<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, 2001

                                       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)

                  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)

                                 (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, 2001, the registrant had 117,343,344 shares of common stock,
$0.01 par value, outstanding.
<PAGE>   2
                               DIME BANCORP, INC.
             FORM 10-Q FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2001
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                            Page
                                                                                            ----
<S>                                                                                         <C>
PART I.  FINANCIAL INFORMATION

Item 1.  Financial Statements (Unaudited)

                Consolidated Statements of Financial Condition as of June 30, 2001            3
                 and December 31, 2000

                Consolidated Statements of Income for the Three Months and Six
                 Months Ended June 30, 2001 and 2000                                          4

                Consolidated Statements of Changes in Stockholders' Equity for the
                 Six Months Ended June 30, 2001 and 2000                                      5

                Consolidated Statements of Cash Flows for the Six Months Ended June
                 30, 2001 and 2000                                                            6

                Notes to Consolidated Financial Statements                                    7

Item 2.  Management's Discussion and Analysis of Financial Condition and Results of          10
          Operations

Item 3.  Quantitative and Qualitative Disclosures about Market Risk                          28

PART II.  OTHER INFORMATION

Item 1.  Legal Proceedings                                                                   28

Item 4.  Submission of Matters to a Vote of Security Holders                                 29

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

SIGNATURES                                                                                   31
</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,
                                                       2001            2000
                                                       ----            ----
<S>                                                <C>             <C>
ASSETS
Cash and due from banks                            $    390,625    $    421,685
Money market investments                                 89,678          13,626
Securities available for sale ($1,572,597
 and $1,975,884 pledged as collateral
 at June 30, 2001 and December 31, 2000,
 respectively)                                        2,194,005       2,851,043
Federal Home Loan Bank of New York stock                393,021         346,770
Loans held for sale                                   4,858,396       2,804,767
Loans receivable, net:
    Residential real estate loans                     7,693,965       7,916,035
    Commercial real estate loans                      4,326,542       4,152,874
    Consumer loans                                    3,133,702       3,050,377
    Business loans                                    1,085,229       1,167,878
                                                   ------------    ------------
        Total loans receivable                       16,239,438      16,287,164
    Allowance for loan losses                          (150,337)       (144,362)
                                                   ------------    ------------
        Total loans receivable, net                  16,089,101      16,142,802
                                                   ------------    ------------
Premises and equipment, net                             186,079         187,746
Mortgage servicing assets, net                          924,802       1,021,861
Goodwill                                                486,702         503,320
Other assets                                          1,434,893       1,394,208
                                                   ------------    ------------
Total assets                                       $ 27,047,302    $ 25,687,828
                                                   ============    ============

LIABILITIES
Deposits                                           $ 14,631,636    $ 13,976,941
Federal funds purchased and securities
 sold under agreements to repurchase                  3,233,468       3,082,322
Other short-term borrowings                           4,779,902       4,545,199
Guaranteed preferred beneficial interests
 in Dime Bancorp, Inc.'s junior
 subordinated deferrable interest debentures            152,255         152,243
Other long-term debt                                  1,740,761       1,722,623
Other liabilities                                       676,663         483,661
                                                   ------------    ------------
        Total liabilities                            25,214,685      23,962,989
                                                   ------------    ------------

STOCKHOLDERS' EQUITY
Preferred stock, $0.01 par value (40,000,000
 shares authorized; none issued)                             --              --
Common stock, $0.01 par value (350,000,000
 shares authorized; 120,252,459 shares
 issued at June 30, 2001 and December 31, 2000)           1,203           1,203
Additional paid-in capital                            1,163,088       1,153,376
Warrants                                                 46,722          46,722
Retained earnings                                       762,141         643,838
Treasury stock, at cost (3,801,718 shares at
 June 30, 2001 and 3,401,666 shares at
 December 31, 2000)                                    (114,674)        (87,225)
Accumulated other comprehensive loss                    (22,240)        (30,191)
Unearned compensation                                    (3,623)         (2,884)
                                                   ------------    ------------
        Total stockholders' equity                    1,832,617       1,724,839
                                                   ------------    ------------
Total liabilities and stockholders' equity         $ 27,047,302    $ 25,687,828
                                                   ============    ============
</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>
                                                            THREE MONTHS ENDED              SIX MONTHS ENDED
                                                                 JUNE 30,                       JUNE 30,
                                                         ------------------------      -------------------------
                                                           2001           2000           2001            2000
                                                           ----           ----           ----            ----
<S>                                                      <C>            <C>            <C>             <C>
INTEREST INCOME
Loans held for sale                                      $  86,749      $  36,639      $ 147,616       $  63,596
Residential real estate loans receivable                   136,736        147,091        280,314         292,596
Commercial real estate loans receivable                     74,377         75,764        153,734         144,925
Consumer loans receivable                                   56,308         56,696        118,522         109,755
Business loans receivable                                   20,423         24,012         44,639          46,874
Securities available for sale                               40,954         70,750         89,178         138,452
Other interest-earning assets                                9,200          8,438         18,216          17,199
                                                         ---------      ---------      ---------       ---------
        Total interest income                              424,747        419,390        852,219         813,397
                                                         ---------      ---------      ---------       ---------
INTEREST EXPENSE
Deposits                                                   127,169        132,286        262,217         262,762
Borrowed funds                                             121,372        130,955        255,429         239,818
                                                         ---------      ---------      ---------       ---------
        Total interest expense                             248,541        263,241        517,646         502,580
                                                         ---------      ---------      ---------       ---------
        Net interest income                                176,206        156,149        334,573         310,817
Provision for loan losses                                   11,000          7,000         28,000          14,000
                                                         ---------      ---------      ---------       ---------
        Net interest income after
         provision for loan losses                         165,206        149,149        306,573         296,817
                                                         ---------      ---------      ---------       ---------
NON-INTEREST INCOME
Loan servicing and production fees                          88,657         71,265        170,825         138,109
Banking service fees                                        16,904         16,418         32,758          31,939
Securities and insurance brokerage fees                      9,936         11,314         20,643          21,847
Net gains on sales and related activities                   73,158         30,519        173,636          67,158
Other                                                        3,280          3,891          7,084           7,535
                                                         ---------      ---------      ---------       ---------
        Total non-interest income                          191,935        133,407        404,946         266,588
                                                         ---------      ---------      ---------       ---------
NON-INTEREST EXPENSE
General and administrative expense:
    Compensation and employee benefits                      88,989         75,831        170,128         151,448
    Occupancy and equipment                                 25,106         27,612         52,787          55,726
    Other                                                   36,389         35,643         70,465          73,196
                                                         ---------      ---------      ---------       ---------
        Total general and administrative expense           150,484        139,086        293,380         280,370
Amortization and valuation adjustments of mortgage
    servicing assets and related hedging activities         62,154         31,009        124,800          60,241
Amortization of goodwill                                     8,308          8,371         16,618          16,717
Special charges                                              2,101         54,255          2,101          54,255
                                                         ---------      ---------      ---------       ---------
        Total non-interest expense                         223,047        232,721        436,899         411,583
                                                         ---------      ---------      ---------       ---------
Income before income tax expense and cumulative
    effect of a change in accounting principle             134,094         49,835        274,620         151,822
Income tax expense                                          46,263         15,392         94,744          52,106
                                                         ---------      ---------      ---------       ---------
Income before cumulative effect of a change in
    accounting principle                                    87,831         34,443        179,876          99,716
Cumulative effect of a change in accounting
    principle, net of tax benefit of $7,815                     --             --        (10,521)             --
                                                         ---------      ---------      ---------       ---------
Net income                                               $  87,831      $  34,443      $ 169,355       $  99,716
                                                         =========      =========      =========       =========
PER COMMON SHARE
Basic earnings:
    Income before cumulative effect of a change in
      accounting principle                               $    0.77      $    0.31      $    1.56       $    0.90
    Cumulative effect of a change in accounting
      principle                                                 --             --          (0.09)             --
                                                         ---------      ---------      ---------       ---------
    Net income                                           $    0.77      $    0.31      $    1.47       $    0.90
                                                         =========      =========      =========       =========
Diluted earnings:
    Income before cumulative effect of a change in
      accounting principle                               $    0.72      $    0.31      $    1.48       $    0.90
    Cumulative effect of a change in accounting
      principle                                                 --             --          (0.09)             --
                                                         ---------      ---------      ---------       ---------
    Net income                                           $    0.72      $    0.31      $    1.39       $    0.90
                                                         =========      =========      =========       =========
Cash dividends declared                                  $    0.12      $    0.08      $    0.22       $    0.14
</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>
                                                         SIX MONTHS ENDED
                                                            JUNE 30,
                                                   ---------------------------
                                                      2001            2000
                                                      ----            ----
<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                       1,153,376       1,166,530
Tax benefit associated with stock-based
  compensation plans                                    10,216           1,557
Cost of issuing Litigation Tracking
  Warrants(TM)                                            (504)             --
                                                   -----------     -----------
    Balance at end of period                         1,163,088       1,168,087
                                                   -----------     -----------
WARRANTS
Balance at beginning of period                          46,722              --
                                                   -----------     -----------
    Balance at end of period                            46,722              --
                                                   -----------     -----------
RETAINED EARNINGS
Balance at beginning of period                         643,838         670,343
Net income                                             169,355          99,716
Cash dividends declared on common stock                (25,360)        (15,592)
Issuance of treasury stock under stock-based
  compensation plans                                   (25,692)         (3,719)
                                                   -----------     -----------
    Balance at end of period                           762,141         750,748
                                                   -----------     -----------
TREASURY STOCK, AT COST
Balance at beginning of period                         (87,225)       (230,035)
Purchase of treasury stock                            (115,962)        (45,061)
Issuance of treasury stock under stock-based
  compensation plans                                    88,513          15,532
                                                   -----------     -----------
    Balance at end of period                          (114,674)       (259,564)
                                                   -----------     -----------
ACCUMULATED OTHER COMPREHENSIVE LOSS
Balance at beginning of period                         (30,191)        (87,257)
Other comprehensive income (loss)                        7,951         (12,994)
                                                   -----------     -----------
    Balance at end of period                           (22,240)       (100,251)
                                                   -----------     -----------
UNEARNED COMPENSATION
Balance at beginning of period                          (2,884)         (4,679)
Issuance of restricted stock                            (4,369)        (11,109)
Amortization of unearned compensation                    3,630          15,788
                                                   -----------     -----------
    Balance at end of period                            (3,623)             --
                                                   -----------     -----------
Total stockholders' equity                         $ 1,832,617     $ 1,560,223
                                                   ===========     ===========
</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>
                                                                    SIX MONTHS ENDED
                                                                        JUNE 30,
                                                             -----------------------------
                                                                 2001             2000
                                                                 ----             ----
<S>                                                          <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income                                                   $   169,355       $    99,716
Adjustments to reconcile net income to
  net cash used by operating activities:
    Depreciation, amortization and accretion, net                158,255           115,678
    Mortgage servicing assets valuation adjustments               51,626                --
    Provision for deferred income tax expense                     37,070            17,838
    Provision for loan losses                                     28,000            14,000
    Net securities gains                                            (453)           (1,472)
    Net increase in loans held for sale                       (2,039,789)         (431,483)
    Other, net                                                    (1,008)         (228,828)
                                                             -----------       -----------
       Net cash used by operating activities                  (1,596,944)         (414,551)
                                                             -----------       -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales of securities
  available for sale                                           1,285,161           321,811
Proceeds from maturities of securities
  available for sale                                             239,995           304,988
Purchases of securities available for sale                      (167,653)         (589,620)
Purchase of Federal Home Loan Bank
  of New York stock                                              (46,251)               --
Loans receivable originated and purchased,
  net of principal payments                                     (654,248)         (888,953)
Proceeds from sales of loans                                      12,396            39,698
Proceeds from sales of other real estate owned                     9,817            13,007
Net purchases of premises and equipment                          (14,157)          (12,659)
                                                             -----------       -----------
       Net cash provided (used) by investing activities          665,060          (811,728)
                                                             -----------       -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in deposits                                         656,946            22,834
Net increase in borrowings with original
  maturities of three months or less                             335,951         1,648,056
Proceeds from other borrowings                                   450,139                --
Repayments of other borrowings                                  (382,786)         (436,619)
Purchases of treasury stock                                     (115,962)          (45,061)
Proceeds from issuances of treasury stock                         58,452               704
Cash dividends paid                                              (25,360)          (15,592)
Other                                                               (504)               --
                                                             -----------       -----------
            Net cash provided by financing activities            976,876         1,174,322
                                                             -----------       -----------
Net increase (decrease) in cash and cash equivalents              44,992           (51,957)
Cash and cash equivalents at beginning of period                 435,311           432,455
                                                             -----------       -----------
Cash and cash equivalents at end of period                   $   480,303       $   380,498
                                                             ===========       ===========
Supplemental cash flow information:
    Interest payments on deposits and borrowed funds         $   531,104       $   501,172
    Income tax (refunds) payments, net                            (6,416)           48,973
Supplemental non-cash investing information:
    Securitization of loans receivable                           657,629            78,618
</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 adjustments) 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, 2000, as amended (the "2000 10-K"). The results for
the three months and six months ended June 30, 2001 are not necessarily
indicative of the results that may be expected for the year ending December 31,
2001. Certain amounts in prior periods have been reclassified to conform with
the current presentation.

NOTE 2 -- PENDING MERGER

     On June 25, 2001, the Holding Company entered into a definitive Agreement
and Plan of Merger (the "Merger Agreement") with Washington Mutual, Inc.
("Washington Mutual"), headquartered in Seattle, Washington, pursuant to which
the Holding Company will merge with and into Washington Mutual, with Washington
Mutual as the surviving corporation (the "Merger"). The Merger, which is
currently expected to be completed in the first quarter of 2002, is subject
to regulatory approval and the approval of the Holding Company's stockholders.

     The value of the merger consideration per share of the Holding Company's
common stock will be determined in accordance with the following formula:
$11.6245, plus 0.7511 times the average of the closing prices for Washington
Mutual's common stock during the ten consecutive full trading days ending on the
tenth business day before the completion of the Merger.

     The Holding Company's common stockholders will be entitled to elect to
receive merger consideration in the form of Washington Mutual common stock,
cash, or a combination thereof. In the Merger Agreement, the Holding Company and
Washington Mutual agreed that, in the aggregate, the merger consideration will
consist of $1,428,809,000 in cash and approximately 92.3 million shares of
Washington Mutual common stock; therefore, approximately 71.5% of the
outstanding shares of the Holding Company's common stock will be converted into
shares of Washington Mutual common stock and the remaining 28.5% will be
converted into cash. (However, to the extent that the number of outstanding
shares of the Holding Company's common stock changes, the aggregate number of
shares of Washington Mutual common stock to be issued will change accordingly,
but the aggregate cash consideration to be paid will not change.) The election
to receive cash and/or shares of Washington Mutual common stock will be subject
to proration if either the cash or stock component of the total merger
consideration is oversubscribed.

NOTE 3 -- DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

     On January 1, 2001, the Company adopted Statement of Financial Accounting
Standards ("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging
Activities," as amended. SFAS No. 133 established accounting and reporting
standards for derivative instruments, including certain derivative instruments
embedded in other contracts, and for hedging activities. Under this standard,
the Company recognizes all derivative instruments as either assets or
liabilities in its consolidated statements of financial condition and measures
those instruments at fair value. Changes in the fair values of derivatives are
reported in the Company's results of operations or other comprehensive income or
loss depending on the use of the derivative and whether it qualifies for hedge
accounting. The key criterion for hedge accounting is that the hedging
relationship must be highly effective in achieving offsetting changes in those
fair values or cash flows that are attributable to the hedged risk, both at
inception of the hedge and on an ongoing basis.

     As required under SFAS No. 133, when the Company elects to apply hedge
accounting, it establishes, at the inception of the hedge, the method it will
use for assessing the effectiveness of the hedging derivative and the
measurement approach for determining the ineffective aspect of the hedge (the
amount by which hedge gains or losses do not entirely offset corresponding
losses or gains on the hedged item). For fair value hedge transactions in

                                       7
<PAGE>   8
which the Company is hedging changes in the fair value of assets, liabilities or
firm commitments, changes in the fair values of the derivative instruments are
generally offset in the Company's results of operations by changes in the fair
values of the risks being hedged. For cash flow hedge transactions in which the
Company is hedging the variability of cash flows related to variable rate
assets, liabilities or forecasted transactions, changes in the fair values of
the derivative instruments are reported in other comprehensive income or loss
along with changes in the fair values of the risks being hedged. The gains and
losses on derivative instruments that are reported in other comprehensive income
or loss are reflected in the results of operations in the periods in which the
results of operations are impacted by the variability of the cash flows of the
hedged items. The ineffective portion of all hedges is recognized in current
period results of operations.

     Upon adoption of SFAS No. 133, the Company recorded a transition
adjustment, which resulted in an after-tax reduction in net income of $10.5
million. This transition adjustment is reflected in the Company's results of
operations as the cumulative effect of a change in accounting principle.

     As further described below, the Company uses a variety of derivative
instruments in connection with its overall interest rate risk management
strategy. The adoption of SFAS No. 133 may cause volatility in the Company's
earnings, comprehensive income and stockholders' equity as compared with prior
periods.

     The Company uses various derivative instruments as hedges against the risk
that fluctuations in interest rates will cause unfavorable changes in the fair
value of certain of its securities available for sale, loans receivable,
deposits and borrowed funds. At June 30, 2001, related derivatives accounted for
as fair value hedges included pay fixed/receive variable and pay
variable/receive fixed interest rate swaps (certain of which are forward
starting), zero coupon pay variable interest rate swaps, interest rate caps and
interest rate cap corridors, and related derivatives accounted for as cash flow
hedges included pay fixed/receive variable interest rate swaps. In addition, the
Company hedges the interest rate risk associated with sales of loans into the
secondary market. Adverse market interest rate changes between the time an
interest rate-lock commitment is granted to a customer and the time the loan is
sold to an investor can erode the fair value of that loan. Therefore, the
Company enters into forward sales transactions and purchases options to hedge
its loans held for sale. These hedges are accounted for as fair value hedges.
The interest rate-locked committed pipeline, to the extent projected to be
closed and sold in the secondary market, as well as the related forward loan
sales contracts, are considered derivatives under SFAS No. 133; however, such
derivatives do not qualify for hedge accounting and are recorded at estimated
fair value. For hedges of interest-earning assets and interest-bearing
liabilities, net gains of $0.6 million and $0.2 million were reflected in "Net
gains on sales and related activities" for the three months and six months ended
June 30, 2001, respectively, representing the sum of (i) changes in the fair
value of purchased option-based derivative instruments related to time value
(which are excluded from the assessment of hedge effectiveness) and (ii) the
ineffective portion of the hedges.

     The Company also uses various derivative instruments as fair value hedges
in order to protect against the adverse impact on the fair value of the
Company's mortgage servicing assets of declines in long-term interest rates and
the consequent increase in mortgage loan prepayment rates. At June 30, 2001,
these instruments included forward purchases of mortgage-backed securities
("MBS"), pay fixed/receive variable interest rate swaps (which are used to hedge
certain risks in the forward purchases of MBS), interest rate swaptions,
interest rate floors and interest rate flooridors. Included as a component of
"Amortization and valuation adjustments of mortgage servicing assets and related
hedging activities" for the three months and six months ended June 30, 2001 were
net gains of $15.9 million and $37.5 million, respectively, representing the sum
of (i) changes in the fair value of purchased option-based derivative
instruments related to time value (which are excluded from the assessment of
hedge effectiveness) and (ii) the ineffective portion of the hedges.

NOTE 4 -- RESTRUCTURING LIABILITY

     In September 2000, the Company announced a series of actions intended to
reduce annual expenses by approximately $50 million (the "Expense Reduction
Initiative"), which included, but were not limited to, a reduction in the
employee complement through both terminations and attrition, the consolidation
of selected operational functions and the consolidation or disposal of certain
facilities. Upon implementation of the Expense Reduction Initiative, the Company
established a restructuring liability of $38.1 million, of which $16.4 million
related to personnel costs, $20.4 million related to facilities costs and $1.3
million represented goodwill impairment. The restructuring liability was reduced
from $18.2 million at December 31, 2000 to $10.5 million at June 30, 2001 as a
result of cash payments of $5.8 million for personnel costs and $1.9 million for
facilities costs.


                                       8
<PAGE>   9
NOTE 5 -- EARNINGS PER COMMON SHARE

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

<TABLE>
<CAPTION>
                                                              THREE MONTHS ENDED              SIX MONTHS ENDED
                                                                   JUNE 30,                       JUNE 30,
                                                           ------------------------      -------------------------
                                                              2001           2000           2001            2000
                                                              ----           ----           ----            ----
<S>                                                        <C>            <C>            <C>             <C>
Income before cumulative effect of a change in
   accounting principle                                    $  87,831      $  34,443      $ 179,876       $  99,716

Cumulative effect of a change in accounting principle             --             --        (10,521)             --
                                                           ---------      ---------      ---------       ---------
Net income                                                 $  87,831      $  34,443      $ 169,355       $  99,716
                                                           =========      =========      =========       =========

Weighted average basic common shares outstanding             114,525        110,293        115,074         110,415
Effects of dilutive securities:
    Common stock options and restricted common stock           2,515          1,146          2,327             919

    Warrants to purchase Series C and Series D
        preferred stock                                        5,181             --          4,408              --
                                                           ---------      ---------      ---------       ---------
Weighted average diluted common shares outstanding           122,221        111,439        121,809         111,334
                                                           =========      =========      =========       =========
Basic earnings per common share:
    Income before cumulative effect of a change in
        accounting principle                               $    0.77      $    0.31      $    1.56       $    0.90
    Cumulative effect of a change in accounting
        principle                                                 --             --          (0.09)             --
                                                           ---------      ---------      ---------       ---------
    Net income                                             $    0.77      $    0.31      $    1.47       $    0.90
                                                           =========      =========      =========       =========
Diluted earnings per common share:
    Income before cumulative effect of a change in
        accounting principle                               $    0.72      $    0.31      $    1.48       $    0.90
    Cumulative effect of a change in accounting
        principle                                                 --             --          (0.09)             --
                                                           ---------      ---------      ---------       ---------
    Net income                                             $    0.72      $    0.31      $    1.39       $    0.90
                                                           =========      =========      =========       =========
</TABLE>

NOTE 6 -- COMPREHENSIVE INCOME

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

<TABLE>
<CAPTION>
                                       THREE MONTHS ENDED    SIX MONTHS ENDED
                                       ------------------   ------------------

                                            JUNE 30,              JUNE 30,
                                         2001      2000       2001       2000
                                         ----      ----       ----       ----
<S>                                    <C>       <C>        <C>        <C>
        Net income                     $87,831   $34,443    $169,355   $99,716
        Other comprehensive (loss)
          income, net of taxes:
            Net unrealized (loss)
              gain on securities
              available for sale
              arising during the
              period, net of
              reclassification
              adjustment                (1,453)  (10,385)      7,951   (12,994)
                                       -------   -------    --------   -------
        Comprehensive income           $86,378   $24,058    $177,306   $86,722
                                       =======   =======    ========   =======
</TABLE>

NOTE 7 -- NEW ACCOUNTING PRONOUNCEMENTS

     In June 2001, the Financial Accounting Standards Board (the "FASB") issued
SFAS No. 141, "Business Combinations," which addresses financial accounting and
reporting for business combinations. SFAS No. 141 requires that all business
combinations be accounted for using the purchase method, thereby eliminating the
use of the pooling of interests method. The provisions of SFAS No. 141 apply to
all business combinations initiated after June 30, 2001 and to all business
combinations accounted for using the purchase method for which the date of
acquisition is July 1, 2001 or later. The Company does not expect that the
adoption of SFAS No. 141 will materially impact its financial statements.

                                       9
<PAGE>   10
     In June 2001, the FASB also issued SFAS No. 142, "Goodwill and Other
Intangible Assets," which addresses financial accounting and reporting for
goodwill and other intangible assets. Under SFAS No. 142, goodwill and other
intangible assets with indefinite lives will no longer be subject to
amortization but rather will be subject to assessment for impairment on at least
an annual basis by application of a fair value-based test. For the Company, the
provisions of SFAS No. 142 are required to be applied effective January 1, 2002.
The Company does not currently expect to recognize impairment upon its initial
adoption of SFAS No. 142.

     The following table sets forth the Company's net income excluding the
after-tax effect of amortization of goodwill and related earnings per common
share for the periods indicated (in thousands, except per share data):

<TABLE>
<CAPTION>
                                                     THREE MONTHS ENDED       SIX MONTHS ENDED
                                                          JUNE 30,                JUNE 30,
                                                     ------------------     --------------------
                                                       2001       2000        2001        2000
                                                       ----       ----        ----        ----
<S>                                                  <C>        <C>         <C>         <C>
Net income excluding amortization of goodwill        $94,092    $40,867     $181,879    $112,536

Net income excluding amortization of goodwill
   per common share:
        Basic                                         $ 0.82     $ 0.37       $ 1.58      $ 1.02
        Diluted                                         0.77       0.37         1.49        1.01
</TABLE>

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.

PENDING MERGER

     On June 25, 2001, the Holding Company and Washington Mutual entered into
the Merger Agreement, pursuant to which the Holding Company will merge with and
into Washington Mutual, with Washington Mutual as the surviving corporation. The
Merger, which is currently expected to be completed in the first quarter of
2002, is subject to regulatory approval and the approval of the Holding
Company's stockholders.

RESULTS OF OPERATIONS

   General

     The Company reported net income of $87.8 million for the quarter ended June
30, 2001, as compared with $34.4 million for the quarter ended June 30, 2000,
and $169.4 million for the first six months of 2001, as compared with $99.7
million for the first six months of 2000. Diluted earnings per common share were
$0.72 and $1.39 for the three- and six-month periods ended June 30, 2001,
respectively, up from $0.31 and $0.90 for the three- and six-month periods ended
June 30, 2000, respectively. Net income and diluted earnings per common share
for the six months ended June 30, 2001 were reduced by $10.5 million and $0.09,
respectively, as a result of the cumulative effect of change in accounting
principle resulting from the adoption of SFAS No. 133, "Accounting for
Derivative Instruments and Hedging Activities." The Company's annualized returns
on average stockholders' equity for the three months and six months ended June
30, 2001 were 20.00% and 19.42%, respectively, as compared with 8.86% and 12.92%
for the three months and six months ended June 30, 2000, respectively. The
Company's annualized returns on average assets for the three months and six
months ended June 30, 2001 were 1.30% and 1.29%, respectively, up from 0.56% and
0.83% for the three months and six months ended June 30, 2000, respectively.

     The growth in net income for the 2001 periods, as compared with the prior
year periods, was achieved substantially as a result of strong residential real
estate loan production and related sales activities resulting from the
relatively lower interest rate environment, as well as the impact of the Expense
Reduction Initiative.

     Net income before special charges (the "Special Charges") for the second
quarter of 2001 was $89.2 million, up $22.6 million, or 33.9%, from the level in
the second quarter of 2000. (For a discussion of the Special Charges,

                                       10
<PAGE>   11
see Results of Operations - Non-Interest Expense.") Net income before Special
Charges for the first six months of 2001 totaled $170.7 million, which was $38.8
million, or 29.5%, higher than the level for the first six months of 2000.
Diluted earnings per common share before Special Charges were $0.73 for the
second quarter of 2001, up 21.7% from $0.60 for the comparable quarter of 2000,
and $1.40 for the first six months of 2001, an increase of 17.6% from $1.19 for
the same period one year ago. Before Special Charges, annualized returns on
average stockholders' equity for the three months and six months ended June 30,
2001 were 20.31% and 19.58%, respectively, as compared with 17.14% and 17.09%
for the three months and six months ended June 30, 2000, respectively.
Annualized returns on average assets before Special Charges for the three months
and six months ended June 30, 2001 were 1.32% and 1.30%, respectively, up from
1.09% and 1.10% for the three months and six months ended June 30, 2000,
respectively.

     The Company believes that net income before Special Charges data, when
taken in conjunction with reported results, provides useful information in
evaluating performance on a comparable basis, although not currently a required
basis for reporting financial results under generally accepted accounting
principles.

   Net Interest Income

     Net interest income on a taxable-equivalent basis amounted to $176.4
million for the quarter ended June 30, 2001, up $19.5 million from the
comparable quarter of 2000. This increase reflects growth in average
interest-earning assets of $1.9 billion, coupled with growth in the net interest
margin to 2.95% for the second quarter of 2001 from 2.88% for the second quarter
of 2000. Net interest income on a taxable-equivalent basis for the first six
months of 2001 was $335.3 million, an increase of $23.5 million from the same
period one year ago. This increase was driven by a rise in average
interest-earning assets of $1.8 billion, the effect of which was partially
offset by a reduction in the net interest margin to 2.87% for the first six
months of 2001 from 2.92% for the comparable period of 2000. The Company's
interest rate spread was 3.07% and 2.98% for the second quarter and first six
months of 2001, respectively, as compared with 2.99% and 3.03% for the second
quarter and first six months of 2000, respectively.

     The yield on average interest-earning assets was 7.13% for the second
quarter of 2001, as compared with 7.67% for the second quarter of 2000, and
7.35% for the first six months of 2001, as compared with 7.59% for the first six
months of 2000. The yields for the 2001 periods benefited from the continuation
of the Company's strategy to increase the aggregate percentage of its
non-residential loans receivable (which consist of commercial real estate,
consumer and business loans and generally have higher yields than the Company's
residential real estate loans) to total loans receivable, as well as a
significantly lower level of MBS (which generally yield below that recognized in
the loan portfolio). However, such benefits were more than offset by the effects
of a declining interest rate environment during the 2001 periods. The average
balance of non-residential loans rose $0.9 billion, or 12.2%, for the second
quarter of 2001, as compared with the same year ago quarter, and $1.1 billion,
or 14.6%, for the six months ended June 30, 2001, as compared with the
corresponding 2000 period. Such loans represented 52.1% of total average loans
receivable for the second quarter of 2001, up from 47.8%, for the second quarter
of 2000, and 51.6% for the first six months of 2001, an increase from 47.1% for
the first six months of 2000.

     The cost of average interest-bearing liabilities declined to 4.06% for the
second quarter of 2001 from 4.68% for the same period of 2000 and to 4.37% for
the first six months of 2001 from 4.56% for the comparable period of 2000. These
declines reflect the lower interest rate environment in the 2001 periods, the
impact of which was partially offset by significantly higher levels of borrowed
funds, which was necessitated to fund the higher level of residential real
estate loan production, and higher time deposit costs. The cost of average
interest-bearing liabilities in the 2001 periods, versus the 2000 periods,
benefited somewhat by the Company's ongoing strategy to grow its core deposits,
which consist of demand, savings and money market deposits and are generally
less costly than the Company's time deposits and borrowed funds. Average core
deposits for the second quarter of 2001 were $8.3

                                       11
<PAGE>   12
billion, or 56.5% of average total deposits, up from $7.7 billion, or 54.3% of
average total deposits, for the second quarter of 2000. Average core deposits
for the first six months of 2001 were $8.1 billion, or 56.2% of average total
deposits, up from $7.7 billion, or 54.1% of average total deposits, for the
first six months of 2000.


                                       12
<PAGE>   13
     The following tables set forth, for the periods indicated, the Company's
consolidated statement of average financial condition, net interest income,
interest rate spread and net interest margin. The information in the tables is
presented on a tax-equivalent basis assuming a federal income tax rate of 35%
and applicable state and local income tax rates. Non-accrual loans are included
in average balances in the tables below.

<TABLE>
<CAPTION>
                                                                             THREE MONTHS ENDED JUNE 30,
                                                      ------------------------------------------------------------------------
                                                                     2001                                  2000
                                                      ----------------------------------    ----------------------------------
                                                                                  AVERAGE                               AVERAGE
                                                        AVERAGE                    YIELD/     AVERAGE                    YIELD/
                                                        BALANCE      INTEREST       COST      BALANCE       INTEREST      COST
                                                        -------      --------       ----      -------       --------      ----
                                                                               (DOLLARS IN THOUSANDS)
<S>                                                   <C>           <C>           <C>       <C>            <C>          <C>
ASSETS
Interest-earning assets:
    Loans held for sale                               $ 4,745,754   $  86,749       7.33%   $ 1,775,859    $  36,639      8.28%
    Loans receivable:
        Residential real estate                         7,747,362     136,736       7.06      8,219,236      147,091      7.16
        Commercial real estate                          4,258,760      74,377       6.99      3,716,320       75,764      8.16
        Consumer                                        3,077,687      56,308       7.34      2,711,016       56,696      8.39
        Business                                        1,092,926      20,423       7.49      1,087,281       24,012      8.86
                                                      -----------   ---------               -----------    ---------
           Total loans receivable                      16,176,735     287,844       7.12     15,733,853      303,563      7.73
                                                      -----------   ---------               -----------    ---------
    Securities available for sale:
        MBS                                             1,973,551      33,866       6.86      3,467,037       62,116      7.17
        Other                                             402,997       7,310       7.26        467,485        9,434      8.07
                                                      -----------   ---------               -----------    ---------
           Total securities available for sale          2,376,548      41,176       6.93      3,934,522       71,550      7.27
                                                      -----------   ---------               -----------    ---------
    Other interest-earning assets                         558,509       9,200       6.60        490,233        8,438      6.91
                                                      -----------   ---------               -----------    ---------
           Total interest-earning assets               23,857,546     424,969       7.13     21,934,467      420,190      7.67
                                                      -----------   ---------               -----------    ---------
Other assets                                            3,098,737                             2,507,865
                                                      -----------                           -----------
Total assets                                          $26,956,283                           $24,442,332
                                                      ===========                           ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing liabilities:
    Deposits:
        Core:
            Demand                                    $ 2,795,912       2,411       0.35    $ 2,161,225        1,910      0.36
            Savings                                     2,272,274      12,173       2.15      2,352,232       12,506      2.14
            Money market                                3,184,387      27,293       3.44      3,235,486       32,912      4.09
                                                      -----------   ---------               -----------    ---------
           Total core                                   8,252,573      41,877       2.04      7,748,943       47,328      2.46
        Time                                            6,348,428      85,292       5.39      6,509,594       84,958      5.25
                                                      -----------   ---------               -----------    ---------
           Total deposits                              14,601,001     127,169       3.49     14,258,537      132,286      3.73
                                                      -----------   ---------               -----------    ---------
    Borrowed funds:
        Federal funds purchased and securities sold
            under agreements to repurchase              3,466,341      38,348       4.44      3,380,967       54,139      6.34

        Other short-term borrowings                     4,517,919      50,359       4.47      3,509,052       54,258      6.12
        Long-term debt                                  1,925,449      32,665       6.80      1,307,394       22,558      6.86
                                                      -----------   ---------               -----------    ---------
           Total borrowed funds                         9,909,709     121,372       4.91      8,197,413      130,955      6.33
                                                      -----------   ---------               -----------    ---------
           Total interest-bearing liabilities          24,510,710     248,541       4.06     22,455,950      263,241      4.68
                                                      -----------   ---------               -----------    ---------
Other liabilities                                         688,624                               431,520
Stockholders' equity                                    1,756,949                             1,554,862
                                                      -----------                           -----------
Total liabilities and stockholders' equity            $26,956,283                           $24,442,332
                                                      ===========                           ===========
Net interest income                                                 $ 176,428                              $ 156,949
                                                                    =========                              =========
Interest rate spread                                                                3.07                                  2.99
Net interest margin                                                                 2.95                                  2.88
</TABLE>


                                       13
<PAGE>   14
<TABLE>
<CAPTION>
                                                                           SIX MONTHS ENDED JUNE 30,
                                                -------------------------------------------------------------------------------
                                                                  2001                                      2000
                                                -------------------------------------     -------------------------------------
                                                                               AVERAGE                                   AVERAGE
                                                  AVERAGE                       YIELD/       AVERAGE                      YIELD/
                                                  BALANCE        INTEREST        COST        BALANCE      INTEREST         COST
                                                  -------        --------        ----        -------      --------         ----
                                                                            (DOLLARS IN THOUSANDS)
<S>                                             <C>            <C>             <C>        <C>            <C>             <C>
ASSETS
Interest-earning assets:
  Loans held for sale                           $ 3,965,844    $   147,616      7.49%     $ 1,550,226    $    63,596      8.24%
  Loans receivable:
    Residential real estate                       7,851,047        280,314      7.14        8,207,686        292,596      7.13
    Commercial real estate                        4,205,359        153,734      7.33        3,616,297        144,925      8.02
    Consumer                                      3,064,986        118,522      7.78        2,623,975        109,755      8.39
    Business                                      1,113,924         44,639      8.07        1,076,618         46,874      8.73
                                                -----------    -----------                -----------    -----------
       Total loans receivable                    16,235,316        597,209      7.37       15,524,576        594,150      7.66
                                                -----------    -----------                -----------    -----------
  Securities available for sale:
    MBS                                           2,090,672         74,023      7.08        3,466,785        122,797      7.08
    Other                                           428,972         15,903      7.41          429,579         16,658      7.76
                                                -----------    -----------                -----------    -----------
       Total securities available for sale        2,519,644         89,926      7.14        3,896,364        139,455      7.16
                                                -----------    -----------                -----------    -----------
  Other interest-earning assets                     527,634         18,216      6.95          502,868         17,199      6.87
                                                -----------    -----------                -----------    -----------
       Total interest-earning assets             23,248,438        852,967      7.35       21,474,034        814,400      7.59
                                                -----------    -----------                -----------    -----------
Other assets                                      3,020,441                                 2,485,212
                                                -----------                               -----------
Total assets                                    $26,268,879                               $23,959,246
                                                ===========                               ===========

LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing liabilities:
  Deposits:
    Core:
     Demand                                     $ 2,618,402          4,501      0.35      $ 2,093,070          3,678      0.35
     Savings                                      2,252,981         24,060      2.15        2,361,679         25,422      2.16
     Money market                                 3,210,261         60,920      3.83        3,244,955         65,852      4.08
                                                -----------    -----------                -----------    -----------
       Total core                                 8,081,644         89,481      2.23        7,699,704         94,952      2.48
    Time                                          6,301,133        172,736      5.53        6,545,186        167,810      5.16
                                                -----------    -----------                -----------    -----------
       Total deposits                            14,382,777        262,217      3.68       14,244,890        262,762      3.71
                                                -----------    -----------                -----------    -----------
  Borrowed funds:
    Federal funds purchased and
     securities sold under
     agreements to repurchase                     3,357,334         84,355      5.07        3,368,477        103,020      6.05
    Other short-term borrowings                   4,102,480        102,085      5.02        3,071,349         91,823      5.91
    Long-term debt                                2,017,090         68,989      6.87        1,311,439         44,975      6.82
                                                -----------    -----------                -----------    -----------
       Total borrowed funds                       9,476,904        255,429      5.43        7,751,265        239,818      6.13
                                                -----------    -----------                -----------    -----------
       Total interest-bearing liabilities        23,859,681        517,646      4.37       21,996,155        502,580      4.56
                                                -----------    -----------                -----------    -----------
Other liabilities                                   665,159                                   419,444
Stockholders' equity                              1,744,039                                 1,543,647
                                                -----------                               -----------
Total liabilities and stockholders' equity      $26,268,879                               $23,959,246
                                                ===========                               ===========
Net interest income                                            $   335,321                               $   311,820
                                                               ===========                               ===========
Interest rate spread                                                            2.98                                      3.03
Net interest margin                                                             2.87                                      2.92
</TABLE>


                                       14
<PAGE>   15
     The following table sets forth the changes in interest income on a
taxable-equivalent basis and interest expense 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>
                                             THREE MONTHS ENDED                            SIX MONTHS ENDED
                                         JUNE 30, 2001 VERSUS 2000                    JUNE 30, 2001 VERSUS 2000
                                   --------------------------------------       --------------------------------------
                                            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:
    Loans held for sale            $ 54,733       $ (4,623)      $ 50,110       $ 90,429       $ (6,409)      $ 84,020
    Loans receivable                  8,368        (24,087)       (15,719)        26,629        (23,570)         3,059
    Securities available
     for sale                       (27,136)        (3,238)       (30,374)       (49,136)          (393)       (49,529)
    Other interest-earning
     assets                           1,137           (375)           762            854            163          1,017
                                   --------       --------       --------       --------       --------       --------
       Total interest income         37,102        (32,323)         4,779         68,776        (30,209)        38,567
                                   --------       --------       --------       --------       --------       --------
Interest expense:
    Deposits                          3,122         (8,239)        (5,117)         2,530         (3,075)          (545)
    Borrowed funds                   24,339        (33,922)        (9,583)        49,033        (33,422)        15,611
                                   --------       --------       --------       --------       --------       --------
       Total interest expense        27,461        (42,161)       (14,700)        51,563        (36,497)        15,066
                                   --------       --------       --------       --------       --------       --------
Net interest income                $  9,641       $  9,838       $ 19,479       $ 17,213       $  6,288       $ 23,501
                                   ========       ========       ========       ========       ========       ========
</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"), amounted to $11.0 million for the second quarter of 2001 and
$28.0 million for the first six months of 2001. In comparison, the provision for
loan losses was $7.0 million and $14.0 million for the three- and six-month
periods ended June 30, 2000, respectively. The increases in the provision for
loan losses were consistent with the Company's intent to migrate its allowance
for loan losses to a level commensurate with its changing loan portfolio mix.

   Non-Interest Income

     Non-interest income was $191.9 million for the quarter ended June 30, 2001,
up 43.9% from $133.4 million for the same quarter of 2000. For the first six
months of 2001, non-interest income was $404.9 million, a 51.9% increase from
$266.6 million in the comparable prior year period. These increases largely
resulted from the favorable impact on net gains on loan sales and loan
production fees of substantially higher residential real estate loan production
in the 2001 periods as compared with the 2000 periods. Non-interest income
represented 52.1% of total revenue (net interest income plus non-interest
income) for the second quarter of 2001, as compared with 46.1% for the second
quarter of 2000, and 54.8% for the first six months of 2001, as compared with
46.2% for the first six months of 2000.

     Loan servicing and production fees amounted to $88.7 million for the second
quarter of 2001, an increase of $17.4 million, or 24.4%, from the comparable
quarter of 2000. Loan servicing and production fees for the first six months of
2001 were $170.8 million, up $32.7 million, or 23.7%, from the same period one
year ago. The higher levels of such fees were largely attributable to growth in
loan production fees to $33.6 million for the second quarter of 2001 from $17.3
million for the second quarter of 2000 and to $59.4 million for the first six
months of 2001 from $30.4 million for the first six months of 2000. Driving the
increases in loan production fees was growth in residential real estate loan
production to $12.4 billion and $21.9 billion for the three and six months ended
June 30, 2001, respectively, from $4.9 billion and $8.2 billion for the three
and six months ended June 30, 2000, respectively, resulting primarily from
significantly higher levels of refinance activity and, to a lesser extent,
higher levels of originations of loans for home purchases.

     At June 30, 2001, the Company's portfolio of mortgage loans serviced for
others (excluding loans being subserviced by the Company) amounted to $42.7
billion, up $1.6 billion from December 31, 2000 and up $4.5 billion from June
30, 2000. This portfolio consists substantially of residential real estate
loans, the underlying

                                       15
<PAGE>   16
weighted average note rates of which were 7.31%, 7.40% and 7.30% at June 30,
2001, December 31, 2000 and June 30, 2000, respectively. In connection with
sales of mortgage loan servicing rights, the Company was subservicing $6.5
billion of loans at June 30, 2001, as compared with $3.1 billion and $2.9
billion at December 31, 2000 and June 30, 2000, respectively. The Company
receives fees for subservicing loans until the transfer of the servicing
responsibility to the purchasers of the servicing rights. It has been the
Company's recent practice to sell the majority of the mortgage servicing rights
associated with its newly-originated residential real estate loans held for sale
under contractual flow sale arrangements. In light of the expiration in July
2001 of one of its contractual flow sale arrangements, coupled with the pending
Merger, the Company is evaluating what its practice in this area will be going
forward.

     Net gains on sales and related activities were $73.2 million for the three
months ended June 30, 2001, up $42.6 million from the same quarter one year ago.
Net gains on sales and related activities for the first six months of 2001 were
$173.6 million, an increase of $106.5 million from the comparable prior year
period. These increases largely reflect growth in loan sales to $11.2 billion
for the second quarter of 2001 from $3.9 billion for the comparable 2000 quarter
and to $17.9 billion for the first six months of 2001 from $7.0 billion for the
same period one year ago. Under SFAS No. 133, gains resulting from the
production and sale of loans into the secondary market are recorded at the time
value is created during the residential mortgage origination process. Under
prior guidelines, the value of loans originated for sale was recognized only
upon actual sale. Approximately $29.5 million of net gains recorded during the
first quarter of 2001 would have been recorded during the fourth quarter of 2000
had SFAS No. 133 been in effect at that time.

   Non-Interest Expense

     Non-interest expense amounted to $223.0 million and $436.9 million for the
second quarter and first six months of 2001, respectively, as compared with
$232.7 million and $411.6 million for the second quarter and first six months of
2000, respectively. Excluding the Special Charges, non-interest expense was
$220.9 million for the second quarter of 2001, up 23.8% from $178.5 million for
the second quarter of 2000, and $434.8 million for the first six months of 2001,
up 21.7% from $357.3 million for the first six months of 2000. These increases
were largely attributable to higher amortization and valuation adjustments of
mortgage servicing assets and related hedging activities, and, to a lesser
extent, higher levels of mortgage banking-related general and administrative
("G&A") expense.

     G&A expense totaled $150.5 million for the second quarter of 2001, an
increase of $11.4 million from the same quarter one year ago. For the first six
months of 2001, G&A expense was $293.4 million, up $13.0 million from the
comparable year-ago period. The higher G&A expense levels were fueled by
increases in variable mortgage-banking related expenses resulting from growth in
residential real estate loan production, which more than offset the favorable
effects of the Expense Reduction Initiative. A substantial portion of the $50
million of expense reductions under the Expense Reduction Initiative were
achieved by December 31, 2000, and the program was completed by June 30, 2001.
The efficiency ratio improved to 40.9% for the second quarter of 2001 from 48.0%
for the same quarter of 2000 and to 39.7% for the first six months of 2001 from
48.6% for the corresponding period of 2000.

     Amortization and valuation adjustments of mortgage servicing assets and
related hedging activities amounted to $62.2 million for the second quarter of
2001 and $124.8 million for the first six months of 2001, up from $31.0 million
for the second quarter of 2000 and $60.2 million for the first six months of
2000. These increases occurred largely due to higher amortization resulting from
sharp increases in prepayment activity of the loans underlying the mortgage
servicing assets portfolio in response to the lower mortgage interest rate
environment during the 2001 periods. Included in the second quarter and first
six months of 2001 were charges of $13.7 million and $51.6 million,
respectively, as valuation allowances against the mortgage servicing assets, the
impact of which was more than offset in the second quarter of 2001 and partially
offset in the first six months of 2001 by net gains (including those associated
with net accruals and cash payments) of $16.5 million and $39.6 million,
respectively, associated with related hedging activities.

     Special Charges for each of the three months and six months ended June 30,
2001 amounted to $2.1 million and were largely associated with the accelerated
vesting of certain of the Holding Company's restricted common stock as a result
of its entering into the Merger Agreement. Special Charges during each of the
second quarter and first six months of 2000 amounted to $54.3 million and were
related to the defense of a hostile takeover attempt of the

                                       16
<PAGE>   17
Holding Company, which ultimately expired by its terms in September 2000, the
accelerated vesting of the Holding Company's restricted common stock triggered
by this hostile takeover attempt and the termination, in April 2000, of a merger
agreement.

   Income Tax Expense

     Income tax expense amounted to $46.3 million and $94.7 million for the
three- and six month periods ended June 30, 2001, respectively, as compared with
$15.4 million and $52.1 million for the three- and six-month periods ended June
30, 2000, respectively. The increases in the 2001 periods from the 2000 periods
principally reflect growth in pre-tax income. The Company's effective income tax
rates, on both a reported basis and a net income before Special Charges basis,
were 34.5% for each of the second quarter and first six months of 2001. For the
second quarter and first six months of 2000, the Company's effective income tax
rates on a reported basis were 30.9% and 34.3%, respectively, whereas on a net
income before Special Charges basis, the effective income tax rates were 36.0%
for each of the 2000 periods.

BUSINESS SEGMENTS

     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 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 (dollars in thousands):

<TABLE>
<CAPTION>
                                                                                           TOTAL
                               RETAIL       COMMERCIAL      MORTGAGE      INVESTMENT     REPORTABLE     RECONCILING
                              BANKING        BANKING        BANKING       PORTFOLIO       SEGMENTS       ITEMS (1)       TOTAL
                              -------        -------        -------       ---------       --------       ---------       -----
<S>                         <C>            <C>            <C>            <C>            <C>            <C>            <C>
THREE MONTHS ENDED
JUNE 30, 2001:
Revenue (2)                 $   122,424    $    37,889    $   213,088    $     6,059    $   379,460    $   (22,319)   $   357,141
Net income before Special
    Charges                      41,087         16,195         41,099          3,360        101,741        (12,534)        89,207
Segment net income to
    total net income of
    reportable segments            40.4%          15.9%          40.4%           3.3%         100.0%

THREE MONTHS ENDED
JUNE 30, 2000:
Revenue (2)                 $   136,717    $    34,726    $   110,899    $    14,223    $   296,565    $   (14,009)   $   282,556
Net income before Special
    Charges                      44,830         14,342          8,945          8,340         76,457         (9,841)        66,616
Segment net income to
    total net income of
    reportable segments            58.6%          18.8%          11.7%          10.9%         100.0%

SIX MONTHS ENDED
JUNE 30, 2001:
Revenue (2)                 $   255,338    $    73,657    $   417,777    $    20,075    $   766,847    $   (55,328)   $   711,519
Net income before Special
    Charges                      87,974         30,700         83,822         11,816        214,312        (43,581)       170,731
Segment net income to
    total net income of
    reportable segments            41.1%          14.3%          39.1%           5.5%         100.0%

SIX MONTHS ENDED
JUNE 30, 2000:
Revenue (2)                 $   264,399    $    70,462    $   218,589    $    27,482    $   580,932    $   (17,527)   $   563,405
Net income before Special
    Charges                      83,550         29,686         15,214         16,293        144,743        (12,854)       131,889
Segment net income to
    total net income of
    reportable segments            57.7%          20.5%          10.5%          11.3%         100.0%

ASSETS AT:
June 30, 2001               $10,835,931    $ 5,359,527    $ 7,301,766    $ 2,972,591    $26,469,815    $   577,487    $27,047,302
June 30, 2000                11,123,713      5,007,947      4,009,457      4,401,428     24,542,545        716,231     25,258,776
</TABLE>

----------

(1)  Reconciling items include intersegment eliminations, the Company's funding
     center, and, for the six months ended June 30, 2001, the $10.5 million
     after-tax charge for the cumulative effect of a change in accounting
     principle.

(2)  Revenue reflects net interest income after provision for loan losses plus
     non-interest income.

     Reconcilements of net income before Special Charges to reported net income
are provided in the following table for the periods indicated (in thousands):

<TABLE>
<CAPTION>
                                      THREE MONTHS ENDED     SIX MONTHS ENDED
                                            JUNE 30,              JUNE 30,
                                      -------------------   -------------------
                                        2001       2000       2001       2000
                                        ----       ----       ----       ----
<S>                                   <C>        <C>        <C>        <C>
        Net income before Special
          Charges                     $ 89,207   $ 66,616   $170,731   $131,889
        Special Charges                 (2,101)   (54,255)    (2,101)   (54,255)
        Income tax benefits on
            Special Charges                725     22,082        725     22,082
                                       -------   --------   --------   --------
        Reported net income           $ 87,831   $ 34,443   $169,355   $ 99,716
                                      ========   ========   ========   ========
</TABLE>


                                       18
<PAGE>   19
     The Retail Banking segment, which focuses on individuals, includes deposit
accounts and related services, securities brokerage services, insurance
products, consumer lending activities and a portfolio of residential real estate
loans receivable. For the second quarter of 2001, the Retail Banking segment's
net income was $41.1 million, a decrease of $3.7 million, or 8.3%, as compared
with the same quarter of 2000. This decline mainly reflects the lower market
interest rates in 2001 resulting in reduced management accounting-related
credits on deposits, the effects of which were partially offset by growth in
average consumer loans receivable. The Retail Banking segment's net income for
the first six months of 2001 was $88.0 million, up $4.4 million, or 5.3%, from
the same period one year ago. These increases were principally due to growth in
average consumer loans receivable, coupled with a lower provision for loan
losses associated with residential real estate loans receivable, the effects of
which were partially offset by the impact of lower market rates on deposits
discussed above.

     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. The net income generated by the
Commercial Banking segment was $16.2 million for the second quarter of 2001, up
12.9% from $14.3 million for the comparable prior year quarter, and $30.7
million for the first six months of 2001, up 3.4% from $29.7 million for the
same period one year ago. These increases were primarily due to growth in
average commercial real estate and business loans, the effects of which were
partially offset by higher provisions for loan losses.

     The Mortgage Banking segment's activities include the production of
residential real estate loans for sale into the secondary market and, to a far
lesser degree, for the Company's portfolio and servicing loans for the Company
and others. The Mortgage Banking segment had net income of $41.1 million for the
second quarter of 2001, up $32.2 million from the second quarter of 2000, and
$83.8 million for the first six months of 2001, an increase of $68.6 million
from the comparable year-ago period. These increases largely reflect higher loan
production and loan sales activities, the effects of which were partially offset
by higher non-interest expenses.

     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.
In addition, this segment includes Federal Home Loan Bank of New York ("FHLBNY")
stock required to be held by The Dime Savings Bank of New York, FSB (the "Bank")
as a member of the FHLBNY. The net income for the Investment Portfolio segment
amounted to $3.4 million for the second quarter of 2001, a decrease of $5.0
million from the comparable quarter of 2000. For the first six months of 2001,
the Investment Portfolio segment's net income was $11.8 million, a decline of
$4.5 million from the comparable period of 2000. These declines were primarily
due to a reduction in MBS.

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, mortgage
servicing assets, interest-bearing liabilities and derivative 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 loan prepayment and
closing behavior, the relative repricing characteristics of its interest-

                                       19
<PAGE>   20
earning assets and interest-bearing liabilities, as well as depositors' choices.
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 exposure to foreign exchange rate risk or commodity price risk. Movements in
equity prices may have an indirect effect on certain of the Company's business
activities or the value of credit sensitive loans and securities.

   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 instruments.

     The sensitivity of the Company's net interest income to interest rates is
driven 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,
mortgage loans and the loans 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 lower prepayments due to rising interest
rates or decrease as a result of higher prepayments due to falling 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 affected in a complementary fashion, the
gap between the duration of the Company's interest-earning assets and
interest-bearing liabilities generally increases as interest rates rise and
decreases as interest rates fall. 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 Instruments

     The Company currently uses a variety of derivative instruments to assist in
managing the interest rate risk exposures in its net interest income, mortgage
servicing assets, and loans held for sale and related loan commitment

                                       20
<PAGE>   21
pipeline. While the Company's use of derivative 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.

     The Company's assets have historically repriced or matured at a longer term
than the liabilities used to fund those assets. At June 30, 2001, the Company
used the following derivative instruments in its efforts to reduce the effects
on net interest income of its repricing risk associated with certain of its
securities available for sale, loans receivable and borrowed funds: (i) interest
rate swaps where, based on the specified notional amount, the Company either
makes fixed-rate payments and receives variable-rate payments or makes
variable-rate payments and receives fixed-rate payments, with the variable rates
tied to the one- or three-month London Interbank Offered Rate ("LIBOR"); (ii)
interest rate caps, where, in exchange for the payment of a premium to the
counterparty, the Company receives the excess of a designated market interest
rate (substantially one-month LIBOR) over a specified strike rate, as applied to
the specified notional amount; and (iii) interest rate cap corridors, where, in
exchange for the payment of a premium to the counterparty, the Company receives
the amount by which one-month LIBOR exceeds a specified strike rate up to a
maximum rate, as applied to the specified notional amount. In addition, the
Company, in connection with its issuance of time deposits, including zero coupon
time deposits, with various call features, has entered into: (i) interest rate
swaps (certain of which are forward starting) where the Company pays a variable
rate based on one- or three-month LIBOR less a specified margin and receives a
fixed interest rate; and (ii) zero coupon interest rate swaps, where the Company
pays a variable rate based on three-month LIBOR less a margin with the notional
amount increasing to par value over its life. These interest rate swaps and zero
coupon interest rate swaps have call features that match the hedged time
deposits and, when considered together with the related time deposits, that
result in short-term repricing liabilities. The Company uses these time deposits
to replace short-term repricing wholesale funds.

     At June 30, 2001, the Company used the following derivative instruments to
protect against the adverse impact on the value of the Company's mortgage
servicing assets of declines in long-term interest rates and the consequent
increase in mortgage loan prepayment rates: (i) forward contracts to purchase
MBS; (ii) interest rate swaps (which are used to hedge certain risks in the
forward contracts to purchase MBS), where the Company pays a fixed rate and
receives a variable rate, with the variable rates tied to one- or three-month
LIBOR; (iii) interest rate swaptions, where, in exchange for the payment of a
premium to the counterparty, the Company has the right, but not the obligation,
to enter into pay fixed/receive variable interest rate swap agreements at a
future date; (iv) interest rate floors, where, in exchange for the payment of a
premium to the counterparty, the Company receives the excess of a specified
strike rate over the constant maturity swap index, as applied to the specified
notional amount; and (v) interest rate flooridors, where, in exchange for the
payment of a premium to the counterparty, the Company receives the amount by
which a swap rate is below a specified strike rate up to a minimum rate, as
applied to the specified notional amount.

     In addition, the Company hedges the interest rate risk associated with
sales of loans into the secondary market. Adverse market interest rate changes
between the time an interest rate-lock commitment is granted to a customer and
the time the loan is sold to an investor can erode the fair value of that loan.
Therefore, the Company enters into forward sales transactions and purchases
options to hedge its loans held for sale and to manage the interest rate risk on
the related interest rate-locked commitment pipeline.


                                       21
<PAGE>   22
     The following table sets forth the derivative instruments used by the
Company at June 30, 2001 for interest rate risk-management purposes (dollars in
thousands):

<TABLE>
<CAPTION>
                                                                                       WEIGHTED AVERAGE
                                                                        ESTIMATED      ----------------
                                                        NOTIONAL          FAIR           PAY    RECEIVE
                                                         AMOUNT           VALUE         RATE     RATE
                                                         ------           -----         ----     ----
<S>                                                    <C>             <C>              <C>     <C>
Net interest income risk-management instruments:
    Pay fixed/receive variable interest rate
      swap hedging:
        Securities available for sale(1)               $   405,091     $   (17,077)     6.86%    4.08%
        Loans receivable(1)                              1,597,903         (28,926)     6.28     3.89
        Borrowed funds(1)                                  100,000            (224)     6.06     4.06
    Pay variable/receive fixed interest rate
      swaps hedging:
        Time deposits(1)                                   223,000          (4,508)     3.96     6.51
        Borrowed funds(1)                                  500,000             472      3.98     5.08
    Forward starting pay variable/receive
      fixed interest rate swaps hedging time deposits       10,000            (266)       --       --
    Zero coupon pay variable interest rate swaps
        hedging time deposits(1)                             7,120            (347)     3.93       --
    Interest rate caps hedging loans receivable(3)          87,846               5        --       --
    Interest rate cap corridors hedging:
        Securities available for sale(4)                    14,000             187        --       --
        Loans receivable(4)                                 64,527             600        --       --
                                                       -----------     -----------
            Total net interest income
              risk-management instruments                3,009,487         (50,084)
                                                       -----------     -----------
Mortgage servicing assets risk-management
  instruments:
    Pay fixed/receive variable interest
      rate swaps(1)                                        680,000             584      5.24     3.87
    Interest rate swaptions(5)                           2,265,000          42,252        --       --
    Interest rate floors(6)                              3,540,000          46,484        --       --
    Interest rate flooridors(7)                            900,000           3,811        --       --
    Forward contracts                                    3,505,000         (17,999)       --       --
                                                       -----------     -----------
            Total mortgage servicing assets risk-
              management instruments                    10,890,000          75,132
                                                       -----------     -----------
Loans held for sale and related loan commitment
  pipeline risk-management instruments:
        Forward contracts                                6,574,548          15,125        --       --
        Put options purchased                              120,000             403        --       --
                                                       -----------     -----------
            Total loans held for sale and related
              loan commitment pipeline
              risk-management instruments                6,694,548          15,528
                                                       -----------     -----------
Total interest rate risk-management instruments        $20,594,035     $    40,576
                                                       ===========     ===========
</TABLE>

----------

(1)  Variable rates are presented on the basis of rates in effect at June 30,
     2001.

(2)  The accrual of interest begins July 20, 2001. The variable-rate payable
     will be tied to three-month LIBOR and the fixed-rate receivable will be
     7.00%.

(3)  The weighted average strike rate was 6.97%.

(4)  The weighted average strike rate was 5.94% and the weighted average maximum
     rate was 7.44%.

(5)  The weighted average strike rate was 5.90%.

(6)  The weighted average strike rate was 6.24%.

(7)  The weighted average strike rate was 5.68% and the weighted average minimum
     rate was 4.68%.


                                       22
<PAGE>   23
   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
instruments at June 30, 2001. The amount of each asset, liability or derivative
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 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>
                                                      PROJECTED REPRICING
                                             --------------------------------------
                                                            OVER ONE
                                                            THROUGH          OVER
                                             ONE YEAR        THREE          THREE
                                             OR LESS         YEARS          YEARS          TOTAL
                                             -------         -----          -----          -----
                                                             (DOLLARS IN MILLIONS)
<S>                                          <C>            <C>            <C>            <C>
Interest-earning assets                      $ 13,221       $  4,681       $  6,016       $ 23,918
Interest-bearing liabilities                   17,511          3,841          3,186         24,538
                                             --------       --------       --------       --------
Periodic gap before impact of derivative
  instruments                                  (4,290)           840          2,830           (620)
Impact of derivative instruments                1,695            100         (1,795)            --
                                             --------       --------       --------       --------
Periodic gap                                 $ (2,595)      $    940       $  1,035       $   (620)
                                             ========       ========       ========       ========
Cumulative gap                               $ (2,595)      $ (1,655)      $   (620)
                                             ========       ========       ========
Cumulative gap as a percentage of total
  assets                                         (9.6)%         (6.1)%         (2.3)%
</TABLE>

MANAGEMENT OF CREDIT RISK

     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.

     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
collectibility of contractual principal or interest payments is doubtful.


                                       23
<PAGE>   24
     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,
                                               2001         2000         2000
                                               ----         ----         ----
<S>                                          <C>         <C>            <C>
         Non-accrual loans:
             Residential real estate          $36,634      $41,071      $35,897
             Commercial real estate             4,963        2,348        4,645
             Consumer                           6,741        8,392        8,957
             Business                          13,710       15,352       16,330
                                              -------      -------      -------
                 Total non-accrual loans       62,048       67,163       65,829
                                              -------      -------      -------
         Other real estate owned, net:
             Residential real estate            9,647       19,549       15,116
             Commercial real estate               747          823        3,156
                                              -------      -------      -------
                 Total other real estate
                   owned, net                  10,394       20,372       18,272
                                              -------      -------      -------
         Total non-performing assets          $72,442      $87,535      $84,101
                                              =======      =======      =======
         Non-performing assets to total          0.27%        0.34%        0.33%
           assets
         Non-accrual loans to loans              0.38         0.41         0.41
           receivable
</TABLE>

     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, 2001, 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          $27,713     $11,280    $38,993
           Commercial real estate               749          --        749
           Consumer                          17,461       4,366     21,827
           Business                           3,385       3,556      6,941
                                            -------     -------    -------
           Total                            $49,308     $19,202    $68,510
                                            =======     =======    =======
</TABLE>

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

<TABLE>
<CAPTION>
                                              THREE MONTHS ENDED           SIX MONTHS ENDED
                                                   JUNE 30,                    JUNE 30,
                                            ----------------------      ----------------------
                                              2001          2000          2001          2000
                                              ----          ----          ----          ----
<S>                                         <C>           <C>           <C>           <C>
           Balance at beginning of
             period                         $147,210      $142,485      $144,362      $140,296
           Provision for loan losses          11,000         7,000        28,000        14,000
           Loan charge-offs:
               Residential real estate        (1,867)       (4,644)       (3,814)       (8,098)
               Commercial real estate           (224)          (18)         (292)          (32)
               Consumer                       (2,836)       (3,048)       (7,143)       (5,784)
               Business                       (4,709)         (120)      (13,928)         (125)
                                            --------      --------      --------      --------
                   Total loan
                     charge-offs              (9,636)       (7,830)      (25,177)      (14,039)
                                            --------      --------      --------      --------
           Loan recoveries:
               Residential real estate           291           221           524           779
               Commercial real estate             97           593           118           621
               Consumer                        1,274           960         2,338         1,763
               Business                          101             3           172            12
                                            --------      --------      --------      --------
                   Total loan
                     recoveries                1,763         1,777         3,152         3,175
                                            --------      --------      --------      --------
                   Net loan charge-offs       (7,873)       (6,053)      (22,025)      (10,864)
                                            --------      --------      --------      --------
           Balance at end of period         $150,337      $143,432      $150,337      $143,432
                                            ========      ========      ========      ========
</TABLE>


                                       24
<PAGE>   25
     The increase in net loan charge-offs for the first six months of 2001 from
the comparable period of 2000 was largely attributable to a $9.0 million
write-down of a single business loan during the first quarter of 2001.

     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,
                                                 2001         2000        2000
                                                 ----         ----        ----
<S>                                            <C>        <C>           <C>
          Allowance for loan losses to:
              Loans receivable                    0.93%        0.89%       0.90%
              Non-accrual loans                 242.29       214.94      217.89
</TABLE>

     The Company is exposed to credit risk in the event of non-performance by
counterparties to derivative instruments. The level of credit risk associated
with derivative 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 set-off rights 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. The Company manages the credit
risk associated with its derivative instruments through credit approvals, limits
and monitoring procedures, dealing only with counterparties with high credit
ratings, obtaining collateral when deemed necessary and including master netting
and set-off provisions in its agreements when possible. The Company's credit
risk associated with its use of derivative instruments amounted to approximately
$92 million at June 30, 2001. There were no past due amounts related to the
Company's derivative instruments at June 30, 2001.

FINANCIAL CONDITION

   General

     The Company's total assets amounted to $27.0 billion at June 30, 2001, up
5.3% from $25.7 billion at the end of 2000. This increase was driven by growth
in loans held for sale of $2.1 billion, the impact of which was partially offset
by a reduction in securities available for sale.

   Securities Available for Sale

     Securities available for sale amounted to $2.2 billion at the end of the
2001 second quarter, down from $2.9 billion at year-end 2000. Contributing
significantly to this decline was a reduction in MBS of $603.6 million, or
24.9%, largely due to sales.

     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, 2001               DECEMBER 31, 2000
                                             -------------------------     -------------------------
                                              AMORTIZED      ESTIMATED      AMORTIZED      ESTIMATED
                                                COST        FAIR VALUE        COST        FAIR VALUE
                                                ----        ----------        ----        ----------
<S>                                          <C>            <C>            <C>            <C>
MBS:
    Pass-through securities:
        Privately-issued                     $  784,328     $  774,048     $1,357,832     $1,344,297
        U. S. government agencies               612,811        615,185        562,207        560,162
    Collateralized mortgage obligations:
        Privately-issued                        433,410        434,594        493,590        509,982
        U. S. government agencies                    --             --         13,271         12,819
    Interest-only                                   383            242            436            374
                                             ----------     ----------     ----------     ----------
            Total MBS                         1,830,932      1,824,069      2,427,336      2,427,634
                                             ----------     ----------     ----------     ----------
Domestic corporate debt securities              357,378        326,007        356,821        305,003
Other debt securities                            25,201         25,435         24,888         24,573
Equity securities                                18,483         18,494         93,712         93,833
                                             ----------     ----------     ----------     ----------
Total securities available for sale          $2,231,994     $2,194,005     $2,902,757     $2,851,043
                                             ==========     ==========     ==========     ==========
</TABLE>

   Loans Receivable


                                       25
<PAGE>   26
     Loans receivable (exclusive of the allowance for loan losses) amounted to
$16.2 billion at June 30, 2001, relatively unchanged from the level at December
31, 2000. At June 30, 2001, non-residential loans represented 52.6% of total
loans receivable, up from 51.4% at December 31, 2000.

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

<TABLE>
<CAPTION>

                                         JUNE 30, 2001            DECEMBER 31, 2000         INCREASE
                                     ---------------------      ---------------------       (DECREASE)
                                        AMOUNT      PERCENT        AMOUNT      PERCENT      IN AMOUNT
                                        ------      -------        ------      -------      ---------

<S>                                  <C>            <C>         <C>            <C>         <C>
Residential real estate              $ 7,693,965      47.4%     $ 7,916,035      48.6%     $  (222,070)
Commercial real estate:
  Multi-family                         1,936,442      11.9        1,846,582      11.3           89,860
  Other                                2,390,100      14.7        2,306,292      14.2           83,808
                                     -----------     -----      -----------     -----      -----------
    Total commercial real estate       4,326,542      26.6        4,152,874      25.5          173,668
                                     -----------     -----      -----------     -----      -----------
Consumer:
  Home equity                          2,178,459      13.4        2,063,558      12.7          114,901
  Automobile                             856,401       5.3          878,600       5.4          (22,199)
  Other                                   98,842       0.6          108,219       0.6           (9,377)
                                     -----------     -----      -----------     -----      -----------
    Total consumer                     3,133,702      19.3        3,050,377      18.7           83,325
                                     -----------     -----      -----------     -----      -----------
Business                               1,085,229       6.7        1,167,878       7.2          (82,649)
                                     -----------     -----      -----------     -----      -----------
Total loans receivable               $16,239,438     100.0%     $16,287,164     100.0%     $   (47,726)
                                     ===========     =====      ===========     =====      ===========
</TABLE>

   Deposits

     At June 30, 2001, deposits amounted to $14.6 billion, up from $14.0 billion
at the end of 2000. This increase was largely attributable to growth in core
deposits (primarily demand deposits) of $511.3 million, or 6.6%.

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

<TABLE>
<CAPTION>

                           JUNE 30, 2001            DECEMBER 31, 2000         INCREASE
                           -------------            -----------------         (DECREASE)
                         AMOUNT       PERCENT       AMOUNT       PERCENT      IN AMOUNT
                         ------       -------       ------       -------      ---------
<S>                    <C>            <C>         <C>            <C>         <C>
Core:
    Demand             $ 2,790,817      19.1%     $ 2,240,124      16.0%     $   550,693
    Savings              2,300,477      15.7        2,239,541      16.0           60,936
    Money market         3,127,573      21.4        3,227,871      23.1         (100,298)
                       -----------     -----      -----------     -----      -----------
        Total core       8,218,867      56.2        7,707,536      55.1          511,331
Time                     6,412,769      43.8        6,269,405      44.9          143,364
                       -----------     -----      -----------     -----      -----------
Total deposits         $14,631,636     100.0%     $13,976,941     100.0%     $   654,695
                       ===========     =====      ===========     =====      ===========

</TABLE>

   Borrowed Funds

     Borrowed funds totaled $9.9 billion at the end of the 2001 first quarter,
as compared with $9.5 billion at the end of 2000.


                                       26
<PAGE>   27
     Presented in the table below is the composition of the Company's borrowed
funds at the dates indicated (in thousands):

<TABLE>
<CAPTION>
                                             JUNE 30,     DECEMBER 31,
                                               2001           2000
                                               ----           ----
<S>                                         <C>           <C>
Short-term borrowings:
    Federal funds purchased                 $2,316,000     $1,635,000
    Securities sold under agreements
      to repurchase                            917,468      1,447,322
    FHLBNY advances                          4,700,000      4,487,102
    Other                                       79,902         58,097
                                            ----------     ----------
        Total short-term borrowings          8,013,370      7,627,521
                                            ----------     ----------
Long-term debt:
    Guaranteed preferred beneficial
      interests in Dime Bancorp, Inc.'s
      junior subordinated deferrable
      interest debentures                      152,255        152,243
    FHLBNY advances                          1,309,592      1,091,485
    Senior notes of the Holding Company        399,231        592,470
    Other                                       31,938         38,668
                                            ----------     ----------
        Total long-term debt                 1,893,016      1,874,866
                                            ----------     ----------
Total borrowed funds                        $9,906,386     $9,502,387
                                            ==========     ==========
</TABLE>

   Stockholders' Equity

     Stockholders' equity was $1.8 billion at June 30, 2001, up $107.8 million,
or 6.2%, from December 31, 2000. The increase was primarily due to net income of
$169.4 million.

     During the first six months of 2001, the Holding Company repurchased
3,848,000 shares of its common stock at a cost of $116.0 million in connection
with a program announced in October 2000 under which the Holding Company is
authorized to repurchase up to 13,607,664 shares of its common stock. Through
the end of the 2001 second quarter, the Holding Company repurchased 10,690,500
shares of its common stock under this program. Under the terms of the Merger
Agreement, without the prior consent of Washington Mutual, the Holding Company
is prohibited from repurchasing any of its common stock. The Holding Company
does not currently expect to seek such consent from Washington Mutual, although
there can be no assurances that the Holding Company will not do so.

     Cash dividends declared and paid per share of the Holding Company's common
stock were $0.12 for the second quarter of 2001 and $0.22 for the first six
months of 2001. In comparison, during the three months and six months ended June
30, 2000, cash dividends declared and paid per share of the Holding Company's
common stock were $0.08 and $0.14, respectively. On July 24, 2001, the Holding
Company announced the declaration of a cash dividend of $0.12 per share on its
common stock. This dividend will be paid on September 4, 2001 to the Holding
Company's common stockholders of record as of the close of business on August
15, 2001. The Holding Company's common stock dividend payout ratios for the
second quarter and first six months of 2001 were 16.67% and 15.83%,
respectively, as compared with 25.81% and 15.56% for the second quarter and
first six months of 2000, respectively. Under the terms of the Merger Agreement,
the Holding Company, without the prior consent of Washington Mutual, is
prohibited from declaring or paying any dividends or distributions on any shares
of its stock, except for regular quarterly cash dividends on its common stock at
rate of $0.12 per share, as long as the Holding Company does not need to borrow
money to pay that dividend. The Holding Company does not currently expect to
seek such consent from Washington Mutual, although there can be no assurances
that the Holding Company will not do so.

LIQUIDITY

     The Company's liquidity management process focuses on ensuring that
sufficient funds exist to meet withdrawals by depositors, loan funding
commitments, debt service requirements and other financial obligations and
expenditures. The liquidity position of the Company, which is monitored on a
daily basis, is managed pursuant to established policies and guidelines.

                                       27
<PAGE>   28
     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 cash provided by
operations. The Company has access to the capital markets for issuing debt or
equity securities, and the Bank has access to the discount window of the Federal
Reserve Bank of New York, if necessary, 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
Office of Thrift Supervision (the "OTS"). At June 30, 2001, the Holding Company
had available for issuance an aggregate of $250.0 million of debentures, notes
or other unsecured evidences of indebtedness under an effective shelf
registration with the Securities and Exchange Commission (the "Commission"). The
debt securities issuable under this shelf registration, 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.

REGULATORY CAPITAL

     Pursuant to OTS regulations, the Bank is required to maintain tangible
capital of at least 1.5% of adjusted total assets, core ("tier 1") capital of at
least 3.0% of adjusted total assets and total risk-based capital of at least
8.0% of risk-weighted assets. The Bank exceeded these capital requirements at
June 30, 2001.

     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 10.0% or more,
its ratio of tier 1 capital to risk-weighted assets is 6.0% or more, its ratio
of core capital to adjusted total assets is 5.0% or greater, and it is not
subject to any order or directive by the OTS to meet a specific capital level.
At June 30, 2001, 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, 2001        DECEMBER 31, 2000
                                  -------------------    ------------------
                                    AMOUNT      RATIO      AMOUNT     RATIO
                                    ------      -----      ------     -----
<S>                               <C>           <C>      <C>          <C>
      Tangible and core capital   $1,601,127     6.04%   $1,463,350    5.83%
      Tier 1 risk-based capital    1,601,127     8.96     1,463,350    8.54
      Total risk-based capital     1,876,463    10.51     1,732,712   10.11
</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

     There have not been any material developments regarding the status of the
Bank's goodwill lawsuit against the United States government since the filing of
the 2000 10-K.

     The Company remains a named defendant in two of the seven
previously-disclosed purported class action lawsuits concerning the issue of
whether certain payments -- known as "yield spread premiums" -- to mortgage
brokers in connection with the making of residential real estate loans violated
federal law: McDuffie (formerly Bailey) v. North American Mortgage Company,
filed in the United States District Court for the Middle District of Alabama in
October 1997, and Brigham v. North American Mortgage Company, filed in the
United States District Court for the Middle District of Georgia in January 1998.
Neither case has been certified as a class action. The other five cases have
been dismissed.

     In a lawsuit not involving the Company, Culpepper v. Inland Mortgage Corp.
("Culpepper"), the United States Court of Appeals for the Eleventh Circuit
(covering, in part, Alabama and Georgia) ruled on June 15, 2001 that the

                                       28
<PAGE>   29
lower court in that case did not abuse its discretion in certifying a class
action to determine the propriety of yield spread premium payments in connection
with the making of the residential real estate loan at issue in that case.
Culpepper was one of four cases involving broker compensation argued before the
Eleventh Circuit, and the only one of the four cases in which the Circuit has to
date rendered a decision. The defendant in Culpepper has filed for a rehearing
before the full bench of the Eleventh Circuit.

     The Company continues to believe that its compensation programs for
mortgage brokers comply with applicable laws and with accepted mortgage banking
industry practices and that it has meritorious defenses to each of these
actions. The Company intends to continue to oppose each of these actions
vigorously.

     Certain claims, suits, complaints and investigations involving the Company,
arising in the ordinary course of business, have been filed or are pending. The
Company is of the opinion, after discussion with legal counsel representing the
Company in these proceedings, that the aggregate liability or loss, if any,
arising from the ultimate disposition of these matters would not have a material
adverse effect on the Company's consolidated financial position or results of
operations.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     The Holding Company's Annual Meeting of Stockholders was held on June 13,
2001 (the "Annual Meeting"). Set forth below is a brief description of each
matter voted upon at the Annual Meeting, and the number of votes cast for,
against or withheld, as well as the number of abstentions as to each such
matter.

(a)     Election of directors:

        The following individuals were duly elected as directors of the Holding
Company:

<TABLE>
<CAPTION>
                                                                   TERM
                 NOMINEE                  FOR       WITHHELD    EXPIRATION
                 -------                  ---       --------    ----------
<S>                                   <C>           <C>         <C>
         Frederick C. Chen            100,205,689   4,963,826      2004
         J. Barclay Collins II        100,314,422   4,855,093      2003
         James F. Fulton              100,213,114   4,956,401      2003
         Virginia M. Kopp             100,201,922   4,967,593      2003
         James M. Large, Jr.          100,279,924   4,889,591      2004
         John Morning                 100,287,772   4,881,743      2004
         Sally Hernandez-Pinero       100,297,964   4,871,551      2003
         Eugene G. Schulz, Jr.        100,213,675   4,955,840      2004
         Norman R. Smith              100,372,736   4,796,779      2004
         Lawrence J. Toal             100,143,383   5,026,132      2003
         Anthony P. Terracciano       103,780,138   1,389,377      2004
</TABLE>

     The following directors of the Board, whose terms did not expire at the
Annual Meeting, continued to serve as directors of the Board following the
Annual Meeting: Derrick D. Cephas; Richard W. Dalrymple; Fred B. Koons; Margaret
Osmer-McQuade; Howard H. Newman; Howard Smith; and Ira T. Wender.

(b)     A proposal regarding certain amendments to the Holding Company's 1991
        Stock Incentive Plan was approved with 92,539,130 votes cast for,
        11,938,294 votes cast against and 692,091 abstentions.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)  EXHIBITS

     None.


                                       29
<PAGE>   30
(b)  REPORTS ON FORM 8-K

     During the three-month period ended June 30, 2001, the Holding Company
filed with the Commission the following Current Reports on Form 8-K:

     --   Dated April 19, 2001 and filed on April 20, 2001, reporting the
          issuance of (i) a press release announcing its financial results for
          the first quarter of 2001 and (ii) a press release announcing a cash
          dividend to be paid to common stockholders under Item 5 and filing
          copies of the press releases under Item 7.

     --   Dated June 25, 2001 and filed on June 26, 2001, reporting the
          announcement of the Merger Agreement under Item 5 and filing copies of
          the announcing press release and investor presentation materials under
          Item 7.

     --   Dated June 26, 2001 and filed on June 27, 2001, reporting the
          announcement of the Merger Agreement under Item 5 and filing copies of
          the Merger Agreement and other pertinent agreements under Item 7.


                                       30
<PAGE>   31
                                   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, 2001            By:    /s/ Lawrence J. Toal
                                         ---------------------------------------
                                         Lawrence J. Toal
                                         Chief Executive Officer, President
                                           and Chief Operating Officer


Dated: August 13, 2001            By:    /s/ Anthony R. Burriesci
                                         ---------------------------------------
                                         Anthony R. Burriesci
                                         Executive Vice President and
                                           Chief Financial Officer


Dated: August 13, 2001            By:    /s/ John F. Kennedy
                                         ---------------------------------------
                                         John F. Kennedy
                                         Controller and Chief Accounting Officer


                                       31