##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-K
  þ
    
    Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 For the fiscal year ended: December 31, 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
    
   Yes þ
    
    No o
  Yes o
    
    No þ
  Yes þ
    
    No o
  þ
  Large accelerated filer þ
    
    Accelerated filer o
    
    Non-accelerated filer o
  Yes o
    
    No þ




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##### 



Hudson City Bancorp, Inc.
2005 Annual Report on Form 10-K
Table of Contents
 PagePART IItem 1
    
    Business
    
    
    5Item 1A
    
    Risk Factors
    
    
    49Item 1B
    
    Unresolved Staff Comments
    
    
    52Item 2
    
    Properties
    
    
    53Item 3
    
    Legal Proceedings
    
    
    53Item 4
    
    Submission of Matters to a Vote of Security Holders
    
    
    53PART IIItem 5
    
    Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
    
    
    54Item 6
    
    Selected Financial Data
    
    
    56Item 7
    
    Managements Discussion and Analysis of Financial Condition and Results Of Operations
    
    
    58Item 7A
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    91Item 8
    
    Financial Statements and Supplementary Data
    
    
    92Item 9
    
    Changes in and Disagreements with Accountants on Accounting and Financial Disclosures
    
    
    133Item 9A
    
    Controls and Procedures
    
    
    133Item 9B
    
    Other Information
    
    
    134PART IIIItem 10
    
    Directors and Executive Officers of the Registrant
    
    
    135Item 11
    
    Executive Compensation
    
    
    135Item 12
    
    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    
    135Item 13
    
    Certain Relationships and Related Transactions
    
    
    135Item 14
    
    Principal Accounting Fees and Services
    
    
    136PART IVItem 15
    
    Exhibits, Financial Statement Schedules
    
    
    137SIGNATURES
    
    
    
    
    140EX-10.21: AMENDED AND RESTATED EMPLOYMENT AGREEMENTEX-10.22: AMENDED AND RESTATED EMPLOYMENT AGREEMENTEX-10.23: AMENDED AND RESTATED EMPLOYMENT AGREEMENTEX-10.24: AMENDED AND RESTATED EMPLOYMENT AGREEMENTEX-10.25: AMENDED AND RESTATED EMPLOYMENT AGREEMENTEX-10.26: AMENDED AND RESTATED EMPLOYMENT AGREEMENTEX-10.27: EXECUTIVE OFFICER ANNUAL INCENTIVE PLANEX-10.28: AMENDED AND RESTATED LOAN AGREEMENTEX-10.29: AMENDED AND RESTATED PROMISSORY NOTEEX-10.30: AMENDED AND RESTATED PLEDGE AGREEMENTEX-10.31: FORM OF AMENDED AND RESTATED ASSIGNMENTEX-10.32: LOAN AGREEMENTEX-10.33: PROMISSORY NOTEEX-10.34: PLEDGE AGREEMENTEX-10.35: FORM OF ASSIGNMENTEX-11.1: STATEMENT RE: COMPUTATION OF PER SHARE EARNINGSEX-21.1: SUBSIDIARIESEX-23.1: CONSENT OF KPMG LLPEX-31.1: CERTIFICATIONEX-31.2: CERTIFICATIONEX-32.1: CERTIFICATION
  Page 2




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PRIVATE SECURITIES LITIGATION REFORM ACT SAFE HARBOR STATEMENT
  
    
    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 the 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;
    
    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;
    
    the risks associated with continued diversification of assets and adverse changes to credit quality;
    
    difficulties associated with achieving expected future financial results;
    
    the risk of an economic slowdown that would adversely affect credit quality and loan originations;
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
    
    our business and Sound Federals business may not be combined successfully, or such
combination may take longer to accomplish than expected;
    
    the cost savings from the merger may not be full realized or may take longer to realize
than expected;
    
    operating costs, customer loss and business disruption following the merger, including
adverse effects on relationships with employees, may be greater than expected;
    
    governmental approvals of the merger may not be obtained, or adverse regulatory
conditions may be imposed in connection with governmental approvals of the merger; or
    
    the stockholders of Sound Federal may fail to approve the merger.
   Page 4




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PART I
 
 Item 1. Business.
       Page 5




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Available Information
 ,
 Proposed Acquisition of Sound Federal Bancorp, Inc.
  Market Area
   
 
 Page 6




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Competition
   Lending Activities
 Loan Portfolio Composition.
  Page 7




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Page 8




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At December 31,2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001Percent
    
    
    
    
    
    
    Percent
    
    
    
    
    
    
    Percent
    
    
    
    
    
    
    Percent
    
    
    
    
    
    
    PercentAmount
    
    
    of Total
    
    
    Amount
    
    
    of Total
    
    
    Amount
    
    
    of Total
    
    
    Amount
    
    
    of Total
    
    
    Amount
    
    
    of Total(Dollars in thousands)First mortgage loans:One- to four-family
    
    $
    14,780,819
    
    
    
    98.13
    %
    
    $
    11,120,874
    
    
    
    97.87
    %
    
    $
    8,567,442
    
    
    
    97.32
    %
    
    $
    6,708,806
    
    
    
    96.25
    %
    
    $
    5,664,973
    
    
    
    94.93
    %FHA/VA
    
    
    43,672
    
    
    
    0.29
    
    
    
    81,915
    
    
    
    0.72
    
    
    
    98,502
    
    
    
    1.12
    
    
    
    131,209
    
    
    
    1.88
    
    
    
    151,203
    
    
    
    2.53Multi-family and
commercial
    
    
    2,320
    
    
    
    0.02
    
    
    
    3,000
    
    
    
    0.03
    
    
    
    2,843
    
    
    
    0.03
    
    
    
    2,668
    
    
    
    0.04
    
    
    
    2,548
    
    
    
    0.04Total first mortgage
loans
    
    
    14,826,811
    
    
    
    98.44
    
    
    
    11,205,789
    
    
    
    98.62
    
    
    
    8,668,787
    
    
    
    98.47
    
    
    
    6,842,683
    
    
    
    98.17
    
    
    
    5,818,724
    
    
    
    97.50Consumer and other loans:Fixed-rate second
mortgages
    
    
    205,826
    
    
    
    1.37
    
    
    
    127,737
    
    
    
    1.12
    
    
    
    105,361
    
    
    
    1.20
    
    
    
    93,691
    
    
    
    1.34
    
    
    
    115,244
    
    
    
    1.93Home equity credit
lines
    
    
    29,150
    
    
    
    0.19
    
    
    
    28,929
    
    
    
    0.25
    
    
    
    28,217
    
    
    
    0.32
    
    
    
    33,543
    
    
    
    0.48
    
    
    
    32,715
    
    
    
    0.55Other
    
    
    662
    
    
    
    
    
    
    
    584
    
    
    
    0.01
    
    
    
    701
    
    
    
    0.01
    
    
    
    983
    
    
    
    0.01
    
    
    
    1,488
    
    
    
    0.02Total consumer and
other loans
    
    
    235,638
    
    
    
    1.56
    
    
    
    157,250
    
    
    
    1.38
    
    
    
    134,279
    
    
    
    1.53
    
    
    
    128,217
    
    
    
    1.83
    
    
    
    149,447
    
    
    
    2.50Total loans
    
    
    15,062,449
    
    
    
    100.00
    %
    
    
    11,363,039
    
    
    
    100.00
    %
    
    
    8,803,066
    
    
    
    100.00
    %
    
    
    6,970,900
    
    
    
    100.00
    %
    
    
    5,968,171
    
    
    
    100.00
    %Deferred loan costs (fees)
    
    
    1,653
    
    
    
    
    
    
    
    (8,073
    )
    
    
    
    
    
    
    (10,255
    )
    
    
    
    
    
    
    (13,508
    )
    
    
    
    
    
    
    (12,060
    )Allowance for loan
losses
    
    
    (27,393
    )
    
    
    
    
    
    
    (27,319
    )
    
    
    
    
    
    
    (26,547
    )
    
    
    
    
    
    
    (25,501
    )
    
    
    
    
    
    
    (24,010
    )Net loans
    
    $
    15,036,709
    
    
    
    
    
    
    $
    11,327,647
    
    
    
    
    
    
    $
    8,766,264
    
    
    
    
    
    
    $
    6,931,891
    
    
    
    
    
    
    $
    5,932,101
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Loan Maturity .
 At December 31, 2005First
    
    
    ConsumerMortgage
    
    
    andLoans
    
    
    Other Loans
    
    
    Total(In thousands)Amounts Due:One year or less
    
    $
    504
    
    
    $
    358
    
    
    $
    862After one year:One to three years
    
    
    23,370
    
    
    
    5,906
    
    
    
    29,276Three to five years
    
    
    20,844
    
    
    
    18,823
    
    
    
    39,667Five to ten years
    
    
    209,202
    
    
    
    52,123
    
    
    
    261,325Ten to twenty years
    
    
    2,054,238
    
    
    
    158,428
    
    
    
    2,212,666Over twenty years
    
    
    12,518,653
    
    
    
    
    
    
    
    12,518,653Total due after one
year
    
    
    14,826,307
    
    
    
    235,280
    
    
    
    15,061,587Total loans
    
    $
    14,826,811
    
    
    $
    235,638
    
    
    
    15,062,449Deferred loan costs
    
    
    
    
    
    
    
    
    
    
    1,653Allowance for loan losses
    
    
    
    
    
    
    
    
    
    
    (27,393
    )Net loans
    
    
    
    
    
    
    
    
    
    $
    15,036,709
  Due After December 31, 2006Fixed
    
    
    Adjustable
    
    
    Total(In thousands)First mortgage loans
    
    $
    12,257,673
    
    
    $
    2,568,634
    
    
    $
    14,826,307Consumer and other loans
    
    
    205,809
    
    
    
    29,471
    
    
    
    235,280Total loans due
after one year
    
    $
    12,463,482
    
    
    $
    2,598,105
    
    
    $
    15,061,587
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For the Year Ended December 31,2005
    
    
    2004
    
    
    2003(In thousands)Total loans:Balance outstanding at beginning of period
    
    $
    11,363,039
    
    
    $
    8,803,066
    
    
    $
    6,970,900Originations:First mortgage loans
    
    
    2,068,183
    
    
    
    1,378,709
    
    
    
    2,168,148Consumer and other loans
    
    
    126,591
    
    
    
    85,932
    
    
    
    103,000Total originations
    
    
    2,194,774
    
    
    
    1,464,641
    
    
    
    2,271,148Purchases:One- to four-family first mortgage loans
    
    
    3,676,260
    
    
    
    3,099,759
    
    
    
    3,168,892FHA/VA first mortgage loans
    
    
    
    
    
    
    22,334
    
    
    
    36,064Other first mortgage loans
    
    
    
    
    
    
    316
    
    
    
    293Total purchases
    
    
    3,676,260
    
    
    
    3,122,409
    
    
    
    3,205,249Less:Principal payments:First mortgage loans
    
    
    2,103,100
    
    
    
    1,956,395
    
    
    
    3,530,205Consumer and other loans
    
    
    48,203
    
    
    
    62,960
    
    
    
    96,938Total principal
payments
    
    
    2,151,303
    
    
    
    2,019,355
    
    
    
    3,627,143Premium amortization and
discount accretion, net
    
    
    8,247
    
    
    
    5,374
    
    
    
    14,094Transfers to foreclosed real estate
    
    
    1,750
    
    
    
    2,348
    
    
    
    2,994Loan sales
    
    
    10,324
    
    
    
    
    
    
    
    Balance outstanding at end of
period
    
    $
    15,062,449
    
    
    $
    11,363,039
    
    
    $
    8,803,066
 Residential Mortgage Lending .
  Page 11




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.
  Page 12




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Percent ofFirst MortgageAmount
    
    Loan Originations(In thousands)2005
    
    $
    156,492
    
    
    
    7.6
    %2004
    
    
    143,959
    
    
    
    10.42003
    
    
    530,408
    
    
    
    24.5
  Mortgage LoansModified(In thousands)2005
    
    $
    39,2542004
    
    
    220,0592003
    
    
    1,458,836
 Page 13




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Page 14




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Page 15




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.
 Consumer Loans .
     Loan Approval Procedures and Authority .
 Page 16




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Asset Quality
  Delinquent Loans and Foreclosed Assets .
   Page 17




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Page 18




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2005
    
    
    2004
    
    
    200360-89 Days
    
    
    90 Days or More
    
    
    60-89 Days
    
    
    90 Days or More
    
    
    60-89 Days
    
    
    90 Days or MorePrincipal
    
    
    
    
    
    
    Principal
    
    
    
    
    
    
    Principal
    
    
    
    
    
    
    Principal
    
    
    
    
    
    
    Principal
    
    
    
    
    
    
    PrincipalNo. of
    
    
    Balance
    
    
    No. of
    
    
    Balance
    
    
    No. of
    
    
    Balance
    
    
    No. of
    
    
    Balance
    
    
    No. of
    
    
    Balance
    
    
    No. of
    
    
    BalanceLoans
    
    
    of Loans
    
    
    Loans
    
    
    of Loans
    
    
    Loans
    
    
    of Loans
    
    
    Loans
    
    
    of Loans
    
    
    Loans
    
    
    of Loans
    
    
    Loans
    
    
    of Loans(Dollars in thousands)One- to four-family
first
mortgages
    
    
    44
    
    
    $
    10,113
    
    
    
    67
    
    
    $
    15,273
    
    
    
    43
    
    
    $
    9,819
    
    
    
    64
    
    
    $
    15,232
    
    
    
    52
    
    
    $
    8,974
    
    
    
    58
    
    
    $
    9,690FHA/VA first mortgages
    
    
    10
    
    
    
    1,755
    
    
    
    24
    
    
    
    4,037
    
    
    
    8
    
    
    
    773
    
    
    
    53
    
    
    
    6,375
    
    
    
    15
    
    
    
    1,493
    
    
    
    85
    
    
    
    10,459Multi-family and Commercial
mortgages
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    76
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Consumer and other loans
    
    
    2
    
    
    
    2
    
    
    
    2
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    4
    
    
    
    3
    
    
    
    102Total delinquent loans
(60 days and
over)
    
    
    56
    
    
    $
    11,870
    
    
    
    93
    
    
    $
    19,312
    
    
    
    52
    
    
    $
    10,668
    
    
    
    117
    
    
    $
    21,607
    
    
    
    68
    
    
    $
    10,471
    
    
    
    146
    
    
    $
    20,251Delinquent loans (60 days
and over) to total
loans
    
    
    
    
    
    
    0.08
    %
    
    
    
    
    
    
    0.13
    %
    
    
    
    
    
    
    0.09
    %
    
    
    
    
    
    
    0.19
    %
    
    
    
    
    
    
    0.12
    %
    
    
    
    
    
    
    0.23
    %
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At December 31,2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001(Dollars in thousands)Non-accrual first mortgage
loans
    
    $
    9,649
    
    
    $
    6,057
    
    
    $
    4,401
    
    
    $
    6,053
    
    
    $
    8,177Non-accrual consumer and other
loans
    
    
    2
    
    
    
    
    
    
    
    102
    
    
    
    19
    
    
    
    85Accruing loans delinquent 90 days
or more
    
    
    9,661
    
    
    
    15,550
    
    
    
    15,748
    
    
    
    14,123
    
    
    
    7,386Total
non-performing
loans
    
    
    19,312
    
    
    
    21,607
    
    
    
    20,251
    
    
    
    20,195
    
    
    
    15,648Foreclosed real estate, net
    
    
    1,040
    
    
    
    878
    
    
    
    1,002
    
    
    
    1,276
    
    
    
    250Total
non-performing
assets
    
    $
    20,352
    
    
    $
    22,485
    
    
    $
    21,253
    
    
    $
    21,471
    
    
    $
    15,898Non-performing loans to total
loans
    
    
    0.13
    %
    
    
    0.19
    %
    
    
    0.23
    %
    
    
    0.29
    %
    
    
    0.26
    %Non-performing assets to total
assets
    
    
    0.07
    
    
    
    0.11
    
    
    
    0.12
    
    
    
    0.15
    
    
    
    0.14
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Allowance for Loan Losses .
 At or for the Year Ended December 31,2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001(Dollars in thousands)Balance at beginning of period
    
    $
    27,319
    
    
    $
    26,547
    
    
    $
    25,501
    
    
    $
    24,010
    
    
    $
    22,144Provision for loan losses
    
    
    65
    
    
    
    790
    
    
    
    900
    
    
    
    1,500
    
    
    
    1,875Charge-offs:First mortgage loans
    
    
    (2
    )
    
    
    (11
    )
    
    
    (92
    )
    
    
    (3
    )
    
    
    (6
    )Consumer and other loans
    
    
    (8
    )
    
    
    (9
    )
    
    
    (4
    )
    
    
    (10
    )
    
    
    (14
    )Total
charge-offs
    
    
    (10
    )
    
    
    (20
    )
    
    
    (96
    )
    
    
    (13
    )
    
    
    (20
    )Recoveries
    
    
    19
    
    
    
    2
    
    
    
    242
    
    
    
    4
    
    
    
    11Net recoveries (charge-offs)
    
    
    9
    
    
    
    (18
    )
    
    
    146
    
    
    
    (9
    )
    
    
    (9
    )Balance at end of period
    
    $
    27,393
    
    
    $
    27,319
    
    
    $
    26,547
    
    
    $
    25,501
    
    
    $
    24,010Allowance for loan losses to
total loans
    
    
    0.18
    %
    
    
    0.24
    %
    
    
    0.30
    %
    
    
    0.37
    %
    
    
    0.40
    %Allowance for loan losses to
non-performing loans
    
    
    141.84
    
    
    
    126.44
    
    
    
    131.09
    
    
    
    126.27
    
    
    
    153.44
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At December 31,2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001Percentage
    
    
    
    
    
    
    Percentage
    
    
    
    
    
    
    Percentage
    
    
    
    
    
    
    Percentage
    
    
    
    
    
    
    Percentageof Loans in
    
    
    
    
    
    
    of Loans in
    
    
    
    
    
    
    of Loans in
    
    
    
    
    
    
    of Loans in
    
    
    
    
    
    
    of Loans inCategory
    
    
    
    
    
    
    Category
    
    
    
    
    
    
    Category
    
    
    
    
    
    
    Category
    
    
    
    
    
    
    Categoryto Total
    
    
    
    
    
    
    to Total
    
    
    
    
    
    
    to Total
    
    
    
    
    
    
    to Total
    
    
    
    
    
    
    to TotalAmount
    
    
    Loans
    
    
    Amount
    
    
    Loans
    
    
    Amount
    
    
    Loans
    
    
    Amount
    
    
    Loans
    
    
    Amount
    
    
    Loans(Dollars in thousands)First mortgage loans:One- to four-family
conventional
    
    $
    25,474
    
    
    
    98.13
    %
    
    $
    25,524
    
    
    
    97.87
    %
    
    $
    24,690
    
    
    
    97.32
    %
    
    $
    23,040
    
    
    
    96.25
    %
    
    $
    18,114
    
    
    
    94.93
    %Other first mortgages
    
    
    23
    
    
    
    0.31
    
    
    
    35
    
    
    
    0.75
    
    
    
    28
    
    
    
    1.15
    
    
    
    26
    
    
    
    1.92
    
    
    
    28
    
    
    
    2.57Total first mortgage
loans
    
    
    25,497
    
    
    
    98.44
    
    
    
    25,559
    
    
    
    98.62
    
    
    
    24,718
    
    
    
    98.47
    
    
    
    23,066
    
    
    
    98.17
    
    
    
    18,142
    
    
    
    97.50Consumer and other loans
    
    
    1,774
    
    
    
    1.56
    
    
    
    1,305
    
    
    
    1.38
    
    
    
    1,152
    
    
    
    1.53
    
    
    
    1,097
    
    
    
    1.83
    
    
    
    1,247
    
    
    
    2.50Unallocated
    
    
    122
    
    
    
    
    
    
    
    455
    
    
    
    
    
    
    
    677
    
    
    
    
    
    
    
    1,338
    
    
    
    
    
    
    
    4,621
    
    
    
    Total allowance for
loan losses
    
    $
    27,393
    
    
    
    100.00
    %
    
    $
    27,319
    
    
    
    100.00
    %
    
    $
    26,547
    
    
    
    100.00
    %
    
    $
    25,501
    
    
    
    100.00
    %
    
    $
    24,010
    
    
    
    100.00
    %
 Page 23




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##### Table of Contents



Investment Activities
    Investment Securities .
  Mortgage-backed Securities .
 Page 24




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##### Table of Contents



Page 25




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##### Table of Contents



For the Year Ended December 31,2005
    
    
    2004
    
    
    2003(In thousands)Investment securities:Carrying value at beginning of
period
    
    $
    2,928,888
    
    
    $
    2,245,178
    
    
    $
    562,338Purchases:Held to maturity
    
    
    300,000
    
    
    
    1,769,643
    
    
    
    Available for sale
    
    
    4,008,680
    
    
    
    337,306
    
    
    
    3,089,474Calls:Held to maturity
    
    
    (99,978
    )
    
    
    (436,670
    )
    
    
    (40
    )Available for sale
    
    
    (100,007
    )
    
    
    (986,343
    )
    
    
    (1,332,072
    )Maturities:Held to maturity
    
    
    (65
    )
    
    
    (100
    )
    
    
    Available for sale
    
    
    (1,500,000
    )
    
    
    
    
    
    
    (150
    )Sales:Available for sale
    
    
    
    
    
    
    
    
    
    
    (50,000
    )Equity securities
    
    
    (10,000
    )
    
    
    
    
    
    
    (20
    )Premium amortization and discount
accretion, net
    
    
    16,295
    
    
    
    32
    
    
    
    (2,047
    )Change in unrealized gain or
loss
    
    
    (47,086
    )
    
    
    (158
    )
    
    
    (22,305
    )Net increase in investment
securities
    
    
    2,567,839
    
    
    
    683,710
    
    
    
    1,682,840Carrying value at end of
period
    
    $
    5,496,727
    
    
    $
    2,928,888
    
    
    $
    2,245,178
  For the Year Ended December 31,2005
    
    
    2004
    
    
    2003(In thousands)Mortgage-backed securities:Carrying value at beginning of
period
    
    $
    5,376,629
    
    
    $
    5,422,701
    
    
    $
    6,126,161Purchases:Held to
maturity
    
    
    1,604,473
    
    
    
    921,765
    
    
    
    3,038,153Available for
sale
    
    
    1,675,428
    
    
    
    1,278,921
    
    
    
    1,489,154Principal payments:Held to
maturity
    
    
    (960,630
    )
    
    
    (1,445,507
    )
    
    
    (3,387,605
    )Available for
sale
    
    
    (499,387
    )
    
    
    (282,901
    )
    
    
    (410,316
    )Sales:Held to
maturity
    
    
    
    
    
    
    
    
    
    
    (64,590
    )Available for
sale
    
    
    (227,894
    )
    
    
    (499,067
    )
    
    
    (1,310,004
    )Premium amortization and discount
accretion, net
    
    
    (14,627
    )
    
    
    (14,138
    )
    
    
    (31,307
    )Change in unrealized gain or
loss
    
    
    (43,495
    )
    
    
    (5,145
    )
    
    
    (26,945
    )Net increase (decrease) in
mortgage-backed
securities
    
    
    1,533,868
    
    
    
    (46,072
    )
    
    
    (703,460
    )Carrying value at end of period
    
    $
    6,910,497
    
    
    $
    5,376,629
    
    
    $
    5,422,701
 Page 26




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##### Table of Contents



At December 31,2005
    
    
    
    
    
    
    
    
    
    
    2004
    
    
    
    
    
    
    
    
    
    
    2003Carrying
    
    
    Percent of
    
    
    Fair
    
    
    Carrying
    
    
    Percent of
    
    
    Fair
    
    
    Carrying
    
    
    Percent of
    
    
    FairValue
    
    
    Total (1)
    
    
    Value
    
    
    Value
    
    
    Total (1)
    
    
    Value
    
    
    Value
    
    
    Total (1)
    
    
    Value(Dollars in thousands)Money market investments:Federal funds sold
    
    $
    4,587
    
    
    
    100.00
    %
    
    $
    4,587
    
    
    $
    45,700
    
    
    
    100.00
    %
    
    $
    45,700
    
    
    $
    63,600
    
    
    
    100.00
    %
    
    $
    63,600Investment securities:Held to maturity:United States
government-sponsored
agencies
    
    $
    1,533,050
    
    
    
    27.89
    %
    
    $
    1,506,865
    
    
    $
    1,333,018
    
    
    
    45.51
    %
    
    $
    1,325,054
    
    
    $
    
    
    
    
    
    %
    
    $
    Municipal bonds
    
    
    1,166
    
    
    
    0.02
    
    
    
    1,190
    
    
    
    1,231
    
    
    
    0.04
    
    
    
    1,282
    
    
    
    1,366
    
    
    
    0.06
    
    
    
    1,443Total held to
maturity
    
    
    1,534,216
    
    
    
    27.91
    
    
    
    1,508,055
    
    
    
    1,334,249
    
    
    
    45.55
    
    
    
    1,326,336
    
    
    
    1,366
    
    
    
    0.06
    
    
    
    1,443Available for sale:United States
government-sponsored
agencies
    
    
    3,962,178
    
    
    
    72.09
    
    
    
    3,962,178
    
    
    
    1,584,384
    
    
    
    54.10
    
    
    
    1,584,384
    
    
    
    2,233,035
    
    
    
    99.46
    
    
    
    2,233,035Corporate bonds
    
    
    67
    
    
    
    
    
    
    
    67
    
    
    
    74
    
    
    
    
    
    
    
    74
    
    
    
    81
    
    
    
    
    
    
    
    81Equity
securities
    
    
    266
    
    
    
    
    
    
    
    266
    
    
    
    10,181
    
    
    
    0.35
    
    
    
    10,181
    
    
    
    10,696
    
    
    
    0.48
    
    
    
    10,696Total available for
sale
    
    
    3,962,511
    
    
    
    72.09
    
    
    
    3,962,511
    
    
    
    1,594,639
    
    
    
    54.45
    
    
    
    1,594,639
    
    
    
    2,243,812
    
    
    
    99.94
    
    
    
    2,243,812Total investment
securities
    
    $
    5,496,727
    
    
    
    100.00
    %
    
    $
    5,470,566
    
    
    $
    2,928,888
    
    
    
    100.00
    %
    
    $
    2,920,975
    
    
    $
    2,245,178
    
    
    
    100.00
    %
    
    $
    2,245,255Mortgage-backed securities:By issuer:Held to maturity:GNMA pass-through
certificates
    
    $
    293,680
    
    
    
    4.25
    %
    
    $
    294,332
    
    
    $
    416,665
    
    
    
    7.75
    %
    
    $
    422,032
    
    
    $
    616,618
    
    
    
    11.37
    %
    
    $
    626,239FNMA pass-through
certificates
    
    
    2,535,361
    
    
    
    36.69
    
    
    
    2,489,102
    
    
    
    2,017,165
    
    
    
    37.51
    
    
    
    2,017,791
    
    
    
    1,650,544
    
    
    
    30.44
    
    
    
    1,652,854FHLMC pass-through
certificates
    
    
    1,108,195
    
    
    
    16.04
    
    
    
    1,082,564
    
    
    
    561,095
    
    
    
    10.44
    
    
    
    554,341
    
    
    
    439,793
    
    
    
    8.11
    
    
    
    433,097FHLMC and FNMA REMICs
    
    
    452,628
    
    
    
    6.55
    
    
    
    422,774
    
    
    
    760,996
    
    
    
    14.15
    
    
    
    726,865
    
    
    
    1,585,489
    
    
    
    29.24
    
    
    
    1,538,498Total held to
maturity
    
    
    4,389,864
    
    
    
    63.53
    
    
    
    4,288,772
    
    
    
    3,755,921
    
    
    
    69.85
    
    
    
    3,721,029
    
    
    
    4,292,444
    
    
    
    79.16
    
    
    
    4,250,688Available for sale:GNMA pass-through
certificates
    
    
    1,700,132
    
    
    
    24.60
    
    
    
    1,700,132
    
    
    
    503,839
    
    
    
    9.37
    
    
    
    503,839
    
    
    
    336,458
    
    
    
    6.20
    
    
    
    336,458FNMA pass-through
certificates
    
    
    666,485
    
    
    
    9.64
    
    
    
    666,485
    
    
    
    743,380
    
    
    
    13.83
    
    
    
    743,380
    
    
    
    493,383
    
    
    
    9.10
    
    
    
    493,383FHLMC pass-through
certificates
    
    
    154,016
    
    
    
    2.23
    
    
    
    154,016
    
    
    
    373,489
    
    
    
    6.95
    
    
    
    373,489
    
    
    
    300,416
    
    
    
    5.54
    
    
    
    300,416Available for sale
    
    
    2,520,633
    
    
    
    36.47
    
    
    
    2,520,633
    
    
    
    1,620,708
    
    
    
    30.15
    
    
    
    1,620,708
    
    
    
    1,130,257
    
    
    
    20.84
    
    
    
    1,130,257Total mortgage-backed
securities
    
    $
    6,910,497
    
    
    
    100.00
    %
    
    $
    6,809,405
    
    
    $
    5,376,629
    
    
    
    100.00
    %
    
    $
    5,341,737
    
    
    $
    5,422,701
    
    
    
    100.00
    %
    
    $
    5,380,945By coupon type:Adjustable-rate
    
    $
    3,704,146
    
    
    
    53.60
    %
    
    $
    3,683,965
    
    
    $
    1,258,859
    
    
    
    23.41
    
    
    $
    1,262,923
    
    
    $
    959,445
    
    
    
    17.69
    %
    
    $
    967,477Fixed-rate
    
    
    3,206,351
    
    
    
    46.40
    
    
    
    3,125,440
    
    
    
    4,117,770
    
    
    
    76.59
    
    
    
    4,078,814
    
    
    
    4,463,256
    
    
    
    82.31
    
    
    
    4,413,468Total mortgage-backed
securities
    
    $
    6,910,497
    
    
    
    100.00
    %
    
    $
    6,809,405
    
    
    $
    5,376,629
    
    
    
    100.00
    %
    
    $
    5,341,737
    
    
    $
    5,422,701
    
    
    
    100.00
    %
    
    $
    5,380,945Total investment portfolio
    
    $
    12,411,811
    
    
    
    
    
    
    $
    12,284,558
    
    
    $
    8,351,217
    
    
    
    
    
    
    $
    8,308,412
    
    
    $
    7,731,479
    
    
    
    
    
    
    $
    7,689,800
 
 (1)
    
    Based on carrying value for each investment type. Page 27




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##### Table of Contents



Carrying Values, Rates and Maturities .
 At December 31, 2005More Than One Year
    
    
    More Than Five YearsOne Year or Less
    
    
    to Five Years
    
    
    to Ten Years
    
    
    More Than Ten Years
    
    
    TotalWeighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    WeightedCarrying
    
    
    Average
    
    
    Carrying
    
    
    Average
    
    
    Carrying
    
    
    Average
    
    
    Carrying
    
    
    Average
    
    
    Carrying
    
    
    AverageValue
    
    
    Rate
    
    
    Value
    
    
    Rate
    
    
    Value
    
    
    Rate
    
    
    Value
    
    
    Rate
    
    
    Value
    
    
    Rate(Dollars in thousands)Money market investments:Federal funds
sold
    
    $
    4,587
    
    
    
    4.25
    %
    
    $
    
    
    
    
    
    %
    
    $
    
    
    
    
    
    %
    
    $
    
    
    
    
    
    %
    
    $
    4,587
    
    
    
    4.25
    %Investment securities:Held to maturity:United States
government-sponsored
agencies
    
    $
    
    
    
    
    
    
    
    $
    475,000
    
    
    
    4.68
    
    
    $
    436,528
    
    
    
    4.82
    
    
    $
    621,522
    
    
    
    5.02
    
    
    $
    1,533,050
    
    
    
    4.86Municipal
bonds
    
    
    
    
    
    
    
    
    
    
    610
    
    
    
    6.48
    
    
    
    556
    
    
    
    6.18
    
    
    
    
    
    
    
    
    
    
    
    1,166
    
    
    
    6.34Total held to
maturity
    
    
    
    
    
    
    
    
    
    
    475,610
    
    
    
    4.68
    
    
    
    437,084
    
    
    
    4.82
    
    
    
    621,522
    
    
    
    5.02
    
    
    
    1,534,216
    
    
    
    4.86Available for sale:United States
government-sponsored
agencies
    
    
    496,647
    
    
    
    3.87
    
    
    
    2,901,169
    
    
    
    4.18
    
    
    
    564,362
    
    
    
    4.49
    
    
    
    
    
    
    
    
    
    
    
    3,962,178
    
    
    
    4.19Corporate
bonds
    
    
    5
    
    
    
    6.43
    
    
    
    62
    
    
    
    5.59
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    67
    
    
    
    5.65Total available for
sale
    
    
    496,652
    
    
    
    3.87
    
    
    
    2,901,231
    
    
    
    4.18
    
    
    
    564,362
    
    
    
    4.49
    
    
    
    
    
    
    
    
    
    
    
    3,962,245
    
    
    
    4.19Total investment
securities
    
    $
    496,652
    
    
    
    3.87
    
    
    $
    3,376,841
    
    
    
    4.25
    
    
    
    1,001,446
    
    
    
    4.63
    
    
    $
    621,522
    
    
    
    5.02
    
    
    $
    5,496,461
    
    
    
    4.37Mortgage-backed securities:By issuer:Held to maturity:GNMA pass-through
certificates
    
    $
    80
    
    
    
    7.37
    
    
    $
    1,813
    
    
    
    8.63
    
    
    $
    129
    
    
    
    11.36
    
    
    $
    291,658
    
    
    
    4.40
    
    
    $
    293,680
    
    
    
    4.43FNMA pass-through
certificates
    
    
    
    
    
    
    
    
    
    
    8,943
    
    
    
    6.46
    
    
    
    2,425
    
    
    
    7.04
    
    
    
    2,523,993
    
    
    
    4.85
    
    
    
    2,535,361
    
    
    
    4.86FHLMC pass-through
certificates
    
    
    1
    
    
    
    6.72
    
    
    
    1,648
    
    
    
    7.87
    
    
    
    2,303
    
    
    
    6.71
    
    
    
    1,104,243
    
    
    
    4.59
    
    
    
    1,108,195
    
    
    
    4.60FHLMC, FNMA and
REMICs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    452,628
    
    
    
    4.40
    
    
    
    452,628
    
    
    
    4.40Total held to
maturity
    
    
    81
    
    
    
    7.36
    
    
    
    12,404
    
    
    
    6.96
    
    
    
    4,857
    
    
    
    7.00
    
    
    
    4,372,522
    
    
    
    4.71
    
    
    
    4,389,864
    
    
    
    4.72Available for sale:GNMA pass-through
certificates
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,700,132
    
    
    
    4.01
    
    
    
    1,700,132
    
    
    
    4.01FNMA pass-through
certificates
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    666,485
    
    
    
    4.86
    
    
    
    666,485
    
    
    
    4.86FHLMC pass-through
certificates
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    154,016
    
    
    
    5.02
    
    
    
    154,016
    
    
    
    5.02Total available
for sale
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,520,633
    
    
    
    4.30
    
    
    
    2,520,633
    
    
    
    4.30Total
mortgage-backed
securities
    
    $
    81
    
    
    
    7.36
    
    
    $
    12,404
    
    
    
    6.96
    
    
    $
    4,857
    
    
    
    7.00
    
    
    $
    6,893,155
    
    
    
    4.56
    
    
    $
    6,910,497
    
    
    
    4.57By coupon type:Adjustable-rate
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    387
    
    
    
    4.73
    
    
    $
    3,703,759
    
    
    
    4.38
    
    
    $
    3,704,146
    
    
    
    4.38Fixed-rate
    
    
    81
    
    
    
    7.36
    
    
    
    12,404
    
    
    
    6.96
    
    
    
    4,470
    
    
    
    7.19
    
    
    
    3,189,396
    
    
    
    4.78
    
    
    
    3,206,351
    
    
    
    4.79Total
mortgage-backed
securities
    
    $
    81
    
    
    
    7.36
    
    
    $
    12,404
    
    
    
    6.96
    
    
    $
    4,857
    
    
    
    7.00
    
    
    $
    6,893,155
    
    
    
    4.56
    
    
    $
    6,910,497
    
    
    
    4.57Total investment portfolio
    
    $
    501,320
    
    
    
    3.87
    
    
    $
    3,389,245
    
    
    
    4.26
    
    
    $
    1,006,303
    
    
    
    4.64
    
    
    $
    7,514,677
    
    
    
    4.60
    
    
    $
    12,411,545
    
    
    
    4.48
 Page 28




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##### Table of Contents



Sources of Funds
 General .
 Deposits .
    Page 29




---



##### Table of Contents



For the Year Ended December 31,2005
    
    
    2004
    
    
    2003(Dollars in thousands)Total deposits at
beginning of period
    
    $
    11,477,300
    
    
    $
    10,453,780
    
    
    $
    9,138,629Net (decrease) increase
in deposits
    
    
    (387,736
    )
    
    
    808,707
    
    
    
    1,105,812Interest credited, net
penalties
    
    
    293,736
    
    
    
    214,813
    
    
    
    209,339Total deposits at end of
period
    
    $
    11,383,300
    
    
    $
    11,477,300
    
    
    $
    10,453,780Net (decrease)
increase
    
    $
    (94,000
    )
    
    $
    1,023,520
    
    
    $
    1,315,151Percent (decrease)
increase
    
    
    (0.82
    )%
    
    
    9.79
    %
    
    
    14.39
    %
  Maturity Period
    
    Amount(In thousands)Three months or less
    
    $
    426,930Over three months through six
months
    
    
    275,766Over six months through 12
months
    
    
    418,344Over 12 months
    
    
    257,300Total
    
    $
    1,378,340
 Page 30




---



##### Table of Contents



At December 31,2005
    
    
    2004
    
    
    2003Weighted
    
    
    
    
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    
    
    
    
    WeightedPercent
    
    
    average
    
    
    
    
    
    
    Percent
    
    
    average
    
    
    
    
    
    
    Percent
    
    
    averageof total
    
    
    nominal
    
    
    
    
    
    
    of total
    
    
    nominal
    
    
    
    
    
    
    of total
    
    
    nominalAmount
    
    
    deposits
    
    
    rate
    
    
    Amount
    
    
    deposits
    
    
    rate
    
    
    Amount
    
    
    deposits
    
    
    rate(Dollars in thousands)Savings
    
    $
    808,325
    
    
    
    7.10
    %
    
    
    0.98
    %
    
    $
    931,783
    
    
    
    8.12
    %
    
    
    0.98
    %
    
    $
    945,595
    
    
    
    9.05
    %
    
    
    0.98
    %Interest-bearing transaction
    
    
    3,616,644
    
    
    
    31.77
    
    
    
    3.19
    
    
    
    4,290,099
    
    
    
    37.38
    
    
    
    2.46
    
    
    
    2,808,901
    
    
    
    26.87
    
    
    
    2.09Money market
    
    
    342,021
    
    
    
    3.00
    
    
    
    1.14
    
    
    
    564,700
    
    
    
    4.92
    
    
    
    0.96
    
    
    
    623,811
    
    
    
    5.97
    
    
    
    0.96Noninterest-bearing demand
    
    
    442,042
    
    
    
    3.88
    
    
    
    
    
    
    
    417,502
    
    
    
    3.64
    
    
    
    
    
    
    
    396,495
    
    
    
    3.79
    
    
    
    Total
    
    
    5,209,032
    
    
    
    45.75
    
    
    
    2.44
    
    
    
    6,204,084
    
    
    
    54.06
    
    
    
    1.94
    
    
    
    4,774,802
    
    
    
    45.68
    
    
    
    1.55Time deposits:Time deposits $100,000
and over
    
    
    1,378,340
    
    
    
    12.11
    
    
    
    3.61
    
    
    
    886,079
    
    
    
    7.72
    
    
    
    2.45
    
    
    
    914,639
    
    
    
    8.75
    
    
    
    2.19Time deposits less than
$100,000 with original
maturities of:Three months or less
    
    
    199,280
    
    
    
    1.75
    
    
    
    3.17
    
    
    
    339,354
    
    
    
    2.96
    
    
    
    1.37
    
    
    
    483,460
    
    
    
    4.62
    
    
    
    1.37Over three months to
twelve months
    
    
    1,338,588
    
    
    
    11.76
    
    
    
    3.72
    
    
    
    864,250
    
    
    
    7.53
    
    
    
    1.64
    
    
    
    1,166,713
    
    
    
    11.16
    
    
    
    1.52Over twelve months to
twenty-four months
    
    
    1,541,166
    
    
    
    13.54
    
    
    
    3.36
    
    
    
    1,368,900
    
    
    
    11.93
    
    
    
    2.07
    
    
    
    1,634,702
    
    
    
    15.64
    
    
    
    2.18Over twenty-four months
to thirty-six months
    
    
    495,670
    
    
    
    4.35
    
    
    
    3.17
    
    
    
    650,289
    
    
    
    5.67
    
    
    
    2.81
    
    
    
    562,678
    
    
    
    5.38
    
    
    
    2.94Over thirty-six months to
forty-eight months
    
    
    294,538
    
    
    
    2.59
    
    
    
    3.47
    
    
    
    283,747
    
    
    
    2.47
    
    
    
    3.40
    
    
    
    149,801
    
    
    
    1.43
    
    
    
    3.48Over forty-eight months
to sixty months
    
    
    50,680
    
    
    
    0.45
    
    
    
    3.72
    
    
    
    48,692
    
    
    
    0.42
    
    
    
    3.76
    
    
    
    27,594
    
    
    
    0.26
    
    
    
    3.70Over sixty months
    
    
    149,724
    
    
    
    1.32
    
    
    
    3.93
    
    
    
    135,160
    
    
    
    1.18
    
    
    
    3.87
    
    
    
    70,850
    
    
    
    0.68
    
    
    
    3.79Qualified retirement
plans
    
    
    726,282
    
    
    
    6.38
    
    
    
    3.49
    
    
    
    696,745
    
    
    
    6.06
    
    
    
    2.65
    
    
    
    668,541
    
    
    
    6.40
    
    
    
    2.57Total time deposits
    
    
    6,174,268
    
    
    
    54.25
    
    
    
    3.51
    
    
    
    5,273,216
    
    
    
    45.94
    
    
    
    2.32
    
    
    
    5,678,978
    
    
    
    54.32
    
    
    
    2.16Total deposits
    
    $
    11,383,300
    
    
    
    100.00
    %
    
    
    3.02
    
    
    $
    11,477,300
    
    
    
    100.00
    %
    
    
    2.11
    
    
    $
    10,453,780
    
    
    
    100.00
    %
    
    
    1.88
 Page 31




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##### Table of Contents



At December 31,2005
    
    
    2004
    
    
    2003(In thousands)Time deposit accounts:2.00% or less
    
    $
    56,745
    
    
    $
    2,318,278
    
    
    $
    3,025,3052.01% to 2.50%
    
    
    297,237
    
    
    
    1,345,286
    
    
    
    968,7572.51% to 3.00%
    
    
    462,856
    
    
    
    511,037
    
    
    
    813,1993.01% to 3.50%
    
    
    2,246,361
    
    
    
    557,706
    
    
    
    501,9263.51% to 4.00%
    
    
    2,154,784
    
    
    
    370,029
    
    
    
    256,6724.01% and over
    
    
    956,285
    
    
    
    170,880
    
    
    
    113,119Total
    
    $
    6,174,268
    
    
    $
    5,273,216
    
    
    $
    5,678,978
  Period to Maturity from December 31, 2005Within
    
    
    Over three
    
    
    Over six
    
    
    Over one
    
    
    Over two
    
    
    Overthree
    
    
    to six
    
    
    months to
    
    
    to two
    
    
    to three
    
    
    threemonths
    
    
    months
    
    
    one year
    
    
    years
    
    
    years
    
    
    years
    
    
    Total(In thousands)Time deposit accounts:2.00% or less
    
    $
    46,075
    
    
    $
    6,027
    
    
    $
    3,587
    
    
    $
    1,049
    
    
    $
    6
    
    
    $
    1
    
    
    $
    56,7452.01% to 2.50%
    
    
    195,831
    
    
    
    94,553
    
    
    
    6,817
    
    
    
    36
    
    
    
    
    
    
    
    
    
    
    
    297,2372.51% to 3.00%
    
    
    185,781
    
    
    
    110,361
    
    
    
    144,357
    
    
    
    22,321
    
    
    
    
    
    
    
    36
    
    
    
    462,8563.01% to 3.50%
    
    
    1,005,984
    
    
    
    512,068
    
    
    
    533,424
    
    
    
    141,041
    
    
    
    53,835
    
    
    
    9
    
    
    
    2,246,3613.51% to 4.00%
    
    
    411,204
    
    
    
    543,216
    
    
    
    542,307
    
    
    
    481,993
    
    
    
    93,489
    
    
    
    82,575
    
    
    
    2,154,7844.01% and over
    
    
    2,386
    
    
    
    3,151
    
    
    
    633,722
    
    
    
    58,652
    
    
    
    52,865
    
    
    
    205,509
    
    
    
    956,285Total
    
    $
    1,847,261
    
    
    $
    1,269,376
    
    
    $
    1,864,214
    
    
    $
    705,092
    
    
    $
    200,195
    
    
    $
    288,130
    
    
    $
    6,174,268
 Borrowings.
 .
 Page 32




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##### Table of Contents



2005
    
    
    2004Weighted
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    AveragePrincipal
    
    
    Rate
    
    
    Principal
    
    
    Rate(Dollars in thousands)Securities sold under agreements to repurchase:FHLB
    
    $
    850,000
    
    
    
    4.96
    %
    
    $
    950,000
    
    
    
    4.73
    %Other brokers
    
    
    7,050,000
    
    
    
    3.45
    
    
    
    4,350,000
    
    
    
    3.11Total securities sold under
agreements to repurchase
    
    
    7,900,000
    
    
    
    3.61
    
    
    
    5,300,000
    
    
    
    3.40Advances from the FHLB
    
    
    3,450,000
    
    
    
    3.95
    
    
    
    1,850,000
    
    
    
    3.81Total borrowed funds
    
    $
    11,350,000
    
    
    
    3.72
    
    
    $
    7,150,000
    
    
    
    3.51
  Borrowings by Scheduled
    
    
    Borrowings by NextMaturity Date
    
    
    Potential Call DateWeighted
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    AverageYear
    
    Principal
    
    
    Rate
    
    
    Principal
    
    
    Rate(Dollars in thousands)2006
    
    $
    
    
    
    
     %
    
    
    $
    4,175,000
    
    
    
    3.77
    %2007
    
    
    
    
    
    
    
    
    
    
    2,650,000
    
    
    
    3.272008
    
    
    
    
    
    
    
    
    
    
    2,975,000
    
    
    
    3.872009
    
    
    
    
    
    
    
    
    
    
    900,000
    
    
    
    3.812010
    
    
    300,000
    
    
    
    5.68
    
    
    
    350,000
    
    
    
    4.012011
    
    
    775,000
    
    
    
    4.79
    
    
    
    300,000
    
    
    
    4.892012
    
    
    1,450,000
    
    
    
    4.06
    
    
    
    
    
    
    
    2013
    
    
    850,000
    
    
    
    3.81
    
    
    
    
    
    
    
    2014
    
    
    2,850,000
    
    
    
    2.84
    
    
    
    
    
    
    
    2015
    
    
    5,125,000
    
    
    
    3.82
    
    
    
    
    
    
    
    Total
    
    $
    11,350,000
    
    
    
    3.72
    
    
    $
    11,350,000
    
    
    
    3.72
 Page 33




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##### Table of Contents



At or for the year endedDecember 31,2005
    
    
    2004
    
    
    2003(In thousands)Amortized cost of collateral:United
States government-sponsored agency securities
    
    $
    2,849,947
    
    
    $
    2,030,978
    
$
615,806Mortgage-backed securities
    
    
    5,224,648
    
    
    
    3,198,768
    

2,369,058REMICs
    
    
    356,579
    
    
    
    455,598
    
    
495,074Total amortized cost of
collateral
    
    $
    8,431,174
    
    
    $
    5,685,344
    
$
3,479,938Fair value of collateral:United
States government-sponsored agency securities
    
    $
    2,778,462
    
    
    $
    2,008,710
    
$
604,397Mortgage-backed securities
    
    
    5,119,225
    
    
    
    3,188,386
    

2,387,457REMICs
    
    
    332,532
    
    
    
    434,249
    

478,192Total fair value of
collateral
    
    $
    8,230,219
    
    
    $
    5,631,345
    
$
3,470,046Average balance of outstanding repurchase
agreements during the
year
    
    $
    6,447,560
    
    
    $
    4,182,197
    
$
2,253,025Maximum balance of outstanding repurchase
agreements at any month-end
during the year
    
    $
    7,900,000
    
    
    $
    5,300,000
    
$
3,200,000Average cost of securities sold under agreements
to repurchase
    
    
    3.52
    %
    
    
    3.41
    %

4.26
%
  Subsidiaries
   Personnel
  Page 34




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##### Table of Contents



REGULATION OF HUDSON CITY SAVINGS BANK AND HUDSON CITY BANCORP
 General
   Federally Chartered Savings Bank Regulation
 Activity Powers .
 
    
    real estate mortgages;
    
    consumer and commercial loans;
    
    certain types of debt securities; and
    
    certain other assets.
 Page 35




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##### Table of Contents



Capital Requirements.
 OTS RequirementsMinimum Capital
    
    
    For Classification asBank Actual
    
    
    Adequacy
    
    
    Well-CapitalizedAmount
    
    
    Ratio
    
    
    Amount
    
    
    Ratio
    
    
    Amount
    
    
    Ratio(Dollars in thousands)December 31, 2005Tangible
capital
    
    $
    4,129,937
    
    
    
    14.68
    %
    
    $
    422,069
    
    
    
    1.50
    %
    
    
    n/a
    
    
    
    n/aLeverage (core)
capital
    
    
    4,129,937
    
    
    
    14.68
    
    
    
    1,125,518
    
    
    
    4.00
    
    
    $
    1,406,897
    
    
    
    5.00
    %Total-risk-based
capital
    
    
    4,157,330
    
    
    
    41.31
    
    
    
    805,040
    
    
    
    8.00
    
    
    
    1,006,300
    
    
    
    10.00December 31, 2004Tangible
capital
    
    $
    1,282,665
    
    
    
    6.36
    %
    
    $
    302,325
    
    
    
    1.50
    %
    
    
    n/a
    
    
    
    n/aLeverage (core)
capital
    
    
    1,282,665
    
    
    
    6.36
    
    
    
    806,200
    
    
    
    4.00
    
    
    $
    1,007,750
    
    
    
    5.00
    %Total-risk-based
capital
    
    
    1,309,984
    
    
    
    17.49
    
    
    
    599,199
    
    
    
    8.00
    
    
    
    748,998
    
    
    
    10.00
  Page 36




---



##### Table of Contents



Safety and Soundness Standards.
  Prompt Corrective Action.
 Page 37




---



##### Table of Contents



Insurance Activities.
 Deposit Insurance.
  Page 38




---



##### Table of Contents



Transactions with Affiliates of Hudson City Savings.
   Privacy Standards.
  Page 39




---



##### Table of Contents



Community Reinvestment Act.
  
    
    a lending test, to evaluate the institutions record of making loans in its service
areas;
    
    an investment test, to evaluate the institutions record of investing in community
development projects, affordable housing, and programs benefiting low or moderate income
individuals and businesses; and
    
    a service test, to evaluate the institutions delivery of services through its branches,
ATMs and other offices.
  Loans to One Borrower.
 Page 40




---



##### Table of Contents



Qualified Thrift Lender (QTL) Test.
  Limitation on Capital Distributions.
    Page 41




---



##### Table of Contents



Liquidity.
 Assessments.
 Branching.
 Anti-Money Laundering and Customer Identification
   
    
    Establishment of anti-money laundering programs.
    
    Establishment of a program specifying procedures for obtaining identifying information
from customers seeking to open new accounts, including verifying the identity of customers
within a reasonable period of time.
    
    Establishment of enhanced due diligence policies, procedures and controls designed to
detect and report money-laundering.
    
    Prohibitions on correspondent accounts for foreign shell banks and compliance with
record keeping obligations with respect to correspondent accounts of foreign banks.
 Page 42




---



##### Table of Contents




    
    Bank regulators are directed to consider a holding companys effectiveness in combating
money laundering when ruling on Federal Reserve Act and Bank Merger Act applications.
 Federal Home Loan Bank System
   Federal Reserve System
  Page 43




---



##### Table of Contents



Federal Holding Company Regulation
  Restrictions Applicable to New Savings and Loan Holding Companies.
 
    
    furnishing or performing management services for a savings institution subsidiary of
such holding company;
    
    conducting an insurance agency or escrow business;
    
    holding, managing, or liquidating assets owned or acquired from a savings institution
subsidiary of such company;
    
    holding or managing properties used or occupied by a savings institution subsidiary of
such company;
    
    acting as trustee under a deed of trust;
    
    any other activity (i) that the FRB, by regulation, has determined to be permissible for
bank holding companies under Section 4(c) of the Bank Holding Company Act of 1956 (the BHC
Act), unless the Director of the Office of Thrift Supervision, by regulation, prohibits or
limits any such activity for savings and loan holding companies, or (ii) in which multiple
savings and loan holding companies were authorized by regulation to directly engage in on
March 5, 1987;
    
    purchasing, holding, or disposing of stock acquired in connection with a qualified stock
issuance if the purchase of such stock by such holding company is approved by the Director
of the Office of Thrift Supervision; and
    
    any activity permissible for financial holding companies under section 4(k) of the BHC
Act.
  
    
    lending, exchanging, transferring, investing for others, or safeguarding money or securities;
 Page 44




---



##### Table of Contents




    
    insurance activities or providing and issuing annuities, and acting as principal, agent, or broker;
    
    financial, investment, or economic advisory services;
    
    issuing or selling instruments representing interests in pools of assets that a bank is
permitted to hold directly;
    
    underwriting, dealing in, or making a market in securities;
    
    activities previously determined by the FRB to be closely related to banking;
    
    activities that bank holding companies are permitted to engage in outside of the U.S.; and
    
    portfolio investments made by an insurance company.
  Restrictions Applicable to All Savings and Loan Holding Companies.
 
    
    control (as defined under HOLA) of another savings institution (or a holding company
parent) without prior Office of Thrift Supervision approval;
    
    through merger, consolidation, or purchase of assets, another savings institution or a
holding company thereof, or acquiring all or substantially all of the assets of such
institution (or a holding company) without prior Office of Thrift Supervision approval; or
    
    control of any depository institution not insured by the FDIC (except through a merger
with and into the holding companys savings institution subsidiary that is approved by the
Office of Thrift Supervision).
  
    
    in the case of certain emergency acquisitions approved by the FDIC;
    
    if such holding company controls a savings institution subsidiary that operated a home
or branch office in such additional state as of March 5, 1987; or
    
    if the laws of the state in which the savings institution to be acquired is located
specifically authorize a savings institution chartered by that state to be acquired by a
savings institution chartered by the state where the acquiring savings institution or
savings and loan holding company is located or by a holding company that controls such a
state chartered association.
  Page 45




---



##### Table of Contents



Federal Securities Law
  Delaware Corporation Law
  Page 46




---



##### Table of Contents



TAXATION
 Federal
 General.
 Bad Debt Reserves.
 Distributions.
  Corporate Alternative Minimum Tax.
 Page 47




---



##### Table of Contents



Elimination of Dividends; Dividends Received Deduction.
 State
 New Jersey State Taxation.
  Delaware State Taxation.
 New York State Taxation.
 New York City Taxation.
 Page 48




---



##### Table of Contents



Item 1A. Risk Factors.
 Changes In Interest Rates Could Adversely Affect Our Results of Operations And Financial Condition.
    Page 49




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##### Table of Contents



Our Plans To Increase The Level Of Our Adjustable-Rate Assets May Be Difficult To Implement And May
Decrease Our Profitability .
 Because We Compete Primarily On The Basis Of The Interest Rates We Offer Depositors And The Terms
Of Loans We Offer Borrowers, Our Margins Could Decrease If We Were Required To Increase Deposit
Rates Or Lower Interest Rates On Loans In Response To Competitive Pressures.
   Page 50




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We May Fail to Realize the Anticipated Benefits of the Merger with Sound Federal and May Not
Receive Required Regulatory Approvals or Such Approvals, if Received, May Be Subject to Adverse
Regulatory Conditions.
   We May Not Be Able To Successfully Implement Our Plans For Growth. de novo de novo
 The Geographic Concentration Of Our Loan Portfolio And Lending Activities Makes Us Vulnerable To A
Downturn In The Local Economy.
 Page 51




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Changes In The Regulation Of Financial Services Companies Could Adversely Affect Our Business.
 Our Stock Benefit Plans Will Increase Our Costs, Which Will Reduce Our Profitability And
Stockholders Equity.
  Our Return On Average Equity Is Low Compared To Other Companies. This Could Negatively Impact The
Price Of Our Common Stock.
 
 Item 1B. Unresolved Staff Comments.
  Page 52




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Item 2. Properties.
   
 Item 3. Legal Proceedings.
  
 Item 4. Submission of Matters to a Vote of Security Holders.
 .
 Page 53




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##### Table of Contents



PART II
 
 Item 5. Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases
of Equity Securities.
  Sales Price
    
    
    Dividend InformationHigh
    
    
    Low
    
    
    Amount Per Share
    
    
    Date of Payment2004First quarter
    
    $
    12.60
    
    
    $
    11.17
    
    
    $
    0.050
    
    
    March 1, 2004Second quarter
    
    
    11.97
    
    
    
    9.79
    
    
    
    0.053
    
    
    June 1, 2004Third quarter
    
    
    11.20
    
    
    
    10.06
    
    
    
    0.056
    
    
    September 1, 2004Fourth quarter
    
    
    12.79
    
    
    
    10.85
    
    
    
    0.059
    
    
    December 1, 20042005First quarter
    
    
    11.82
    
    
    
    10.75
    
    
    
    0.062
    
    
    March 1, 2005Second quarter
    
    
    11.69
    
    
    
    10.09
    
    
    
    0.066
    
    
    June 1, 2005Third quarter
    
    
    12.61
    
    
    
    11.36
    
    
    
    0.070
    
    
    September 1, 2005Fourth quarter
    
    
    12.25
    
    
    
    11.15
    
    
    
    0.070
    
    
    December 1, 2005
    Page 54




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Total Number of
    
    
    Maximum NumberTotal
    
    
    
    
    
    
    Shares Purchased
    
    
    of Shares that MayNumber of
    
    
    Average
    
    
    as Part of Publicly
    
    
    Yet Be PurchasedShares
    
    
    Price Paid
    
    
    Announced Plans
    
    
    Under the Plans orPeriod
    
    Purchased
    
    
    per Share
    
    
    or Programs
    
    
    Programs (1) (2) (3)October 1 thru October 31,
2005
    
    
    450,000
    
    
    $
    11.65
    
    
    
    450,000
    
    
    
    29,430,000November 1 thru November
30, 2005
    
    
    5,206,000
    
    
    
    11.77
    
    
    
    5,206,000
    
    
    
    24,224,000December 1 thru December
31, 2005
    
    
    3,207,000
    
    
    
    11.95
    
    
    
    3,207,000
    
    
    
    21,017,000Total
    
    
    8,863,000
    
    
    
    11.83
    
    
    
    8,863,000
 
 (1)
    
    On October 18, 2005, Hudson City Bancorp announced the adoption of its sixth Stock Repurchase Program, which authorized the purchase of up to
29,880,000 shares of common stock. This program has no expiration date.(2)
    
    The fifth Stock Repurchase Program, which had been suspended due to the second-step conversion and stock offering, was terminated during the
fourth quarter of 2005 upon adoption of the sixth repurchase plan. No other repurchase plan or program expired during the quarter.(3)
    
    Shares indicated are determined as of the close of business on the last day of the period presented.  Page 55




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##### Table of Contents



Item 6. Selected Financial Data
  At December 31,2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001(In thousands)Selected Financial Condition Data:Total assets
    
    $
    28,075,353
    
    
    $
    20,145,981
    
    
    $
    17,033,360
    
    
    $
    14,144,604
    
    
    $
    11,426,768Loans
    
    
    15,062,449
    
    
    
    11,363,039
    
    
    
    8,803,066
    
    
    
    6,970,900
    
    
    
    5,968,171Federal Home Loan
Bank of New York
stock
    
    
    226,962
    
    
    
    140,000
    
    
    
    164,850
    
    
    
    137,500
    
    
    
    81,149Investment
securities held to
maturity
    
    
    1,534,216
    
    
    
    1,334,249
    
    
    
    1,366
    
    
    
    1,406
    
    
    
    1,441Investment
securities
available for
sale
    
    
    3,962,511
    
    
    
    1,594,639
    
    
    
    2,243,812
    
    
    
    560,932
    
    
    
    167,427Mortgage-backed
securities held to
maturity
    
    
    4,389,864
    
    
    
    3,755,921
    
    
    
    4,292,444
    
    
    
    4,734,266
    
    
    
    4,478,488Mortgage-backed
securities
available for
sale
    
    
    2,520,633
    
    
    
    1,620,708
    
    
    
    1,130,257
    
    
    
    1,391,895
    
    
    
    530,690Total cash and cash
equivalents
    
    
    102,259
    
    
    
    168,183
    
    
    
    254,584
    
    
    
    240,796
    
    
    
    101,814Foreclosed real
estate,
net
    
    
    1,040
    
    
    
    878
    
    
    
    1,002
    
    
    
    1,276
    
    
    
    250Total
deposits
    
    
    11,383,300
    
    
    
    11,477,300
    
    
    
    10,453,780
    
    
    
    9,138,629
    
    
    
    7,912,762Total borrowed
funds
    
    
    11,350,000
    
    
    
    7,150,000
    
    
    
    5,150,000
    
    
    
    3,600,000
    
    
    
    2,150,000Total stockholders
equity
    
    
    5,201,476
    
    
    
    1,402,884
    
    
    
    1,329,366
    
    
    
    1,316,083
    
    
    
    1,288,736
 For the Year Ended December 31,2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001(In thousands)Selected Operating Data:Total interest and dividend income
    
    $
    1,178,908
    
    
    $
    915,058
    
    
    $
    777,328
    
    
    $
    784,217
    
    
    $
    690,498Total interest expense
    
    
    616,774
    
    
    
    430,066
    
    
    
    376,354
    
    
    
    395,774
    
    
    
    403,427Net interest income
    
    
    562,134
    
    
    
    484,992
    
    
    
    400,974
    
    
    
    388,443
    
    
    
    287,071Provision for loan losses
    
    
    65
    
    
    
    790
    
    
    
    900
    
    
    
    1,500
    
    
    
    1,875Net interest income after provision
for loan losses
    
    
    562,069
    
    
    
    484,202
    
    
    
    400,074
    
    
    
    386,943
    
    
    
    285,196Non-interest income:Service charges and other income
    
    
    5,267
    
    
    
    5,128
    
    
    
    5,338
    
    
    
    5,947
    
    
    
    4,694Gains on securities transactions, net
    
    
    2,740
    
    
    
    11,429
    
    
    
    24,326
    
    
    
    2,066
    
    
    
    Total non-interest
income
    
    
    8,007
    
    
    
    16,557
    
    
    
    29,664
    
    
    
    8,013
    
    
    
    4,694Total non-interest
expense
    
    
    127,703
    
    
    
    118,348
    
    
    
    102,527
    
    
    
    93,541
    
    
    
    81,824Income before income tax expense
    
    
    442,373
    
    
    
    382,411
    
    
    
    327,211
    
    
    
    301,415
    
    
    
    208,066Income tax
expense
    
    
    166,318
    
    
    
    143,145
    
    
    
    119,801
    
    
    
    109,382
    
    
    
    73,517Net income
    
    $
    276,055
    
    
    $
    239,266
    
    
    $
    207,410
    
    
    $
    192,033
    
    
    $
    134,549
 Page 56




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At or for the Year Ended December 31,2005
    
    
    2004
    
    
    2003
    
    
    2002
    
    
    2001Selected Financial Ratios and Other Data:Performance Ratios:Return on average assets
    
    
    1.14
    %
    
    
    1.29
    %
    
    
    1.34
    %
    
    
    1.50
    %
    
    
    1.32
    %Return on average stockholders equity
    
    
    7.52
    
    
    
    17.66
    
    
    
    15.38
    
    
    
    14.84
    
    
    
    10.09Net interest rate spread (1)
    
    
    1.84
    
    
    
    2.43
    
    
    
    2.37
    
    
    
    2.66
    
    
    
    2.12Net interest margin (2)
    
    
    2.35
    
    
    
    2.66
    
    
    
    2.65
    
    
    
    3.10
    
    
    
    2.87Non-interest expense to average assets
    
    
    0.53
    
    
    
    0.64
    
    
    
    0.66
    
    
    
    0.73
    
    
    
    0.80Efficiency ratio (3)
    
    
    22.40
    
    
    
    23.60
    
    
    
    23.81
    
    
    
    23.59
    
    
    
    28.04Average interest-earning assets to
average interest-bearing liabilities
    
    
    1.20
    x
    
    
    1.09
    x
    
    
    1.11
    x
    
    
    1.14
    x
    
    
    1.19
    xShare and Per Share Data:Basic earnings per share
    
    $
    0.49
    
    
    $
    0.41
    
    
    $
    0.35
    
    
    $
    0.32
    
    
    $
    0.21Diluted earnings per share
    
    
    0.48
    
    
    
    0.40
    
    
    
    0.34
    
    
    
    0.32
    
    
    
    0.21Cash dividends paid per common share
    
    
    0.268
    
    
    
    0.218
    
    
    
    0.162
    
    
    
    0.108
    
    
    
    0.073Dividend pay-out ratio (4)
    
    
    54.69
    %
    
    
    53.17
    %
    
    
    46.29
    %
    
    
    33.75
    %
    
    
    34.76
    %Stockholders equity per common share
    
    $
    9.44
    
    
    $
    7.85
    
    
    $
    7.33
    
    
    $
    7.22
    
    
    $
    6.87Weighted average number of common
shares outstanding:basic
    
    
    567,789,397
    
    
    
    576,621,209
    
    
    
    585,316,009
    
    
    
    592,880,271
    
    
    
    627,934,521diluted
    
    
    581,063,426
    
    
    
    593,000,573
    
    
    
    601,681,732
    
    
    
    609,157,242
    
    
    
    637,953,989Capital Ratios:Average stockholders equity to average assets
    
    
    15.10
    %
    
    
    7.29
    %
    
    
    8.73
    %
    
    
    10.12
    %
    
    
    13.05
    %Stockholders equity to assets (5)
    
    
    18.53
    
    
    
    6.96
    
    
    
    7.80
    
    
    
    9.30
    
    
    
    11.28Regulatory Capital Ratios of Bank:Leverage capital (6)
    
    
    14.68
    %
    
    
    6.36
    %
    
    
    7.52
    %
    
    
    8.85
    %
    
    
    10.64
    %Total risk-based capital (7)
    
    
    41.31
    
    
    
    17.49
    
    
    
    20.89
    
    
    
    26.81
    
    
    
    31.96Asset Quality Ratios:Non-performing loans to total loans
    
    
    0.13
    %
    
    
    0.19
    %
    
    
    0.23
    %
    
    
    0.29
    %
    
    
    0.26
    %Non-performing assets to total assets
    
    
    0.07
    
    
    
    0.11
    
    
    
    0.12
    
    
    
    0.15
    
    
    
    0.14Allowance for loan losses to non-performing loans
    
    
    141.84
    
    
    
    126.44
    
    
    
    131.09
    
    
    
    126.27
    
    
    
    153.44Allowance for loan losses to total loans
    
    
    0.18
    
    
    
    0.24
    
    
    
    0.30
    
    
    
    0.37
    
    
    
    0.40Net charge-offs (recoveries) to average loans
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Branch and Deposit Data:Number of deposit accounts
    
    
    484,956
    
    
    
    476,627
    
    
    
    491,293
    
    
    
    503,998
    
    
    
    495,871Branches
    
    
    90
    
    
    
    85
    
    
    
    81
    
    
    
    81
    
    
    
    80Average deposits per branch (thousands)
    
    $
    126,481
    
    
    $
    135,027
    
    
    $
    129,059
    
    
    $
    112,823
    
    
    $
    98,910
 
 (1)
    
    Determined by subtracting the weighted average cost of average total interest-bearing liabilities from the weighted average yield
on average total interest-earning assets.(2)
    
    Determined by dividing net interest income by average total interest-earning assets.(3)
    
    Determined by dividing total non-interest expense by the sum of net interest income and total non-interest income.(4)
    
    The dividend pay-out ratio for 2004 and 2005 uses amount per share information that does not reflect the dividend waiver by Hudson City, MHC.(5)
    
    We had no goodwill at any of the dates presented. Accordingly, our tangible stockholders equity to assets is the same at each date as our stockholders equity to assets.(6)
    
    Ratios determined pursuant to FDIC regulations for 2003 and prior years. Beginning January 1, 2004, Hudson City Savings became subject to the capital requirements under OTS
regulations.(7)
    
    The calculation is the same under both OTS and
FDIC regulations. Page 57




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##### Table of Contents



Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
 .
 Executive Summary
      Page 58




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Page 59




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##### Table of Contents



Comparison of Financial Condition at December 31, 2005 and December 31, 2004
   Page 60




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Page 61




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Analysis of Net Interest Income
  Page 62




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Average Balance Sheet.
 Page 63




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For the Year Ended December 31,2005
    
    
    2004
    
    
    2003Average
    
    
    
    
    
    
    
    
    
    
    Average
    
    
    
    
    
    
    
    
    
    
    AverageAverage
    
    
    
    
    
    
    Yield/
    
    
    Average
    
    
    
    
    
    
    Yield/
    
    
    Average
    
    
    
    
    
    
    Yield/Balance
    
    
    Interest
    
    
    Cost
    
    
    Balance
    
    
    Interest
    
    
    Cost
    
    
    Balance
    
    
    Interest
    
    
    Cost(Dollars in thousands)Assets:Interest-earnings assets:First mortgage loans, net (1)
    
    $
    12,656,118
    
    
    $
    689,435
    
    
    
    5.45
    %
    
    $
    9,783,953
    
    
    $
    539,966
    
    
    
    5.52
    %
    
    $
    6,989,907
    
    
    $
    414,417
    
    
    
    5.93
    %Consumer and other loans
    
    
    185,320
    
    
    
    10,786
    
    
    
    5.82
    
    
    
    144,621
    
    
    
    8,650
    
    
    
    5.98
    
    
    
    129,087
    
    
    
    8,379
    
    
    
    6.49Federal funds sold
    
    
    236,288
    
    
    
    5,013
    
    
    
    2.12
    
    
    
    124,755
    
    
    
    1,580
    
    
    
    1.27
    
    
    
    170,302
    
    
    
    1,794
    
    
    
    1.05Mortgage-backed securities,
at amortized cost
    
    
    6,218,312
    
    
    
    273,063
    
    
    
    4.39
    
    
    
    5,379,439
    
    
    
    242,335
    
    
    
    4.50
    
    
    
    5,948,336
    
    
    
    268,235
    
    
    
    4.51Federal Home Loan Bank stock
    
    
    169,781
    
    
    
    9,394
    
    
    
    5.53
    
    
    
    150,104
    
    
    
    3,213
    
    
    
    2.14
    
    
    
    156,721
    
    
    
    4,424
    
    
    
    2.82Investment securities at amortized cost
    
    
    4,503,416
    
    
    
    191,217
    
    
    
    4.25
    
    
    
    2,671,263
    
    
    
    119,314
    
    
    
    4.47
    
    
    
    1,733,236
    
    
    
    80,079
    
    
    
    4.62Total interest-earning assets
    
    
    23,969,235
    
    
    
    1,178,908
    
    
    
    4.92
    
    
    
    18,254,135
    
    
    
    915,058
    
    
    
    5.01
    
    
    
    15,127,589
    
    
    
    777,328
    
    
    
    5.14Noninterest-earning assets
    
    
    324,004
    
    
    
    
    
    
    
    
    
    
    
    334,712
    
    
    
    
    
    
    
    
    
    
    
    325,230Total assets
    
    $
    24,293,239
    
    
    
    
    
    
    
    
    
    
    $
    18,588,847
    
    
    
    
    
    
    
    
    
    
    $
    15,452,819Liabilities and stockholders equity:Interest-bearing liabilities:Savings accounts
    
    $
    980,707
    
    
    
    9,709
    
    
    
    0.99
    
    
    $
    942,486
    
    
    
    9,359
    
    
    
    0.99
    
    
    $
    927,191
    
    
    
    10,680
    
    
    
    1.15Interest-bearing transaction accounts
    
    
    4,124,359
    
    
    
    118,530
    
    
    
    2.87
    
    
    
    3,575,468
    
    
    
    79,750
    
    
    
    2.23
    
    
    
    1,971,581
    
    
    
    43,516
    
    
    
    2.21Money market accounts
    
    
    469,254
    
    
    
    5,172
    
    
    
    1.10
    
    
    
    593,426
    
    
    
    5,681
    
    
    
    0.96
    
    
    
    623,442
    
    
    
    6,889
    
    
    
    1.10Time deposits
    
    
    5,546,364
    
    
    
    160,325
    
    
    
    2.89
    
    
    
    5,482,554
    
    
    
    120,023
    
    
    
    2.19
    
    
    
    5,970,416
    
    
    
    148,254
    
    
    
    2.48Total interest-bearing deposits
    
    
    11,120,684
    
    
    
    293,736
    
    
    
    2.64
    
    
    
    10,593,934
    
    
    
    214,813
    
    
    
    2.03
    
    
    
    9,492,630
    
    
    
    209,339
    
    
    
    2.21Borrowed funds
    
    
    8,917,089
    
    
    
    323,038
    
    
    
    3.62
    
    
    
    6,098,282
    
    
    
    215,253
    
    
    
    3.53
    
    
    
    4,090,459
    
    
    
    167,015
    
    
    
    4.08Total interest-bearing liabilities
    
    
    20,037,773
    
    
    
    616,774
    
    
    
    3.08
    
    
    
    16,692,216
    
    
    
    430,066
    
    
    
    2.58
    
    
    
    13,583,089
    
    
    
    376,354
    
    
    
    2.77Noninterest-bearing liabilities:Noninterest-bearing deposits
    
    
    437,790
    
    
    
    
    
    
    
    
    
    
    
    415,905
    
    
    
    
    
    
    
    
    
    
    
    409,220Other noninterest-bearing liabilities
    
    
    148,523
    
    
    
    
    
    
    
    
    
    
    
    125,929
    
    
    
    
    
    
    
    
    
    
    
    111,706Total noninterest-bearing liabilities
    
    
    586,313
    
    
    
    
    
    
    
    
    
    
    
    541,834
    
    
    
    
    
    
    
    
    
    
    
    520,926Total liabilities
    
    
    20,624,086
    
    
    
    
    
    
    
    
    
    
    
    17,234,050
    
    
    
    
    
    
    
    
    
    
    
    14,104,015Stockholders equity
    
    
    3,669,153
    
    
    
    
    
    
    
    
    
    
    
    1,354,797
    
    
    
    
    
    
    
    
    
    
    
    1,348,804Total liabilities and
stockholders equity
    
    $
    24,293,239
    
    
    
    
    
    
    
    
    
    
    $
    18,588,847
    
    
    
    
    
    
    
    
    
    
    $
    15,452,819Net interest income
    
    
    
    
    
    $
    562,134
    
    
    
    
    
    
    
    
    
    
    $
    484,992
    
    
    
    
    
    
    
    
    
    
    $
    400,974Net interest rate spread (2)
    
    
    
    
    
    
    
    
    
    
    1.84
    %
    
    
    
    
    
    
    
    
    
    
    2.43
    %
    
    
    
    
    
    
    
    
    
    
    2.37
    %Net interest-earning assets
    
    $
    3,931,462
    
    
    
    
    
    
    
    
    
    
    $
    1,561,919
    
    
    
    
    
    
    
    
    
    
    $
    1,544,500Net interest margin (3)
    
    
    
    
    
    
    
    
    
    
    2.35
    %
    
    
    
    
    
    
    
    
    
    
    2.66
    %
    
    
    
    
    
    
    
    
    
    
    2.65
    %Ratio of interest-earning assets to
interest-bearing liabilities
    
    
    
    
    
    
    
    
    
    
    1.20
    x
    
    
    
    
    
    
    
    
    
    
    1.09
    x
    
    
    
    
    
    
    
    
    
    
    1.11
    x
 
 (1)
    
    Amount is net of deferred loan fees and allowance for loan losses and includes non-performing loans.(2)
    
    Determined by subtracting the weighted average cost of average total interest-bearing liabilities from the weighted average yield on average total interest-earning assets.(3)
    
    Determined by dividing net interest income by average total interest-earning assets.(4)
    
    At December 31, 2005, the weighted-average rate on our outstanding interest-earning assets, other than our FHLB stock, was as follows: first mortgage loans, 5.64%, consumer and other loans, 5.81%, federal funds sold, 4.25%, mortgage-backed securities, 4.75%,
investment securities, 4.37%. At December 31, 2005, the weighted-average rate on our outstanding interest-bearing liabilities was as follows: savings accounts, 0.98%, interest-bearing transaction accounts, 3.19%, money market accounts, 1.14%, time deposits, 3.51%,
borrowed funds, 3.72%. Page 64




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Rate/Volume Analysis.
 
    
    changes attributable to changes in volume (changes in volume multiplied by prior rate);
    
    changes attributable to changes in rate (changes in rate multiplied by prior volume); and
    
    the net change.
  2005 Compared to 2004
    
    
    2004 Compared to 2003Increase (Decrease) Due To
    
    
    Increase (Decrease) Due ToVolume
    
    
    Rate
    
    
    Net
    
    
    Volume
    
    
    Rate
    
    
    Net(In thousands)Interest-earning assets:First mortgage loans, net
    
    $
    156,410
    
    
    $
    (6,941
    )
    
    $
    149,469
    
    
    $
    155,901
    
    
    $
    (30,352
    )
    
    $
    125,549Consumer and other loans
    
    
    2,373
    
    
    
    (237
    )
    
    
    2,136
    
    
    
    960
    
    
    
    (689
    )
    
    
    271Federal funds sold
    
    
    1,963
    
    
    
    1,470
    
    
    
    3,433
    
    
    
    (540
    )
    
    
    326
    
    
    
    (214
    )Mortgage-backed securities
    
    
    36,795
    
    
    
    (6,067
    )
    
    
    30,728
    
    
    
    (25,313
    )
    
    
    (587
    )
    
    
    (25,900
    )Federal Home Loan Bank stock
    
    
    472
    
    
    
    5,709
    
    
    
    6,181
    
    
    
    (181
    )
    
    
    (1,030
    )
    
    
    (1,211
    )Investment securities
    
    
    78,056
    
    
    
    (6,153
    )
    
    
    71,903
    
    
    
    41,920
    
    
    
    (2,685
    )
    
    
    39,235Total
    
    
    276,069
    
    
    
    (12,219
    )
    
    
    263,850
    
    
    
    172,747
    
    
    
    (35,017
    )
    
    
    137,730Interest-bearing liabilities:Savings accounts
    
    
    350
    
    
    
    
    
    
    
    350
    
    
    
    175
    
    
    
    (1,496
    )
    
    
    (1,321
    )Interest-bearing transaction
accounts
    
    
    13,514
    
    
    
    25,266
    
    
    
    38,780
    
    
    
    35,836
    
    
    
    398
    
    
    
    36,234Money market accounts
    
    
    (1,279
    )
    
    
    770
    
    
    
    (509
    )
    
    
    (331
    )
    
    
    (877
    )
    
    
    (1,208
    )Time deposits
    
    
    1,416
    
    
    
    38,886
    
    
    
    40,302
    
    
    
    (11,613
    )
    
    
    (16,618
    )
    
    
    (28,231
    )Borrowed funds
    
    
    102,151
    
    
    
    5,634
    
    
    
    107,785
    
    
    
    73,146
    
    
    
    (24,908
    )
    
    
    48,238Total
    
    
    116,152
    
    
    
    70,556
    
    
    
    186,708
    
    
    
    97,213
    
    
    
    (43,501
    )
    
    
    53,712Net change in net
interest income
    
    $
    159,917
    
    
    $
    (82,775
    )
    
    $
    77,142
    
    
    $
    75,534
    
    
    $
    8,484
    
    
    $
    84,018
 Comparison of Operating Results for the Years Ended December 31, 2005 and 2004
 General.
 Page 65




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Interest and Dividend Income.
    Interest Expense.
 Page 66




---



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Net Interest Income.
  Page 67




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Provision for Loan Losses.
    Non-Interest Income.
 Non-Interest Expense.
 Income Taxes.
 Page 68




---



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Comparison of Financial Condition at December 31, 2004 and December 31, 2003
      Page 69




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Page 70




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Comparison of Operating Results for the Years Ended December 31, 2004 and 2003
 General.
 Interest and Dividend Income.
   Page 71




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Interest Expense.
    Page 72




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Net Interest Income.
  Provision for Loan Losses.
   Non-Interest Income.
 Page 73




---



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Non-Interest Expense.
 Income Taxes.
 Liquidity and Capital Resources
    Page 74




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Page 75




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Page 76




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Management of Interest Rate Risk
  Page 77




---



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
    
    evaluate the interest rate risk inherent in our balance sheet accounts;
    
    determine the appropriate level of interest rate risk given our business plan, the
current business environment and our capital and liquidity requirements; and
    
    manage interest rate risk in a manner consistent with the approved guidelines and
policies set by our Board of Directors.
  Page 78




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Simulation Model.
 Page 79




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
    
    we assumed an annual prepayment rate for fixed-rate first mortgage loans of 125% of the
FHLMC fixed-rate index of moderately seasoned loans and an annual prepayment rate for
variable-rate first mortgage loans of 125% of the FHLMC 5 year balloon index of new loans;
    
    we assumed an annual prepayment rate for our mortgage-backed securities using the
prepayment index associated with the security type;
    
    we reported savings accounts that had no stated maturity using decay rates (the assumed
rate at which the balance of existing accounts would decline) of: 5.0% in less than six
months, 5.0% in six months to one year, 5.0% in one year to two years, 5.0% in two years to
three years, 10.0% in three years to five years, and 70.0% in more than five years;
    
    we reported interest-bearing transaction accounts that had no stated maturity using
decay rates of : 5.0% in less than six months, 5.0% in six months to one year, 10.0% in
one to two years, 10.0% in two to three years, 20.0% in three years to five years, and
50.0% in more than five years;
    
    we reported money market accounts that had no stated maturity using decay rates of: 2.5%
in less than six months, 2.5% in six months to one year, 10.0% in one to two years, 10.0%
in two to three years, 20.0% in three years to five years, and 55.0% in more than five
years;
    
    the model will report callable investment securities and borrowed funds at the earlier
of their next call date or maturity date given the rate of the instrument in relation to
the current market rate environment and the call option frequency, and the model assumed no
calls of investment securities and $3.28 billion of calls of borrowed funds over the next
year.
   Page 80




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Change in
    
    Percent Change inInterest Rates
    
    Net Interest Income(Basis points)200
    
    
    (8.50
    )%100
    
    
    (3.66
    )50
    
    
    (1.64
    )0
    
    
    (50)
    
    
    (0.19
    )(100)
    
    
    (3.13
    )(200)
    
    
    (13.36
    )
    Page 81




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Present Value of EquityAs Percent of PresentPresent Value of Equity
    
    Value of AssetsChange in
    
    Dollar
    
    Dollar
    
    Percent
    
    Present
    
    Change inInterest Rates
    
    Amount
    
    Change
    
    Change
    
    Value Ratio
    
    Basis Points(Basis points)
    
    (Dollars in thousands)200
    
    
    $
    4,852,550
    
    
    $
    (1,271,138
    )
    
    
    (20.76
    )%
    
    
    18.71
    %
    
    
    (309
    )100
    
    
    
    5,526,081
    
    
    
    (597,607
    )
    
    
    (9.76
    )
    
    
    20.45
    
    
    
    (135
    )50
    
    
    
    5,850,832
    
    
    
    (272,856
    )
    
    
    (4.46
    )
    
    
    21.21
    
    
    
    (59
    )0
    
    
    
    6,123,688
    
    
    
    
    
    
    
    
    
    
    
    21.80
    
    
    
    (50
    )
    
    
    6,258,319
    
    
    
    134,631
    
    
    
    2.20
    
    
    
    21.96
    
    
    
    16(100
    )
    
    
    5,984,036
    
    
    
    (139,652
    )
    
    
    (2.28
    )
    
    
    20.95
    
    
    
    (85
    )(200
    )
    
    
    5,012,180
    
    
    
    (1,111,508
    )
    
    
    (18.15
    )
    
    
    17.57
    
    
    
    (423
    )
   Page 82
    Table of Contents    Gap Analysis.
   Page 83




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At December 31, 2005More than
    
    
    More thanMore than
    
    
    More than
    
    
    two years
    
    
    three yearsSix months
    
    
    six months
    
    
    one year 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
    
    $
    1,145,635
    
    
    $
    1,153,163
    
    
    $
    1,891,448
    
    
    $
    1,798,985
    
    
    $
    2,504,606
    
    
    $
    6,328,662
    
    
    $
    14,822,499Consumer and other loans
    
    
    29,198
    
    
    
    295
    
    
    
    1,410
    
    
    
    4,390
    
    
    
    18,772
    
    
    
    181,571
    
    
    
    235,636Federal funds sold
    
    
    4,587
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,587Mortgage-backed securities
    
    
    1,178,360
    
    
    
    1,423,167
    
    
    
    893,377
    
    
    
    1,098,697
    
    
    
    1,352,854
    
    
    
    964,042
    
    
    
    6,910,497FHLB stock
    
    
    226,962
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    226,962Investment securities
    
    
    499,815
    
    
    
    1,097,103
    
    
    
    915,622
    
    
    
    69,886
    
    
    
    1,762,959
    
    
    
    1,151,342
    
    
    
    5,496,727Total interest-earning assets
    
    
    3,084,557
    
    
    
    3,673,728
    
    
    
    3,701,857
    
    
    
    2,971,958
    
    
    
    5,639,191
    
    
    
    8,625,617
    
    
    
    27,696,908Interest-bearing liabilities:Savings accounts
    
    
    40,983
    
    
    
    41,582
    
    
    
    40,320
    
    
    
    40,320
    
    
    
    80,640
    
    
    
    564,480
    
    
    
    808,325Interest-bearing transaction accounts
    
    
    178,319
    
    
    
    178,319
    
    
    
    361,664
    
    
    
    361,664
    
    
    
    723,329
    
    
    
    1,813,349
    
    
    
    3,616,644Money market accounts
    
    
    8,551
    
    
    
    8,551
    
    
    
    34,202
    
    
    
    34,202
    
    
    
    68,404
    
    
    
    188,111
    
    
    
    342,021Time deposits
    
    
    3,116,637
    
    
    
    1,864,214
    
    
    
    705,092
    
    
    
    200,195
    
    
    
    288,130
    
    
    
    
    
    
    
    6,174,268Borrowed funds
    
    
    700,000
    
    
    
    2,525,000
    
    
    
    
    
    
    
    
    
    
    
    250,000
    
    
    
    7,875,000
    
    
    
    11,350,000Total interest-bearing liabilities
    
    
    4,044,490
    
    
    
    4,617,666
    
    
    
    1,141,278
    
    
    
    636,381
    
    
    
    1,410,503
    
    
    
    10,440,940
    
    
    
    22,291,258Interest rate sensitivity gap
    
    $
    (959,933
    )
    
    $
    (943,938
    )
    
    $
    2,560,579
    
    
    $
    2,335,577
    
    
    $
    4,228,688
    
    
    $
    (1,815,323
    )
    
    $
    5,405,650Cumulative interest rate sensitivity
gap
    
    $
    (959,933
    )
    
    $
    (1,903,871
    )
    
    $
    656,708
    
    
    $
    2,992,285
    
    
    $
    7,220,973
    
    
    $
    5,405,650Cumulative interest rate sensitivity gap
as a percent of total assets
    
    
    (3.42
    )%
    
    
    (6.78
    )%
    
    
    2.34
    %
    
    
    10.66
    %
    
    
    25.72
    %
    
    
    19.25
    %Cumulative interest-earning assets
as a percent of interest-bearing
liabilities
    
    
    76.27
    %
    
    
    78.02
    %
    
    
    106.70
    %
    
    
    128.66
    %
    
    
    160.93
    %
    
    
    124.25
    %
 Page 84




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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
    
    $
    260,755
    
    
    $
    260,755
    
    
    $
    
    
    
    $
    
    
    
    $
    Mortgage loan
purchases
    
    
    715,445
    
    
    
    715,445
    
    
    
    
    
    
    
    
    
    
    
    Mortgage-backed
security purchases
    
    
    452,500
    
    
    
    452,500
    
    
    
    
    
    
    
    
    
    
    
    Operating
leases
    
    
    95,573
    
    
    
    5,199
    
    
    
    11,238
    
    
    
    10,665
    
    
    
    68,471Total
    
    $
    1,524,273
    
    
    $
    1,433,899
    
    
    $
    11,238
    
    
    $
    10,665
    
    
    $
    68,471
  Page 85




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Recent Accounting Pronouncements
   Page 86




---



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Page 87




---



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Impact of Inflation and Changing Prices




Critical Accounting Policies




Allowance for Loan Losses.




Page 88




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Asset Impairment Judgments.




Page 89




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Pension and Other Postretirement Benefit Assumptions.
      Page 90




---



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Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
 
 Page 91




---



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Item 8. Financial Statements and Supplementary Data.
 Report of Independent Registered Public Accounting Firm
 
    Internal
ControlIntegrated Framework
 
 
 Page 92




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Report of Independent Registered Public Accounting Firm
 
 Internal ControlIntegrated Framework
    Internal ControlIntegrated Framework Internal
ControlIntegrated Framework .
 Page 93




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Page 94




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Hudson City Bancorp, Inc. and Subsidiary
Consolidated Statements of Financial Condition
 December 31,
    
    
    December 31,2005
    
    
    2004(In thousands)Assets:Cash and due from banks
    
    $
    97,672
    
    
    $
    122,483Federal funds sold
    
    
    4,587
    
    
    
    45,700Total cash and cash equivalents
    
    
    102,259
    
    
    
    168,183Investment securities held to maturity, market value of $1,508,055 at
December 31, 2005 and $1,326,336 at December 31, 2004
    
    
    1,534,216
    
    
    
    1,334,249Investment securities available for sale, at market value
    
    
    3,962,511
    
    
    
    1,594,639Federal Home Loan Bank of New York stock
    
    
    226,962
    
    
    
    140,000Mortgage-backed
securities held to maturity, market value of $4,288,772
at December 31, 2005 and $3,721,029 at December 31, 2004
    
    
    4,389,864
    
    
    
    3,755,921Mortgage-backed securities available for sale, at market value
    
    
    2,520,633
    
    
    
    1,620,708Loans
    
    
    15,062,449
    
    
    
    11,363,039Deferred loan costs (fees)
    
    
    1,653
    
    
    
    (8,073
    )Allowance for loan losses
    
    
    (27,393
    )
    
    
    (27,319
    )Net loans
    
    
    15,036,709
    
    
    
    11,327,647Foreclosed real estate, net
    
    
    1,040
    
    
    
    878Accrued interest receivable
    
    
    140,723
    
    
    
    97,490Banking premises and equipment, net
    
    
    49,132
    
    
    
    36,399Other assets
    
    
    111,304
    
    
    
    69,867Total Assets
    
    $
    28,075,353
    
    
    $
    20,145,981Liabilities and Stockholders Equity:Deposits:Interest-bearing
    
    $
    10,941,258
    
    
    $
    11,059,798Noninterest-bearing
    
    
    442,042
    
    
    
    417,502Total deposits
    
    
    11,383,300
    
    
    
    11,477,300Borrowed funds
    
    
    11,350,000
    
    
    
    7,150,000Accrued expenses and other liabilities
    
    
    140,577
    
    
    
    115,797Total liabilities
    
    
    22,873,877
    
    
    
    18,743,097Common
stock, $0.01 par value, 3,200,000,000 shares authorized; 741,466,555
shares issued, 588,905,543 shares outstanding at December 31, 2005
and 596,777,836 shares outstanding at December 31, 2004
    
    
    7,415
    
    
    
    7,415Additional paid-in capital
    
    
    4,533,329
    
    
    
    565,403Retained earnings
    
    
    1,759,492
    
    
    
    1,588,792Treasury stock, at cost; 152,561,012 shares at December 31, 2005 and
144,688,719 shares at December 31, 2004
    
    
    (798,232
    )
    
    
    (696,812
    )Unallocated common stock held by the employee stock
ownership plan
    
    
    (234,264
    )
    
    
    (47,552
    )Unearned common stock held by the recognition and
retention plan
    
    
    (2,815
    )
    
    
    (5,267
    )Accumulated other comprehensive loss, net of tax
    
    
    (63,449
    )
    
    
    (9,095
    )Total stockholders equity
    
    
    5,201,476
    
    
    
    1,402,884Commitments and contingenciesTotal Liabilities and Stockholders Equity
    
    $
    28,075,353
    
    
    $
    20,145,981
  Page 95




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Hudson City Bancorp, Inc. and Subsidiary
Consolidated Statements of Income
 Year Ended December 31,2005
    
    
    2004
    
    
    2003(In thousands, except per share data)Interest and Dividend Income:Interest and fees on first mortgage loans
    
    $
    689,435
    
    
    $
    539,966
    
    
    $
    414,417Interest and fees on consumer and other loans
    
    
    10,786
    
    
    
    8,650
    
    
    
    8,379Interest on mortgage-backed securities held to maturity
    
    
    182,309
    
    
    
    174,596
    
    
    
    217,962Interest on mortgage-backed securities available for sale
    
    
    90,754
    
    
    
    67,739
    
    
    
    50,273Interest on investment securities held to maturity
    
    
    72,582
    
    
    
    41,435
    
    
    
    87Interest and dividends on investment securities
available for sale
    
    
    118,635
    
    
    
    77,879
    
    
    
    79,992Dividends on Federal Home Loan Bank of New York stock
    
    
    9,394
    
    
    
    3,213
    
    
    
    4,424Interest on federal funds sold
    
    
    5,013
    
    
    
    1,580
    
    
    
    1,794Total interest and dividend income
    
    
    1,178,908
    
    
    
    915,058
    
    
    
    777,328Interest Expense:Interest on deposits
    
    
    293,736
    
    
    
    214,813
    
    
    
    209,339Interest on borrowed funds
    
    
    323,038
    
    
    
    215,253
    
    
    
    167,015Total interest expense
    
    
    616,774
    
    
    
    430,066
    
    
    
    376,354Net interest income
    
    
    562,134
    
    
    
    484,992
    
    
    
    400,974Provision for Loan Losses
    
    
    65
    
    
    
    790
    
    
    
    900Net interest income after provision for loan losses
    
    
    562,069
    
    
    
    484,202
    
    
    
    400,074Non-interest Income:Service charges and other income
    
    
    5,267
    
    
    
    5,128
    
    
    
    5,338Gains on securities transactions, net
    
    
    2,740
    
    
    
    11,429
    
    
    
    24,326Total non-interest income
    
    
    8,007
    
    
    
    16,557
    
    
    
    29,664Non-interest Expense:Compensation and employee benefits
    
    
    83,211
    
    
    
    79,195
    
    
    
    68,776Net occupancy expense
    
    
    20,211
    
    
    
    16,035
    
    
    
    14,981Federal deposit insurance assessment
    
    
    1,656
    
    
    
    1,644
    
    
    
    1,564Computer and related services
    
    
    2,498
    
    
    
    2,041
    
    
    
    1,714Other expense
    
    
    20,127
    
    
    
    19,433
    
    
    
    15,492Total non-interest expense
    
    
    127,703
    
    
    
    118,348
    
    
    
    102,527Income before income tax expense
    
    
    442,373
    
    
    
    382,411
    
    
    
    327,211Income Tax Expense
    
    
    166,318
    
    
    
    143,145
    
    
    
    119,801Net income
    
    $
    276,055
    
    
    $
    239,266
    
    
    $
    207,410Basic earnings per share
    
    $
    0.49
    
    
    $
    0.41
    
    
    $
    0.35Diluted earnings per share
    
    $
    0.48
    
    
    $
    0.40
    
    
    $
    0.34
  Page 96




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##### Table of Contents



Hudson City Bancorp, Inc. and Subsidiary
Consolidated Statements of Changes in Stockholders Equity
 Unallocated
    
    
    Unearned
    
    
    AccumulatedAdditional
    
    
    
    
    
    
    
    
    
    
    Common
    
    
    Common
    
    
    Other
    
    
    TotalCommon
    
    
    Paid-In
    
    
    Retained
    
    
    Treasury
    
    
    Stock Held
    
    
    Stock Held
    
    
    Comprehensive
    
    
    StockholdersStock
    
    
    Capital
    
    
    Earnings
    
    
    Stock
    
    
    by the ESOP
    
    
    by the RRP
    
    
    Income (Loss)
    
    
    Equity(In thousands)Balance at December 31, 2002
    
    $
    7,415
    
    
    $
    525,394
    
    
    $
    1,291,960
    
    
    $
    (465,249
    )
    
    $
    (51,474
    )
    
    $
    (16,253
    )
    
    $
    24,290
    
    
    $
    1,316,083Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    207,410
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    207,410Other comprehensive income:Unrealized holding losses arising during
period (net of tax of $9,065)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (15,859
    )
    
    
    (15,859
    )Reclassification adjustment for gains in
net income (net of tax of $9,937)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (14,389
    )
    
    
    (14,389
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    177,162Declaration
of dividends ($0.162 per share)
    
    
    
    
    
    
    
    
    
    
    (95,627
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (95,627
    )Tax benefit from stock plans
    
    
    
    
    
    
    7,686
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,686Allocation of ESOP stock
    
    
    
    
    
    
    5,724
    
    
    
    
    
    
    
    
    
    
    
    1,961
    
    
    
    
    
    
    
    
    
    
    
    7,685Vesting of RRP stock
    
    
    
    
    
    
    (317
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,790
    
    
    
    
    
    
    
    6,473Purchase of treasury stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (101,057
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (101,057
    )Exercise of stock options
    
    
    
    
    
    
    
    
    
    
    (7,486
    )
    
    
    18,447
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,961Balance at December 31, 2003
    
    
    7,415
    
    
    
    538,487
    
    
    
    1,396,257
    
    
    
    (547,859
    )
    
    
    (49,513
    )
    
    
    (9,463
    )
    
    
    (5,958
    )
    
    
    1,329,366Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    239,266
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    239,266Other comprehensive income:Unrealized holding gains arising during
period (net of tax of $2,503)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,623
    
    
    
    3,623Reclassification adjustment for gains in
net income (net of tax of $4,669)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,760
    )
    
    
    (6,760
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    236,129Declaration
of dividends ($0.218 per share)
    
    
    
    
    
    
    
    
    
    
    (40,482
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (40,482
    )Tax benefit from stock plans
    
    
    
    
    
    
    20,880
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    20,880Allocation of ESOP stock
    
    
    
    
    
    
    8,544
    
    
    
    
    
    
    
    
    
    
    
    1,961
    
    
    
    
    
    
    
    
    
    
    
    10,505Purchase of RRP stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,299
    )
    
    
    
    
    
    
    (7,299
    )Vesting of RRP stock
    
    
    
    
    
    
    (2,508
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11,495
    
    
    
    
    
    
    
    8,987Purchase of treasury stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (161,662
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (161,662
    )Exercise of stock options
    
    
    
    
    
    
    
    
    
    
    (6,249
    )
    
    
    12,709
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,460Balance at December 31, 2004
    
    
    7,415
    
    
    
    565,403
    
    
    
    1,588,792
    
    
    
    (696,812
    )
    
    
    (47,552
    )
    
    
    (5,267
    )
    
    
    (9,095
    )
    
    
    1,402,884Comprehensive income:Net income
    
    
    
    
    
    
    
    
    
    
    276,055
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    276,055Other comprehensive income:Unrealized holding losses arising during
period (net of tax of $35,884)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (51,958
    )
    
    
    (51,958
    )Reclassification adjustment for gains in
net income (net of tax of $1,119)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,621
    )
    
    
    (1,621
    )Minimum pension liability adjustment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (775
    )
    
    
    (775
    )Total comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    221,701Common stock offering
    
    
    
    
    
    
    3,953,001
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,953,001Declaration
of dividends ($0.268 per share)
    
    
    
    
    
    
    
    
    
    
    (102,103
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (102,103
    )Tax benefit from stock plans
    
    
    
    
    
    
    9,431
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,431Purchase of ESOP stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (189,348
    )
    
    
    
    
    
    
    
    
    
    
    (189,348
    )Allocation of ESOP stock
    
    
    
    
    
    
    5,632
    
    
    
    
    
    
    
    
    
    
    
    2,636
    
    
    
    
    
    
    
    
    
    
    
    8,268Purchase of RRP stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,290
    )
    
    
    
    
    
    
    (1,290
    )Vesting of RRP stock
    
    
    
    
    
    
    (138
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,742
    
    
    
    
    
    
    
    3,604Purchase of treasury stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (107,499
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (107,499
    )Exercise of stock options
    
    
    
    
    
    
    
    
    
    
    (3,252
    )
    
    
    6,079
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,827Balance at December 31, 2005
    
    $
    7,415
    
    
    $
    4,533,329
    
    
    $
    1,759,492
    
    
    $
    (798,232
    )
    
    $
    (234,264
    )
    
    $
    (2,815
    )
    
    $
    (63,449
    )
    
    $
    5,201,476
  Page 97




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##### Table of Contents



Hudson City Bancorp, Inc. and Subsidiary
Consolidated Statements of Cash Flows
 Year Ended December 31,2005
    
    
    2004
    
    
    2003(In thousands)Cash Flows from Operating Activities:Net income .
    
    $
    276,055
    
    
    $
    239,266
    
    
    $
    207,410Adjustments to reconcile net income to net cash provided
by operating activities:Depreciation, accretion and amortization expense
    
    
    10,197
    
    
    
    24,129
    
    
    
    44,497Provision for loan losses
    
    
    65
    
    
    
    790
    
    
    
    900Gains on net securities transactions
    
    
    (2,740
    )
    
    
    (11,429
    )
    
    
    (24,326
    )Allocation of stock for employee benefit plans
    
    
    11,872
    
    
    
    19,492
    
    
    
    14,158Deferred tax benefit
    
    
    (6,505
    )
    
    
    (6,912
    )
    
    
    (6,392
    )Net proceeds from sale of foreclosed real estate
    
    
    1,588
    
    
    
    2,509
    
    
    
    3,144Increase in accrued interest receivable
    
    
    (43,233
    )
    
    
    (17,270
    )
    
    
    (10,972
    )Decrease in other assets
    
    
    2,070
    
    
    
    6,418
    
    
    
    2,606Increase in accrued expenses and other liabilities
    
    
    24,005
    
    
    
    15,583
    
    
    
    8,565Tax benefit from stock plans
    
    
    9,431
    
    
    
    20,880
    
    
    
    7,686Net Cash Provided by Operating Activities
    
    
    282,805
    
    
    
    293,456
    
    
    
    247,276Cash Flows from Investing Activities:Originations of loans
    
    
    (2,194,774
    )
    
    
    (1,464,641
    )
    
    
    (2,271,148
    )Purchases of loans
    
    
    (3,676,260
    )
    
    
    (3,122,409
    )
    
    
    (3,205,249
    )Payments on loans
    
    
    2,154,125
    
    
    
    2,016,447
    
    
    
    3,630,638Principal collection of mortgage-backed securities held to maturity
    
    
    960,630
    
    
    
    1,445,507
    
    
    
    3,387,605Proceeds from sales of mortgage-backed securities held to maturity
    
    
    
    
    
    
    
    
    
    
    68,652Purchases of mortgage-backed securities held to maturity
    
    
    (1,604,473
    )
    
    
    (921,765
    )
    
    
    (3,038,153
    )Principal collection of mortgage-backed securities available for sale
    
    
    499,387
    
    
    
    282,901
    
    
    
    410,316Proceeds from sales of mortgage-backed securities available for sale
    
    
    230,632
    
    
    
    510,496
    
    
    
    1,329,731Purchases of mortgage-backed securities available for sale
    
    
    (1,675,428
    )
    
    
    (1,278,921
    )
    
    
    (1,489,154
    )Proceeds from maturities and calls of investment securities held to maturity
    
    
    100,043
    
    
    
    436,770
    
    
    
    40Purchases of investment securities held to maturity
    
    
    (300,000
    )
    
    
    (1,769,643
    )
    
    
    Proceeds from maturities and calls of investment securities available for sale
    
    
    1,600,029
    
    
    
    986,343
    
    
    
    1,332,222Proceeds from sales of investment securities available for sale
    
    
    9,980
    
    
    
    
    
    
    
    50,557Purchases of investment securities available for sale
    
    
    (4,008,680
    )
    
    
    (337,306
    )
    
    
    (3,089,474
    )Purchases of Federal Home Loan Bank of New York stock
    
    
    (104,162
    )
    
    
    
    
    
    
    (27,350
    )Redemption of Federal Home Loan Bank of New York stock
    
    
    17,200
    
    
    
    24,850
    
    
    
    Purchases of premises and equipment, net
    
    
    (18,566
    )
    
    
    (9,023
    )
    
    
    (2,149
    )Net Cash Used in Investment Activities
    
    
    (8,010,317
    )
    
    
    (3,200,394
    )
    
    
    (2,912,916
    )Cash Flows from Financing Activities:Net (decrease) increase in deposits
    
    
    (94,000
    )
    
    
    1,023,520
    
    
    
    1,315,151Proceeds from borrowed funds
    
    
    5,125,000
    
    
    
    3,750,000
    
    
    
    2,025,000Principal payments on borrowed funds
    
    
    (925,000
    )
    
    
    (1,750,000
    )
    
    
    (475,000
    )Cash
proceeds from the common stock offering  net
    
    
    3,953,001
    
    
    
    
    
    
    
    Dividends paid
    
    
    (102,103
    )
    
    
    (40,482
    )
    
    
    (95,627
    )Purchases of stock by the ESOP
    
    
    (189,348
    )
    
    
    
    
    
    
    Purchases of stock by the RRP
    
    
    (1,290
    )
    
    
    (7,299
    )
    
    
    Purchases of treasury stock
    
    
    (107,499
    )
    
    
    (161,662
    )
    
    
    (101,057
    )Exercise of stock options
    
    
    2,827
    
    
    
    6,460
    
    
    
    10,961Net Cash Provided by Financing Activities
    
    
    7,661,588
    
    
    
    2,820,537
    
    
    
    2,679,428Net (Decrease) Increase in Cash and Cash Equivalents
    
    
    (65,924
    )
    
    
    (86,401
    )
    
    
    13,788Cash and Cash Equivalents at Beginning of Year
    
    
    168,183
    
    
    
    254,584
    
    
    
    240,796Cash and Cash Equivalents at End of Year
    
    $
    102,259
    
    
    $
    168,183
    
    
    $
    254,584Supplemental Disclosures:Interest paid
    
    $
    599,037
    
    
    $
    422,862
    
    
    $
    373,234Income taxes paid
    
    $
    167,200
    
    
    $
    133,800
    
    
    $
    122,535
  Page 98




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##### Table of Contents



1. Summary of Significant Accounting Policies
 a) Basis of Presentation
    b) Comprehensive Income
  c) Statements of Cash Flows
  d) Investment Securities
  Page 99




---



##### Table of Contents



e) Mortgage-Backed Securities
   f) Security Impairment
  g) Loans
   Page 100




---



##### Table of Contents



h) Allowance for Loan Losses
     Page 101




---



##### Table of Contents



i) Foreclosed Real Estate
  j) Banking Premises and Equipment
  k) Income Taxes
   l) Employee Benefit Plans
   Page 102




---



##### Table of Contents



2005
    
    
    2004
    
    
    2003(In thousands, except per share data)Net income, as reported
    
    $
    276,055
    
    
    $
    239,266
    
    
    $
    207,410Add: expense recognized for the recognition and
retention plans, net of related tax effect
    
    
    2,249
    
    
    
    5,623
    
    
    
    4,103Less: total stock option and recognition and
retention plans expense, determined under the
fair value method, net of related tax effect
    
    
    (3,738
    )
    
    
    (8,939
    )
    
    
    (6,529
    )Pro forma net income
    
    $
    274,566
    
    
    $
    235,950
    
    
    $
    204,984Basic earnings per share:As reported
    
    $
    0.49
    
    
    $
    0.41
    
    
    $
    0.35Pro forma
    
    
    0.48
    
    
    
    0.41
    
    
    
    0.35Diluted earnings per share:As reported
    
    $
    0.48
    
    
    $
    0.40
    
    
    $
    0.34Pro forma
    
    
    0.47
    
    
    
    0.40
    
    
    
    0.34
  For the Year Ended December 31,2005
    
    
    2004
    
    
    2003Expected dividend
yield
    
    
    2.23
    %
    
    
    1.69
    %
    
    
    2.24
    %Expected
volatility
    
    
    21.57
    
    
    
    19.66
    
    
    
    24.71Risk-free interest
rate
    
    
    3.64
    
    
    
    3.05
    
    
    
    2.98Expected option
life
    
    5 years
    
    
    5 years
    
    
    5 years
 Page 103




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##### Table of Contents



m) Borrowed Funds
   n) Earnings Per Share
   2. Plan of Conversion and Reorganization
  Page 104




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##### Table of Contents



3. Stockholders Equity
    4. Restrictions on Cash and Due From Banks
  Page 105




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##### Table of Contents



5. Investment Securities
  Gross
    
    
    Gross
    
    
    EstimatedAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    Fair MarketCost
    
    
    Gains
    
    
    Losses
    
    
    Value(In thousands)2005Held to Maturity:United States government-sponsored
agencies
    
    $
    1,533,050
    
    
    $
    
    
    
    $
    (26,185
    )
    
    $
    1,506,865Municipal bonds
    
    
    1,166
    
    
    
    24
    
    
    
    
    
    
    
    1,190Total held to
maturity
    
    $
    1,534,216
    
    
    $
    24
    
    
    $
    (26,185
    )
    
    $
    1,508,055Available for Sale:United States government-sponsored
agencies
    
    $
    4,022,316
    
    
    $
    
    
    
    $
    (60,138
    )
    
    $
    3,962,178Corporate bonds
    
    
    67
    
    
    
    
    
    
    
    
    
    
    
    67Equity securities
    
    
    168
    
    
    
    98
    
    
    
    
    
    
    
    266Total available for
sale
    
    $
    4,022,551
    
    
    $
    98
    
    
    $
    (60,138
    )
    
    $
    3,962,5112004Held to Maturity:United States government-sponsored
agencies
    
    $
    1,333,018
    
    
    $
    1,144
    
    
    $
    (9,108
    )
    
    $
    1,325,054Municipal bonds
    
    
    1,231
    
    
    
    51
    
    
    
    
    
    
    
    1,282Total held to
maturity
    
    $
    1,334,249
    
    
    $
    1,195
    
    
    $
    (9,108
    )
    
    $
    1,326,336Available for Sale:United States government-sponsored
agencies
    
    $
    1,597,351
    
    
    $
    919
    
    
    $
    (13,886
    )
    
    $
    1,584,384Corporate bonds
    
    
    74
    
    
    
    1
    
    
    
    (1
    )
    
    
    74Equity securities
    
    
    10,168
    
    
    
    63
    
    
    
    (50
    )
    
    
    10,181Total available for
sale
    
    $
    1,607,593
    
    
    $
    983
    
    
    $
    (13,937
    )
    
    $
    1,594,639
 Page 106




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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
    
    $
    4,174,994
    
    
    $
    43,833
    
    
    $
    1,294,049
    
    
    $
    42,490
    
    
    $
    5,469,043
    
    
    $
    86,3232004United States
government-sponsored
agencies
    
    $
    1,543,473
    
    
    $
    18,231
    
    
    $
    216,626
    
    
    $
    4,763
    
    
    $
    1,760,099
    
    
    $
    22,994Corporate
bonds
    
    
    66
    
    
    
    1
    
    
    
    
    
    
    
    
    
    
    
    66
    
    
    
    1Equity
securities
    
    
    9,950
    
    
    
    50
    
    
    
    
    
    
    
    
    
    
    
    9,950
    
    
    
    50Total
    
    $
    1,553,489
    
    
    $
    18,282
    
    
    $
    216,626
    
    
    $
    4,763
    
    
    $
    1,770,115
    
    
    $
    23,045
   EstimatedAmortized
    
    
    Fair MarketCost
    
    
    Value(In thousands)Held to MaturityDue after one year through five years
    
    $
    475,610
    
    
    $
    468,368Due after five years through ten years
    
    
    437,084
    
    
    
    430,180Due after ten years
    
    
    621,522
    
    
    
    609,507Total held to maturity
    
    $
    1,534,216
    
    
    $
    1,508,055Available for SaleDue in one year or less
    
    $
    500,005
    
    
    $
    496,652Due after one year through five years
    
    
    2,940,885
    
    
    
    2,901,231Due after five years through ten years
    
    
    581,493
    
    
    
    564,362Total available for
sale
    
    $
    4,022,383
    
    
    $
    3,962,245
 Page 107




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##### Table of Contents



2005
    
    
    2004
    
    
    2003(In thousands)United States government-sponsored
agencies
    
    $
    191,133
    
    
    $
    118,653
    
    
    $
    79,411Municipal bonds
    
    
    75
    
    
    
    83
    
    
    
    87Corporate bonds
    
    
    4
    
    
    
    4
    
    
    
    7Equity securities
    
    
    5
    
    
    
    574
    
    
    
    574Total interest and
dividend income
    
    $
    191,217
    
    
    $
    119,314
    
    
    $
    80,079
  Page 108




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##### Table of Contents



6. Mortgage-Backed Securities
  Gross
    
    
    Gross
    
    
    EstimatedAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    Fair MarketCost
    
    
    Gains
    
    
    Losses
    
    
    Value(In thousands)2005Held to Maturity:GNMA pass-through
certificates
    
    $
    293,680
    
    
    $
    1,089
    
    
    $
    (437
    )
    
    $
    294,332FNMA pass-through
certificates
    
    
    2,535,361
    
    
    
    2,685
    
    
    
    (48,944
    )
    
    
    2,489,102FHLMC pass-through
certificates
    
    
    1,108,195
    
    
    
    758
    
    
    
    (26,389
    )
    
    
    1,082,564FHLMC and FNMA  REMICs
    
    
    452,628
    
    
    
    13
    
    
    
    (29,867
    )
    
    
    422,774Total held to
maturity
    
    $
    4,389,864
    
    
    $
    4,545
    
    
    $
    (105,637
    )
    
    $
    4,288,772Available for Sale:GNMA pass-through
certificates
    
    $
    1,726,111
    
    
    $
    72
    
    
    $
    (26,051
    )
    
    $
    1,700,132FNMA pass-through
certificates
    
    
    683,604
    
    
    
    
    
    
    
    (17,119
    )
    
    
    666,485FHLMC pass-through
certificates
    
    
    156,835
    
    
    
    
    
    
    
    (2,819
    )
    
    
    154,016Total available for
sale
    
    $
    2,566,550
    
    
    $
    72
    
    
    $
    (45,989
    )
    
    $
    2,520,6332004Held to Maturity:GNMA pass-through
certificates
    
    $
    416,665
    
    
    $
    5,453
    
    
    $
    (86
    )
    
    $
    422,032FNMA pass-through
certificates
    
    
    2,017,165
    
    
    
    9,923
    
    
    
    (9,297
    )
    
    
    2,017,791FHLMC pass-through
certificates
    
    
    561,095
    
    
    
    1,296
    
    
    
    (8,050
    )
    
    
    554,341FHLMC, FNMA and GNMA-REMICs
    
    
    760,996
    
    
    
    132
    
    
    
    (34,263
    )
    
    
    726,865Total held to
maturity
    
    $
    3,755,921
    
    
    $
    16,804
    
    
    $
    (51,696
    )
    
    $
    3,721,029Available for Sale:GNMA pass-through
certificates
    
    $
    504,812
    
    
    $
    1,196
    
    
    $
    (2,169
    )
    
    $
    503,839FNMA pass-through
certificates
    
    
    747,252
    
    
    
    812
    
    
    
    (4,684
    )
    
    
    743,380FHLMC pass-through
certificates
    
    
    371,066
    
    
    
    2,852
    
    
    
    (429
    )
    
    
    373,489Total available for
sale
    
    $
    1,623,130
    
    
    $
    4,860
    
    
    $
    (7,282
    )
    
    $
    1,620,708
 Page 109




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##### Table of Contents



Less Than 12 Months
    
    
    12 Months or Longer
    
    
    TotalFair
    
    
    Unrealized
    
    
    Fair
    
    
    Unrealized
    
    
    Fair
    
    
    UnrealizedValue
    
    
    Losses
    
    
    Value
    
    
    Losses
    
    
    Value
    
    
    Losses(In thousands)2005GNMA pass-through
certificates
    
    $
    1,693,276
    
    
    $
    25,640
    
    
    $
    51,814
    
    
    $
    848
    
    
    $
    1,745,090
    
    
    $
    26,488FNMA pass-through
certificates
    
    
    2,837,631
    
    
    
    64,306
    
    
    
    49,552
    
    
    
    1,757
    
    
    
    2,887,183
    
    
    
    66,063FHLMC pass-through
certificates
    
    
    1,107,426
    
    
    
    28,086
    
    
    
    42,889
    
    
    
    1,122
    
    
    
    1,150,315
    
    
    
    29,208FHLMC and
FNMA 
REMICs
    
    
    401,538
    
    
    
    29,361
    
    
    
    20,192
    
    
    
    506
    
    
    
    421,730
    
    
    
    29,867Total
    
    $
    6,039,871
    
    
    $
    147,393
    
    
    $
    164,447
    
    
    $
    4,233
    
    
    $
    6,204,318
    
    
    $
    151,6262004GNMA pass-through
certificates
    
    $
    320,069
    
    
    $
    2,255
    
    
    $
    
    
    
    $
    
    
    
    $
    320,069
    
    
    $
    2,255FNMA pass-through
certificates
    
    
    1,575,778
    
    
    
    9,462
    
    
    
    196,579
    
    
    
    4,519
    
    
    
    1,772,357
    
    
    
    13,981FHLMC pass-through
certificates
    
    
    223,234
    
    
    
    1,597
    
    
    
    244,757
    
    
    
    6,882
    
    
    
    467,991
    
    
    
    8,479FHLMC and
FNMA 
REMICs
    
    
    23,720
    
    
    
    174
    
    
    
    699,272
    
    
    
    34,089
    
    
    
    722,992
    
    
    
    34,263Total
    
    $
    2,142,801
    
    
    $
    13,488
    
    
    $
    1,140,608
    
    
    $
    45,490
    
    
    $
    3,283,409
    
    
    $
    58,978
   EstimatedAmortized
    
    
    Fair MarketCost
    
    
    Value(In thousands)Held to MaturityDue in one year or less
    
    $
    81
    
    
    $
    82Due after one year through five years
    
    
    12,404
    
    
    
    12,745Due after five years through ten years
    
    
    4,857
    
    
    
    5,057Due after ten years
    
    
    4,372,522
    
    
    
    4,270,888Total held to maturity
    
    $
    4,389,864
    
    
    $
    4,288,772Available for SaleDue after ten years
    
    
    2,566,550
    
    
    
    2,520,633Total available for
sale
    
    $
    2,566,550
    
    
    $
    2,520,633
 Page 110




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##### Table of Contents



7. Loans and Allowance for Loan Losses
  2005
    
    
    2004(In thousands)First mortgage loans:One- to four-family
    
    $
    14,780,819
    
    
    $
    11,120,874FHA/VA
    
    
    43,672
    
    
    
    81,915Multi-family and commercial
    
    
    2,320
    
    
    
    3,000Total first mortgage loans
    
    
    14,826,811
    
    
    
    11,205,789Consumer and other loans:Fixedrate second mortgages
    
    
    205,826
    
    
    
    127,737Home equity credit lines
    
    
    29,150
    
    
    
    28,929Other
    
    
    662
    
    
    
    584Total consumer and other loans
    
    
    235,638
    
    
    
    157,250Total loans
    
    $
    15,062,449
    
    
    $
    11,363,039
   2005
    
    
    2004(In thousands)Non-accrual loans
    
    $
    9,651
    
    
    $
    6,057Accruing loans delinquent 90 days or more
    
    
    9,661
    
    
    
    15,550Total non-performing loans
    
    $
    19,312
    
    
    $
    21,607
  Page 111




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##### Table of Contents



2005
    
    
    2004
    
    
    2003(In thousands)Balance at beginning of year
    
    $
    27,319
    
    
    $
    26,547
    
    
    $
    25,501Charge-offs
    
    
    (10
    )
    
    
    (20
    )
    
    
    (96
    )Recoveries
    
    
    19
    
    
    
    2
    
    
    
    242Net recoveries (charge-offs)
    
    
    9
    
    
    
    (18
    )
    
    
    146Provision for loan losses
    
    
    65
    
    
    
    790
    
    
    
    900Balance at end of
year
    
    $
    27,393
    
    
    $
    27,319
    
    
    $
    26,547
 8. Banking Premises and Equipment, net
  2005
    
    
    2004(In thousands)Land
    
    $
    5,215
    
    
    $
    5,215Buildings
    
    
    34,199
    
    
    
    32,378Leasehold improvements
    
    
    23,435
    
    
    
    15,493Furniture, fixtures and equipment
    
    
    53,722
    
    
    
    44,955Total acquisition cost
    
    
    116,571
    
    
    
    98,041Accumulated depreciation and amortization
    
    
    (67,439
    )
    
    
    (61,642
    )Total banking premises and
equipment, net
    
    $
    49,132
    
    
    $
    36,399
   Page 112




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##### Table of Contents



Year
    
    Amount(In thousands)2006
    
    $
    5,1992007
    
    
    5,6702008
    
    
    5,5682009
    
    
    5,4622010
    
    
    5,203Thereafter
    
    
    68,471Total
    
    $
    95,573
  9. Deposits
  2005
    
    
    2004Balance
    
    
    Percent
    
    
    Balance
    
    
    Percent(Dollars in thousands)Savings
    
    $
    808,325
    
    
    
    7.10
    %
    
    $
    931,783
    
    
    
    8.12
    %Noninterest-bearing demand
    
    
    442,042
    
    
    
    3.88
    
    
    
    417,502
    
    
    
    3.64Interest-bearing transaction
    
    
    3,616,644
    
    
    
    31.77
    
    
    
    4,290,099
    
    
    
    37.38Money market
    
    
    342,021
    
    
    
    3.00
    
    
    
    564,700
    
    
    
    4.92Time deposits
    
    
    6,174,268
    
    
    
    54.25
    
    
    
    5,273,216
    
    
    
    45.94Total deposits
    
    $
    11,383,300
    
    
    
    100.00
    %
    
    $
    11,477,300
    
    
    
    100.00
    %
   Year
    
    Amount(In thousands)2006
    
    $
    4,980,8512007
    
    
    705,0922008
    
    
    200,1952009
    
    
    184,7952010
    
    
    103,335Total
    
    $
    6,174,268
 Page 113




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##### Table of Contents



10. Borrowed Funds
  2005
    
    
    2004Weighted
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    AveragePrincipal
    
    
    Rate
    
    
    Principal
    
    
    Rate(Dollars in thousands)Securities sold under agreements to repurchase:FHLB
    
    $
    850,000
    
    
    
    4.96
    %
    
    $
    950,000
    
    
    
    4.73
    %Other brokers
    
    
    7,050,000
    
    
    
    3.45
    
    
    
    4,350,000
    
    
    
    3.11Total securities sold under
agreements to
repurchase
    
    
    7,900,000
    
    
    
    3.61
    
    
    
    5,300,000
    
    
    
    3.40Advances from the FHLB
    
    
    3,450,000
    
    
    
    3.95
    
    
    
    1,850,000
    
    
    
    3.81Total borrowed funds
    
    $
    11,350,000
    
    
    
    3.72
    
    
    $
    7,150,000
    
    
    
    3.51
  Borrowings by Scheduled
    
    
    Borrowings by NextMaturity Date as of
    
    
    Potential Call Date as ofDecember 31, 2005
    
    
    December 31, 2005Weighted
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    AverageYear
    
    Principal
    
    
    Rate
    
    
    Principal
    
    
    Rate(Dollars in thousands)2006
    
    $
    
    
    
    
    
    %
    
    $
    4,175,000
    
    
    
    3.77
    %2007
    
    
    
    
    
    
    
    
    
    
    2,650,000
    
    
    
    3.272008
    
    
    
    
    
    
    
    
    
    
    2,975,000
    
    
    
    3.872009
    
    
    
    
    
    
    
    
    
    
    900,000
    
    
    
    3.812010
    
    
    300,000
    
    
    
    5.68
    
    
    
    350,000
    
    
    
    4.012011
    
    
    775,000
    
    
    
    4.79
    
    
    
    300,000
    
    
    
    4.892012
    
    
    1,450,000
    
    
    
    4.06
    
    
    
    
    
    
    
    2013
    
    
    850,000
    
    
    
    3.81
    
    
    
    
    
    
    
    2014
    
    
    2,850,000
    
    
    
    2.84
    
    
    
    
    
    
    
    2015
    
    
    5,125,000
    
    
    
    3.82
    
    
    
    
    
    
    
    Total
    
    $
    11,350,000
    
    
    
    3.72
    
    
    $
    11,350,000
    
    
    
    3.72
 Page 114




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##### Table of Contents



At or for the year endedDecember 31,2005
    
    
    2004
    
2003(In thousands)Amortized cost of collateral:United States government-sponsored
agency securities
    
    $
    2,849,947
    
    
    $
    2,030,978
    
$
615,806Mortgage-backed securities
    
    
    5,224,648
    
    
    
    3,198,768
    

2,369,058REMICs
    
    
    356,579
    
    
    
    455,598
    

495,074Total amortized cost of
collateral
    
    $
    8,431,174
    
    
    $
    5,685,344
    
$
3,479,938Fair value of collateral:United States government-sponsored
agency securities
    
    $
    2,778,462
    
    
    $
    2,008,710
    
$
604,397Mortgage-backed securities
    
    
    5,119,225
    
    
    
    3,188,386
    

2,387,457REMICs
    
    
    332,532
    
    
    
    434,249
    

478,192Total fair value of
collateral
    
    $
    8,230,219
    
    
    $
    5,631,345
    
$
3,470,046Average balance of outstanding repurchase
agreements during the year
    
    $
    6,447,560
    
    
    $
    4,182,197
    
$
2,253,025Maximum balance of outstanding repurchase
agreements at any month-end
during the year
    
    $
    7,900,000
    
    
    $
    5,300,000
    
$
3,200,000Average cost of securities sold under agreements
to repurchase
    
    
    3.52
    %
    
    
    3.41
    %

4.26
%
  11. Employee Benefit Plans
 a) Retirement and Other Postretirement Benefits
   Page 115




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##### Table of Contents



Retirement Plans
    
    
    Other Benefits2005
    
    
    2004
    
    
    2005
    
    
    2004(In thousands)Change in Benefit Obligation:Benefit obligation at beginning of
year
    
    $
    83,268
    
    
    $
    73,753
    
    
    $
    46,396
    
    
    $
    41,464Service cost
    
    
    3,048
    
    
    
    2,945
    
    
    
    1,921
    
    
    
    2,120Interest cost
    
    
    4,784
    
    
    
    4,527
    
    
    
    2,492
    
    
    
    2,318Plan amendments
    
    
    1,884
    
    
    
    
    
    
    
    (28,171
    )
    
    
    Participant contributions
    
    
    
    
    
    
    
    
    
    
    40
    
    
    
    25Reduction due to Medicare
Prescription Plan
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,399
    )Actuarial (gain) loss
    
    
    (176
    )
    
    
    4,185
    
    
    
    15,003
    
    
    
    7,415Benefits paid
    
    
    (2,715
    )
    
    
    (2,142
    )
    
    
    (1,427
    )
    
    
    (1,547
    )Benefit obligation at end of
year
    
    
    90,093
    
    
    
    83,268
    
    
    
    36,254
    
    
    
    46,396Change in Plan Assets:Fair value of plan assets at
beginning of year
    
    
    78,901
    
    
    
    76,066
    
    
    
    
    
    
    
    Actual return on plan assets
    
    
    3,411
    
    
    
    4,974
    
    
    
    
    
    
    
    Employer contribution
    
    
    493
    
    
    
    3
    
    
    
    1,387
    
    
    
    1,522Participant contributions
    
    
    
    
    
    
    
    
    
    
    40
    
    
    
    25Benefits paid
    
    
    (2,715
    )
    
    
    (2,142
    )
    
    
    (1,427
    )
    
    
    (1,547
    )Fair value of plan assets at end of
year
    
    
    80,090
    
    
    
    78,901
    
    
    
    
    
    
    
    Funded
Status
    
    
    (10,003
    )
    
    
    (4,367
    )
    
    
    (36,254
    )
    
    
    (46,396
    )Unrecognized prior service
cost
    
    
    1,874
    
    
    
    15
    
    
    
    (27,193
    )
    
    
    Unrecognized net actuarial loss
(gain)
    
    
    15,851
    
    
    
    13,098
    
    
    
    15,615
    
    
    
    1,232Prepaid (accrued)
benefit cost
    
    $
    7,722
    
    
    $
    8,746
    
    
    $
    (47,832
    )
    
    $
    (45,164
    )
  Page 116




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Retirement Plans
    
    
    Other Benefits2005
    
    
    2004
    
    
    2005
    
    
    2004(In thousands)Prepaid benefit
cost
    
    $
    13,090
    
    
    $
    13,763
    
    
    $
    
    
    
    $
    Accrued benefit
cost
    
    
    (5,368
    )
    
    
    (5,017
    )
    
    
    (47,832
    )
    
    
    (45,164
    )Minimum pension liability
    
    
    (775
    )
    
    
    
    
    
    
    
    
    
    
    Net amount
recognized
    
    $
    6,947
    
    
    $
    8,746
    
    
    $
    (47,832
    )
    
    $
    (45,164
    )
   Retirement Plans
    
    
    Other Benefits2005
    
    
    2004
    
    
    2003
    
    
    2005
    
    
    2004
    
    
    2003(In thousands)Service cost
    
    $
    3,048
    
    
    $
    2,945
    
    
    $
    2,709
    
    
    $
    1,921
    
    
    $
    2,120
    
    
    $
    1,643Interest cost
    
    
    4,784
    
    
    
    4,527
    
    
    
    4,270
    
    
    
    2,492
    
    
    
    2,318
    
    
    
    1,958Expected return on assets
    
    
    (6,774
    )
    
    
    (6,532
    )
    
    
    (5,286
    )
    
    
    
    
    
    
    
    
    
    
    Amortization of:Net loss (gain)
    
    
    435
    
    
    
    59
    
    
    
    528
    
    
    
    621
    
    
    
    (40
    )
    
    
    (368
    )Unrecognized prior service cost
    
    
    25
    
    
    
    (16
    )
    
    
    (16
    )
    
    
    (978
    )
    
    
    
    
    
    
    Unrecognized remaining net assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net periodic benefit cost
    
    $
    1,518
    
    
    $
    983
    
    
    $
    2,205
    
    
    $
    4,056
    
    
    $
    4,398
    
    
    $
    3,233
  Retirement Plans
    
    
    Other Benefits2005
    
    
    2004
    
    
    2003
    
    
    2005
    
    
    2004
    
    
    2003Discount rate
    
    
    5.75
    %
    
    
    6.25
    %
    
    
    6.50
    %
    
    
    5.75
    %
    
    
    6.25
    %
    
    
    6.50
    %Expected return on
assets
    
    
    8.75
    
    
    
    8.75
    
    
    
    8.75
    
    
    
    
    
    
    
    
    
    
    
    Rate of
compensation
increase
    
    
    4.25
    
    
    
    4.75
    
    
    
    5.00
    
    
    
    
    
    
    
    
    
    
    
    
  Retirement Plans
    
    
    Other Benefits2005
    
    
    2004
    
    
    2005
    
    
    2004Discount
rate
    
    
    5.75
    %
    
    
    5.75
    %
    
    
    5.75
    %
    
    
    5.75
    %Rate of
compensation
increase
    
    
    4.25
    
    
    
    4.25
    
    
    
    
    
    
    
    
 Page 117




---



##### Table of Contents



1% Increase
    
    
    1% Decrease(In thousands)Effect on total service cost and
interest cost
    
    $
    48
    
    
    $
    (49
    )Effect on other benefit
obligations
    
    
    1,249
    
    
    
    (1,185
    )
  Plan Assetsat December 31,Asset Category
    
    2005
    
    
    2004Equity securities
    
    
    60.2
    %
    
    
    59.0
    %Fixed Income
    
    
    25.2
    
    
    
    37.0Cash
    
    
    14.6
    
    
    
    4.0Total
    
    
    100.0
    %
    
    
    100.0
    %
   Page 118




---



##### Table of Contents



Retirement
    
    OtherPlans
    
    Benefits(In thousands)2006
    
    $
    3,602
    
    
    $
    1,6612007
    
    
    3,731
    
    
    
    1,7982008
    
    
    3,938
    
    
    
    1,9682009
    
    
    4,250
    
    
    
    2,1552010
    
    
    4,404
    
    
    
    2,2892011 through 2015
    
    
    28,922
    
    
    
    13,994
 b) Employee Stock Ownership Plan
     Page 119




---



##### Table of Contents



c) Recognition and Retention Plans
     Restricted Stock Awards2005
    
    
    2004
    
    
    2003Outstanding at beginning of year
    
    
    2,973,759
    
    
    
    5,601,236
    
    
    
    8,212,202Granted
    
    
    150,682
    
    
    
    762,868
    
    
    
    52,899Vested
    
    
    (2,172,680
    )
    
    
    (3,390,345
    )
    
    
    (2,663,865
    )Outstanding at end of year
    
    
    951,761
    
    
    
    2,973,759
    
    
    
    5,601,236
 d) Stock Option Plans
  Page 120




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##### Table of Contents



2005
    
    
    2004
    
    
    2003Weighted
    
    
    
    
    
    
    Weighted
    
    
    
    
    
    
    WeightedNumber of
    
    
    Average
    
    
    Number of
    
    
    Average
    
    
    Number of
    
    
    AverageStock
    
    
    Exercise
    
    
    Stock
    
    
    Exercise
    
    
    Stock
    
    
    ExerciseOptions
    
    
    Price
    
    
    Options
    
    
    Price
    
    
    Options
    
    
    PriceOutstanding at beginning
of year
    
    
    22,425,161
    
    
    $
    3.95
    
    
    
    22,009,657
    
    
    $
    2.53
    
    
    
    26,385,571
    
    
    $
    2.40Granted
    
    
    496,930
    
    
    
    11.17
    
    
    
    3,305,393
    
    
    
    11.93
    
    
    
    557,850
    
    
    
    6.14Exercised
    
    
    (1,247,475
    )
    
    
    2.26
    
    
    
    (2,886,042
    )
    
    
    2.24
    
    
    
    (4,905,551
    )
    
    
    2.23Forfeited
    
    
    (14,747
    )
    
    
    8.13
    
    
    
    (3,847
    )
    
    
    3.10
    
    
    
    (28,213
    )
    
    
    3.05Outstanding at end of year
    
    
    21,659,869
    
    
    
    4.21
    
    
    
    22,425,161
    
    
    
    3.95
    
    
    
    22,009,657
    
    
    
    2.53
  Options Outstanding
    
    
    Options ExercisableWeightedAverage
    
    
    Weighted
    
    
    
    
    
    
    WeightedNumber
    
    
    Remaining
    
    
    Average
    
    
    Number
    
    
    AverageExercise
    
    
    Of Options
    
    
    Contractual
    
    
    Exercise
    
    
    Of Options
    
    
    ExercisePrice
    
    
    Outstanding
    
    
    Life
    
    
    Price
    
    
    Exercisable
    
    
    Price$
    2.16
    
    
    
    14,553,679
    
    
    4 years
    
    $
    2.16
    
    
    
    14,553,679
    
    
    $
    2.163.09
    
    
    
    262,231
    
    
    5 years
    
    
    3.09
    
    
    
    194,244
    
    
    
    3.093.40
    
    
    
    441,145
    
    
    5 years
    
    
    3.40
    
    
    
    330,858
    
    
    
    3.403.59
    
    
    
    820,736
    
    
    5 years
    
    
    3.59
    
    
    
    615,552
    
    
    
    3.594.20
    
    
    
    500,132
    
    
    6 years
    
    
    4.20
    
    
    
    284,689
    
    
    
    4.205.53
    
    
    
    769,440
    
    
    6 years
    
    
    5.53
    
    
    
    769,440
    
    
    
    5.535.96
    
    
    
    263,350
    
    
    7 years
    
    
    5.96
    
    
    
    92,147
    
    
    
    5.966.35
    
    
    
    256,480
    
    
    7 years
    
    
    6.35
    
    
    
    256,480
    
    
    
    6.3510.33
    
    
    
    448,840
    
    
    8 years
    
    
    10.33
    
    
    
    89,768
    
    
    
    10.3311.17
    
    
    
    487,312
    
    
    9 years
    
    
    11.17
    
    
    
    
    
    
    
    11.91
    
    
    
    371,890
    
    
    8 years
    
    
    11.91
    
    
    
    74,363
    
    
    
    11.9112.22
    
    
    
    2,484,634
    
    
    8 years
    
    
    12.22
    
    
    
    128,240
    
    
    
    12.224.21
    
    
    
    21,659,869
    
    
    
    
    
    
    
    4.21
    
    
    
    17,389,460
    
    
    
    2.67
 e) Incentive Plans
   Page 121




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12. Income Taxes
  2005
    
    
    2004
    
    
    2003(In thousands)Federal:Current
    
    $
    160,263
    
    
    $
    139,839
    
    
    $
    120,498Deferred
    
    
    (5,573
    )
    
    
    (4,838
    )
    
    
    (4,564
    )Total federal
    
    
    154,690
    
    
    
    135,001
    
    
    
    115,934State:Current
    
    
    12,560
    
    
    
    10,218
    
    
    
    5,695Deferred
    
    
    (932
    )
    
    
    (2,074
    )
    
    
    (1,828
    )Total state
    
    
    11,628
    
    
    
    8,144
    
    
    
    3,867Total income tax
expense
    
    $
    166,318
    
    
    $
    143,145
    
    
    $
    119,801
   2005
    
    
    2004
    
    
    2003(Dollars in thousands)Income before income tax
expense
    
    $
    442,373
    
    
    $
    382,411
    
    
    $
    327,211Statutory income tax
rate
    
    
    35
    %
    
    
    35
    %
    
    
    35
    %Computed expected income tax
expense
    
    
    154,831
    
    
    
    133,844
    
    
    
    114,524State income taxes, net of federal
income tax benefit
    
    
    7,558
    
    
    
    5,294
    
    
    
    2,514Tax-exempt interest
    
    
    (67
    )
    
    
    (71
    )
    
    
    (84
    )ESOP fair market value
adjustment
    
    
    1,971
    
    
    
    2,990
    
    
    
    2,003Other, net
    
    
    2,025
    
    
    
    1,088
    
    
    
    844Income tax
expense
    
    $
    166,318
    
    
    $
    143,145
    
    
    $
    119,801
 Page 122




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##### Table of Contents



2005
    
    
    2004(In thousands)Deferred tax asset:Deferred loan origination fees
    
    $
    1,985
    
    
    $
    1,425Postretirement benefits
    
    
    20,028
    
    
    
    18,667Loan loss reserve
    
    
    10,146
    
    
    
    10,116Mortgage premium amortization
    
    
    5,417
    
    
    
    5,417Non-accrual interest income
    
    
    156
    
    
    
    105Non-qualified benefit plans
    
    
    15,999
    
    
    
    12,358Net unrealized loss on securities available for sale
    
    
    43,283
    
    
    
    6,281Other
    
    
    7,952
    
    
    
    6,954104,966
    
    
    
    61,323Deferred tax liability:Discount accretion
    
    
    257
    
    
    
    239Retirement plan
    
    
    5,282
    
    
    
    5,622Other
    
    
    3,160
    
    
    
    2,7028,699
    
    
    
    8,563Net deferred tax asset
    
    $
    96,267
    
    
    $
    52,760
   13. Fair Value of Financial Instruments
  Page 123




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##### Table of Contents



2005
    
    
    2004Carrying
    
    
    Estimated
    
    
    Carrying
    
    
    EstimatedAmount
    
    
    Fair Value
    
    
    Amount
    
    
    Fair Value(In thousands)Assets:Cash and due from
banks
    
    $
    97,672
    
    
    $
    97,672
    
    
    $
    122,483
    
    
    $
    122,483Federal funds
sold
    
    
    4,587
    
    
    
    4,587
    
    
    
    45,700
    
    
    
    45,700Investment
securities held to
maturity
    
    
    1,534,216
    
    
    
    1,508,055
    
    
    
    1,334,249
    
    
    
    1,326,336Investment
securities
available for
sale
    
    
    3,962,511
    
    
    
    3,962,511
    
    
    
    1,594,639
    
    
    
    1,594,639Federal Home Loan
Bank of New York
stock
    
    
    226,962
    
    
    
    226,962
    
    
    
    140,000
    
    
    
    140,000Mortgage-backed
securities held to
maturity
    
    
    4,389,864
    
    
    
    4,288,772
    
    
    
    3,755,921
    
    
    
    3,721,029Mortgage-backed
securities
available for sale
    
    
    2,520,633
    
    
    
    2,520,633
    
    
    
    1,620,708
    
    
    
    1,620,708Loans,
net
    
    
    15,036,709
    
    
    
    15,183,250
    
    
    
    11,327,647
    
    
    
    11,486,022Liabilities:Deposits
    
    
    11,383,300
    
    
    
    11,376,587
    
    
    
    11,477,300
    
    
    
    11,475,827Borrowed
funds
    
    
    11,350,000
    
    
    
    11,237,494
    
    
    
    7,150,000
    
    
    
    7,238,626
 14. Regulatory Capital
   Page 124




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OTS RequirementsMinimum Capital
    
    
    For Classification asBank Actual
    
    
    Adequacy
    
    
    Well-CapitalizedAmount
    
    
    Ratio
    
    
    Amount
    
    
    Ratio
    
    
    Amount
    
    
    Ratio(Dollars in thousands)December 31, 2005Tangible
capital
    
    $
    4,129,937
    
    
    
    14.68
    %
    
    $
    422,069
    
    
    
    1.50
    %
    
    
    n/a
    
    
    
    n/aLeverage (core)
capital
    
    
    4,129,937
    
    
    
    14.68
    
    
    
    1,125,518
    
    
    
    4.00
    
    
    $
    1,406,897
    
    
    
    5.00
    %Total-risk-based
capital
    
    
    4,157,330
    
    
    
    41.31
    
    
    
    805,040
    
    
    
    8.00
    
    
    
    1,006,300
    
    
    
    10.00December 31, 2004Tangible
capital
    
    $
    1,282,665
    
    
    
    6.36
    %
    
    $
    302,325
    
    
    
    1.50
    %
    
    
    n/a
    
    
    
    n/aLeverage (core)
capital
    
    
    1,282,665
    
    
    
    6.36
    
    
    
    806,200
    
    
    
    4.00
    
    
    $
    1,007,750
    
    
    
    5.00
    %Total-risk-based
capital
    
    
    1,309,984
    
    
    
    17.49
    
    
    
    599,199
    
    
    
    8.00
    
    
    
    748,998
    
    
    
    10.00
  15. Off-Balance Sheet Risk and Contingencies
  Page 125




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##### Table of Contents



16. Parent Company Only Financial Statements
  Statements of Financial Condition
 December 31,
    
    
    December 31,2005
    
    
    2004(In thousands)Assets:Cash and due from bank
    
    $
    894,128
    
    
    $
    76,761Investment in subsidiary
    
    
    4,067,146
    
    
    
    1,273,453ESOP loan receivable
    
    
    240,958
    
    
    
    52,715Other assets
    
    
    83
    
    
    
    81Total
Assets
    
    $
    5,202,315
    
    
    $
    1,403,010Liabilities and Stockholders Equity:Accrued expenses
    
    $
    839
    
    
    $
    126Total stockholders equity
    
    
    5,201,476
    
    
    
    1,402,884Total Liabilities
and Stockholders
Equity
    
    $
    5,202,315
    
    
    $
    1,403,010
 Page 126




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##### Table of Contents



Statements of Income
 Year Ended December 31,2005
    
    
    2004
    
    
    2003(In thousands)Income:Dividends received from subsidiary
    
    $
    259,329
    
    
    $
    226,592
    
    
    $
    203,149Interest on ESOP loan receivable
    
    
    6,954
    
    
    
    4,128
    
    
    
    4,180Interest on deposit with subsidiary
    
    
    5,964
    
    
    
    423
    
    
    
    721Total income
    
    
    272,247
    
    
    
    231,143
    
    
    
    208,050Expenses
    
    
    1,733
    
    
    
    673
    
    
    
    749Income before income tax expense
and equity in
undistributed
earnings of
subsidiary
    
    
    270,514
    
    
    
    230,470
    
    
    
    207,301Income tax expense
    
    
    4,205
    
    
    
    1,464
    
    
    
    1,555Income before equity in undistributed
earnings of
subsidiary
    
    
    266,309
    
    
    
    229,006
    
    
    
    205,746Equity in undistributed earnings
of subsidiary
    
    
    9,746
    
    
    
    10,260
    
    
    
    1,664Net Income
    
    $
    276,055
    
    
    $
    239,266
    
    
    $
    207,410
 Page 127




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##### Table of Contents



Statements of Cash Flows
 Year Ended December 31,2005
    
    
    2004
    
    
    2003(In thousands)Cash Flows from Operating Activities:Net income
    
    $
    276,055
    
    
    $
    239,266
    
    
    $
    207,410Adjustments to reconcile net income
to cash provided by operating activities:Equity in undistributed
earnings
    
    
    (9,746
    )
    
    
    (10,260
    )
    
    
    (1,664
    )(Increase) decrease in other
assets
    
    
    (2
    )
    
    
    14
    
    
    
    (5
    )Increase (decrease) in accrued
expenses
    
    
    713
    
    
    
    96
    
    
    
    (28
    )Net Cash Provided by Operating Activities
    
    
    267,020
    
    
    
    229,116
    
    
    
    205,713Cash Flows from Investing Activities:Capital contribution to subsidiary
    
    
    (3,000,000
    )
    
    
    
    
    
    
    Loan to ESOP
    
    
    (189,348
    )
    
    
    
    
    
    
    Principal collected on ESOP loan
    
    
    1,105
    
    
    
    726
    
    
    
    674Net Cash (Used) Provided by Investing
Activities
    
    
    (3,188,243
    )
    
    
    726
    
    
    
    674Cash Flows from Financing Activities:Proceeds from second-step conversion and stock
offering, net
    
    
    3,953,001
    
    
    
    
    
    
    
    Purchase of treasury stock
    
    
    (107,499
    )
    
    
    (161,662
    )
    
    
    (101,057
    )Exercise of stock options
    
    
    2,827
    
    
    
    6,460
    
    
    
    10,961Cash dividends paid to unallocated ESOP
shares
    
    
    (7,636
    )
    
    
    (5,120
    )
    
    
    (3,978
    )Cash dividends paid
    
    
    (102,103
    )
    
    
    (40,482
    )
    
    
    (95,627
    )Net Cash Provided (Used) by Financing
Activities
    
    
    3,738,590
    
    
    
    (200,804
    )
    
    
    (189,701
    )Net Increase in Cash Due from Bank
    
    
    817,367
    
    
    
    29,038
    
    
    
    16,686Cash Due from Bank at Beginning of Year
    
    
    76,761
    
    
    
    47,723
    
    
    
    31,037Cash Due from Bank at End of Year
    
    $
    894,128
    
    
    $
    76,761
    
    
    $
    47,723
 Page 128




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17. Selected Quarterly Financial Data (Unaudited)
  2005 Quarter EndedMarch 31
    
    
    June 30
    
    
    September 30
    
    
    December 31(In thousands, except per share data)Interest and dividend income
    
    $
    253,619
    
    
    $
    279,204
    
    
    $
    313,787
    
    
    $
    332,298Interest expense
    
    
    127,733
    
    
    
    147,517
    
    
    
    161,611
    
    
    
    179,913Net interest income
    
    
    125,886
    
    
    
    131,687
    
    
    
    152,176
    
    
    
    152,385Provision for loan losses
    
    
    65
    
    
    
    
    
    
    
    
    
    
    
    Net interest income after
provision for loan losses
    
    
    125,821
    
    
    
    131,687
    
    
    
    152,176
    
    
    
    152,385Non-interest income
    
    
    3,873
    
    
    
    1,245
    
    
    
    1,413
    
    
    
    1,476Non-interest expense
    
    
    30,765
    
    
    
    30,256
    
    
    
    32,923
    
    
    
    33,759Income before income
tax expense
    
    
    98,929
    
    
    
    102,676
    
    
    
    120,666
    
    
    
    120,102Income tax expense
    
    
    37,000
    
    
    
    38,385
    
    
    
    45,635
    
    
    
    45,298Net income
    
    $
    61,929
    
    
    $
    64,291
    
    
    $
    75,031
    
    
    $
    74,804Basic earnings per share
    
    $
    0.11
    
    
    $
    0.11
    
    
    $
    0.13
    
    
    $
    0.13Diluted earnings per share
    
    $
    0.11
    
    
    $
    0.11
    
    
    $
    0.13
    
    
    $
    0.13
 2004 Quarter EndedMarch 31
    
    
    June 30
    
    
    September 30
    
    
    December 31(In thousands, except per share data)Interest  and dividend income
    
    $
    213,027
    
    
    $
    220,791
    
    
    $
    234,261
    
    
    $
    246,979Interest expense
    
    
    97,488
    
    
    
    101,831
    
    
    
    110,293
    
    
    
    120,454Net interest income
    
    
    115,539
    
    
    
    118,960
    
    
    
    123,968
    
    
    
    126,525Provision for loan losses
    
    
    225
    
    
    
    225
    
    
    
    225
    
    
    
    115Net interest income after
provision for loan losses
    
    
    115,314
    
    
    
    118,735
    
    
    
    123,743
    
    
    
    126,410Non-interest income
    
    
    3,631
    
    
    
    3,916
    
    
    
    4,899
    
    
    
    4,111Non-interest expense
    
    
    29,053
    
    
    
    29,184
    
    
    
    28,888
    
    
    
    31,223Income before income
tax expense
    
    
    89,892
    
    
    
    93,467
    
    
    
    99,754
    
    
    
    99,298Income tax expense
    
    
    33,663
    
    
    
    35,049
    
    
    
    37,734
    
    
    
    36,699Net income
    
    $
    56,229
    
    
    $
    58,418
    
    
    $
    62,020
    
    
    $
    62,599Basic earnings per share
    
    $
    0.10
    
    
    $
    0.10
    
    
    $
    0.11
    
    
    $
    0.11Diluted earnings per share
    
    $
    0.09
    
    
    $
    0.10
    
    
    $
    0.11
    
    
    $
    0.11
 Page 129




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18. Earnings Per Share
  For the Year Ended December 31,2005
    
    
    2004
    
    
    2003Per
    
    
    
    
    
    
    
    
    
    
    Per
    
    
    
    
    
    
    
    
    
    
    PerShare
    
    
    
    
    
    
    
    
    
    
    Share
    
    
    
    
    
    
    
    
    
    
    ShareIncome
    
    
    Shares
    
    
    Amount
    
    
    Income
    
    
    Shares
    
    
    Amount
    
    
    Income
    
    
    Shares
    
    
    Amount(In thousands, except per share data)Net income
    
    $
    276,055
    
    
    
    
    
    
    
    
    
    
    $
    239,266
    
    
    
    
    
    
    
    
    
    
    $
    207,410Basic earnings per share:Income available to
common
stockholders
    
    $
    276,055
    
    
    
    567,789
    
    
    $
    0.49
    
    
    $
    239,266
    
    
    
    576,621
    
    
    $
    0.41
    
    
    $
    207,410
    
    
    
    585,316
    
    
    $
    0.35Effect of dilutive common
stock equivalents
    
    
    
    
    
    
    13,274
    
    
    
    
    
    
    
    
    
    
    
    16,380
    
    
    
    
    
    
    
    
    
    
    
    16,366Diluted earnings per share:Income available to
common
stockholders
    
    $
    276,055
    
    
    
    581,063
    
    
    $
    0.48
    
    
    $
    239,266
    
    
    
    593,001
    
    
    $
    0.40
    
    
    $
    207,410
    
    
    
    601,682
    
    
    $
    0.34
 19. Recent Accounting Pronouncements
   Page 130




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Page 131




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20. Subsequent Event
  Page 132




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Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosures.
  
 Item 9A. Controls and Procedures.
 Evaluation of Disclosure Controls and Procedures
 Rule 13a-15(e)
 Management Report on Internal Control Over Financial Reporting
    Internal
Control-Integrated Framework
  Page 133




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Changes in Internal Control Over Financial Reporting
  
 Item 9B. Other Information.
  Page 134




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PART III
 
 Item 10. Directors and Executive Officers of the Company.
  Audit Committee Financial Expert
  Code of Ethics
  
 Item 11. Executive Compensation.
  
 Item 12. Security Ownership of Certain Beneficial Owners and Management.
  
 Item 13. Certain Relationships and Related Transactions.
  Page 135




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Item 14. Principal Accounting Fees and Services.
  Page 136




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PART IV
 
 Item 15. Exhibits, Financial Statement Schedules
 (a)
    
    List of Documents Filed as Part of this Annual Report on Form 10-K
 (1)
    
    The following consolidated financial statements are in Item 8 of
this annual report:
 
    
    Reports of Independent Registered Public Accounting Firm
    
    Consolidated Statements of Financial Condition as of December 31,
2005 and 2004
    
    Consolidated Statements of Income for the years ended December 31,
2005, 2004 and 2003
    
    Consolidated Statements of Changes in Stockholders Equity for the
years ended December 31, 2005, 2004 and 2003
    
    Consolidated Statements of Cash Flows for the years ended
December 31, 2005, 2004 and 2003
    
    Notes to Consolidated Financial Statements
 (2)
    
    Financial Statement Schedules have been omitted because they are
not applicable or the required information is shown in the Consolidated
Financial Statements or Notes thereto in Item 8 of this annual report.
 (b)
    
    Exhibits Required by Item 601 of Regulation S-K
 Page 137




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EXHIBIT
    
    DESCRIPTION2.1
    
    Amended and Restated Plan of Conversion and Reorganization of Hudson City, MHC, Hudson City
Bancorp, Inc. and Hudson City Savings Bank (1)2.2
    
    Agreement and Plan of Merger, dated February 8, 2006, by and between Hudson City Bancorp,
Inc. and Sound Federal Bancorp, Inc. (2)3.1
    
    Certificate of Incorporation of Hudson City Bancorp, Inc. (3)3.2
    
    Amended and Restated Bylaws of Hudson City Bancorp, Inc. (4)4.1
    
    Certificate of Incorporation of Hudson City Bancorp, Inc. (See Exhibit 3.1)4.2
    
    Amended and Restated Bylaws of Hudson City Bancorp, Inc. (See Exhibit 3.2)4.3
    
    Form of Stock Certificate of Hudson City Bancorp, Inc. (3)10.1
    
    Employee Stock Ownership Plan of Hudson City Savings Bank (Incorporating amendments No.
1,2,3,4,and 5) (5)10.2
    
    Profit Incentive Bonus Plan of Hudson City Savings Bank (5)10.3
    
    Supplementary Savings Plan of Hudson City Savings Bank (3)10.4
    
    Form of One-Year Change in Control Agreement by and among Hudson City Savings Bank and
Hudson City Bancorp, Inc. and certain officers (3)10.5
    
    Form of Two-Year Change in Control Agreement by and among Hudson City Savings Bank and
Hudson City Bancorp, Inc. and certain officers (5)10.6
    
    Severance Pay Plan of Hudson City Savings Bank (3)10.7
    
    ESOP Restoration Plan of Hudson City Savings Bank (Incorporating Amendment No.1) (5)10.8
    
    Hudson City Savings Bank Outside Directors Consultation Plan (3)10.9
    
    Hudson City Savings Bank Supplemental Executive Retirement Plan (3)10.10
    
    Hudson City Bancorp, Inc. 2000 Stock Option Plan (6)10.11
    
    Hudson City Bancorp, Inc. 2000 Recognition and Retention Plan (6)10.12
    
    Hudson City Bancorp, Inc. Denis J. Salamone Restricted Stock Award Plan (7)10.13
    
    Hudson City Bancorp, Inc. Denis J. Salamone Stock Option Plan (7)10.14
    
    Hudson City Bancorp, Inc. 2004 Employment Inducement Stock Program with Ronald E. Butkovich
(8)10.15
    
    Hudson City Bancorp, Inc. 2004 Employment Inducement Stock Program with Christopher
Nettleton (8)10.16
    
    Hudson City Savings Bank Post Retirement Death Benefit for Senior Officers between Hudson
City Savings Bank and Ronald E. Hermance, Jr. (5)10.17
    
    Hudson City Savings Bank Post Retirement Death Benefit for Senior Officers between Hudson
City Savings Bank and Leonard S. Gudelski (5)10.18
    
    Hudson City Savings Bank Post Retirement Death Benefit for Senior Officers between Hudson
City Savings Bank and Denis J. Salamone (5)10.19
    
    Hudson City Savings Bank Post Retirement Death Benefit for Senior Officers between Hudson
City Savings Bank and John M. Tassillo (5)10.20
    
    Hudson City Savings Bank Post Retirement Death Benefit for Senior Officers between Hudson
City Savings Bank and James C. Kranz (5)10.21
    
    Amended and Restated Employment Agreement between Hudson City Bancorp, Inc. and Ronald E.
Hermance, Jr. (*)10.22
    
    Amended and Restated Employment Agreement between Hudson City Savings Bank and Ronald E.
Hermance, Jr. (*)10.23
    
    Amended and Restated Employment Agreement between Hudson City Bancorp, Inc. and John
M. Tassillo (*)10.24
    
    Amended and Restated Employment Agreement between Hudson City Savings Bank and John M.
Tassillo (*)10.25
    
    Amended and Restated Employment Agreement between Hudson City Bancorp, Inc. and Denis J.
Salamone (*)10.26
    
    Amended and Restated Employment Agreement between Hudson City Savings Bank and Denis J.
Salamone (*)10.27
    
    Executive Officer Annual Incentive Plan of Hudson City Savings Bank (*)10.28
    
    Amended and Restated Loan Agreement by and between Employee Stock Ownership Plan Trust of
Hudson City Savings Bank and Hudson City Bancorp, Inc. (*)10.29
    
    Amended and Restated Promissory Note between Employee Stock Ownership Plan Trust and Hudson
City Bancorp, Inc. (*)
 Page 138




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EXHIBIT
    
    DESCRIPTION10.30
    
    Amended and Restated Pledge Agreement by and between Employee Stock Ownership Plan Trust of
Hudson City Savings Bank and Hudson City Bancorp, Inc. (*)10.31
    
    Form of Amended and Restated Assignment between Employee Stock Ownership Plan Trust and
Hudson City Bancorp, Inc. (*)10.32
    
    Loan Agreement by and between Employee Stock Ownership Plan Trust of Hudson City Savings
Bank and Hudson City Bancorp, Inc. (*)10.33
    
    Promissory Note between Employee Stock Ownership Plan Trust and Hudson City Bancorp, Inc. (*)10.34
    
    Pledge Agreement by and between Employee Stock Ownership Plan Trust of Hudson City Savings
Bank and Hudson City Bancorp, Inc. (*)10.35
    
    Form of Assignment between Employee Stock Ownership Plan Trust and Hudson City Bancorp, Inc.
(*)11.1
    
    Statement Re: Computation of Per Share Earnings21.1
    
    Subsidiaries of Hudson City Bancorp, Inc.23.1
    
    Consent of KPMG LLP (9)31.1
    
    Certification of Disclosure of Ronald E. Hermance, Jr.31.2
    
    Certification of Disclosure of Denis J. Salamone32.1
    
    Statement Furnished Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C.
Section 1350
 
 (1)
    
    Incorporated herein by reference to the Exhibits to the Registrants Registration Statement No. 333-122989 on Form S-3
filed with the Securities and Exchange Commission on February 25, 2005, as amended.(2)
    
    Incorporated herein by reference to the Exhibits to the Registrants Current Report on Form 8-K filed with the
Securities and Exchange Commission on February 10, 2006.(3)
    
    Incorporated herein by reference to the Exhibits to the Registrants Registration Statement No. 333-74383 on Form S-1,
filed with the Securities and Exchange Commission on March 15, 1999, as amended.(4)
    
    Incorporated herein by reference to the Exhibits to the Registrants Current Report on Form 8-K filed with the
Securities and Exchange Commission on January 27, 2003.(5)
    
    Incorporated herein by reference to the Exhibits to the Registrants Annual Report on Form 10-K for the fiscal year
ended December 31, 2004 filed with the Securities and Exchange Commission on February 25, 2005.(6)
    
    Incorporated herein by reference to the Exhibits to the Registrants Registration Statement No. 333-95193 on Form S-8,
filed with the Securities and Exchange Commission on January 21, 2000.(7)
    
    Incorporated herein by reference to the Exhibits to the Registrants Annual Report on Form 10-K for the fiscal year
ended December 31, 2001 filed with the Securities and Exchange Commission on March 28, 2002.(8)
    
    Incorporated herein by reference to the Exhibits to the Registrants Registration Statement No. 333-114536 on Form S-8,
filed with the Securities and Exchange Commission on April 16, 2004.(9)
    
    Submitted only with filing in electronic format.(*)
    
    Filed herewith. Page 139




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SIGNATURES
  Hudson City Bancorp, Inc.By:
    /s/ Ronald E. Hermance, Jr.Ronald E. Hermance, Jr.Chairman, President and Chief Executive Officer
(principal executive officer)By:
    /s/ Denis J. SalamoneDenis J. Salamone
Senior Executive Vice President and
Chief Operating Officer
(principal financial and accounting officer) Page 140




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NAME
    
    TITLE
    
    DATE/s/ Ronald E. Hermance, Jr.
 Ronald
E. Hermance, Jr.
    
    Director, Chairman, President and
Chief Executive Officer
(principal executive officer)
    
    March 14, 2006/s/ Denis J. Salamone
 Denis
J. Salamone
    
    Director, Senior Executive Vice President and
Chief Operating Officer (principal financial
and accounting officer)
    
    March 14, 2006/s/ Michael W. Azzara
 Michael
W. Azzara
    
    Director
    
    March 14, 2006/s/ William G. Bardel
 William
G. Bardel
    
    Director
    
    March 14, 2006/s/ Scott A. Belair
 Scott
A. Belair
    
    Director
    
    March 14, 2006/s/ John D. Birchby
 John
D. Birchby
    
    Director
    
    March 14, 2006/s/ Victoria H. Bruni
 Victoria
H. Bruni
    
    Director
    
    March 14, 2006/s/ William J. Cosgrove
 William
J. Cosgrove
    
    Director
    
    March 14, 2006/s/ Andrew J. Egner, Jr.
 Andrew
J. Egner, Jr.
    
    Director
    
    March 14, 2006/s/ Leonard S. Gudelski
 Leonard
S. Gudelski
    
    Director
    
    March 14, 2006/s/ Donald O. Quest
 Donald
O. Quest
    
    Director
    
    March 14, 2006/s/ Joseph G. Sponholz
 Joseph
G. Sponholz
    
    Director
    
    March 14, 2006
 Page 141