<PAGE>   1

                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 JUNE 30, 1999

                                       OR

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

                        COMMISSION FILE NUMBER 001-13094

                               DIME BANCORP, INC.
             (Exact name of registrant as specified in its charter)

<TABLE>

<S>                                                                                  <C>
                DELAWARE                                                                   11-3197414
     (State or other jurisdiction of                                                    (I.R.S. Employer
     incorporation or organization)                                                   Identification No.)

  589 FIFTH AVENUE, NEW YORK, NEW YORK                                                       10017
(Address of principal executive offices)                                                   (Zip Code)
</TABLE>


                                 (212) 326-6170
              (Registrant's telephone number, including area code)

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

As of July 31, 1999, the registrant had 113,473,774 shares of common stock,
$0.01 par value, outstanding.
<PAGE>   2
                               DIME BANCORP, INC.
             FORM 10-Q FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1999
                                TABLE OF CONTENTS
<TABLE>
<CAPTION>
                                                                                                              Page
                                                                                                              ----
PART I.  FINANCIAL INFORMATION
<S>                                                                                                           <C>
Item 1.  Financial Statements (Unaudited)

                Consolidated Statements of Financial Condition as of June 30, 1999 and December 31, 1998        3

                Consolidated Statements of Income for the Three Months and Six Months Ended June 30,
                    1999 and 1998                                                                               4

                Consolidated Statements of Changes in Stockholders' Equity for the Six Months Ended
                    June 30, 1999 and 1998                                                                      5

                Consolidated Statements of Cash Flows for the Six Months Ended June 30, 1999 and 1998           6

                Notes to Consolidated Financial Statements                                                      7

Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations                  9

Item 3.  Quantitative and Qualitative Disclosures about Market Risk                                            31

PART II.  OTHER INFORMATION

Item 1.  Legal Proceedings                                                                                     31

Item 4.  Submission of Matters to a Vote of Security Holders                                                   33

Item 6.  Exhibits and Reports on Form 8-K                                                                      33

SIGNATURES                                                                                                     34
</TABLE>



                                       2
<PAGE>   3
PART I.  FINANCIAL INFORMATION
ITEM 1.  FINANCIAL STATEMENTS

                       DIME BANCORP, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
                        (IN THOUSANDS, EXCEPT SHARE DATA)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                   JUNE 30,          DECEMBER 31,
                                                                                     1999                1998
                                                                                 ------------        ------------
<S>                                                                              <C>                 <C>
ASSETS
Cash and due from banks                                                          $    300,543        $    279,490
Money market investments                                                               12,588              78,287
Securities available for sale                                                       3,498,006           3,329,444
Federal Home Loan Bank of New York stock                                              328,732             324,106
Loans held for sale                                                                 2,512,648           3,884,886
Loans receivable, net:
    Residential real estate loans                                                   8,088,718           8,919,817
    Commercial real estate loans                                                    3,005,934           2,567,750
    Consumer loans                                                                  1,266,334             973,230
    Business loans                                                                    350,196             287,271
    Allowance for loan losses                                                        (121,381)           (105,081)
                                                                                 ------------        ------------
        Total loans receivable, net                                                12,589,801          12,642,987
                                                                                 ------------        ------------
Accrued interest receivable                                                            99,205              97,124
Premises and equipment, net                                                           186,113             170,879
Mortgage servicing assets                                                             882,800             692,473
Other assets                                                                        1,019,347             821,174
                                                                                 ------------        ------------
Total assets                                                                     $ 21,429,783        $ 22,320,850
                                                                                 ============        ============

LIABILITIES
Deposits                                                                         $ 13,414,798        $ 13,651,460
Federal funds purchased and securities sold under agreements to repurchase          1,925,528           2,245,218
Other short-term borrowings                                                         3,042,579           3,756,733
Long-term debt                                                                      1,000,232             608,892
Guaranteed preferred beneficial interests in Dime Bancorp, Inc.'s junior
    subordinated deferrable interest debentures                                       152,208             162,005
Other liabilities                                                                     400,995             510,877
                                                                                 ------------        ------------
        Total liabilities                                                          19,936,340          20,935,185
                                                                                 ------------        ------------

STOCKHOLDERS' EQUITY
Common stock, par value $0.01 per share (350,000,000 shares authorized and
    120,252,459 shares issued at June 30, 1999 and December 31, 1998)                   1,203               1,203
Additional paid-in capital                                                          1,165,759           1,165,251
Retained earnings                                                                     561,428             463,907
Treasury stock, at cost (6,713,450 shares at June 30, 1999 and 8,682,858
    shares at December 31, 1998)                                                     (180,480)           (233,965)
Accumulated other comprehensive loss                                                  (48,642)             (3,285)
Unearned compensation                                                                  (5,825)             (7,446)
                                                                                 ------------        ------------
        Total stockholders' equity                                                  1,493,443           1,385,665
                                                                                 ------------        ------------
Total liabilities and stockholders' equity                                       $ 21,429,783        $ 22,320,850
                                                                                 ============        ============
</TABLE>

          See accompanying notes to consolidated financial statements.



                                       3
<PAGE>   4
                       DIME BANCORP, INC. AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF INCOME
                      (IN THOUSANDS, EXCEPT PER SHARE DATA)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                  FOR THE                   FOR THE
                                                                             THREE MONTHS ENDED         SIX MONTHS ENDED
                                                                                  JUNE 30,                  JUNE 30,
                                                                       -------------------------       --------------------------
                                                                         1999            1998            1999             1998
                                                                       ---------       ---------       ---------        ---------
<S>                                                                    <C>             <C>             <C>              <C>
INTEREST INCOME
Residential real estate loans                                          $ 187,254       $ 225,465       $ 390,070        $ 446,252
Commercial real estate loans                                              53,921          49,406         103,675           98,879
Consumer loans                                                            22,042          17,181          41,696           33,503
Business loans                                                             6,290           2,938          12,054            5,375
Mortgage-backed securities                                                52,545          50,878         101,443          123,938
Other securities                                                          12,696           9,677          24,917           17,548
Money market investments                                                     270           1,566             776            4,415
                                                                       ---------       ---------       ---------        ---------
        Total interest income                                            335,018         357,111         674,631          729,910
                                                                       ---------       ---------       ---------        ---------

INTEREST EXPENSE
Deposits                                                                 116,511         139,037         236,353          278,065
Borrowed funds                                                            78,617          87,237         162,890          185,097
                                                                       ---------       ---------       ---------        ---------
        Total interest expense                                           195,128         226,274         399,243          463,162
                                                                       ---------       ---------       ---------        ---------
        Net interest income                                              139,890         130,837         275,388          266,748
Provision for loan losses                                                  7,500           8,000          15,500           16,000
                                                                       ---------       ---------       ---------        ---------
        Net interest income after provision for loan losses              132,390         122,837         259,888          250,748
                                                                       ---------       ---------       ---------        ---------

NON-INTEREST INCOME
Loan servicing and production fees                                        69,716          42,631         131,644           85,081
Banking service fees                                                      12,587          10,168          23,854           19,168
Securities and insurance brokerage fees                                   10,052           8,957          18,656           16,467
Net gains on sales activities                                             57,696          63,743         122,003          108,991
Other                                                                      2,452           2,491           5,576            4,817
                                                                       ---------       ---------       ---------        ---------
        Total non-interest income                                        152,503         127,990         301,733          234,524
                                                                       ---------       ---------       ---------        ---------

NON-INTEREST EXPENSE
General and administrative expense:
    Compensation and employee benefits                                    75,201          69,661         151,674          134,456
    Occupancy and equipment                                               25,901          22,467          50,687           44,331
    Other                                                                 48,559          53,280          96,896           97,063
                                                                       ---------       ---------       ---------        ---------
        Total general and administrative expense                         149,661         145,408         299,257          275,850
Amortization of mortgage servicing assets                                 35,200          16,897          65,857           33,832
Amortization of goodwill                                                   3,497           2,836           6,373            5,715
                                                                       ---------       ---------       ---------        ---------
        Total non-interest expense                                       188,358         165,141         371,487          315,397
                                                                       ---------       ---------       ---------        ---------
Income before income tax expense and extraordinary items                  96,535          85,686         190,134          169,875
Income tax expense                                                        35,718          27,420          70,349           54,360
                                                                       ---------       ---------       ---------        ---------
Income before extraordinary items                                         60,817          58,266         119,785          115,515
Extraordinary items -- losses on early extinguishment of
    debt, net of tax benefits of $3,044                                       --              --          (4,127)              --
                                                                       ---------       ---------       ---------        ---------
Net income                                                             $  60,817       $  58,266       $ 115,658        $ 115,515
                                                                       =========       =========       =========        =========

PER COMMON SHARE
Basic earnings:
    Income before extraordinary items                                  $    0.54       $    0.51       $    1.08        $    1.01
    Extraordinary items                                                       --              --           (0.04)              --
                                                                       ---------       ---------       ---------        ---------
    Net income                                                         $    0.54       $    0.51       $    1.04        $    1.01
                                                                       =========       =========       =========        =========
Diluted earnings:
    Income before extraordinary items                                  $    0.54       $    0.50       $    1.06        $    0.99
    Extraordinary items                                                       --              --           (0.03)              --
                                                                       ---------       ---------       ---------        ---------
    Net income                                                         $    0.54       $    0.50       $    1.03        $    0.99
                                                                       =========       =========       =========        =========

Dividends declared                                                     $    0.06       $    0.05       $    0.11        $    0.09
</TABLE>

          See accompanying notes to consolidated financial statements.





                                       4
<PAGE>   5
                       DIME BANCORP, INC. AND SUBSIDIARIES
           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                                 (IN THOUSANDS)
                                   (UNAUDITED)
<TABLE>
<CAPTION>
                                                                 FOR THE SIX MONTHS ENDED
                                                                         JUNE 30,
                                                              ------------------------------
                                                                  1999               1998
                                                              -----------        -----------
<S>                                                           <C>                <C>
COMMON STOCK
Balance at beginning of period                                $     1,203        $     1,203
                                                              -----------        -----------
    Balance at end of period                                        1,203              1,203
                                                              -----------        -----------

ADDITIONAL PAID-IN CAPITAL
Balance at beginning of period                                  1,165,251          1,158,221
Tax benefit on stock options exercised                                508              3,354
                                                              -----------        -----------
    Balance at end of period                                    1,165,759          1,161,575
                                                              -----------        -----------

RETAINED EARNINGS
Balance at beginning of period                                    463,907            261,201
Net income                                                        115,658            115,515
Cash dividends declared on common stock                           (12,224)           (10,295)
Treasury stock issued in connection with acquisition               (4,256)                --
Treasury stock issued under employee benefit plans, net            (1,657)            (7,615)
                                                              -----------        -----------
    Balance at end of period                                      561,428            358,806
                                                              -----------        -----------

TREASURY STOCK, AT COST
Balance at beginning of period                                   (233,965)           (95,221)
Treasury stock purchased                                          (22,626)          (113,106)
Treasury stock issued in connection with acquisition               73,444                 --
Treasury stock issued under employee benefit plans, net             2,667             26,690
                                                              -----------        -----------
    Balance at end of period                                     (180,480)          (181,637)
                                                              -----------        -----------

ACCUMULATED OTHER COMPREHENSIVE LOSS
Balance at beginning of period                                     (3,285)            (9,534)
Other comprehensive (loss) income                                 (45,357)             7,506
                                                              -----------        -----------
    Balance at end of period                                      (48,642)            (2,028)
                                                              -----------        -----------

UNEARNED COMPENSATION
Balance at beginning of period                                     (7,446)            (1,012)
Restricted stock activity, net                                          7             (7,748)
Amortization of unearned compensation, net                          1,614              1,224
                                                              -----------        -----------
    Balance at end of period                                       (5,825)            (7,536)
                                                              -----------        -----------

Total stockholders' equity                                    $ 1,493,443        $ 1,330,383
                                                              ===========        ===========
</TABLE>


          See accompanying notes to consolidated financial statements.






                                       5
<PAGE>   6
                       DIME BANCORP, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
                                   (UNAUDITED)
<TABLE>
<CAPTION>
                                                                                    FOR THE SIX MONTHS ENDED
                                                                                             JUNE 30,
                                                                                  ------------------------------
                                                                                     1999               1998
                                                                                  -----------        -----------
<S>                                                                               <C>                <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income                                                                        $   115,658        $   115,515
Adjustments to reconcile net income to net cash provided (used) by
    operating activities:
        Provision for loan losses                                                      15,500             16,000
        Depreciation, amortization and accretion, net                                 103,054             73,735
        Provision for deferred income tax expense                                      55,708             44,572
        Net securities losses (gains)                                                      47            (16,946)
        Losses on early extinguishment of debt                                          7,171                 --
        Net decrease (increase) in loans held for sale                              1,372,238           (697,194)
        Other, net                                                                   (302,952)          (167,267)
                                                                                  -----------        -----------
            Net cash provided (used) by operating activities                        1,366,424           (631,585)
                                                                                  -----------        -----------

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of securities available for sale                                         (1,193,058)          (181,736)
Proceeds from sales of securities available for sale                                  867,663          1,489,480
Proceeds from maturities of securities available for sale                             524,838            791,041
Purchases of Federal Home Loan Bank of New York stock                                      --            (20,819)
Loans receivable originated and purchased, net of principal payments                 (195,018)          (453,506)
Proceeds from sales of loans                                                           48,979              2,257
Acquisitions, net of cash and cash equivalents acquired                               (16,578)                --
Proceeds from sales of other real estate owned                                         11,284              8,732
Net purchases of premises and equipment                                               (23,166)           (26,164)
                                                                                  -----------        -----------
            Net cash provided by investing activities                                  24,944          1,609,285
                                                                                  -----------        -----------

CASH FLOWS FROM FINANCING ACTIVITIES
Net (decrease) increase in deposits                                                  (698,609)           185,212
Net decrease in borrowings with original maturities of three months or less          (558,974)          (990,439)
Proceeds from other borrowings                                                        100,645                 --
Repayments of other borrowings                                                       (245,243)          (238,164)
Proceeds from issuances of common and treasury stock                                    1,017             11,327
Purchases of treasury stock                                                           (22,626)          (113,106)
Cash dividends paid on common stock                                                   (12,224)           (10,295)
                                                                                  -----------        -----------
            Net cash used by financing activities                                  (1,436,014)        (1,155,465)
                                                                                  -----------        -----------

Net decrease in cash and cash equivalents                                             (44,646)          (177,765)
Cash and cash equivalents at beginning of period                                      357,777            452,527
                                                                                  -----------        -----------
Cash and cash equivalents at end of period                                        $   313,131        $   274,762
                                                                                  ===========        ===========

Supplemental cash flow information:
    Interest payments on deposits and borrowed funds                              $   395,940        $   474,602
    Income tax payments (refunds), net                                                  3,499             (3,500)
Supplemental non-cash investing information:
    Securitization of loans receivable                                                491,761                 --
    Loans held for sale transferred to loans receivable                                    --            296,608
    Loans receivable transferred to loans held for sale                                    --            779,719
</TABLE>


          See accompanying notes to consolidated financial statements.





                                       6
<PAGE>   7
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

NOTE 1 -- BASIS OF PRESENTATION

         In the opinion of management, the unaudited consolidated financial
statements of Dime Bancorp, Inc. (the "Holding Company") and subsidiaries
(collectively, the "Company") included herein reflect all adjustments
(consisting only of normal recurring accruals) necessary for a fair presentation
of such financial statements as of the dates, or for the periods, indicated. The
unaudited consolidated financial statements presented herein should be read in
conjunction with the consolidated financial statements and notes thereto
included in the Holding Company's Annual Report on Form 10-K for the year ended
December 31, 1998 (the "1998 10-K"). Certain amounts in the prior periods have
been reclassified to conform with the presentation for the current period. The
results for the three months and six months ended June 30, 1999 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 1999.

NOTE 2 -- EARNINGS PER COMMON SHARE

         The following table sets forth the computations of basic and diluted
earnings per common share for the periods indicated (in thousands, except per
share data):

<TABLE>
<CAPTION>
                                                                                   FOR THE                    FOR THE
                                                                            THREE MONTHS ENDED             SIX MONTHS ENDED
                                                                                  JUNE 30,                      JUNE 30,
                                                                          -------------------------     ----------------------
                                                                            1999            1998          1999             1998
                                                                          ---------       ---------     ---------        ---------
<S>                                                                       <C>             <C>           <C>              <C>
  Basic earnings per common share:
      Numerators:
          Income before extraordinary items                               $  60,817       $  58,266     $ 119,785        $ 115,515
          Extraordinary items                                                    --              --        (4,127)              --
                                                                          ---------       ---------     ---------        ---------
          Net income                                                      $  60,817       $  58,266     $ 115,658        $ 115,515
                                                                          =========       =========     =========        =========
      Denominator:
          Weighted average number of common shares outstanding              111,958         114,016       111,470          114,584
      Basic earnings per common share:
          Income before extraordinary items                               $    0.54       $    0.51     $    1.08        $    1.01
          Extraordinary items                                                    --              --         (0.04)              --
                                                                          ---------       ---------     ---------        ---------
          Net income                                                      $    0.54       $    0.51     $    1.04        $    1.01
                                                                          =========       =========     =========        =========
  Diluted earnings per common share:
      Numerators:
          Income before extraordinary items                               $  60,817       $  58,266     $ 119,785        $ 115,515
          Extraordinary items                                                    --              --        (4,127)              --
                                                                          ---------       ---------     ---------        ---------
          Net income                                                      $  60,817       $  58,266     $ 115,658        $ 115,515
                                                                          =========       =========     =========        =========
      Denominator:
          Weighted average number of common shares outstanding              111,958         114,016       111,470          114,584
          Common equivalent shares due to stock options, restricted
              stock and employee stock purchase rights                        1,281           1,790         1,371            1,893
                                                                          ---------       ---------     ---------        ---------
          Weighted average number of diluted shares outstanding             113,239         115,806       112,841          116,477
                                                                          =========       =========     =========        =========
      Diluted earnings per common share:
          Income before extraordinary items                               $    0.54       $    0.50     $    1.06        $    0.99
          Extraordinary items                                                    --              --         (0.03)              --
                                                                          ---------       ---------     ---------        ---------
          Net income                                                      $    0.54       $    0.50     $    1.03        $    0.99
                                                                          =========       =========     =========        =========
</TABLE>





                                       7
<PAGE>   8
NOTE 3 -- COMPREHENSIVE INCOME

         The following table sets forth the Company's comprehensive income for
the periods indicated (in thousands):

<TABLE>
<CAPTION>
                                                FOR THE                          FOR THE
                                            THREE MONTHS ENDED              SIX MONTHS ENDED
                                                 JUNE 30,                        JUNE 30,
                                        --------------------------       ----------------------
                                           1999             1998            1999             1998
                                        ---------        ---------       ---------        ---------
<S>                                     <C>              <C>             <C>              <C>
Net income                              $  60,817        $  58,266       $ 115,658        $ 115,515
Other comprehensive (loss) income         (31,660)             779         (45,357)           7,506
                                        ---------        ---------       ---------        ---------
Comprehensive income                    $  29,157        $  59,045       $  70,301        $ 123,021
                                        =========        =========       =========        =========
</TABLE>



NOTE 4 -- ACQUISITIONS

         After the close of business on May 21, 1999, the Company acquired
Lakeview Financial Corp ("Lakeview") in a transaction accounted for under the
purchase method (the "Lakeview Acquisition"). Lakeview was the holding company
for Lakeview Savings Bank, which, at the date of acquisition, operated 11
branches in northern New Jersey. At the date of acquisition, Lakeview had
consolidated assets of $560.6 million, including loans receivable, net, of
$282.0 million, and consolidated liabilities of $515.9 million, including
deposits of $461.9 million. Under the terms of the agreement, holders of
Lakeview's common stock received either 0.9 of a share of the Holding Company's
common stock or $24.26 in cash for each outstanding share of Lakeview common
stock. In connection therewith, the Holding Company issued 2,851,938 shares of
its common stock from treasury at an aggregate assigned cost of $69.2 million
and paid a total of $41.4 million in cash. Goodwill arising from the Lakeview
Acquisition amounted to $75.5 million as of June 30, 1999.

         On April 19, 1999, the Holding Company announced that its wholly-owned
subsidiary, The Dime Savings Bank of New York, FSB (the "Bank"), had entered
into a definitive agreement to acquire the automobile finance business conducted
by Citibank, N.A. ("Citibank"). This acquisition was consummated effective as of
August 1, 1999 and was accounted for under the purchase method (the "Citibank
Automobile Finance Business Acquisition"). In connection therewith, the Bank
acquired loans receivable of approximately $950 million, consisting largely of
consumer and business loans. As part of this transaction, the Bank also assumed
deposits of approximately $50 million.

         On May 27, 1999, the Holding Company announced that the Bank had
entered into a definitive agreement to acquire all of KeyBank N.A.'s ("KeyBank")
28 banking branches located in New York's Nassau and Suffolk Counties (the
"Pending KeyBank Branch Acquisition"). At the date of the announcement, these
branches had approximately $1.3 billion of deposits. As part of this
transaction, the Bank will also acquire business and consumer loans associated
with these branches, the total of which amounted to approximately $415 million
as of the announcement date. This acquisition, which is subject to regulatory
approval, is currently expected to close in October 1999 and will be accounted
for using the purchase method.

NOTE 5 -- RECENT ACCOUNTING DEVELOPMENTS

         Effective January 1, 1999, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 134, "Accounting for Mortgage-Backed
Securities Retained After the Securitization of Mortgage Loans Held for Sale by
a Mortgage Banking Enterprise." SFAS No. 134, which amends SFAS No. 65,
"Accounting for Certain Mortgage Banking Activities," requires that, after the
securitization of a mortgage loan held for sale, any retained mortgage-backed
security ("MBS") should be classified in accordance with the provisions of SFAS
115, "Accounting for Certain Investments in Debt and Equity Securities."
However, SFAS No. 134 requires that a mortgage banking enterprise classify as
trading any retained MBS that it commits to sell before or during the
securitization process. The adoption of SFAS No. 134 did not materially impact
the Company's financial condition or results of operations.

         In June 1998, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities,"
which establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts, and for
hedging



                                       8
<PAGE>   9
activities. SFAS No. 133 requires that an entity recognize all derivative
instruments as either assets or liabilities in statements of financial position
and measure those instruments at fair value. SFAS No. 133, as amended in July
1999 by SFAS No. 137, "Accounting for Derivative Instruments and Hedging
Activities -- Deferral of the Effective Date of FASB Statement No. 133," is
effective for fiscal years beginning after June 15, 2000. The Company intends to
adopt SFAS No. 133 on January 1, 2001. The Company has not completed its
evaluation of the effect that the adoption of SFAS No. 133 will have upon its
financial condition and results of operations.

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

FORWARD-LOOKING STATEMENTS

         Certain statements contained in this quarterly report on Form 10-Q are
forward-looking and may be identified by the use of words such as "believe,"
"expect," "anticipate," "should," "planned," "estimated," and "potential." These
forward-looking statements are based on the current expectations of the Company.
A variety of factors could cause the Company's actual results and experience to
differ materially from the anticipated results or other expectations expressed
in such forward-looking statements. The risks and uncertainties that may affect
the operations, performance, development and results of the Company's business
include interest rate movements, competition from both financial and
non-financial institutions, changes in applicable laws and regulations, the
timing and occurrence (or non-occurrence) of transactions and events that may be
subject to circumstances beyond the Company's control and general economic
conditions.

RESULTS OF OPERATIONS

    General

         Net income was $60.8 million for the quarter ended June 30, 1999, as
compared with $58.3 million for the corresponding prior year quarter, and $115.7
million for the first six months of 1999, as compared with $115.5 million for
the comparable period of 1998. Diluted earnings per common share were $0.54 for
the second quarter of 1999, up 8.0% from $0.50 for the same quarter one year
ago. For the first six months of 1999, diluted earnings per common share were
$1.03, an increase of 4.0% from $0.99 for the comparable year-ago period. Net
income and diluted earnings per common share for the six months ended June 30,
1999 were reduced by $4.1 million and $0.03, respectively, as a result of
after-tax extraordinary losses on the early extinguishment of debt. The
Company's annualized returns on average stockholders' equity for the three- and
six-month periods ended June 30, 1999 were 16.73% and 16.21%, respectively, as
compared with 17.70% and 17.66% for the respective prior year periods. The
Company's annualized return on average assets was 1.15% for the second quarter
of 1999, as compared with 1.09% for the same quarter of 1998, and 1.08% for the
first six months of 1999, as compared with 1.07% for the corresponding period of
1998.

         Net income for the second quarter and first six months of 1999, as
compared with the same prior year periods, were favorably affected by growth in
the net interest margin of 18 basis points and 20 basis points, respectively,
which more than offset the impact of lower levels of average interest-earning
assets, and increases in non-interest income of $24.5 million and $67.2 million,
respectively. The impact of these factors was partially offset by increases in
non-interest expense of $23.2 million for the second quarter of 1999 and $56.1
million for the first six months of 1999, as compared with the corresponding
periods of 1998. The improvement in the net interest margin was driven by a
sharp reduction in the Company's cost of funds, coupled with favorable changes
in both the Company's interest-earning asset mix and the interest rate yield
curve. The higher levels of non-interest income and non-interest expense were
largely associated with the Company's mortgage banking operations. Other factors
affecting the comparison of the 1999 periods to the 1998 periods included an
increase in the Company's effective income tax rate from 32% for each of the
1998 periods, which reflected the benefits of certain tax planning strategies
during 1998, to 37% in each of the 1999 periods, pre-tax net gains of $4.7
million recognized in the 1998 first quarter in connection with certain balance
sheet restructuring and risk management initiatives, and the after-tax
extraordinary losses associated with debt extinguishments recognized during the
first quarter of 1999.





                                       9
<PAGE>   10
Net Interest Income

         Net interest income amounted to $139.9 million for the quarter ended
June 30, 1999 and $275.4 million for the first six months of 1999, up $9.1
million, or 6.9%, and $8.6 million, or 3.2%, as compared with the corresponding
periods of 1998. These increases reflected growth in the net interest margin to
2.94% for the second quarter of 1999 from 2.66% for the second quarter of 1998
and to 2.84% for the first six months of 1999 from 2.64% for the comparable
period of 1998. The growth in the net interest margins for the 1999 periods was
driven by reductions in the cost of average interest-bearing liabilities,
favorable changes in the mix of average interest-earning assets and a relatively
steeper interest rate yield curve. The beneficial impact of the higher net
interest margins on net interest income was partially offset by reductions in
average interest-earning assets of $656.1 million and $744.0 million for the
three- and six-month periods ended June 30, 1999, respectively, as compared with
the same periods one year ago. The interest rate spread for the second quarter
of 1999 was 2.98%, up 33 basis points from the same quarter of 1998, and 2.89%
for the first six months of 1999, an increase of 25 basis points from the
comparable period of 1998.

         For the second quarter and first six months of 1999, the cost of
average interest-bearing liabilities was 4.03% and 4.09%, respectively, down
from 4.57% and 4.63% during the comparable prior year periods, reflective of
changes in the interest rate environment and the effects of the Company's
strategy to increase the percentage of core deposits (consisting of demand,
savings and money market deposits) to total deposits. Average core deposits for
the second quarter of 1999 were $6.9 billion, or 52.3% of average total
deposits, up from $6.3 billion, or 44.8% of average total deposits, for the
second quarter of 1998. For the first six months of 1999, average core deposits
were $6.9 billion, or 51.7% of average total deposits, an increase from $6.1
billion, or 44.1% of average total deposits, for the first six months of 1998.

         While the Company's yield on average interest-earning assets declined,
largely due to the impact of the interest rate environment, to 7.01% for the
second quarter of 1999 from 7.22% for the comparable prior year quarter and to
6.98% for the first six months of 1999 from 7.27% for the corresponding year-ago
period, the yields in the 1999 periods benefited from the effects of the
Company's strategy to increase the aggregate percentage of its commercial real
estate, consumer and business loans to total loans receivable. The aggregate
average balance of commercial real estate, consumer and business loans, which
rose $1.0 billion, or 30.6%, for the second quarter of 1999 and $893.9 million,
or 27.7%, for the first six months of 1999, as compared with the same periods
one year ago, represented 34.3% of total average loans receivable for the second
quarter of 1999, up from 24.5% for the second quarter of 1998, and 32.4% of
total average loans receivable for the first six months of 1999, an increase
from 24.3% for the first six months of 1998.




                                       10
<PAGE>   11
         The following tables set forth, for the periods indicated, the
Company's consolidated average statement of financial condition, net interest
income, interest rate spread and net interest margin. Average balances are
computed on a daily basis. Non-accrual loans are included in average balances in
the tables below.


<TABLE>
<CAPTION>
                                                                  FOR THE THREE MONTHS ENDED JUNE 30,
                                                         ---------------------------------------------------
                                                                                 1999
                                                         ----------------------------------------------------
                                                                                                      AVERAGE
                                                               AVERAGE                                 YIELD/
                                                               BALANCE          INTEREST                COST
                                                               -------          --------                ----
                                                                         (DOLLARS IN THOUSANDS)
<S>                                                         <C>               <C>                     <C>
  ASSETS
  Interest-earning assets:
      Loans:
          Loans held for sale                               $ 2,671,910       $    45,720                 6.86%
          Loans receivable:
              Residential real estate                         8,265,105           141,534                 6.85
              Commercial real estate                          2,840,697            53,921                 7.59
              Consumer                                        1,146,648            22,042                 7.70
              Business                                          327,249             6,290                 7.71
                                                            -----------       -----------
                  Total loans receivable                     12,579,699           223,787                 7.12
                                                            -----------       -----------
                  Total loans                                15,251,609           269,507                 7.07
                                                            -----------       -----------
      Securities:
          MBS                                                 3,156,376            52,545                 6.66
          Other                                                 699,844            12,696                 7.26
                                                            -----------       -----------
                  Total securities                            3,856,220            65,241                 6.77
                                                            -----------       -----------
      Money market investments                                   19,588               270                 5.52
                                                            -----------       -----------
                  Total interest-earning assets              19,127,417           335,018                 7.01
                                                            -----------       -----------
  Other assets                                                2,074,282
                                                            -----------
  Total assets                                              $21,201,699
                                                            ===========
  LIABILITIES AND STOCKHOLDERS' EQUITY
  Interest-bearing liabilities:
      Deposits:
          Core:
              Demand                                        $ 1,812,520             2,028                 0.45
              Savings                                         2,286,908            11,992                 2.10
              Money market                                    2,837,947            25,967                 3.67
                                                            -----------       -----------
                  Total core                                  6,937,375            39,987                 2.31
                                                            -----------       -----------
          Time                                                6,332,616            76,524                 4.85
                                                            -----------       -----------
                  Total deposits                             13,269,991           116,511                 3.52
                                                            -----------       -----------
      Borrowed funds:
          Federal funds purchased and securities sold
              under agreements to repurchase                  3,168,608            38,619                 4.82
          Other short-term borrowings                         1,839,495            23,020                 4.95
          Other                                               1,061,706            16,978                 6.36
                                                            -----------       -----------
                  Total borrowed funds                        6,069,809            78,617                 5.13
                                                            -----------       -----------
                  Total interest-bearing liabilities         19,339,800           195,128                 4.03
                                                            -----------       -----------
  Other liabilities                                             408,129
  Stockholders' equity                                        1,453,770
                                                            -----------
  Total liabilities and stockholders' equity                $21,201,699
                                                            ===========
  Net interest income                                                        $   139,890
                                                                             ===========
  Interest rate spread                                                                                    2.98
  Net interest margin                                                                                     2.94



                                                                   FOR THE THREE MONTHS ENDED JUNE 30,
                                                         -------------------------------------------------
                                                                              1998
                                                           -----------------------------------------------
                                                                                                       AVERAGE
                                                           AVERAGE                                      YIELD/
                                                           BALANCE         INTEREST                      COST
                                                           -------         --------                    -------
                                                                     (DOLLARS IN THOUSANDS)
<S>                                                       <C>              <C>                         <C>
  ASSETS
  Interest-earning assets:
      Loans:
          Loans held for sale                             $ 2,677,658       $    49,923                 7.46%
          Loans receivable:
              Residential real estate                      10,209,775           175,542                 6.88
              Commercial real estate                        2,335,467            49,406                 8.46
              Consumer                                        830,590            17,181                 8.30
              Business                                        138,723             2,938                 8.49
                                                          -----------       -----------
                  Total loans receivable                   13,514,555           245,067                 7.26
                                                          -----------       -----------
                  Total loans                              16,192,213           294,990                 7.29
                                                          -----------       -----------
      Securities:
          MBS                                               2,963,013            50,878                 6.87
          Other                                               517,107             9,677                 7.50
                                                          -----------       -----------
                  Total securities                          3,480,120            60,555                 6.96
                                                          -----------       -----------
      Money market investments                                111,146             1,566                 5.59
                                                          -----------       -----------
                  Total interest-earning assets            19,783,479           357,111                 7.22
                                                          -----------       -----------
  Other assets                                              1,614,262
                                                          -----------
  Total assets                                            $21,397,741
                                                          ===========
  LIABILITIES AND STOCKHOLDERS' EQUITY
  Interest-bearing liabilities:
      Deposits:
          Core:
              Demand                                      $ 1,889,293             2,445                 0.52
              Savings                                       2,352,718            12,221                 2.08
              Money market                                  2,034,744            19,746                 3.89
                                                          -----------       -----------
                  Total core                                6,276,755            34,412                 2.20
                                                          -----------       -----------
          Time                                              7,734,774           104,625                 5.43
                                                          -----------       -----------
                  Total deposits                           14,011,529           139,037                 3.98
                                                          -----------       -----------
      Borrowed funds:
          Federal funds purchased and securities sold
              under agreements to repurchase                1,307,810            18,491                 5.59
          Other short-term borrowings                       3,386,305            49,010                 5.73
          Other                                             1,075,112            19,736                 7.31
                                                          -----------       -----------
                  Total borrowed funds                      5,769,227            87,237                 5.99
                                                          -----------       -----------
                  Total interest-bearing liabilities       19,780,756           226,274                 4.57
                                                          -----------       -----------
  Other liabilities                                           300,197
  Stockholders' equity                                      1,316,788
                                                          -----------
  Total liabilities and stockholders' equity              $21,397,741
                                                          ===========
  Net interest income                                                       $   130,837
                                                                            ===========
  Interest rate spread                                                                                  2.65
  Net interest margin                                                                                   2.66
</TABLE>




                                       11
<PAGE>   12
<TABLE>
<CAPTION>
                                                                FOR THE SIX MONTHS ENDED JUNE 30,
                                                         -------------------------------------------------
                                                                                 1999
                                                         -------------------------------------------------
                                                                                                   AVERAGE
                                                            AVERAGE                                YIELD/
                                                            BALANCE             INTEREST            COST
                                                            -------             --------            ----
                                                                        (DOLLARS IN THOUSANDS)
<S>                                                       <C>               <C>                    <C>
ASSETS
Interest-earning assets:
    Loans:
        Loans held for sale                               $ 2,899,180       $    97,912                 6.79%
        Loans receivable:
            Residential real estate                         8,572,317           292,158                 6.82
            Commercial real estate                          2,732,584           103,675                 7.59
            Consumer                                        1,075,837            41,696                 7.79
            Business                                          309,406            12,054                 7.84
                                                           ----------        ----------
                Total loans receivable                     12,690,144           449,583                 7.09
                                                           ----------        ----------
                Total loans                                15,589,324           547,495                 7.04
                                                           ----------        ----------
    Securities:
        MBS                                                 3,047,500           101,443                 6.66
        Other                                                 694,676            24,917                 7.20
                                                           ----------        ----------
                Total securities                            3,742,176           126,360                 6.76
                                                           ----------        ----------
    Money market investments                                   29,064               776                 5.37
                                                           ----------        ----------
                Total interest-earning assets              19,360,564           674,631                 6.98
                                                           ----------        ----------
Other assets                                                2,048,850
                                                           ----------

Total assets                                              $21,409,414
                                                          ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing liabilities:
    Deposits:
        Core:
            Demand                                        $ 1,822,107             3,675                 0.41
            Savings                                         2,283,188            24,178                 2.14
            Money market                                    2,774,779            51,149                 3.72
                                                          -----------       -----------
                Total core                                  6,880,074            79,002                 2.32
                                                         ------------       -----------
        Time                                                6,440,109           157,351                 4.93
                                                         ------------       -----------
                Total deposits                             13,320,183           236,353                 3.58
                                                         ------------       -----------
    Borrowed funds:
        Federal funds purchased and securities sold
            under agreements to repurchase                  3,117,916            75,955                 4.85
        Other short-term borrowings                         2,192,684            55,720                 5.06
        Other                                                 944,748            31,215                 6.59
                                                         ------------       -----------
                Total borrowed funds                        6,255,348           162,890                 5.18
                                                         ------------       -----------
                Total interest-bearing liabilities         19,575,531           399,243                 4.09
                                                         ------------       -----------
Other liabilities                                             406,570
Stockholders' equity                                        1,427,313
                                                         ------------
Total liabilities and stockholders' equity                $21,409,414
                                                         ============

Net interest income                                                         $   275,388
                                                                            ===========
Interest rate spread                                                                                    2.89
Net interest margin                                                                                     2.84


                                                                   FOR THE SIX MONTHS ENDED JUNE 30,
                                                             -------------------------------------------
                                                                               1998
                                                             -------------------------------------------
                                                                                                  AVERAGE
                                                             AVERAGE                               YIELD/
                                                             BALANCE          INTEREST              COST
                                                             -------          --------              ----
                                                                        (DOLLARS IN THOUSANDS)
<S>                                                         <C>               <C>                 <C>
ASSETS
Interest-earning assets:
    Loans:
        Loans held for sale                                 $ 2,595,886       $    97,985           7.55%
        Loans receivable:
            Residential real estate                          10,054,302           348,267           6.93
            Commercial real estate                            2,293,239            98,879           8.62
            Consumer                                            806,443            33,503           8.38
            Business                                            124,269             5,375           8.72
                                                            -----------       -----------
                Total loans receivable                       13,278,253           486,024           7.33
                                                            -----------       -----------
                Total loans                                  15,874,139           584,009           7.36
                                                            -----------       -----------
    Securities:
        MBS                                                   3,598,115           123,938           6.89
        Other                                                   474,155            17,548           7.44
                                                            -----------       -----------
                Total securities                              4,072,270           141,486           6.95
                                                            -----------       -----------
    Money market investments                                    158,185             4,415           5.56
                                                            -----------       -----------
                Total interest-earning assets                20,104,594           729,910           7.27
                                                            -----------       -----------
Other assets                                                  1,574,883
                                                            -----------
Total assets                                                $21,679,477
                                                            ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing liabilities:
    Deposits:
        Core:
            Demand                                          $ 1,768,403             4,916           0.56
            Savings                                           2,364,458            25,362           2.16
            Money market                                      2,009,818            37,473           3.76
                                                            -----------       -----------
                Total core                                    6,142,679            67,751           2.22
                                                            -----------       -----------
        Time                                                  7,779,764           210,314           5.45
                                                            -----------       -----------
                Total deposits                               13,922,443           278,065           4.03
                                                            -----------       -----------
    Borrowed funds:
        Federal funds purchased and securities sold
            under agreements to repurchase                    1,807,364            51,194           5.63
        Other short-term borrowings                           3,206,531            92,558           5.74
        Other                                                 1,132,700            41,345           7.28
                                                            -----------       -----------
                Total borrowed funds                          6,146,595           185,097           5.99
                                                            -----------       -----------
                Total interest-bearing liabilities           20,069,038           463,162           4.63
                                                            -----------       -----------
Other liabilities                                               302,377
Stockholders' equity                                          1,308,062
                                                            -----------
Total liabilities and stockholders' equity                  $21,679,477
                                                            ===========
Net interest income                                                           $   266,748
                                                                              ===========
Interest rate spread                                                                                2.64
Net interest margin                                                                                 2.64
</TABLE>





                                       12

<PAGE>   13


         The following table sets forth, for the periods indicated, the changes
in interest income and interest expense for each major component of
interest-earning assets and interest-bearing liabilities and the amounts
attributable to changes in average balances (volume) and average interest rates
(rate). The changes in interest income and interest expense attributable to
changes in both volume and rate have been allocated proportionately to the
changes due to volume and the changes due to rate.

<TABLE>
<CAPTION>
                                    FOR THE THREE MONTHS ENDED           FOR THE SIX MONTHS ENDED
                                     JUNE 30, 1999 VERSUS 1998           JUNE 30, 1999 VERSUS 1998
                                 --------------------------------    --------------------------------
                                         INCREASE (DECREASE)                 INCREASE (DECREASE)
                                 --------------------------------    --------------------------------
                                  DUE TO      DUE TO                  DUE TO      DUE TO
                                  VOLUME       RATE        TOTAL      VOLUME       RATE        TOTAL
                                 --------    --------    --------    --------    --------    --------
                                                           (IN THOUSANDS)
<S>                              <C>         <C>         <C>         <C>         <C>         <C>
Interest income:
    Total loans                  $(16,797)   $ (8,686)   $(25,483)   $(10,344)   $(26,170)   $(36,514)
    Total securities                6,400      (1,714)      4,686     (11,229)     (3,897)    (15,126)
    Money market investments       (1,263)        (33)     (1,296)     (3,455)       (184)     (3,639)
                                 --------    --------    --------    --------    --------    --------
        Total interest income     (11,660)    (10,433)    (22,093)    (25,028)    (30,251)    (55,279)
                                 --------    --------    --------    --------    --------    --------

Interest expense:
    Total deposits                 (7,091)    (15,435)    (22,526)    (11,654)    (30,058)    (41,712)
    Total borrowed funds            4,371     (12,991)     (8,620)      3,224     (25,431)    (22,207)
                                 --------    --------    --------    --------    --------    --------
        Total interest expense     (2,720)    (28,426)    (31,146)     (8,430)    (55,489)    (63,919)
                                 --------    --------    --------    --------    --------    --------
Net interest income              $ (8,940)   $ 17,993    $  9,053    $(16,598)   $ 25,238    $  8,640
                                 ========    ========    ========    ========    ========    ========
</TABLE>

    Provision for Loan Losses

         The provision for loan losses, which is predicated upon the Company's
assessment of the adequacy of its allowance for loan losses (see "Management of
Credit Risk -- Allowance for Loan Losses"), amounted to $7.5 million for the
second quarter of 1999 and $15.5 million for the first six months of 1999. In
comparison, the provision for loan losses was $8.0 million and $16.0 million for
the three months and six months ended June 30, 1998, respectively. Net loan
charge-offs were $3.5 million for the quarter ended June 30, 1999, as compared
with $7.2 million for the second quarter of 1998, and $4.2 million for the first
six months of 1999, as compared with $10.8 million for the first six months of
1998. Contributing to the reductions in net charge-offs was the effect of a bulk
sale in December 1998 of approximately $53 million of non-performing loans,
substantially all of which were residential real estate loans (the "1998 NPA
Sale").

    Non-Interest Income

         General. Non-interest income was $152.5 million for the quarter ended
June 30, 1999, up $24.5 million, or 19.2%, from the second quarter of 1998. This
increase was driven by higher fee income, the effect of which was partially
offset by a reduction in net gains on sales activities. For the first six months
of 1999, non-interest income amounted to $301.7 million, an increase of $67.2
million, or 28.7%, as compared with the same period one year ago, which included
net gains of $4.7 million recognized during the first quarter of 1998 in
connection with certain balance sheet restructuring and risk management
initiatives. This increase was principally due to growth in fee income and, to a
lesser extent, a higher level of net gains on sales activities. The changes in
fee income and net gains on sales activities in the 1999 periods, as compared
with the 1998 periods, were largely associated with the Company's mortgage
banking operations. Fees from loan servicing and production activities, banking
service activities and securities and insurance brokerage activities increased,
in the aggregate, by $30.6 million, or 49.5%, for the second quarter of 1999 and
$53.4 million, or 44.3%, for the first six months of 1999, as compared with the
corresponding prior year periods. Non-interest income represented 52.2% of total
revenues (net interest income plus non-interest income) for the second quarter
of 1999, as compared with 49.5% for the second quarter of 1998, and 52.3% for
the first six months of 1999, as compared with 46.8% for the first six months of
1998.

         Loan Servicing and Production Fees. Loan servicing and production fees
amounted to $69.7 million for the second quarter of 1999 and $131.6 million for
the six months ended June 30, 1999, representing increases of $27.1 million, or
63.5%, and $46.6 million, or 54.7%, as compared with the respective periods of
1998. These increases were largely attributable to higher levels of loan
servicing fees, primarily reflecting growth in the average balance of the
mortgage servicing portfolio as well as changes in its characteristics.


                                       13
<PAGE>   14
         The Company's portfolio of mortgages serviced for others (excluding
mortgages being subserviced by the Company) amounted to $32.5 billion at June
30, 1999, up $5.5 billion, or 20.4%, since the end of 1998 and $7.5 billion, or
29.8%, from one year earlier, as additions outpaced the effects of sales and
runoff. The weighted average interest rate of the loans underlying this
portfolio was 7.17% at the end of the 1999 second quarter, as compared with
7.37% and 7.62% at December 31, 1998 and June 30, 1998, respectively.

         The following table sets forth activity in the Company's portfolio of
mortgages serviced for others for the periods indicated (in thousands):

<TABLE>
<CAPTION>
                                  FOR THE THREE MONTHS ENDED       FOR THE SIX MONTHS ENDED
                                           JUNE 30,                         JUNE 30,
                                 ----------------------------    ----------------------------
                                     1999            1998            1999            1998
                                 ------------    ------------    ------------    ------------
<S>                              <C>             <C>             <C>             <C>
Balance at beginning of period   $ 32,450,686    $ 19,710,393    $ 27,009,693    $ 21,986,111
Additions                           5,860,187       6,615,801      12,956,370      10,578,925
Sales                              (5,003,898)             --      (5,412,401)     (4,842,817)
Runoff (1)                           (785,136)     (1,279,317)     (2,031,823)     (2,675,342)
                                 ------------    ------------    ------------    ------------
Balance at end of period         $ 32,521,839    $ 25,046,877    $ 32,521,839    $ 25,046,877
                                 ============    ============    ============    ============
</TABLE>
----------

(1) Includes scheduled amortization, full and partial prepayments, and other
reductions.

         During the first six months of 1999, the Company sold $4.7 billion of
mortgage servicing rights in a bulk sale as part of its overall risk management
program and a limited amount on a flow basis. The sales of all of the $4.8
billion of mortgage servicing rights during the first six months of 1998 were
consummated in connection with the Company's risk management program. (In total,
the Company sold $13.3 billion of mortgage servicing rights during 1998 in
connection with this program.)

         In connection with sales of mortgage servicing rights, the Company was
subservicing $5.4 billion of loans at June 30, 1999, as compared with $7.9
billion and $6.9 billion at December 31, 1998 and June 30, 1998, respectively.
The Company receives fees for subservicing loans until the transfer of the
servicing responsibility to the purchasers of the loan servicing rights.

         Banking Service Fees. Banking service fees amounted to $12.6 million
for the second quarter of 1999, up 23.8% from $10.2 million for the second
quarter of 1998. Banking service fees for the first six months of 1999 were
$23.9 million, an increase of 24.4% from $19.2 million for the corresponding
period in 1998. The growth in banking service fees was attributable to higher
transaction volumes, changes in the Company's fee structure and the introduction
of certain fee-based services.

         Securities and Insurance Brokerage Fees. Securities and insurance
brokerage fees totaled $10.1 million for the quarter ended June 30, 1999 and
$18.7 million for the first six months of 1999, up $1.1 million, or 12.2%, and
$2.2 million, or 13.3%, as compared with the corresponding periods of 1998.
These increases reflect growth in fees from sales of annuity products as a
result of higher sales levels, coupled with increased fee income from insurance
activities as a result of, among other factors, synergies arising from the
Company's mortgage banking operations as well as the Company's heightened focus
in this area.

         Net Gains on Sales Activities. Net gains on sales activities amounted
to $57.7 million for the three months ended June 30, 1999, down from $63.7
million for the year-ago quarter, and $122.0 million for the six months ended
June 30, 1999, up from $109.0 million for the comparable period of 1998, which
included net gains of $4.7 million recognized during the first quarter of 1998
in connection with certain balance sheet restructuring and risk management
initiatives. The net gains on sales activities for the 1999 and 1998 periods
were largely associated with loan sales in connection with the Company's
mortgage banking activities.

         Net gains on sales of loans held for sale into the secondary market
were $55.1 million for the second quarter of 1999, as compared with $65.4
million for the second quarter of 1998. For the first six months of 1999, such
net gains were $119.1 million, as compared with $91.6 million for the first six
months of 1998. The net gains during the first six months of 1998 were reduced
by losses of approximately $11 million recognized during the first


                                       14
<PAGE>   15
quarter of 1998 associated with the transfer of certain relatively
lower-yielding loans from loans receivable to loans held for sale in connection
with the Company's balance sheet restructuring activities. In total, the Company
sold $6.6 billion of loans held for sale into the secondary market during the
second quarter of 1999, as compared with $7.3 billion during the year-ago
quarter, and $13.9 billion during the first six months of 1999, as compared with
$11.6 billion during the same period in 1998.

         Net gains on sales activities for the first six months of 1998 also
included securities-related net gains of $16.9 million (of which $14.1 million
were recognized during the first quarter of 1998), which resulted primarily from
sales of substantially all of the $1.4 billion of MBS that, in December 1997,
had been designated for sale in connection with a balance sheet restructuring
initiative. Results from securities transactions were not material during the
second quarter or first six months of 1999. In addition, net gains on sales
activities for the six months ended June 30, 1998 included net gains on sales of
mortgage servicing rights in the amount of $5.8 million (of which $5.4 million
were recognized during the first quarter of 1998). Net gains from sales of
mortgage servicing rights were not material during the three- or six-month
periods ended June 30, 1999.

         Other. Other non-interest income was $2.5 million for the quarter ended
June 30, 1999, virtually unchanged from the same quarter one year ago. For the
first six months of 1999, other non-interest income amounted to $5.6 million, up
from $4.8 million for the comparable period of 1998. This increase was
substantially associated with higher revenues earned from the Company's
Bank-Owned Life Insurance Program.

    Non-Interest Expense

         General. Non-interest expense amounted to $188.4 million for the
quarter ended June 30, 1999, up $23.2 million, or 14.1%, from the comparable
quarter of 1998. Non-interest expense for the first six months of 1999 amounted
to $371.5 million, an increase of $56.1 million, or 17.8%, from the same period
of 1998. These increases were substantially attributable to a higher level of
amortization of mortgage servicing assets coincident with growth in the mortgage
servicing assets portfolio and an increase in general and administrative ("G&A")
expense, primarily associated with the Company's mortgage banking activities.

         G&A Expense. G&A expense amounted to $149.7 million for the second
quarter of 1999, as compared with $145.4 million during the same quarter one
year ago, and $299.3 million for the first six months of 1999, as compared with
$275.9 million for the corresponding period of 1998. Compensation and employee
benefits expense totaled $75.2 million for the second quarter of 1999 and $151.7
million for the first six months of 1999, up $5.5 million, or 8.0%, and $17.2
million, or 12.8%, as compared with the same periods of 1998. These increases
were principally as a result of growth in the Company's full-time equivalent
employee complement, which rose to 7,373 at June 30, 1999 from 6,718 one year
earlier, primarily associated with the Company's mortgage banking activities,
particularly in the area of loan originations. Occupancy and equipment expense
increased to $25.9 million and $50.7 million for the three months and six months
ended June 30, 1999 from $22.5 million and $44.3 million for the comparable
periods of 1998. Other G&A expense amounted to $48.6 million for the second
quarter of 1999 and $96.9 million for the first six months of 1999, down $4.7
million and $0.2 million as compared with the corresponding periods one year
ago. Other G&A expense levels for the 1999 periods, as compared with the 1998
periods, benefited from, among other factors, reductions in expenses associated
with the Company's plan to prepare its computer systems, software applications,
hardware and facility systems to properly process dates beyond December 31, 1999
(the "Year 2000 Plan"), which is further described under the heading "Year 2000
Issue" below.

         Amortization of Mortgage Servicing Assets. Amortization of mortgage
servicing assets amounted to $35.2 million for the second quarter of 1999, up
$18.3 million, or 108.3%, from the comparable prior year quarter. For the first
six months of 1999, amortization of mortgage servicing assets amounted to $65.9
million, an increase of $32.0 million, or 94.7%, as compared with the same
period one year ago. These increases were substantially reflective of growth in
mortgage servicing assets.

         At June 30, 1999, the Company's mortgage servicing assets (including
related derivative financial instruments hedging such assets) had a carrying
value of $882.8 million and an estimated fair value of approximately $912
million. These amounts included $79.9 million and $40.8 million, respectively,
associated


                                       15
<PAGE>   16
with derivative financial instruments. At December 31, 1998 and June 30, 1998,
the carrying value of mortgage servicing assets amounted to $692.5 million and
$527.8 million, respectively.

         In a declining long-term interest rate environment, actual or expected
prepayments of the loans underlying the Company's mortgage servicing assets
portfolio may increase, which would have an adverse impact on the value of such
assets. In connection therewith, the Company uses certain derivative financial
instruments to hedge its mortgage servicing assets (see "Asset/Liability
Management -- Derivative Financial Instruments").

         Amortization of Goodwill. Amortization of goodwill for the three- and
six-month periods ended June 30, 1999 amounted to $3.5 million and $6.4 million,
respectively. This compares with $2.8 million and $5.7 million for the three-
and six-month periods ended June 30, 1998, respectively. The higher expense
levels were substantially associated with the Lakeview Acquisition.

    Income Tax Expense

         Income tax expense increased to $35.7 million and $70.3 million for the
three and six months ended June 30, 1999, respectively, from $27.4 million and
$54.4 million for the respective prior year periods. The increased levels of
income tax expense reflect higher effective income tax rates and growth in
pre-tax income. The Company's effective income tax rate was 37.0% for both the
second quarter and first six months of 1999, up from 32.0% for each of the
comparable prior year periods. The effective income tax rates in the 1998
periods were favorably affected by a restructuring of assets within the legal
entities that comprise the Company's affiliated group.

    Extraordinary Items

         During the first six months of 1999, the Company recognized after-tax
extraordinary losses of $4.1 million on the early extinguishment of $110.0
million of long-term debt (see "Financial Condition -- Borrowed Funds"). All
such losses were incurred during the first quarter of 1999.

OPERATING EARNINGS AND BUSINESS SEGMENTS

         For internal management purposes, the Company also views its
performance on an operating earnings basis, which represents net income adjusted
for the effects of certain non-recurring or unusual items. Net income on an
operating earnings basis amounted to $60.8 million for the second quarter of
1999 (which was the same as reported net income) and $119.8 million for the
first six months of 1999, up $6.8 million, or 12.7%, and $15.7 million, or
15.1%, as compared with the corresponding periods one year ago. Diluted
operating earnings per share increased to $0.54 for the second quarter of 1999
from $0.47 for the second quarter of 1998 and to $1.06 for the first six months
of 1999 from $0.89 for the first six months of 1998. On an operating earnings
basis, the annualized returns on average stockholders' equity and average assets
increased to 16.73% and 1.15%, respectively, for the second quarter of 1999 from
16.40% and 1.01%, respectively, for the comparable year-ago quarter and to
16.78% and 1.12%, respectively, for the first six months of 1999 from 15.91% and
0.96%, respectively, for the corresponding period of 1998.


                                       16
<PAGE>   17
           Reconcilements of operating earnings to reported net income are
provided in the following table for the periods indicated (in thousands):

<TABLE>
<CAPTION>
                                                            FOR THE               FOR THE
                                                         THREE MONTHS            SIX MONTHS
                                                         ENDED JUNE 30,        ENDED JUNE 30,
                                                       -----------------   ----------------------
                                                         1999      1998      1999        1998
                                                       -------   -------   --------    --------
<S>                                                    <C>       <C>       <C>         <C>
Operating earnings                                     $60,817   $53,982   $119,785    $104,044
Items not included in operating earnings:
    Net gains related to balance sheet restructuring
      and risk management initiatives                       --        --         --       4,725
    Income tax effect on above items                        --        --         --      (1,748)
    Adjustments to conform internal tax expense to
      corporate tax expense                                 --     4,284         --       8,494
    Extraordinary losses on early extinguishment of
      debt, net of tax benefits                             --        --     (4,127)         --
                                                       -------   -------   --------    --------
            Net adjustments after tax                       --     4,284     (4,127)     11,471
                                                       -------   -------   --------    --------
Reported net income                                    $60,817   $58,266   $115,658    $115,515
                                                       =======   =======   ========    ========
</TABLE>

         For purposes of its disclosures in accordance with SFAS No. 131,
"Disclosures about Segments of an Enterprise and Related Information," the
Company has four reportable segments: Retail Banking; Commercial Banking;
Mortgage Banking; and Investment Portfolio. The Company measures the performance
of each business segment on an operating earnings basis utilizing an internal
profitability reporting system.

         The performance of the Company's segments will vary from period to
period for a variety of factors. The primary factors are the amount of revenue
earned and direct expenses incurred by each segment. However, other factors may
also play an important role in segment performance. Among the most significant
of these other factors are interest rate movements and general economic
conditions, which influence the Company's transfer pricing, and the level of
internal support expenses, which are fully allocated in the Company's internal
profitability reporting process.


                                       17
<PAGE>   18
         The following table sets forth certain information regarding the
Company's business segments for the periods indicated (dollars in thousands):

<TABLE>
<CAPTION>
                                                                                        TOTAL                           TOTAL
                               RETAIL      COMMERCIAL     MORTGAGE     INVESTMENT     REPORTABLE    INTERSEGMENT      OPERATING
                               BANKING       BANKING       BANKING     PORTFOLIO       SEGMENTS     ELIMINATIONS      EARNINGS
                            -----------    ----------    ----------    ----------    -----------    ------------      ---------
<S>                         <C>            <C>           <C>           <C>           <C>            <C>               <C>
For the three months
  ended June 30, 1999:
    Segment revenues        $   105,097    $   27,738    $  149,916    $    9,463    $   292,214      $ (7,321)        $284,893
    Segment profit               30,940        12,666        15,540         5,034         64,180        (3,363)          60,817
    Percentage of segment
      profit to total
      profit of
      reportable segments          48.2%         19.7%         24.2%          7.9%         100.0%

For the three months
  ended June 30, 1998:
    Segment revenues        $   103,899    $   20,589    $  134,279    $    4,620    $   263,387      $(12,560)        $250,827
    Segment profit               28,682         8,893        23,659         1,732         62,966        (8,984)          53,982
    Percentage of segment
      profit to total
      profit of
      reportable segments          45.5%         14.1%         37.6%         2.8%          100.0%

For the six months ended
  June 30, 1999:
    Segment revenues        $   207,857    $   51,503    $  302,425    $   18,022    $   579,807      $(18,186)        $561,621
    Segment profit               61,964        23,165        35,185         9,459        129,773        (9,988)         119,785
    Percentage of segment
      profit to total
      profit of
      reportable segments          47.7%         17.9%         27.1%          7.3%         100.0%

For the six months ended
  June 30, 1998:
    Segment revenues        $   205,517    $   42,450    $  241,643    $   18,499    $   508,109      $(27,562)        $480,547
    Segment profit               59,964        19,126        35,389         9,528        124,007       (19,963)         104,044
    Percentage of segment
      profit to total
      profit of
      reportable segments          48.4%         15.4%         28.5%          7.7%         100.0%

Segment assets at:
    June 30, 1999           $ 9,312,806    $3,347,235    $4,125,440    $4,169,493    $20,954,974
    June 30, 1998            10,453,164     2,564,273     4,118,204     3,327,417     20,463,058
</TABLE>

         For purposes of the above presentation, segment revenues reflect net
interest income, less provision for loan losses, plus non-interest income.

         The Retail Banking segment, which focuses on individuals, includes
deposit accounts and related services, securities brokerage services, insurance
products, consumer lending activities and maintenance of a portfolio of
residential real estate loans receivable. Retail Banking's profit for the second
quarter and first six months of 1999 was $30.9 million and $62.0 million,
respectively, up $2.3 million and $2.0 million from the corresponding periods in
1998. The impact of growth in consumer loans receivable and core deposits and
higher fee income from both banking services and insurance activities more than
offset lower levels of residential real estate loans receivable and retail time
deposits.

         The Commercial Banking segment, which includes commercial real estate
lending and business banking activities, provides both lending and deposit
products and services to business customers. This segment's profit was $12.7
million in the second quarter of 1999, $3.8 million greater than that in the
comparable prior year quarter, and $23.2 million for the first six months of
1999, up $4.0 million from the corresponding period of 1998. These increases
were generally reflective of growth in both loans and deposits.

         The Mortgage Banking segment's activities, which are conducted
principally through the Bank's wholly-owned subsidiary, North American Mortgage
Company, include the production of residential real estate loans either for the
Company's portfolio or for sale into the secondary market and servicing loans
for the Company and others. Mortgage Banking generated profits of $15.5 million
in the 1999 second quarter, a decline from $23.7 million in the 1998 second
quarter, and $35.2 million in the first six months of 1999, down slightly from
$35.4 million in the comparable prior year period. These declines principally
reflect increases in amortization of


                                       18
<PAGE>   19
mortgage servicing assets and G&A expense, the effects of which were partially
offset by higher loan servicing and production fee income.

         The Investment Portfolio segment invests in certain debt and equity
securities and money market investments in conjunction with the Company's
overall liquidity and interest rate risk and credit risk management processes.
This segment's profit was $5.0 million for the second quarter of 1999, $3.3
million greater than the related period of 1998, due primarily to a higher
level of MBS. For the first six months of 1999, the Investment Portfolio
segment had profits of $9.5 million, virtually unchanged from the corresponding
period in 1998.

         For further information regarding the Company's business segments, see
the 1998 Form 10-K.

         The Company believes that operating earnings basis information, and the
cash operating earnings basis information discussed below, when taken in
conjunction with reported results, provide useful information in evaluating
performance on a comparable basis, although neither operating earnings nor cash
operating earnings is currently a required basis for reporting financial results
under generally accepted accounting principles.

CASH OPERATING EARNINGS

         Net income on a cash operating earnings basis (which represents
operating earnings excluding amortization of goodwill, net of taxes) was $64.2
million, or $0.57 per diluted share, for the second quarter of 1999, up from
$56.7 million, or $0.49 per diluted share, for the corresponding quarter of
1999. For the first six months of 1999, net income on a cash operating earnings
basis was $125.9 million, or $1.12 per diluted share, up from $109.6 million, or
$0.94 per diluted share, for the first six months of 1998.

YEAR 2000 ISSUE

         The Company acknowledges the challenges posed worldwide due to the
current inability of certain computer systems to properly recognize the date
change from December 31, 1999 to January 1, 2000. Failure to adequately meet
these challenges could have a material adverse effect on the operations of a
financial institution, such as the Company.

         In accordance with guidelines established by the Federal Financial
Institutions Examinations Council and the Office of Thrift Supervision ("OTS"),
the Company has completed the assessment and analysis, remediation and testing
phases of the Year 2000 Plan (including user acceptance, unit and interface
testing) with respect to all of its mission-critical systems. The Company has
successfully completed the implementation of year 2000-capable versions of all
of its mission-critical systems and is continuing to test and validate these
newly-implemented systems.

         Further, the Company has established remediation contingency plans and
business resumption contingency plans for its mission-critical systems. The
Company's remediation contingency plans were intended to mitigate the risks had
the Company not successfully remediated its mission-critical systems prior to
the year 2000. The Company's business resumption contingency plans focus on
mitigating the operational risks to the Company and its customers should the
Company's core business processes fail. The Company is currently testing and
validating these contingency plans.

         The Company has also developed a campaign designed to educate and
reassure its customers and employees regarding the impact of the year 2000 issue
and the readiness of the Company to face the challenges posed by the approach of
the year 2000.

         In addition, the Company is involved in ongoing communications with its
significant third-party contractors, such as vendors and service providers, for
the purpose of evaluating their readiness to meet the challenges of the year
2000 and the extent to which the Company may be affected by the remediation
efforts connected with their systems, software, and applications. The Company
cannot guarantee that the computer systems of such third parties will be
remediated on a timely basis or that the failure of any such party to remediate,


                                       19
<PAGE>   20
or a remediation that is incompatible with the Company's systems, would not have
a material adverse effect on the Company.

         Finally, the Company has implemented a process of ongoing credit risk
assessment and monitoring of its significant commercial real estate and business
lending customers in an effort to prepare for any year 2000-related risk that
may result from their failure to adequately address the year 2000 issue.

         Cumulatively, since commencing its year 2000 efforts in 1997, the
Company has incurred approximately $23 million of pre-tax expense in connection
with the Year 2000 Plan. The Company currently anticipates that it will not
incur significant additional expense in completing the implementation of the
Year 2000 Plan. The total expense substantially reflects consulting fees
associated with software remediation, project management and programming, as
well as ancillary items, but does not include such items as the cost of Company
personnel involved in the Year 2000 Plan or capital expenditures that would have
been made regardless of the issues associated with the impending year 2000.

         The preceding discussion includes forward-looking statements that
involve inherent risks and uncertainties. A number of factors could cause the
actual impact of the year 2000 issue to differ materially from Company
estimates. Those factors include, but are not limited to, uncertainties in the
cost of remediation of hardware and software, inaccurate or incomplete testing
results and the ineffective remediation of computer codes of internal
mission-critical systems or external system interfaces. The Company cannot
guarantee that its efforts will be accomplished in a timely manner or that the
failure thereof will not have a material adverse effect on the Company. Failure
of the Company or its significant third-party contractors to effectively remedy
year 2000 issues could cause disruption of the Company's operations resulting in
increased operating costs and other adverse effects. In addition, to the extent
that the financial positions of the Company's borrowers are weakened as a result
of year 2000 issues, credit quality could be adversely impacted.

ASSET/LIABILITY MANAGEMENT

    General

         The Company's asset/liability management is governed by policies that
are reviewed and approved annually by the Boards of Directors of the Holding
Company and the Bank, which oversee the development and execution of risk
management strategies in furtherance of these policies. The Asset/Liability
Management Committee, which is comprised of members of the Company's senior
management, monitors the Company's interest rate risk position and related
strategies.

    Market Risk

         In general, market risk is the sensitivity of income to variations in
interest rates, foreign currency exchange rates, commodity prices, and other
relevant market rates or prices, such as prices of equities. The Company's
market rate sensitive instruments include interest-earning assets,
interest-bearing liabilities and derivative financial instruments.

         The Company enters into market rate sensitive instruments in connection
with its various business operations, particularly its mortgage banking
activities. Loans originated, and the related commitments to originate loans
that will be sold, represent market risk that is realized in a short period of
time, generally two to three months.

         The Company's primary source of market risk exposure arises from
changes in United States interest rates and the effects thereof on mortgage
prepayment and closing behavior, as well as depositors' choices ("interest rate
risk"). Changes in these interest rates will result in changes in the Company's
earnings and the market value of its assets and liabilities. The Company does
not have any material exposure to foreign exchange rate risk or commodity price
risk. Movements in equity prices may have an indirect, but limited, effect on
certain of the Company's business activities or the value of credit sensitive
loans and securities.


                                       20
<PAGE>   21
    Interest Rate Risk Management

         The Company manages its interest rate risk through strategies designed
to maintain acceptable levels of interest rate exposure throughout a range of
interest rate environments. These strategies are intended not only to protect
the Company from significant long-term declines in net interest income as a
result of certain changes in the interest rate environment, but also to mitigate
the negative effect of certain interest rate changes upon the Company's mortgage
banking operating results. The Company seeks to contain its interest rate risk
within a band that it believes is manageable and prudent given its capital and
income generating capacity. As a component of its interest rate risk management
process, the Company employs various derivative financial instruments.

         The Company's sensitivity to interest rates is driven primarily by the
mismatch between the term to maturity or repricing of its interest-earning
assets and that of its interest-bearing liabilities. Historically, the Company's
interest-bearing liabilities have repriced or matured, on average, sooner than
its interest-earning assets.

         The Company is also exposed to interest rate risk arising from the
"option risk" embedded in many of the Company's interest-earning assets. For
example, mortgages and the mortgages underlying MBS may contain prepayment
options, interim and lifetime interest rate caps and other such features
affected by changes in interest rates. Prepayment option risk affects
mortgage-related assets in both rising and falling interest rate environments as
the financial incentive to refinance a mortgage loan is directly related to the
level of the existing interest rate on the loan relative to current market
interest rates.

         Extension risk on mortgage-related assets is the risk that the duration
of such assets may increase as a result of declining prepayments due to rising
interest rates. Certain mortgage-related assets are more sensitive to changes in
interest rates than others, resulting in a higher risk profile. Because the
Company's interest-bearing liabilities are not similarly affected, the gap
between the duration of the Company's interest-earning assets and
interest-bearing liabilities generally increases as interest rates rise. In
addition, in a rising interest rate environment, adjustable-rate assets may
reach interim or lifetime interest rate caps, thereby limiting the amount of
their upward adjustment, which effectively lengthens the duration of such
assets.

         Lower interest rate environments may also present interest rate risk
exposure. In general, lower interest rate environments tend to accelerate loan
prepayment rates, thus reducing the duration of mortgage-related assets and
accelerating the amortization of any premiums paid in the acquisition of these
assets. The amortization of any premiums over a shorter than expected term
causes yields on the related assets to decline from anticipated levels. In
addition, unanticipated accelerated prepayment rates increase the likelihood of
potential losses of net future servicing revenues associated with the Company's
mortgage servicing assets.

         The Company is also exposed to interest rate risk resulting from
certain changes in the shape of the yield curve (particularly a flattening or
inversion -- also called "yield curve twist risk" -- of the yield curve) and to
differing indices upon which the yield on the Company's interest-earning assets
and the cost of its interest-bearing liabilities are based ("basis risk").

         In evaluating and managing its interest rate risk, the Company employs
simulation models to help assess its interest rate risk exposure and the impact
of alternate interest rate scenarios, which consider the effects of
adjustable-rate loan indices, periodic and lifetime interest rate adjustment
caps, estimated loan prepayments, anticipated deposit retention rates and other
dynamics of the Company's portfolios of interest-earning assets and
interest-bearing liabilities.

    Derivative Financial Instruments

         The Company currently uses a variety of derivative financial
instruments to assist in managing its interest rate risk exposures and, on a
very limited basis, for trading purposes. While the Company's use of derivative
financial instruments in managing its interest rate exposures has served to
mitigate the unfavorable effects that changes in interest rates may have on its
results of operations, the Company continues to be subject to interest rate
risk.


                                       21
<PAGE>   22
         Interest Rate Risk-Management Instruments. The Company's assets have
historically repriced or matured at a longer term than the liabilities used to
fund those assets. At June 30, 1999, the Company used the following derivative
financial instruments in its efforts to reduce its repricing risk: (i) interest
rate swaps, where, based on the notional amount of the related agreement, the
Company makes fixed-rate payments and receives variable-rate payments, all of
which are tied to the one- or three-month London Interbank Offered Rate
("LIBOR"); (ii) interest rate cap corridors, where, in exchange for the payment
of a premium, the Company receives the amount by which a designated market
interest rate exceeds a specified strike rate up to a maximum rate,
as applied to the notional amount of the related agreement; and (iii) interest
rate futures, where the Company pays any increase, or receives any decrease, in
the market value of the instrument.

         The following table sets forth certain information on the derivative
financial instruments used by the Company at June 30, 1999 for interest rate
risk-management purposes, segregated by the activities that they hedge (dollars
in thousands):

<TABLE>
<CAPTION>
                                                                      WEIGHTED AVERAGE
                                                     ESTIMATED   --------------------------
                                         NOTIONAL      FAIR      FIXED-RATE   VARIABLE-RATE
                                          AMOUNT       VALUE       PAYABLE      RECEIVABLE
                                        ----------   ---------   ----------   -------------
<S>                                     <C>          <C>         <C>          <C>
Interest rate swaps hedging:
    Securities available for sale (1)   $  370,000    $   806       5.76%        5.08%
    Loans receivable (1)                 1,532,832      4,181       6.27         5.09
    Borrowed funds (1)                     550,000        417       6.00         5.12
Interest rate cap corridors hedging
  loans receivable (2)                     280,704     11,847         --           --
Interest rate futures hedging:
    Securities available for sale           17,000         --         --           --
    Loans receivable                        38,400         --         --           --
                                        ----------    -------
Total                                   $2,788,936    $17,251
                                        ==========    =======
</TABLE>
----------

(1)   Variable rates receivable are presented on the basis of rates in effect at
      June 30, 1999; however, actual repricings of the interest rate swaps will
      be based on the applicable interest rates in effect at the actual
      repricing dates.

(2)   The weighted average strike rate was 4.93% and the weighted average
      maximum rate was 5.93%. The designated market interest rates were all tied
      to one-month LIBOR.

         The use of derivative financial instruments for interest rate
risk-management purposes resulted in reductions in net interest income during
the three and six months ended June 30, 1999 of $6.1 million and $12.2 million,
respectively, as compared with reductions in net interest income during the
three and six months ended June 30, 1998 of $5.2 million and $10.7 million,
respectively.

         Mortgage Banking Risk-Management Instruments. At June 30, 1999, the
Company used the following derivative financial instruments to protect against
the impact of substantial declines in long-term interest rates and the
consequent increase in mortgage prepayment rates on the value of the Company's
mortgage servicing assets: (i) interest rate swaps, where the Company receives a
fixed rate and pays a variable rate tied to one-month LIBOR, although, in
certain cases, the Company pays a fixed rate for a pre-determined period of
time; (ii) interest rate swaptions, where, in exchange for the payment of a
premium, the Company, at a future date, has the right to enter into interest
rate swap agreements; (iii) interest rate floors, where, in exchange for the
payment of a premium, the Company receives the excess of a specified strike rate
over a designated market interest rate, as applied to the notional amount of the
related agreement; (iv) interest rate caps, where, in exchange for the payment
of a premium, the Company receives the excess of a designated market interest
rate over a specified strike rate, as applied to the notional amount of the
related agreement; and (v) principal-only swaps, where the Company receives the
discount realized on the underlying principal-only security and pays a variable
rate based on one-month LIBOR as applied to the notional amount of the swap. The
Company also pays or receives changes in market value of the underlying
principal-only security. Subsequent month discount amounts are based on the
previous month's market value.

         Derivative financial instruments were also used by the Company at June
30, 1999 to hedge the risk in its loans held for sale and related commitment
pipeline. To the extent that the Company estimates that it will have loans to
sell, the Company sells loans into the forward MBS market. Such short sales are
similar in composition as


                                       22
<PAGE>   23
to term and coupon with the loans held in, or expected to be funded into, the
loans held for sale portfolio. In addition, because the amount of loans that the
Company will fund, as compared with the total amount of loans that it has
committed to fund, is uncertain, the Company purchases put options on MBS and
interest rate futures.

         The following table sets forth certain information on the derivative
financial instruments used by the Company at June 30, 1999 in connection with
its mortgage banking operations, segregated by the activities that they hedge
(dollars in thousands):

<TABLE>
<CAPTION>
                                                                 WEIGHTED
                                               ESTIMATED       AVERAGE RATE
                                   NOTIONAL      FAIR      --------------------
                                    AMOUNT       VALUE     PAYABLE   RECEIVABLE
                                  ----------   ---------   -------   ----------
<S>                               <C>          <C>         <C>       <C>
Interest rate swaps hedging
  mortgage servicing assets:
    Pay variable rate/receive
      fixed rate (1)              $1,017,000   $(32,932)     5.03%      6.02%
    Pay fixed rate/receive
      fixed rate (2)                 300,000     (2,038)     5.93       6.16
Interest rate swaptions hedging
  mortgage servicing assets (3)      840,000     29,004        --         --
Interest rate floors hedging
  mortgage servicing assets (4)    3,464,926     17,567        --         --
Interest rate caps hedging
  mortgage servicing assets (5)      400,000     28,467        --         --
Principal-only swaps hedging
  mortgage servicing assets (1)       52,892        779      5.14         --
Forward contracts hedging loans
  held for sale                    3,626,895     24,251        --         --
Put options purchased hedging
  loans held for sale                114,000        750        --         --
                                  ----------   --------
Total                             $9,815,713   $ 65,848
                                  ==========   ========
</TABLE>
----------

(1)   Variable rates payable are presented on the basis of rates in effect at
      June 30, 1999; however, actual repricings of the interest rate swaps will
      be based on the applicable interest rates in effect at the actual
      repricing dates.

(2)   These interest rate swaps are structured so that the Company both receives
      and makes fixed-rate payments for the initial two years of the agreements.
      During the fourth quarter of 1999, the Company will begin making
      variable-rate payments on these interest rate swaps that are tied to
      one-month LIBOR.

(3)   The weighted average strike rate was 6.32%.

(4)   The weighted average strike rate was 5.28%. The designated market interest
      rates were generally tied to constant maturity Treasury or swap indices.

(5)   The weighted average strike rate was 6.09%. The designated market interest
      rates were all tied to one-month LIBOR.

         Trading Instruments. At June 30, 1999, the derivative financial
instruments used by the Company for trading purposes consisted of interest rate
caps with a notional amount of $65.0 million. The estimated fair value of these
interest rate caps at that date was not material.

    Asset/Liability Repricing

         The measurement of differences (or "gaps") between the Company's
interest-earning assets and interest-bearing liabilities that mature or reprice
within a period of time is one indication of the Company's sensitivity to
changes in interest rates. A negative gap generally indicates that, in a period
of rising interest rates, deposit and borrowing costs will increase more rapidly
than the yield on loans and securities and, therefore, reduce the Company's net
interest margin and net interest income. The opposite effect will generally
occur in a declining interest rate environment. Although the Company has a large
portfolio of adjustable-rate assets, the protection afforded by such assets in
the event of substantial rises in interest rates for extended time periods is
limited due to interest rate reset delays, periodic and lifetime interest rate
caps, payment caps and the fact that indices used to reprice a portion of the
Company's adjustable-rate assets lag changes in market rates. Moreover, in
declining interest rate environments or certain shifts in the shape of the yield
curve, these assets may prepay at significantly faster rates than otherwise
anticipated. It should also be noted that the Company's gap measurement reflects
broad judgmental assumptions with regard to repricing intervals for certain
assets and liabilities.

         The following table reflects the repricing of the Company's
interest-earning assets, interest-bearing liabilities and related derivative
financial instruments at June 30, 1999. The amount of each asset, liability or
derivative financial instrument is included in the table at the earlier of the
next repricing date or maturity. Prepayment assumptions for loans and MBS used
in preparing the table are based upon industry standards as well


                                       23
<PAGE>   24
as the Company's experience and estimates. Non-accrual loans have been included
in the "Over One Through Three Years" category. Demand deposits, money market
deposits and savings accounts are allocated to the various repricing intervals
in the table based on the Company's experience and estimates.

<TABLE>
<CAPTION>
                                                 OVER ONE
                                                  THROUGH      OVER
                                     ONE YEAR      THREE      THREE
                                      OR LESS      YEARS       YEARS        TOTAL
                                     --------    ---------    -------      -------
                                                  (DOLLARS IN MILLIONS)
<S>                                  <C>         <C>          <C>          <C>
Total interest-earning assets         $ 9,097     $ 3,788     $ 6,396      $19,281
Total interest-bearing liabilities     11,568       3,985       3,983       19,536
                                      -------     -------     -------      -------
Periodic gap before impact of
  derivative financial instruments     (2,471)       (197)      2,413         (255)
Impact of derivative financial
  instruments                           2,625      (1,462)     (1,163)          --
                                      -------     -------     -------      -------
Periodic gap                          $   154     $(1,659)    $ 1,250      $  (255)
                                      =======     =======     =======      =======
Cumulative gap                        $   154     $(1,505)    $  (255)
                                      =======     =======     =======
Cumulative gap as a percentage of
  total assets                            0.7%       (7.0)%       (1.2)%
</TABLE>

MANAGEMENT OF CREDIT RISK

    General

         The Company's credit risk arises from the possibility that borrowers,
issuers, or counterparties will not perform in accordance with contractual
terms. The Company has a process of credit risk controls and management
procedures by which it monitors and manages its level of credit risk.

    Non-Performing Assets

         The Company's non-performing assets consist of non-accrual loans and
other real estate owned, net. Non-accrual loans are all loans 90 days or more
delinquent, as well as loans less than 90 days past due for which the full
collectability of contractual principal or interest payments is doubtful.

         The following table presents the components of the Company's
non-performing assets at the dates indicated (dollars in thousands):

<TABLE>
<CAPTION>
                                             JUNE 30,   DECEMBER 31,    JUNE 30,
                                               1999        1998           1998
                                             --------   ------------   ---------
<S>                                          <C>        <C>            <C>
Non-accrual loans:
    Residential real estate                  $ 53,714     $ 37,771     $  83,713
    Commercial real estate                      7,800       11,992        16,696
    Consumer                                    6,201        5,292         4,878
    Business                                      169           56           291
                                             --------     --------     ---------
        Total non-accrual loans                67,884       55,111       105,578
                                             --------     --------     ---------
Other real estate owned, net:
    Residential real estate                     8,938       15,170        20,634
    Commercial real estate                     12,510       14,505        14,812
    Allowance for losses                         (857)      (1,443)       (1,534)
                                             --------     --------     ---------
        Total other real estate owned, net     20,591       28,232        33,912
                                             --------     --------     ---------
Total non-performing assets                  $ 88,475     $ 83,343     $ 139,490
                                             ========     ========     =========

Non-performing assets to total assets            0.41%        0.37%         0.67%
Non-accrual loans to loans receivable            0.53         0.43          0.82
</TABLE>

         Contributing significantly to the increase in non-performing assets
from the end of 1998 to June 30, 1999 of $5.1 million, or 6.2%, was the effect
of the Lakeview Acquisition. The reduction in non-performing assets of $51.0
million, or 36.6%, from June 30, 1998 to June 30, 1999 was due, in part, to the
impact of the 1998 NPA Sale.


                                       24
<PAGE>   25
         The Company continues to expand its lending activities and product mix.
The Company intends to continue to monitor closely the effects of these efforts
on the overall risk profile of its loans receivable portfolio, which the Company
expects will continue to change over time.

         The level of loans delinquent less than 90 days may, to some degree, be
an indicator of future levels of non-performing assets. The following table sets
forth, at June 30, 1999, such delinquent loans of the Company, net of those
already in non-performing status (in thousands):

<TABLE>
<CAPTION>
                                              DELINQUENCY PERIOD
                                      ---------------------------------
                                      30 - 59      60 - 89
                                        DAYS         DAYS        TOTAL
                                      -------      -------      -------
<S>                                   <C>          <C>          <C>
         Residential real estate      $34,072      $16,452      $50,524
         Commercial real estate           570          219          789
         Consumer                       5,625        2,261        7,886
         Business                       1,304          493        1,797
                                      -------      -------      -------
         Total                        $41,571      $19,425      $60,996
                                      =======      =======      =======
</TABLE>

    Allowance for Loan Losses

         The Company's allowance for loan losses, which amounted to $121.4
million at June 30, 1999, is intended to be maintained at a level sufficient to
absorb all estimable and probable losses inherent in the loans receivable
portfolio. While the Company believes that the allowance for loan losses is
adequate, additions to the allowance for loan losses may be necessary in the
event of future adverse changes in economic and other conditions that the
Company is unable to predict.

         The following table sets forth the activity in the Company's allowance
for loan losses for the periods indicated (in thousands):

<TABLE>
<CAPTION>
                                              FOR THE                   FOR THE
                                         THREE MONTHS ENDED         SIX MONTHS ENDED
                                              JUNE 30,                  JUNE 30,
                                       ----------------------    ----------------------
                                          1999         1998         1999         1998
                                       ---------    ---------    ---------    ---------
<S>                                    <C>          <C>          <C>          <C>
Balance at beginning of period         $ 112,369    $ 109,096    $ 105,081    $ 104,718
Provision for loan losses                  7,500        8,000       15,500       16,000
Allowance acquired in the
  Lakeview Acquisition                     4,965           --        4,965           --
Loan charge-offs:
    Residential real estate               (4,062)      (7,280)      (6,812)     (13,511)
    Commercial real estate                  (323)        (645)        (629)        (838)
    Consumer                                (870)        (810)      (1,552)      (1,512)
    Business                                 (17)          --          (44)          --
                                       ---------    ---------    ---------    ---------
            Total loan charge-offs        (5,272)      (8,735)      (9,037)     (15,861)
                                       ---------    ---------    ---------    ---------
Loan recoveries:
    Residential real estate                  375          755        1,397        1,866
    Commercial real estate                 1,059          267        2,654        2,170
    Consumer                                 383          546          819        1,029
    Business                                   2            5            2           12
                                       ---------    ---------    ---------    ---------
            Total loan recoveries          1,819        1,573        4,872        5,077
                                       ---------    ---------    ---------    ---------
                Net loan charge-offs      (3,453)      (7,162)      (4,165)     (10,784)
                                       ---------    ---------    ---------    ---------
Balance at end of period               $ 121,381    $ 109,934    $ 121,381    $ 109,934
                                       =========    =========    =========    =========
</TABLE>


                                       25
<PAGE>   26
         The following table sets forth the Company's allowance for loan losses
coverage ratios at the dates indicated:

<TABLE>
<CAPTION>
                                            JUNE 30,   DECEMBER 31,   JUNE 30,
                                              1999         1998         1998
                                            --------   ------------   --------
<S>                                         <C>        <C>            <C>
          Allowance for loan losses to:
              Loans receivable                 0.95%        0.82%        0.85%
              Non-accrual loans              178.81       190.67       104.13
</TABLE>

    MBS

         Of the $3.1 billion carrying value of the Company's MBS available for
sale portfolio at June 30, 1999, $2.0 billion were issued by entities other than
the Federal Home Loan Mortgage Corporation ("FHLMC"), the Government National
Mortgage Association ("GNMA"), and the Federal National Mortgage Association
("FNMA"). These privately-issued MBS, which have generally been underwritten by
large investment banking firms, are subject to certain credit-related risks
normally not associated with MBS issued by FHLMC, GNMA and FNMA. While
substantially all of the privately-issued MBS held by the Company at June 30,
1999 were rated "AA" or better by one or more of the nationally recognized
securities rating agencies, no assurance can be given that such ratings will be
maintained.

    Derivative Financial Instruments

         The level of credit risk associated with derivative financial
instruments depends on a variety of factors, including the estimated fair value
of the instrument, the collateral maintained, the use of master netting
arrangements, and the ability of the counterparty to comply with its contractual
obligations. In the event of default by a counterparty, the Company would be
subject to an economic loss that corresponds to the cost to replace the
agreement. There were no past due amounts related to the Company's derivative
financial instruments at June 30, 1999 or December 31, 1998.

FINANCIAL CONDITION

    General

         The Company's total assets amounted to $21.4 billion at June 30, 1999,
down $891.1 million, or 4.0%, from December 31, 1998. The decline in total
assets, which occurred despite the impact of the Lakeview Acquisition, was
largely due to a lower level of loans held for sale.


                                       26
<PAGE>   27
    Securities Available for Sale

         The following table summarizes the amortized cost and estimated fair
value of securities available for sale at the dates indicated (in thousands):

<TABLE>
<CAPTION>
                                                 JUNE 30, 1999           DECEMBER 31, 1998
                                            -----------------------   -----------------------
                                            AMORTIZED    ESTIMATED    AMORTIZED    ESTIMATED
                                               COST      FAIR VALUE      COST      FAIR VALUE
                                            ----------   ----------   ----------   ----------
<S>                                         <C>          <C>          <C>          <C>
MBS:
    Pass-through securities:
        Privately-issued                    $1,974,575   $1,932,853   $1,795,369   $1,775,264
        U.S. government agencies             1,123,576    1,097,247    1,002,850    1,008,921
    Collateralized mortgage obligations:
        Privately-issued                        93,132       91,989      179,407      179,484
        U.S. government agencies                26,806       26,740           --           --
    Interest-only                                1,090          591        1,286          628
                                            ----------   ----------   ----------   ----------
            Total MBS                        3,219,179    3,149,420    2,978,912    2,964,297
                                            ----------   ----------   ----------   ----------
Other debt securities:
    U. S. government and federal agencies        4,962        4,956        3,492        3,525
    State and municipal                         10,080        9,822       13,036       12,834
    Domestic corporate                         338,120      322,886      333,683      343,095
    Other                                          500          500          500          500
                                            ----------   ----------   ----------   ----------
            Total other debt securities        353,662      338,164      350,711      359,954
                                            ----------   ----------   ----------   ----------
Equity securities                               10,375       10,422        5,529        5,193
                                            ----------   ----------   ----------   ----------
Total securities available for sale         $3,583,216   $3,498,006   $3,335,152   $3,329,444
                                            ==========   ==========   ==========   ==========
</TABLE>

    Loans

         Loans held for sale into the secondary market in connection with the
Company's mortgage banking activities amounted to $2.5 billion at June 30, 1999.
This represents a decline of $1.4 billion from the level at the end of 1998.

         Loans receivable (exclusive of the allowance for loan losses) amounted
to $12.7 billion at June 30, 1999, down $36.9 million from year-end 1998. This
decline was attributable to a reduction in residential real estate loans of
$831.1 million, or 9.3%, the effect of which was substantially offset by
aggregate growth in commercial real estate, consumer and business loans in the
amount of $794.2 million, or 20.7%. In connection with the Lakeview Acquisition,
the Company acquired loans receivable of $286.9 million, of which $199.3 million
were commercial real estate, consumer and business loans.

         A key component of the Company's strategy with respect to its loans
receivable is to continue to increase the aggregate percentage of its commercial
real estate, consumer and business loans to total loans receivable. At June 30,
1999, these loans, which generally offer higher returns than the Company's
residential real estate loans, comprised 36.4% of total loans receivable, up
from 30.0% at December 31, 1998 and 26.7% at June 30, 1998.

         The following table sets forth a summary of the Company's loans
receivable at the dates indicated (dollars in thousands):

<TABLE>
<CAPTION>
                                  JUNE 30, 1999            DECEMBER 31, 1998
                           -------------------------   -------------------------
                                          PERCENTAGE                  PERCENTAGE
                              AMOUNT       OF TOTAL       AMOUNT       OF TOTAL
                           -----------    ----------   -----------    ----------
<S>                        <C>            <C>          <C>            <C>
Residential real estate    $ 8,088,718        63.6%    $ 8,919,817       70.0%
Commercial real estate       3,005,934        23.6       2,567,750       20.1
Consumer                     1,266,334        10.0         973,230        7.6
Business                       350,196         2.8         287,271        2.3
                           -----------       -----     -----------      -----
Total loans receivable     $12,711,182       100.0%    $12,748,068      100.0%
                           ===========       =====     ===========      =====
</TABLE>


                                       27
<PAGE>   28
         The consummation of the Citibank Automobile Finance Business
Acquisition furthered the Company's strategy to increase the aggregate
percentage of its commercial real estate, consumer and business loans to total
loans receivable. In connection therewith, the Company acquired approximately
$950 million of loans receivable, consisting largely of consumer and business
loans. On a pro forma basis at June 30, 1999, giving effect to this acquisition
as of that date, the aggregate percentage of the Company's commercial real
estate, consumer and business loans to total loans receivable was approximately
41%. In addition, upon completion of the Pending KeyBank Branch Acquisition, the
Company will acquire business and consumer loans that amounted to approximately
$415 million as of the date of the announcement of this transaction.

         Loan production, which includes originations and purchases for the
loans receivable portfolio and for sale into the secondary market, amounted to
$7.3 billion for the three months ended June 30, 1999, down $455.9 million from
the comparable period in 1998. This decline was attributable to a reduction in
residential real estate loan production of $573.5 million, primarily due to a
slowing of refinancing activity. Of the total residential real estate loans
produced during the quarters ended June 30, 1999 and 1998 of $6.5 billion and
$7.1 billion, respectively, $2.5 billion and $3.5 billion, respectively, were
refinanced loans. The impact of the lower level of residential real estate loan
production was partially offset by higher production levels in all other major
loan categories, primarily consumer loans, which increased $94.0 million, or
48.0%, to $289.5 million for the second quarter of 1999.

         Loan production for the first six months of 1999 was $14.9 billion, up
$94.4 million from the comparable period of 1998. This increase was reflective
of growth in consumer loan production of $155.8 million, or 45.1%, commercial
real estate loan production of $71.4 million, or 13.0%, and business loan
production of $55.3 million, or 41.9%. Partially offsetting these increases was
a reduction in residential real estate loan production of $188.2 million, or
1.4%.

         The following table summarizes the Company's loan production for the
periods indicated (in thousands):

<TABLE>
<CAPTION>
                                           FOR THE THREE MONTHS         FOR THE SIX MONTHS
                                              ENDED JUNE 30,              ENDED JUNE 30,
                                         -----------------------   -------------------------
                                            1999         1998          1999          1998
                                         ----------   ----------   -----------   -----------
<S>                                      <C>          <C>          <C>           <C>
Residential real estate:
    For sale into the secondary market   $6,086,989   $6,540,617   $12,712,708   $12,272,004
    For portfolio                           410,472      530,389       871,511     1,500,379
                                         ----------   ----------   -----------   -----------
        Total residential real estate     6,497,461    7,071,006    13,584,219    13,772,383
                                         ----------   ----------   -----------   -----------
Commercial real estate                      375,284      351,832       622,566       551,133
Consumer                                    289,527      195,577       500,882       345,108
Business                                     89,922       89,629       187,364       132,019
                                         ----------   ----------   -----------   -----------
Total loan production                    $7,252,194   $7,708,044   $14,895,031   $14,800,643
                                         ==========   ==========   ===========   ===========
</TABLE>

    Deposits

         Total deposits amounted to $13.4 billion at June 30, 1999, down from
$13.7 billion at year-end 1998. This decline reflects a $450.7 million reduction
in time deposits, the effect of which was partially offset by growth of $214.1
million in core deposits, which are generally less costly than the Company's
time deposits. In connection with the Lakeview Acquisition, the Company acquired
$461.9 million of deposits, including $197.5 million of core deposits.

          Part of the Company's strategy with respect to its deposits is to
increase the percentage of core deposits to total deposits. At the end of the
second quarter of 1999, core deposits represented 53.0% of total deposits, up
from 50.6% at year-end 1998 and 44.6% at June 30, 1998.


                                       28
<PAGE>   29
         The following table sets forth a summary of the Company's deposits at
the dates indicated (dollars in thousands):

<TABLE>
<CAPTION>
                               JUNE 30, 1999                DECEMBER 31, 1998
                         -------------------------     --------------------------
                                        PERCENTAGE                     PERCENTAGE
                            AMOUNT       OF TOTAL         AMOUNT        OF TOTAL
                         -----------    ----------     ------------    ----------
<S>                      <C>               <C>         <C>               <C>
Core:
    Demand               $ 1,856,253        13.8%       $ 1,976,122        14.5%
    Savings                2,346,060        17.5          2,291,782        16.8
    Money market           2,913,976        21.7          2,634,312        19.3
                         -----------       -----        -----------       -----
        Total core         7,116,289        53.0          6,902,216        50.6
                         -----------       -----        -----------       -----
Time                       6,298,509        47.0          6,749,244        49.4
                         -----------       -----        -----------       -----
Total deposits           $13,414,798       100.0%       $13,651,460       100.0%
                         ===========       =====        ===========       =====
</TABLE>

         At June 30, 1999, the Bank operated 100 branches in the greater New
York City metropolitan area, including 11 branches acquired in connection with
the Lakeview Acquisition. As part of the Pending KeyBank Branch Acquisition, the
Bank will acquire 28 branches, which at the date of the announcement of this
acquisition, had deposits of approximately $1.3 billion.

    Borrowed Funds

         The following table sets forth a summary of the Company's borrowed
funds at the dates indicated (dollars in thousands):

<TABLE>
<CAPTION>
                                                 JUNE 30, 1999           DECEMBER 31, 1998
                                            -----------------------   -----------------------
                                                         PERCENTAGE                PERCENTAGE
                                              AMOUNT      OF TOTAL      AMOUNT      OF TOTAL
                                            ----------   ----------   ----------   ----------
<S>                                         <C>          <C>          <C>          <C>
Federal funds purchased and securities
    sold under agreements to repurchase     $1,925,528       31.5%    $2,245,218       33.1%
Other short-term borrowings                  3,042,579       49.7      3,756,733       55.5
Long-term debt                               1,000,232       16.3        608,892        9.0
Guaranteed preferred beneficial interests
    in Dime Bancorp, Inc.'s junior
    subordinated deferrable interest
    debentures                                 152,208        2.5        162,005        2.4
                                            ----------      -----     ----------      -----
                                            $6,120,547      100.0%    $6,772,848      100.0%
                                            ==========      =====     ==========      =====
</TABLE>

         During January 1999, the Holding Company, at its option, redeemed all
$100.0 million of its outstanding 10.50% senior notes due November 2005 and
purchased $10.0 million of the outstanding guaranteed preferred beneficial
interests in its 9.33% junior subordinated deferrable interest debentures. These
transactions resulted in pre-tax extraordinary losses of $6.0 million and $1.2
million, respectively.

         During January 1999, the Holding Company issued $200.0 million of
unsecured 6.375% senior notes due January 2001 (the "6.375% Senior Notes"). In
addition, the Holding Company, in July 1999, issued $150.0 million of 7.00%
senior notes due July 2001 (the "7.00% Senior Notes") in connection with an
effective shelf registration. After giving effect to the issuance of the 7.00%
Senior Notes, the amount of debentures, notes or other unsecured evidences of
indebtedness that can be issued under the shelf registration is $150.0 million.
These debt securities, which may be unsubordinated or subordinated to certain
other obligations of the Holding Company, may be offered separately or together
in one or more series.

    Stockholders' Equity

         Stockholders' equity amounted to $1.5 billion at June 30, 1999, up
$107.8 million, or 7.8%, from year-end 1998. This increase was largely due to
net income of $115.7 million, coupled with the $69.2 million cost assigned to
the 2,851,938 shares of the Holding Company's common stock issued in connection
with the Lakeview


                                       29
<PAGE>   30
Acquisition. The growth in stockholders' equity was limited principally by the
effects of a $45.4 million increase in the Company's accumulated other
comprehensive loss, treasury stock purchases totaling $22.6 million and cash
dividends aggregating $12.2 million paid by the Holding Company on its common
stock.

         At the end of the second quarter of 1999, stockholders' equity
represented 6.97% of total assets, as compared with 6.21% at December 31, 1998.
Book value per common share and tangible book value per common share increased
to $13.15 and $10.48, respectively, at June 30, 1999 from $12.42 and $10.35,
respectively, at the end of 1998.

         During the first six months of 1999, the Holding Company repurchased
990,700 shares of its common stock. These repurchases were made pursuant to a
program announced in September 1998 under which the Holding Company is
authorized to repurchase up to approximately 5.6 million shares of its
outstanding common stock. In connection with this program, the Holding Company
repurchased a total of 1,325,700 shares of its common stock through June 30,
1999. No time limit was established to complete this program.

         Cash dividends declared and paid by the Holding Company on its common
stock were $0.06 per share in the second quarter of 1999 and $0.11 per share for
the first six months of 1999. This compares with $0.05 per share in the second
quarter of 1998 and $0.09 per share for the first six months of 1998. The
Holding Company's common stock dividend payout ratio increased to 11.11% and
10.68% for the three- and six-month periods ended June 30, 1999, respectively,
from 10.00% and 9.09% for the respective periods in 1998. On July 22, 1999, the
Holding Company announced the declaration of a cash dividend of $0.06 per share
on its common stock. This dividend will be paid on September 1, 1999 to
stockholders of record as of the close of business on August 20, 1999.

LIQUIDITY

         The Company's liquidity management process focuses on ensuring that
sufficient funds exist to meet withdrawals from deposit accounts, loan funding
commitments, the repayment of borrowed funds, and other financial obligations
and expenditures, as well as ensuring the Bank's compliance with regulatory
liquidity requirements. The liquidity position of the Company, which is
monitored on a daily basis, is managed pursuant to established policies and
guidelines.

         The Company's sources of liquidity include principal repayments on
loans and MBS, borrowings, deposits, sales of loans in connection with mortgage
banking activities, sales of securities available for sale and net cash
provided by operations. Additionally, the Company has access to the capital
markets for issuing debt or equity securities, as well as access to the discount
window of the Federal Reserve Bank of New York for the purpose of borrowing to
meet temporary liquidity needs.

         Excluding funds raised through the capital markets, the primary source
of funds of the Holding Company, on an unconsolidated basis, has been dividends
from the Bank, whose ability to pay dividends is subject to regulations of the
OTS, its primary regulator.

         Under OTS regulations, the Bank must maintain average eligible liquid
assets for each calendar quarter of not less than 4.00% of its liquidity base.
The Bank was in compliance with these regulations for the second quarter of
1999.

REGULATORY CAPITAL

         Pursuant to OTS regulations, the Bank is required to maintain tangible
capital of at least 1.50% of adjusted total assets, core capital of at least
3.00% of adjusted total assets, and total risk-based capital of at least 8.00%
of risk-weighted assets. The Bank exceeded these capital requirements at June
30, 1999.

         Under the prompt corrective action regulations adopted by the OTS
pursuant to the Federal Deposit Insurance Corporation Improvement Act of 1991,
an institution is considered well capitalized, the highest of five categories,
if its ratio of total risk-based capital to risk-weighted assets is 10% or more,
its ratio of Tier 1 ("core") capital to risk-weighted assets is 6% or more, its
ratio of core capital to adjusted total assets is 5% or greater, and it


                                       30
<PAGE>   31
is not subject to any order or directive by the OTS to meet a specific capital
level. At June 30, 1999, the Bank met the published standards for a well
capitalized designation under these regulations.

         The following table sets forth the regulatory capital position of the
Bank at the dates indicated (dollars in thousands):

<TABLE>
<CAPTION>
                                   JUNE 30, 1999         DECEMBER 31, 1998
                                -------------------     -------------------
                                  AMOUNT      RATIO       AMOUNT      RATIO
                                ----------    -----     ----------    -----
<S>                             <C>           <C>       <C>            <C>
   Tangible and core capital    $1,461,411     6.92%    $1,282,010     5.82%
   Tier 1 risk-based capital     1,461,411    11.07      1,282,010     9.58
   Total risk-based capital      1,582,792    11.99      1,387,091    10.37
</TABLE>

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

           Information required by this item is contained in Item 2,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Asset/Liability Management," incorporated herein by reference.

                           PART II. OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

         On January 13, 1995, Anchor Savings Bank FSB ("Anchor Savings") filed
suit in the United States Court of Federal Claims against the United States for
breach of contract and taking of property without compensation in contravention
of the Fifth Amendment to the United States Constitution. The action arose
because the passage of the Financial Institutions Reform, Recovery, and
Enforcement Act of 1989 ("FIRREA") and the regulations adopted by the OTS
pursuant to FIRREA deprived Anchor Savings of the ability to include supervisory
goodwill and certain other assets for purposes of computing its regulatory
capital as the Federal Savings and Loan Insurance Corporation ("FSLIC") had
agreed. The direct effect was to cause Anchor Savings to go from an institution
that substantially exceeded its regulatory capital requirements to one that was
critically undercapitalized upon the effectiveness of the FIRREA-mandated
capital requirements.

         From 1982 to 1985, Anchor Savings had acquired eight FSLIC-insured
institutions that were in danger of failing and causing a loss to the FSLIC.
Four institutions were acquired with some financial assistance from the FSLIC
and four were unassisted "supervisory" cases. In acquiring the institutions,
Anchor Savings assumed liabilities determined to exceed the assets it acquired
by over $650 million at the dates of the respective acquisitions. The difference
between the fair values of the assets acquired and the liabilities assumed in
the transactions were recorded on Anchor Savings' books as goodwill. At the time
of these acquisitions, the FSLIC had agreed that this supervisory goodwill was
to be amortized over periods of up to 40 years. Without that agreement, Anchor
Savings would not have made the acquisitions. When the capital regulations
imposed under FIRREA became effective, Anchor Savings still had over $518
million of supervisory goodwill on its books and in excess of 20 years remaining
to amortize it under the agreements with FSLIC. The FIRREA-mandated capital
requirements excluded all but approximately $124 million of Anchor Savings'
supervisory goodwill, over $42 million attributable to the FSLIC contribution in
one acquisition, and, until the formation of Anchor Bancorp, Inc., the holding
company for Anchor Savings ("Anchor Bancorp"), in 1991, $157 million associated
with preferred stock issued to the FSLIC as a result of one of the acquisitions.
FIRREA also required the remaining supervisory goodwill to be eliminated by
December 31, 1994 for regulatory capital purposes. The elimination of the
supervisory goodwill resulted in severe limitations on Anchor Savings'
activities and required the disposition of valuable assets under
liquidation-like circumstances, as a result of which Anchor Savings was damaged.
The complaint asks that the Government make Anchor Savings whole for the effects
of the loss, which are estimated to exceed substantially the goodwill remaining
at the time FIRREA was enacted.

         There are approximately 130 cases involving similar issues pending in
the United States Court of Federal Claims, which has entered summary judgment
for the plaintiffs in a small number of the cases as to liability, but not
damages. The first three of those cases, referred to as the Winstar cases, were
appealed to the United States Supreme Court, which, on July 1, 1996, affirmed
the decision that the Government was liable for breach of contract in those
cases.


                                       31
<PAGE>   32
         All of the Winstar-related cases, including Anchor Savings' lawsuit
(which was assumed by the Bank upon consummation of the merger of Anchor Bancorp
and Anchor Savings with and into the Holding Company and the Bank, respectively,
were assigned to the Chief Judge of the Court of Federal Claims. The Chief Judge
has issued an Omnibus Case Management Order ("OCMO") that controls the
proceedings in all these cases. The OCMO imposes procedures and schedules
different from most cases in the Court of Federal Claims. Under the OCMO, the
Bank has moved for partial summary judgment as to the existence of a contract
and the inconsistency of the Government's actions with that contract in each of
the related transactions. The Government has disputed the existence of a
contract in each case and cross-moved for summary judgment. The Government also
submitted a filing acknowledging that it is not aware of any affirmative
defenses. Briefing on the motions was completed on August 1, 1997. In August
1997, the Court held a hearing on summary judgment motions in four other cases.
As part of that hearing, the Court heard argument on eleven issues that the
plaintiffs contend are common to many of the pending cases, including the Bank's
case. The Court issued its order on December 22, 1997, ruling in favor of the
plaintiffs on all eleven "common" issues. The Court's order directed the
Government to submit a "show cause" filing by February 20, 1998 asserting why
judgment for the plaintiff should not be entered on each of the common issues
with respect to each pending summary judgment motion. The Government then
submitted a filing in response to the "show cause" order, but asserted that it
might need further discovery as to certain issues. At a status conference on
March 11, 1998, the Court directed each of the plaintiffs to submit a proposed
form of order for entry of judgment as to liability on the Winstar contract
issues and an accompanying brief by March 31, 1998 and directed the Government
to respond by April 30, 1998 with a filing asserting any basis for not entering
the order proposed by the plaintiff. On March 31, 1998, the Bank, as directed by
the Court, submitted a proposed order imposing liability on the Government as to
each of the Bank's claims. On April 30, 1998, the Government served its
opposition to the entry of the order. Final submissions were made on May 15,
1998 by the Bank and May 22, 1998 by the Government. No date has been set for
argument on the Bank's request to enter judgment. It is not possible to predict
whether the Court will grant any of the Bank's motions for partial summary
judgment or, if so, when it will schedule a trial on damages and any remaining
liability issues.

         Commencing in April 1998, the oldest 30 of the pending cases (after
excluding certain specific cases) that elected to proceed were allowed to
commence full discovery as to liability and damages in their cases. The second
30 cases will start discovery in 1999, and so on. Cases will not be assigned to
trial judges until after the fact discovery is completed. The Bank is among the
first 30 plaintiffs and commenced full case-specific discovery on April 1, 1998.
Case-specific fact discovery ended on July 31, 1999, and expert discovery will
continue until the spring of 2000.

         There have been two court decisions determining damages in the
Winstar-related cases. The trial in the first of the Winstar-related cases to
proceed to trial on damages was concluded in April 1998, with closing arguments
held in September 1998. A decision was handed down in that case on April 9,
1999, and it ordered the Government to pay $909 million in restitution and
non-overlapping reliance damages to the plaintiff, Glendale Federal Bank, FSB. A
second decision was issued on April 16, 1999 in the California Federal Bank
case, and the Government was ordered to pay damages of $33 million on a cost of
replacement capital theory. Based on the facts of each case, neither court
entered judgment for lost profits (otherwise known as expectancy damages). A
trial in one other case also recently ended, and a decision is expected shortly.
The determinations of damages by the Court of Federal Claims in both the
Glendale and California Federal Bank cases have been appealed. It is impossible,
therefore, to predict the measure of damages that will be upheld in cases in
which liability is found.

         During the summer of 1998, there were settlements in a total of four of
the Winstar-related cases in which the Government agreed to make payments to the
plaintiffs. The Bank believes that the circumstances of the four settled cases
were materially different from the Bank's case, and the Bank does not believe
that these settlements will affect the final outcome of its case. The Company is
unaware of any other pending settlements in this litigation.

         The Company continues to believe that its claim is meritorious, that it
is one of the more significant cases before the Court, and that it is entitled
to damages, which, as noted, are estimated to exceed substantially the goodwill
remaining on Anchor Savings' books at the time FIRREA was enacted. The Company
also believes that it is entitled to damages under each of the primary damage
theories considered by the courts in the Glendale and California Federal Bank
cases, including: restitution; reliance; cost of replacement capital; and
expectancy.


                                       32
<PAGE>   33
ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         The Holding Company's Annual Meeting of Stockholders was held on April
29, 1999 (the "Annual Meeting"). The following matters received the number of
affirmative votes, negative votes, withheld votes, abstentions and broker
non-votes set forth below.

(a)        Election of six directors:

           The following individuals were duly elected as directors of the
Holding Company for three-year terms:

<TABLE>
<CAPTION>
                                        Affirmative    Withheld
                                            Votes        Votes
                                        -----------    ---------
<S>                                     <C>            <C>
               Derrick D. Cephas         88,424,851    2,019,181
               Richard W. Dalrymple      87,742,448    2,701,584
               Fred B. Koons             88,429,985    2,014,047
               Margaret Osmer-McQuade    88,405,790    2,038,242
               Howard Smith              88,417,817    2,026,215
               Ira T. Wender             87,607,750    2,836,282
</TABLE>

(b)        A proposal regarding an amendment to the Holding Company's 1993
           Employee Stock Purchase Plan was approved after receiving 86,527,286
           affirmative votes, which was more than a majority of the shares of
           common stock represented, in person or by proxy, at the Annual
           Meeting. This proposal also received 3,466,932 negative votes and 0
           withheld votes, with 449,814 abstentions and 0 broker non-votes.

(c)        A proposal to ratify the appointment of KPMG LLP as independent
           public accountants for the fiscal year ended December 31, 1999 was
           approved after receiving 90,077,452 affirmative votes, which was more
           than a majority of the shares of common stock represented, in person
           or by proxy, at the Annual Meeting. This proposal also received
           180,232 negative votes and 0 withheld votes, with 186,348 abstentions
           and 0 broker non-votes.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(A)        EXHIBITS

           Exhibit 12 --  Ratio of Earnings to Fixed Charges
           Exhibit 27 --  Financial Data Schedule

(B)        REPORTS ON FORM 8-K

         During the three-month period ended June 30, 1999, the Holding Company
filed with the Securities and Exchange Commission the following Current Reports
on Form 8-K:

         --  Form 8-K, filed on April 15, 1999, containing the press release
             announcing the Company's consolidated financial results for the
             quarter ended March 31, 1999.

         --  Form 8-K, filed on April 19, 1999, amending the Form 8-K filed on
             January 28, 1999 announcing the Holding Company's issuance of the
             6.375% Senior Notes.

         --  Form 8-K, filed on April 26, 1999, containing the press release
             announcing that the Bank had entered into a definitive agreement
             regarding the Citibank Automobile Finance Business Acquisition.

         --  Form 8-K, filed on May 27, 1999, containing the press release
             announcing the Pending KeyBank Branch Acquisition.


                                       33
<PAGE>   34
                                   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.


                                       DIME BANCORP, INC.
                                       (Registrant)





Dated: August 13, 1999                 By: /s/ Lawrence J. Toal
                                           --------------------
                                           Lawrence J. Toal
                                           Chairman of the Board,
                                             Chief Executive Officer,
                                             President and Chief
                                             Operating Officer


Dated: August 13, 1999                 By: /s/ Anthony R. Burriesci
                                           ------------------------
                                           Anthony R. Burriesci
                                           Executive Vice President and
                                             Chief Financial Officer


Dated: August 13, 1999                 By: /s/ John F. Kennedy
                                           -------------------
                                           John F. Kennedy
                                           Controller and Chief
                                             Accounting Officer


                                       34
<PAGE>   35
                                  EXHIBIT INDEX



<TABLE>
<CAPTION>
EXHIBIT
NUMBER               IDENTIFICATION OF EXHIBIT
-------              -------------------------
<S>                  <C>
12                   Ratio of Earnings to Fixed Charges

27                   Financial Data Schedule (filed electronically)
</TABLE>


                                       35