##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
  þ
    
    Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the quarterly period ended: September 30, 2005
 o
    
    Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the transition period from  to
 Commission File Number: 0-26001
 Hudson City Bancorp, Inc.
  Delaware
    
    22-3640393(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)West 80 Century RoadParamus, New Jersey
    
    07652(Address of Principal Executive Offices)
    
    (Zip Code)
 (201)967-1900
  þ o
  þ o
 o þ




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PageNumberPART I  FINANCIAL INFORMATIONItem 1.  Financial StatementsConsolidated Statements of Financial Condition  September 30, 2005 (Unaudited) and December 31, 2004
    
    
    4Consolidated Statements of Income (Unaudited)  For the three and nine months ended September 30, 2005 and 2004
    
    
    5Consolidated Statements of Cash Flows (Unaudited)  For the nine months ended September 30, 2005 and 2004
    
    
    6Notes to Consolidated Financial Statements
    
    
    7Item 2.  Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    16Item 3.  Quantitative and Qualitative Disclosures About Market Risk
    
    
    35Item 4.  Controls and Procedures
    
    
    40PART II  OTHER INFORMATIONItem 1.  Legal Proceedings
    
    
    40Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    40Item 3.  Defaults Upon Senior Securities
    
    
    40Item 4.  Submission of Matters to a Vote of Security Holders
    
    
    41Item 5.  Other Information
    
    
    41Item 6.  Exhibits
    
    
    41SIGNATURES
    
    
    42EX-31.1: CERTIFICATIONEX-31.2: CERTIFICATIONEX-32.1: CERTIFICATION
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
    
    the timing and occurrence or non-occurrence of events may be subject to
circumstances beyond our control;
    
    there may be increases in competitive pressure among financial institutions or
from non-financial institutions;
    
    changes in the interest rate environment may reduce interest margins or affect
the value of our investments;
    
    changes in deposit flows, loan demand or real estate values may adversely affect
our business;
    
    changes in accounting principles, policies or guidelines may cause our financial
condition to be perceived differently;
    
    general economic conditions, either nationally or locally in some or all of the
areas in which we do business, or conditions in the securities markets or the
banking industry may be less favorable than we currently anticipate;
    
    legislative or regulatory changes may adversely affect our business;
    
    applicable technological changes may be more difficult or expensive than we anticipate;
    
    success or consummation of new business initiatives may be more difficult or
expensive than we anticipate; or
    
    litigation or matters before regulatory agencies, whether currently existing or
commencing in the future, may delay the occurrence or non-occurrence of events
longer than we anticipate.
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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1.  Financial Statements
 Hudson City Bancorp, Inc. and Subsidiary
 
 Consolidated Statements of Financial Condition
 September 30,
    
    
    December 31,2005
    
    
    2004(Unaudited)(In thousands)AssetsCash and due from banks
    
    $
    93,923
    
    
    $
    122,483Federal funds sold
    
    
    15,400
    
    
    
    45,700Total cash and cash equivalents
    
    
    109,323
    
    
    
    168,183Investment securities held to maturity, market value of $1,518,867 at
September 30, 2005 and $1,326,336 at December 31, 2004
    
    
    1,534,213
    
    
    
    1,334,249Investment securities available for sale, at market value
    
    
    3,949,004
    
    
    
    1,594,639Federal Home Loan Bank of New York stock
    
    
    175,000
    
    
    
    140,000Mortgage-backed securities held to maturity, market value of $4,073,895
at September 30, 2005 and $3,721,029 at December 31, 2004
    
    
    4,163,152
    
    
    
    3,755,921Mortgage-backed securities available for sale, at market value
    
    
    2,555,958
    
    
    
    1,620,708Loans
    
    
    13,816,352
    
    
    
    11,363,039Less:Deferred loan fees
    
    
    2,260
    
    
    
    8,073Allowance for loan losses
    
    
    27,392
    
    
    
    27,319Net loans
    
    
    13,786,700
    
    
    
    11,327,647Foreclosed real estate, net
    
    
    1,092
    
    
    
    878Accrued interest receivable
    
    
    134,660
    
    
    
    97,490Banking premises and equipment, net
    
    
    48,108
    
    
    
    36,399Other assets
    
    
    95,529
    
    
    
    69,867Total Assets
    
    $
    26,552,739
    
    
    $
    20,145,981Liabilities and Stockholders EquityDeposits:Interest-bearing
    
    $
    10,915,672
    
    
    $
    11,059,798Noninterest-bearing
    
    
    465,722
    
    
    
    417,502Total deposits
    
    
    11,381,394
    
    
    
    11,477,300Borrowed funds
    
    
    9,750,000
    
    
    
    7,150,000Accrued expenses and other liabilities
    
    
    132,715
    
    
    
    115,797Total liabilities
    
    
    21,264,109
    
    
    
    18,743,097Common stock, $0.01 par value, 3,200,000,000 shares authorized;
741,466,555 shares issued; 597,602,158 shares outstanding
at September 30, 2005; 596,777,836 shares outstanding
at December 31, 2004
    
    
    7,415
    
    
    
    7,415Additional paid-in capital
    
    
    4,531,741
    
    
    
    565,403Retained earnings
    
    
    1,724,238
    
    
    
    1,588,792Treasury stock, at cost; 143,864,397 shares at September 30, 2005 and
144,688,719 shares at December 31, 2004
    
    
    (694,262
    )
    
    
    (696,812
    )Unallocated common stock held by the employee stock ownership plan
    
    
    (235,092
    )
    
    
    (47,552
    )Unearned common stock held by the recognition and retention plan
    
    
    (3,231
    )
    
    
    (5,267
    )Accumulated other comprehensive loss, net of tax
    
    
    (42,179
    )
    
    
    (9,095
    )Total stockholders equity
    
    
    5,288,630
    
    
    
    1,402,884Total Liabilities and Stockholders Equity
    
    $
    26,552,739
    
    
    $
    20,145,981
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Hudson City Bancorp, Inc. and Subsidiary
 
 Consolidated Statements of Income
(Unaudited)
 For the Three Months
    
    
    For the Nine MonthsEnded September 30,
    
    
    Ended September 30,2005
    
    
    2004
    
    
    2005
    
    
    2004(In thousands, except share data)Interest and Dividend Income:Interest and fees on first mortgage loans
    
    $
    177,562
    
    
    $
    138,421
    
    
    $
    500,218
    
    
    $
    389,400Interest and fees on consumer and other loans
    
    
    2,795
    
    
    
    2,213
    
    
    
    7,561
    
    
    
    6,345Interest on mortgage-backed securities held to maturity
    
    
    45,865
    
    
    
    42,409
    
    
    
    133,210
    
    
    
    132,364Interest on mortgage-backed securities available for sale
    
    
    26,359
    
    
    
    17,540
    
    
    
    63,956
    
    
    
    50,200Interest on investment securities held to maturity
    
    
    18,634
    
    
    
    14,199
    
    
    
    53,950
    
    
    
    25,901Interest and dividend income on investment securities
available for sale
    
    
    39,720
    
    
    
    18,262
    
    
    
    77,863
    
    
    
    60,649Dividends on Federal Home Loan Bank
of New York stock
    
    
    2,116
    
    
    
    858
    
    
    
    7,031
    
    
    
    2,250Interest on federal funds sold
    
    
    736
    
    
    
    359
    
    
    
    2,821
    
    
    
    970Total interest and dividend income
    
    
    313,787
    
    
    
    234,261
    
    
    
    846,610
    
    
    
    668,079Interest Expense:Interest on deposits
    
    
    76,446
    
    
    
    54,253
    
    
    
    210,264
    
    
    
    155,453Interest on borrowed funds
    
    
    85,165
    
    
    
    56,040
    
    
    
    226,597
    
    
    
    154,159Total interest expense
    
    
    161,611
    
    
    
    110,293
    
    
    
    436,861
    
    
    
    309,612Net interest income
    
    
    152,176
    
    
    
    123,968
    
    
    
    409,749
    
    
    
    358,467Provision for Loan Losses
    
    
    
    
    
    
    225
    
    
    
    65
    
    
    
    675Net interest income after provision
for loan losses
    
    
    152,176
    
    
    
    123,743
    
    
    
    409,684
    
    
    
    357,792Non-Interest Income:Service charges and other income
    
    
    1,413
    
    
    
    1,373
    
    
    
    3,791
    
    
    
    3,849Gains on securities transactions, net
    
    
    
    
    
    
    3,526
    
    
    
    2,740
    
    
    
    8,597Total non-interest income
    
    
    1,413
    
    
    
    4,899
    
    
    
    6,531
    
    
    
    12,446Non-Interest Expense:Compensation and employee benefits
    
    
    21,534
    
    
    
    19,878
    
    
    
    61,739
    
    
    
    59,349Net occupancy expense
    
    
    5,681
    
    
    
    4,044
    
    
    
    14,729
    
    
    
    11,788Federal deposit insurance assessment
    
    
    413
    
    
    
    405
    
    
    
    1,235
    
    
    
    1,228Computer and related services
    
    
    607
    
    
    
    529
    
    
    
    1,835
    
    
    
    1,485Other expense
    
    
    4,688
    
    
    
    4,032
    
    
    
    14,406
    
    
    
    13,275Total non-interest expense
    
    
    32,923
    
    
    
    28,888
    
    
    
    93,944
    
    
    
    87,125Income before income tax expense
    
    
    120,666
    
    
    
    99,754
    
    
    
    322,271
    
    
    
    283,113Income Tax Expense
    
    
    45,635
    
    
    
    37,734
    
    
    
    121,020
    
    
    
    106,446Net income
    
    $
    75,031
    
    
    $
    62,020
    
    
    $
    201,251
    
    
    $
    176,667Basic Earnings Per Share
    
    $
    0.13
    
    
    $
    0.11
    
    
    $
    0.35
    
    
    $
    0.31Diluted Earnings Per Share
    
    $
    0.13
    
    
    $
    0.11
    
    
    $
    0.34
    
    
    $
    0.30Weighted Average Number of Common Shares Outstanding:Basic
    
    
    566,667,689
    
    
    
    573,760,934
    
    
    
    571,809,470
    
    
    
    577,955,597Diluted
    
    
    580,174,828
    
    
    
    589,020,292
    
    
    
    585,122,824
    
    
    
    594,304,055
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Hudson City Bancorp, Inc. and Subsidiary
 
 Consolidated Statements of Cash Flows
(Unaudited
 For the Nine MonthsEnded September 30,2005
    
    
    2004(In thousands)Cash Flows from Operating Activities:Net income
    
    $
    201,251
    
    
    $
    176,667Adjustments to reconcile net income to net cash provided
by operating activities:Depreciation, accretion and amortization expense
    
    
    6,891
    
    
    
    19,751Provision for loan losses
    
    
    65
    
    
    
    675Gains on securities transactions, net
    
    
    (2,740
    )
    
    
    (8,597
    )Allocation of stock for employee benefit plans
    
    
    9,673
    
    
    
    14,670Deferred tax (benefit) expense
    
    
    (204
    )
    
    
    20Net proceeds from sale of foreclosed real estate
    
    
    1,536
    
    
    
    1,651Increase in accrued interest receivable
    
    
    (37,170
    )
    
    
    (15,448
    )(Increase) decrease in other assets
    
    
    (2,610
    )
    
    
    784Increase in accrued expenses and other liabilities
    
    
    16,918
    
    
    
    19,256Tax benefit from stock plans
    
    
    8,798
    
    
    
    20,269Net Cash Provided by Operating Activities
    
    
    202,408
    
    
    
    229,698Cash Flows from Investing Activities:Originations of loans
    
    
    (1,538,120
    )
    
    
    (1,181,806
    )Purchases of loans
    
    
    (2,624,806
    )
    
    
    (2,361,841
    )Payments on loans
    
    
    1,696,466
    
    
    
    1,575,804Principal collection of mortgage-backed securities held to maturity
    
    
    737,604
    
    
    
    1,208,846Purchases of mortgage-backed securities held to maturity
    
    
    (1,152,803
    )
    
    
    (573,916
    )Principal collection of mortgage-backed securities available for sale
    
    
    342,959
    
    
    
    210,275Proceeds from sales of mortgage-backed securities available for sale
    
    
    230,632
    
    
    
    380,863Purchases of mortgage-backed securities available for sale
    
    
    (1,532,145
    )
    
    
    (1,016,973
    )Proceeds from maturities and calls of investment securities held to maturity
    
    
    100,043
    
    
    
    300,030Purchases of investment securities held to maturity
    
    
    (300,000
    )
    
    
    (1,469,643
    )Proceeds from maturities and calls of investment securities available for sale
    
    
    1,000,026
    
    
    
    861,339Proceeds from sales of investment securities available for sale
    
    
    9,980
    
    
    
    Purchases of investment securities available for sale
    
    
    (3,383,680
    )
    
    
    (337,306
    )Purchases of Federal Home Loan Bank of New York stock
    
    
    (51,300
    )
    
    
    Redemption of Federal Home Loan Bank of New York stock
    
    
    16,300
    
    
    
    24,850Purchases of premises and equipment, net
    
    
    (15,626
    )
    
    
    (5,818
    )Net Cash Used in Investment Activities
    
    
    (6,464,470
    )
    
    
    (2,385,296
    )Cash Flows from Financing Activities:Net (decrease) increase in deposits
    
    
    (95,906
    )
    
    
    741,939Proceeds from borrowed funds
    
    
    2,800,000
    
    
    
    3,050,000Principal payments on borrowed funds
    
    
    (200,000
    )
    
    
    (1,550,000
    )Cash
proceeds from the common stock offering  net
    
    
    3,806,627
    
    
    
    Consolidation of Hudson City, MHC
    
    
    146,374
    
    
    
    Dividends paid
    
    
    (63,063
    )
    
    
    (29,761
    )Purchases of stock by the employee stock ownership plan
    
    
    (189,348
    )
    
    
    Purchases of stock by the recognition and retention plan
    
    
    (1,290
    )
    
    
    (7,299
    )Purchases of treasury stock
    
    
    (2,659
    )
    
    
    (160,729
    )Exercise of stock options
    
    
    2,467
    
    
    
    5,323Net Cash Provided by Financing Activities
    
    
    6,203,202
    
    
    
    2,049,473Net Decrease in Cash and Cash Equivalents
    
    
    (58,860
    )
    
    
    (106,125
    )Cash and Cash Equivalents at Beginning of Period
    
    
    168,183
    
    
    
    254,584Cash and Cash Equivalents at End of Period
    
    $
    109,323
    
    
    $
    148,459Supplemental Disclosures:Interest paid
    
    $
    426,156
    
    
    $
    304,413Income taxes paid
    
    $
    114,990
    
    
    $
    78,299
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##### Table of Contents



1.  Basis of Presentation
    Statements of Cash Flow.
 Stock Option Plans Fair Value Disclosure.
 Page 7




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##### Table of Contents



For the Three MonthsEnded September 30,2005
    
    
    2004(In thousands, except per share data)Net income, as reported
    
    $
    75,031
    
    
    $
    62,020Add: expense recognized for the recognition and
retention plans, net of related tax effect
    
    
    393
    
    
    
    1,309Less: total stock option and recognition and
retention plans expense, determined under
the fair value method, net of
related tax effect
    
    
    (764
    )
    
    
    (2,133
    )Pro forma net income
    
    $
    74,660
    
    
    $
    61,196Basic earnings per share: As reported
    
    $
    0.13
    
    
    $
    0.11Pro forma
    
    
    0.13
    
    
    
    0.11Diluted earnings per share: As reported
    
    $
    0.13
    
    
    $
    0.11Pro forma
    
    
    0.13
    
    
    
    0.10
 For the Nine MonthsEnded September 30,2005
    
    
    2004(In thousands, except per share data)Net income, as reported
    
    $
    201,251
    
    
    $
    176,667Add: expense recognized for the recognition and
retention plans, net of related tax effect
    
    
    1,856
    
    
    
    4,294Less: total stock option and recognition and
retention plans expense, determined under
the fair value method, net of
related tax effect
    
    
    (2,974
    )
    
    
    (6,774
    )Pro forma net income
    
    $
    200,133
    
    
    $
    174,187Basic earnings per share: As reported
    
    $
    0.35
    
    
    $
    0.31Pro forma
    
    
    0.35
    
    
    
    0.30Diluted earnings per share: As reported
    
    $
    0.34
    
    
    $
    0.30Pro forma
    
    
    0.34
    
    
    
    0.29
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##### Table of Contents



For the Three and Nine Months EndedSeptember 30,2005
    
    2004Expected dividend yield
    
    
    2.23
    %
    
    
    1.69
    %Expected volatility
    
    
    21.57
    
    
    
    19.66Risk-free interest rate
    
    
    3.64
    
    
    
    3.05Expected option life
    
    5 years
    
    5 years
 2. Plan of Conversion and Reorganization
  Page 9




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##### Table of Contents



3.  Comprehensive Income
  For the Three MonthsEnded September 30,2005
    
    
    2004(In thousands)Net income
    
    $
    75,031
    
    
    
    62,020Other
comprehensive (loss) income:Unrealized holding (loss) gain on securities
available for sale, net of tax benefit of
($22,606) for 2005 and expense of
$35,442 for 2004
    
    
    (32,738
    )
    
    
    51,320Reclassification adjustment for gains in
net income, net of tax of ($1,440)
for 2004
    
    
    
    
    
    
    (2,086
    )Total comprehensive
income
    
    $
    42,293
    
    
    $
    111,254
 For the Nine MonthsEnded September 30,2005
    
    
    2004(In thousands)Net income
    
    $
    201,251
    
    
    $
    176,667Other
comprehensive (loss) income:Unrealized holding (loss) gain on securities
available for sale, net of tax benefit of
($21,729) for 2005 and expense of
$8,746 for 2004
    
    
    (31,463
    )
    
    
    12,664Reclassification adjustment for gains
in net income, net of tax of ($1,119)
for 2005 and ($3,512) for 2004
    
    
    (1,621
    )
    
    
    (5,085
    )Total comprehensive
income
    
    $
    168,167
    
    
    $
    184,246
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##### Table of Contents



4.  Earnings Per Share
 For the Three Months Ended September 30,2005
    
    
    2004Per
    
    
    
    
    
    
    
    
    
    
    PerShare
    
    
    
    
    
    
    
    
    
    
    ShareIncome
    
    
    Shares
    
    
    Amount
    
    
    Income
    
    
    Shares
    
    
    Amount(In thousands, except per share data)Net income
    
    $
    75,031
    
    
    
    
    
    
    
    
    
    
    $
    62,020Basic earnings per share:Income available to
common stockholders
    
    $
    75,031
    
    
    
    566,668
    
    
    $
    0.13
    
    
    $
    62,020
    
    
    
    573,761
    
    
    $
    0.11Effect of dilutive common
stock equivalents
    
    
    
    
    
    
    13,507
    
    
    
    
    
    
    
    
    
    
    
    15,259Diluted earnings per share:Income available to
common
stockholders
    
    $
    75,031
    
    
    
    580,175
    
    
    $
    0.13
    
    
    $
    62,020
    
    
    
    589,020
    
    
    $
    0.11
 For the Nine Months Ended September 30,2005
    
    
    2004Per
    
    
    
    
    
    
    
    
    
    
    PerShare
    
    
    
    
    
    
    
    
    
    
    ShareIncome
    
    
    Shares
    
    
    Amount
    
    
    Income
    
    
    Shares
    
    
    Amount(In thousands, except per share data)Net income
    
    $
    201,251
    
    
    
    
    
    
    
    
    
    
    $
    176,667Basic earnings per share:Income available to
common stockholders
    
    $
    201,251
    
    
    
    571,809
    
    
    $
    0.35
    
    
    $
    176,667
    
    
    
    577,956
    
    
    $
    0.31Effect of dilutive common
stock equivalents
    
    
    
    
    
    
    13,314
    
    
    
    
    
    
    
    
    
    
    
    16,348Diluted earnings per share:Income available to
common stockholders
    
    $
    201,251
    
    
    
    585,123
    
    
    $
    0.34
    
    
    $
    176,667
    
    
    
    594,304
    
    
    $
    0.30
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##### Table of Contents



5.  Fair Value and Unrealized Losses of Securities
  Less Than 12 Months
    
    
    12 Months or Longer
    
    
    TotalFair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized
    
    
    Fair
    
    
    UnrealizedValue
    
    
    Losses
    
    
    Value
    
    
    Losses
    
    
    Value
    
    
    Losses(In thousands)2005United States government
sponsored agencies
    
    $
    3,697,643
    
    
    $
    28,850
    
    
    $
    1,141,555
    
    
    $
    32,646
    
    
    $
    4,839,198
    
    
    $
    61,496GNMA pass-through certificates
    
    $
    1,385,826
    
    
    $
    12,118
    
    
    $
    46,165
    
    
    $
    604
    
    
    $
    1,431,991
    
    
    $
    12,722FNMA pass-through certificates
    
    
    1,804,072
    
    
    
    23,608
    
    
    
    849,252
    
    
    
    22,779
    
    
    
    2,653,324
    
    
    
    46,387FHLMC pass-through certificates
    
    
    889,890
    
    
    
    9,872
    
    
    
    273,504
    
    
    
    11,675
    
    
    
    1,163,394
    
    
    
    21,547FHLMC and FNMA REMICs
    
    
    29,581
    
    
    
    1,437
    
    
    
    438,339
    
    
    
    26,568
    
    
    
    467,920
    
    
    
    28,005Total mortgage-backed
securities
    
    $
    4,109,369
    
    
    $
    47,035
    
    
    $
    1,607,260
    
    
    $
    61,626
    
    
    $
    5,716,629
    
    
    $
    108,6612004United States government-
sponsored agencies
    
    $
    461,021
    
    
    $
    2,684
    
    
    $
    702,383
    
    
    $
    8,145
    
    
    $
    1,163,404
    
    
    $
    10,829GNMA pass-through certificates
    
    $
    170,944
    
    
    $
    1,433
    
    
    $
    
    
    
    $
    
    
    
    $
    170,944
    
    
    $
    1,433FNMA pass-through certificates
    
    
    1,256,331
    
    
    
    4,181
    
    
    
    203,576
    
    
    
    3,788
    
    
    
    1,459,907
    
    
    
    7,969FHLMC pass-through certificates
    
    
    70,662
    
    
    
    359
    
    
    
    250,106
    
    
    
    5,865
    
    
    
    320,768
    
    
    
    6,224FHLMC, FNMA and GNMA -
REMICs
    
    
    46,423
    
    
    
    730
    
    
    
    767,187
    
    
    
    36,190
    
    
    
    813,610
    
    
    
    36,920Total mortgage-backed
securities
    
    $
    1,544,360
    
    
    $
    6,703
    
    
    $
    1,220,869
    
    
    $
    45,843
    
    
    $
    2,765,229
    
    
    $
    52,546
  6.  Stockholders Equity
  Page 12




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7.  Net Periodic Benefit Plans Expenses
  Page 13




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For the Three Months Ended September 30,Retirement Plans
    
    
    Other Benefits2005
    
    
    2004
    
    
    2005
    
    
    2004(In thousands)Service cost
    
    $
    806
    
    
    $
    736
    
    
    $
    598
    
    
    $
    530Interest cost
    
    
    1,172
    
    
    
    1,132
    
    
    
    657
    
    
    
    580Expected return on assets
    
    
    (1,693
    )
    
    
    (1,633
    )
    
    
    
    
    
    
    Amortization of:Net loss (gain)
    
    
    86
    
    
    
    15
    
    
    
    (3
    )
    
    
    (10
    )Unrecognized prior service cost
    
    
    (4
    )
    
    
    (4
    )
    
    
    
    
    
    
    Net periodic benefit cost
    
    $
    367
    
    
    $
    246
    
    
    $
    1,252
    
    
    $
    1,100
 For the Nine Months Ended September 30,Retirement Plans
    
    
    Other Benefits2005
    
    
    2004
    
    
    2005
    
    
    2004(In thousands)Service cost
    
    $
    2,417
    
    
    $
    2,209
    
    
    $
    1,793
    
    
    $
    1,590Interest cost
    
    
    3,517
    
    
    
    3,396
    
    
    
    1,970
    
    
    
    1,739Expected return on assets
    
    
    (5,078
    )
    
    
    (4,900
    )
    
    
    
    
    
    
    Amortization of:Net loss (gain)
    
    
    259
    
    
    
    44
    
    
    
    (8
    )
    
    
    (30
    )Unrecognized prior service cost
    
    
    (12
    )
    
    
    (12
    )
    
    
    
    
    
    
    Net periodic benefit cost
    
    $
    1,103
    
    
    $
    737
    
    
    $
    3,755
    
    
    $
    3,299
   8.  Subsequent Event
  9.  Recent Accounting Pronouncements
  Page 14




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Page 15




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Item 2.  Managements Discussion and Analysis of Financial Condition and Results of
Operations
 Executive Summary
      Page 16




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Page 17




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Comparison of Financial Condition at September 30, 2005 and December 31, 2004
   Page 18




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Page 19




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Average Balance Sheets for the Three- and Nine-Months Ended September 30, 2005 and 2004
  Page 20




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For the Three Months Ended September 30,2005
    
    
    2004Average
    
    
    
    
    
    
    
    
    
    
    AverageAverage
    
    
    
    
    
    
    Yield/
    
    
    Average
    
    
    
    
    
    
    Yield/Balance
    
    
    Interest
    
    
    Cost
    
    
    Balance
    
    
    Interest
    
    
    Cost(Dollars in thousands)Assets:Interest-earnings assets:First mortgage loans, net (1)
    
    $
    13,087,551
    
    
    $
    177,562
    
    
    
    5.43
    %
    
    $
    10,053,014
    
    
    $
    138,421
    
    
    
    5.51
    %Consumer and other loans
    
    
    191,038
    
    
    
    2,795
    
    
    
    5.85
    
    
    
    148,268
    
    
    
    2,213
    
    
    
    5.97Federal funds sold
    
    
    85,983
    
    
    
    736
    
    
    
    3.40
    
    
    
    103,830
    
    
    
    359
    
    
    
    1.38Mortgage-backed securities at amortized cost
    
    
    6,640,580
    
    
    
    72,224
    
    
    
    4.35
    
    
    
    5,324,117
    
    
    
    59,949
    
    
    
    4.50Federal Home Loan Bank of New York stock
    
    
    178,657
    
    
    
    2,116
    
    
    
    4.74
    
    
    
    144,511
    
    
    
    858
    
    
    
    2.37Investment securities at amortized cost
    
    
    5,676,595
    
    
    
    58,354
    
    
    
    4.11
    
    
    
    2,874,795
    
    
    
    32,461
    
    
    
    4.52Total interest-earning assets
    
    
    25,860,404
    
    
    
    313,787
    
    
    
    4.85
    
    
    
    18,648,535
    
    
    
    234,261
    
    
    
    5.02Noninterest-earnings assets
    
    
    346,613
    
    
    
    
    
    
    
    
    
    
    
    295,252Total Assets
    
    $
    26,207,017
    
    
    
    
    
    
    
    
    
    
    $
    18,943,787Liabilities and Stockholders Equity:Interest-bearing liabilities:Savings accounts
    
    $
    859,240
    
    
    
    2,141
    
    
    
    0.99
    
    
    $
    948,515
    
    
    
    2,366
    
    
    
    0.99Interest-bearing demand accounts
    
    
    4,133,327
    
    
    
    31,258
    
    
    
    3.00
    
    
    
    3,790,740
    
    
    
    21,010
    
    
    
    2.20Money market accounts
    
    
    386,599
    
    
    
    1,167
    
    
    
    1.20
    
    
    
    585,848
    
    
    
    1,408
    
    
    
    0.96Time deposits
    
    
    5,497,737
    
    
    
    41,880
    
    
    
    3.02
    
    
    
    5,399,202
    
    
    
    29,469
    
    
    
    2.17Total interest-bearing deposits
    
    
    10,876,903
    
    
    
    76,446
    
    
    
    2.79
    
    
    
    10,724,305
    
    
    
    54,253
    
    
    
    2.01Borrowed funds
    
    
    9,328,016
    
    
    
    85,165
    
    
    
    3.62
    
    
    
    6,359,782
    
    
    
    56,040
    
    
    
    3.51Total interest-bearing liabilities
    
    
    20,204,919
    
    
    
    161,611
    
    
    
    3.17
    
    
    
    17,084,087
    
    
    
    110,293
    
    
    
    2.57Noninterest-bearing liabilities:Noninterest-bearing deposits
    
    
    450,142
    
    
    
    
    
    
    
    
    
    
    
    427,877Other noninterest-bearing liabilities
    
    
    153,184
    
    
    
    
    
    
    
    
    
    
    
    124,862Total noninterest-bearing liabilities
    
    
    603,326
    
    
    
    
    
    
    
    
    
    
    
    552,739Total liabilities
    
    
    20,808,245
    
    
    
    
    
    
    
    
    
    
    
    17,636,826Stockholders equity
    
    
    5,398,772
    
    
    
    
    
    
    
    
    
    
    
    1,306,961Total Liabilities and Stockholders Equity
    
    $
    26,207,017
    
    
    
    
    
    
    
    
    
    
    $
    18,943,787Net interest income/net interest rate spread (2)
    
    
    
    
    
    $
    152,176
    
    
    
    1.68
    %
    
    
    
    
    
    $
    123,968
    
    
    
    2.45
    %Net interest-earning assets/net interest margin (3)
    
    $
    5,655,485
    
    
    
    
    
    
    
    2.37
    %
    
    $
    1,564,448
    
    
    
    
    
    
    
    2.67
    %Ratio of interest-earning assets to
interest-bearing liabilities
    
    
    
    
    
    
    
    
    
    
    1.28
    x
    
    
    
    
    
    
    
    
    
    
    1.09
    x
 
 (1)
    
    Amount is net of deferred loan fees and allowance for loan losses and includes
non-performing loans.(2)
    
    Determined by subtracting the annualized weighted average cost of total interest-bearing
liabilities from
the annualized weighted average yield on total interest-earning assets.(3)
    
    Determined by dividing annualized net interest income by total average interest-earning assets. Page 21




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For the Nine Months Ended September 30,2005
    
    
    2004Average
    
    
    
    
    
    
    
    
    
    
    AverageAverage
    
    
    
    
    
    
    Yield/
    
    
    Average
    
    
    
    
    
    
    Yield/Balance
    
    
    Interest
    
    
    Cost (4)
    
    
    Balance
    
    
    Interest
    
    
    Cost(Dollars in thousands)Assets:Interest-earnings assets:First mortgage loans, net (1)
    
    $
    12,244,226
    
    
    $
    500,218
    
    
    
    5.45
    %
    
    $
    9,421,679
    
    
    $
    389,400
    
    
    
    5.51
    %Consumer and other loans
    
    
    173,556
    
    
    
    7,561
    
    
    
    5.81
    
    
    
    140,897
    
    
    
    6,345
    
    
    
    6.00Federal funds sold
    
    
    131,938
    
    
    
    2,821
    
    
    
    2.86
    
    
    
    122,842
    
    
    
    970
    
    
    
    1.06Mortgage-backed securities at amortized cost
    
    
    6,010,245
    
    
    
    197,166
    
    
    
    4.37
    
    
    
    5,455,954
    
    
    
    182,564
    
    
    
    4.46Federal Home Loan Bank of New York stock
    
    
    161,380
    
    
    
    7,031
    
    
    
    5.81
    
    
    
    153,533
    
    
    
    2,250
    
    
    
    1.95Investment securities at amortized cost
    
    
    4,153,466
    
    
    
    131,813
    
    
    
    4.23
    
    
    
    2,586,558
    
    
    
    86,550
    
    
    
    4.46Total interest-earning assets
    
    
    22,874,811
    
    
    
    846,610
    
    
    
    4.93
    
    
    
    17,881,463
    
    
    
    668,079
    
    
    
    4.98Noninterest-earnings assets
    
    
    437,058
    
    
    
    
    
    
    
    
    
    
    
    331,634Total Assets
    
    $
    23,311,869
    
    
    
    
    
    
    
    
    
    
    $
    18,213,097Liabilities and Stockholders Equity:Interest-bearing liabilities:Savings accounts
    
    $
    1,033,838
    
    
    
    7,655
    
    
    
    0.99
    
    
    $
    947,351
    
    
    
    7,042
    
    
    
    0.99Interest-bearing demand accounts
    
    
    4,233,540
    
    
    
    89,216
    
    
    
    2.82
    
    
    
    3,392,201
    
    
    
    54,486
    
    
    
    2.15Money market accounts
    
    
    504,996
    
    
    
    4,082
    
    
    
    1.08
    
    
    
    601,600
    
    
    
    4,308
    
    
    
    0.96Time deposits
    
    
    5,402,361
    
    
    
    109,311
    
    
    
    2.71
    
    
    
    5,537,205
    
    
    
    89,617
    
    
    
    2.16Total interest-bearing deposits
    
    
    11,174,735
    
    
    
    210,264
    
    
    
    2.52
    
    
    
    10,478,357
    
    
    
    155,453
    
    
    
    1.98Borrowed funds
    
    
    8,428,269
    
    
    
    226,597
    
    
    
    3.59
    
    
    
    5,853,544
    
    
    
    154,159
    
    
    
    3.52Total interest-bearing liabilities
    
    
    19,603,004
    
    
    
    436,861
    
    
    
    2.98
    
    
    
    16,331,901
    
    
    
    309,612
    
    
    
    2.53Noninterest-bearing liabilities:Noninterest-bearing deposits
    
    
    436,163
    
    
    
    
    
    
    
    
    
    
    
    416,808Other noninterest-bearing liabilities
    
    
    143,273
    
    
    
    
    
    
    
    
    
    
    
    122,459Total noninterest-bearing liabilities
    
    
    579,436
    
    
    
    
    
    
    
    
    
    
    
    539,267Total liabilities
    
    
    20,182,440
    
    
    
    
    
    
    
    
    
    
    
    16,871,168Stockholders equity
    
    
    3,129,429
    
    
    
    
    
    
    
    
    
    
    
    1,341,929Total Liabilities and Stockholders Equity
    
    $
    23,311,869
    
    
    
    
    
    
    
    
    
    
    $
    18,213,097Net interest income/net interest rate spread (2)
    
    
    
    
    
    $
    409,749
    
    
    
    1.95
    %
    
    
    
    
    
    $
    358,467
    
    
    
    2.45
    %Net interest-earning assets/net interest margin (3)
    
    $
    3,271,807
    
    
    
    
    
    
    
    2.38
    %
    
    $
    1,549,562
    
    
    
    
    
    
    
    2.67
    %Ratio of interest-earning assets to
interest-bearing liabilities
    
    
    
    
    
    
    
    
    
    
    1.17
    x
    
    
    
    
    
    
    
    
    
    
    1.09
    x
 
 (1)
    
    Amount is net of deferred loan fees and allowance for loan losses and includes
non-performing loans.(2)
    
    Determined by subtracting the annualized weighted average cost of total interest-bearing
liabilities from
the annualized weighted average yield on total interest-earning assets.(3)
    
    Determined by dividing annualized net interest income by total average interest-earning assets.(4)
    
    At September 30, 2005, the weighted-average rate on our outstanding interest-earning assets,
other than our FHLB stock, was as follows: first mortgage loans, 5.62%, consumer and other loans,
5.79%, federal funds sold, 3.75%, mortgage-backed securities, 4.70%, investment securities, 4.22%.
At September 30, 2005, the weighted-average rate on our outstanding interest-bearing liabilities
was as follows: savings accounts, 0.98%, interest-bearing demand
accounts, 3.00%, money market accounts, 1.20%, time deposits, 3.22%,
borrowed funds, 3.59%. Page 22




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Comparison of Operating Results for the Three Months Ended September 30, 2005 and 2004
 General.
 Interest and Dividend Income.
    Page 23




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Interest Expense.
    Page 24




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Net Interest Income.
  Provision for Loan Losses.
    Page 25




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Non-Interest Income.
 Non-Interest Expense.
 Income Taxes.
 Comparison of Operating Results for the Nine Months Ended September 30, 2005 and 2004
 General.
 Interest and Dividend Income.
 Page 26




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Interest Expense.
  Page 27




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Net Interest Income.
  Page 28




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Provision for Loan Losses.
 Non-Interest Income.
 Non-Interest Expense.
 Income Taxes.
 Liquidity and Capital Resources
   Page 29




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Page 31




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Page 32




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Off-Balance Sheet Arrangements and Contractual Obligations
   Payments Due By PeriodLess Than
    
    
    1 Year to
    
    
    3 Years to
    
    
    More ThanContractual Obligation
    
    Total
    
    
    1 Year
    
    
    3 Years
    
    
    5 Years
    
    
    5 Years(In thousands)First mortgage loan
originations
    
    $
    292,309
    
    
    $
    292,309
    
    
    $
    
    
    
    $
    
    
    
    $
    Mortgage loan
purchases
    
    
    588,643
    
    
    
    588,643
    
    
    
    
    
    
    
    
    
    
    
    Mortgage-backed security
purchases
    
    
    326,000
    
    
    
    326,000
    
    
    
    
    
    
    
    
    
    
    
    Operating
leases
    
    
    92,535
    
    
    
    5,082
    
    
    
    11,029
    
    
    
    10,546
    
    
    
    65,878Total
    
    $
    1,299,487
    
    
    $
    1,212,034
    
    
    $
    11,029
    
    
    $
    10,546
    
    
    $
    65,878
  Critical Accounting Policies
  Page 33




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Allowance for Loan Losses.
     Page 34




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Asset Impairment Judgments.
  
 Item 3.  Quantitative and Qualitative Disclosures About Market Risk
  General.
  Page 35




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Interest Rate Risk Analysis.
  Page 36




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Present Value of EquityAs Percent of PresentPresent Value of Equity
    
    Value of AssetsChange in
    
    
    
    Dollar
    
    Dollar
    
    Percent
    
    Present
    
    PercentInterest Rates
    
    
    
    Amount
    
    Change
    
    Change
    
    Value Ratio
    
    Change(Basis points)
    
    
    
    (Dollars in thousands)200
    
    
    
    
    $
    5,127,519
    
    
    $
    (1,116,709
    )
    
    
    (17.88
    )%
    
    
    20.89
    %

    
    
    (11.11
    )%100
    
    
    
    
    
    5,718,450
    
    
    
    (525,778
    )
    
    
    (8.42
    )
    
    
    22.36
    
    
    
    (4.85
    )50
    
    
    
    
    
    6,013,063
    
    
    
    (231,165
    )
    
    
    (3.70
    )
    
    
    23.04
    
    
    
    (1.96
    )0
    
    
    
    
    
    6,244,228
    
    
    
    
    
    
    
    
    
    
    
    23.50
    
    
    
    (50
    )
    
    
    
    
    6,216,585
    
    
    
    (27,643
    )
    
    
    (0.44
    )
    
    
    23.17
    
    
    
    (1.40
    )(100
    )
    
    
    
    
    5,942,232
    
    
    
    (301,996
    )
    
    
    (4.84
    )
    
    
    22.10
    
    
    
    (5.96
    )(200
    )
    
    
    
    
    5,075,063
    
    
    
    (1,169,165
    )
    
    
    (18.72
    )
    
    
    18.87
    
    
    
    (19.70
    )
   Page 37




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Change in
    
    
    
    Percent Change inInterest Rates
    
    
    
    Net Interest Income(Basis points)200
    
    
    
    
    
    (6.84
    )%100
    
    
    
    
    
    (2.70
    )50
    
    
    
    
    
    (1.08
    )0
    
    
    
    
    
    (50
    )
    
    
    
    
    (1.87
    )(100
    )
    
    
    
    
    (6.18
    )(200
    )
    
    
    
    
    (16.31
    )
  GAP Analysis.
  Page 38




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At September 30, 2005More than
    
    
    More thanMore than
    
    
    More than one year
    
    
    two years
    
    
    three yearsSix months
    
    
    six months
    
    
    to
    
    
    to three
    
    
    to five
    
    
    More thanor less
    
    
    to one year
    
    
    two years
    
    
    years
    
    
    years
    
    
    five years
    
    
    Total(Dollars in thousands)Interest-earning assets:First mortgage loans
    
    $
    1,058,311
    
    
    $
    1,062,416
    
    
    $
    1,733,856
    
    
    $
    1,540,042
    
    
    $
    2,471,834
    
    
    $
    5,741,740
    
    
    $
    13,608,199Consumer and other loans
    
    
    29,583
    
    
    
    287
    
    
    
    1,383
    
    
    
    4,822
    
    
    
    15,935
    
    
    
    152,558
    
    
    
    204,568Federal funds sold
    
    
    15,400
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,400Mortgage-backed securities
    
    
    1,160,908
    
    
    
    1,425,894
    
    
    
    826,781
    
    
    
    1,078,077
    
    
    
    1,032,495
    
    
    
    1,194,955
    
    
    
    6,719,110FHLB stock
    
    
    175,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    175,000Investment securities
    
    
    597,658
    
    
    
    848,525
    
    
    
    1,042,692
    
    
    
    22
    
    
    
    1,488,459
    
    
    
    1,505,861
    
    
    
    5,483,217Total interest-earning assets
    
    
    3,036,860
    
    
    
    3,337,122
    
    
    
    3,604,712
    
    
    
    2,622,963
    
    
    
    5,008,723
    
    
    
    8,595,114
    
    
    
    26,205,494Interest-bearing liabilities:Savings accounts
    
    
    26,105
    
    
    
    21,358
    
    
    
    41,841
    
    
    
    41,841
    
    
    
    83,682
    
    
    
    627,611
    
    
    
    842,438Interest-bearing demand accounts
    
    
    197,356
    
    
    
    197,356
    
    
    
    399,461
    
    
    
    399,461
    
    
    
    798,922
    
    
    
    2,002,054
    
    
    
    3,994,610Money market accounts
    
    
    9,340
    
    
    
    9,340
    
    
    
    37,360
    
    
    
    37,360
    
    
    
    74,719
    
    
    
    205,478
    
    
    
    373,597Time deposits
    
    
    2,522,602
    
    
    
    1,643,882
    
    
    
    928,354
    
    
    
    294,268
    
    
    
    315,921
    
    
    
    
    
    
    
    5,705,027Borrowed funds
    
    
    875,000
    
    
    
    1,350,000
    
    
    
    
    
    
    
    
    
    
    
    150,000
    
    
    
    7,375,000
    
    
    
    9,750,000Total interest-bearing liabilities
    
    
    3,630,403
    
    
    
    3,221,936
    
    
    
    1,407,016
    
    
    
    772,930
    
    
    
    1,423,244
    
    
    
    10,210,143
    
    
    
    20,665,672Interest rate sensitivity gap
    
    $
    (593,543
    )
    
    $
    115,186
    
    
    $
    2,197,696
    
    
    $
    1,850,033
    
    
    $
    3,585,479
    
    
    $
    (1,615,029
    )
    
    $
    5,539,822Cumulative interest rate sensitivity gap
    
    $
    (593,543
    )
    
    $
    (478,357
    )
    
    $
    1,719,339
    
    
    $
    3,569,372
    
    
    $
    7,154,851
    
    
    $
    5,539,822Cumulative interest rate sensitivity gap
as a percent of total assets
    
    
    (2.24
    )%
    
    
    (1.80
    )%
    
    
    6.48
    %
    
    
    13.44
    %
    
    
    26.95
    %
    
    
    20.86
    %Cumulative interest-earning assets
as a percent of interest-bearing
liabilities
    
    
    83.65
    %
    
    
    93.02
    %
    
    
    120.82
    %
    
    
    139.52
    %
    
    
    168.43
    %
    
    
    126.81
    %
 Page 39




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##### Table of Contents



Item 4.  Controls and Procedures
   
 PART II  OTHER INFORMATION
 
 Item 1.  Legal Proceedings
  
 Item 2.  Unregistered Sales of Equity Securities and Use of Proceeds
  
 Item 3.  Defaults Upon Senior Securities
  Page 40




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##### Table of Contents



Item 4.  Submission of Matters to a Vote of Security Holders
  
 Item 5.  Other Information
  
 Item 6.  Exhibits
 Exhibit Number
    
    Exhibit31.1
    
    
    Certification of Chief Executive Officer31.2
    
    
    Certification of Chief Financial Officer32.1
    
    
    Written Statement of Chief Executive Officer and
Chief Financial Officer furnished pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002,
18 U.S.C. Section 1350. *
 
 *
    
    Pursuant to SEC rules, this exhibit will not be deemed filed for purposes of Section 18
of the Exchange Act or otherwise subject to the liability of that section. Page 41




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##### Table of Contents



SIGNATURES
   Date: November 7, 2005
    By:
    /s/ Ronald E. Hermance, Jr.Ronald E. Hermance, Jr.Chairman, President and Chief
Executive Officer
(principal executive officer) Date: November 7, 2005
    By:
    /s/ Denis J. SalamoneDenis J. SalamoneSenior Executive Vice President and
Chief Operating Officer
(principal financial and
accounting officer) Page 42