SECURITIES AND EXCHANGE COMMISSION

FORM 10-Q

Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934

NORTH FORK BANCORPORATION, INC.

(631) 844-1004
(Company’s telephone number, including area code)

Indicate by check mark whether the Company (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 Company was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: (X) Yes (  ) No

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). (X)Yes (  ) No

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

North Fork Bancorporation, Inc.

Form 10-Q

INDEX

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Item 1. Financial Statements

Consolidated Balance Sheets (Unaudited)

See accompanying notes to consolidated financial statements

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Consolidated Statements of Income (Unaudited)

See accompanying notes to consolidated financial statements

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Consolidated Statements of Cash Flows (unaudited)

See accompanying notes to consolidated financial statements

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Consolidated Statements of Changes in Stockholders’ Equity (unaudited)

[Continued from above table, first column(s) repeated]

See accompanying notes to consolidated financial statements

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Consolidated Statements of Comprehensive Income (Unaudited)

See accompanying notes to consolidated financial statements

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North Fork Bancorporation, Inc.
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
March 31, 2004 and 2003

In this quarterly report filed on Form 10-Q, where the context requires, “the Company”, “North Fork”, “we”, “us”, and “our” refer to North Fork Bancorporation, Inc. and its subsidiaries.

Note 1 - Summary of Significant Accounting Policies

Nature of Operations

     We are a $22 billion bank holding company incorporated in Delaware since 1980 and registered as a “bank holding company” under the Bank Holding Company Act. We are headquartered in Melville, New York, and our principal subsidiary, North Fork Bank, is a New York state chartered bank. North Fork Bank operates 180 retail banking branches in the New York Metropolitan area, including one branch in New Jersey. North Fork Bank’s assets and revenues represent approximately 95% of our consolidated assets and revenues. North Fork Bank provides banking and financial services to middle market and small businesses, local government units and retail customers in our service area. Our non-bank subsidiaries offer financial services such as asset management, trust, securities brokerage, and related annuity and mutual fund products. Our other bank subsidiary, Superior Savings of New England, N.A., is a nationally chartered bank, headquartered in Connecticut, which operates from two locations and focuses on gathering deposits throughout the northeast.

Basis of Presentation

     Our accounting and reporting policies are in conformity with accounting principles generally accepted in the United States of America. The preparation of these unaudited interim consolidated financial statements, in conformity with accounting principles generally accepted in the United States of America, requires that management make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the unaudited interim consolidated financial statements and the reported amounts of income and expenses during the reporting period. Such estimates are subject to change in the future as additional information becomes available or previously existing circumstances are modified. Actual results could differ from those estimates. In management’s opinion, all adjustments have been made for a fair presentation of the financial position and results of operations in these unaudited consolidated interim financial statements.

     On January 1, 2004, we were required to adopt the accounting provisions of FASB Interpretation No. 46, “Consolidation of Variable Interest Entities (revised December 2003), (“FIN 46R”)”. In accordance with the provisions of FIN 46R, we were required to deconsolidate the wholly-owned statutory business trusts (collectively, the “Trusts”) that were formed to issue Capital Securities (or “Trust Preferred Securities”). This deconsolidation resulted in the re-characterization of the underlying consolidated debt obligation from the Capital Securities to the Junior Subordinated Debt securities that exist between the Company and the Trusts that issued the Capital Securities. The re-characterization was reflected for all periods presented in this report. The adoption of FIN 46R had no effect on net income or stockholders’ equity.

     These unaudited interim consolidated financial statements and related management’s discussion and analysis should be read together with the consolidated financial information in our 2003 Annual Report on Form 10-K/A, previously filed with the United States Securities and Exchange Commission (“SEC”). The purpose of the amended 2003 Annual Report filed on Form 10-K/A was to clarify and enhance certain disclosures following a standard review by the SEC. Our consolidated statements of financial position and consolidated results of operations for the periods presented in our 2003 Annual Report filed on Form 10-K/A were not restated from the consolidated financial position and consolidated results of operations originally reported in our 2003 Annual Report filed on Form 10-K.

     In reviewing and understanding the financial information contained herein you are encouraged to read the significant accounting policies contained in Note 1 - Summary of Significant Accounting Policies of our 2003 Annual Report on Form 10-K/A. There have not been any significant changes in the factors or methodology used in determining accounting estimates or applied in our critical accounting policies since December 2003 that are material in relation to our financial condition or results of operations. Of these policies, we believe the most critical is the accounting for the allowance for loan losses (See “Critical Accounting Estimates” – below).

     Results of operations for the three months ended March 31, 2004 are not necessarily indicative of the results of operations which may be expected for the full year 2004 or any future interim period.

Critical Accounting Estimates

     Our policy with respect to the methodology used in the determination of our periodic provisioning and the adequacy of the allowance for loan losses involves a higher degree of complexity and requires us to make difficult and subjective estimates about highly uncertain matters or the susceptibility of such matters to change. The impact of the estimates and assumptions used in assessing the adequacy of the allowance for loan losses could have a material impact on our financial condition or results of operations.

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     The allowance for loan losses is available to cover probable losses inherent in the current loan portfolio. Loans, or portions thereof, deemed uncollectible are charged to the allowance for loan losses, while recoveries, if any, of amounts previously charged off are added to the allowance. Amounts are charged off after giving consideration to such factors as the customer’s financial condition, underlying collateral values and guarantees, and general economic conditions.

     The evaluation process for determining the adequacy of the allowance for loan losses and the periodic provisioning for estimated losses is undertaken on a quarterly basis, but may increase in frequency should conditions arise that would require our prompt attention. Conditions giving rise to such action are business combinations or other acquisitions or dispositions of large quantities of loans, dispositions of non-performing and marginally performing loans by bulk sale or any development which may indicate an adverse trend. Recognition is also given to the changed risk profile resulting from previous business combinations, customer knowledge, results of ongoing credit-quality monitoring processes and the cyclical nature of economic and business conditions.

     The loan portfolio is categorized according to collateral type, loan purpose or borrower type (i.e. commercial, consumer). The categories used include Multi-Family Mortgages, Residential Mortgages, Commercial Mortgages, Commercial, Consumer, and Construction and Land, which are more fully described in the section entitled “Management’s Discussion and Analysis – Loan Portfolio.” An important consideration is our concentration of real estate related loans located in the New York Metropolitan area.

     The methodology employed for assessing the appropriateness of the allowance consists of the following criteria:

•  Establishment of reserve amounts for specifically identified criticized loans, including those arising from business combinations and those designated as requiring special attention by our internal loan review program, bank regulatory examinations or our external auditors (specific-allowance method).

•  An allocation to the remaining loans giving effect to historical losses experienced in each loan category, cyclical trends and current economic conditions which may impact future losses (loss experience factor method).

     The initial allocation or specific-allowance methodology commences with loan officers and underwriters grading the quality of their loans on a risk classification scale ranging from 1 - 8. Loans identified as below investment grade are referred to our independent Loan Review Department (“LRD”) for further analysis and identification of those factors that may ultimately affect the full recovery or collectibility of principal and/or interest. These loans are subject to continuous review and monitoring while they remain in a criticized category. Additionally, LRD is responsible for performing periodic reviews of the loan portfolio independent from the identification process employed by loan officers and underwriters. Loans that fall into criticized categories are further evaluated for impairment in accordance with the provisions of Statement of Financial Accounting Standards (“SFAS”) No. 114, “Accounting by Creditors for Impairment of a Loan.” The portion of the allowance allocated to impaired loans is based on the most appropriate of the following measures: discounted cash flows from the loan using the loan’s effective interest rate, the fair value of the collateral for collateral dependent loans, or the observable market price of the impaired loan.

     The remaining allocation applies a category specific loss experience factor to loans which have not been specifically reviewed for impairment, including smaller balance homogeneous loans that we have identified as residential and consumer, which are not specifically reviewed for impairment. These category specific factors give recognition to our historical loss experience, as well as that of acquired businesses, cyclical trends, current economic conditions and our exposure to real estate values. These factors are reviewed on a quarterly basis with senior lenders to ensure that the factors applied to each loan category are reflective of trends or changes in the current business environment which may affect these categories.

     Upon completion of both allocation processes, the specific allowance and loss experience factor allocations are combined, producing the allocation of the allowance for loan losses by loan category. Other factors used to evaluate the adequacy of the allowance for loan losses include the amount and trend of criticized loans, results of regulatory examinations, peer group comparisons and economic data associated with the relevant markets, specifically the local real estate market. Because many loans depend upon the sufficiency of collateral, any adverse trend in the relevant real estate markets, particularly real estate in the New York Metropolitan area, could have a significant adverse effect on the quality of our loan portfolio. This may lead management to consider that the overall allowance level should be greater than the amount determined by the allocation process described above.

Accounting for Stock-Based Compensation

     We account for our stock-based compensation plans in accordance with the requirements specified in SFAS No. 123 “Accounting for Stock-Based Compensation” (“SFAS 123”), as amended by SFAS No. 148, “Accounting for Stock-Based Compensation – Transition and Disclosure” (“SFAS 148”). As permitted under these statements, we have elected to apply the intrinsic value method in accounting for option-based stock compensation plans. Accordingly, compensation expense has not been recognized in the accompanying consolidated financial statements for stock-based compensation plans, other than for restricted stock awards. Restricted stock awards are recorded as deferred compensation, a component of stockholders’ equity, at the fair value of these awards at the date of grant and are amortized to compensation expense over the awards’ specified vesting periods. Since the intrinsic value method is used, we are required to disclose the pro-forma impact on net income and earnings per share that the fair value-based method would have had, if it was applied rather than the intrinsic value method. Stock options are typically awarded at year end and contain a nominal vesting period. Since the pro forma effect on net income of expensing stock options during the three months ended March 31, 2004 and 2003 is nominal, we have not included such pro forma

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compensation expense and its’ related effect on net income. There would be no related effect on pro forma earnings per share for the three months ended March 31, 2004 and 2003.

Segment Reporting

SFAS NO. 131 “Disclosure about Segments of an Enterprise and Related Information” (“SFAS 131”) requires public companies to report certain financial information about operating segments for which such information is available and utilized by the chief operating decision maker in deciding how to allocate resources and in assessing performance. Specific information to be reported for individual operating segments includes a measure of segment profit and loss, total revenues, and segment assets. As a retail bank, substantially all of our operations involve the issuance of loans and the acceptance of customer deposits. Our Financial Services Division, or “Private Asset Group”, includes discount brokerage, investment management, insurance and annuity sales, and trust and estate administration. The products in this segment are directed toward existing bank customers and non-customers. Management has segregated the budgeting and reporting of this segment from its commercial bank, utilizing separate plans and measurements to evaluate performance. The Private Asset Group’s total revenues, net income and total assets were approximately $4 million, $1 million and $7.7 million for the period ended March 31, 2004 and $3.2 million, $.5 million and $5.3 million, respectively for the period ended March 31, 2003. The private asset group’s total revenues, net income and total assets comprise approximately 1%, 0.7% and 0.03%, respectively of the consolidated totals for all period presented.

NOTE 2 — PENDING BUSINESS COMBINATIONS

The Trust Company of New Jersey

     On December 16, 2003, we entered into a definitive agreement to acquire The Trust Company of New Jersey (“TCNJ”) in an all stock transaction valued at $726 million. Under the terms of the agreement, in a tax-free exchange of shares, TCNJ shareholders will receive a fixed exchange ratio of one share of our common stock for each common share of TCNJ held. TCNJ is a New Jersey state chartered bank and is the fourth largest commercial bank headquartered in New Jersey. TCNJ currently operates 95 retail bank branches, including 43 “in-store” supermarket branches, located principally in the affluent and densely populated Northern New Jersey market. TCNJ recently closed 8 unprofitable “in-store” branches and is in the process of closing 20 additional “in-store” branches prior to the merger date. TCNJ will be merged with and into North Fork Bank. As of March 31, 2004 TCNJ reported $4.2 billion in total assets, $2.2 billion in loans and $3.2 billion in deposits. We have received all necessary regulatory approvals. A special meeting of TCNJ shareholders to approve the merger will be held on May 13, 2004. The merger requires the affirmative vote of 66 2/3% of shares outstanding; holders of approximately 42% of TCNJ shares held by insiders have been committed to vote in favor of the merger. We expect to complete the merger on May 14, 2004 and simultaneously convert all systems. For additional information regarding the terms of the merger and its pro forma impact on our financial statements, see amendment No. 2 to Form S-4 filed on April 12, 2004 with the Securities and Exchange Commission. Additionally, we have filed TCNJ’s Form 10-Q for the period ended March 31, 2004 on a Form 8-K dated May 4, 2004.

GreenPoint Financial Corp.

     On February 15, 2004, we entered into a definitive agreement to acquire GreenPoint Financial Corp. (“GreenPoint”) in an all stock transaction valued at $6.3 billion. Under the terms of the agreement, in a tax-free exchange of shares, GreenPoint shareholders will receive a fixed exchange ratio of 1.0514 shares of North Fork common stock for each common share of GreenPoint held. GreenPoint operates two primary businesses, a retail bank (GreenPoint Bank) and a national mortgage company (GreenPoint Mortgage Corp.). GreenPoint Bank is a New York state chartered savings bank and the second largest thrift in the Metropolitan New York area, where it operates through 90 retail bank branches. GreenPoint Mortgage Corp. is a national mortgage company headquartered in California. GreenPoint Mortgage Corp. originates a wide variety of “A” quality residential mortgage loans. Their product menu includes agency qualifying loans, Jumbo A mortgages and Specialty Alternative A mortgages. GreenPoint Mortgage Corp. reported loan originations of $39 billion in 2003 through 29 office facilities located throughout the United States. Pursuant to the agreement, GreenPoint will merge with and into North Fork Bancorporation, Inc. and GreenPoint Bank will merge with and into North Fork Bank. As of March 31, 2004, GreenPoint reported $23.8 billion in total assets, $14.7 billion in loans and $12.6 billion in customer deposits. The transaction is expected to close in the third quarter of 2004, following receipt of all regulatory approvals and certain other customary closing conditions. The merger agreement is also subject to approval by the GreenPoint and North Fork shareholders.

NOTE 3 — SECURITIES PORTFOLIO

The amortized cost and estimated fair values of available-for-sale and held-to-maturity securities are as follows:

(1) Amortized cost and fair value includes $68.2 million, $68.2 million and $200 million in Federal Home Loan Bank stock at March 31, 2004, December 31, 2003 and March 31, 2003, respectively.

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     During the second and third quarters of 2003, we repositioned the balance sheet to change our interest rate risk profile by reducing the available-for-sale portfolio and related short term collateralized borrowings. This decision reduced our exposure to extension risk and the potential for significant unrealized losses in a rising interest rate environment. The portfolio was reduced from its interim period high by approximately $3.0 billion, of which $1.1 billion was accomplished through sales and the remainder through portfolio cash flows. (See “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations – Net Interest Income Section” for additional Information)

     We maintain a Bank Owned Life Insurance trust (commonly referred to as BOLI). The BOLI trust, which insures consenting officer level employees, was formed to offset future employee benefit related costs and to provide additional benefits due to its tax-exempt nature. Approximately $238.7 million in assets support the program, $223.4 million of which are included in the available-for-sale portfolio. The BOLI’s impact on net income has not been significant through the first quarter of 2004.

     At March 31, 2004, securities carried at $3.5 billion were pledged to secure securities sold under agreements to repurchase, other borrowings, and for other purposes as required by law. Securities pledged under agreements pursuant to which the collateral may be sold or repledged by the secured parties approximated $2.0 billion, while securities pledged under agreements pursuant to which the secured parties may not sell or repledge approximated $1.5 billion at March 31, 2004.

NOTE 4 — LOANS

The following table represents the components of the loan portfolio as of the dates indicated:

     The loan portfolio is concentrated primarily in loans secured by real estate located in the New York Metropolitan area. The segments of the real estate portfolio are diversified in terms of risk and repayment sources. The underlying collateral includes multi-family apartment buildings, residential 1 - - 4 family homes and owner occupied/non-owner occupied commercial properties. The risks inherent in this portfolio are dependent on both regional and general economic stability, which affect property values and the financial well being and creditworthiness of the borrowers. Included in residential mortgages are loans held for sale totaling $3.2 million, $4 million and $17.6 million at March 31, 2004, December 31, 2003 and March 31, 2003, respectively.

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Non-Performing Assets

     Non-performing assets include loans ninety days past due and still accruing, non-accrual loans and other real estate. Other real estate consists of properties acquired through foreclosure or deed in lieu of foreclosure. Other real estate is carried at the lower of the recorded amount of the loan or the fair value of the property based on the current appraised value adjusted for estimated disposition costs.

The following table presents the components of non-performing assets as of the dates indicated:

     Future levels of non-performing assets will be influenced by prevailing economic conditions and the impact of those conditions on our customers, prevailing interest rates, unemployment rates, property values, pending acquisitions and other internal and external factors.

The following table represents the components of non-performing loans as of the dates indicated:

Interest forgone on non-accrual loans, or the amount of income that would have been recorded had these loans been current in accordance with their original terms, aggregated approximately $.3 million for the quarter ended March 31, 2004. The amount of interest income included in net income on non-accrual loans during the most recent quarter was not significant.

     As of March 31, 2004, there were no commitments to lend additional funds to borrowers whose loans are non-performing. Additionally, there were no restructured accruing loans outstanding as of the dates indicated above.

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NOTE 5 — ALLOWANCE FOR LOAN LOSSES

The following table is a summary of the changes in the allowance for loan losses and reflects charge-offs and recoveries by loan type for the periods indicated:

NOTE 6 – FEDERAL HOME LOAN BANK ADVANCES AND REPURCHASE AGREEMENTS

The maturity or repricing frequency of Repurchase Agreements (“Repo’s”) and Federal Home Loan Bank (“FHLB”) advances at March 31, 2004 is as follows:

(1)

Includes the effects of interest rate swaps.

     Interest rate swaps were used to convert certain FHLB advances and Repo’s from variable rates to fixed rates. These swaps, which qualify as cash flow hedges are explained in more detail in “Notes to Consolidated Financial Statements Note 9 — Derivative Financial Instruments.” The total average rate excluding these swaps was 3.59%.

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NOTE 7 — SUBORDINATED DEBT

The following table is a summary of Subordinated Notes outstanding as of the dates indicated:

     We issued $350 million aggregate principal amount of 5.875% Subordinated Notes and $150 million aggregate principal amount of 5% Fixed Rate/Floating Rate Subordinated Notes in 2002. Both series of notes mature in 2012 and qualify as Tier II capital for regulatory purposes. The 5.875% subordinated notes bear interest at a fixed rate through maturity, pay interest semi-annually and are not redeemable prior to maturity. The Fixed Rate/Floating Rate Notes bear interest at a fixed rate of 5% per annum for the first five years, and convert to a floating rate thereafter until maturity based on three-month LIBOR plus 1.87%. Beginning in the sixth year, we have the right to redeem the fixed rate/floating rate notes at par plus accrued interest.

     In 2003, $500 million in pay floating swaps, designated as fair value hedges, were used to convert the stated fixed rate on the subordinated notes to variable rates indexed to three-month LIBOR. (See “Notes to Consolidated Financial Statements Note 9 — Derivative Financial Instruments” for further details).

NOTE 8 — JUNIOR SUBORDINATED DEBT

The following table is a summary of Junior Subordinated Debt outstanding as of the dates indicated:

     The Capital Trusts (“Wholly-Owned Statutory Trusts”) were formed with initial capitalizations in common stock and for the exclusive purpose of issuing Capital Securities (or “Trust Preferred Securities”) and using the proceeds of both the common stock and Capital Securities to acquire Junior Subordinated Debt Securities (“Junior Subordinated Debt “) issued by the Company. The Capital Securities are obligations of the Wholly-Owned Statutory Business Trusts. The Junior Subordinated Debt and Capital Securities bear the same interest rates, are due concurrently and are non-callable at any time in whole or in part for ten years from the date of issuance, except in certain circumstances. They may be redeemed annually thereafter, in whole or in part, at declining premiums to maturity. The costs associated with these issuances have been capitalized and are being amortized to maturity using the straight-line method.

     On January 1, 2004, FIN 46R required us to deconsolidate our investment in the Wholly-Owned Statutory Business Trusts. This deconsolidation resulted in the re-characterization of the underlying consolidated debt obligation from Capital Securities and the equity investment to the Junior Subordinated Debt obligation that existed between the Company and the Trusts that issued the securities. Additionally, we were required to re-designate the $245 million of interest rate swaps that were hedging the Capital Securities to a corresponding amount of Junior Subordinated Debt.

     Interest rate swap agreements continue to be designated as fair value hedges and based on this re-designation are being used to change the repricing characteristics of $245 million in Junior Subordinated Debt from their stated fixed rates to variable rates indexed to three-month LIBOR. (See “Notes to Consolidated Financial Statements — Note 9 — Derivative Financial Instruments” for further details.)

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     The Capital Securities currently qualify as Tier I capital for regulatory purposes, however, there can be no assurance that the Federal Reserve will continue to allow institutions to include Capital Securities as a component of Tier 1 Capital. As of March 31, 2004, we would still exceed the well capitalized threshold under the regulatory framework for prompt corrective action assuming the exclusion of these Capital Securities.

NOTE 9 — DERIVATIVE FINANCIAL INSTRUMENTS

     As part of our interest rate risk management process, we periodically enter into interest rate derivative contracts. These derivative interest rate contracts may include interest rate swaps, caps, and floors and are used to modify the repricing characteristics of specific assets and liabilities. We did not enter into or maintain interest rate caps/floors and collars as part of our risk management strategy during the periods presented.

The following table details the interest rate swaps and the associated hedged liabilities outstanding as of March 31, 2004:

     At March 31, 2004, $275 million in pay fixed swaps, designated as cash flow hedges, were outstanding. These agreements change the repricing characteristics of certain term borrowings, requiring us to make periodic fixed rate payments and receive periodic variable rate payments indexed to three-month LIBOR, based on a common notional amount and identical payment and maturity dates. These swaps had original maturities of up to 10 years and, as of the end of the period, had an unrealized loss of $13.3 million, which is recorded as a component of other liabilities (the net of tax balance of $7.6 million is reflected in stockholders’ equity as a component of accumulated other comprehensive income). The use of pay fixed swaps outstanding increased interest expense by $2.7 million and $10.4 million in the first quarters of 2004 and 2003, respectively. The decline in swap related interest expense is primarily due to the maturity of $850 million of these interest rate swaps in June 2003. Based upon the current interest rate environment, approximately $3.3 million of after tax loss is expected to be reclassified from accumulated other comprehensive income during the next twelve months.

     In June 2003, $350 million in pay floating swaps designated as fair value hedges were used to convert the stated fixed rate on the 5.875% subordinated notes to variable rates indexed to three-month LIBOR. The swap term and payment dates match the related terms of the subordinated notes. In July 2003, $150 million in pay floating swaps designated as fair value hedges were used to convert the stated fixed rate on the 5% subordinated notes to variable rates indexed to three-month LIBOR. The swap term is for five years, matching the period of time the subordinated notes pay a fixed rate. Beginning in the sixth year, we have the right to redeem the fixed rate/floating rate notes at par plus accrued interest or the interest rate converts to a spread over three month LIBOR. At March 31, 2004, the negative fair value adjustment of $11.2 million (unrealized loss) on the swap agreements hedging $350 million of subordinated notes is reflected as a component of other liabilities. The carrying amount of the $350 million in subordinated notes was decreased by an identical amount. The positive fair value adjustment of .4 million (unrealized gain) on the swap agreements hedging $150 million of subordinated notes is reflected as a component of other assets. The carrying amount of the $150 million in subordinated notes was increased by an identical amount. These swaps reduced interest expense by approximately $2.7 million in the first quarter of 2004. There was no hedge ineffectiveness recorded in the Consolidated Statement of Income on these transactions for all periods reported.

     Interest rate swap agreements were used to change the repricing characteristics of $245 million in Junior Subordinated Debt from their stated fixed rates to variable rates indexed to three-month LIBOR. The swaps, designated as fair value hedges, contain payment dates, maturity dates and embedded call options held by the counterparty (exercisable in approximately four years), which are identical to the terms and call provisions contained in the Junior Subordinated Debt. At March 31, 2004, the positive fair value adjustment on the swap agreements hedging $200 million of Junior Subordinated Debt was an unrealized gain totaling $22.5 million and is reflected as a component of other assets. The carrying amount of the $200 million in Junior Subordinated Debt was increased by an identical amount. The negative fair value adjustment on the swap agreements hedging $45 million of Junior Subordinated Debt was an unrealized loss totaling $.7 million and is reflected as a component of other liabilities. The carrying amount of the $45 million in Junior Subordinated Debt was decreased by an identical amount.

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These swaps decreased interest expense by $3.4 million and $2.8 million in the first quarter of 2004 and 2003, respectively. There was no hedge ineffectiveness recorded in the Consolidated Statements of Income from these transactions for all periods reported. As previously mentioned these swaps were re-designated from Capital Securities to the Junior Subordinated Debt due to the adoption of FIN 46R. All prior periods have been adjusted to reflect the re-designation.

     The use of derivative financial instruments creates exposure to credit risk. This credit exposure relates to losses that would be recognized if the counterparties fail to perform their obligations under the contracts. To mitigate this exposure to non-performance, we deal only with counterparties of good credit standing and establish counterparty credit limits.

NOTE 10 — OTHER COMMITMENTS AND CONTINGENT LIABILITIES

Credit Related Commitments

     We extend traditional off-balance sheet financial products to meet the financing needs of our customers. They include commitments to extend credit and letters of credit. Funded commitments are reflected on the consolidated balance sheets.

     Commitments to extend credit are agreements to lend to customers in accordance with contractual provisions. These commitments usually have fixed expiration dates or other termination clauses and may require the payment of a fee. Total commitments outstanding do not necessarily represent future cash flow requirements, since many commitments expire without being funded.

     Management evaluates each customer’s creditworthiness prior to issuing these commitments and may also require certain collateral upon the extension of credit based on management’s credit evaluation. Collateral varies but may include accounts receivable, inventory, property, plant and equipment, and income-producing properties. Fixed rate commitments are subject to interest rate risk based on changes in prevailing rates during the commitment period. We are subject to credit risk in the event that the commitments are drawn upon and the customer is unable to repay the obligation.

     Letters of credit are irrevocable commitments issued at the request of customers. They authorize the beneficiary to draw drafts for payment in accordance with the stated terms and conditions. Letters of credit substitute a bank’s creditworthiness for that of the customer and are issued for a fee commensurate with the risk.

     We typically issue two types of letters of credit: Commercial (documentary) Letters of Credit and Standby Letters of Credit. Commercial Letters of Credit are commonly issued to finance the purchase of goods and are typically short term in nature. Standby letters of credit are issued to back financial or performance obligations of a bank customer, and are typically issued for periods up to one year. Due to their long-term nature, standby letters of credit require adequate collateral in the form of cash or other liquid assets. In most instances, standby letters of credit expire without being drawn upon. The credit risk involved in issuing letters of credit is essentially the same as extending credit facilities to comparable customers.

The following table presents total commitments and letters of credit outstanding at March 31, 2004:

(1) Standby letters of credit are considered guarantees in accordance with the criteria specified by FIN 45. Standby letters of credit are reflected in other liabilities in the accompanying consolidated balance sheet at their estimated fair value of $1.3 million as of March 31, 2004. The fair value of these instruments is recognized in income over the initial term of the guarantee.

NOTE 11 – RETIREMENT AND OTHER EMPLOYEE BENEFIT PLANS

The components of net periodic benefit costs for the three months ended March 31,

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     As previously disclosed in our consolidated financial statements for the year ended December 31, 2003 filed on Form 10-K/A, we do not expect to make a contribution to the pension plan during 2004, but we do expect to make a $1.2 million contribution to the post-retirement plan during 2004.

NOTE 12 — RECENT ACCOUNTING PRONOUNCEMENTS

Consolidation of Variable Interest Entities

As described in Note 1, on January 1, 2004, we were required to adopt the accounting provisions of FIN 46R and deconsolidate our Wholly-Owned Statutory Business Trusts previously formed to issue Capital Securities (or “Trust Preferred Securities”). This deconsolidation resulted in the re-characterization of the underlying consolidated debt obligation from the Capital Securities and the related equity investments to Junior Subordinated Debt obligations that exist between the Company and the three wholly-owned trust entities that issued the securities. The adoption of FIN 46R had no effect on net income or stockholders equity.

     In July 2003, the Board of Governors of the Federal Reserve issued a supervisory letter instructing bank holding companies to continue to include Trust Preferred Securities in Tier 1 capital for regulatory capital purposes until further notice. On May 6, 2004, the Board of Governors of the Federal Reserve System issued a notice of proposed rulemaking in regards to Trust Preferred Securities and the definition of capital. In general, the Board of Governors proposed to allow the continued inclusion of outstanding and prospective issuances of Trust Preferred Securities in Tier 1 capital of bank holding companies, subject to stricter quantitative limits and qualitative standards. The quantitative limits would become effective after a three year transition period (See “Federal Reserve System 12 CFR Parts 208 and 225” for further details). As of March 31, 2004, assuming we no longer included the Capital Securities issued by North Fork Capital Trust I, North Fork Capital Trust II, and Reliance Capital Trust I in Tier 1 capital, we would still exceed the well capitalized threshold under the regulatory framework for prompt corrective action. (See “Notes to Consolidated Financial Statements” — Footnote 8 — “Junior Subordinated Debt” for additional information).

Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity

In May 2003, the FASB issued SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of Both Liabilities and Equity” (“SFAS 150”). SFAS 150 establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. SFAS 150 requires that an issuer classify a financial instrument that is within its scope as a liability (or an asset in some circumstances). Many of those instruments were previously classified as equity. SFAS 150 was effective immediately for financial instruments entered into or modified after May 31, 2003; otherwise, it was effective for all existing contracts on July 1, 2003. However, the effective date of the statement’s provisions related to the classification and measurement of certain mandatorily redeemable non-controlling interests has been deferred indefinitely by the FASB, pending further Board action. Adoption of SFAS 150 did not have a material effect on our consolidated financial statements.

Application of Accounting Principles to Loan Commitments

In March, 2004, the Securities and Exchange Commission staff issued Staff Accounting Bulletin No. 105, “Application of Accounting Principles to Loan Commitments” (“SAB 105”). SAB 105 provides recognition guidance for entities that issue loan commitments that are required to be accounted for as derivative instruments. SAB 105 indicates that the expected future cash flows related to the associated servicing of the loan and any other internally-developed intangible assets should not be considered when recognizing a loan commitment at inception or through its life. SAB 105 also discusses disclosure requirements for loan commitments and is effective for loan commitments accounted for as derivatives and entered into subsequent to March 31, 2004. Currently, loan commitments that we would be required to account for as derivative instruments under SAB 105 are insignificant. However, due to the pending acquisition of GreenPoint Financial Corp., which includes GreenPoint Mortgage Corp., a national mortgage company, we are presently evaluating the potential impact of applying the requirements of SAB 105.

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

Forward-Looking Statements

This document, including information incorporated by reference, contains “forward-looking statements” (as that term is defined in the Private Securities Litigation Reform Act of 1995). In addition, senior management may make forward-looking statements orally to analysts, investors, the media, and others. These forward looking statements may be identified by the use of such words as: “believe”, “expect”, “anticipate”, “intend”, “plan”, “estimate”, or words of similar meaning, or future or conditional terms such as “will”, “would”, “should”, “could”, “may”, “likely”, “probably”, or “possibly”.

          Examples of forward-looking statements include, but are not limited to, estimates or projections with respect to our future financial condition, expected or anticipated revenues, results of operations and our business, with respect to:

	•		projections of revenues, income, earnings per share, capital expenditures, assets, liabilities, dividends, capital structure, or other financial items;
	•		statements regarding the adequacy of the allowance for loan losses or other reserves;
	•		descriptions of plans or objectives of management for future operations, products, or services, including pending acquisition transactions;
	•		costs or difficulties related to the integration of the business of The Trustcompany of New Jersey (“TCNJ”) and GreenPoint Financial Corp. (“GreenPoint”) may be greater than expected;
	•		expected cost savings and revenue enhancements from the pending acquisitions may not be fully realized or realized within the expected time frame;
	•		forecasts of future economic performance; and
	•		descriptions of assumptions underlying or relating to any of the foregoing.

By their nature, forward-looking statements are subject to risks and uncertainties. There are a number of factors, many of which are beyond our control, that could cause actual conditions, events, or results to differ significantly from those described in the forward-looking statements.

     Factors which could cause or contribute to such differences include, but are not limited to:

	•		general business and economic conditions on both a regional and national level;
	•		worldwide political and social unrest, including acts of war and terrorism;
	•		competitive pressures among financial services companies may increase significantly;
	•		changes in the interest rate environment may reduce interest margins;
	•		changes may occur in the securities and bond markets;
	•		legislative or regulatory changes may adversely affect the businesses in which we are engaged;
	•		technological changes, including the impact of the Internet;
	•		monetary and fiscal policies of the U.S. Government, including policies of the U.S. Treasury and the Federal Reserve Board and;
	•		accounting principles, policies, practices or guidelines.

Any forward-looking statements made in this report or incorporated by reference in this report are made as of the date of this report, and, except as required by applicable law, we assume no obligation to update the forward-looking statements or to update the reasons why actual results could differ from those projected in the forward-looking statements. You should consider these risks and uncertainties in evaluating forward-looking statements and you should not place undue reliance on these statements.

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Financial Summary

Overview

Selected financial highlights for the three months ended March 31, 2004 and 2003 are set forth in the table below. The succeeding discussion and analysis describes the changes in components of operating results.