<PAGE>   1


                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

(Mark one)
[x ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND
     EXCHANGE ACT OF 1934

                  For the quarterly period ended March 31, 2001

                                       OR

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

                           Commission File No. 1-12655

                          HOMESIDE INTERNATIONAL, INC.
                          ----------------------------
             (Exact name of registrant as specified in its charter)

<TABLE>
<S>                                                                                       <C>
                        DELAWARE                                                                     59-3387041
                        --------                                                                     ----------
(State or other jurisdiction of incorporation or organization)                            (I.R.S. Employer Identification No.)
</TABLE>


                   7301 BAYMEADOWS WAY, JACKSONVILLE, FL 32256
                   -------------------------------------------
               (Address of principal executive offices) (Zip Code)

                                 (904) 281-3000
                                 --------------
              (Registrant's telephone number, including area code)



Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [x] No [_]




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

<TABLE>
<CAPTION>
           Class                                                      Outstanding at May 15, 2001
           -----                                                      ---------------------------
<S>                                                                   <C>
Common stock $0.01 par value                                                       1
Class C non-voting common stock $1.00 par value                                   none
</TABLE>
<PAGE>   2
                              FINANCIAL INFORMATION

ITEM 1.  Financial Statements


                          HOMESIDE INTERNATIONAL, INC.
                           CONSOLIDATED BALANCE SHEETS
                                   (UNAUDITED)
                    (DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)


<TABLE>
<CAPTION>
                                                                                         MARCH 31, 2001       SEPTEMBER 30, 2000
                                                                                         --------------       ------------------
<S>                                                                                      <C>                  <C>
ASSETS

Cash and cash equivalents                                                                  $   190,501             $  110,737
Mortgage loans held for sale, net                                                            1,614,909              1,441,216
Mortgage servicing rights, net                                                               4,362,340              4,464,312
Risk management instruments at fair value, net                                                 260,806                     --
Early pool buyout advances                                                                     143,418                141,255
Accounts receivable, net                                                                       322,318                324,028
Premises and equipment, net                                                                     83,461                 80,052
Goodwill, net                                                                                  594,448                612,018
Other assets                                                                                   137,995                 93,415
                                                                                           -----------             ----------
Total Assets                                                                               $ 7,710,196             $7,267,033
                                                                                           ===========             ==========


LIABILITIES AND STOCKHOLDER'S EQUITY


Accounts payable and accrued liabilities                                                   $   704,012             $  587,275
Notes payable                                                                                3,334,500              3,235,400
Long-term debt                                                                               2,171,569              1,899,772
Deferred income taxes, net                                                                     270,272                271,369
                                                                                           -----------             ----------
Total Liabilities                                                                            6,480,353              5,993,816
                                                                                           -----------             ----------

Stockholder's Equity:
Common stock:

     Common stock, $.01 par value, 100 shares authorized and 1 share issued and
         Outstanding
     Class C non-voting common stock, $1.00 par value, 195,000 shares
         authorized, and 0 shares issued and outstanding                                            --                     --
Additional paid-in capital                                                                   1,231,302              1,231,302
Retained earnings                                                                                 (907)                41,915
Accumulated other comprehensive income                                                            (552)                    --
                                                                                           -----------             ----------

Total Stockholder's Equity                                                                   1,229,843              1,273,217
                                                                                           -----------             ----------

Total Liabilities and Stockholder's Equity                                                 $ 7,710,196             $7,267,033
                                                                                           ===========             ==========
</TABLE>


   The accompanying notes are an integral part of these financial statements.


                                       2
<PAGE>   3
                          HOMESIDE INTERNATIONAL, INC.
           CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
                                   (UNAUDITED)
                             (DOLLARS IN THOUSANDS)


<TABLE>
<CAPTION>
                                                            FOR THE THREE      FOR THE THREE     FOR THE SIX      FOR THE SIX
                                                             MONTHS ENDED       MONTHS ENDED     MONTHS ENDED     MONTHS ENDED
                                                            MARCH 31, 2001     MARCH 31, 2000    MARCH 31, 2001   MARCH 31, 2000
                                                            --------------     --------------    --------------   --------------
<S>                                                         <C>                <C>               <C>              <C>
REVENUES:

Mortgage servicing fees                                        $ 220,255         $ 185,629         $ 428,453         $ 356,827
Amortization of mortgage servicing  rights                      (135,392)         (102,659)         (255,654)         (200,187)
                                                               ---------         ---------         ---------         ---------
    Net servicing revenue                                         84,863            82,970           172,799           156,640

Interest income                                                   29,150            30,107            57,834            66,272
Interest expense                                                 (47,927)          (43,015)          (95,808)          (78,587)
                                                               ---------         ---------         ---------         ---------
    Net interest (expense)                                       (18,777)          (12,908)          (37,974)          (12,315)

Net mortgage origination revenue                                  33,850            21,900            55,963            38,908
Other income                                                       2,134             1,248             8,293             2,111
                                                               ---------         ---------         ---------         ---------
    Total Revenues                                               102,070            93,210           199,081           185,344

EXPENSES:

Salaries and employee benefits                                    32,642            25,870            62,520            55,688
Occupancy and equipment                                            9,369             7,719            19,207            16,269
Servicing losses on investor-owned loans                           8,109             7,386            18,200            15,754
   and foreclosure-related expenses
Other expenses                                                    15,675             9,315            35,032            22,676
                                                               ---------         ---------         ---------         ---------
    Total Expenses                                                65,795            50,290           134,959           110,387

NET OPERATING REVENUE BEFORE RISK MANAGEMENT
RESULTS (SFAS 133), PROVISION FOR MORTGAGE
SERVICING RIGHTS, AND GOODWILL AMORTIZATION                       36,275            42,920            64,122            74,957

Goodwill amortization                                             (8,785)           (8,974)          (17,570)          (17,948)
Risk management results (SFAS 133) and
provision for mortgage servicing rights                          (74,734)               --           (67,532)               --
                                                               ---------         ---------         ---------         ---------
(Loss) income before income taxes and cumulative
effect of a change in accounting principle                       (47,244)           33,946           (20,980)           57,009
Income tax (benefit) expense                                     (14,056)           15,666            (1,275)           20,559
                                                               ---------         ---------         ---------         ---------
(Loss) income before cumulative effect of a change in
accounting principle                                             (33,188)           18,280           (19,705)           36,450

Cumulative effect of a change in accounting for
derivative instruments and hedging activities, net of
income tax expense of $507                                            --                --               883                --
                                                               ---------         ---------         ---------         ---------
NET (LOSS) INCOME                                                (33,188)           18,280           (18,822)           36,450
Other comprehensive income, net of tax:
      Cumulative effect of a change in accounting
      for derivative instruments and hedging activities               --                --            (9,133)               --
      Net gains/(losses) on current period cash flow               2,376                --              (539)               --
      Less: reclassification adjustment for losses
      included in net income                                          38                --             9,120                --
                                                               ---------         ---------         ---------         ---------
Other comprehensive income                                         2,414                --              (552)
                                                               ---------         ---------         ---------         ---------
COMPREHENSIVE (LOSS) INCOME                                    $ (30,774)        $  18,280         $ (19,374)        $  36,450
                                                               =========         =========         =========         =========
</TABLE>


   The accompanying notes are an integral part of these financial statements.


                                       3
<PAGE>   4
                          HOMESIDE INTERNATIONAL, INC.
                      CONSOLIDATED STATEMENT OF CASH FLOWS
                                   (UNAUDITED)

                             (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                 FOR THE THREE     FOR THE THREE      FOR THE SIX     FOR THE SIX
                                                                  MONTHS ENDED      MONTHS ENDED     MONTHS ENDED    MONTHS ENDED
                                                                 MARCH 31, 2001    MARCH 31, 2000    MARCH 31, 2001  MARCH 31, 2000
                                                                  --------------   --------------    --------------  --------------
<S>                                                              <C>             <C>              <C>              <C>
CASH FLOWS  (USED IN) PROVIDED BY OPERATING
ACTIVITIES AND RISK MANAGEMENT RESULTS:

Net (loss) income                                                $ (33,188)       $  18,280        $ (18,822)       $  36,450
Adjustments to reconcile net income to net cash (used in)
  provided by operating activities and risk management
  results:
  Amortization  of mortgage servicing rights                       135,392          102,659          255,654          200,187
  Depreciation and amortization                                     12,701           11,546           24,973           23,029
  Cumulative effect of a change in accounting for
     derivative instruments and hedging activities, net                 --               --             (883)              --
  Change in fair value of net hedged assets                        226,076               --          576,474               --
  Change in fair value of derivative contracts                    (181,845)              --         (547,317)              --
  Valuation provision                                                5,500               --           16,000               --
  Servicing losses on investor-owned loans                             479            2,674            4,039            5,204
  Change in deferred income tax liability                           11,194           17,715           21,355           22,612
  Origination, purchase and sale of loans held for sale,
    net of repayments                                             (287,473)         412,154         (162,447)         524,488
  Change in accounts receivable                                     10,323           (3,528)          (2,799)         (39,297)
  Change in other assets and accounts payable and
     accrued liabilities                                           (10,228)         (45,909)         126,456          (54,545)
                                                                 ---------        ---------        ---------        ---------

Net cash (used in) provided by operating activities and
  risk management results                                         (111,069)         515,591          292,683          718,124

CASH FLOWS USED IN INVESTING ACTIVITIES:

Purchase of premises and equipment, net                             (5,603)          (7,192)         (11,685)         (13,443)
Acquisition of mortgage servicing rights                          (297,401)        (123,255)        (734,786)        (358,174)
Net purchase of risk management contracts                          167,850         (414,032)         213,455         (552,839)
Net early pool buyout reimbursements                               (16,961)          28,184           (2,551)         123,180
                                                                 ---------        ---------        ---------        ---------
Net cash used in investing activities                             (152,115)        (516,295)        (535,567)        (801,276)

CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES:

Net borrowings (repayments to) from  banks                         160,500         (559,398)          99,100          (64,799)
Net issuance of commercial paper                                   235,000          318,743               --          336,097
Issuance of medium-term notes                                           --               --          250,000               --
Payment of debt issue costs                                           (755)            (249)          (2,291)          (2,371)
Repayment of long-term debt                                            (82)         (60,223)            (161)         (60,444)
Dividends paid to the National                                          --               --          (24,000)         (24,000)
                                                                 ---------        ---------        ---------        ---------
Net cash provided by (used in) financing activities                394,663         (301,127)         322,648          184,483

Net increase (decrease) in cash and cash equivalents               131,479         (301,831)          79,764          101,331
Cash and cash equivalents at beginning of period                    59,022          606,021          110,737          202,859
                                                                 ---------        ---------        ---------        ---------

Cash and cash equivalents at end of period                       $ 190,501        $ 304,190        $ 190,501        $ 304,190
                                                                 =========        =========        =========        =========
Supplemental disclosure of cash flow information:
Interest paid                                                    $  58,656        $  43,063        $ 109,474        $  75,489
Income taxes paid                                                $      21        $     339        $      23        $     342
Income taxes refunded                                                   --        $   2,388        $      14        $   2,395
Impact of cash flow hedges on other comprehensive income, net    $   2,414               --        $    (552)              --
</TABLE>


   The accompanying notes are an integral part of these financial statements.


                                       4
<PAGE>   5
                          HOMESIDE INTERNATIONAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

1.  BASIS OF PRESENTATION

The accompanying consolidated financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Rule 10-01 of Regulation
S-X. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments (consisting of normal
recurring adjustments) considered necessary for a fair presentation have been
included.

Operating results for the three- and six-month periods ended March 31, 2001 and
March 31, 2000 are not necessarily indicative of the results that may be
expected for the fiscal period ending September 30, 2001. For further
information, refer to the consolidated financial statements and footnotes
thereto included in the Form 10-K for the fiscal year ended September 30, 2000
of HomeSide International, Inc. ("HomeSide or the "Company").

2. CASH AND CASH EQUIVALENTS

Cash and cash equivalents include cash on hand and cash due from banks and
interest-bearing deposits with an original maturity of three months or less.
Margin deposits associated with the risk management program for mortgage
servicing rights are maintained with counterparties and the Company in
accordance with the requirements of International Swap Dealer Agreements. At
March 31, 2001 counterparty net margin deposits with the Company were
approximately $94.7 million. At September 30, 2000, the Company's net margin
deposits with counterparties totaled approximately $84.0 million

3. MORTGAGE SERVICING RIGHTS

The change in the balance of mortgage servicing rights was as follows (in
thousands):

<TABLE>
<S>                                             <C>
Balance, September 30, 2000                     $4,464,312
Additions                                          734,786
Change in value due to hedged risk                (565,104)
Amortization                                      (255,654)
Valuation provision                                (16,000)
                                                ----------
Balance, March 31, 2001                         $4,362,340
                                                ==========
</TABLE>


4. RISK MANAGEMENT AND THE ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING
ACTIVITIES

The Company has developed risk management programs and processes designed to
manage market risk associated with the Company's business activities. As more
fully described herein, interest rate risk is a predominant risk that further
influences a number of other business risks such as pricing risk, prepayment
risk, valuation risk, balance sheet management and funding risk. As part of its
risk management programs, the Company utilizes a number of derivative
instruments to manage these risks.

In June of 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities" (SFAS 133). SFAS 133, as amended, standardizes the
accounting for derivative instruments and hedging activities and requires that
all derivative instruments be recognized as assets and liabilities at fair
value. If certain conditions are met, "hedge accounting" may be applied and the
derivative instruments may be specifically designated as: (a) a hedge of the
exposure to changes in the fair value of a recognized asset or liability or an
unrecognized firm commitment ("fair value hedge"), (b) a hedge of the exposure
to variability of cash flows of a recognized asset, liability or forecasted
transaction ("cash flow hedge") or (c) a hedge of certain foreign currency
exposures. In the case of a qualifying fair value hedge, changes in the value of
the derivative instruments that have been highly effective are recognized in
current earnings along with the change in value of the designated hedge item. In
the case


                                       5
<PAGE>   6
of a qualifying cash flow hedge, changes in the value of the derivative
instruments that have been highly effective are recognized in other
comprehensive income ("OCI"), until such time that earnings are affected by the
cash flows of the underlying hedged item. In either a fair value hedge or a cash
flow hedge, net earnings are impacted to the extent the changes in the value of
the derivative instruments do not perfectly offset the changes in the value of
the hedge items (so called "ineffectiveness"). Derivative instruments that are
non-designated or do not meet the relevant hedge accounting criteria are
accounted for at fair value with gains and losses recorded to current earnings.
The Company is not a party to any foreign currency hedge relationships.

Effective with its first fiscal quarter beginning October 1, 2000, the Company
adopted SFAS 133 as required. Accordingly, all derivative instruments are
recognized on balance sheet at fair value and are either designated as fair
value hedges, cash flow hedges, or are non-designated pursuant to the Company's
risk management policies. At October 1, 2000, the Company recognized a
cumulative-effect transition adjustment of $1.4 million to increase pre-tax
income for the effect of the change in accounting principle. Additionally, the
Company recognized a pre-tax cumulative-effect transition adjustment to reduce
OCI by $14.4 million. The transition adjustments are more fully explained in the
following sections along with the risk management activities and hedge
accounting results for the three months and six months ended March 31, 2001. The
impact of the accounting for risk management activities pursuant to SFAS 133 is
expected to create a level of ongoing volatility in reported financial results.
The impact of SFAS 133 for the three- and six-month periods ended March 31, 2001
is included in the caption titled "Risk management results (SFAS 133) and
provision for mortgage servicing rights" in the accompanying consolidated
statements of income.

Risk Management of Loan Production Activities

Loan production activities include the origination or acquisition of mortgage
loans, the warehousing of those loans in inventory and the resale of those loans
to investors in the secondary mortgage market. The Company maintains a risk
management program to protect and manage interest rate risk and pricing risk
associated with its mortgage committed pipeline and mortgage inventory. The
Company does not presently originate or acquire loans for investment (portfolio)
purposes.

Mortgage Pipeline

The Company's mortgage committed pipeline includes interest rate lock
commitments ("IRLCs") that have been extended to borrowers who have applied for
loan funding and meet certain defined credit and underwriting criteria. All of
the Company's IRLCs will be classified as held for sale upon funding of the
underlying loan. Effective with the adoption of SFAS 133, the Company classifies
and accounts for IRLCs as non-designated derivative instruments. Accordingly,
IRLCs are recorded at fair value with changes in value recorded to current
earnings. Risk management derivative contracts used to economically hedge the
IRLCs are also classified and accounted for as non-designated derivatives. In
summary, since a derivative instrument cannot hedge another derivative
instrument (for accounting purposes) the pipeline is effectively accounted for
as a mark-to-market book of business.

The fair value of the Company's IRLCs generally approximate zero at inception
(the lock-in date) since the Company's practice is to extend loan commitments at
market rates of interest and to exclude from its fair value calculation the
normal profit margin associated with the future loan execution. The future loan
execution involves the sale of the loan and, typically, the retention of the
servicing rights. IRLCs have value characteristics that are somewhat analogous
to certain option contracts in that the commitments tend to: (i) decrease in
value at an accelerating rate as interest rates increase and the probability of
the borrower's loan closing increases, and (ii) increase in value at a
decelerating rate as interest rates decline and the probability of the
borrower's loan closing decreases. The Company manages the interest rate and
pricing risks associated with its IRLCs by using mortgage forward delivery
contracts, options on mortgage-backed securities and certain treasury
instruments. The Company's risk management program employs the use of financial
modeling to maintain a high degree of economic correlation between the changes
in values of the IRLCs and the related non-designated derivatives. However, due
to imprecisions in projecting the timing and rate of loan closings (which are
influenced by borrower behavior), some level of economic ineffectiveness can be
expected.

Following is a summary of the net gains/(losses) recognized on non-designated
risk management derivatives related to the pipeline at March 31, 2001 (in
thousands):


                                       6
<PAGE>   7
<TABLE>
<CAPTION>
                                                            For the three          For the six
                                                            months ended           months ended
                                                           March 31, 2001        March 31, 2001
                                                           --------------        --------------
<S>                                                        <C>                  <C>
Gains on IRLCs recognized to income                           $ 16,184             $ 33,876

Losses on mortgage forward delivery contracts                   (9,549)             (23,367)
Losses on options contracts                                     (1,125)              (2,671)
   Total losses recognized to income                           (10,674)             (26,038)
                                                              --------             --------

Net gains recognized on non-designated derivatives            $  5,510             $  7,838
                                                              ========             ========
</TABLE>

Gains on interest rate lock commitments represent increases in the value of the
commitments from the rate-lock inception date to the loan funding date (for
those commitments that are funded), or to the current reporting date for those
IRLCs that are open at March 31, 2001. The basis of the IRLCs at the loan
funding date, representing cumulative gains or losses on the IRLCs, is included
as a component of the initial cost basis of the loans. Approximately $7.7
million of the gains recognized on IRLCs (reported for the three months ended
March 31, 2001, above) were applied to the initial basis of the underlying loans
funded and are included in the carrying amount of loans held for sale at March
31, 2001. The balance of the gains totaling $8.5 million are recognized as open
derivative contracts at March 31, 2001 and are recorded at fair value in the
consolidated balance sheets. The net gains and losses on non-designated risk
management derivatives (related to the pipeline) are included as a component of
the risk management results in the accompanying consolidated statements of
income.

Mortgage Inventory

The Company's mortgage inventory includes closed loans that are held for resale
pending completion of normal post-closing review, collateral document
preparation and other pooling requirements necessary to consummate the sale
and/or securitization. Based on the status of such, as well as historical
delivery patterns and investor settlement dates, the Company is able to forecast
the amount and timing of loan sales. Approximately $1.50 billion of the
Company's loans at March 31, 2001 are conforming loans which have been
underwritten pursuant to the requirements of the secondary marketing agencies
(FNMA, FHLMC or GNMA as appropriate). The Company's risk management program
involves the use of mortgage forward delivery contracts to hedge 100% of its
agency-eligible conforming loans as forecasted loan sales. At March 31, 2001, a
total of $1.50 billion of mortgage forward delivery contracts were designated as
cash flow hedges. At the inception of the hedge, the Company formally documents
the relationship between the forward delivery contracts and the forecasted loan
sales as well as its risk management objective and strategy for undertaking the
hedge transactions. The dollar amount of the forward delivery contracts along
with the underlying rate and terms of the contracts are equivalent to the
forecasted loan sales that are probable of occurring. Hence, the forward
delivery contracts effectively fix the forward sales price and thereby
substantially eliminate interest rate and pricing risk to the Company.
Cumulative losses related to the hedge instruments in the amount of $0.9 million
were recorded in OCI at March 31, 2001 and will be reclassified to earnings
during the next 90 days, concurrent with the recognition in earnings of the
changes in cash flows of the forecasted loan sales. Pursuant to SFAS 133, the
unrealized gains (representing the expected offset from the variability in cash
flows) associated with the forecasted loan sales are not recorded in the
consolidated balance sheet at March 31, 2001 but are represented as a component
of the fair value of loans held for sale in excess of their carrying value.

Mortgage loans held for sale at March 31, 2001 include non-conforming loans
aggregating $112.4 million which will be sold to non-agency, private investors.
During the three- and six-month periods ended March 31, 2001, gains/(losses) of
$0.2 million and $(0.2) million, respectively, on non-designated mortgage
forward delivery contracts maintained as economic hedges of non-conforming loans
were recorded to earnings and are a component of risk management results in the
accompanying consolidated statements of income.


                                       7
<PAGE>   8
The fair values of risk management hedging relationships at March 31, 2001 are
as follows (in thousands):

<TABLE>
<S>                                                                <C>
Mortgage Pipeline:
IRLCs at period end                                                $     8,521
Non-designated mortgage forward delivery contracts                      (9,548)
Options on mortgage-backed securities                                    1,671
                                                                   -----------
   Total fair value of pipeline derivatives                                644

Mortgage Inventory:
Designated mortgage forward delivery contracts                            (869)
Non-designated mortgage forward delivery contracts                        (214)
                                                                   -----------
   Total fair value of derivatives related to inventory                 (1,083)

Net liability recorded for fair value derivatives                  $      (439)
                                                                   ===========

Carrying value of mortgage loans held for sale                     $ 1,614,909
Fair value of loans held for sale                                    1,618,779
                                                                   -----------
     Unrealized gains in mortgage inventory                        $     3,870
                                                                   ===========
</TABLE>


Transition Adjustments and Current Period Activity in OCI

As discussed above, the cumulative effect of the adoption of SFAS 133 was to
increase pre-tax net income by $1.4 million. This amount relates solely to the
mortgage pipeline at October 1, 2000 and represents the net effect of the
adjustments necessary to record IRLCs and the related non-designated derivatives
at fair value.

The pre-tax cumulative-effect transition adjustment to reduce OCI by $14.4
million relates solely to the hedging activities of the mortgage inventory at
October 1, 2000. Specifically, this amount represents the cumulative losses (to
September 30, 2000) of mortgage forward delivery contracts that were off-balance
sheet prior to the adoption of SFAS 133. Such cumulative losses did not exceed
cumulative unrealized gains in the designated mortgage inventory at October 1,
2000. Pursuant to the requirements of SFAS 133, cumulative losses in OCI of
$14.3 million were reclassified to earnings during the six-month period ended
March 31, 2001, concurrent with the recognition of the gains (or favorable
variability in cash flows) of the related forecasted loan sales that were
settled. Gains and losses on such hedge relationships related to settled
transactions are included as a component of net mortgage origination revenue in
the accompanying consolidated statements of income. Activity in OCI related to
cash flow hedges of forecasted loan sales is summarized as follows for the six
months ended March 31, 2001 (in thousands):


<TABLE>
<CAPTION>
                                                                                                    Tax
                                                                            Before-tax            (expense)            Net-of-tax
                                                                              Amount              or benefit            Amount
                                                                              ------              ----------            ------
<S>                                                                        <C>                    <C>                <C>
Balance at September 30, 2000                                                 $     --             $    --             $    --
Cumulative effect of a change in accounting for hedging activities             (14,383)              5,250              (9,133)
Net losses on current period cash flow hedge                                    (4,589)              1,674              (2,915)
Reclassification of  losses to net income                                       14,302              (5,220)              9,082
                                                                              --------             -------             -------
Balance at December 31, 2000                                                  $ (4,670)            $ 1,704             $(2,966)
Net gains on current period cash flow hedge                                      3,742              (1,366)              2,376
 Reclassification of net losses to net income                                       59                 (21)                 38
                                                                              --------             -------             -------

Balance at March 31, 2001                                                     $   (869)            $   317             $  (552)
                                                                              ========             =======             =======
</TABLE>


Risk Management of Mortgage Servicing Rights

HomeSide utilizes a number of risk management derivative instruments to manage
the interest rate risk associated with its mortgage servicing rights. Such
instruments include interest rate swaps, swaptions and caps, mortgage forward
delivery contracts, options on mortgage-backed securities, and options and
futures on exchange traded Treasury and Eurodollar contracts. Given the unique
value


                                       8
<PAGE>   9
determinants and convexity of mortgage servicing rights, management uses a
combination of derivative instruments to construct a hedge portfolio that is
intended to provide effective protection of the value of the Company's mortgage
servicing rights from interest rate risk.

Pursuant to the requirements of SFAS 133, mortgage servicing rights are
stratified into portfolios of similar assets based on their price sensitivity
such that the mortgage servicing rights in a given portfolio can be expected to
respond in a generally proportionate manner to the expected changes in the total
value of the designated portfolio. The Company uses vendor provided valuation
models to determine the price sensitivity of the mortgage servicing rights for
selected rate shock scenarios such that individual portfolios can be established
and qualify for hedge designation (hereinafter referred to as the "designated
portfolios"). Certain mortgage servicing rights with dissimilar value
determinants and unique convexity profiles may fail to meet the Company's price
sensitivity criteria and are excluded from the portfolios that are designated
for hedging (such portfolios are hereinafter referred to as "non-designated
portfolios").

The Company's risk-management derivative contracts are designated as fair value
hedges of the designated mortgage servicing rights (designated portfolios). As
permitted by SFAS 133, the "hedged risk" is defined and measured as the change
in value of the designated portfolios due to changes in benchmark interest
rates. For its monthly hedge periods in the three months and six months ended
March 31, 2001, the Company defined swap rates as the designated benchmark
interest rate. At the inception of the hedge period, the Company formally
documents the relationship between the hedging instruments and the hedged items
(representing the individual designated portfolios described above), as well as
its risk-management objective and strategy for undertaking the hedging
relationships. The Company employs statistical correlation techniques - both at
the inception of the hedge period and on an ongoing basis - to formally assess
its expectation that changes in the value of the derivative contracts will be
highly effective in offsetting changes in the value of the designated hedge
portfolios. In its assessment of hedge effectiveness, the Company excludes the
change in the value of the derivative contracts due to time decay (theta) which
is recorded to current earnings. During the three- and six-month periods ended
March 31, 2001, the Company's hedging relationships were highly effective.
Accordingly, the increase in the value of the designated derivative contracts
(net of excluded components) of $264.2 million and $634.6 million was recorded
to earnings along with the decrease in the value of the designated mortgage
servicing rights (due to the benchmark interest rate) of $217.2 million and
$565.1 million for the three- and six-month periods ended March 31, 2001,
respectively.

HomeSide's risk management program also employs the use of non-designated
derivative contracts that are used to provide a level of economic offset against
the value changes attributable to the non-designated portfolios that do not
qualify for hedge accounting treatment under SFAS 133. Additionally, the Company
is party to certain risk management strategies that are structured to mitigate
yield curve risk and to provide a level of economic offset to the time decay
(theta). These non-designated derivatives are marked-to-market with changes in
value recorded to earnings.

Risk management results related to mortgage servicing rights for the quarter
ended March 31, 2001 are summarized below and are included in the caption
entitled risk management results in the accompanying consolidated statements of
income (in thousands):

<TABLE>
<CAPTION>
                                                                            For the three        For the six
                                                                             months ended        months ended
                                                                            March 31, 2001      March 31, 2001
                                                                            --------------      --------------
<S>                                                                         <C>                <C>
Gains on risk management derivative contracts                                   $142,589           $508,061

Decrease in value of designated mortgage servicing rights                      (217,182)          (565,104)
</TABLE>

The fair value of the Company's derivative instruments used in the risk
management of mortgage servicing rights are as follows at March 31, 2001 (in
thousands):


<TABLE>
<S>                                                                               <C>
Derivatives designated as fair value hedges                                       $195,081

Non-designated derivatives related to non-designated portfolios                   $ 41,164
</TABLE>


Risk Management of Corporate Funding

To meet its funding requirements, the Company periodically issues fixed-rate,
medium-term notes which are converted to floating-rate debt as part of its
Corporate funding strategies. As of the three months and six months ended March
31, 2001, the Company had $750 million of fixed-rate, medium term notes that had
been swapped to floating rates of interest with $750 million in notional
interest rate swaps. The Company has designated the interest rate swaps as fair
value hedges of the change in value of the medium-term notes due to


                                       9
<PAGE>   10
LIBOR interest rates. At the inception of the hedge, the Company formally
documents the hedging relationships between the hedge instruments and the hedged
items, as well as the risk management objectives and strategy for undertaking
the hedge transactions. The medium-term notes are not prepayable and the key
terms of the interest rate swaps are equivalent to those of the medium-term
notes. Accordingly, the Company expects that changes in the value of the
interest rate swaps will offset the changes in the value of the fixed-rate debt
attributable to LIBOR interest rates. During the three months and six months
ended March 31, 2001, the value of the interest rate swap contracts increased by
$11.8 million and $25.2 million, respectively, and offset the changes in the
fair value of the medium-term notes due to the hedge risk. The fair value of
interest rate swap contracts designated as fair value hedges of medium-term
notes was $25.0 million at March 31, 2001.

Termination of Hedging Relationships

The Company employs a number of risk management monitoring procedures to ensure
that the designated hedging relationships are demonstrating, and are expected to
continue to demonstrate, a high level of effectiveness. Hedge accounting is
discontinued on a prospective basis if it is determined that the hedging
relationship is no longer effective or expected to be effective in offsetting
changes in the fair value or cash flows of the hedge item, or if a forecasted
transaction is no longer probable of occurring. When hedge accounting is
discontinued, the Company continues to carry the derivative instruments at fair
value with changes in their value recorded to earnings. However, in the case of
a fair value hedge that is discontinued, the carrying amount of the previously
hedged asset or liability may not be adjusted for changes in their fair value,
except in the case where a decline in fair value creates impairment to the
Company. In the case of a cash flow hedge of a forecasted transaction that is no
longer probable of occurring, gains and losses that were previously accumulated
in other comprehensive income are immediately recognized to earnings. During the
three months and six months ended March 31, 2001, no hedging relationships were
terminated.

Fair Value of Derivative Instruments

Derivative Contracts: The fair value of mortgage forward delivery contracts,
options on mortgage-backed securities and exchange traded futures and options on
Treasury and Eurodollar contracts are determined based on market quotes.
Interest rate swaps, swaptions and caps are determined based on discounted
valuation models and are periodically validated against dealer quotes.

Interest Rate Lock Commitments Classified as Derivatives: The fair value of
interest rate lock commitments is determined using a vendor provided valuation
model which references market quotes of the underlying mortgages. The valuation
model also considers a number of other key value determinants including the
remaining commitment period, the rate of the commitment in relation to current
market rates, interest rate volatility and the probability of the loan closing.
The probability of the loan closing is estimated based on historical
pull-through rates which are stored in matrix detail within the model database
by product type for an established set of interest rate shock scenarios. The
fair value of the Company's IRLCs generally approximate zero at inception (the
lock-in date) since the Company's practice is to extend loan commitments at
market rates of interest and to exclude from its fair value calculation the
normal profit margin associated with the future loan sale transactions.

Other Derivatives: The Company uses certain derivatives to economically hedge
the funding activities associated with government loans that are repurchased out
of GNMA (Government National Mortgage Association) pools that the Company has
previously sold. However, the Company does not designate a hedging relationship
for these derivatives for hedge accounting purposes. Accordingly, net losses on
these derivatives of $0.4 million and $0.7 million for the three months and six
months ended March 31, 2001, respectively, were recorded to income and are
included as a component of risk management results in the accompanying
consolidated statements of income.


                                       10
<PAGE>   11
5.       NOTES PAYABLE

Notes payable consist of the following (in thousands):

<TABLE>
<CAPTION>
                                                                               WEIGHTED AVERAGE INTEREST RATE
                                                    TOTAL OUTSTANDING         AT PERIOD END       DURING THE PERIOD
<S>                                                 <C>                       <C>                 <C>
March 31, 2001:
Commercial paper                                         $1,500,000                5.40%                   5.84%
National Australia Bank unsecured facility                1,834,500                5.41%                   6.00%
                                                         ----------
  Total                                                  $3,334,500
                                                         ==========

September 30, 2000:
Commercial Paper                                         $1,500,000                6.63%                   6.16%
National Australia Bank Unsecured Facility                1,735,400                6.70%                   6.25%
                                                         ----------
  Total                                                  $3,235,400
                                                         ==========
</TABLE>

HomeSide Lending, the Company's wholly-owned operating subsidiary, has
established a commercial paper program which is supported by an independent
syndicate of banks under a credit facility. On March 19, 2001 this commercial
paper program was increased from $1.5 billion to $2.0 billion. The weighted
average interest rates on commercial paper outstanding during the three- and
six-month periods ended March 31, 2001 were 5.84% and 6.24%, respectively. On
October 16, 2000, HomeSide Lending entered into a $1.5 billion back-up credit
facility. This agreement replaces HomeSide Lending's previous bank credit
facility and will terminate on October 15, 2002. Borrowings under the credit
facility bear interest at rates per annum, based on, at HomeSide Lending's
option, (i) the Eurodollar rate plus an applicable margin, (ii) the greater of
the federal funds rate plus an applicable margin or the prime rate, (iii) in the
case of swingline loans, the federal funds rate plus an applicable margin, or
(iv) in the case of competitive bid loans, the lowest competitive Eurodollar or
fixed rate submitted by a bidding lender. The primary purpose of this credit
facility is to provide liquidity back-up for HomeSide's commercial paper
program. The outstanding commercial paper reduces available borrowings under the
credit facility. At March 31, 2001, there were no amounts outstanding under the
credit facility.

HomeSide Lending's unsecured revolving credit facility with the National
provides short-term funding up to $2.5 billion, subject to limits imposed by the
National's regulatory authorities. As of March 31, 2001, the National's limit to
lend funds to HomeSide Lending, a non-bank affiliate, was approximately $2.0
billion. Borrowings under the credit facility may be overnight or for periods of
7,30,60 or 90 days. For overnight borrowings, the interest rate is determined by
the National at the time of the borrowing. For LIBOR - based borrowings, the
interest rate is charged at the corresponding LIBOR rate. The weighted average
interest rate on outstanding borrowings under this credit facility during the
three- and six-month periods ended March 31, 2001 were 6.00% and 6.35%,
respectively.

6. LONG-TERM DEBT

Medium-term notes

Effective February 16, 2001, HomeSide Lending registered an additional $1.0
billion in medium-term notes under a registration statement on Form S-3
(Registration Number 333-54684) filed with the Securities and Exchange
Commission. This effectively raised the medium-term note shelf registration to
$3.568 billion. As of March 31, 2001, outstanding medium-term notes issued by
HomeSide Lending under this shelf registration statement were as follows (in
thousands):


                                       11
<PAGE>   12
<TABLE>
<CAPTION>
         ISSUE DATE              OUTSTANDING BALANCE            COUPON RATE               MATURITY DATE
<S>                               <C>                           <C>                      <C>
June 30, 1997                         $  200,000                     6.88%                June 30,2002
June 30, 1997                             40,000                     6.82%                July 2,2001
July 1, 1997                              15,000                     6.86%                July 2,2001
July 31, 1997                            200,000                     6.75%                August 1,2004
September 15, 1997                        45,000                     6.77%                September 17,2001
April 23, 1998                           125,000                    5.79%*                April 24,2001
May 22, 1998                             225,000                     6.20%                May 15,2003
June 9, 2000                             215,000                    7.07%*                June 10,2002
June 9, 2000                             200,000                    6.89%*                Apri l9,2002
June 9, 2000                              85,000                    7.07%*                June 10,2002
August 1, 2000                            75,000                    6.97%*                August 1,2002
September 14, 2000                        75,000                    6.79%*                September 16,2002
September 14, 2000                        60,000                    6.94%*                September 15,2003
September 14, 2000                        25,000                     7.00%                September 16,2002
September 15, 2000                       100,000                    6.79%*                September 16,2002
September 15, 2000                        50,000                    6.86%*                September 16,2002
December 4, 2000                         125,000                    6.98%*                December 4,2002
December 4, 2000                          75,000                    6.98%*                December 4,2002
December 4, 2000                          50,000                    6.87%*                December 4,2002
                                      ----------
  Total                               $1,985,000
                                      ==========
</TABLE>

*  Represents initial interest rate for floating rate note

As of March 31, 2001, the outstanding fixed rate medium-term notes of $750
million had been effectively converted by interest rate swap agreements to
floating-rate notes. During the three months and six months ended March 31,
2001, the value of the interest rate swap contracts increased by $11.8 million
and $25.2 million, respectively, and offset the changes in the fair value of the
medium-term notes due to the hedge risk. The fair value of interest rate swap
contracts designated as fair value hedges of medium-term notes was $25.0 million
at March 31, 2001. See note 4. The weighted average borrowing rates on
medium-term borrowings issued for the three- and six-month periods ended March
31, 2001, including the effect of the interest rate swap agreements, were 6.22%
and 6.58%, respectively. Net proceeds from the issuances were primarily used to
reduce the amounts outstanding under the bank credit agreement, acquire
servicing rights, and fund loan originations.

Mortgage note payable

 In connection with the acquisition of BancBoston Mortgage Corporation, HomeSide
Lending assumed a mortgage note payable that is due in 2017 and bears interest
at a stated rate of 9.5%. HomeSide Lending's main office building is pledged as
collateral for the mortgage note payable. The balance of the mortgage payable at
March 31, 2001, including the fair value adjustments resulting from the merger
with the National, was $22.1 million.

11.25% Notes and Subsequent event

The Company issued $200.0 million of 11.25% notes (the "Notes") pursuant to the
terms of that certain Indenture dated as of May 14, 1996 (the "Indenture"). The
Notes mature on May 15, 2003, and pay interest semiannually in arrears on May 15
and November 15 of each year. The Notes are redeemable at the option of the
Company, in whole or in part, at any time on or after May 15, 2001, at certain
fixed redemption prices. On April 16, 2001 the Company issued a redemption
notice in accordance with the provisions of the Indenture notifying the holders
of the Notes that it would redeem them on May 16, 2001 at the redemption price
set forth in the Notes. The redemption of the Notes is not expected to have a
material effect on the consolidated financial statements of the Company. The
Notes are secured by a pledge of the common stock of HomeSide Lending, the
Company's wholly-owned subsidiary. The Company is in compliance with all
requirements included in the Indenture. The Company used a portion of the
proceeds from its February 5, 1997 offering of common stock to pre-pay $70.0
million of the Parent Notes at a premium of $7.9 million. The amount outstanding
at March 31, 2001 was $130.0 million. The balance of the Parent Notes at March
31, 2001, including the fair value adjustment resulting from the merger with the
National, was $139.5 million.


                                       12
<PAGE>   13
7. EXECUTIVE COMPENSATION

Effective March 20, 2001, the Company adopted certain changes to its previously
adopted NAB Group - USA Deferred Compensation Plan, effective as of February 10,
1998 (the "Plan"). The Plan is for the benefit of certain employees of the
Company's subsidiary, HomeSide Lending, Inc., all of whom constitute a select
group of management or highly compensated employees ("Participants"). Pursuant
to the provisions of Section 2.16 of the Plan, HomeSide Lending, Inc. was
designated a Participating Employer.

The purpose of the Plan is to provide participants the opportunity to defer
receipt of salary, bonus, and other specified cash compensation. The Plan is
intended to benefit a "select group of management or highly compensated
employees" within the meaning of Sections 201, 301 and 401 of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), and to be
therefore exempt from the requirements of Parts 2, 3 and 4 of Title I of ERISA.

The changes adopted as of March 20, 2001 may be summarized as follows:

Key Elements of Amended Plan

Interim Distributions Now Permitted: Deferral payments can now be paid on a
specified Interim Distribution Date while still employed. A Participant may have
up to three Interim Distribution Dates. Any Interim Distribution Dates scheduled
after the actual termination of employment will be paid in a lump sum upon
termination. Previously, deferral payments were made only after termination of
employment.

Amount of Interim Distribution: A Participant may establish a maximum amount to
be paid on the Interim Distribution Date. Any excess due to investment build-up
will be swept to the Termination Benefit. This is a new feature not previously
available under the Plan.

Greater Flexibility in Termination Benefit Installment Payments: There is
increased flexibility in administering the installment payment method for the
Termination Benefit. Rather than requiring equal installments, the Participant
may now elect up to three varying lump installments with the remaining
installments being equal in amount. Previously, there were only two benefit
payment options.

Greater Flexibility in Changing the Termination Benefit payment election: The
prior 54th birthday requirement for changing the form of payment has been
eliminated. The payment form elected (lump or installment) may now be changed at
any time as long as the requested change takes place at least twelve months
before employment termination.

Change of Control: There is no longer an automatic lump sum payout in the event
of a Change of Control. Payments will be accelerated to a lump sum only if a
Participant is involuntarily terminated without cause within three years
following a Change of Control. Otherwise, payments will be made as scheduled by
Participant.

One Form of Payment for the Termination Benefit: In order to ease administration
of the Plan, future Termination Benefit deferrals must follow a single payment
regime (for instance, no lump sum payment on one deferral and installments on
another as previously permitted). If the Participant has already elected
multiple payout methods in earlier deferrals, he may retain those varying
payment schedules only for those deferrals unless he voluntarily waives them.

The foregoing is only a summary of the key changes to the Plan. There were
additional minor changes to the Plan not summarized here. The complete text of
the revised Plan is filed as an exhibit hereto and should be referred to for a
complete understanding of the changes. Capitalized terms used in the foregoing
summary are defined in the Plan.


8. NEW ACCOUNTING STANDARDS

In September 2000, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 140, "Accounting for Transfers and Servicing
of Financial Assets and Extinguishments of Liabilities" ("SFAS 140") which
replaces Statement No. 125. This statement revises the standards of accounting
for securitizations and other transfers of financial assets and collateral along
with requiring certain disclosures. This statement is effective for the
transfers and servicing of financial assets and extinguishments of liabilities
occurring after March 31, 2001. It is effective for recognition and
reclassification of collateral for fiscal years ending after December 15, 2000.
Management does not expect the requirements of this standard to have a
significant impact on the financial statements.


                                       13
<PAGE>   14
9. DIVIDENDS

On October 23, 2000 the Company paid dividends to the National in the amount of
$24.0 million.


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

General


HomeSide International, Inc. ("HomeSide or the "Company"), through its
wholly-owned operating subsidiary, HomeSide Lending, Inc., is one of the largest
full service residential mortgage banking companies in the United States. On
February 10, 1998, National Australia Bank, Ltd. (the "National") acquired all
outstanding shares of the common stock of HomeSide International, Inc. (the
"Parent") and the Company adopted a fiscal year end of September 30 to conform
to the fiscal year of the National. The Company was formed through the
acquisition of the mortgage banking operations of BankBoston, N.A. ("BBMC
Predecessor") on March 16, 1996 and subsequently purchased the mortgage banking
operations of Barnett Banks, Inc.

HomeSide's strategy emphasizes variable cost mortgage origination, low cost
servicing, and effective risk management. Headquartered in Jacksonville,
Florida, HomeSide ranks as the 10th largest originator and the 6th largest
servicer in the United States at March 31, 2001, based on data published by
Inside Mortgage Finance.

HomeSide plans to continue to expand its core operations through (i) improved
economies of scale in servicing; (ii) increased productivity using proprietary
technology; and (iii) expanded and diversified variable cost origination
channels. In addition, HomeSide intends to pursue additional loan portfolio
acquisitions and strategic origination relationships with mortgage lenders and
other entities that offer similar financial services.

Operating results for the three- and six-month periods ended March 31, 2001 and
2000 are not necessarily indicative of the results that may be expected for the
fiscal year ending September 30, 2001. For further information, refer to the
consolidated financial statements and footnotes thereto included in the Form
10-K for the fiscal year ended September 30, 2000 of HomeSide International,
Inc.


  Forward-Looking Statements

The Private Securities Litigation Reform Act of 1995 provides a "safe harbor"
for certain forward-looking statements. This Quarterly Report on Form 10-Q
contains forward-looking statements which reflect the Company's current views
with respect to future events and financial performance. These forward-looking
statements are subject to certain risks and uncertainties, including those
identified below, which could cause actual results to differ materially from
historical results or those anticipated. The words "believe," "expect,"
"anticipate," "intend," "estimate" and other expressions which indicate future
events and trends identify forward-looking statements, which speak only as of
their dates. The Company undertakes no obligation to publicly update or revise
any forward-looking statements whether as a result of new information, future
events or otherwise. The following factors could cause actual results to differ
materially from historical results or those anticipated: (1) the Company's
ability to grow which depends on its ability to obtain additional financing in
the future for originating loans, investment in servicing rights, working
capital, capital expenditure and general corporate purposes, (2) economic
downturns may negatively affect the Company's profitability as the frequency of
loan default tends to increase in such environments and (3) changes in interest
rates may affect the volume of loan originations and acquisitions, the interest
rate spread on loans held for sale, the amount of gain or loss on the sale of
loans and the value of the Company's servicing portfolio. These risks and
uncertainties are more fully detailed in the Company's filings with the
Securities and Exchange Commission.

  Loan Production Activities

HomeSide participates in several origination channels, including wholesale
origination (correspondent, co-issue, and broker) and direct origination
channels. The direct channels include internet, telemarketing, direct mail, and
mortgages related to affinity group and co-branding partnerships. HomeSide also
purchases servicing rights in bulk from time to time. HomeSide's strategy is to
customarily sell all loans that it originates or purchases while retaining the
servicing rights to such loans. This multi-channel production base provides
access to and flexibility among production channels in a wide variety of market
and economic conditions. By focusing on production channels with a variable cost
structure, HomeSide eliminates the fixed costs associated with traditional
mortgage branch offices. Without the burden of high fixed cost origination
overhead, HomeSide is well positioned to weather a variety of interest rate
environments.


                                       14
<PAGE>   15
The following information regarding loan production activities for HomeSide is
presented to aid in understanding the results of operations and financial
condition of HomeSide for the three and six month periods ended March 31, 2001
and 2000 (in millions):


<TABLE>
<CAPTION>
                                  FOR THE THREE        FOR THE THREE         FOR THE SIX          FOR THE SIX
                                   MONTHS ENDED         MONTHS ENDED         MONTHS ENDED         MONTHS ENDED
                                  MARCH 31, 2001       MARCH 31, 2000        MARCH 31, 2001       MARCH 31, 2000
                                  --------------       --------------        --------------       --------------
<S>                               <C>                  <C>                  <C>                   <C>
Correspondent                        $ 3,421               $1,717               $ 6,195               $ 4,279
Co-issue                               4,381                1,642                 7,531                 4,072
Broker                                 1,058                  343                 1,780                   812
                                     -------               ------               -------               -------
  Total wholesale                      8,860                3,702                15,506                 9,163
Direct                                   275                  129                   506                   276
                                     -------               ------               -------               -------
  Total production                     9,135                3,831                16,012                 9,439
Bulk acquisitions                      2,064                2,466                15,261                 7,024
                                     -------               ------               -------               -------
  Total production and
    acquisitions                     $11,199               $6,297               $31,273               $16,463
                                     =======               ======               =======               =======
</TABLE>

Total loan production, excluding bulk acquisitions, was $9.1 billion for the
three months ended March 31, 2001 compared to $3.8 billion for the three months
ended March 31, 2000, a 139% increase. Loan production was $16.0 billion for the
six months ended March 31, 2001 compared to $9.4 billion for the six months
ended March 31, 2000, a 70% increase. The increase was a function of HomeSide's
ability to leverage origination alliances, technological enhancements and
influences from a more favorable interest rate environment. When interest rates
decline, the size of the mortgage origination market increases as home ownership
becomes more affordable and as existing mortgagors refinance their loans. For
the three- and six-month periods ended March 31, 2001, refinances were 52% and
41%, respectively, of HomeSide's production volume, compared to 22% and 21%,
respectively, for the three- and six-month periods ended March 31, 2000.

Economies of scale are vital to the long-term viability of mortgage servicing
and are increasingly important to remain competitive in the industry. During the
quarter, HomeSide continued to pursue growth opportunities through bulk
acquisitions of mortgage servicing rights and expansion of its Preferred
Partnership program. Preferred partnerships generally include a bulk servicing
acquisition and an ongoing mortgage origination flow. HomeSide services loans on
a priority basis on behalf of its Preferred Partners and offers the customer
mortgage-related products. Preferred Partner relationships contributed 20% of
HomeSide's production volume for the six months ended March 31, 2001. Homeside
completed bulk acquisitions totaling $2.1 billion and $15.3 billion during the
three and six month periods ended March 31, 2001, respectively. Homeside
completed bulk acquisitions totaling $2.5 billion and $7.0 billion during the
three and six month periods ended March 31, 2000, respectively.


Servicing Portfolio

Based on certain industry servicing statistics, management asserts that HomeSide
is one of the most efficient mortgage servicers in the industry based on its
servicing cost per loan and the number of loans serviced per employee. The
servicing operation makes extensive use of state-of-the-art technology, process
re-engineering and expense management. With a portfolio size of $189.4 billion,
HomeSide services the loans of approximately 2.1 million homeowners from across
the United States and is committed to protecting the associated asset value by a
sophisticated risk management strategy. HomeSide anticipates its low cost of
servicing loans will continue to maximize the bottom-line impact of its growing
servicing portfolio. HomeSide's focus on efficient and low cost processes is
pursued through the selective use of automation, strategic outsourcing of
selected servicing functions and effective control of delinquencies and
foreclosures.

The number of loans serviced at March 31, 2001 was 2,107,171 compared to
1,726,192 at March 31, 2000. HomeSide's strategy is to grow its mortgage
servicing portfolio by concentrating on variable cost loan origination
strategies and selective portfolio acquisitions, and as a result, benefit from
improved economies of scale. A key to HomeSide's future growth is the capacity
provided by its proprietary servicing software. This system allows HomeSide to
double the number of loans typically serviced on a single system and is also
used by the National to service its growing loan portfolio.


                                       15
<PAGE>   16
The following information on the dollar amounts of loans serviced is presented
to aid in understanding the results of operations and financial condition of
HomeSide for the three and six-month periods ended March 31, 2001 and 2000 (in
millions):

<TABLE>
<CAPTION>
                                     FOR THE THREE         FOR THE THREE          FOR THE SIX              FOR THE SIX
                                      MONTHS ENDED          MONTHS ENDED          MONTHS ENDED             MONTHS ENDED
                                     MARCH 31, 2001        MARCH 31, 2000        MARCH 31, 2001           MARCH 31, 2000
<S>                                  <C>                   <C>                    <C>                    <C>
Balance at beginning of
  period                                $187,552               $150,735               $173,310               $145,552
   Additions, net                         11,176                  6,227                 31,229                 16,384
   Scheduled amortization                  1,329                  1,045                  2,525                  2,083
   Prepayments                             7,784                  3,112                 12,191                  6,802
   Foreclosures                              207                    304                    415                    550
                                        --------               --------               --------               --------
       Total reductions                    9,320                  4,461                 15,131                  9,435
                                        --------               --------               --------               --------
Balance at end of period                $189,408               $152,501               $189,408               $152,501
                                        ========               ========               ========               ========
</TABLE>


RESULTS OF OPERATIONS

FOR THE THREE MONTHS ENDED MARCH 31, 2001 COMPARED TO THE THREE MONTHS ENDED
MARCH 31, 2000

   Summary

HomeSide's net operating revenue before risk management results (SFAS 133),
provision for mortgage servicing rights, and goodwill amortization was $36.3
million for the three months ended March 31, 2001, compared to $42.9 million for
the three months ended March 31, 2000, a decrease of 15%. HomeSide's net (loss)
income decreased to ($33.2) million for the three months ended March 31, 2001,
compared to $18.3 million for the three months ended March 31, 2000 due to the
impact of risk management results (SFAS 133) recognized in earnings. Total
revenues for the three months ended March 31, 2001 were $102.1 million compared
to $93.2 million for the three months ended March 31, 2000, a 10% increase. Net
servicing revenue increased 2% for the three months ended March 31, 2001
compared to the three months ended March 31, 2000, primarily due to the increase
in mortgage servicing fees resulting from the growth in the servicing portfolio.
Net interest expense increased to ($18.8) million for the three months ended
March 31, 2001, compared to ($12.9) million for the three months ended March 31,
2000. This 46% increase resulted primarily from a narrowing of the spread
between short-term and long-term interest rates and the growth of HomeSide's net
assets. Net mortgage origination revenue increased from $21.9 million to $33.9
million due to declining mortgage interest rates, which resulted in increased
production volumes. Total operating expenses increased 31% as a result of higher
expenses associated with the increase in production volumes, growth of the
servicing portfolio, and higher prepayment activity. Income tax expense
decreased as a result of the net loss due to the impact of risk management
results (SFAS 133) recognized in earnings.

   Net Servicing Revenue

Net servicing revenue was $84.9 million for the three months ended March 31,
2001 compared to $83.0 million for the three months ended March 31, 2000, a 2%
increase. Net servicing revenue is comprised of mortgage servicing fees net of
guaranty fees, ancillary servicing revenue, and amortization.

Mortgage servicing fees increased 19% to $220.3 million for the three months
ended March 31, 2001 compared to $185.6 million for the three months ended March
31, 2000, primarily as a result of portfolio growth. The servicing portfolio
increased $36.9 billion to $189.4 billion at March 31, 2001 compared to $152.5
billion at March 31, 2000, a 24% increase. The portfolio growth is primarily due
to loan production and bulk acquisitions. HomeSide's weighted average interest
rate on the mortgage loans in the servicing portfolio was 7.60% and 7.48% at
March 31, 2001 and 2000, respectively. The weighted average servicing fee, net
of guaranty fees and including ancillary income, for the servicing portfolio was
47.0 basis points for the three months ended March 31, 2001 compared to 49.1
basis points for the three months ended March 31, 2000.

Amortization expense increased 32% to $135.4 million for the three months ended
March 31, 2001, from $102.7 million for the three months ended March 31, 2000.
The increase in amortization expense was primarily due to acceleration of
projected prepayment speeds associated with declining mortgage interest rates. A
decline in mortgage interest rates results in an increase in prepayment
estimates used in calculating periodic amortization expense. Because mortgage
servicing rights are amortized over the expected period of service fee


                                       16
<PAGE>   17
revenues, an increase in mortgage prepayment activity typically results in a
shorter estimated life of the mortgage servicing assets and, accordingly, higher
amortization expense.


   Net Interest (Expense)

Net interest expense is driven by the level of interest rates, the direction in
which rates are moving and the associated spread between short- and long-term
interest rates, the rates at which HomeSide is able to borrow, and the growth in
net assets. These factors influence the size of the residential mortgage
origination market, HomeSide's loan production volumes, the interest income
HomeSide earns on its mortgages held for sale and interest paid to its lenders.
These factors also influence risk management results that affect funding
requirements.

Loan refinancing levels are the largest contributor to changes in the size of
the mortgage origination market. As interest rates decline, more borrowers
refinance their mortgages, resulting in an increase in the mortgage origination
market. Higher loan production volumes result in higher average balances of
mortgages held for sale and consequently higher levels of the interest income
from interest earned on such loans prior to their sale. This higher level of
interest income due to increased volume is partially offset by the lower rates
earned on the loans.

Overall borrowing costs also fluctuate with changes in interest rates.
Currently, the interest expense HomeSide pays to finance mortgage loans held for
sale and other net assets is generally calculated with reference to short-term
interest rates. In addition, because mortgage loans held for sale earn interest
based on longer term interest rates, net interest revenue is also influenced by
the spread between long-term and short-term interest rates.

Net interest expense increased 46% from ($12.9) million to ($18.8) million for
the quarter ended March 31, 2001 compared to the quarter ended March 31, 2000.
The increase in net interest expense was primarily due to a narrowing of the
spread between short-term and long-term rates and an increase in net assets due
to higher production volumes and servicing portfolio growth. For the quarter
ended March 31, 2001, average mortgage rates declined 121 basis points while
average short-term LIBOR rates declined 39 basis points, thereby tightening
spreads by 82 basis points. Although spreads began to widen during the last half
of March 2001 with the decline in short-term rates, average spreads for the
quarter ended March 31, 2001 were 154 basis points versus an average of 236
basis points for the quarter ended March 31, 2000.


   Net Mortgage Origination Revenue

Net mortgage origination revenue is comprised of fees earned on the origination
of mortgage loans, fees charged to review loan documents for purchased loan
production and gains and losses on the sale of loans. Net mortgage origination
revenue was $33.9 million for the three months ended March 31, 2001 compared to
$21.9 million for the three months ended March 31, 2000. The increase was
primarily due to an increase in production volumes resulting from the factors
previously discussed in the loan production activities section.


   Other Income

Other income for the three months ended March 31, 2001 was $2.1 million compared
to $1.2 million for the three months ended March 31, 2000. This increase is
primarily due to the amortization of the deferred gain resulting from a
sale-leaseback transaction involving HomeSide's facility in San Antonio, Texas
entered into on October 2, 2000. In accordance with SFAS 98 "Accounting for
Leases", HomeSide recognized an immediate gain of $4.5 million. In addition, a
deferred gain of $7.3 million was recorded and is amortized over the life of the
lease.

   Salaries and Employee Benefits

Salaries and employee benefits expense was $32.6 million for the three months
ended March 31, 2001 compared to $25.9 million for the three months ended March
31, 2000, a 26% increase. The average number of full-time equivalent employees
was 2,506 for the three months ended March 31, 2001 compared to 2,474 for the
three months ended March 31, 2000. The increase during the quarter is
attributable to higher production volumes resulting in higher commissions,
incentives and an increase in temporary and overtime.


                                       17
<PAGE>   18
   Occupancy and Equipment Expense

Occupancy and equipment expense primarily includes rental expense, repairs and
maintenance costs, certain computer software expenses and depreciation of
HomeSide's premises and equipment. Occupancy and equipment expense for the three
months ended March 31, 2000 was $9.4 million compared to $7.7 million for the
three months ended March 31, 2000, a 22% increase. The increase is driven by
additional leased space and technology related assets in support of growth in
the mortgage servicing portfolio.


   Servicing Losses on Investor-Owned Loans and Foreclosure-Related Expenses

Servicing losses on investor-owned loans represent anticipated losses primarily
attributable to servicing FHA and VA loans for investors. These amounts include
actual losses for the final disposition of loans, non-recoverable foreclosure
costs, accrued interest for which payment has been curtailed and estimates for
potential losses based on HomeSide's experience as a servicer of government
loans.

The servicing losses on investor-owned loans and foreclosure-related expenses
totaled $8.1 million for the three months ended March 31, 2001 compared to $7.4
million for the three months ended March 31, 2000. The increase was primarily
attributable to an increase in servicing losses related to the growth of the
servicing portfolio.

Included in the balance of accounts payable and accrued liabilities at March 31,
2001 is a reserve for estimated servicing losses on investor-owned loans of
$16.7 million. The reserve has been established for potential losses related to
the mortgage servicing portfolio. Increases to the reserve are charged to
earnings as servicing losses on investor-owned loans. The reserve is decreased
for actual losses incurred related to the mortgage servicing portfolio.
HomeSide's historical loss experience on VA loans generally has been consistent
with industry experience. Management believes that HomeSide has an adequate
level of reserve based on servicing volume, portfolio composition, credit
quality and historical loss rates, as well as estimated future losses.

The following table sets forth HomeSide's delinquency and foreclosure
experience:

                                         SERVICING PORTFOLIO DELINQUENCIES
                                              (PERCENT BY LOAN COUNT)

<TABLE>
<CAPTION>
                                                                                   MARCH 31, 2001          MARCH 31, 2000
<S>                                                                                <C>                    <C>
Servicing Portfolio Delinquencies, excluding bankruptcies (at end of period)
          30 days                                                                       2.60%                  2.23%
          60 days                                                                       0.52%                  0.48%
          90+ days                                                                      0.43%                  0.55%
                                                                                        ----                   ----
               Total past due                                                           3.55%                  3.26%
                                                                                        ----                   ----
          Foreclosures pending                                                          0.59%                  0.52%
                                                                                        ====                   ====
</TABLE>



  Other Expenses

Other expenses consist mainly of professional fees, communications expense,
advertising and public relations, data processing expenses and certain loan
origination expenses. The level of other expenses fluctuates in part based upon
the level of HomeSide's mortgage servicing portfolio and loan production
volumes.

Other expenses were $15.7 million for the three months ended March 31, 2001,
compared to $9.3 million for the three months ended March 31, 2000, a 69%
increase. The increase is primarily driven by higher production volumes and an
increase in prepayment activity.


   Risk Management Results (SFAS 133)

The results of HomeSide's risk management programs and the associated accounting
for derivative instruments and hedging activities pursuant to SFAS 133, as
amended, is more fully described in Note 4 to the Consolidated Financial
Statements. Additionally, risk management activities are more fully discussed in
the Management Discussion and Analysis section entitled "Risk Management
Activities."


                                       18
<PAGE>   19
   Income Tax Expense

HomeSide's income tax (benefit) expense was $(14.1) million for the three months
ended March 31, 2001 compared to $15.7 million for the three months ended March
31, 2000. The effective income tax rates for the three-month periods ended March
31, 2001 and 2000 were (30%) and 46%, respectively. The decrease in the
effective income tax rate was due to a net loss resulting from the impact of
risk management results recognized in earnings pursuant to SFAS 133.


RESULTS OF OPERATIONS
FOR THE SIX MONTHS ENDED MARCH 31, 2001 COMPARED TO THE SIX MONTHS ENDED MARCH
31, 2000

   Summary

HomeSide's net operating revenue before risk management results (SFAS 133),
provision for mortgage servicing rights, and goodwill amortization was $64.1
million for the six months ended March 31, 2001, compared to $75.0 million for
the six months ended March 31, 2000, a decrease of 15%. HomeSide's net (loss)
income decreased to ($19.7) million for the six months ended March 31, 2001,
compared to $36.5 million for the six months ended March 31, 2000 due to the
impact of risk management results (SFAS 133) recognized in earnings. Total
revenues for the six months ended March 31, 2001 were $199.1 million compared to
$185.3 million for the six months ended March 31, 2000. Net servicing revenue of
$172.8 million for the six months ended March 31, 2001 compared to $156.6
million, a 10% increase, for the six months ended March 31, 2000 was primarily
driven by the increase in mortgage servicing fees resulting from the growth in
the servicing portfolio growth. Net interest expense increased to ($38.0)
million for the six months ended March 31, 2001, compared to ($12.3) million for
the quarter ended March 31, 2000. This 209% increase resulted primarily from a
narrowing of the spread between short-term and long-term interest rates and the
growth of HomeSide's net assets. Net mortgage origination revenue increased 44%
for the six months ended March 31, 2001 compared to the six months ended March
31, 2000 due to declining mortgage interest rates which resulted in increased
production volume. Total operating expenses of $135.0 million for the six months
ended March 31, 2001 compared to $110.4 million for the six months ended March
31, 2000, an increase of 22%, was a result of higher expenses associated with
the increase in production volumes, the growth of the servicing portfolio, and
higher prepayment activity. Income tax expense decreased as a result of the net
loss due to the impact of risk management results recognized in earnings.


Net Servicing Revenue

Net servicing revenue was $172.8 million for the six months ended March 31, 2001
compared to $156.6 million for the six months ended March 31, 2000,a 10%
increase. Net servicing revenue is comprised of mortgage servicing fees net of
guaranty fees, ancillary servicing revenue and amortization.

Mortgage servicing fees were $428.5 million for the six months ended March 31,
2001 compared to $356.8 million for the six months ended March 31, 2000,
primarily as a result of portfolio growth. The servicing portfolio increased
$36.9 billion to $189.4 billion at March 31, 2001 compared to $152.5 billion at
March 31, 2000, a 24% increase. The portfolio growth is primarily due to loan
production and bulk acquisitions. HomeSide's weighted average interest rate on
the mortgage loans in the servicing portfolio was 7.60% and 7.48% at March 31,
2001 and 2000, respectively. The weighted average servicing fee, including
ancillary income, for the servicing portfolio was 46.8 basis points for the six
months ended March 31, 2001 compared to 47.9 basis points for the six months
ended March 31, 2000.

Amortization expense was $255.7 million for the six months ended March 31, 2001
compared to $200.2 million for the six months ended March 31, 2000, a 28%
increase. The increase in amortization expense was primarily due to the
accelerated projected prepayment speeds associated with declining mortgage
interest rates. A decrease in mortgage interest rates results in an increase in
prepayment estimates used in calculating periodic amortization expense. Because
mortgage servicing rights are amortized over the expected period of service fee
revenues, an increase in mortgage prepayment activity typically results in a
shorter estimated life of the mortgage servicing assets and, accordingly, higher
amortization expense.

   Net Interest (Expense)

Net interest expense is driven by the level of interest rates, the direction in
which rates are moving and the associated spread between short and long-term
interest rates, the rates at which HomeSide is able to borrow, and the growth in
net assets. These factors influence the size


                                       19
<PAGE>   20
of the residential mortgage origination market. HomeSide's loan production
volumes, the interest income HomeSide earns on its mortgages held for sale and
interest paid to its lenders. These factors also influence risk management
results that affect funding requirements.

Loan refinancing levels are the largest contributor to changes in the size of
the mortgage origination market. As interest rates decline, more borrowers
refinance their mortgages, resulting in an increase in the mortgage origination
market. Higher loan production volumes result in higher average balances of
mortgages held for sale and consequently higher levels of the interest income
from interest earned on such loans prior to their sale. This higher level of
interest income due to increased volume is partially offset by the lower rates
earned on the loans.

Overall borrowing costs also fluctuate with changes in interest rates.
Currently, the interest expense HomeSide pays to finance mortgage loans held for
sale and other net assets is generally calculated with reference to short-term
interest rates. In addition, because mortgage loans held for sale earn interest
based on longer term interest rates, net interest revenue is also influenced by
the spread between long-term and short-term interest rates.

Net interest expense increased 209% from ($12.3) million to ($38.0) million for
the six months ended March 31, 2001 compared to the six months ended March 31,
2000. The increase in net interest expense was primarily due to a narrowing of
the spread between short-term and long-term rates and an increase in net assets
due to higher production volumes and servicing portfolio growth. For the six
months ended March 31, 2001, average mortgage rates declined 70 basis points
while average short-term LIBOR rates increased 23 basis points, thereby
tightening spreads by 93 basis points. Although spreads began to widen during
the last half of March 2001 with the decrease in short-term-rates, average
spreads for the six months ended March 31, 2001 were 130 basis points versus an
average of 223 basis points for the six months ended March 31, 2000.

Net Mortgage Origination Revenue

Net mortgage origination revenue is comprised of fees earned on the origination
of mortgage loans, fees charged to review loan documents for purchased loan
production, and gains and losses on the sale of loans. Net mortgage origination
revenue was $56.0 million for the six months ended March 31, 2001 compared to
$38.9 million for the six months ended March 31, 2000. The increase was
primarily due to an increase in production volumes resulting from the factors
previously discussed in the loan production activities section.


Other Income

Other income for the six months ended March 31, 2001 was $8.3 million compared
to $2.1 million for the six months ended March 31, 2000. This increase primarily
resulted from a sale-leaseback transaction involving HomeSide's facility in San
Antonio, Texas entered into on October 2, 2000. In accordance with SFAS 98
"Accounting for Leases", HomeSide recognized an immediate gain of $4.5 million.
In addition, a deferred gain of $7.3 million was recorded and is amortized over
the life of the lease.


Salaries and Employee Benefits

Salaries and employee benefits expense was $62.5 million for the six months
ended March 31, 2001 compared to $55.7 million for the six months ended March
31, 2000, a 12% increase. The average number of full-time equivalent employees
was 2,434 for the six months ended March 31, 2001 compared to 2,513 for the six
months ended March 31, 2000.


Occupancy and Equipment Expense

Occupancy and equipment expense primarily includes rental expense, repairs and
maintenance costs, certain computer software expenses and depreciation of
HomeSide's premises and equipment. Occupancy and equipment expense for the six
months ended March 31, 2001 was $19.2 million compared to $16.3 million for the
six months ended March 31, 2000, a 18% increase. The increase is driven by
additional leased space and technology related assets in support of growth in
the mortgage servicing portfolio.


                                       20
<PAGE>   21
 Servicing Losses on Investor-Owned Loans and Foreclosure-Related Expenses


Servicing losses on investor-owned loans represent anticipated losses primarily
attributable to servicing FHA and VA loans for investors. These amounts include
actual losses for the final disposition of loans, non-recoverable foreclosure
costs, accrued interest for which payment has been curtailed and estimates for
potential losses based on HomeSide's experience as a servicer of government
loans.


The servicing losses on investor-owned loans and foreclosure-related expenses
totaled $18.2 million for the six months ended March 31, 2001 compared to $15.8
million for the six months ended March 31, 2000. The increase was primarily
attributable to an increase in servicing losses related to the growth of the
servicing portfolio.


Other Expenses


Other expenses consist mainly of professional fees, communications expense,
advertising and public relations, data processing expenses and certain loan
origination expenses. The level of other expenses fluctuates in part based upon
the level of HomeSide's mortgage servicing portfolio and loan production
volumes.


Other expenses were $35.0 million for the six months ended March 31, 2001,
compared to $22.7 million for the six months ended March 31, 2000, a 54%
increase. The increase is primarily due to an increase in expenses associated
with higher production volumes and an increase in prepayment activity.

Risk Management Results (SFAS 133)


The results of HomeSide's risk management programs and the associated accounting
for derivative instruments and hedging activities pursuant to SFAS 133, as
amended, is more fully described in Note 4 to the Consolidated Financial
Statements. Additionally, risk management activities are more fully discussed in
the Management Discussion and Analysis section entitled "Risk Management
Activities."


Income Tax Expense


HomeSide's income tax (benefit) expense was ($1.0) million for the six months
ended March 31, 2001 compared to $20.6 million for the six months ended March
31, 2000. The effective income tax rates for the six-month periods ended March
31, 2001 and 2000 were (4%) and 36%, respectively. The decrease in the effective
income tax rate was due to a net loss resulting from the impact of risk
management results recognized in earnings pursuant to SFAS 133.



RISK MANAGEMENT ACTIVITIES

Mortgage banking entities face a broad range of risk that must be proactively
managed to achieve success in the industry. The Company has utilized the
enterprise-wide risk management structure that has been implemented and proven
at the National and its global entities. The structure comprises a common policy
framework and a set of controls that are utilized to achieve standardization of
risks. Each business function is responsible for using standardized risk
assessment templates along with best practices methodology for the
identification and quantification of the particular risk it is exposed to and
for the implementation of appropriate policies and procedures.


The Company's Risk Council, comprising executive and senior management as well
as representation from internal audit, is the principal risk operating policy
decision making body within the Company. Risk Council's role is to constantly
monitor and assess the Company's risk profile in existing and future business
operations, and to assist business units in the design and implementation of
appropriate risk management policies and strategies.

The Risk Council provides direction and oversight for many types of risks such
as credit, operations, legislative compliance, e-commerce, business continuity
and disaster recovery. Certain of the Company's other major risk areas (e.g.
market risk) are more fully discussed below.


                                       21
<PAGE>   22
Risk Management of Market Risk


Market risk recognizes the potential change in the value of assets, liabilities
and other financial commitments as a result of changes in asset prices along
with changes in actual and projected interest rates. Certain members of the
Company's Risk Council also comprise the Company's Asset and Liability
Management Committee (ALCO) which, under delegated authority from the Board,
sets policies in relation to the management of market risk, corporate funding
and balance sheet management. Representatives of the Company's ALCO report to
the National's ALCO concerning risk management and also participate in the
National's group ALCO meetings.

As more fully discussed in the notes to the financial statements, the Company
adopted SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities", effective October 1, 2000. Accordingly, for the three-month and six
month periods ended March 31, 2001, all of the Company's risk management
derivative instruments are recorded at fair value. Changes in the value of risk
management derivatives instruments designated as qualifying fair value hedging
relationships are recognized in current earnings along with the changes in the
value of the qualifying hedged assets or liabilities. Changes in the value of
risk management derivative instruments designated as qualifying cash flow
hedging relationships of forecasted loan sale transactions are recorded to other
comprehensive income ("OCI") and reclassified to earnings concurrent with
settlement of the loan sale transactions. The accounting policies relevant to
derivative instruments and hedging activities for each of the Company's key risk
management areas are more fully discussed in note 4 to the financial statements.


Market Environment

The market environment during the three-months and six-months ended March 31,
2001 was extremely volatile. During the periods, key interest rates along the
one- to ten-year sectors of the treasury curve declined, on average, by
approximately 70 and 140 basis points, respectively.

Mortgage rates declined by 35 basis points from 7.30% at December 31, 2000 to
6.95% at March 31, 2001 and 93 basis points from 7.88% at September 30, 2000 to
6.95% at March 31, 2001. Other key interest rates for the Company include 5- and
10-year swap rates which declined by 57 and 29 basis points for the three months
ended and 136 and 107 basis points for the six-months ended March 31, 2001,
respectively.

Overall, interest rate spreads on mortgage products were extremely volatile.
One-month LIBOR was down 148 basis points from 6.56% at December 31, 2000 to
5.08% at March 31, 2001. As a result, spreads between mortgage rates and
one-month LIBOR widened by approximately 113 and 61 basis points for the
three-months and six-months ended March 31, 2001. However, average spreads for
the current three-and six-month periods remained well below average spreads of
the corresponding periods in the previous year.

Following is a summary of risk management activities and results for the three
months and six months ended March 31, 2001:

Risk Management of Loan Production Activities


The Company maintains a risk management program to protect and manage interest
rate risk and pricing risk associated with its mortgage commitment pipeline and
mortgage inventory. In the normal course of business, the Company extends
interest rate lock commitments ("IRLCs" or "commitments") to borrowers who apply
for loan funding and meet certain credit and underwriting criteria. IRLCs in the
mortgage pipeline expose the Company to interest rate and pricing risk. In a
rising rate environment, the aggregate value of the Company's commitments tends
to decrease in value and, generally, at an accelerating rate. In a declining
rate environment, the value of the Company's commitments tends to increase in
value. However, the rate of increase in the value tends to decelerate as the
likelihood of the borrower closing on the loan decreases if market rates decline
by a meaningful amount versus the borrower's committed rate. As part of its risk
management processes, the Company has devoted substantial resources and modeling
solutions to enable management to project the expected percent of IRLCs that
will ultimately fund under different interest rate scenarios (referred to as
"pull-through rates"). The success of the Company's risk management strategies
relies on proactive analysis of historical and projected pull-through rates.
However, since borrower behavior cannot be perfectly predicted and modeled, an
element of economic ineffectiveness can be expected in the Company's pipeline
hedging relationships.

In the aggregate, the Company's strategy involves the use of a combination of
mortgage forward delivery commitments and mortgage options to maintain
appropriate risk management coverage related to IRLCs. The Company utilizes
mortgage forward delivery contracts to hedge a baseline portion of the Company's
pipeline composed of interest rate lock commitments that management believes are
probable of closing. Additionally, the Company utilizes options on mortgage
securities and certain other products to hedge an element of the pipeline which
is considered more uncertain of closing, and for which pull-through rates are
likely to be volatile. During the three months and six months ended March 31,
2001, the Company's risk management strategy was effective in the declining
interest rate environment as the


                                       22
<PAGE>   23
increase in the value of the Company's commitments more than offset the losses
in the value of the related risk management derivative instruments. During the
three months and six months ended March 31, 2001, a net gain of approximately
$5.7 million and $8.0 million, respectively attributable to pipeline hedging
results was recognized to earnings. Pursuant to the requirements of SFAS 133
(which are discussed in note 4 to the Company's consolidated financial
statements) interest rate lock commitments and related risk management
derivative instruments are accounted for as non-designated derivatives with
changes in their values recorded to current earnings.

Interest rate lock commitments that are ultimately funded (closed) are
classified as loans held for sale and are included in the Company's mortgage
inventory. Closed loans in the mortgage inventory are also subject to interest
rate and pricing risk. The Company's risk management program involves the use of
mortgage forward delivery contracts to hedge 100% of its agency-eligible
conforming loans as forecasted loan sales. Pursuant to the terms of SFAS 133,
the Company accounts for the forward delivery contracts as cash flow hedges of
forecasted loan sales. The forward contracts achieve effective offset against
the changes in the value of the loans in that the forward contracts effectively
fix the future loan delivery price. At March 31, 2001, losses on forward
delivery contracts of $0.9 million were included in other comprehensive income
(OCI). Pursuant to the requirements of SFAS 133, the related unrealized gains in
the underlying mortgage loans accounted for as forecasted loan sales are not
recognized in the Company's financial statements at March 31, 2001. Rather, the
unrealized gains will be recognized to earnings on the loan settlement dates,
together with the related deferred hedge losses that will be reclassified to
earnings (from OCI) as the forecasted loan sales are consummated over the next
90 days.



Risk Management of Mortgage Servicing Rights


Mortgage servicing rights represent the capitalized value of the estimated
future net servicing revenues associated with the Company's servicing portfolio.
The Company maintains a risk management program designed to protect the value of
mortgage servicing rights from changes in value due to changes in estimated loan
prepayment speeds, which are mainly influenced by changes in interest rates.

The value of mortgage servicing rights is extremely sensitive to changes in
interest rates since interest rates are the primary driver of actual and
projected prepayment rates. As interest rates decline, prepayment rates increase
as a result of actual and expected refinancing activities of borrowers. As a
result, the value of mortgage servicing rights decreases in value as interest
rates decline and, generally, at accelerating rates depending in large measure
on the note rates of the underlying loans in relation to market interest rates.
The value of the Company's mortgage servicing rights is based on the present
value of expected cash flows received over the life of the loan using vendor
models which incorporate prepayment estimates to forecast estimated future
servicing revenues, servicing costs, ancillary revenues, escrow earnings, credit
losses and other expenses.

The Company's risk management program involves the use of a portfolio of risk
management derivative instruments which increase in value as interest rates
decline. More specifically, management uses a combination of derivative
instruments designed to provide effective offset to changes in the value of the
mortgage servicing rights in different interest rate scenarios. The Company also
attempts to manage basis risk, term sector risk, and liquidity risk by
diversifying its portfolio with an array of derivative instruments that are
approved for use by the Company's ALCO. Accordingly, the hedge portfolio is
generally comprised of mortgage products, swap products and treasury products
that are structured along various points of the yield curve.

Since the inception of HomeSide in March of 1996, the Company's hedge strategy
has been effective in providing effective offset to changes in the value of its
mortgage servicing rights. For the three-month and six-month periods ended March
31, 2001, the increases in value of risk management derivative contracts was
$142.6 million and $508.1 million, respectively, while the decrease in the value
of the designated mortgage servicing rights (due to the designated hedge risk)
was $217.2 million and $565.1 million, respectively.

Management maintains an ongoing expectation that the Company's risk management
hedging program will be effective in meeting corporate objectives over the
longer term. However, as a result of the new accounting requirements of SFAS
133, quarterly earnings will henceforth be impacted (positively or negatively)
to the extent that changes in the value of the hedged instruments do not
perfectly offset changes in the value of the designated mortgage servicing
rights. Given the magnitude of the Company's investment in mortgage servicing
rights, the accounting requirements of SFAS 133 will result in a higher level of
volatility in reported quarterly earnings as a result of temporary market
conditions that may impact quarterly hedge results without compromise to the
long-term hedge objectives.


Risk Management of Corporate Funding


As part of its corporate funding and balance sheet management strategies, the
Company maintains a desired level of its total borrowings through short-term
funding sources. To meet the Company's financing needs, short-term funding is
provided through the Company's commercial paper program and its short-term
facility with the Parent. Additionally, the Company can alter its weighting in
fixed-rate funding by converting medium-term notes to floating rate. During the
three-month period ended March 31, 2001, the Company was party


                                       23
<PAGE>   24
to $750 million in interest rate swaps which were effective in converting $750
million of medium-term notes to LIBOR-based funding. As discussed in note 4 to
the financial statements, the interest rate swaps were accounted for as fair
value hedges of the designated medium-term notes.



LIQUIDITY AND CAPITAL RESOURCES


The Company's principal financing needs are the financing of loan origination
activities and the investment in mortgage servicing rights. To meet these needs,
the Company currently utilizes funding from its commercial paper program, a
credit facility with the National, medium-term notes, floating-rate notes, an
independent syndicate of banks, repurchase agreements, and cash flow from
operations. HomeSide continues to investigate and pursue alternative and
supplementary methods to finance its growing operations through the public and
private capital markets. These may include methods designed to expand the
Company's financial capacity and reduce its cost of capital. In addition, to
facilitate the sale and distribution of certain mortgage products, HomeSide
Mortgage Securities, Inc., a wholly-owned subsidiary of HomeSide Lending, Inc.,
may continue to issue mortgage-backed securities.


Operations

Net cash used in operating activities for the quarter ended March 31, 2001 was
$111.1 million. Net cash provided by operating activities for the quarter ended
March 31, 2000 was $515.6 million. Net cash provided by operating activities for
the six month periods ended March 31, 2001 and 2000 were $292.7 million and
$718.1 million, respectively. Cash provided from servicing fee income, loan
sales and principal repayments was partially offset by cash used for the
origination and purchase of mortgage loans held for sale and to pay corporate
expenses. Cash flows from loan originations are dependent upon current economic
conditions and the level of long-term interest rates. Decreases in long-term
interest rates generally result in higher loan refinancing activity, which
results in higher cash demands to meet loan production levels.

Investing


Net cash used in investing activities for the quarters ended March 31, 2001 and
2000 were $152.1 million and $516.3 million, respectively. Net cash used in
investing activities for the six-month periods ended March 31, 2001 and 2000
were $535.6 million and $801.3 million, respectively. Cash used in investing
activities was primarily for the purchase of mortgage servicing rights and risk
management contracts. Cash was provided by proceeds from risk management
contracts and early pool buyout reimbursements. Future uses of cash for
investing activities will be dependent on the mortgage origination market and
HomeSide's hedging needs. HomeSide is not able to estimate the timing and amount
of cash uses for future acquisitions of other mortgage banking entities, if such
acquisitions were to occur.


Financing

Net cash provided by financing activities for the quarter ended March 31, 2001
was $394.7 million. Net cash used in financing activities for the quarter ended
March 31, 2000 was $301.1 million. Net cash provided by financing activities for
the six-month periods ended March 31, 2001 and 2000 were $322.7 million and
$184.5 million, respectively. Cash was provided by borrowings from the National
and the issuance of commercial paper and medium term notes. Cash was used for
repayment of borrowings from the National, payment of debt issue costs, payment
of dividends to the Parent, and repayment of medium-term notes.

HomeSide expects that to the extent cash generated from operations is inadequate
to meet its liquidity needs, those needs can be met through financing from its
bank credit facility and other facilities which may be entered into from time to
time, as well as from the issuance of debt securities in the public markets.
Accordingly, HomeSide does not currently anticipate that it will make sales of
servicing rights to any significant degree for the purpose of generating cash.
Nevertheless, in addition to its cash and mortgage loans held for sale balances,
HomeSide's portfolio of mortgage servicing rights provides a potential source of
funds to meet liquidity requirements, especially in periods of rising interest
rates when loan origination volume slows. Repurchase agreements also provide an
alternative to the established funding sources for mortgages held for sale.
Future cash needs are highly dependent on future loan production and servicing
results, which are influenced by changes in long-term interest rates.


                                       24
<PAGE>   25
QUANTITATIVE AND QUALITATIVE MARKET RISK


There have been no material changes in the Company's market risk from September
30, 2000. For information regarding the Company's market risk, refer to Form
10-K for the fiscal year ended September 30, 2000 of HomeSide International,
Inc.



                           PART II - OTHER INFORMATION

ITEM 1.  Legal Proceedings


HomeSide is a defendant in a number of legal proceedings arising in the normal
course of business. HomeSide, in management's estimation, has recorded adequate
reserves in the financial statements for pending litigation. Management, after
reviewing all actions and proceedings pending against or involving HomeSide,
considers that the aggregate liability or loss, if any, resulting from the final
outcome of these proceedings will not have a material effect on the financial
position of HomeSide.


In recent years, the mortgage banking industry has been subject to class action
lawsuits which allege violations of federal and state laws and regulations,
including the propriety of collecting and paying various fees and charges. Class
action lawsuits may be filed in the future against the mortgage banking
industry.


ITEM 6.  Exhibits and Reports on Form 8-K

(a)   The following document is filed as a part of this Report:

<TABLE>
<CAPTION>
Number            Description
------            -----------
<S>      <C>
10.1     Amended NAB Group - USA Deferred Compensation Plan Dated as of March 20, 2001

10.2     First Amendment to Rabbi Trust Agreement between HomeSide Lending, Inc.
         and SunTrust Banks of Florida, Inc. Effective as of February 1, 2001
</TABLE>


 (b)   Reports on form 8-K

HomeSide filed no reports on Form 8-K during the quarter ended March 31, 2001.


                                       25
<PAGE>   26
                                   SIGNATURES

    Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                 HomeSide International, Inc.
                                 ----------------------------
                                 (Registrant)

Date: May 15, 2001               By:   /s/
                                          -----------------------------------
                                          Hugh R. Harris
                                 President, Chief Operating Officer and
                                   Director

Date: May 15, 2001               By:  /s/
                                          -----------------------------------
                                          W. Blake Wilson
                                 Vice President, Chief Financial Officer
                                   and Director


                                       26