to
     cover risks associated with borrowers' delinquencies and defaults on loans
     held for sale.

                                       23
<PAGE>

Provision for Loan and Lease Losses and Real Estate Operations (Continued):
---------------------------------------------------------------------------

Nonperforming loans and leases at December 31, 1999, decreased by $773,000
compared to June 30, 1999, primarily due to net decreases of $3.8 million in
delinquent commercial loans and leases and other loans partially offset by
increases of $3.0 million in delinquent consumer and residential loans. The net
increase in real estate of $7.4 million at December 31, 1999, compared to June
30, 1999, is due primarily to the transfer of two delinquent commercial loans
totaling $4.8 million to nonperforming commercial real estate. The net decrease
of $4.2 million in troubled debt restructurings at December 31, 1999, compared
to June 30, 1999, is due primarily to the reclassification of a commercial
troubled debt restructuring to nonperforming loan status.

The ratio of nonperforming loans and leases to total loans and leases decreased
compared to June 30, 1999, due to the net increase in loans and leases at
December 31, 1999, compared to June 30, 1999. The ratio of nonperforming assets
to total assets decreased compared to June 30, 1999 due to the net increase in
total assets partially offset by the increase in total nonperforming assets. The
percentage of allowance for loan and lease losses to total loans and leases
decreased compared to June 30, 1999, due primarily to the net decrease in the
allowance for loan and leases over the same periods of time. The allowance for
loan and lease losses to total nonperforming assets decreased at December 31,
1999 compared to June 30, 1999 due primarily to the net increase in total
nonperforming assets.

Loan Servicing Fees:
--------------------

Fees from loans serviced for other institutions totaled $6.2 million and $12.2
million for the three and six months ended December 31, 1999 compared to $5.8
million and $11.3 million, respectively, for the three and six months ended
December 31, 1998. The amount of revenue generated from loan servicing fees, and
changes in comparing fiscal periods, is primarily due to the average size of the
Corporation's portfolio of mortgage loans serviced for other institutions and
the level of rates for service fees collected. At December 31, 1999 and 1998,
the Corporation's mortgage servicing portfolio approximated $7.284 billion and
$7.301 billion, respectively.

Effective July 1, 1999, the amortization expense of mortgage servicing rights
was reclassified from general and administrative expenses to a reduction of loan
servicing fees. Such reclassification was primarily for presentation purposes to
be more in line with other financial institutions. For the three and six months
ended December 31, 1999, gross loan servicing fees totaled $8.4 million and
$17.4 million, respectively, compared to gross loan servicing fees of $8.8
million and $17.3 million, respectively, for the three and six months ended
December 31, 1998.

The value of the Corporation's loan servicing portfolio increases as mortgage
interest rates rise and loan prepayments decrease. It is expected that income
generated from the Corporation's loan servicing portfolio will increase in such
an environment. However, this positive effect on the Corporation's income is
offset, in part, by a decrease in additional servicing fee income attributable
to new loan originations, which historically decrease in periods of higher, or
increasing, mortgage interest rates, and by an increase in expenses from loan
production costs since a portion of such costs cannot be deferred due to lower
loan originations. Conversely, the value of the Corporation's loan servicing
portfolio will decrease as mortgage interest rates decline.

Retail Fees and Charges:
------------------------

Retail fees and charges totaled $10.7 million and $20.7 million, respectively,
for the three and six months ended December 31, 1999 compared to $9.6 million
and $18.9 million, respectively, for the three and six months ended December 31,
1998. Increases in certain checking account fees and related ancillary fees for
overdraft and insufficient funds charges, VISA debit card fees and a reduction
in the amount of waiver of retail fees are all reasons for the increases over
1998. The net increases also result partially from the AmerUs and Midland
acquisitions accounted for as purchases and included in operations since their
respective dates of consummation.

                                       24
<PAGE>

Gain on Sales of Loans:
-----------------------

The Corporation sold loans to third parties through its mortgage banking
operations resulting in a net pre-tax gains of $363,000 and $241,000,
respectively, for the three and six months ended December 31, 1999 on loans sold
totaling $182.4 million and $341.6 million. These results compare to net pre-
tax gains of $1.7 million and $3.6 million, respectively, for the three and six
months ended December 31, 1998 on loans sold totaling $498.0 million and $1.011
billion, respectively. Mortgage loans are generally sold in the secondary market
with loan servicing retained and without recourse to the Corporation.

Gain on Sales of Securities:
----------------------------

The Corporation sold securities available for sale resulting in net pre-tax
gains of $1.6 million and $3.3 million, respectively, for the three and six
months ended December 31, 1998, on sales of mortgage-backed securities totaling
$121.2 million and $199.7 million, respectively, acquired in the AmerUs
acquisition. During the three and six months ended December 31, 1999, there were
no sales of securities available for sale.

Other Operating Income:
-----------------------

Other operating income totaled $14.6 million and $20.7 million, respectively,
for the three and six months ended December 31, 1999, compared to $6.6 million
and $12.3 million, respectively, for the three and six months ended December 31,
1998. The major components of other operating income are brokerage commissions,
credit life and disability commissions, insurance commissions and leasing
operations. The net increases for the three and six months ended December 31,
1999 compared to the prior year periods are primarily attributable to the gain
totaling $8.5 million on the sale of the Corporation's headquarters building on
December 1, 1999 and to increases in credit life and disability and insurance
commissions partially offset by the prior year nonrecurring gain of $1.1 million
on the sale of a branch closed pursuant to the First Colorado Bancorp, Inc.
merger.

General and Administrative Expenses:
------------------------------------

General and administrative expenses totaled $66.5 million and $127.8 million,
respectively, for the three and six months ended December 31, 1999, compared to
$49.3 million and $112.3 million, respectively, for the three and six months
ended December 31, 1998. Excluding restructure costs totaling $4.3 million
recorded in this current fiscal year second quarter, general and administrative
expenses totaled $62.2 million and $123.5 million for the three and six months
ended December 31, 1999. The restructuring costs of $4.3 million reflects the
expenses and charges pursuant to the sale and closing of 21 branches ($2.4
million) and the elimination of 121 positions ($1.9 million). General and
administrative expenses are expected to decrease as a result of the
implementation of this restructuring plan. Management expects such positive
effects beginning in the third quarter ended March 31, 2000, increasing through
the fourth quarter of fiscal year 2000 with full realization of approximately
$12.0 million anticipated for fiscal year 2001. See Note B "Restructure Costs"
to the Notes to Consolidated Financial Statements for additional information.
Excluding merger-related expenses totaling $16.2 million incurred in the quarter
ended September 30, 1998, associated with the First Colorado Bancorp, Inc.
acquisition, general and administrative expenses totaled $96.1 million for the
six months ended December 31, 1998.

Excluding the restructure charges totaling $4.3 million, the net increase of
$12.9 million for the three months ended December 31, 1999, compared to the
three months ended December 31, 1998, is primarily due to net increases in other
operating expenses of $5.3 million, compensation and benefits of $4.5 million,
data processing of $2.2 million and occupancy and equipment of $617,000.
Excluding both the nonrecurring charges for merger expenses and the restructure
costs, the net increase of $27.2 million for the six months ended December 31,
1999 compared to 1998 is due to increases in other operating expenses of $11.1
million, compensation and benefits of $9.5 million, data processing of $3.9
million and occupancy and equipment of $2.5 million.

The Midland acquisition, which was accounted for under the purchase method of
accounting, contributed to the net increases in additional general and
administrative expenses for the three and six months ended December 31, 1999.
The AmerUs acquisition, also accounted for as a purchase, contributed to a
lesser extent to the net increases for the six months ended December 31, 1999.
These acquisitions result in increased personnel wages and benefits and costs of
operating additional branches, as well as other expenses incurred on an indirect
basis attributable to these acquisitions. General and administrative expenses
also increased for the three and six months ended December 31, 1999 compared to
1998 due to higher costs associated with the new data processing computer
systems, higher item processing costs from the customer deposit delivery system
implemented in the second quarter of last fiscal year and to decreases in
deferred costs associated with loan originations due to lower loan origination
volumes.

                                       25
<PAGE>

Amortization of Intangible Assets:
----------------------------------

Amortization of intangible assets totaled $4.6 million and $9.3 million,
respectively, for the three and six months ended December 31, 1999, compared to
$4.2 million and $7.5 million, respectively, for the three and six months ended
December 31, 1998. The net increases for the three and six months ended December
31, 1999 compared to the respective 1998 periods is primarily due to the Midland
acquisition consummated March 1, 1999.

Provision for Income Taxes:
---------------------------

For the three and six months ended December 31, 1999, the provision for income
taxes totaled $15.2 million and $29.2 million, respectively, compared to $18.7
million and $32.1 million, respectively, for the three and six months ended
December 31, 1998. The effective income tax rates for the three and six months
ended December 31, 1999 were 34.6% and 34.7%, respectively, compared to 37.5%
and 40.9%, respectively, for the three and six months ended December 31, 1998.
The effective tax rates for all periods vary from the statutory rate primarily
due to the nondeductibility of amortization of intangible assets in relation to
the level of taxable income for the respective periods, increases in tax-exempt
securities and, for the six months ended December 31, 1998, to the
nondeductibility of certain merger-related expenses and other nonrecurring
charges.

Cumulative Effect of Change in Accounting Principle:
----------------------------------------------------

Effective July 1, 1999, the Corporation adopted the provisions of Statement of
Position 98-5 "Reporting the Costs of Start-Up Activities" (SOP 98-5), which
requires that costs of start-up activities and organizational costs be expensed
as incurred. Prior to the adoption of this statement, these costs were
capitalized and amortized over periods ranging from five to 25 years. The effect
of adopting the provisions of SOP 98-5 was to record a charge of $1,776,000, net
of an income tax benefit of $978,000, or $.03 per diluted share, as a cumulative
effect of a change in accounting principle in the accompanying consolidated
statement of operations. These costs consist of organizational costs primarily
associated with the creation of a real estate investment trust subsidiary and
start-up costs of the proof of deposit department for processing customer
transactions following the complete conversion of the Corporation's deposit
system.

                                       26
<PAGE>

Year 2000:
----------

The year 2000 posed important business issues regarding how existing application
software programs and operating systems, both internal and external, could
accommodate this date value. The Corporation did not experience any data
processing delays, mistakes or failures as a result of Year 2000 issues.

All of the significant computer programs of the Corporation that could have been
affected by this problem were provided by major third party vendors. The
Corporation completed the process of replacing/upgrading its computer systems
and programs, as well as most equipment, in order to provide cost-effective and
efficient delivery of services to its customers, information to management, and
to provide additional capacity for processing information and transactions due
to acquisitions. The total cost of the Year 2000 project is estimated to
approximate $14.0 million funded through cash flows from operations. Most of the
total project cost was capitalized since it involved the purchase of computer
systems, programs and equipment. During the three and six months ended December
31, 1999, approximately $338,000 and $620,000, respectively, was expensed that
related to systems conversion costs, internal staff costs as well as consulting
and other Year 2000 expenses. For fiscal year 1999, approximately $4.4 million
was expensed relating to such items. In addition, during fiscal year 1998 the
Corporation expensed $4.3 million due to accelerated amortization of certain
computer systems and software necessitated by Year 2000 compliance and the
related planned systems conversions. The adjusted carrying amount of these
computer systems and software was depreciated until their disposal at the date
of conversion.

                      Item 3. QUANTITATIVE AND QUALITATIVE
                      ------------------------------------
                         DISCLOSURES ABOUT MARKET RISK
                         -----------------------------


Information concerning the Corporation's exposure to market risk, which has
remained relatively unchanged from June 30, 1999, is incorporated by reference
from the text under the caption "Market Risk" in the Form 10-K for the
Corporation's fiscal year ended June 30, 1999.

                                       27

<PAGE>

                          PART II. OTHER INFORMATION
                          --------------------------


Item 4. Submission of Matters to a Vote of Security Holders
        ---------------------------------------------------

        (a). The Corporation held its Annual Meeting of Stockholders on November
             16, 1999 in Omaha, Nebraska. The inspector of election issued his
             certified final report on November 16, 1999 for the election of
             directors voted upon at such Annual Meeting.


        (b). Not applicable.

        (c). The proposal voted upon at the Annual Meeting was for the election
             of four individuals as directors for three-year terms. The results
             of voting were as follows:
<TABLE>
<CAPTION>
        Proposal 1--Election of Directors:
        ----------------------------------

        Nominee (for terms to expire on 2002):    Votes for (1)    Votes Withheld
        --------------------------------------    -------------    --------------
        <S>                                       <C>              <C>
        Michael P. Glinsky                          43,054,417        1,667,414
        Robert F. Krohn                             43,054,417        2,641,878
        Joseph J. Whiteside                         43,054,417          469,257
        George R. Zoffinger                         43,054,417          468,214
</TABLE>

        --------------------
        (1)  Stockholders are entitled to cumulate their votes in the election
             of directors. Unless otherwise indicated by the stockholder, a vote
             for the Board of Directors' nominees gives the proxies named
             discretionary authority to cumulate all votes to which the
             stockholder was entitled and to allocate such votes in favor of one
             or more of the Board's nominees as the proxies determined. The
             votes reported herein reflect the allocation of votes so as to
             maximize the number of nominees elected to serve as directors.

        (d). On October 29, 1999, the Corporation entered into an agreement (the
             Settlement Agreement) with Franklin Mutual Advisers, LLC (Franklin)
             to settle all pending litigation and the proxy contest relating to
             the election of directors at the Corporation's 1999 Annual Meeting
             of Stockholders held on November 16, 1999 (the Annual Meeting).

             The Settlement Agreement provided that Franklin would immediately
             cease its solicitation of proxies in connection with the Annual
             Meeting and not vote any proxies it solicited at the Annual
             Meeting. Franklin also agreed to vote its shares in favor of the
             Corporation's reconfigured slate of directors. The Corporation
             agreed to include George R. Zoffinger and Joseph J. Whiteside in
             place of two of its previously announced nominees and they,
             together with Robert F. Krohn and Michael P. Glinsky, constituted
             all of the nominees for the four seats up for election at the
             Annual Meeting. Two other individuals who had been named in the
             Corporation's Proxy Statement did not stand for reelection at the
             Annual Meeting.

             All pending litigation between the parties was dismissed with
             prejudice. The Settlement Agreement also provided for mutual
             releases by all parties to the litigation of all claims relating to
             the proxy solicitation, the Annual Meeting and all related matters.
             The parties agreed that the Corporation's By-law amendment adopted
             September 28, 1999, which provides that no person who is a
             controlling person or management official of a federally insured
             depository organization (other than affiliates of the Corporation)
             that operates branches in any market in which the Corporation
             operates branches shall be eligible to be nominated for service, or
             to serve, as a director of the Corporation, shall remain in effect.

             Each party agreed to bear its own expenses resulting from the proxy
             contest and the related litigation. Through December 31, 1999 the
             Corporation expensed $456,000 relating to these issues. The
             Corporation also represented in the Settlement Agreement that it
             had no present intention to increase the size of the Board of
             Directors to more than 10 members.


                                       28
<PAGE>

                     PART II. OTHER INFORMATION (Continued)
                     --------------------------------------


Item 5. Other Information
        -----------------

        On December 1, 1999, the Corporation's headquarters building (Commercial
        Federal Tower) was sold resulting in a pre-tax gain of $8.5 million
        ($5.4 million after-tax or $.09 per diluted share). The Corporation now
        leases its existing Commercial Federal Tower office space under an
        agreement that expires June 30, 2001, with five three-month extensions
        available. In a related transaction, on December 20, 1999, the
        Corporation purchased 70.04 acres of unimproved land in West Omaha for
        its new corporate headquarters. This purchase allows the Corporation to
        defer approximately $8.8 million in taxable income from the sale of the
        Commercial Federal Tower under the like-kind exchange rules. This income
        tax deferral of the net gain on the sale of the Commercial Federal Tower
        is subject to certain conditions which must be completed by May 28,
        2000.


Item 6. Exhibits and Reports on Form 8-K
        --------------------------------

        (a). Exhibits:

             Exhibit 27. Financial Data Schedules

        (b). Reports on Form 8-K:

             The Corporation filed a Form 8-K dated October 5, 1999, regarding
             the nomination on September 9, 1999, by Franklin Mutual Advisers,
             LLC, ("Franklin") of two individuals for election as directors at
             the 1999 Annual Meeting of Stockholders and one individual as an
             alternate in the event either of its two nominees were unable to
             serve, and the notification by the Corporation on September 29,
             1999, to Franklin that the Corporation believed that neither
             individual nominated was eligible for election as a director of the
             Corporation. The Form 8-K also included as an exhibit the amended
             By-laws of the Corporation as adopted on September 28, 1999, by the
             Corporation's Board of Directors which provide that in order to
             qualify to serve as a member of the board of the Corporation, such
             individual must not also serve as a management official of another
             federally insured depository organization that operates branches in
             any market in which the Corporation operates branches. Also
             included in the Form 8-K was the announcement of the appointment of
             Sharon G. Marvin by the Corporation's Board of Directors to fill
             the vacancy arising from the resignation of W.A. Krause.

             On October 14, 1999, the Corporation filed a Form 8-K announcing
             that it had filed suit in the United States District Court for the
             District of Nebraska seeking (i) a declaration by the court that
             one of the nominees and the alternate nominee nominated by Franklin
             for election as directors of the Corporation at the Corporation's
             Annual Meeting of Stockholders do not meet the eligibility
             requirements under applicable federal banking laws and under a long
             standing qualification provision of the Corporation's By-laws, and
             (ii) a declaration by the court that a recent amendment to its By-
             laws is legally valid.

             On November 2, 1999, the Corporation filed a Form 8-K announcing
             that it had entered into an agreement with Franklin on October 29,
             1999, to settle all pending litigation and the proxy contest
             relating to the election of directors at the Corporation's 1999
             Annual Meeting of Stockholders to be held November 16, 1999. See
             Note C "Settlement Agreement" to the Notes to Consolidated
             Financial Statements for additional information.

             On December 30, 1999, the Corporation filed a Form 8-K announcing
             that on December 27, 1999, its Board of Directors authorized the
             additional repurchase of up to three million shares of its
             outstanding common stock during the next 18 months. See Note E
             "Common Stock Repurchase" to the Notes to Consolidated Financial
             Statements for additional information.

                                       29
<PAGE>

                                   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.



                                   COMMERCIAL FEDERAL CORPORATION
                                   ------------------------------
                                   (Registrant)



Date:  February 14, 2000           /s/ James A. Laphen
       -----------------           -------------------
                                   James A. Laphen, President and Chief
                                   Operating Officer (Duly Authorized
                                   and Principal Financial Officer)



Date:  February 14, 2000           /s/ Gary L. Matter
       -----------------           ------------------
                                   Gary L. Matter, Senior Vice President,
                                   Controller and Secretary
                                   (Principal Accounting Officer)

                                       30
<PAGE>

                                 EXHIBIT INDEX
                                 -------------

Exhibit 27. Financial Data Schedules

                                       31